Tuesday, 29 March 2016

Economists on trade deals

This comes from Greg Mankaw's blog:
The new IGM Panel poll of prominent economists asks about this proposition:
An important reason why many workers in Michigan and Ohio have lost jobs in recent years is because US presidential administrations over the past 30 years have not been tough enough in trade negotiations.
Only 5 percent agree, while 64 percent disagree. (The rest were uncertain or did not answer.) A previous poll asked about this statement:
Past major trade deals have benefited most Americans.
On this one, 83 percent agreed, and zero percent disagreed.
With regard to the first poll mentioned, David Cutler, who "agreed" with the statement made an interesting comment,
The phrasing implies that any reduction in jobs is bad. Some shifts in employment are valuable (e.g., fewer sweatshop jobs in the US).
So there may be good even in the bad.

When the responses to this poll are weighted by each expert's confidence, those who "agree" falls to 3%. In both weighted and unweighted responses 0% "strongly agree". The weighted "disagrees" is 86%. So those who disagree are confident in their position.

So the vast majority of economists see advantages in trade deals, even if non-economists don't.

Do politicians affect economic outcomes?

For the US at least the answer, in one sense, is yes: the US economy has performed better under Democratic presidents than Republican ones.

But why?

A new paper in the American Economic Review (Vol. 106, Issue 4 -- April 2016 ) looks at this question.
Presidents and the US Economy: An Econometric Exploration
Alan S. Blinder and Mark W. Watson

The US economy has performed better when the president of the United States is a Democrat rather than a Republican, almost regardless of how one measures performance. For many measures, including real GDP growth (our focus), the performance gap is large and significant. This paper asks why. The answer is not found in technical time series matters nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior total factor productivity (TFP) performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future. (JEL D72, E23, E32, E65, N12, N42)
When you look at the things that drive the Democratic advantage - benign oil shocks, superior total factor productivity (TFP) performance, a more favorable international environment and more optimistic consumer expectations - apart from may be the more optimistic consumer expectations, it is not obvious how the current term president could affect the other drives of economic performance.

So in this sense the answer to the question is no. It looks more like luck than good management on the part of politicians that drives economic success.

Sunday, 20 March 2016

Israel Kirzner on the history and importance of the Austrian Theory of the Market Process

Mercatus Center Academic & Student Programs recently hosted the 2016 Advanced Austrian Seminar at which Dr. Israel M. Kirzner, Professor Emeritus of Economics at New York University, delivered the keynote lecture, “The History and Importance of the Austrian Theory of the Market Process.” In this talk, Professor Kirzner examines the history of thought in Austrian economics, specifically focusing on the developments in the 20th century, to develop a link between the Austrian theory of the market process and the notion of subjectivism as the central idea in Austrian economics.

David Friedman & Bob Murphy - The Chicago Vs. Austrian School Debate

David Friedman and Robert Murphy will compare and contrast the different principles and methods of the Chicago and Austrian schools of economics -- and their impact on ethics and other social sciences.

Peter Boettke on Austrian Economics in the 21st Century at the Legatum Institute

The Legatum Institute's Economics of Prosperity programme hosted a breakfast discussion with Peter Boettke, one of the world’s most prominent Austrian economists. In this short video, the Legatum Institute's Shanker Singham, Boettke discusses the US elections (in particular, the rise of populist candidates such as Bernie Sanders and Donald Trump), the issue of inequality and economic distortion, which Boettke believes has come about because of the crony capitalism that has been spawned by a regulatory system that is captured by the elites, and why 'innovation' could be the 'magic bullet' for improving human capital.