Four Basic Truths of Macroeconomics • Hacker News Board

Re: Four Basic Truths of Macroeconomics

#201

Post by DoreenMichele » Tue, Feb 23, 2021, 10:32 AM UTC

p1necone wrote: post #35

xnx wrote: post #7

"I also think measures of price inflation are almost useless over the long run, because a person today consumes a very different bundle of goods than one in, say, 1950." I agree with this wholeheartedly. How do we put a value on the fact that, for the cost of no more than a day's labor, most in the US can have a handheld device with access to nearly the sum total of the world's knowledge and entertainment? No one, at…

Sure you can have the entire worlds information and entertainment at your fingertips with a $50 smartphone, but if you can't afford to have a roof over your head I'd argue the smartphone is irrelevant. I don't think we should be including basic necessities alongside improvements in entertainment in the same statistic, because it will just hide problems.

I spent nearly 6 years homeless. I earned money online to help keep myself fed, among other things.

A cheap phone is vastly cheaper than rent. It's tiresome to see people online act like "If only you would not extravagantly piss away $7/month on a phone, you would be back in housing!!!"

Internet access and a phone number are essential for job hunting and an earned income is a common means to get off the street. You can also do online banking and other essential things much easier than dealing with going in person on foot to the bank and so forth.

Re: Four Basic Truths of Macroeconomics

#202

Post by bondarchuk » Tue, Feb 23, 2021, 10:33 AM UTC

Tangentially related but I'll take this opportunity to ask. One thing I have never understood is the idea that a weak currency is good for exports, because it makes goods cheaper (more competitive) for the foreign buyer. It seems like it would be very simple for exporting companies to adjust their prices instantly to counteract any weakening of the currency. If not, they are essentially lowering their prices. Alternatively, why can't exporters just lower their prices without weakening the entire currency?

Re: Four Basic Truths of Macroeconomics

#203

Post by brazzy » Tue, Feb 23, 2021, 10:35 AM UTC

cambalache wrote: post #189

brazzy wrote: post #170

Earlier quoted context omitted.

> but if you can't afford to have a roof over your head I'd argue the smartphone is irrelevant. I'm pretty sure that the vast majority of homeless people would disagree vehemently. Not only does smartphone make it much easier to find a job and get back to the point where you can afford a roof over your head, it allows you to stay in touch with people you care about, people who may help you out now and then. And it gi…

I dont know what homeless people you do know (I guess the number is zero) but here on planet earth 99.99% of poor/homeless people would prefer a roof over their heads than a smart-phone. Well, everybody with a working brain would choose the house.

I don't know what gave you the silly idea that I was saying people would prefert a smartphone over a permanent home. That is not the choice people have to make. A smartphone does not cost hundreds of dollars per month. And I'm pretty sure that you don't know any homeless people either if you think they'd give up their phone for a few nights of shelter (which is what it might realistically buy).

I was disagreeing with the statement "if you can't afford to have a roof over your head I'd argue the smartphone is irrelevant".

Contrary to that, if you do not have a home, a smartphone is extremely useful and valuable. In the hypothetical sitation that you find yourself homeless with nothing except clothes and $100, a cheap smartphone is absolutely the best possible use of that money.

Re: Four Basic Truths of Macroeconomics

#204

Post by bondarchuk » Tue, Feb 23, 2021, 10:36 AM UTC

DoreenMichele wrote: post #201

p1necone wrote: post #35

Earlier quoted context omitted.

Sure you can have the entire worlds information and entertainment at your fingertips with a $50 smartphone, but if you can't afford to have a roof over your head I'd argue the smartphone is irrelevant. I don't think we should be including basic necessities alongside improvements in entertainment in the same statistic, because it will just hide problems.

I spent nearly 6 years homeless. I earned money online to help keep myself fed, among other things. A cheap phone is vastly cheaper than rent. It's tiresome to see people online act like "If only you would not extravagantly piss away $7/month on a phone, you would be back in housing!!!" Internet access and a phone number are essential for job hunting and an earned income is a common means to get off the street. You c…

Nobody's saying that you shouldn't spend money on a phone and save it for housing. Rather the opposite. People are saying that literally everything except housing (and healthcare) is so cheap compared to housing (and healthcare) that inflation measures (which typically exclude housing and healthcare) are pretty much useless.

Re: Four Basic Truths of Macroeconomics

#205

Post by DoreenMichele » Tue, Feb 23, 2021, 10:39 AM UTC

bondarchuk wrote: post #204

DoreenMichele wrote: post #201

Earlier quoted context omitted.

I spent nearly 6 years homeless. I earned money online to help keep myself fed, among other things. A cheap phone is vastly cheaper than rent. It's tiresome to see people online act like "If only you would not extravagantly piss away $7/month on a phone, you would be back in housing!!!" Internet access and a phone number are essential for job hunting and an earned income is a common means to get off the street. You c…

Nobody's saying that you shouldn't spend money on a phone and save it for housing. Rather the opposite. People are saying that literally everything except housing (and healthcare) is so cheap compared to housing (and healthcare) that inflation measures (which typically exclude housing and healthcare) are pretty much useless.

This is the line I was responding to:

but if you can't afford to have a roof over your head I'd argue the smartphone is irrelevant.

