Ask an Economist (Post #1005 and counting)

[WillJ]

Thanks for mentioning that guy, Fifty. I'll have to check out his books, as they look interesting. Joseph Stiglitz makes a lot of the same points.

 

[Fifty]

Thanks for mentioning that guy, Fifty. I'll have to check out his books, as they look interesting. Joseph Stiglitz makes a lot of the same points.

If you were a respectable student of economics, then at this point you would point out that the arguments Chang makes are about the real world and, well, who gives a crap about the real world? We can just ceteris paribus it out of existence!!!

 

[Homie]

If you were a respectable student of economics, then at this point you would point out that the arguments Chang makes are about the real world and, well, who gives a crap about the real world? We can just ceteris paribus it out of existence!!!

Don´t knock ceteris paribus, it is a useful tool that makes sense in a "science" that deals with human action, which can never be predicted perfectly nor be studied in a lab. Without ceteris paribus we cannot make any theories, models or sense of anything, which is silly.

Here´s an example.
Theory: If we put an income tax of 100% on all income above 100,000$ then, ceteris paribus, people will not work more once they reached the 100,000$ mark.
This would be a reasonable assumption, and it uses the ceteris paribus principle. Without it we can say nothing about the economy. Because if not "All else is equal" then e.g. the fairy of hard work might reward all men who make more than 100,000$ with seventy beautiful virgins, or she might not, who knows, all else is not equal - so anything can happen.

 

[Grimz101]

My two questions.

1. How did West Germany turn from war torn, to the strongest economy in Europe?
What economic policies, facilitated this growth?
I mean they had the marshall plan but other European countries got more money, and West Germany also had to pay reparations

2.
What is your opinion on foreign reserves?
I mean China and Hong Kong have around 1.1 trllion combined in the Dollar, this means they effectively control exchange rates more than the banks in the west..?
Isnt this seen as a dangerous threat?
What does China do with these foreign reserves?

 

[Elrohir]

JerichoHill, I have a question about price controls. A few days ago, we were discussing price controls in fiftychat, and I (Along with another) asserted that price controls pretty much always distort the market and are harmful. (To varying degrees, depending on where they're set in relation to the real market price) Another person disagreed, saying that price controls are useful in the short term to help prevent market shocks, while acknowledging that they're damaging in the long term. So my question is, are government price controls ever the best solution? What about in the short, as well as the long term?

Thanks.

 

[Grimz101]

Also im very intrested in the currency markets, are there any sites you can give me to give advice, on investing ect..

 

[Grimz101]

and bump
Islamic economic policies too, all i can find is biast information..
will they cause economic failure
has it any posatives?
main negatives?

 

[JerichoHill]

@@Grimz101
1. How did West Germany turn from war torn, to the strongest economy in Europe?
heavy investment in infrastructure


2.
What is your opinion on foreign reserves?
I mean China and Hong Kong have around 1.1 trllion combined in the Dollar, this means they effectively control exchange rates more than the banks in the west..?
How is having another country's currency a threat. You'd threaten to devalue them, thus lowering your value? Wasn't the US having alot of reserves at one point. I think honestly, you're far too worried. Countries hold other countries currency so they can do business with that country. There is nothing to fear about it.

I don't recommend currency speculation, unless you're a really savvy investor and have a crud (100K+ money to throw into it. If you're a small-time investor, best stick to stock markets and index funds.


@@Elrohir
So my question is, are government price controls ever the best solution? What about in the short, as well as the long term?
Wage anf Price Controls are never a good solution. When they are imposed, they distort the market and always lead to higher inflation and wage shock when they are lifted. One may say short-term is better because less inflation builds up. Put this way, controls are like a lid on a boiling pot. It doesn't hurt much to take the lid off after a short-term, but it still burns a little.

 

[gangleri2001]

What's a dollar? I mean, what's the value of a dollar? How can it be expressed so I understand all the effort (human and natural) behind that symbol that is a dollar? I mean, what's the reality behind that symbol?

 

[JerichoHill]

You mean, what's money right? Money is a representation of value, and value is derived how a product is created, how useful it is, how substitutable it is.

I'd really love to answer your question Gang, but its incoherent in its current form. I really don't know if you want a technical answer or a esoteric answer.

 

[RedRalph]

JH I think he means how does a dollar express the value of the labour you worked to earn it, rather than what you can buy with it, they arent the same thing. then again i might be misinterpreting him.

 

[scy12]

So.... Where do you speculate the price of oil will be by December ?

 

[JerichoHill]

JH I think he means how does a dollar express the value of the labour you worked to earn it, rather than what you can buy with it, they arent the same thing. then again i might be misinterpreting him.

