I kinda look at economics as quantum mechanics problem of sorts in that ya can't pin down an exact answer, what I see is something akin to a calculating a probable statistic (but even that term is being generous at best).
So after reading in the economist about the cost of filling a gas tank varies hugely around the world
http://www.economist.com/daily/chartgal ... id=9430924
and the article in last weeks financial times about the IEA forcast of probelms in 5 years due to increased oil demend, gotta a question what people think is a fair price calculation, for using fuel? On one side of the equation ya have the USA with a population of approx 300 million people using as much fuel if not lots more than the other side of the equation where ya more than the two billion plus people who live in china and india.
Basically what I'm asking is how would a professional economist model or assigning values to concepts like fairness, of price given that poor people will always pay a higher percentage of their income on stuff like gas and balance that concept against some kinda value assigned to what's fair in life.
I guess this question is kinda of a parallel discussion in this fourm,
if peakers support taxes on gas.
I personally found that question kind of difficult to answer because if ya take into account everything. In other words I try mentally to assign values to pre-mature deaths due to pollution effects which result because burning carbon fuels, and balance that un-calculatable effect of pollution against economic measures such as GDP, and to me it only gets confusing the more accurate I try and make the problem, so basically I went with gut feelings and life experence, seeing that over in europe they have high taxes on fuels that are used to fund public transportation.
Anyone else find economics confusing and interesting at the same time? Guess I've been fascinated with economics off and on over the years. In my own case interest in economics kinda started when I was in a poli-sci class of sorts and about the time when the exxon valdez had its little oil spill. Basically I read something to the effect that GDP in the state of alaska at the time increased, because people hired to clean up the mess were classified as doing domestic production, wacky eh?
PeakOil is You
economics is confusing and interesting at the same time!
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economics is confusing and interesting at the same time!
by phaster » Mon 16 Jul 2007, 04:16:29
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phaster - Tar Sands
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Re: economics is confusing and interesting at the same time!
by MrBill » Mon 16 Jul 2007, 06:17:37
Thanks for the link. The global economy with its millions upon millions of individual variables is bound to be confusing. Usually, micro-economists say that, 'anyone who claims to understand macro-economics is lying.' Maybe there is truth in that?
Many governments have different priorities and approach, say, growth and protection for the environment differently from one another. There is no world government, and the UN is a piss-poor substitute, while supra-national agencies are usually consigned to analysis and giving advice rather than implementing policy at the national level. And local governments guard their autonomy jealously.
Therefore, it is pretty much impossible to accurately model how the world economy functions, much less make hard predictions about the future given too many variables, them changing over time, and their feedback loops.
One of the best macro-economists that I read regularly on exchange rates, current accounts and trade, for example, is Brad Setser at RGE Monitor. You can find his blog here.
RGE Monitor
You may find this analysis quite interesting as it suggests that we can make energy savings just by 'not subsidizing' energy imports or refined products to consumers like gasoline and diesel. Of course, this is a nation's priority to allocate resources as they see it, but it has some very perverse outcomes, like stimulating extra demand for a finite resource that is getting more expensive, while worsening the said country's external trade balances. Not a very enlightened policy, but one you will find politicians defending.
$this->bbcode_second_pass_quote('', ' ') Article at a glance:
Curbing the growth of global energy demand
McKinsey research shows that the growth in worldwide energy demand can be cut in half or more over the next 15 years without reducing the benefits end users enjoy. The key is a concerted global effort to boost energy productivity.
This article’s exhibits examine the opportunities by focusing on four sectors that represent 98 percent of all end-user demand for energy. Capturing the full range of opportunities would save the equivalent of 64 million barrels of oil a day and help reduce greenhouse gases significantly. But market forces alone won’t produce these outcomes.
Many governments have different priorities and approach, say, growth and protection for the environment differently from one another. There is no world government, and the UN is a piss-poor substitute, while supra-national agencies are usually consigned to analysis and giving advice rather than implementing policy at the national level. And local governments guard their autonomy jealously.
Therefore, it is pretty much impossible to accurately model how the world economy functions, much less make hard predictions about the future given too many variables, them changing over time, and their feedback loops.
One of the best macro-economists that I read regularly on exchange rates, current accounts and trade, for example, is Brad Setser at RGE Monitor. You can find his blog here.
RGE Monitor
You may find this analysis quite interesting as it suggests that we can make energy savings just by 'not subsidizing' energy imports or refined products to consumers like gasoline and diesel. Of course, this is a nation's priority to allocate resources as they see it, but it has some very perverse outcomes, like stimulating extra demand for a finite resource that is getting more expensive, while worsening the said country's external trade balances. Not a very enlightened policy, but one you will find politicians defending.
