The General Economics Thread

There are a lot of people in the business and economics worlds predicting an oncoming recession due to inflation control measures. I would imagine that this is based on the experience of the late 1970s, when the Federal Reserve implemented massive rate hikes to control "stagflation", with a major recession as the result.

The experiences of the past are supposed to inform our predictions of the future, but economics as a profession is not great at understanding when things are not the same as they were before. In particular, the demand for skilled employees is not ebbing and indicates enormous pent-up growth tension in the relevant industries.

The problem is figuring out how much of this inflation is intrinsic, due to overheating, and how much is extrinsic, due to global supply factors such as COVID and the Ukraine war. Intrinsic inflation — too much money in the system — is managed with rate hikes and asset sales. Extrinsic inflation is not as easily controlled and is the kind that is most harmful on a day-to-day basis.

Consumers look at food and gas prices (Krugman, NYT) as representative of the state of inflation, not abstract measures by bankers and economists. But food and gas prices are the things that politicians are least able to control right now, because they aren't caused by policy decisions.

Well, can you blame consumers for doing so? The average civilian is not going to understand the intricacies of national economics, but they understand the prices they see in stores and at the pump.

Edited by Redmess on Jun 3rd 2022 at 4:26:17 PM

Politicians are blamed for things that they can't control, but this leads to poor decisions by voters. Do we just resign ourselves to the situation?

In this particular case, I would say it is on the consumer to understand that if food and oil are going up it's mostly because of the war in Ukraine and the consequences of the COVID pandemic, or at least the USA government needs to clarify if Biden doesn't want anyone to clamor for a return of Reaganomics.

Yes, please god we do not need more Reaganomics.

But it is in turn up to politicians to explain why this is not Biden's fault, and how Biden intends to resolve or at least lessen the impact of the situation.

And you can't really blame consumers when politicians fail to convey this message well enough, if they have one.

I'd say it's more on the news media for failing to inform consumers about economic cause and effect, even at a basic level. The problem with expecting politicians to do it is that people only believe them if they are already inclined to, and the news gets far more general airtime than politicians. Biden can give all the speeches he wants but if the local news station follows it up with pictures of high gas prices and asks, "Who is to blame," the message is drowned out.

Edited by Fighteer on Jun 3rd 2022 at 11:14:50 AM

Except that it's blatantly obvious that a ton of news people either don't understand it or have a direct agenda to obfuscate the truth as much as possible.

And there's the added problem that the US public has a very high amount of distrust for politicians to begin with, so even if the stars align, the White House does some effective messaging and the media gives it plenty of attention, the public may simply not believe it.

This is a fundamental issue for US politics: how to restore some amount of trust in politicians.

I listened to a podcast on Pim Fortuyn recently, and it noted that, while he was a bit of a radical with racist tendencies, his dislodging of the public's unwavering trust in politicians was a good thing. The US takes it to the other extreme, though. Some distrust is healthy, but too much is damaging to everyone.

Yeah, so what is the solution? We've determined that there are no influencers who are able or willing to represent the truth effectively. So I guess it's just delivering emotional appeals to the Lowest Common Denominator in the hopes that they are momentarily stirred from their reality TV stupor in order to vote for our side?

Edited by Fighteer on Jun 3rd 2022 at 1:17:06 PM

Also, do we even want to appeal to the Lowest Common Denominator in this case? Because that would mean restarting the Anti-Russia machine from the Cold War.

I wasn't taught macroeconomics until college. That's on politicians and educators. (Well, and on the fact that our educational technology is still a century out of date and is useless for actually teaching students anything useful, but that's a separate thread.)

Anyway, one solution might be aggressive legal action and Justice by Other Legal Means against bad influencers. The problem is, while it's almost axiomatic that someone shilling for the Republican viewpoint is going to be doing something illegal, and while we absolutely want to come down like the wrath of God on people who are committing crimes in the service of reactionary politics, we probably don't want to weaponize the fact that everyone's guilty of something.

