Six small ideas

I find modern economic theory so empty of useful ideas that it amazes me that it still survives. Nothing in a modern text ever seems to be of much value in assessing what’s going on or in deciding what policies to pursue. The Economist has put out a series it titles, Six Big Ideas which are standard forms of theory that either state the obvious in complicated ways or state what is almost certainly false in beguilingly simple ways. It is undated so may be quite old. I can only say that once economics ended up in the hands of academics, rather than being the preserve of people engaged in business and the practical realities of life (Ricardo, James and John Stuart Mill), it went off the rails. The one part that makes me think this is a bit old is the discussion of the Stolper-Samuelson theorem, which they describe in this way:

The paper was “remarkable”, according to Alan Deardorff of the University of Michigan, partly because it proved something seemingly obvious to non-economists: free trade with low-wage nations could hurt workers in a high-wage country.

Since this is what Donald Trump is trying to say, seems unlikely they would say it right now.

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