$this->bbcode_second_pass_quote('', ' ') Article at a glance:
Curbing the growth of global energy demand
McKinsey research shows that the growth in worldwide energy demand can be cut in half or more over the next 15 years without reducing the benefits end users enjoy. The key is a concerted global effort to boost energy productivity.
This article’s exhibits examine the opportunities by focusing on four sectors that represent 98 percent of all end-user demand for energy. Capturing the full range of opportunities would save the equivalent of 64 million barrels of oil a day and help reduce greenhouse gases significantly. But market forces alone won’t produce these outcomes.
Source: Curbing the growth of global energy demand
In turn there are some links attached to that article worth reading as well. Take care and all the best. Cheers.
The organized state is a wonderful invention whereby everyone can live at someone else's expense.
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MrBill - Expert
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Re: economics is confusing and interesting at the same time!
by mefistofeles » Mon 16 Jul 2007, 06:27:47
$this->bbcode_second_pass_quote('', 'B')asically what I'm asking is how would a professional economist model or assigning values to concepts like fairness, of price given that poor people will always pay a higher percentage of their income on stuff like gas and balance that concept against some kinda value assigned to what's fair in life.
Having actually received a degree in economics I can tell you quite abit, although you may have even more questions.
Economicsts ,especially neo classicalists, believe that markets are efficient and that people generally make rational choices. Neo classical economists don't believe in natural limits on growth.
Keysians on the other hand believe that government can through fiscal and monetary policy control economic growth and prosperity and avoid recessions.
Although these two schools are different they share some similarities they believe that supply and demand eventually balance at some equilibrium point.
However these two accepted mainstream schools have failed. They have failed to predict things such as the housing bubble or peak oil. Why? Because they don't address the real world or how people really make decisions.
The assumption behind both schools is that people make decisions rationally. Yet this is totally at odds with what happens in the real world with the real estate flipper who keeps on accumulating more debt or the drug addict. Or with our current peak oil situation/
The assumptions themselves are flawed because they include no adjustments for irrationality or true natural resource limits. This is what Malthus talked about in the 1800's when he said that populations increase geometrically and food production increases arithmetically. Its an idea that an ecologist or biologist is well acquainted with.
Regarding irrationality behavioural economics is more concerned with addressing that.
At some point ecology,evolution and economics are just dealing with the same thing: how does life thrive prosper. Ultimately no matter how high the GDP numbers if people have no water to drink or food to eat,you probably have an economic problem if certainly not a ecological one.
There are some people doing some very weird work at the edge of evolutionary psychology, evolutionary ecology/biology and economics that want to bring it all together.
Personally whether you are talking about the bacteria in your gut or the stores that open in the mall there are alot of economic/natural systems that operate in conjunction with each other.
$this->bbcode_second_pass_quote('', 'B')asically what I'm asking is how would a professional economist model or assigning values to concepts like fairness, of price given that poor people will always pay a higher percentage of their income on stuff like gas and balance that concept against some kinda value assigned to what's fair in life.
Economists do not have real answers to those questions. Yes you can develop socio econonomic scales such as Gini coefficient that measure such things.
However I think evolutionary and ecological models may be better.
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mefistofeles - Coal
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Re: economics is confusing and interesting at the same time!
by wisconsin_cur » Mon 16 Jul 2007, 06:29:35
I would even go a step farther. Economists are like theologians. The presuppostions they bring to their study determine the outcome. That is why you can have so many theologians with so many different opinions. I find economists to be in the same camp.
Not that I don't enjoy both, of course, I even come up with the right answers since I do have the "right" presuppositions.
Not that I don't enjoy both, of course, I even come up with the right answers since I do have the "right" presuppositions.
http://www.thenewfederalistpapers.com
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Re: economics is confusing and interesting at the same time!
by mefistofeles » Mon 16 Jul 2007, 06:35:25
$this->bbcode_second_pass_quote('', 'O')ne of the best macro-economists that I read regularly on exchange rates, current accounts and trade, for example, is Brad Setser at RGE Monitor. You can find his blog here.
Rgemonitor is good and has alot of very smart people posting but I really think its for "econoheads" who have backgrounds in finance or economics.
Personally I feel that thinking there is very much oriented around conventional ideas about economists.
If you really want to learn about economics I think the best way is to understand human psychology and what happens when actual resource shortages hit. Because the numbers,statistics models and theories are basically worthless if you can't predict what people will do.
Economics is nothing more than a tool to measure the human machine. Collectively and individually. This is something that I feel alot of economists lose sight of.
If you have different metrics for understanding and measuring behaviour by all means do so, perhaps you might event a new science.
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mefistofeles - Coal
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