Good old mathematical proof with spherical cows in a frictionless vacuum. Should be complemented with some empiricism. From https://en.wikipedia.org/wiki/Comparative_advantage#Criticis...: "none of the world's most successful trading regions, including Japan, Korea, Taiwan, and now mainland China, reached their current status by adopting neoliberal trading rules."
If you want to learn more read Architect of Prosperity.
Capital favouring policies seem to work great for capital - if you have capital.
Hong Kong was not the logistics hub of an empire after WWII. It was the remnant of one, a place that had never been important before and wasn’t a priority to anyone in the metropole.
Capital favouring policy work great for people who live anywhere with rule of law and security of contract. If you do that you can go from bombed out war zone poverty to the first world in one lifetime, as South Korea, Japan, Singapore and Hong Kong all did.
Hong Kong’s importance is on showing that industrial policy and tariffs are completely unnecessary to that process.
Hong Kong is situated at the mouth of the Pearl River Valley, one of the most densely populated areas in the world. Important enough that the UK fought two wars to maintain the territory, and it benefited tremendously from being a border city during the Cold War.
Many of those refugees came from the area, and chose to leave because they had wealth or experience. Meanwhile, US allied powers embargoed China while still providing assistance to Hong Kong. These things had far too great of an impact to really credit the trade policy.
Or read about survivor bias.
Edit: "the other way around" isn't quite right, I thought you were making a point besides the one you were actually making. Hurpadurpa.
Even more crucially, it says nothing on what its effects with time are. It's optimizing for immediate benefits, with no regard for future ones. Export rice and import tractors, because it's cheaper at this moment, but it never lets you develop your own industries.
The question tends to end up - are the costs and benefits diffuse or focused. Focused costs tend to be negatives (loud complaints from small groups), and diffuse benefits aren't perceived.
Free trade (at the start) is a diffuse benefit, and a focused injury. It's like arguing for action on climate change.
() eg: all the following were justified by "economists": trickle down economics were promised to increase middle class (nope), prediction of inflation caused by quantitative easement (hasn't happened yet), devaluation of dollar due to trade deficit (hasn't happened yet), gains in tax revenues by unlocking growth through tax cuts (nope), etc ...
Much as I like to point out that microeconomics has a way better record than macroeconomics, it’s akso easier because we have much, much more data.
You’re still wrong about macroeconomics though.
If you increase the money supply you’ll get inflation. If you increase it a lot you’ll get hyperinflation. If you surprise people with unexpectedly higher inflation you’ll get a boom. As people realise inflation is higher than expected you’ll get a recession.
If you raise taxes unexpectedly people will spend less, not just because they have less money, but because they realise they’ll have less money than they expected over the course of their whole lives, they’re poorer.
Here are his thoughts on supply-side "trickle-down" economics:
"It's basically what happens when a college sophomore attends the first 8 weeks of an intro macro course and is like, 'ok, I've heard enough. I'm going to go write policy now'."
It makes sense in the context of basic economic theory devoid of complication introduced later, but no legitimate economists still believe in supply-side economics and very few did to begin with. The powers that be reached for, and continue to reach for, economic theory that supports their agenda; they don't look for consensus in the academic community.
That's a wonderful quote. Thank you for that.
But skyrocketing healthcare, education, and housing costs could easily be due to inflation. They are all inelastic goods that the CPI ignores. They are purchased with seemingly infinite loan availability.
When a loan is granted that money is conjured out of thin air, inflating the money supply.
Economists treat it like it was a proof, but it wasn't; it's a sort of shaggy dog story in service of an ideology.
However, the overwhelming consensus of the economics profession remains that while these arguments are theoretically valid under certain assumptions, these assumptions do not usually hold and should not be used to guide trade policy. Gregory Mankiw, chairman of the Harvard Economics Department, has said: ″Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards.″
It's sad to have to rehash this every time people on HN who've never studied economics figure they're experts on the subject, much like happens with climate change denialists, so I'll have to repeat it again. There is an overwhelming consensus among people who study the subject that protectionism has a negative effect on economic growth and economic welfare . Even economists who lean interventionist like Paul Krugman strongly agree, and have tried time and time again to explain why free trade is a good thing to an ignorant public. It is shameful that so many people feel obligated to opine strongly on a subject which they don't understand, causing bad policies to be enacted.
Protectionism makes society worse off. It makes the world poorer.
