Conversational economist Timothy Taylor posted on August 13th entitled “What Economic Ideas Are Truth and Non-obvious?”
He starts with the famous story that Paul Samuelson said, and I quote it here:
[O]The subject of ur advances the best foot forward when talking about international trade. This was at my house many years ago, so I was with mathematician Stanislow Ulam in the Harvard University fellow association. ULAM, which was to become the originator of the Monte Carlo Act and co-discover of hydrogen bombs, had already brought age to the world-famous topot. And he was a pleasant conversationalist, wandering slowly through all areas of knowledge. I teased, “Name one proposition of all social sciences that is true and not trivial.” This was to test what I always failed. But now, 30 years later, on the stairs, so to speak, answer me: Ricardo’s theory of the advantages of comparison. Trade is a demonstration that trade is mutually profitable, even when it is absolutely large or productive in terms of the commodity of the event. It is not necessary for mathematicians to discuss logically true. Not trivial is seen by thousands of important and intelligent men who could not grasp the doctrine for themselves or believe it after explaining it to them.
Tim Keys in the last sentence of Samuelson quote above. He writes:
If thousands of intelligent and important people can meet “non-trivial” criteria in economic theories that cannot grasp or believe them, then the IT sem that many economic theories are true and (obviously) non-trivial can allow governments to set prices or pose challenges that they have no experience. News headlines provide examples of (obviously) intelligent and important people.
Tim thinks a true statement means that governments that set prices and abolish tariffs will experience trade-offs.
It reminded me of a question Amen Archian and William Allen asked at Economics Textbook University Economics. During my first year at UCLA, I met while TA-ing for an introductory micro-economics course.
Question #21 in Chapter 13 (p. 21) of the 3rd edition of University Economics, University Economics, is:
Evidence for the spectalization of knowledge is provided by Albert Einstein’s claim (Socialist International Information) just before his death.
I don’t mind answering their questions. Because I think the answer is clear, especially to readers of econlog.
Give me something else. We often see clearly intelligent people, embracing the decline in incomes of 20% at the bottom, claiming that the poor are becoming poor. There are two problems with this. What’s more obvious is that the share of growing Inomes may be falling, but the average disadvantage of those in the lowest quintiles can rise. The second and less obvious is that people in the lowest quintile of a year are not all of the people next year. And there is a transfer of hage between the quintiles of income over 10 years. .
Note: The related photos are from Universal Economics, the latest in the old Archia and Allen texts.
