320 Years of History
Gold Member
- Nov 1, 2015
- 6,060
- 822
The economic models of the past are inadequate to the times.
Economic models and theories developed and tested in the past are just fine. Indeed, what we observe today is precisely what those models and theories predict. It's how the models and theories are being applied in our age to develop policy that is the problem.
Evolution, like economic behavior (how humans behave in the face of scarcity and and thus having to make choices about the acquisition and use of resources), has worked exactly the same way for hundreds of millions of years. Evolution has produced different outcomes over the years, creatures, and the Theory of Evolution (ToE) describes how evolution does so, but evolution itself hasn't changed, and time and time again we see that the ToE does indeed accurately describe how evolution works.
The same concept is so with economics. Economically driven behavior is no different now than it was at the dawn of humanity. Time and time again, we see that the theories of economics accurately predict outcomes observed.
For example, economists in the 1990s noted that, say, NAFTA would keep prices for goods covered by NAFTA lower than they would be were they not party to a free trade agreement. It was politicians who, for whatever reason -- likely to curry favor among the electorate -- indicated it'd create, or at least not jeopardize, jobs, not economists. Economists knew better and in any economics textbook, anyone could have discerned as much, so basic is the principle of free trade. And what do researchers today observe? That imported goods drive prices down while maintaining access to high quality goods.