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April 27, 2015

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Posted: 27 Apr 2015 12:06 AM PDT

'This Is Not A Trade Agreement'

Posted: 26 Apr 2015 09:41 AM PDT

This is not a subtweet:

This Is Not A Trade Agreement, by Paul Krugman: OK, Greg Mankiw has me puzzled. Has he really read nothing about TPP? Is he completely unaware of the nature of the argument?
Personally, I'm a lukewarm opponent of the deal, but I don't see it as the end of the Republic and can even see some reasons (mainly strategic) to support it. One thing that should be totally obvious, however, is that it's off-point and insulting to offer an off-the-shelf lecture on how trade is good because of comparative advantage, and protectionists are dumb. For this is not a trade agreement. It's about intellectual property and dispute settlement; the big beneficiaries are likely to be pharma companies and firms that want to sue governments.
Those are the issues that need to be argued. David Ricardo is irrelevant.

'Mediamacro Myth 6: 2013 Recovery Vindication'

Posted: 26 Apr 2015 09:22 AM PDT

Simon Wren-Lewis:

Mediamacro myth 6: 2013 recovery vindication: The idea that austerity during the first two years of the coalition government was vindicated by the 2013 recovery is so ludicrous that it is almost embarrassing to have to explain why. The half-truths in this case are so flimsy they do not deserve that label. I can think of two reasons why that claim could have any credibility. The first is that people confuse levels and rates or change. The second is that some critics of austerity might have occasionally overstated their case.
To see the first point, imagine that a government on a whim decided to close down half the economy for a year. That would be a crazy thing to do, and with only half as much produced everyone would be a lot poorer. However a year later when that half of the economy started up again, economic growth would be around 100%. The government could claim that this miraculous recovery vindicated its decision to close half the economy down the year before. That would be absurd, but it is a pretty good analogy with claiming that the 2013 recovery vindicated 2010 austerity.
The second point is that some critics of austerity did on a few occasions allow their rhetoric to get the better of them, and suggested that if austerity continued a recovery would never come. That was always an overstatement. ...
What any knowledgeable and honest media reporting should have done is tear the vindication argument to shreds. ...

On Microfoundations

Posted: 26 Apr 2015 09:05 AM PDT

Via Diane Coyle, a quote from Alfred Marshall's Elements of the Economics of Industry:

...He wrote that earlier economists:
"Paid almost exclusive attention to the motives of individual action, But it must not be forgotten that economists, like all other students of social science, are concerned with individuals chiefly as members of the social organism. As a cathedral is something more than the stones of which it is built, as a person is more than a series of thoughts and feelings, so the life of society is something more than the sum of the lives of its individual members. It is true that the action of the whole is made up of that of its constituent parts; and that in most economic problems the best starting point is to be found in the motives that affect the individual….. but it is also true that economics has a great and increasing concern in motives connected with the collective ownership of property and the collective pursuit of important aims."

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