tempeh and green bean stir-fry

[keturn]

A few weeks ago now I finished reading Henry Hazlitt's Economics in One Lesson, and there are some things from that I wanted to write down before moving on to No More Throw-Away People.

As you know, I haven't studied much economics, but Hazlitt's work is categorized as being from the classical school of thought, very Adam Smith Wealth of Nations

Comments

[joyquality]

Let's say I'm a bike mechanic. If I buy mittens from local knitters, then the local knitters would have money to spend on bike repair. If I buy mittens from Olympia knitters, then they would also have money to spend on bike repair, but presumably they'd take their bike to a mechanic in Olympia, not to me. Isn't it in my own interest then to buy from the local knitters?

[qousqous]

But what if, with all that extra money in the Olympia economy going around because of their booming mitten-export business, some people in Olympia decide they want to buy more hats from renowned Portland haberdashers? Haberdashers who then buy muffins in Portland, of course.

[jes5199]

oh, sure, it seems like it might work out that as much money will come in as go out, but ... it's a little hard to be sure, right? what if there's a sneaking suspicion that in Olympia, they're more likely to order hats from that awful Vancouver. And besides, isn't every transaction a little bit wasteful?

[freyley]

wasteful of what? or perhaps, where does it go?

[jes5199]

I don't know. I think I meant something like, let's hope Olympia's economy collapses so they stop sending money to China.

seems half-baked, now.

[boojum]

I think each transaction is both a little wasteful and a little helpful.

I mean, suppose I'm a knitter and you're a haberdasher and we agree to swap my mittens for your jester's cap. We've both lost some time to talking about it. I have to dig the mittens out of the stack in the back of my closet, and you have to carry the lead-lined jester's cap all the way over to my house. We each have the risk that the other is going to bail, or going to make a crappy thing, or going to provide a useless neon-green whatsit due to some misunderstanding. But on the flipside, I've gone from having 20 pairs of mittens and a bare head to having 19 pairs of mittens (big whoop, my hands are still warm) and a head that's protected from alien mind control rays. And you've gone from having 20 hats and cold hands to 19 hats (big whoop, it's not like you've got more than 19 heads) and warm hands.

muffin man rides a bike

[keturn]

The interesting thing is, in all Hazlitt's import/export illustrations, he talks about exports to a region with a different currency, e.g. Vancouver knitters whose wages are paid in Loonies. So when you use greenbacks to pay for Vancouver mittens, people in Vancouver end up with greenbacks, maybe in the hands of some money-changer so the workers can actually be paid in loonies

Re: muffin man rides a bike

[freyley]

This is absolutely right, and why the trade deficit isn't generally considered a problem by economists. Trade deficit is why the Chinese government has about $2 trillion in foreign currency and assets, and what can they do with it? Buy things from those foreign countries. Some of what they buy is land, which brings up the "they own our land/they own us" issues, but when they buy our land, at high prices, that money goes back to someone in the US to do things in the US.

This would argue for a system of microcurrencies, so that localities could trust that this would happen, but it's too complex still to implement (maybe when the millennials run the world)

Enlightened self interest.

[flamingweasel]

And every time a transaction happens in my local economy, 8ish percent of it gets dumped into my local government to pay for that cool park at the bottom of the hill and for Cori to have a job teaching local kids and for there to be a light rail system so I can get to the airport easily.

"I love paying taxes, I buy civilization with it."