[QuantumChaos]

I appreciate you and DannyBee's comments. It is disheartening to me that basic economics is treated here as right wing propaganda. Mainstream economics won against all other theories academically. Yet many otherwise educated people are unaware of fundamentals such as the welfare theorems (or dismiss them out of hands with "muh frictions").

[jmckib]

Thanks! Here's my economic explanation for why people don't understand economics or have intelligent political opinions in general: there's just no incentive to. Understanding economics is hard, and for the individual there's really no penalty for not understanding it. This is why you have otherwise brilliant people who just don't seem to understand basic supply and demand. Not saying this is true in every case, some people just have a different opinion of the tradeoffs involved, e.g. they're willing to accept slower economic growth in exchange for less creative destruction.

My hope is that this becomes less and less true as people become more mobile. Imagine if you could just teleport to a political jurisdiction that is more aligned with your opinions. Suddenly, the penalty for not understanding economics could be very high.

[QuantumChaos]

Have to disagree with you there. Educated people tend to be well informed and hold sensible opinions on global warming, vaccination, and education (and often hold silly opinions on nutrition, even though there is a very strong incentive). Economics is unique as something where people disdain the mainstream.

One notable difference (you can see it in this thread) is that people assume economists are somehow different from other academics. That academics in general can be trusted, but economists are sellouts. What they miss is that there is no significant difference between Economics as a field, and other fields. They get paid slightly more, but otherwise the journals, professional organizations, tenure committees, etc. are exactly the same. There is literally no point where the capitalist comes along with bags of money for his obedient intellectual servants.

The real reason people don't accept the mainstream is that it is very dismal. It says that your revealed preference proves that you value a cup of coffee in every morning over the life of an African (since you could donate that money to life saving charities). It says that inequality can't be fully ironed out because some people are more productive than others. It says that there is no way to shuffle around interest rates, bank accounts, etc. and make everyone better off. It says that there is no easy way to make the world better, because the free market has already maxed out the easy gains.

Personally, I think that the best way to encourage people to be more open to the mainstream, is to tell the other side of the store. Economics is also uplifting. It says that when you work for a company, you are creating value, and that that value can and does help people other than yourself (through the tax system). I also believe that tech has very large positive externalities (especially once you understand that taking people's jobs isn't an externality). Finally, it enables people to embrace the positive, self-affirming aspects of Ayn Rand's philosophy, without going to extremes. I do feel guilty that I don't do more for the people who are worst off. But at least I can enjoy my money, and my life, without feeling guilty that I'm driving some artist out of the current trendy area.

[jmckib]

I think that given the right incentives, people will learn something even if it is dismal and boring, like economics is for a lot of people. I'm sure you can think of some examples. However, as I said in the post above, there is no incentive to understand economics, because there is no penalty for having a stupid political opinion, and really no reward for having a well-informed opinion.

[rtpg]

Except that "Basic economics" has a series of prerequisites that people like DannyBee are ignoring.

Free Markets are only efficient with perfect information, fluidity, and lots of jobs (Necessary but not sufficient). Labor markets are almost never as fluid or with enough supply to make them efficient in the way people seem to imply.

Misapplying economic theories has led to so much misinformed political thought in the past century I almost wish we stop talking about supply and demand in schools (joking, but only slightly).

[DannyBee]

"Except that "Basic economics" has a series of prerequisites that people like DannyBee are ignoring. "

I actually don't believe free markets are particularly efficient, and labor markets certainly aren't.

But I also don't believe you can magically provide a way to make it feasible for everyone to stay exactly where they are, for as long as they like, regardless of job market, housing, etc.

At a base level, as you can see in a lot of the replies, it comes down to "people believe that if they've been somewhere long enough, they now have a right to stay there as long as they like, and anything else is harsh and mean".

Even if i thought this was right, I doubt you can find an economic model that allows this to happen, and can survive long term (and as evidence i offer that, in the history of civilization, nobody has accomplished this).

If you can, great! I'd love for it to be the case that people can always afford to live where they like, no matter what.

[QuantumChaos]

>At a base level, as you can see in a lot of the replies, it comes down to "people believe that if they've been somewhere long enough, they now have a right to stay there as long as they like, and anything else is harsh and mean".

>Even if i thought this was right, I doubt you can find an economic model that allows this to happen, and can survive long term (and as evidence i offer that, in the history of civilization, nobody has accomplished this).

Insurance against changes in housing prices might let people avoid the effects of gentrification much longer. Imagine a bond that pays the difference between the current average rental rate and some "strike price" $X (when this difference is positive).

[QuantumChaos]

Labor markets are inefficient, that's the primary reason the field of "Labor Econoimcs" exists.

However, these inefficiencies do not explain why Facebook bus drivers make so little. Classical economics is sufficient for that.

You cannot simply point to frictions as a get-out-of-jail-free card from classical economics.

[rtpg]

Likewise, you cannot simply hand wave away prerequisites if they're big enough. The friction here is enormous (the cost to move to another city can be extremely large).

[QuantumChaos]

The argument was that people should move to a cheaper city if being a Facebook bus driver can't support them.

But that doesn't imply that Facebook is forcing people to move cities. Facebook isn't altering the labor market by employing drivers at market rates.

I hope you'll agree that the frictions from moving arise from changes in cost of living (or in the labor market, which doesn't appear to be changing). If the change in the housing market is gradual enough, the frictions need not be very significant, since they are amortized over a longer period of time.

[DannyBee]

"the cost to move to another city can be extremely large"

In what sense? Monetarily, i don't believe you. Emotionally, sure.