China vs. Russia

[idlisambar]

A Chinese version of "Debunking Economics" is coming out. Chinese economic thinkers and policy-makers are clearly already smarter than their American counterparts, and it looks like many of them will have a chance to get even smarter. It will be interesting to see how it is recieved. The preface of the Chinese version compares the paths of China and Russia since the end of the cold war...


"You may wonder why a book entitled “Debunking Economics” would be thought worthy of translation into Chinese. I can give no better reason than a comparison of the economic performance of China and Russia in the final decade of the 20th century, which shows that China chose a far more appropriate economic road than Russia. During this decade, both countries moved from centrally planned to mixed economic systems, but there the similarities end. While China's transition towards a more market-oriented economy has been highly successful, Russia's has been so bad that, by the end of the century, the average Russian was substantially worse off than during the final years of the Soviet system."
...
...
The difference did arise because one country “followed the advice of experts” while the other did not. But ironically, the country that followed the advice of experts was Russia! China, by following its own path to a mixed economy, fared far better than Russia which followed the path laid out by Western economists. There was therefore something very wrong with Western economic advice, at least in so far as it applies to economies in transition. This is why Debunking Economics is relevant to China today.


http://www.debunking-economics.com/Chinese/PrefaceChinese.htm

[dcfirefighter]

1. Gorby was given good advice

By several Nobel laureates.

He chose not to follow it: http://www.taxreform.com.au/essays/russian.htm

Instead, he was convinced, by threat of lack of western investment, to follow a more 'western' form of capitalism.

[idlisambar]

2. certainly an interesting suggestion

"It is important that the rent of land be retained as a source of government revenue. While the governments of developed nations with market economies collect some of the rent of land in taxes, they do not collect nearly as much as they could, and they therefore make unnecessarily great use of taxes that impede their economies – taxes on such things as incomes, sales and the value of capital."

It would have been interesting to see how it worked. Can't blame Gorby too much for not taking radical steps to "improve" upon western capitalism in the midst of the political and economic realities of the day.

[oscar111]

3. RW or LW? Debunking eco was not in my courses

pls bring us up to speed with an executive summary in your own words.

no time for links.

[dcfirefighter]

4. My view

Though I won't be upset about any clarifications or corrections to this post.

Debunking Economics is about post-autistic economics.
Theory being that the fundamental assumptions made by most modern economists are wrong, based on simplifications necessary without advanced computing, etc. It also tends to discount the classical econ views of optimization and utility.

In short, they want to start economic theory over, from scratch, using new assumptions and techniques.

IMHO, they are a bunch of socialists, but their points make sense.

A few points they make, and I tend to agree with (as in they do not clash with my personal economic and philosophical views):
Raising minimum wage doesn't always lead to more unemployment
Government monopolies aren't always bad
Progressive income taxes are better for the economy than flat or regressive ones.

IMHO though, minimum wage laws deal with symptoms, not causes of inequity. We'd be better off maximising employment rather than legislating a minimum price for labor. Minimum wage laws also tend to ignore non-monetary compensation. A person may work part-time for less than minimum wage if the schedule and working conditions are otherwise favorable.

Government usually does a pretty poor job of being efficient, but there are some things that only they can do effectively.

Monopolies are OK if the company/firm with the monopoly priveleges pay for them. (Public Utility Model corporations, Land Value Taxation).

I think income taxes on wages discourage employment, but in the absence of more direct taxes, they do a pretty good job of capturing unearned income from monopoly privelege. I'd be for rolling them back, from the bottom up.

[idlisambar]

5. some comments

Debunking Economics is about post-autistic economics.
Theory being that the fundamental assumptions made by most modern economists are wrong, based on simplifications necessary without advanced computing, etc. It also tends to discount the classical econ views of optimization and utility.

In short, they want to start economic theory over, from scratch, using new assumptions and techniques.


With regard to post-autistic economics, this is close to accurate from my understanding as well. Though the post-autistic movement is less a separate school than a rather diverse group unified by their view of the dominant school -- neo-classical economics -- as unscientific and sophistic.

IMHO, they are a bunch of socialists, but their points make sense.

This particular author devoted a chapter of his book (and this doctoral thesis) to discrediting Marxist economics. In addition, the author got a warm reception on a prominent Austrian message board while promoting his book. No matter what your politics the intellectual arguments stand on their own. The goal of the author and most post-autistic folks is to inject more science and less ideology/politics into the subject of economics.

A few points they make, and I tend to agree with (as in they do not clash with my personal economic and philosophical views):
Raising minimum wage doesn't always lead to more unemployment
Government monopolies aren't always bad
Progressive income taxes are better for the economy than flat or regressive ones.

This is not accurate. Again, the post-autistic movement is a movement not a school -- these views are not universally held. The author devotes time to the minimum wage issue in the book, but does not reach this conclusion -- his argument is only that the standard neo-classical argument that a minimum wage causes unemployment is based on fallacy.

[idlisambar]

6. Neither RW nor LW

In the author's words...

"The book takes you behind the sanitized, airbrushed view of economics given by its textbooks, and details the many critiques which have been made of economic theory by economists, in a fashion which is accessible to the intelligent non-economist."

Basically the book starts out by thouroughly discrediting the standard Marshallian neo-classical economic model based on supply and demand. It then goes on to look at selected topics dealing with the macro-economy (say's law, efficient markets hypothesis). Other chapters are included that critique the methodology of economics as currently practiced and the final chapter offers a summary of other schools of thought (Austrian, Post-Keynesian, Sraffian, etc.) providing the authors view of the strenghs and weaknesses of each.

The basic argument of the author is that economics needs to be reformed into something more logically and scientifically sound.