Economics Questions

Re: Free Trade question

Jonathan M. F. Catalán — Wed, 27 Jul 2011 20:32:57 GMT

Ugh. We're talking about free trade and free markets. Not how bureaucrats intervene and screw everything up. Wrong argument.

DD5, why continue to quote me out of context and misconstrue my point. I'm not making that argument. I used it as an example of a follow up question someone you're debating can ask you. My point is that within the context of the debate posited in the OP, your response is not as perfect as you think it is and my response not as bad as you make it out to be.

What does isolation have to do with not conceding to fallacious reasoning?

You're too obsessed with these "concessions". It's an amateur debate between two people. I gain more than I lose. For all we know, maybe I'll lead him to do research of his own that may one day lead him to change his framework entirely. You're too caught up in a black/white argument.

But the point is that they're not using a different framework but simply being inconsistent. How many economists do you know that explain why Jonathan trading with Dan is beneficial by aggregating all the Jonathans and all the Dans?

I don't see how the question is relevant. We're talking about some random guy the OP knows.

Re: Free Trade question

Smiling Dave — Wed, 27 Jul 2011 19:59:31 GMT

SteveZissou:

Would that I had learned this when I was younger.

I know the feeling, Steve.

Re: Free Trade question

John James — Wed, 27 Jul 2011 19:59:18 GMT

Just wondering if anyone saw the relevant article on The Good Krugman.

Re: Free Trade question

DD5 — Wed, 27 Jul 2011 19:54:45 GMT

Jonathan M. F. Catalán:
Ugh. Ok. Then the intentions of the bureaucrats who make up those governments.

Ugh. We're talking about free trade and free markets. Not how bureaucrats intervene and screw everything up. Wrong argument.

Jonathan M. F. Catalán:
Not everyone wants to isolate themselves from people who don't understand praxeology, lol.

What does isolation have to do with not conceding to fallacious reasoning? A person says we need to be energy independent. You ask him in response whether this means that he is worried that he has no oil refinaries in his private backyard? Why is that suppose to fly over his head but not all the aggregate money flows explanations?

Jonathan M. F. Catalán:
it's not so great if you're having a quick debate with someone operating in a completely different framework as you.

But the point is that they're not using a different framework but simply being inconsistent. How many economists do you know that explain why Jonathan trading with Dan is beneficial by aggregating all the Jonathans and all the Dans?

Re: Free Trade question

SteveZissou — Wed, 27 Jul 2011 19:52:53 GMT

I wanted to say I am reading all the posts and I wanted to say thanks to all of you. Would that I had learned this when I was younger.

Re: Free Trade question

Frederique Bastiao — Wed, 27 Jul 2011 19:50:03 GMT

DD5:

Frederique Bastiao:
Actually that is an even better deal to Americans than if the Mexican worker had spent the US dollars he's earned,

Notice that this deal went from "impossible" to "even better".

You said: "What if the Mexican goes home with his inocome and doesn't spend it on US goods?

If you wanted to say that the Mexican could hoard his income indefinitely you shouldn't have added "on US goods", because if he wants to spend it, it will have to be on US goods, period. There's no other option to him if he wants to spend the US dollars.

Re: Free Trade question

Jonathan M. F. Catalán — Wed, 27 Jul 2011 19:34:31 GMT

The framework is fallacious.

Nobody is denying this. But, saying this misses the point.

By using this framework, you are already conceding to what you need not coneed to.

You're not going to persuade someone of the merits of an entire framework they don't understand. When you're responding to these kinds of questions posed by people who are not going to spend a lot of time with you, what's the point of saying something that's going to go right over their heads?

Countries have no intentions just like "all the Jonathans" have no intentions.

Ugh. Ok. Then the intentions of the bureaucrats who make up those governments. Anyways, my point still stands; you, again, missed my point. I never said countries have intentions. I said that's a question someone you're arguing with can ask you.

And honestly, there is no point to go on if one does not understand this.

Not everyone wants to isolate themselves from people who don't understand praxeology, lol.

The point is that once you refute the mytical collecive, you don't need to go on the defense for free trade any longer.

My point is that while this is great if you have the time, it's not so great if you're having a quick debate with someone operating in a completely different framework as you.

Re: Free Trade question

Autolykos — Wed, 27 Jul 2011 19:34:25 GMT

SteveZissou's Friend:
If you cannot control the flow of people into your country and you cannot limit the transfer of wealth out of your country, then you have no power to stop invasion, no one needs a military conquest if they can simply move their own citizens into your nation and have them transfer your nations wealth to their own.

