Matt Nolan

Specialization: Policy and morality

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Philosophy et certa links to an interesting paper by Richard Sharvy titled “Who’s to say what’s right or wrong?  People who have PHDs in philosophy, that’s who”.

At some level this makes sense – philosophers (can) specialise in the study of ethics and morality, and as a result of this training they will have a better idea of what is “right or wrong”, and why it is so, then other people.  My impression of “rightness” and “wrongness” is that it is subjective – deciding what is wrong involves making moral judgments.

As a result, if we accept this, then when forming policy it is Philosophers that should be the ones forming the subjective value judgments required to qualify what the appropriate policy is.

The job of economists is to describe – we have to objectively describe what happens to a bunch of variables in society when one of them is moved.  However, if Philosophers are the experts when in comes to value judgments – they should be the ones that place a values on different variables, so when the economists model moves it can come to some sort of conclusion.

What do you guys think?  How do other disciplines fit into the policy creation process?

Matt Nolan

Where is economics on the political spectrum?

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There seems to be a lot of discussion surrounding economists position on the political spectrum. My answer to this would be that economists are not a political group or a club so economists themselves will be spread over the political spectrum.

However, I have to admit that the process used when discussing economic issues does lend itself (or suits people would already think like it) to a specific way of thinking. As a result, I’m going to discuss where I THINK my own views stand using the definitions of wikipedia. As I am not a political scientist this discussion will be quite useless – so if any political experts would like to help me out in figuring out where my views lie, please give it a go in the comments section.

Ok here we go.

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Matt Nolan

Do economists ignore workers?

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Over at Econospeak Michael Perelman is discussing how he feels economists ignore the concept of a worker when they discuss economic theory.

There appears to be a fair amount of disdain in his post about the mathematical nature of economics. However, I will forgive him for this – he is a heterodox economist after all, so his very discipline is focused on critiquing areas where mainstream economic thought makes a wrong turn. Although I do not share the mis-trust of mathematical theory (infact I believe it is a very useful way to organise ideas (sort of like writing them down), I do agree with the concept that an over reliance on technical models, without an understanding of the underlying assumptions, can lead to spurious conclusions in economics (however, as we have said before, this is a problem with the subjective application of a model – it is not invalidate the model in of itself).

Anyway, the authour appears to believe that economists ignore the idea of a worker. Fundamentally, I get the impression that he is believes economics discusses the rights of capital owners in far more detail than we talk about the rights of workers. However, I’m not certain that I agree – let me try to explain:

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Matt Nolan

Trade-ins: What’s the point

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Yesterday I was talking to my partner about the lack of videos available for her iPod. I was prattling on about how there probably isn’t many videos because the penetration of the video iPod is probably quite low. The reason I believed that the penetration was quite low, was because I couldn’t see lots of people forking out for a new iPod with video – when the old iPod would still do the main bit of playing music.

My partner then said they should do trade-ins for the old iPod, so you can get the new one more cheaply. At first I was dismissive of this idea, stating that, unless you could get money back for the parts what was the point. However, I soon realised that I was completely wrong – there are a large number of circumstances where my partner was right and a trade-in deal made sense.

Now, I haven’t actually seen any trade-in deals for iPods, but I certainly have for the xbox and playstation. As a result, I’m going to discuss why firms that sell durable goods may want to have trade-in deals.

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Matt Nolan

Current account deficit is not a big deal: Discuss

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So, New Zealand has a stock of debt that is equivalent to 86% of annual GDP and ran a 7.8% current account deficit over the year to March 2008.

My article in the Dom today states that “this isn’t a big deal”.  Discuss 🙂

Matt Nolan

What is modern business cycle theory

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If you want to know, have a look at this post. It is completely non-technical, and explains the way macro-economists look at things pretty danged well! (ht Marginal Revolution).

Fundamentally, this view of the business cycle is highly focused on methodological individualism – the business cycle occurs in the context of individuals maximising their happiness given constraints.

Before this strain of thought came out, business cycle theory was a surprising holistic section of economics – something that did not match with the individualistic nature of microeconomics (see Schumpeter). Furthermore, business cycle theory, long-term growth theory, and near term macroeconomics (effectively old school Keynesianism) were relatively incompatible.

Following the collapse of the “consensus” in macroeconomics during the oil crisis the one ray of hope was that we macroeconomics could be recreated in a way that is consistent with microeconomics. According to Kids prefer cheese this research area is still active – which is exactly what we want to hear.

Update: Paul Walker discusses the same article.