Economics

[Michaelangelica]

I just stumbled across this good web site
It would be handy for economics students, teachers or those just interested to learn more.
EconSources!

[nutronjon]

I don't want to download shockwave to see how this site explains economics. Can you tell me if it explains what finite resources have to do with economics. I am under the impression that economist live in a complete fantasy world, as though all we need for our industrial economies is infinitely available to us. How tied to reality is this site you are offering?

[Michaelangelica]

Originally Posted by nutronjon

I don't want to download shockwave to see how this site explains economics. Can you tell me if it explains what finite resources have to do with economics. I am under the impression that economist live in a complete fantasy world, as though all we need for our industrial economies is infinitely available to us. How tied to reality is this site you are offering?

Well first you have to assume that economists are grounded in reality and have good predictive models.
After that it is a cinch.
A bit like having faith in God really.

You should not need shockwave to view the site; my firefox browser was fine.

[Buffy]

Originally Posted by nutronjon

Can you tell me if it explains what finite resources have to do with economics.

There is very little in Economics that is unrelated to finite resources!

Originally Posted by nutronjon

I am under the impression that economist live in a complete fantasy world, as though all we need for our industrial economies is infinitely available to us.

If this was so, gasoline/petrol would be free!

Unfortunately, high gas prices have everything to do with Economics and Hard Reality. The current administration's response to it might however be most appropriate to a fantasy world, but that is not a reflection on the science of Economics...

In economics, the majority is always wrong,
Buffy

[Michaelangelica]

Originally Posted by Buffy

In economics, the majority is always wrong,
Buffy

Naughty
In economics the majority is always right. (?)

if you reduce prices I buy more.
If you increase prices I buy less.
Unless you are called Gucci et al

I am amazed that at the moment we have a "sub-prime" crisis" in both Australia and USA with diametrically opposed causes and solutions.

Are the economic models broken?

[nutronjon]

Hum, I would be very glad to see an economist article that deals with resources, especially oil. I microfilmed 1920 papers for the U of O, and read a tiny article saying, "Given our known oil supplies and rate of consumption, we are headed for economic crisis and possibly war". These newspapers had funny cartoons about skyrocketing gasoline prices. However, in a very short time all industrial economies fell and the world went to war. I have not seen one explanation of the Great Depression and second world war, being the result of not being able to meet the demand for oil.

If economist were working with this reality, perhaps we might have made a few different decisions, such as not encouraging a life style as dependent on oil as we have, not tearing up trolley lines, not building suburban housing miles from where people work, not letting the railroad and bus services fall in decline, not encouraging the manufacturing and marketing of SUV's and those buses people for traveling in. Maintaining Carter's alternative research efforts, and efforts to get us to conserve. Our government artificially kept the price of oil down to encourage this growth. We believed Reagan who told us, it was not necessary to conserve, and we didn't object when he began granting arms to mid east and in 10 years we consumed as much oil as in the previous 100. Until recently when I said we have an oil problem, everyone argued we have plenty of oil, so we had mass ignorance. When I tried to get a college interested the book "Mineral Resources and the Destiny of Nations", I was told it wasn't important to economic theory. In some forums I am still arguing with those well schooled in economic theory about the importance of oil to the economy. So please, if you know of any economist talking about the US once being an exporting nation and now being an importing nation, or explaining state revenues based on finite resources, and how the decline is shifting the tax burden to individual citizens, I will be glad to read them. Like if this is information is being developed by economist, why does the US seem in denial?

[Buffy]

Originally Posted by Michaelangelica

Naughty
In economics the majority is always right. (?)

You didn't look it up did you?

This is John Kenneth Galbraith's (arguably one of the most famous Economists of all time) cynical commentary that the majority of Economic predictions are usually wrong. He was being facetious, but the fact is that Economics--just like many other soft sciences--has better backward vision than forward vision.

Originally Posted by Michaelangelica

Are the economic models broken?

Dr. Galbraith would tell you that the basic rules of Economics still do indeed work.

Originally Posted by Michaelangelica

I am amazed that at the moment we have a "sub-prime" crisis" in both Australia and USA with diametrically opposed causes and solutions.

I think both the Bush and Howard Administrations pushed deregulation of banking rather fiercely, leading to wacky ideas (no-equity loans, interest-only payments) becoming popular, and the resulting equity instruments being sliced and diced and packaged up as "safe investments" (a few years ago here in the US you couldn't watch TV for 5 minutes without hearing a pitch about the wonders of high-return REITs).

Do you see differences between the US and Australia on this topic? What's Kevin doing to clean up the mess?

Asset-price bubbles *are* evidence of imperfect information, an issue that economists have only recently begun to address, and is a nasty hole in the science.

That doesn't make it irrelevant though.

Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable,
Buffy

[nutronjon]

Politics is telling the people what they want to hear, and counting on the public being too ignorant to know any better.