It is also, um...a known thing that a lot of people in academic economics have a severe problem matching theories up to reality.

The "imagine a perfectly spherical cow" thing, where it requires everything to be lined up exactly right to make sense, but in reality, very little works that way.

A lot of people with economics degrees don't really seem to understand a lot of the context. Which seems to be why so many people have austerity economics exactly backwards.

That's because economics also has some ideological bents to their schools even if they don't realise it.

Although most of us lean away from neoliberal capitalism and towards keynesianism, socialism or anarchism, our manner of understanding economics is also driven by our experiences towards what each of us considers a proper model.

Like, for instance, I support protectionism and neo-mercantilism along with keynesianism because of my background, but I'm also aware that those two first policies can carry the weight of nationalism and nativism so they are double-edged swords that have to be handled carefully.

Edited by raziel365 on Jun 3rd 2022 at 8:50:00 AM

And thus, if the economics profession cannot present a unified front, how are laymen supposed to know which theories to believe?

That should be the job of the World Bank and the International Fund, but they also went on-board with the neoliberal wave so it's unfortunately up to trial and error to some degree.

After remote-work ultimatum, Musk reveals plan to cut 10% of Tesla jobs: Musk announces hiring freeze and job cuts, has "super bad feeling" about economy.

Methinks Musk is projecting a little. I think the "super bad feelings" have more to do with his Twitter deal and his Tesla stock than with the general economy. Never My Fault at its finest.

I hope this anti-working from home sentiment doesn't become a trend. The CEO of my company is also against it, though not to the extreme of Musk (he hates that Fridays are always quiet days in the office, for one thing).

Edited by Redmess on Jun 5th 2022 at 9:38:22 PM

A lot of anti-work-from-home sentiments come from those who consider office socialization an important perk of their jobs.

We do already have set office days twice a week where everyone tries to work in the office to account for that. Our CEO seems to be more concerned about appearances, especially to customers. He seems to believe a quiet office signals that people are not hard at work.

, Some CE Os/managers also just want to micromanage their employees, I imagine. Or in really twisted cases, they want to make sure that their victims can't avoid harassment (sexual or otherwise) by staying home.

I mean, there is some academia out there suggesting that in-person office work is vastly better for knowledge transfer. I'm a proponent of WFH, and some places (like the one I'm contracting with until the end of the month) are taking advantage by reducing the amount of office space they rent, but let's not pretend that WFH doesn't have its costs associated with it.

I think Musk is being a capital D Douchebag, but that has more to do with Musk being Musk than WFH being good or bad.

I think a hybrid of both would be very reasonable. Especially since, by his own admission, our Benelux department has done absolutely amazing work in the past few years, while working from home, I would add.

I think a combination of micromanagement and optics is more than sufficient of an explanation. We're not the sort of company that tolerates any sort of harassment.

Reminder that we have already been discussing this in the Electric Vehicles thread. It is preferable to keep conversations in one place, unless we want to discuss different aspects of a complex issue. For example, in this thread we could look at the relative value of office work vs. remote work, but the specific application of the debate to Tesla would go in the EVs topic.

Edited by Fighteer on Jun 5th 2022 at 9:19:26 AM

I think it's really smart for companies in general to examine working from home and having it as an option if possible. A lot of businesses aren't viable for working from home (my particular job involves a lot of non-digitized files from over the last 50 years, so I can't work from home and do my job properly) but for office jobs, there's generally not much reason to mandate constant working in the office. Having an office day every week makes sense, but that might require people to admit that a lot of meetings are pretty superfluous and that a lot of people actually work better when they're able to just get on with their jobs without needing to worry about social interactions.

TBH I miss some of the social interactions with my co-workers. Teams meetings can't compete with talking to someone at the next cubicle, hanging out with them at lunch, or saying hi on an afternoon walk around the building. I'm more sedentary at home, more socially isolated, and I do sometimes feel less motivation to get work done. But I am also not in a hurry to go back.

Obviously, everyone has their own experiences, which is part of why working from home is a valuable option for companies to present if it is reasonable.