I was right there with your line of thinking, but the multiple questions confused me. If its in terms of value, then it must be an expression of the combination of the value of the type of labor that went into creating the value (either manual, skilled, how substitutable said labor is, etc).

Given proper training, almost anyone can flip burgers or sell shirts for a living. That's why retail pays so little, the skills involved are easily substitutable (just get another joe off the street).

But to be a doctor and remove someone's lung without killing them, not everyone can do that, and there's a huge amount of training needed.

By and large, the best way to increase your net wage rate is to develop skills that are not easily found in others.

 

[JerichoHill]

So.... Where do you speculate the price of oil will be by December ?

I drive a scooter. My wife has a scooter. Our home has sola-power panels. Oil prices really don't concern me.

As for a prediction. They'll be high. Don't expect that to change for awhile. I can't wait to see how cheap the gas guzzlers cars go for on resale.

 

[scy12]

I drive a scooter. My wife has a scooter. Our home has sola-power panels. Oil prices really don't concern me.

As for a prediction. They'll be high. Don't expect that to change for awhile. I can't wait to see how cheap the gas guzzlers cars go for on resale.

Come on ... This is Ask an Economist thread , not ask a Politician .... And Economist usually speculate about the economy ... With Numbers. I already know they will be high.

 

[Homie]

Come on ... This is Ask an Economist thread , not ask a Politician .... And Economist usually speculate about the economy ... With Numbers. I already know they will be high.

OK, let me answer for JH here:
It will be exactly 5.03 dollars to the gallon on the 10th of december of this year.

Do you really think economists (or anyone for that matter) have some supernatural skill that allows them to see the future? If JH could give you an exact answer he would have used his time-seeing skills to become super wealthy. Economists understand how the economy works but cannot do anything but speculate, and a number would be complete guesswork.

Frankly economists are better used in government because they understand economy and can give sound advice on policy making. As for prediction, just being able to say that it will be higher or lower is helpful, because you can make decisions based on that information.

 

[scy12]

OK, let me answer for JH here:
It will be exactly 5.03 dollars to the gallon on the 10th of december of this year.

Do you really think economists (or anyone for that matter) have some supernatural skill that allows them to see the future? If JH could give you an exact answer he would have used his time-seeing skills to become super wealthy. Economists understand how the economy works but cannot do anything but speculate, and a number would be complete guesswork.

Frankly economists are better used in government because they understand economy and can give sound advice on policy making. As for prediction, just being able to say that it will be higher or lower is helpful, because you can make decisions based on that information.

Completely clueless post.

We already know it will get higher. The question is by how much . The answer is we can't possibly know but we can make some predictions. Which would probaply be quite off. The best person to make those futile prediction is an economist.


Because someone is an economist does not mean that those predictions are by virtue correct or that he must be judged negatively for them. But saying that the prices would be high it is no prediction at all. But he may has choose to say this due to the unlikeness of making accurate predictions. Still i believe one could give more information.

But he does not have to answer and the thanks in advance is always implied when i ask a question even if by requesting too much i sound rude.

Do you really think economists (or anyone for that matter) have some supernatural skill that allows them to see the future?

How do you judge what you have just said ?

 

[Veritass]

How much of the recent increase in unemployment is a direct product of raising the minimum wage? What other numbers can we look at to determine this?
Thanks.

 

[JerichoHill]

@@Homie
Thanks Homie. Seriously. You get it.

@@scy12
An economist isn't best suited for your question. As a finance guy, or an oil speculator. I know my economics, but any answer I give will be a guess that I woul be 99% sure would be wrong. How could I factor in unknown shocks 8 months out? Talk to a speculator. Good economists don't make futile projections. I know better than to answer a question when I don't really know the answer.

@@Veritass
How much of the recent increase in unemployment is a direct product of raising the minimum wage? What other numbers can we look at to determine this?
Thanks.
Ah, a subject I can speak with some authority on. As I understand it, the unemployment rise has been unduly felt by minorities and teenagers. Now, not only are those the most likely demographic groups that are most likely to be paid minimum wage, they're also the groups more likely to be employed in low-skill occupations that would be first to cut as consumption spending decreased (retail, anyone?). I believe that the rise in unemployment is probably mostly (>90%) attributable to the economic conditions, and not the after effects of a minimum wage increase.

 

[gangleri2001]

JH I think he means how does a dollar express the value of the labour you worked to earn it, rather than what you can buy with it, they arent the same thing. then again i might be misinterpreting him.

I meant something like this. I just wanted to know what's the value behind a dollar of human effort and natural effort. You know, the time&effort spent by a human or the nature to create something.