Reagan opposed Carter. The recession was caused by OPEC discovering it could could control the price of oil and use this as a weapon against the US when the US did something in their region they didn't like, such as back Israel. Carter told us we had to conserve and he invested pretty heavily in researching for alternative energy, and helped pay for solar water heaters for individual families.

Reagan lied to us and said this was not necessary. He slashed domestic budgets and poured our money into military spending which was used to increase our military force in the mid east. In ten years we consumed as much energy as in the previous 100. This brings us to a very expensive war and skyrocketing oil prices. I think you are avoiding this little piece of economic reality.

Reagan scapegoated the poor and slashed domestic budgets, and we come to a housing crisis. Imagine that. I remember when it was not mothers and with children who were homeless. I remember the first of urban sprawl, with the growing freeways these urban communities needed, and I remember trolly cars. Can we talk reality here, or is this thread just for theory?

[Zythryn]

Economics IS theory
Nutronjon, I think you are trying to pick a fight with people that agree with your statement that economics is heavily reliant on resources which are finite in nature.
I certainly agree with you that Reagan stopped and then reversed any gains Carter made in conservation and alternative energy.
You seem to put all the blame of the US using as much oil in 10 years as we did in the previous 100 years at Reagan's feet. That I would disagree with as we didn't suddenly start using lots of oil, it has been ramping up pretty steadily for many decades.
Oil was very cheap and very plentiful, I don't think the great depression was about oil being finite.
I do agree that oil is getting scarce, rapidly, and that it is critical we get off oil for both the good of our society, to avoid resource wars and for the good of the environment (and thus us).

[Buffy]

Originally Posted by nutronjon

I microfilmed 1920 papers for the U of O, and read a tiny article saying, "Given our known oil supply and rate of consumption, we are headed for economic crisis and possibly war". These newspapers had funny cartoons about skyrocketing gasoline prices. However, in a very short time all industrial economies fell and the world went to war. I have not seen one explanation of the Great Depression and second world war, being the result of not being able to meet the demand for oil.

Here's one:

Originally Posted by Wikipedia

The Imperial Navy eventually began to feel that it did not have enough fuel reserves....To remedy this deficiency and ensure a safe supply of oil and other critical resources, Japan would have to challenge the European colonial powers over the control of oil rich areas such as the Dutch East Indies. Such a move against the colonial powers was however expected to lead to open conflict also with the United States. On August 1941, the crisis came to a head as the United States, which at the time supplied 80% of Japanese oil imports, initiated a complete oil embargo.

Originally Posted by nutronjon

Hum, I would be very glad to see an economist article that deals with resources, especially oil.

Actually, I'd love to see a story about oil that did not quote an economist or a politician/CEO quoting an economist.

I think you may be using a definition of "limited resources" than I am. Maybe you want to expound a bit on that.

Originally Posted by nutronjon

If economist were working with this reality, perhaps we might have made a few different decisions, such as not encouraging a life style as dependent on oil as we have, not tearing up trolley lines...

Well, if economists ruled the world, maybe you'd be right! Unfortunately to politicians and the public they are annoying Cassandras who always want to stop the party.

No one likes to hear that what is cheap today is going to be expensive tomorrow. That's why everyone is always "surprised" when that's what happens.

A friend of mine actually wrote a doctoral thesis on Standard Oil and General Motors colluding to rip up the trolley lines in Los Angeles after WWII, and the part of the story that makes perfect sense is their motivation that was based on pure economics: they were eliminating competition from a substitute resource.

Might not make sense for the long term economy, but it does improve their short-term profits, and it most certainly is an example of economic principles!

So the lesson here is if you hear some one who owns a business claiming there are no limits to resources, you'd better check as to *why*:

Originally Posted by nutronjon

We believed Reagan who told us, it was not necessary to conserve, and we didn't object when he began granting arms to mid east and in 10 years we consumed as much oil as in the previous 100. Until recently when I said we have an oil problem, everyone argued we have plenty of oil, so we had mass ignorance.

The Republican party has worked hard to go from being Eisenhower's questioning of the wisdom of building a "military industrial complex" to being unquestioning cheerleaders of business, as if what GM's CEO actually did *not* say, that "what's good for General Motors is good for the country" was the absolute truth, in spite of what all the economists have always said (even Uncle Miltie didn't go as far as Reagan).

I'd love to know who the "everybody" is in your quote. I can imagine that that would be true in some very conservative colleges, but given that conservatives rail against academia in general as being all traitorous liberals, I think you'd find it hard to get this kind of reaction in most schools going back at least 30 years. I know that the mid70's gas crisis was a staple of Economics and Business school when I went to school as an example of not only artificial limitation of supply, but of the impact of *supply chain* inefficiencies (we had oil here, but not enough transportation or refinery capacity to deal with a shift that could have lessened the shock).

The oil can is mightier than the sword,
Buffy