economics - where to begin?

fuck u lack of html

Also after you have read the economics books aimed at people who have no idea about economics (the undercover economist etc) and you want a bit more detail, the best textbook author by far is Greg Mankiw.

Having not studied economics much formally, I'd venture a guess that businesses are probably likely to raise prices for legit reasons but then not drop them down again (as much) unless they really need to. Like I wouldn't be surprised that if the coffee price goes up 10%, Starbucks would raise its prices accordingly, but then if coffee went back down to where it was, Starbucks would either keep prices the same or drop them less than proportionally. Just a hunch.

This is called sticky prices. Oil/petrol in particular has this effect. Pricing in perfect competition should not be sticky.

it's one of my true regrets in this life, that i decided to change my undergrad major from poli sci/economics to poli sci/english. of course, that my economics grads weren't all that hot had something to do with that decision ;__;

and oh yeah, micro/macro weren't all that brutal as classes -- at least not the intro level classes. the intermediate micro/macro classes (i.e., the stuff that econ majors had to take at my school) were a bit more quant-oriented than the intro stuff, but the math wasn't all that bad (though one had to take calculus in order to be able to take intermediate micro/macro in the 1st place).

the REAL bitch of a class for econ majors was econometrics -- that was the shit that made me drop economics as a major.

Economics is equally bad when it tries too hard to be a science and when it tries too hard to be a liberal art

Science as w/ Marx?!

Seriously in need of a crash-course after I finish vol 1 of 'Kapital'. I suppose Smith is the obvious.

No, like more recent economics that dresses itself in excessive math and modeling to disguise its inability to forecast certain things accurately.

Can someone explain how oil keeps getting more expensive in Europe while the dollar keeps getting less expensive? Shouldn't these two, like, cancel each other out at least a little bit?

Do these oil companies really think we're going to just keep on (oh wait, we are, aren't we? oh well, they win.)

Well the price of oil is outpacing the dollar. Oil went up by $3 a barrel in the last week, while today the dollar has dropped by one cent against the pound.

Has this been the case during the last, say, six months? Because I had the impression that in the long run, it didn't feel that way.

Yeah, basically, we've been cusioned from the effects of the rise in oil price somewhat.

Oh. I thought we were being had.

The internet says that since 2001 the exchange rate has changed from $1.45 to the pound, to $2.06 to the pound, so the value of the dollar has fallen by maybe a third. Over the same period the price of oil has risen from about $25 a barrel to about $90 a barrel, nearly three to four times higher.

I think the oil price was a bit higher than that, but what you're basically saying is correct: the dollar hasn't fallen anywhere near enough for the current price to have parity with 2000 prices.

Okay, want an intro on Keynesian economics, pref covering its use in the FDR and the modern eras

as close to a textbook definition as i can muster off top of the dome: keynesian economic theory posits that in times of recession (decreased aggregate demand), government can pick up the slack using economic stimulus. so things like FDR-style public works projects could be interpreted as keynesian economic stimulus since government is spending in the observed absence of private spending. the theory goes that absent any government intervention, the private economy would stagnate or otherwise take longer for aggregate demand to recover and than injection of government spending would help increase the velocity of spending and perhaps reignite the yoga flame of private investment and employment.

at some point "keynesian" came to be interpreted as government spending of any kind (which is rong). the risk of spending too much govt money during economic expansion is the crowding out effect which has the govt demanding too much of the available dollars for private investment to generate more efficient growth, thus stifling said growth!

i guess keynesian or other fiscal policies kind of fell out of favor ca. the recession of the early 80s which was combated with monetary policy of the fed (more associated w/ milton friedman iirc). keynes became new hotness again recently because we already had p low interest rates so there wasn't much stimulus to be gained from that.

does economics ever just...click? i hate not understanding big news stories.

i'm in basically the same position as toby at the start of this thread except i've actually tried reading and studied it at university for a year, to basically no avail. it goes beyond mere lack of knowledge, which can be solved with information and learning, into just sheer total incomprehension and bafflement at how to get to a place of understanding. i have no idea what even the child's-level explanations of inflation upthread mean. seriously what is the key to getting it? this is literally the only subject that makes me feel this thick. (apart from certain branches of cultural theory but at some point i realised those were total bollocks anyway and stopped beating myself up over it.)

or should i just accept that, like, i don't have the right brain to understand economics? i don't beat myself up for not understanding physics, i never see anyone feel bad about not enjoying literature. it's only cuz economics interacts with politics and current affairs that i ever feel the lack.

