No you don't have to. In fact to a great extent you can't. The economy is a very complex and ever shifting thing. It can't be calculated out ahead of time or even, to a sufficient degree to solidly prove that type of statement, in hindsight, at least not unless the difference is vast.
Excellent. You have finally admitted what I stated in the beginning. Economist can't show attribution. Yet you have claimed that you think economic understanding is on a par or better than climate science. Which is why I say nonsense.
For example, just try to attribute the performance of the economy up until this slump, to 1) Bush's tax cuts, vs 2) Fed monetary policy.
The response you will get depends on the ideology of your economist. But it does not matter. They are all licking their finger and sticking it up in the air.
Which BTW, is why I suggest you read up on the long history of GHG science starting with Tyndall. What you will find is that things have slowly been resolved ONLY by doing ever more careful and detailed accounting of the physical, chemical and even biological processes involved, and there is still much to be done.
You are correct to note that economist don't have a prayer of doing so, but you fail to note why, which would tell you why climate science will succeed, but economics never can at attaining detailed knowledge and good predictive power: The feedback loops in economics are dependent on human brains. Major problem. Climate science, while impacted by feedback loops, is not up against that issue. (Please note that human impact on climate science is an input BTW, least you try to claim I'm overlooking that, something many AGW bashers fail to understand and often wail about). Climate science can have predictive issues with say the Sun, but the Sun is not in a feedback loop from the earth's temperature, hence climate science can at least look at the historical solar trends and characterise them. Economist are up against the fact that if X happens (say major job loss from offshoring), people adapt, so it is impossible to predict what the mid to longer term results of X are. Climate science does not have that problem.
Also standard of living is actually a somewhat subjective term.
Yes, absolutely! Like almost all concepts in economics. While for climate science, temperature is not, even global temperature, although you'll find plenty of bashers who will wail that taking a mean in this case is not correct, while they happily use means in any other instance.
Regarding minimum wage, your answer is once again general hand waving. "Too high" or "too low" needs to be resolved in detail. It's like me noting that eating "too much" is not good for you while eating "too little" is not either. Duh! In that sense, I'll agree that economists can agree on the "basics". But the basics are the broad side of a barn and don't have much utility. Policy needs details. All the arguments are over details, which IMO are fairly broad.
What you need to keep firmly in mind is that there is a link between minimum wages, immigrant workers, and free trade, with all the important points being in the details. Bush was correct to note that there are "jobs Americans don't want" but he should have noted that it had a link to pay. Consequently we need immigrants who think the pay for those jobs is good (and who happily don't complain about the lack of additional benefits which most Americans want). If we in fact raise the pay for those jobs to a level that attracts Americans, then free trade has an impact on whether those jobs even exist. But waving your hands and sketching out the links does not help much in implementing good policy, because it is way to crude. Yet that is about as good as economists can do. After that, it is simply ideology which shapes policy. So there are plenty of op-ed pieces written with plenty of glib references to the "basics" as you call them, but zero detail. Said op-ed's are worthless.
I "lack the details" because I'm making general statements. I'm making a post on SI, not publishing a long economics research paper or a book. And even if I was publishing a book or paper, and was a Nobel prize winning economist, the exact details wouldn't be nearly as solid as the general statement.
YOu would think that at least an estimate (with error bars) of what "optimal" tax rates should be wrt to economic performance in terms of % of GDP would exist. Why don't they? Further, why don't economists broadly agree on these numbers? Contrast that to the fact that climate science has a reasonable estimate of current global warming (with error bars) attributed to GHGs (and also for the Solar, sulfates, volcanoes, and ozone).
What amuses me greatly is that most people doubting, or bashing climate science do it for economic reasons, claiming that we should not make profound economic decisions based on such "uncertain" data as AGW, when the "science" of economics can't even in hindsight distinguish the economic effects of major policy decisions like interest rates and tax cuts. If you can't tell me what the relative impacts of Bush's tax cuts vs Fed monetary policy have been during the last 5 years, why should anyone believe any economist who advocates for a certain change to the economic system, especially when the economist comes from an ideological Think Tank?
Well just about no one believes your money should be worth more over time, supporting that statement is the same as supporting deflation which has next to zero support.
On the SI Res Real Estate Crash board, I badgered some gold bugs to tell me how the money supply should grow, and several of them were much in favor of a fixed supply of gold, which grew in value as the economy expanded. They seemed generally more knowledgeable than myself about lots of economic issues (don't laugh!) so what am I to make of that? I'd guess Ron Paul thinks somewhat the same. Plenty of smart people gave him millions of dollars to run for President. At least I assume they were smart, supposedly he had lots of support from techies in Silicon Valley.
FWIW, the only issue I see with modest inflation/deflation is one of expectation. We humans are biased toward "growth" and will take fictional growth if that is all that is available. So inflation is simply fictional growth, which keeps everyone happy. It lets us get pay raises, sans productivity increases. It does alter mindsets regarding savings, investment, and debt, but there are other ways to adjust mindset in that regard as well, so I don't automatically claim that deflation is bad. I think you could construct good systems with -, 0, or + inflation. I suspect you can even construct good systems with high inflation, given computers, and ecommerce. Even hyper inflation if you handle everything electronically. But whats the point? I would think you can make them basically equivalent with computer algorithms. In fact, you could allow an individual to select his desired economic inflation universe, then map all transactions between that an the real one. The only hassle is that at hyperinflation, time lags are an issue, hence transactions must be electronic and very fast. Other than that, they are equivalent.
So I think I do have an answer for why inflation targets are 1-2%. That is psychologically where it needs to be. Deflation causes psychological issues, and too high of inflation does as well. BTW, earlier in Ben's Fed term, there was more talk about this issue of "anchored inflation expectations" as one of the Fed's missions, but I've noticed rather less of that recently. From all the chatter, most people rather expect inflation now, so I guess the Fed, while worrying about actual inflation, can't claim to have anchored expectations on low inflation anymore. |
