tag:blogger.com,1999:blog-4900303239154048192.post1327400350400375473..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: Net Savings and Trade: Krugman is Simply WrongUnknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-4900303239154048192.post-28524488722567595512014-06-23T15:39:29.725-04:002014-06-23T15:39:29.725-04:00Krugman knows the domestic balance is the foreign ...Krugman knows the domestic balance is the foreign balance, he just has so many conflicting and zombie ideas colliding around in his head he can't keep it straight any more. It's why I don't listen to him much.<br />Anonymoushttps://www.blogger.com/profile/11018306000410021518noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-90576432344122285042014-06-22T11:31:27.542-04:002014-06-22T11:31:27.542-04:00«We don’t have a language for this sort of distinc...«We don’t have a language for this sort of distinction in economics. In the article I wrote on this topic I used the phraseology “active” and “passive” and argued that trade decisions are more likely to be active. Actually, I’m not sure about this, either the active-passive frame or the bias toward “trade did it”.»<br /><br />and from your linked paper:<br /><br />«Eventually, it dawned on me that the difference between identity and functional relations vanishes if one considers only equilibrium states, in which functional relations, by definition, hold. And this is, in fact, the methodology of nearly all modern professional Economics.»<br /><br />You critique of mistaking identities as functional is very welcome, as is realuzing that is done under the influence of the theory that proves the truthyness that income distribution depends solely on productivity.<br /><br />But your discussion of identity versus equality is almost as misleading for reason of a rather different nature, even if they are related;<br /><br />* What is far more important in studying the political economy is the distinction between ex-ante and ex-post quantities, and the ability to estimate them. You may be hinting this when you write «limited attention economists give to mechanisms rather than end states«. Fortunately ex-ante and ex-post are well established terms.<br /><br />* More formally in "ordinary" maths and theories based on it there is no difference between equality and identity because they are based on "extensional" logic. For that difference to arise one must use "modal" logic and maths based on it. In other words to introduce "time" in the discourse. When studying political economy this is done by introducing a theory of capital, because the difference between ex-ante and ex-post manifests as changes in stocks. But introducing time in Economics via a theory of capital makes it even more impossible to prove the truthyness that income distribution depends solely on productivity, and that's what motivates «limited attention economists give to mechanisms rather than end states».<br /><br />* Last but not least the terms used in the national accounts use common words like investment, household, government, saving, but they are all defined in a special way that is often quite far from the meaning of the same term used not just in ordinary discourse but also in other parts of Economics, never mind of political economy.<br /><br />For example insisting on the distinction between ex-ante and ex-post is a large part of understanding the original thought of Keynes, and I suspect that his sufferered evolution out of Economics into his General Theory was largely motivated by reflecting on the differences between ex-ante/ex-post.<br /><br />Note: in the above I have tried to use "distinction" to indicate the distinct concepts, and "difference" to indicate the different states of the economy.Anonymousnoreply@blogger.com