i took two economics classes in college, got As in both, have read a couple books on economics on my own, and i feel like i'm starting over every time i try to think about the subject. i think the difficulty largely comes from the way it mixes incredibly airy, abstract concepts with real-world figures and statistics -- you have to think in two different 'modes' at once.

the other challenging thing about economics that you don't get so much with other sciences is that there are several schools of thought, and they all start from completely different places, so depending on what commentator you're reading you get a completely different version of what's going on (e.g., economists from different schools won't agree on the cause of a recession).

i found this pretty lucid and interesting: http://www.amazon.co.uk/Long-Short-Investment-Normally-Intelligent/dp/0954809327/. it's kind of about personal investing rather than macroeconomics, but he has to go through some of the big and fundamental stuff before he gets into, e.g. the markets.

the investing/markets stuff in that book is uk-centric btw.

http://www.guardian.co.uk/commentisfree/2011/aug/05/financial-greek-debt-market-eurozone

this fn guy used to edit the new statesman (well known left-wing magazine) and among other things hired johann hari and put on the cover an image of the star of david impaling the union jack. anyway, he admits to being ignorant of economics. which is fine, because why should the editor of a major political magazine understand economics.

How many editors of news outlets understand it? Or politicians and civil servants?

i think it is kind of impossible not to feel this way at least to some degree unless u are just really stubborn & probably explicitly ideological and think u have it all figured out, or have like a masters degree. i think the reason is the econometric arguments economists use when debating empirics are thoroughly inaccessible to just about everyone in the world, & when translating them into plainspeak a lot of the essence of the argument is lost, which results (ime) in a vertiginous read, especially when reading conflicting viewpoints. it feels as if there's no common logical interpretation of data grounding the debate, and without a strong familiarity with systems of models economists use the whole "this went up, causing that to go down" is very confusing. think this is partly due to conspiratorial ~special interests~ legitimizing supply side arguments (that are often shrouded in fancy complicated theory & econometrics) but also just bc economics is not very advanced as a field yet

my advice is pick a couple writers you feel are reasonable & follow them. paul krugman does
a pretty good job explaining concepts every time they come up on his blog, tone a bit 2 strident though

think this is partly due to conspiratorial ~special interests~ legitimizing supply side arguments (that are often shrouded in fancy complicated theory & econometrics)

& thereby prolonging an unnecessary debate abt basic macro policy

but also just bc economics is not very advanced as a field yet

I think this is a strange way of looking at it. economics is prob the most advanced social science - but it's ultimately a social science, which means there isn't going to be 'a right answer' a lot of the time.

are the economic models that drive "policy" really the most advanced and up-to-date (whichever ideological interest they seem to serve) or is still REALLY just Keynes vs. Hayek? I have had a sneaking suspicion that what's up with the economy is pretty much over everyone's head (or at least over the head of anyone in a position to do something about it). not sure we even have a good model for what's actually "going on" at any given moment.

hayek is a fckn loser

(apart from certain branches of cultural theory but at some point i realised those were total bollocks anyway and stopped beating myself up over it.)

same is true of much economics, no?

larry summers mentioned that when in office he used is-lm models - stuff taught to undergrads but considered to simplistic to even be touched on the graduate level - as his reference point.

when it comes to fiscal policy, you can be pretty certain that models have nothing to do w/ anything.

i've always taken a relatively ignorant Marxist sorta view (every response to a "crisis" is basically laying the groundwork for the next "crisis," ad infinitum) but it has seemed from my layman's perspective (and not really reading the ultra-technical stuff) that the basic theoretical models are still derived from a reaction to the Depression--ie, that our idea of what the Economy is and how it behaves is historically static since the advent of Capitalism.

using metaphors to explain economics actually makes things worse, i've realised

god i can't even get three fucking paragraphs into an apparently "very clear" galbraith article without the words starting to swim

i like what flopson says a few posts above but how, if it's so hard, are so many people apparently so comfortable with the subject? not all of whom have masters degrees and not of all whom are actually that smart outside of understanding economics

"they're just bullshitting" yeah yeah i've heard that but i can't even get to the basic level of comprehension necessary to bullshit

lex how comfy are you with diagrams, models and algebra -- what yr describing sounds like classic maths anxiety, where ppl perfectly capable of grasping something complex and practical get thrown back into classroom nerves by bad association

it totally is that, it feels completely irrational and panicky.

