I want to wring the science out of the dismal science.
September 30, 2011 2:13 PM Subscribe
I want to understand economic policy better, but I'm looking for a source that takes a specific type of approach. Help me find it, assuming it exists.
Every so often I end up in a discussion about economic policy and quickly realize that I'm pretty ignorant on the subject. I've got a bunch of front-line arguments, but once any objections come (not spittle-flecked idiocy in this case -- it's usually with people who have reasonable-sounding and seemingly well-founded counterarguments) I realize that I don't know what I'm talking about. Those counterarguments usually take the form of "that policy would be nice if we lived in an ideal world, but we can't do that because of the damage it would do to [insert segment of the population/economic sector/large entity or group here]." In light of that, I'd really like to find a source that does a few things:
1. Offers an introduction to the various questions and structures of macroeconomics, especially with an eye towards contemporary economic issues, and addresses as fairly as possible the ways that opposing economic schools across the whole spectrum attempt to deal with those questions.
2. As far as is possible, offers comparative, empirical (and, again, even-handed) evaluations of how real-world implementations of those various theories have faired, something along the lines of a case study of (these are all made up) things like how the NHS in the UK has reduced healthcare costs by $X but is projected to not be sustainable because of budgetary concerns A, B, and C, or how environmental deregulation in the Ukraine benefitted industry Z, but externalities incurred by other industries and the harm done to citizens near the affected area resulted in that legislation being a net detriment to the economy/the country, etc.
If it's possible, I'd rather not have a source that offers this information in the context of "here's why conservative economic policy empirically sucks!" or vice versa. I understand that this is a deeply politicized topic, but I'm really trying to avoid just finding information that confirms my intuitions. On the other hand, I don't want to be lied to. Any ideas for some sources that might fit that bill?
Every so often I end up in a discussion about economic policy and quickly realize that I'm pretty ignorant on the subject. I've got a bunch of front-line arguments, but once any objections come (not spittle-flecked idiocy in this case -- it's usually with people who have reasonable-sounding and seemingly well-founded counterarguments) I realize that I don't know what I'm talking about. Those counterarguments usually take the form of "that policy would be nice if we lived in an ideal world, but we can't do that because of the damage it would do to [insert segment of the population/economic sector/large entity or group here]." In light of that, I'd really like to find a source that does a few things:
1. Offers an introduction to the various questions and structures of macroeconomics, especially with an eye towards contemporary economic issues, and addresses as fairly as possible the ways that opposing economic schools across the whole spectrum attempt to deal with those questions.
2. As far as is possible, offers comparative, empirical (and, again, even-handed) evaluations of how real-world implementations of those various theories have faired, something along the lines of a case study of (these are all made up) things like how the NHS in the UK has reduced healthcare costs by $X but is projected to not be sustainable because of budgetary concerns A, B, and C, or how environmental deregulation in the Ukraine benefitted industry Z, but externalities incurred by other industries and the harm done to citizens near the affected area resulted in that legislation being a net detriment to the economy/the country, etc.
If it's possible, I'd rather not have a source that offers this information in the context of "here's why conservative economic policy empirically sucks!" or vice versa. I understand that this is a deeply politicized topic, but I'm really trying to avoid just finding information that confirms my intuitions. On the other hand, I don't want to be lied to. Any ideas for some sources that might fit that bill?
For the answer to #1, go to wikipedia. Their finance articles, I find, are a little overly dry and jargon-laced, but after you go around in a couple of circles it starts to make sense.
For #2, it is almost impossible to get answers from empirical studies, because macroeconomics is just too big and varied to draw very good conclusions from one ecosystem's response to a policy shift, versus another one's. There are too many variables- it is literally the sum of the entire population's decisions in the face of the circumstances of the instant they made those choices. All you can do is ready a variety of coverage on the topic, and try to build a mental filter for political bologna.
A simple, made up example: suppose they are discussing raising the minimum wage. You are going to get typical screaming from the left and the right on that one. One side says it will give people more to spend, another side says it will raise prices. Both are true, so you strip them out of the equation, and what you are left with is all the other questions, like "how many workers are actually making the minimum wage, what proportion of a business's budget is compensation, and how much would the change raise their costs?"
Macroeconomics is about how the money goes around in the circle, and looking for the second and third order effects. And how leverage / fractional reserve banking works.
posted by gjc at 5:14 PM on September 30, 2011
For #2, it is almost impossible to get answers from empirical studies, because macroeconomics is just too big and varied to draw very good conclusions from one ecosystem's response to a policy shift, versus another one's. There are too many variables- it is literally the sum of the entire population's decisions in the face of the circumstances of the instant they made those choices. All you can do is ready a variety of coverage on the topic, and try to build a mental filter for political bologna.
