[helene_t]

mike777, on Jun 11 2007, 10:39 AM, said:

A) As a noneconomist, I define economics as the science of how people make decisions.  True Forum economists may object, , and have another definition.

I think economics is the science of resource allocation. "Making decisions" is slightly too broad, I think. But it's subtle. In fact I'm not sure if I can think of a decision which cannot be decribed as resource allocation, in some sense.

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if everyone gets 3% more compared to last year, how does that translate in quality of life? Are we now 3% happier? I doubt it.

For psychologists, this is a tricky question.

In economics, the answer is (or at least used to be) "yes" (except that 3% is arbitrary, happyness is just on an ordered scale, not an addidive one). The fact that people appear to be maximizing wealth is sufficient argument for wealth being good for them. Except that it could be it is only relative wealth, not absolute wealth, that makes you happy. But the fact that politicians try to maximize growth, and people vote for politicians who promise growth, suggests that growth is actually a good thing.

It could be that growth, to many people, is not an aim in itself but rather a proxy for employment.

[mike777]

helene_t, on Jun 11 2007, 03:52 AM, said:

mike777, on Jun 11 2007, 10:39 AM, said:

A) As a noneconomist, I define economics as the science of how people make decisions.  True Forum economists may object, , and have another definition.

I think economics is the science of resource allocation. "Making decisions" is slightly too broad, I think. But it's subtle. In fact I'm not sure if I can think of a decision which cannot be decribed as resource allocation, in some sense.

I meant the science of how people make decisions as very broad.......extremely broad.....perhaps economists object as too broad?

[Gerben42]

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I am on the side of the jobless worker!
1) He/She is a worker
2) They are jobless!

This is exactly my point. You've identified whose side you are on. Great! Now what? There is no easy solution. You could:

A. You could force the manufacturer to stay open and keep his wages as they, which means that he will have to lose money or not sell anything, either way they go bankrupt and then even more people lose their jobs.

B. The government could keep people busy for lower wages and supplement what they are missing. Lovely idea but who is going to pay for it? For the government it is better to have 100 workers that they don't need to look after and 200 jobless people that might get another job than to have 300 workers with a low wage job that they have no hope of moving to another job and will have to supplement for the rest of their life. This takes the burden off the manufacturers and more and more supplemented jobs will appear until it can no longer be financed. Then the government goes bankrupt.

[mike777]

Gerben42, on Jun 11 2007, 04:20 AM, said:

Quote

I am on the side of the jobless worker!
1) He/She is a worker
2) They are jobless!

This is exactly my point. You've identified whose side you are on. Great! Now what? There is no easy solution. You could:

A. You could force the manufacturer to stay open and keep his wages as they, which means that he will have to lose money or not sell anything, either way they go bankrupt and then even more people lose their jobs.

B. The government could keep people busy for lower wages and supplement what they are missing. Lovely idea but who is going to pay for it? For the government it is better to have 100 workers that they don't need to look after and 200 jobless people that might get another job than to have 300 workers with a low wage job that they have no hope of moving to another job and will have to supplement for the rest of their life. This takes the burden off the manufacturers and more and more supplemented jobs will appear until it can no longer be financed. Then the government goes bankrupt.

Perhaps I was unclear, but not sure why.

Did I not say this is an issue/problem economists should solve or they are worthless?

If they do not know what the decision is, at the very least they should have economic tools helping others arrive at a decision. To repeat...economics is the science of how people make decisions. If the science is imperfect, and I assume it is, fair enough. I just want all those extremely high IQ's helping me in the decision process with the best they got.

[helene_t]

Gerben42, on Jun 11 2007, 11:20 AM, said:

A. You could force the manufacturer to stay open and keep his wages as they, which means that he will have to lose money or not sell anything, either way they go bankrupt and then even more people lose their jobs.

B. The government could keep people busy for lower wages and supplement what they are missing. Lovely idea but who is going to pay for it? For the government it is better to have 100 workers that they don't need to look after and 200 jobless people that might get another job than to have 300 workers with a low wage job that they have no hope of moving to another job and will have to supplement for the rest of their life. This takes the burden off the manufacturers and more and more supplemented jobs will appear until it can no longer be financed. Then the government goes bankrupt.

There is a third option, Gerben: Close the boarders so that wages and prices both remain high for the lack of foreign competition.

I predict that the consequences of that would be more unemployment (because with only a domestic market, employers have less opportunities for finding use of excess labor) and more inequality (because lack of foreign competition creates monopolies).

But maybe my predictions are negatively biased by the fact that I just don't like the idea.

[mike777]

I am for closing our borders
1) I am against cheap, labor, products, ideas coming into this country
2) I am against expensive labor, products, ideas coming into this country.
3) Other than that I am 100% for open borders.

[hrothgar]

mike777, on Jun 11 2007, 11:39 AM, said:

A) As a noneconomist, I define economics as the science of how people make decisions. True Forum economists may object, , and have another definition.

Back in the day, the first day of Economics 101 would spend a reasonable chunk of time defining the scope of the field. Traditionally, the definition of Economics would hinge on two key points:

1. Resource allocation subject to a series of constraints
2. An explicit assumption that people behaved "rationally"

I think that the rationality assumption is an important one because it serves to differentiate Economics from other fields like Sociology and Psychology. However, in more recent years, Economists have started to relax the rationality assumption.

[Winstonm]

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1) Here we have a worker..not a slacker
2) They do not have a job....
3) I think this is a huge huge problem that economists need to help us make a decision. If they cannot help us on this one issue.....they are worthless.......!!!!!!!!!!!!!!!

Is the quality of the job of any importance?

[Al_U_Card]

Economics, like accounting, is a form of score=keeping. As long as the accountants can tell you (legally) that you are profitable, then that is good. When they start telling HOW to be profitable, that can get bad fast.....(not absolutely necessarily but usually) Kind of like the goal judge telling the coach who to play or how the players should take their shots....not always a guarantee of success.

[helene_t]

No, economics is not mere score-keeping. Economists can tell you actual, likely consequences of the choices you consider. Whether those concequences would be good or bad, is up to your own assesment.

richard said:

Traditionally, the definition of Economics would hinge on two key points:

1. Resource allocation subject to a series of constraints
2. An explicit assumption that people behaved "rationally"

No, "rationality" does not define economics as such, it just happens to be a paradigma in classical economics. Suppose some progress in psychology made it possible to predict economical behaviour beyond the rationality assumption. Then economists would have to adopt new models. Even if they had to throw away all their established theories, they would still be economists.