I wish there was more than that baby-sitting co-op to support those ideas. One story doesn't make a proof. Krugman brings it up all the time - so the hopes of the nation apparently rest on a single baby-sitting co-op.
It's been too long since I thought about it, but back then I felt there were some aspects missing from the story. Must think about it again, but overall, it is a very limited experiment, hardly the same as a full economy.
Also, doesn't the co-op story show that people can also create their own money? If lack of money was the problem, why don't they just exchange services and products (I mow your lawn and you clean my car)? Money is just a tool to make exchanges more efficient, but it's not that without money they become impossible.
Of course, it is always appealing to blame everything on some rich elite.
> I wish there was more than that baby-sitting co-op to support those ideas
There are people who dedicate their careers to studying this stuff... and they have better examples. That's just a simplified example used to communicate the idea.
> why don't they just exchange services and products
What money makes possible is more complex exchanges. Say, I make a web site for some guy, who gives a book to some other guy, who gives some steaks to another guy, who gives some pasta sauce to another guy, who gives some milk to me.
Without money, complex interactions necessary for a modern economy wouldn't be possible.
> Of course, it is always appealing to blame everything on some rich elite.
Actual economists generally don't do that. I wish if people wanted to post economics articles, they'd 1) do so on reddit, but if they really can't contain themselves, that at least they'd 2) post actual papers by real economists (and not just their opinion pieces) or something more than politicized handwaving.
"There are people who dedicate their careers to studying this stuff... and they have better examples."
Yeah, but last I heard, not all of them agree with Keynes. Also, please point to some examples. I have heard Krugman repeat that baby-co-op several times now. You'd think he'd provide some other examples occasionally if they are so abundant.
I know that money is a very useful tool, but it still seems to me that if only money was the problem, people could find workarounds. They could create their own money, if the state did not provide enough. The baby co-op did just that, it seems.
It just takes a little more than one baby co-op to convince me that availability of money is the only factor that makes an economy work.
It is however a very appealing theory to governments, because it justifies them printing more money. And as we see, it appeals to conspiracy theoreticians, too.
My own view (without academic seal of approval) is that efficiency is the main factor that determines our well-being.
> My own view (without academic seal of approval) is that efficiency is the main factor that determines our well-being.
Well, "productivity" for efficiency, but yes, you're essentially correct. I wasn't trying to defend Aaron's post, and indeed, economists do differ, widely, on various things. It's a relatively recent field, one where there are lots of messy human factors, and of course it's difficult to do many experiments.
I'd rather not see it here, though, as it usually rapidly devolves into essentially political discussions.
There are other problems with the babysitting co-op. For example, imagine that the co-op now has a whole lot of members who have kids and want babysitting but aren't suitable for babysitting themselves (for some reason). Which is analogous to the real economy, where we can have people sitting around who can make shoes or repair furniture but we have all the shoes/furniture we need really cheaply thanks to China.
Ultimately long-term, sustainable economic growth can only come from improvements in productivity. So if quantitive easing is undertaken to build things that boost national productivity, it probably isn't such a bad thing. If the money is just going to go on buying consumer stuff from overseas I question its value.
Comments
I wish there was more than that baby-sitting co-op to support those ideas. One story doesn't make a proof. Krugman brings it up all the time - so the hopes of the nation apparently rest on a single baby-sitting co-op.
It's been too long since I thought about it, but back then I felt there were some aspects missing from the story. Must think about it again, but overall, it is a very limited experiment, hardly the same as a full economy.
Also, doesn't the co-op story show that people can also create their own money? If lack of money was the problem, why don't they just exchange services and products (I mow your lawn and you clean my car)? Money is just a tool to make exchanges more efficient, but it's not that without money they become impossible.
Of course, it is always appealing to blame everything on some rich elite.
> I wish there was more than that baby-sitting co-op to support those ideas
There are people who dedicate their careers to studying this stuff... and they have better examples. That's just a simplified example used to communicate the idea.
> why don't they just exchange services and products
What money makes possible is more complex exchanges. Say, I make a web site for some guy, who gives a book to some other guy, who gives some steaks to another guy, who gives some pasta sauce to another guy, who gives some milk to me.
Without money, complex interactions necessary for a modern economy wouldn't be possible.
> Of course, it is always appealing to blame everything on some rich elite.
Actual economists generally don't do that. I wish if people wanted to post economics articles, they'd 1) do so on reddit, but if they really can't contain themselves, that at least they'd 2) post actual papers by real economists (and not just their opinion pieces) or something more than politicized handwaving.
"There are people who dedicate their careers to studying this stuff... and they have better examples."
Yeah, but last I heard, not all of them agree with Keynes. Also, please point to some examples. I have heard Krugman repeat that baby-co-op several times now. You'd think he'd provide some other examples occasionally if they are so abundant.
I know that money is a very useful tool, but it still seems to me that if only money was the problem, people could find workarounds. They could create their own money, if the state did not provide enough. The baby co-op did just that, it seems.
It just takes a little more than one baby co-op to convince me that availability of money is the only factor that makes an economy work.
It is however a very appealing theory to governments, because it justifies them printing more money. And as we see, it appeals to conspiracy theoreticians, too.
My own view (without academic seal of approval) is that efficiency is the main factor that determines our well-being.
> My own view (without academic seal of approval) is that efficiency is the main factor that determines our well-being.
Well, "productivity" for efficiency, but yes, you're essentially correct. I wasn't trying to defend Aaron's post, and indeed, economists do differ, widely, on various things. It's a relatively recent field, one where there are lots of messy human factors, and of course it's difficult to do many experiments.
I'd rather not see it here, though, as it usually rapidly devolves into essentially political discussions.
There are other problems with the babysitting co-op. For example, imagine that the co-op now has a whole lot of members who have kids and want babysitting but aren't suitable for babysitting themselves (for some reason). Which is analogous to the real economy, where we can have people sitting around who can make shoes or repair furniture but we have all the shoes/furniture we need really cheaply thanks to China.
Ultimately long-term, sustainable economic growth can only come from improvements in productivity. So if quantitive easing is undertaken to build things that boost national productivity, it probably isn't such a bad thing. If the money is just going to go on buying consumer stuff from overseas I question its value.