2011년 5월 29일 일요일

A short excerpt: A centrist proclamation

(...)

The centrism we describe is not a prescription that is intended to persuade readers away from their beliefs. We are analysts and not cult prescribers. It is not ideology that breeds centrism as our theme. We sift facts and theories to determine the consequences of Hayek-Friedman libertarianism or Marx-Lenin bureaucratic communism. All readers are free to make up their minds about best ethics and value judgments.

Having surveyed the terrain, this is our reading: Economic history confirms that neither unregulated capitalism nor overregulated central planning can organize a modern society effectively.

(...)

What exactly was the road to serfdom that Hayek and Friedman warned us against? They were arguing against social security, a minimum wage, national parks, progressive taxation, and government rules to clean up the environment or slow global warming. People who live in high-income societies support these programs with great majorities. Such mixed economies involve both the rules of law and the limited liberty to compete. 

(...)

(...) We see that unfettered capitalism has generated painful inequalities of income and wealth, and that supply-side fiscal doctrines have produced large government deficits. We observe that the major innovations of modern finance, when operating in an unregulated system, have produced trillions of dollars of losses and led to the ruin of many venerable financial institutions.

Only by steering our societies back to the limited center can we ensure that the global economy returns to full employment where the fruits of progress are more equally shared.

... Out of the first page titled as  “A Centrist Proclamation” in 
ECONOMICS whose authors are PAUL A. SAMUELSON and WILLIAM D. NORDHAUS 
published as its 19th edition in 2010.

[These beginning comments marked as written by  Paul A. Samuelson in Feb. 2009]

...

[And their words continue in PREFACE:]

(...) People are asking, Will the 21st century repeat the successes of the last century? Will the affluence of the few spread to poor countries? Alternatively, will the four horsemen of the economic apocalypseㅡfamine, war, environmental degradation, and depressionㅡspread to the North? Do we have the wisdom to reshape our financial systems so that they can continue to provide the investments that have fueled economic growth up to now? And what should we think about environmental threats such as global warming?

These are ultimately the questions we address in this edition of ECONOMICS.

Growing Role of Markets

You might think that prosperity would lead to a declining interest in economic affairs, but paradoxically an understanding of the enduring truths of economics has become even more vital in the affairs of people and nations. Those who remember history recognize that the crises that threatened financial markets in the 21st century were the modern counterparts of banking panics of an earlier era.

(...) Developing countries like China and Indiaㅡtwo giants that relied heavily on central planning until recentlyㅡneed a firm understanding of the institutions of a market economy if they are to attain the living standards of the affluent. At the same time, there is growing concern about international environmental problems and the need to forge agreements to preserve our precious natural heritage. All the fascinating changes are part of the modern drama that we call economics.

ECONOMICS Reborn (...)

THE 19TH EDITION

(...) Our philosophy continues to emphasize six basic principles that underlie earlier editions and this revision:

1. The Core Truths of Economics. (...) Microeconomic concepts such as scarcity, efficiency, the gains from specialization, and the principle of comparative advantage will be crucial concepts as long as scarcity itself exists. In macroeconomics, we emphasize the two central approaches: Keynsian economics to understand business cycles, and the neoclassical growth model to understand longer-term growth trends. Within these frameworks, established approaches such as consumption function take place alongside new developments in financial macroeconomics.

2. Innovations in Economics. (...) Among the important innovations we survey is the application of economics to our environmental problems through emissions-trading plans.  We explain how behavioral economics has changed views of consumer theory and finance. One of the most important innovations for our common future is dealing with global public goods like climate change, and we analyze new ways to deal with international environmental problems, including approaches such as the Kyoto Protocol. We must also track innovations in policy, such as the changing approach to monetary policy in the Federal Reserve.

3. Small Is Beautiful. Economics has increased its scope greatly over the half-century.  (...) But at its core, economics is the science of choice. That means that we, as authors, must choose the most important and enduring issues for this text. In a survey, as in a meal, small is beautiful because it is digestible.

Choosing the subjects for this text required many hard choices. To select these topics, we continually survey teachers and leading scholars to determine the issues most critical for an informed citizenry and a new generation of economists. (...) At every stage, we asked whether the material was, as best we could judge, necessary for a student's understanding of the economics of the 21st century. (...) The result of this campaign is a book that has lost more than one-quarter of its weight in the last few editions and has trimmed three chapters for this edition. Marxian economics, advanced treatment of general equilibrium, regulatory developments, and the lump-of-labor fallacy have been trimmed to make room for modern financial theory, real business cycles, and global public goods.

4. Policy Issues for Today. (...) Environmental economics helps students understand externalities (...) analyzes different approaches to making human economies compatible with natural systems. New examples bring the core principles of microeconomics to life.

A second area of central importance is financial and monetary economics. We have completely revised our treatment here. Previous treatment emphasized the quantity of money as the prime channel through which the central bank influences the economy. This approach no longer reflects the reality of a modern financial system. Today, the Fed exercises its policies by targeting the short-term interest rate and providing liquidity to financial markets. With the 19th edition, we fully incorporate these changes in three central chapters.

5. Debates about Globalization. The last decade has witnessed pitched battles over the role of international trade in our economies. Some argue that "outsourcing" is leading to the loss of thousands of jobs to India and China. Immigration has been a hot-burner issues, particularly in communities with high unemployment rates. Whatever the causes, the United States was definitely faced with the puzzle of rapid output growth and a very slow growth in employment in the first decade of the 21st century.

One of the major debates of recent years has been over "globalization," which concerns the increasing economic integration of different countries. Americans have learned that no country is an economic island. Immigration and international trade have profound effects on the goods that are available, the prices we pay, and the wages we earn. Terrorism can wreak havoc on the economy at home, while war causes famines, migration, and reduced living standards in Africa. No one can fully understand the impact of growing trade and capital flows without a careful study of the theory of comparative advantage. We will see how the flow of financial capital has an enormous influence on trading patterns as well as understand why poor countries like China save while rich countries like the United States are borrowers. The 19th edition continues to increase the material devoted to international economics and the interaction between international trade and domestic economic events.

6. Clarity. Although there are many new features in the 19th edition, the pole star for our pilgrimage for this edition has been to present economics clearly and simply. Students enter the classroom with a wide range of backgrounds and with many preconceptions about how the world works. Our task is not to change student's values. Rather, we strive to help students understand enduring economic principles so that they may better be able to apply themㅡto make the world a better place for themselves, their families, and their communities. Nothing aids understanding better than clear, simple exposition. We have labored over every page to improve this survey of introductory economics.  (...)

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