A phone and tablet and internet access were essential to my ability to cope and eventually get back into housing. They aren't irrelevant.

If you want to argue we need to do a much better job of making housing something people can afford, I totally agree. If you want to argue that homeless people just are supposed to entirely cease to exist and not care about anything people in homes care about or something....no. That absolutely doesn't work as an argument.

The internet is a really massively helpful thing for people who are homeless.

Re: Four Basic Truths of Macroeconomics

#206

Post by notahacker » Tue, Feb 23, 2021, 10:46 AM UTC

RobertoG wrote: post #197

OrderlyTiamat wrote: post #192

Earlier quoted context omitted.

> in a very specific framework that is never challenged. I'm not trying to be glib here, but that seems to fit with the intent and title of the piece, does it not?

Yes, but that's my point too. The framework is never challenged. He says "The first and most important thing [..] is that a strong negative shock to demand [..] leads to a loss of output and employment" Fair enough. Not even a comment of what causes the demand shock, but it's OK. And then he jumps to: " Nominal wages are sticky, for a complex mix of sociological reasons, and so employers do not always respond to lowe…

It's hardly surprising that a short news piece summarising the conclusions of an entire field of study does not engage itself with challenging the frameworks used.

Nominal wage stickiness, recessions etc has been the subject of an enormous amount of study (and wage stickiness is sufficient, but not actually necessary to cause recessions). And the exception to the rule that increasing the money supply is dealt with by the very next sentence from the one you've singled out as a gotcha. Liquidity traps were already baked into the theory.

Imagine if somebody dismissed the field of computer science as a distraction from database problems based on a blogger listing CAP theorem as one of its essential conclusions

Re: Four Basic Truths of Macroeconomics

#207

Post by bondarchuk » Tue, Feb 23, 2021, 10:48 AM UTC

DoreenMichele wrote: post #205

bondarchuk wrote: post #204

Earlier quoted context omitted.

Nobody's saying that you shouldn't spend money on a phone and save it for housing. Rather the opposite. People are saying that literally everything except housing (and healthcare) is so cheap compared to housing (and healthcare) that inflation measures (which typically exclude housing and healthcare) are pretty much useless.

This is the line I was responding to: but if you can't afford to have a roof over your head I'd argue the smartphone is irrelevant. A phone and tablet and internet access were essential to my ability to cope and eventually get back into housing. They aren't irrelevant. If you want to argue we need to do a much better job of making housing something people can afford, I totally agree. If you want to argue that homeles…

Seems to me like we are secretly all in agreement but people are misinterpreting p1necone. Whatever.

Re: Four Basic Truths of Macroeconomics

#208

Post by michaelt » Tue, Feb 23, 2021, 10:50 AM UTC

Leparamour wrote: post #174

brazzy wrote: post #170

Earlier quoted context omitted.

> but if you can't afford to have a roof over your head I'd argue the smartphone is irrelevant. I'm pretty sure that the vast majority of homeless people would disagree vehemently. Not only does smartphone make it much easier to find a job and get back to the point where you can afford a roof over your head, it allows you to stay in touch with people you care about, people who may help you out now and then. And it gi…

Can homeless people afford data plans? Luckily I haven't been homeless yet, but there were times when I was too poor to have enough phone credit for internet or even regular calls. Granted, there are places that offer free wifi but only with an order if you are a paying customer, which I think most homeless people aren't.

A data plan's a heck of a lot cheaper than rent.

Re: Four Basic Truths of Macroeconomics

#209

Post by haakonhr » Tue, Feb 23, 2021, 10:55 AM UTC

bondarchuk wrote: post #202

Tangentially related but I'll take this opportunity to ask. One thing I have never understood is the idea that a weak currency is good for exports, because it makes goods cheaper (more competitive) for the foreign buyer. It seems like it would be very simple for exporting companies to adjust their prices instantly to counteract any weakening of the currency. If not, they are essentially lowering their prices. Alterna…

I think a first-order explanation (that probably breaks down quickly) is that often many fixed costs are paid in the local currency, such as salaries and rent. To be profitable (in the local currency that they care about) they need to take a certain price, otherwise they're operating at a loss. Currency fluctuations affect all these factors equally so that in the end your product is cheaper for the importer. The salaries and other costs are of course lower as well when the local currency is exchanged to whatever currency the trade is taking place in.

The flip side is of course when you rely on imports to produce your exports (natural resources for example)

Re: Four Basic Truths of Macroeconomics

#210

Post by scatters » Tue, Feb 23, 2021, 11:36 AM UTC

bondarchuk wrote: post #202

Tangentially related but I'll take this opportunity to ask. One thing I have never understood is the idea that a weak currency is good for exports, because it makes goods cheaper (more competitive) for the foreign buyer. It seems like it would be very simple for exporting companies to adjust their prices instantly to counteract any weakening of the currency. If not, they are essentially lowering their prices. Alterna…

Yes, exporters can choose to raise their prices in the local currency. However, this comes with some administrative overhead and is visible to the buyer, hence prices tend to be sticky. Alternatively, they can price in dollars in which case they take on currency risk in the other direction but get the full benefit of a fall in their local currency.

> Alternatively, why can't exporters just lower their prices without weakening the entire currency?

Because then they wouldn't be able to make a profit after paying their local employees and suppliers.