Here. He says this Doonsbury comic is full of bad economics.
I can think of one thing he might be thinking of, but given the context offered by the comic strip (i.e. - that it's job creation at a particular private equity firm) I don't think that particular complaint really works that well. It seems like pretty good economics to me, even if you approach it from the most cynical of public choice perspectives.
Any thoughts on what Steve is thinking of? Am I missing something obvious? Anyway - undergraduates go ahead and give it a shot.
Sunday, June 24, 2012
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Search for the hidden message, Daniel (the last image should make it incredibly obvious).
ReplyDeleteThe class warfare thing? I figured that's a political/social normative judgement. I don't see anything particularly wrong with the economics of it. Anyway - looking forward to seeing what the undergrads turn in.
DeleteIt's a normative judgement based on the implicit message that firms don't care about job creation, and thus we can't rely on firms to create jobs. Sometimes it's not in the "economics" made explicit, but in the "economics" that make the underlying assumptions (or the "economic" conclusion that the comic/article/essay wants the reader to draw).
ReplyDeleteI don't understand how sound economics gives us reason to believe that firms are interested in maximizing employment. That doesn't make sense. If the comic draws that conclusion, that sounds like good economics to me (or at least not "bad" economics). I'm wondering if we're both missing something else, because that doesn't sound wrong to me.
DeleteMaybe he's concerned about the sleight of hand with which unemployment and job creation are being compared... they're of course somewhat different issues.
The point went right over your head, Daniel. Yes, explicitly the cartoon is talking about a single firm. But, the message it's trying to imply is that because firms want to minimize costs (including labor) when possible, these firms can't be trusted to create employment. On the other hand, the government is interested in creating jobs. To make it more obvious: since individual firms look to cut costs, the private market as a whole (made up of individual firms) looks to minimize costs.
DeleteWhy, when I simply think you're wrong, do you always reach for "that went right over your head"?
DeleteTo the extent that you can anthropomorphize the market, it does want to cut costs. What's inaccurate about saying that? What's wrong with recognizing that employment maximization is an objective of a lot of public actors but not an objective of a lot of private actors.
Do you "trust" private equity firms to maximize employment???
Anyway, you seem to be in a mood - I'm not sure why. I agree with every substantive point you've made. You just seem to think that means there some kind of deep-seated antipathy to markets in general that I don't. And to make it clear - that means I think you're wrong, not that I've missed your point.