A number of my friends have posted in facebook in agreement with this
article from The Economist, "To be relevant, economists need to take politics into account." so I will post to contradict it. This article or its title is
misleading if not wrong because:
(1) It is saying that economists writing
about plain economics are not relevant, so to make them relevant, they must
write about economics + politics + sociology + anthropology + history +
genderology + ...?
(2) Consider a simple demand-supply price equilibrium
theory. A big storm damaged crops in a major food producing region that
substantially supplies food in M.Manila, so the supply goes down, the price
goes up since demand remains the same. No need for politics, history, anthro,
sociology, gender, etc. to inject into the analysis to make it relevant.
Now comes politics, government imposes price control on
food items supplied by other regions not affected by that big storm "to
protect the poor." Things become awful, formal supply goes down, turns to
"black market" supply. It is politics inserted into normal economic
phenomena that distort things. And people think economists should always factor
in politics, history, etc. in an otherwise simple situation. Lousy.
(3) Economists who comment on political issues --
politics around the world, political ramifications of federalism and
parliamentarism, revamp of the constitution, etc. -- then they must insert
politics, history, etc. in their analysis.
Consider this paper, "Economics versus Politics:
Pitfalls of
Policy Advice" by Daron Acemoglu and James A.
Robinson, Journal of Economic Perspectives—Volume 27, Number 2—Spring 2013. http://economics.mit.edu/files/10403
"Our argument
is that economic policy should not just focus on removing market failures and
correcting distortions but, particularly when it will affect the distribution
of income and rents in society..." (last par. of the paper)
Can people, economists "remove market
failures"? Wow. Only central planners would think that way. Consider
these:
1. Mr. X and his friends demand a 500 GB USB that is sold
for only P1,000. Demand is there but supply is zero, so market failure.
2. Mr. Y and his friends supply a rice variety that is
said to cure 10 types of common diseases and sold at P800/kilo, no one buys
their rice. Supply is there but demand is zero, so market
failure.
Anyone, anytime and anywhere can create a market failure,
as shown by 2 examples above. Some guys like economists (and politicians, etc.)
think they can stop or remove that? Wow.
On inequality, it's part of nature, it's good. Otherwise
people will work only few hours a day and demand that their pay, their house,
healthcare, etc should be at least 1/5 that of the privileges enjoyed by Bill
Gates and Henry Sy or John Gokongwei, etc. to have equality in society. The
world has progressed because of respecting inequality, not forcing equality
like socialist countries.
Now consider this drama by Oxfam and many other groups,
institutions like the UN. https://www.oxfam.org/.../just-8-men-own-same-wealth-half...
Ok, the incomes and wealth of Bill Gates, Zuckerberg,
etc. have expanded up to the troposphere, did they make people's lives, our
lives, poorer and lousier? Do we have lousy and despicable lives because
Zuckerberg got richer each year because of facebook?
No. On the contrary, we enjoy more comfortable, more
convenient lives because of the inventions of these super rich people. If
people think that Zuckerberg et al are creating a more despicable world because
of their inventions and companies, they better opt out of fb, youtube, google,
iphone, etc because everytime they use those things, they contribute to further
enrichment of these super super rich people.
The world enjoys more comfort, more welfare because of
the innovations made by these super-efficient, super-ambitious and super-rich
people. Soon people will be working only 4 or 3 days a week and still get high
pay because of rising productivity (and rising inequality) introduced by those
super-efficient people. We should support the expansion of more super rich
people instead of demonizing them. The politics of envy is only for the envious,
like Oxfam and the UN :-)
The only way to stop rising inequality is via
dictatorship. Put a gun on people's heads and tell them to stop being too
innovative, too inventive, too revolutionary in business, to stop and limit
excellence.
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See also:
Inequality 28, IBON and sensational analysis, November 19, 2015
Inequality 30, Filipinos in Forbes' world billionaires, March 04, 2016
BWorld 42, World inequality, Oxfam and bad mathematics, February 11, 2016
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