- Unlearningecon argues that static neoclassical models are useless. I could agree with him if he could tell me a good way of learning dynamic models without static models. To agree with him I would also require a dynamic model that one could teach to freshman non-econ majors in one semester so that they can go into the world with a solid intuition. Without impugning Unlearningecon at all, I'm not sure he's up to the task. He also criticizes comparative advantage, and I think that's more straightforwardly wrong. Is comparative advantage the only thing that matters in trade? Of course not - we know from Paul Krugman's Nobel winning work (and really since Adam Smith and before) that it's not the only thing that matters. But it does matter a lot. And what's even more important - comparative advantage explains transactions between individuals very well, even if a lot of other things are going on in international trade.
- Evan sent me this recently. It's a Guardian article suggesting that economics is not value-free, as it claims, and that: "This theory [mainstream economic theory] of how the economy would work if there were free competition has thus been put to the test. The result is what I believe will prove to be the worst economic disruption in the history of the developed world." First - that last sentence is ridiculous. As far as I'm concerned that was the Great Depression, not this episode, and mainstream economics helped this episode avoid a Great Depression. I also obviously disagree on the value-free point. True, many economists do overlay their own values, but that does not mean the science itself is a normative one or that identification of rational behavior and self-interest valorizes those things (as the article claims). It's simply an explanation of how humans act in the real world.
Turning a probability vector into a state
1 hour ago