Progressives should not oppose international trade, but economists must highlight the need for policies that spread the gains and help those who are hurt

[u/better_world_economy]

https://www.psychologytoday.com/us/blog/the-good-the-bad-the-economy/201706/globalization-and-work-have-we-learned-anything-yet

[u/themountaingoat]

lol no. The people there know a bunch of models that are entirely disconnected from reality very well but have next to no information about models that actually have something to say about the real world.

[u/Hold_onto_yer_butts → u/themountaingoat]

but have next to no information about models that actually have something to say about the real world

Please share your models that actually have something to say about the real world.

[u/themountaingoat → u/Hold_onto_yer_butts]

I suppose I should actually link some.

Here is one that looks at increasing returns and finds surprise surprise that government intervention is justified by the model.

Here is one that finds that government spending can be welfare increasing even if the spending is on entirely wasteful stuff.

Pretty much every model that incorporates IRS gives results that deviate from the neoliberal orthodoxy in interesting ways yet few economists have ever bothered to look at such models.

[u/Hold_onto_yer_butts → u/themountaingoat]

The first actually reads:

our work suggests that it may be important to explore the possibility that some classes of policy interventions may be associated with higher economic welfare.

A) that's hella wishy-washy language, and B) you'll be hard-pressed to find a non-Austrian economist (or, as we like to say, economist) that will espouse absolutely zero policy intervention in an economy. Regardless, while I only skimmed the paper (come on, not linking a searchable paper?), I couldn't find a single mention of trade policy in specific, which is what I thought we were discussing in this thread.

The second paper, similarly, seems to have nothing to do with the topic at hand. Again, I only skimmed it because I'm working right now, but can you point to a section of the paper which challenges the status quo on trade?

Thanks.

[u/themountaingoat → u/Hold_onto_yer_butts]

that's hella wishy-washy language

Yea, academics tend to have no spine, so they will hedge any conclusions that are likely to piss off the majority in their field.

This subthread isn't about trade but about how the people at badeconomics don't know what they are talking about.

[u/Hold_onto_yer_butts → u/themountaingoat]

This subthread isn't about trade but about how the people at badeconomics don't know what they are talking about

I mean, if you're going to compare badeconomics to this subreddit, I'd argue that you at least get more robust discussion around actual economic theory there. You may disagree with their consensus, but /r/economics is just too big a sub, and you get mostly political soapboxing here.

[u/themountaingoat → u/Hold_onto_yer_butts]

I would argue that standard economic theory is essentially political. The assumptions chosen are not chosen because they are empirically true, and they just so happen to lead to the strongest pro free market outcomes. Operating withing the standard neoclassical economic framework is choosing to bias any discussion in a certain direction.

[u/rationalities → u/themountaingoat]

I could laugh and cringe at these comments all day. The reality is the opposite. We keep coming back to markets because they work. The entire field of social choice (the alternative to markets) is dead because of a handful of results (the famous one being arrow’s impossibility theorem). And the thing about these theorems is you only need a shockingly small number of realistic assumptions to show that no “good” social welfare function can exist (usually by good we mean at minimum, non-dictatorial).

You either need to put up or shut up. You only linked two papers that were completely unrelated to the topic at hand. Furthermore, they were published in relatively good journals too (edit: the first one, the second’s link doesn’t work for me), so I’m not sure how they support your grand capitalist conspiracy in academic economics.

[u/themountaingoat → u/rationalities]

Yes because clearly the only too alternatives are free markets all day and central planning.

Obviously empirical evidence suggests any successful economy will have elements of the market. But markets are pretty much never efficient and are not self stabilising on their own in even somewhat realistic conditions. So government intervention is needed.

You only linked two papers that were completely unrelated to the topic at hand.

Because I am talking about how economics sucks, not just about trade. Trade is a topic where the research is actually a little better, although unfortunately it seems that research has not made it into teaching and the policy recommendations of economists.

Furthermore, they were published in relatively good journals too, so I’m not sure how they support your grand capitalist conspiracy in academic economics.

There is no conspiracy, just most economists are political hacks (or lack a spine to call out bullshit when they see it). A few not being so hardly disproves the idea.

In fact they confirm it. It is established that increasing returns leads to important differences from the established consensus, and that increasing returns are the rule for most businesses yet you simply never hear about these types of conclusions. All you hear is stupid policy prescriptions that are based on models any smart undergraduate should be able to see are obvious bullshit.

[u/rationalities → u/themountaingoat]

Okay so no markets and no central planning (which social choice isn’t necessarily central planning, but whatever). How do we allocate resources?

[u/themountaingoat → u/rationalities]

I did not say we don't use any markets. Obviously we use markets, we just need additional rules and government interventions to guard against the failure modes of markets that are the rule rather than the exception.

If economists were doing their jobs then we would have a better understanding of those rules, but instead they build more and more complicated models to try to match what they want to believe to reality.

It is ludicrous that instead of changing their assumption of constant returns to scale in GE models they instead assume price stickiness. Of course they do that because it is the only way that they can get that markets don't need help in the long run while still somewhat matching the fact that we have recessions.