Friday, May 23, 2014

Bryan Caplan is in the Movies

Some very standard economic points in cartoons:

Foreigners are our friends

 

Usual Objection: You're assuming that trade is 100% equal. In the real world it is not.

Response: Economists don't assume that trade is 100% equal, they assume that it is mutually beneficial until someone gives them a reason otherwise. Poor labor from the third-world accepts low wages because their alternatives are awful. Taking away the best of their terrible options is not doing them any favors. Rich first world countries import from elsewhere usually because it's cheaper than producing it domestically. Taking away lower prices is not doing consumers any favors (for concern about the competing workers, see Make Progress not Work).

Make Progress not Work

Usual Objection: Unemployment is a real problem. I always thought economists understood that but I guess they don't.

Response: Of course economists care about the unemployed, but they distinguish between natural unemployment (also called frictional), and cyclical unemployment. Natural unemployment is when capital, technology, or trade finds a way of doing something that requires fewer inputs from workers, and those workers have to go and find something else productive to do. That takes time and effort. But economists are concerned with cushioning the blow of this kind of unemployment or making the transition as rapid as possible; not preventing it. Because there has been an efficiency loss, keeping a worker employed producing less than they cost helps a few, but disproportionately impoverishes others. Because there is always natural unemployment, you will never hear an economist say that we need to get unemployment down to 0%. Cyclical unemployment occurs during recessions. There is disagreement about it's causes and solutions, but long story short; it's needless and wasteful.

Markets Solve Problems

Usual Objection: Of course economists love markets, they're a bunch of right wingers.

Response: The typical economists is a moderate democrat. Liberal economists outnumber conservative ones by about 3 to 1. And if you ask economists about market failure, they'll easily list examples on the spot. Economists only fit the right wing depiction when their mostly liberal standard is contrasted with the near universally liberal standard of most other social sciences.

It's not that bad

Usual Objection: People can't be wrong about how well they're doing.

Response: "People" are not a person. An individual person can only know from observation how themselves and those close to them are doing, but they don't know how society, the country, or the world is doing. They also can't compare it to the past unless they've been there. For that they need data, and the typical person almost always underestimates how optimistic that data is.