Along the lines of what Jonathan Catalan wrote, your friend seems to be operating under the false assumptions that 1) wealth is a zero-sum game and 2) wealth equals dollars. He's also operating under the assumption that "the country" is one giant piece of property owned jointly by its citizens. If that's the case, then why (presumably) is there a construct known as "privately-owned land" inside "the country"? Land can't be owned exclusively by two or more people at the same time - it can only be owned exclusively by one person, or by all of them jointly. Finally, your friend is advocating aggression in the sense of telling others who they can and cannot let on their own property.

Re: Free Trade question

Smiling Dave — Wed, 27 Jul 2011 19:33:32 GMT

DD5,

To be more clear. There are two possibilities of what he will do with the money. Either he spends it on US goods, or he doesn't. I was showing that in either case we don't lose anything.

Re: Free Trade question

DD5 — Wed, 27 Jul 2011 19:31:45 GMT

Frederique Bastiao:
Actually that is an even better deal to Americans than if the Mexican worker had spent the US dollars he's earned,

Notice that this deal went from "impossible" to "even better".

Re: Free Trade question

DD5 — Wed, 27 Jul 2011 19:27:09 GMT

Smiling Dave,

Notice you have two seemingly contradicting explantions for why trade between Mexican and US citizen is good:

1. Mexican spends on US goods.

2. Mexican doesn't spend on US goods

How can this possibly be? While it is true that both oucomes are beneficial, they cannot be both the economic explanation for why free trade is good. They are just outcomes and not causes.

Re: Free Trade question

Frederique Bastiao — Wed, 27 Jul 2011 19:23:37 GMT

DD5:
I'm so glad you said this. You just proved my point. It is very much possible! Mexicans can increase their reservation demand for US dollars. They don't buy pesos, they just hoard the dollars indefinitely. No what? Will the Milton Friedman on youtube giving your explanation have to conced that this is a case of bad trade?

Actually that is an even better deal to Americans than if the Mexican worker had spent the US dollars he's earned, as the Mexican worker has worked for free.

Re: Free Trade question

Frederique Bastiao — Wed, 27 Jul 2011 19:20:19 GMT

I think that free trade is actually one of the easiest aspects of 'free markets economics' to explain because it can be properly explained even if we take things in "aggregates" or according to the current framework. It's much more difficult than trying to explain how law can be provided by the market.

The objection raised by SteveZissou's friend, for example, can be addressed even if we take into account the current framework. I mean, how do you steal wealth from a country by sending productive workers there (thus reducing your own productive capacity and increasing your enemy's) to create wealth and then shipping this wealth back to their native countries?

I don't see how one country can impoverish another one by doing that. This objection is really silly, to be honest.

Re: Free Trade question

DD5 — Wed, 27 Jul 2011 19:19:33 GMT

Frederique Bastiao:

DD5:
What if the Mexican goes home with his inocome and doesn't spend it on US goods?

That's impossible since he can't spend US dollars in Mexico, he'll have to exchange these US dollars for Mexican pesos and whoever got the dollars from him will have to spend them on US goods.

This whole "shipping wealth abroad" is such an elementary economic fallacy.

I'm so glad you said this. You just proved my point. It is very much possible! Mexicans can increase their reservation demand for US dollars. They don't buy pesos, they just hoard the dollars indefinitely. No what? Will the Milton Friedman on youtube giving your explanation have to conced that this is a case of bad trade?

Re: Free Trade question

Smiling Dave — Wed, 27 Jul 2011 19:16:32 GMT

Totally agree with all Jonathan wrote, just wanted to add a point.

The worker gets paid in dollars, not in pesos. That means he will have to spend his wages in only one place, the US of A. It may take a while to get here. He may send the money to his wife, who exchanges it in some Mexican bank for pesos, and the bank spends the dollars here. But ultimately, there is only one place to spend US dollars, which is in the US.

And if he puts the money under a matress in Mexico and it never gets spent here, that's even better. Because it means he will have worked here for us for free. Not only that, the value of the money we have in our wallets also goes up, because he retired some dollars, thus reducing inflation.

EDIT: I see this point was quickly raised by the other posters.

DD5,

Let's look at an ugly possibility. Maybe people would rather their own country get rich than some other country. So that saying, "What do you care if an individual in Mexico gets rich instead of an American?" is opening a whole can of worms that can be avoided, I think by Jonathan's reasoning [with my little supplement].