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View Diary: Why Georgists Correctly Predicted the Crisis, and Why Conventional Economists Couldn't (12 comments)

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  •  Less a critique of economics than its teaching (4+ / 0-)
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    stillman, ogre, DaleA, Nulwee

    I'm not familiar with the Georgist tradition, but on the whole, most of your criticisms here apply more to how economics is conventionally taught than a problem with the tools in the modern economist's analytical toolbox:

    1. I'd argue that the factor issue is, well, a non-factor.  A 3 or even N factor model is perfectly consistent with the kind of production functions that underly microeconomic theory.  And I don't think that land is a more significant factor than, say, controlling stock in a corporation.  The issue is one of economic power and social control, rather than the specific factor you exercise that power and control through.
    2. Rent is a broader concept than simply what you charge on land -- arguably, so-called "intellectual property" related fees are no different, and often, no better.
    3. Discounting and time-value-of-money are indeed important concepts, and the failure here is more one of education than theory.
    4. National income accounting is a useful abstraction that makes certain kinds of models possible and useful.  All you are saying here is that these models may miss certain details.  True.  They're models.  But these models also capture a lot of what causes business cycles.  Which is why we use them.
    5. Again, this is more an issue of education and emphasis than of theory.  And economists like Krugman certainly get this, and apply perfectly good microeconomic theory to the problems of wealth distribution.

    All in all, the Georgist tradition sounds a lot more useful and valid than, say, the Austrian tradition, which has the (from its own point of view) virtue of being impossible to either test or debunk.  Austrian economics is the Intelligent Design approach to economics.

    The Georgists at least are asking the right questions, which I agree is a great virtue.

    "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

    by mbayrob on Wed May 06, 2009 at 12:35:06 PM PDT

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