And do their assurances only work if everyone adopts unbiased free trade, and break down when a group favors its own, such as shown in http://jasss.soc.surrey.ac.uk/16/3/7.html ?
>> Fortunately, the rise of the Internet, and specifically Internet marketplace models, act as accelerants to the productivity benefits of the division of labour AND comparative advantage by reducing information asymmetry and increasing the likelihood of a perfect match with regard to the exchange of goods or services.
That is false. Maybe it was the case at the beginning, but now with a small number of big gatekeepers like Google, Amazon and Facebook, the internet actually increases information asymmetry. Mostly by concentrating user attention to a small number of companies/products and thereby encouraging herd mentality and distracting users away from real value which would make their lives better.
That's the sort of "information" the article has in mind. Google's or Facebook's vast tracking of online behaviour is, well, really big. But it has very little relevance to the supply chain.
They connect users to info by herding them.
Google has, what, 25 billion indexed pages? I don’t get those at random when I search. Likewise, I don’t see a random subset of Facebook’s 2.2 billion users or Amazon’s >12 million products. I don’t even see a complete list of my friends’ posts on Facebook; it thinks it knows better and herds me (and everyone else).
I don’t even see the same thing as other users searching for the same keywords: Googling “mouse” in a normal window gives me the computer peripheral, doing the same in an incognito window gives me the animal. Herding people based on what it thinks you want, but easily corruptible if desired.
On Google, some keywords bring up an alert saying some results were hidden because of copyright claims, giving me links to (IIRC) chillingEffect.org, which is a fairly on-the-nose kind of herding.
The thought-terminating cliche "Money Out of Nowhere" reinforces that deception, as though the title was drawn from the self-help or the MLM industry.
Finally, the website name: "Above the crowd". Yuck.
An article written by the fatuous, for the fatuous.
A foreign substance is introduced into our precious bodily fluids without the knowledge of the individual, and certainly without any choice. That's the way your hard-core Commie works. I first became aware of it, Mandrake, during the physical act of love... Yes, a profound sense of fatigue, a feeling of emptiness followed. Luckily I — I was able to interpret these feelings correctly. Loss of essence. I can assure you it has not recurred, Mandrake. Women, er, women sense my power, and they seek the life essence.
I realize the above has nothing to do with economics, but it strikes me as the same mystical thinking, specific-yet-vague phrases, and reverence. Exaggerated, yes, but it's satire.
and while free trade "works" in a homogenous steady-state global economy, we're not there yet. there are a lot of dynamics (i.e., economic, social and political disparities) to work through before that happens.
If a new platform or system enables efficiency, then it creates value.
eg. Textile machinery. One machine can replace 100 of workers, (and it maybe a negatives for those 100 workers), but it can increase the output 10x, hence now more people can afford decent and warm clothes and fabric. The society wins on the long term.
If you are a long distance horse-carriage driver on the 19th century, a train being built on your route, it might suck for you as it may put you out of a job, but it is great for other thousands of people that can do the same trip at 1/10 of the time and 1/5th of the cost.
Historically, tractors, cars, trains etc are the same story.... "online" is just another version of it.
Also, I remember most folks here, there are actually countries in the world where these online efficiencies don't exist. (online shopping, and credit cards are not in mass use). Unless your local shop have something you need, you are out of luck, and yes, life is usually worse for everybody in said countries.
Should the human race decide to fight climate change, for real, then it will be one of the greatest wealth equalizers of all time: we'll all end up a good deal 'poorer' than we were before.
And if wealth is zero-sum, how can we "all end up a good deal 'poorer' than we were before."? NB: that whole sentence seems to be missing an odd number of negations.
But here's an indicator you'll like: "Energy Intensity" is, basically, production / energy usage. This was surprisingly stable over most of the 20th century, lending some support to the gist of your objection. But, two good news: (1) it's now on a definitive downward trend, proving that thinking does produce value (yeah!). And (2) renewable energy is rising, meaning that energy usage is now decoupling from the harms you allude to (CO_2 et al).
While electric vehicles will be about, I think that personal transport, as one example, will become quite rare.
Does that make us poorer? I don't actually think so. I sincerely believe that it will enrich our lives.
Movie theaters, movies, moviegoers... Connect them on a platform that accepts data about customers' available movie nights and preferences, and then allocates movies and moviegoers to available theaters. As a user, you'd enter the dates and times you want to see a movie, the theaters you prefer, and which movies you want to see, and the system presents you with a menu of options.
