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I’ll try that again…

My last post was a little rambling, a little loose and I don’t think that I really said what I wanted to say. Economics is a science. It studies what happens when incentives (usually in the form of prices) change. The key here is that it looks at what actually happens, not what we want to happen. There is no agenda behind microeconomics, no politics. I DO have an agenda of course (that’s what blogs are for, right?), but I like to think that when I make some of my statements, I can back them up with the full force of logic and science backing me. Most of microeconomics is open and shut, there is no room for debate when it comes to the effects of trade, competition for wages and consumers, price controls (including wage controls, rent control, and minimum wage laws), subsidies, and supply and demand issues. It has been proven, it is repeatable every time and microeconomic theory is about as airtight as you can get.
The big trouble (as I see it) is that when people want to help someone else, say through high wages, all anybody looks at is the immediate, obvious results. Usually what is deemed as “helpful” or “nice” usually has terrible consequences. Think of mandatory union hiring, minimum wage laws, price ceilings, rent control. All of these ideas had the best intentions, but ended up hurting more than they helped. Micro econ can point those things out. Not only that, but you can use econ to figure out how to achieve the results that you want. You want to help countries get out of poverty? Send them lots of relief aid and open some schools, right? Wrong. Let them work and trade and give them the freedom to choose where to work and be sure that they can keep what they earn. Loosing jobs due to automation or outsourcing s a terrible thing. Perhaps in the short run to the particular people affected, but long term it helps them and their children out immensely. This is why only 4% of us work on farms as opposed to 40% in 1900. Who actually wishes they worked on a farm and “enjoyed” the standard of living that a farm-worker would have in 1900? We’ll say the same thing about the people that worked in paper clip factories, canneries, etc. before long.
I do wish that when somebody lambastes my position, that they could tell me why what I have put forth is wrong. Usually all I get is “I can’t believe you think that..” Think beyond the immediate and you’ll see that I’m usually on the right track. The alternatives that many people put forth, like getting rid of walmart or preventing companies to hire people in other countries for less than what you’d have to pay someone in the US smacks of ignorance or of simply not thinking things through. Both of those ideas would harm workers far more, why people think that denying them jobs is good for them I’ll never understand. WIth a couple of semester of micro econ, much more would actually get accomplished as opposed to grandstanding and wondering why things didn’t work out.

Isaac

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