maths was a weird one, i ended up with an A at A-level without ever really understanding it (and at intervals this blew up into freakouts that my #chinesetigermother remedied with EXTRA TUITION) - the big exception was algebra which i clicked with right from the start and never felt uncomfortable with right up to A-level pure maths.

i'm not that comfortable with diagrams or models, they feel like simplified metaphors that disguise the ACTUAL THING from being understood (i don't know what this ACTUAL THING is w/r/t economics, at all)

i somewhat agree that metaphors for economics are a problem, actually: the way money works is not "like" other things, and you have to get a grip on its own models -- or better still competing systems of models -- to grasp why not :(

and that galbraith piece is not AT ALL entry-level: it assumes a lot of prior knowledge of terms, and intuited effects (right and wrong), and a working knowledge of US politics (the last you probably have)

haha bad association, yeah well my year studying economics at oxford was a disaster (jesus i still can't believe i received such useless tuition at a supposedly elite institution)

One of the things that is frustrating in political discussion re:economics is the reification of "the deficit" as this thing which must be appeased at all costs, plus the fact that money is created in the form of debt so paying off debt would remove money from circulation which would cause huge deflation, no?

yet "we cannot continue to spend what we haven't earned" continues as a thing, when surely the opposite is true - capitalism requires we spend what we haven't earned yet

http://www.amazon.co.uk/Grip-Death-Slavery-Destructive-Economics/dp/1897766408

Despite the rather lurid title this is a readable and interesting book - esp re:debt - interested in others views on it if they have read

This is a very well written and very concise primer, I highly recommend it.

http://www.amazon.co.uk/Concise-Guide-Macroeconomics-Managers-Executives/dp/1422101797/ref=sr_1_1?s=books&ie=UTF8&qid=1313584460&sr=1-1

the reification of "the deficit" as this thing which must be appeased at all costs

one of the reasons i feel i can't argue fully about ~our current politics~ is that i have no idea how scary the deficit is, or should be, and i assume everyone on both sides is just lying

lex this is a pretty great little film about debt and modern economics. if you have 45 mins available at some point i really recommend it.

https://www.youtube.com/watch?v=Dc3sKwwAaCU

my maths experience was similar: i can be taught to deploy any set of formulae and system of rules of deployment, and get excellent marks -- i actually associate this with my skill at proofreading, it's a mix of excellent visual memory and conentrated precision -- but i never felt i "understood" anything after calculus

it was only once i was teaching maths to 13-yr-olds that i began to realise this is what "understanding" maths pretty much is: there is no ultimate there there to be touched or tasted or smelt, and people who "get it" just have a far wider palette of techniques of rival systems of models they can bring into play, and plus an intuitive sense of where "likeness" operates (as in, this model is "like the situation" bcz x, that model is "not like the situation" bcz y)

x-post: absolutely re reification, it's the curse of the discipline in ANY of its political forms

ed that is one of the actual textbooks we used at oxford! it...got me nowhere :(

[one of the reasons i feel i can't argue fully about ~our current politics~ is that i have no idea how scary the deficit is, or should be, and i assume everyone on both sides is just lying

― lex pretend, Wednesday, August 17, 2011

Want to read more here about Andrew Jackson and 1837 - when the US actually paid off its debt (for the only time in history?) - and what followed wasn't so good, right?

but not sure what the best thing to read on that is!

i can be taught to deploy any set of formulae and system of rules of deployment, and get excellent marks

where this led to freakouts was when this suddenly stopped being true and this cruise control mode, like, crashed into a tree - it felt like there was no "deeper understanding" to fall back on and work things out logically when things went wrong because i hadn't been doing that anyway.

there is no ultimate there there to be touched or tasted or smelt

hmmmmmm i think this makes it less likely that i'll understand economics but more likely that i won't feel bad about it

i was recently recommended "finance: plain and simple -- what you need to know to make better financial decisions" by sebastian nokes, which was said to cut through a lot of the jargon-y bullshit (it's aimed at small business-y people intimidated to financial advisor types), and to lay out a lot of "what they're actually saying" versus "what they're disguising and obfuscating")

however, since i bought it my time and focus have not exactly been my own, w/martin, and w/riots, and w/a vital life-changing career interview next week (if i don't make a fool of myself and no one else is better), so i have barely started it

yes i didn't get freak-outs, i just gradually lost interest in pursuing it at university level (haha bcz CORRECT CHEATS not HANDED ME ON A PLATE i suspect): twice i got excellent marks on a paper by spending the days before frantically memorising formulae and proofs in an area new to me, and just as quickly forgetting everything i'd absorbed after the exam was over