On 9 Dec 96 at 21:17, [EMAIL PROTECTED] wrote: > Max writes:>> Yes but that's to some extent separate from the > neo-classical versus other schools of thought issue.<< > > Political pressure helps determine which ideas (which type of > neoclassical economics) and which economists dominate at any one > time. Back in the 1960s, when labor had more influence, the > dominant economics was also more pro-labor. Nowadays, it's the > Boskins of the world that dominate. But in the case of the BLS, > the rightward wind is to some extent blocked by organized > labor's (waning) influence. Right. I was making my usual distinction between neo-classical economics and conservative politics -- that the former does not imply the latter as a logical matter. > I don't understand Max's cryptic reference to "State and > Treasury. And Justice." Are those meant to be examples of > right-wing departments, so you're agreeing with me, Max? Yes -- they are principal poles in the Wall Street/Washington axis in terms of the revolving door of high-level appointments. > Max writes:>> Yes but there's oodles of consumer theory > underlying the idea of a COL index.<< > > You think so? I'm not so sure. The CPI is a fixed-weight index > that was developed back in the 1910s and seems to have no basis > at all in consumer theory; it's just a weighted average, right? One's evaluation of it would clearly depend on whatever consumer theory one held -- e.g., comparing CPI to compensating variation/equivalent variation and all that jazz, no? > It's Boskin and his ilk who brings up (a very shallow) consumer > theory, i.e., that people substitute as prices change. Neither > of them deal with changing needs (i.e., endogenous tastes). Presumably one could model and test for the latter with some kind of temporal distinction among parameters. I wonder if the champions of endogenous tastes -- which in principle I have no problem with -- have done anything but use the idea to knock the more orthodox consumer theory of the n-c's. If it's not possible to model the alternative theory, that would seem to reduce its usefulness significantly. In the absence of such an option, assuming away changes in taste is less objectionable. This issue of changing preferences seems to be a radical preoccupation, but I wonder about its political significance. It would seem that markets will clear or not clear irrespective of whether preferences are new or fixed. I guess there's a problem in futures markets if one doesn't know one's future preferences. But there's a more general problem with futures markets anyway -- people don't know the future, period. What is the overarching significance, aside from being a way NC theory simplifies the world to try to answer more-or-less mundane questions (e.g., the demand for individual commodities). Admittedly, the labor supply issues are more than mundane, but here again the endogeneity of preferences doesn't seem to be the most ideological aspect of the discussion. > Neoclassical consumer theory doesn't help us very much > concerning any practical issue, since it verges so strongly on > the tautological (i.e., people want what they buy). As opposed to, people want what they want? Different thread: how about Andy Devine? Seeker of truth, MBS =================================================== Max B. Sawicky Economic Policy Institute [EMAIL PROTECTED] 1660 L Street, NW 202-775-8810 (voice) Ste. 1200 202-775-0819 (fax) Washington, DC 20036 Opinions above do not necessarily reflect the views of anyone associated with the Economic Policy Institute. ===================================================