Theater owners would get full(er) houses; movie studios could get feedback about audience preferences; and it would make it much easier to go see the movies you want. Neat, eh?
I'm not really driven by money. I work more for the betterment of society, to help important projects that could change the world, to help others start their careers, and for self-actualization, or to not have to work someday, things like that. If I had solar panels on my roof and a little robotic hydroponic garden in my backyard, there's not a whole lot else I would need from the world. I might consider putting the bulk of my income into a pool for everyone if it meant that I could finally be left alone to research and invent on my own and make a larger contribution to society than the narrow goals that capitalism has for my skills.
Core to their argument is that most things we care about in society have increasing returns to scale so that under our current system we systematically under-allocate and mis-allocate to public goods.
While I disagree with a lot of it in practice, I highly recommend reading it if you're thinking the way the parent comment of this comment does.
Posner is probably best known for (a) suggesting an open market for babies, and (b) being one of the smartest humans of our era.
He's a Chicago School market-mechanisms fetishist, but a reasonable one believing in the necessity of regulations to tackle externalities and anti-trust.
His writings sit in that perfect spot where I instantly notice the author is way smarter than me, but can still understand the jokes.
To be fair, even the creators of Star Trek didn't think much about that, weren't consistent about it, and avoided any exploration of it beyond platitudes.
Also, one of the key assumptions of classical economics that actually seems to hold up to reality (unlike much of the underpinning of the rational actor model) is the concept of unlimited wants, which makes post-scarcity impossible with finite resources.
> Why hasn't an online group (similar to a utopia) formed where members contribute a portion of their incomes and receive a UBI?
Because an opt-in voluntary UBI-providing community faces strong adverse selection issues, and anyone willing to do the effort to set one up will probably think it through long enough to realize that is a fatal flaw.
> A single unicorn could pay everyone to work on unrelated projects and solve real global problems.
If by “unicorn” you mean “succesful venture-backed startup”, there's a fairly obvious reason they don't tend to toss money around on social benefit efforts with no ROI for the firm.
If you mean a literal mythical magical beast, there are other reasons that hasn't materialized.
You will still be consuming then and unless you have enough savings to last, you will eventually depend on the money of others.
Multiply this situation by tens of millions and you have society, filled with people who consume more than they make, whether by lack of capability or unwillingness.
Few people want to work, yet everyone needs some energy to survive and most want more than that. So we have developed elaborate carrot and stick systems to induce people to work.
Don't get me wrong, I'm a big supporter of UBI at the society-wide level, but these problems are substantially mitigated when participation isn't voluntary, or at least is tied to residence/citizenship.
 similar dynamics are in play for halfway measures in health insurance like the ACA, which is why it focused so hard on getting young people to sign up for insurance and improve the quality of the insurance pool
I'm wondering if it might be solvable via an endowment. So for x dollars of UBI, the organization would need to invest roughly 10x in stocks/bonds/mutual funds/etc (assuming a 10% annual return). We'd have to decide if shortfalls due to inflation/taxes/fees would be made up by donations or if everything should be self-funded from the start (which might increase the multiplier).
I'd like to see a spreadsheet with projections on ROI and find out a typical multiplier. Obviously countless people would be on board if the multiplier is <= 1. But I'd like to see the formula for how much membership tapers off with increasing multiplier.
Personally I can see living on about $24,000 per year in my city (assuming I really could live mostly off my greenhouse and not have to commute to a day job), so that limits people here to a multiplier of perhaps 2-4x with $50k-$100k incomes. I think it's conceivable to barely live on $12,000 which would be 4-8x. A 10x or higher multiplier is probably unsustainable.
Which seems to suggest that UBI is not feasible until we have another 2-4x of GDP growth 30+ years from now, or redistribute income from the very wealthy to get us to where we'd be had income kept up with inflation. BUT that ignores economies of scale and the emergent effects of makers who are suddenly free to invent automated solutions for subsistence costs.
For example I've been meaning to build a $1500 electric-assist solar recumbent bicycle from https://www.goldenmotor.com parts that would largely negate all my transportation costs. But I'm too busy with work to ever do that, so the opportunity cost of having a job is at least $100 per month in fuel, insurance, repairs etc on my truck. Not to mention the 10 hours lost per day in preparation and commuting to work that I could be applying towards building apps that would earn me a passive income.
