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

What is poverty?

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Poverty is not an issue that we have touched on terribly much on this blog – however it is a fundamentally important issue when it comes to discussing what outcomes we want as a society.

Now the general impression is that poverty is bad, at least that is how I feel when I hear the word. However, a general feeling is not enough to base policy on – we have to define “poverty” and then define what we think is an appropriate way of increasing social welfare with respect to poverty.

There are two different ways of defining poverty in a population of people: Relative and absolute.

Absolute poverty measures tell us that if a person/household cannot afford a certain bundle of goods, they are experiencing poverty. Relative poverty tells us that if a person/household is in a certain income decile, or earns only a certain proportion of the average wage then they are poor.

A good casual defense of the absolute poverty measure is provided by Tim Harford (*) while a strong case for discussing relative poverty is given by Terence at LAANTA (*)

Now both poverty measures are extremely useful, but neither neatly fits into the strict “feeling” of poverty that society as a whole wants to deal with. In order to understand how to use these measures, we have to ask “why does society care about poverty”?

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cpworthington

Sorry, no conspiracy here

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The Standard(*), No Right Turn(*), and Hard News(*) have all commented on a graph showing the declining share of labour compensation in national output over the period 1981-2002. The claim/implication is that right-wing policies have contributed to the drop in labour’s share, and that the Labour government’s policies have reversed that trend somewhat in recent years. Does this explanation make sense?

Source: Stats NZ (national accounts)

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Matt Nolan

Government in perspective: What is the “other”?

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When people look at government they often see a group of people that they feel are responsible for taking care of the country. Looking deeper, some people see a representation of society that is supposed to do what is in the social interest. Looking again we might see an organisation who is dominated by interest groups and competes with other institutions for resources in the national economy.

All these views of government are true. This does not make them evil or virtuous, they are merely a central component of the current social structure.

Now no matter what view you have of government, there is one thing you are likely to believe – that government should do what is in your countries best interest. However, is this right?

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Matt Nolan

All men are born free, but everywhere they are in chains

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My favourite quote by Rousseau is the title of this post “men are born free, but everywhere they are in chains.

When I was a young boy of 16 I interpreted this with predetermined judgments, namely freedom is good and chains are bad. As a result my feeling was that I should try to break these “chains” and rediscover the freedom I was born with.

In this quote it seemed implicit that chains where the restrictions place on us by society (rather than the physical restrictions in nature – if we included these then freedom truly would be an illusion), while freedom was the absence of these chains.

However, as I grew older I came to realise that not all “chains” are bad and “freedom” in this sense (the absense of chains) may not be good. Read more