A simple, made up example: suppose they are discussing raising the minimum wage. You are going to get typical screaming from the left and the right on that one. One side says it will give people more to spend, another side says it will raise prices. Both are true, so you strip them out of the equation, and what you are left with is all the other questions, like "how many workers are actually making the minimum wage, what proportion of a business's budget is compensation, and how much would the change raise their costs?"
Macroeconomics is about how the money goes around in the circle, and looking for the second and third order effects. And how leverage / fractional reserve banking works.
posted by gjc at 5:14 PM on September 30, 2011
Read The Economist every week. It's accessible enough that you'll soon pick it up.
posted by dmt at 9:57 PM on September 30, 2011
posted by dmt at 9:57 PM on September 30, 2011
If you're interested in healthcare and environment, you're after microeconomics, not macro. And indeed, Public Economics. Stiglitz's Economics of the Public Sector is a good book for that sort of thing and contains simple theory, descriptions of government activity and case studies.
posted by hawthorne at 6:07 AM on October 1, 2011
posted by hawthorne at 6:07 AM on October 1, 2011
For number 1, I highly recommend Memos to the President. A bit dated (1993) but it is accessible and a quicker read than textbooks, while still respecting the intelligence of the reader. "Charles Schultze ... imagines that an incoming President has decided to set aside time each week to learn about the economy and has asked his Chairman of the Council of Economic Advisors to provide him with a series of memos devoted to that purpose." (Schultze chaired Carter's CEA.)
posted by Mr.Know-it-some at 10:35 AM on October 1, 2011
posted by Mr.Know-it-some at 10:35 AM on October 1, 2011
One side says it will give people more to spend, another side says it will raise prices. Both are true...
Things only work this way if you assume the economy has one moving piece. It doesn't. If people have more to spend then goods will go flying of the shelves. If the economy is already running near capacity and it's getting difficult to make more goods and services then, yes, prices will go up. But more typically, you have unemployed people and some factories sitting idle,so that the people who make goods and services will try and get those factories and those people making more goods. More goods will go flying off shelves, etc. You can't ride this loop forever, but that's what maintaining a robust economy is all about.
Also, seconding The Economist - it's conservative in an old school British sort of way. If your an American it is kind of refreshing - it makes you feel like you live on a planet where there are other countries.
posted by Kid Charlemagne at 9:48 PM on October 2, 2011
Things only work this way if you assume the economy has one moving piece. It doesn't. If people have more to spend then goods will go flying of the shelves. If the economy is already running near capacity and it's getting difficult to make more goods and services then, yes, prices will go up. But more typically, you have unemployed people and some factories sitting idle,so that the people who make goods and services will try and get those factories and those people making more goods. More goods will go flying off shelves, etc. You can't ride this loop forever, but that's what maintaining a robust economy is all about.
Also, seconding The Economist - it's conservative in an old school British sort of way. If your an American it is kind of refreshing - it makes you feel like you live on a planet where there are other countries.
posted by Kid Charlemagne at 9:48 PM on October 2, 2011
What you are looking for is an overview of "neoclassical economics." That term is typically used to encompass all the various contemporary "schools of thought" that you mention. Beginning by reading the Economist might be the least plausible way to go about this endeavor, as you need some foundational knowledge to really get anything out of it. I have had a couple semesters of micro and macro economics; I have studied a decent amount of Philosophy of Economics; I have also read some on the history of Veblen and the transition from classical to neoclassical economics. All of this learning has bee done with the guidance of a professor who specializes in this field. The point here is that reading The Economist can still be quite a bit difficult.
Also, whoever said you are interested in micro-economics is mostly correct. If I were in your position, I would begin by making sure I had a good understanding of the foundational concepts/terminology of neoclassical economics. It is imperative that you have a good understanding of Rational Choice Theory (this will include a bit of Game theory), some Keynesian theory, and definitely the theory behind utility maximization. Here is my suggestion:
http://ukcatalogue.oup.com/nav/p/category/academic/series/general/vsi/R/browse+within+this+series/economics+%26+finance/n/4294921790.do?sortby=bookTitleAscend&nType=2
These are excellent and pithy... inexpensive... and actually written by scholars, unlike a wikipedia article. ;)
posted by terezaakarenin at 1:15 PM on October 12, 2011
Also, whoever said you are interested in micro-economics is mostly correct. If I were in your position, I would begin by making sure I had a good understanding of the foundational concepts/terminology of neoclassical economics. It is imperative that you have a good understanding of Rational Choice Theory (this will include a bit of Game theory), some Keynesian theory, and definitely the theory behind utility maximization. Here is my suggestion:
http://ukcatalogue.oup.com/nav/p/category/academic/series/general/vsi/R/browse+within+this+series/economics+%26+finance/n/4294921790.do?sortby=bookTitleAscend&nType=2
These are excellent and pithy... inexpensive... and actually written by scholars, unlike a wikipedia article. ;)
posted by terezaakarenin at 1:15 PM on October 12, 2011
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posted by hellochula at 2:50 PM on September 30, 2011