You want 25x (1/4%) to 30x (1/3.3%) for a long-term endowment.
A 10% withdrawal rate has a ~79% chance of failing (running entirely out of money) inside of 20 years.
For UBS - as stuff gets increasingly easier to produce with automation, the stuff that gets included will grow (Free access to clean water/air, health, housing in a non overpriced city, free online MOOC education).
The Universal Dividend drives the annual UBS allotments - basically if the country as a whole is profitable and there is money left over - then the whole country is rewarded and the amount of UBS given to each person is increased for that year. Hence people will be incentivized to reduce spending because it will effect their UBS.
I mean, there are a lot of places like this. This one has hippie culture, and most of their businesses are old economy, but there are a fair number of places like this that have different cultures and different business focus.
If you want to live in a utopian community, there are lots. I encourage you to find one compatible with your values and give it a shot.
Also, read "walden two" by Skinner.
They still need a way to (efficiently) distribute resources.
Sure, everyone gets a replicator for basic things but what about scarce resources like spaceships? Do you just pop over to the Bureau of Spacecraft Allocation and declare you want a ship to tool around the sector in?
One of the main problems with our current capitalist economic system is that the way it values things doesn't distinguish between commodities like food/energy, things that are difficult to replace like homes/vehicles, and things that are priceless like human lives/the environment. So we waste time talking about the minor monetary cost of feeding the poor while completely ignoring the incalculable price of letting them continue to starve.
Since a spaceship approaches real by being nearly irreplaceable, under UBI it would have a nonlinear value higher than its components. I imagine on Star Trek that some portion of the individual per diem is set aside in a communal fund, and everyone votes on how much of that fund should be allocated to things like spaceships.
I would think that any part of a smaller spaceship like a shuttlecraft that can be replicated (only requiring energy or readily available raw materials) is provided to hobbyists and even children for essentially free. But stuff that's hard to come by like duranium or tritanium might cost credits. Latinum (having no obvious use) might be their equivalent of Bitcoin, but I digress:
After writing this out, I see that I am a huge nerd.
Because all hard-working people find the thought of paying voluntarily to fund lazier people appalling.
> I'm not really driven by money. I work more [...]or to not have to work someday, things like that.
Go ahead, work towards FI and then you can do all the good for society you desire. You might find it a little less tempting at that point to devote your remaining life to helping other people skip the "work towards FI" step though.
Not a lot of thought has gone into the economics of abundance. I think an easy place to start experimenting with this is with food. In the US we produce far more calories than we need and there is a ton of waste, yet people are still hungry. Why? How can we do better?
example: uber is a marketplace for transferring illiquid wealth assets from drivers to uber itself, along with a fraction of the revenues from each ride. put differently, uber may be making its drivers poorer in an abstract way which they may not understand because they are being paid for the labor required to extract value from their vehicle.
another example: freelancing platforms. everyone knows that these platforms depress wages for the freelancers and are a race to the bottom. businesses can grow more because labor costs less on the platform than off of the platform, and they can expect the platform to handle the infrastructure of paying and managing the labor to an extent. but freelancers on the platform could almost certainly make more money if they weren't on the platform because then they wouldn't be competing with as many others for a given opportunity. sure, some people make it work. but on average, people earn far less and expectations are much higher.
The same could be said of the taxi medallion system. Low-income drivers with illiquid value for their time, with most of the value going to medallion owners, car owners and dispatchers.
I feel like I'm of two minds about this, as all of the pieces from rags like the NYT use analyses that assign 100% of the depreciation of the car to driving, which is obviously absurd: your car loses something like half it's value the minute you drive it off the lot. For some reason, none of the analyses I've seen attempt to address this (in fairness, it's probably pretty difficult).
The upshot is the difference between unlocking wealth that was going to be unlocked anyway, and unlocking wealth that was going to be wasted. A person's car is a criminally underutilized asset (from both a personal finance and a societal perspective), and increasing its utilization so you get more value out of it during its trip from full value to $0 is a concrete gain for both society and the Uber driver (and along the way, passengers and Uber itself).
The dynamic you describe is certainly a factor too; It seems to me to be an open question how big a component of an Uber ride's value each of these is. At any rate, I don't think your confident assertion that being an Uber driver is simply giving up your liquid asset value is warranted.
So they may be "unlocking wealth" today but in the long run who really knows how much of that "wealth" they're really benefiting from if any at all.
Why don't they do that then?