Brilliant Essay on Economics, Currency & Govt

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    By one of my favourite writers. He's a gem, this guy:There are several economic models and political memes that rely on an underlying belief in the natural efficiency and goodness of 'free trade' and 'efficient markets.' One can question whether these ideas promoted certain behaviours, or if certain parties promoted these theories to serve as justification for their policy objectives.

    Whatever the case may be, let's take a look at the theories that seem to underpin the virtue of 'free trade,' meaning international commerce with very light national regulations and a centralized semi-autonomous authority as arbiter.

    One of the theories in favor of free trade is the idea of comparative advantage, that is, that one country might have a natural advantage which they can exploit for their own benefit and the general benefit of the world. I am sure we all learned this in business school. I myself was quite a fan of Michael Porter in my day.

    This theory is a universalisation of the idea that the naturally gifted pottery maker, for example, has an inherent talent that can be exploited, and can create and exchange pots for food, let's say, from a farmer who has the advantage of owning suitable farm land and has the talent and tools to exploit it.

    Makes common sense does it? Everyone does what they do best, and through the free exchange of products the aggregate good is increased. A nice simplistic maxim that underpins a broad economic and social philosophy, such as 'from each according to their abilities and to each according to their needs.'

    The fallacy that is repeated over and over by the non-scientific thinker (like too many economists and politicians for example) who use these simple examples and sayings is that one can extend things that might make sense anecdotally into general, almost universal principles writ large on the face real world, or more properly OVER the face of the real world, that at the end have little real fundamental connection with reality and the expected outcomes.

    This was Mandelbrot's great criticism of the neo-liberal school of economics, notably the Chicago School, for example. Their broad assumptions crushed the reality out of the math, and the application of their theory made the markets inherently unstable by miscalculating the risks which were allowed to grow to enormous levels, and then crash at the under-expected event, colloquially known as 'a black swan.'

    There is some validity to this. Some nations, for example, are blessed with great natural resources such as coal and oil, and they can sell these items to other countries and regions in exchange for items like food, for example.

    But like most efficiency arguments, most notably the efficient market hypothesis, these ripples in distribution or market anomalies are quickly exhausted, and in the classic impetus and peril of successful capitalism, the player start to create monopolies and other artificial advantages, such as frauds, which they can exploit more fully.

    So for example, a nation such as China can devalue its currency substantially in the 1990's against the world's reserve currency, and thereby set up a set of artificial import barriers and export subsidies, simply by manipulating their currency.More:

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    Writing an essay is important for a student because it will help him complete the essay and assignment. It's about improving your learning skills.

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    A fascinating study, as I think the topic is very important for our present time.
    The world is changing, the world order is changing, perhaps even a change in the world's reserve currency. I think in such a profound topic, one essay is not enough. My friend, when he was graduating, majoring in economics, faced the problem of writing his dissertation on the reserve currency.
    He spent a lot of time, but he did not understand it himself. But it was good that he found a way out of the deadlock, he took help from those guys who make thebest dissertationsin the Western hemisphere. The result was better than he expected.

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