Friday, April 17, 2015

A contribution to the critique of Krugman's Ricardo paper 



Krugman: "The idea of comparative advantage -- with its implication that trade between two nations normally raises the real incomes of both -- is, like evolution via natural selection, a concept that seems simple and compelling to those who understand it".

--- Sorry but almost all aspects/concepts in economics is on a extremely higher abstraction level than molecular or cell-level biology, and biology is void of a conflation between statistical and political "biology" which is not even biology, but political philosophy.

Krugman:  I am not talking here about the problem of communicating the case for free trade to crudely anti-intellectual opponents, people who simply dislike the idea of ideas".

--- Geez, we do not have free trade in any Geo-economic jurisdictions that is even partly industrialized, what we have is politicized- regulated/legislated/managed/administered/governed trade. Same goes for the expression: "free market(s)".

Krugman: "At the shallowest level, some intellectuals reject comparative advantage simply out of a desire to be intellectually fashionable. Free trade, they are aware, has some sort of iconic status among economists; so, in a culture that always prizes the avant-garde, attacking that icon is seen as a way to seem daring and unconventional."

--- We do not have "free trade", not for several hundred years. And not even in the days and place of the Roman Empire was it totally laissez fair. You couldn't take a "noble man" or patrician as your slave, and not even a plebeian, if he/she was a roman citizen.  Everywhere there was dense populations, there were power asymmetry. An emperor or his bureaucrat, or a feudal lord, if you had substantially more than other citizens (economic agents), you were prone to be "assessed" by the anthropogenic powers that were. And you had to bring tribute to the power in charge, or move elsewhere.

Krugman: "After all, economists are familiar with a number of reasons why the gains from free trade may not work out quite as easily as in the simplest Ricardian model."
 --- We do not have free trade, not even a slight resemblance of free trade.

Krugman: "Or consider the recent anti-free-trade writings of James Fallows,".
--- Are you not anti-free-trade professor Krugman? What is your views on the minimum wage?

Krugman: "Free trade is a sacred cow of economists, who are well-known to be boring, stuffy types; what could be a better way to reinforce one's credentials as a radical, innovative thinker than to skewer their most beloved doctrine?"
--- Doctor Krugman, you do not believe in free trade, and you don't want to open that door. Don't go there Mr. Krugman. I'm warning you...! 

Krugman: "free trade is old hat".
--- How much free trade was there in old China 3000 years ago, and in the Roman Empire 2000 years ago? How much free trade was there 100 years ago in the USA and in Europe? How much free trade will there be in the future? The answers depends, among other things on what level of judicial and legal institutions there will be in the future, and on the power range of the national assemblies.

Krugman: "Two goods, two countries, one productive factor, perfect competition."
--- Which is never the case in the real world, aka the economic terrain where agents do business.
Does Krugman really believes this conceptualization has any relevance to the real world?? 
Dr. Krugman, have you heard of "state of affairs"? How bout' economic/financial state of affairs?

Krugman: "that in the long run the economy has a natural self-correcting tendency to return to full employment."
--- And what is the long run? 100 years? 200 years, 500 years or more? A "natural" tendency, does this involves elections, politicians and national assemblies??

 Krugman: "evolutionary theory -- the real thing -- is based on mathematical models; indeed, increasingly it is based on computer simulation."
--- Nonsense! Biological evolution is observable, and falsiefieable. It is not at all based on mathematical models more than the laws of thermodynamics and the gravitational theories is based on mathematical models. It is based on observable falsiefieable facts!! And empirical data which for the natural sciences is both observable and falsifiable. Not so with most economic theories.
We have experimental physics, and we also have some experimental biology in laboratories. Don't confuse mathematics with science.  A great economist would never make imbecile statements about elementary epistemological methods.
Almost all science in natural science is based on full empiricism, except theoretical physics, which is mostly based on experimental physics, which is laws of the universe, by the way and quite different from statistical correlations in the realm of economics.

 Krugman: "justify modeling: Do not presume, as I did, that people accept and understand the idea that models facilitate understanding. Most intellectuals don't accept that idea, and must be persuaded or at least put on notice that it is an issue. It is particularly useful to have some clear examples of how "common sense" can be misleading."
--- What facilitate science way more than understanding, is empirical data based on observable findings with small confidence intervals.

 Krugman: "a simple model can clarify matters immensely".
--- Empirical data thoroughly examined and cross-checked can clarify matters. Does Krugman adhere and follow the rationalistic method rather than the scientific method used by physicists, biologists and chemists? Does Krugman think that he can think and reason himself to clarity without empirical observations?? Does not Krugman pertain to be Teh Empiricist-economist?

 Krugman: "Ricardo's idea is truly, madly, deeply difficult. But it is also utterly true, immensely sophisticated -- and extremely relevant to the modern world".
--- What is extremely more important than Ricardo's idea of comparative advantage in relation to managed, legislated, administered trade, is comparative advantage in relation to political economy in general, and especially the distribution profiles on a macro level.  Which countries had most financial/economic comparative advantage in the context of payoff-probability for
Geo-econ-jurisdictions from 1950 until today, or even from 2007 and until today? Was it not the social capitalistic countries that applies the Nordic model, aka Rhine Capitalism??

 ---
We humans are not first and foremost economic agents or trade/trading agents, not anywhere near the way economists perceive people. We are individuals, family members, group members, society members, workers, retirees, students etc. I will remind the naivist's that it didn't take a long time from literacy was invented until societies became so culturally complex that any economic activity had to comply with local law or common law or formal law. You can't trade what you want to trade, unless you comply with the people's cultural construction and social construction in whatever society and economic sphere that we want to roam. Basciat's negative railroad is a good example of this. And of course, the falling profit rates between countries is the most important aspect in this.

Some last words on David Ricardo and free trade; One way of interpreting this concept is that we assume that there would be as much free trade between two or more countries that it is inside a country...!!! lolz. Was it this plan that Marx and/or Ricardo had in mind? Because then it makes sense at least in theoretical logic...! And then there would be no worry about "socialism/communism in one country". There would then be whatever capitalism or (free trade) socialism in a big country that earlier existed as several smaller countries...!
And there would be equilibrium...! Hallelujah and amen :-] :-}


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