I am skeptical about armchair Econ-101 reasoning unless it is also supported by empirical data. Many things can go wrong. (Also, it has a flavor of “map over territory”.) For example:
The models are based on some assumptions, which is necessary to create models, but in real life the assumptions may be wrong so much that it changes the outcome. The players are supposed to be 100% rational and all-knowing; the transactions are supposed to be completely friction-less; it is assumed that the market is the only game in town. So when this perfect market notices that e.g. there is an opportunity to sell more food, -- POOF! -- and there is instantly a new farm with food to sell. In reality, people may be slow to notice, risk-averse in face of uncertainty, they may be tons of bribes or paperwork necessary to start a new farm, growing the food may require a lot of time, and if too many food producers happen to belong to a minority ethnicity it might result in their genocide. When Econ 101 says “there shall be a balance”, it usually does not specify how long do we have to wait for its coming: days, weeks, years, or centuries? (“The market can stay irrational longer than you can stay solvent.” In case of Africa, longer than you and your clan can survive.)
It is easy to notice some relevant forces, and miss others. (The archetypal example.)
Seems to me that some armchair conclusions can be weakened or even reverted simply by reasoning “one level higher”. Is increasing human capital a good thing? Sounds uncontroversial, ceteris paribus, but suppose I wave a magical wand and every African magically acquires a PhD in anti-malaria net making. I would still suppose they would have a problem to feed their families. And I wouldn’t be too surprised to learn afterwards that there are still not enough anti-malaria nets produced.
Sorry for providing a fully general counter-argument. But this is exactly my point: with enough sophistication, you can make Econ-101 arguments either way. I have already seen a clever Econ-101 argument against the anti-malaria nets. What I need is a reality check.
I am skeptical about armchair Econ-101 reasoning unless it is also supported by empirical data. Many things can go wrong. (Also, it has a flavor of “map over territory”.) For example:
The models are based on some assumptions, which is necessary to create models, but in real life the assumptions may be wrong so much that it changes the outcome. The players are supposed to be 100% rational and all-knowing; the transactions are supposed to be completely friction-less; it is assumed that the market is the only game in town. So when this perfect market notices that e.g. there is an opportunity to sell more food, -- POOF! -- and there is instantly a new farm with food to sell. In reality, people may be slow to notice, risk-averse in face of uncertainty, they may be tons of bribes or paperwork necessary to start a new farm, growing the food may require a lot of time, and if too many food producers happen to belong to a minority ethnicity it might result in their genocide. When Econ 101 says “there shall be a balance”, it usually does not specify how long do we have to wait for its coming: days, weeks, years, or centuries? (“The market can stay irrational longer than you can stay solvent.” In case of Africa, longer than you and your clan can survive.)
It is easy to notice some relevant forces, and miss others. (The archetypal example.)
Seems to me that some armchair conclusions can be weakened or even reverted simply by reasoning “one level higher”. Is increasing human capital a good thing? Sounds uncontroversial, ceteris paribus, but suppose I wave a magical wand and every African magically acquires a PhD in anti-malaria net making. I would still suppose they would have a problem to feed their families. And I wouldn’t be too surprised to learn afterwards that there are still not enough anti-malaria nets produced.
Sorry for providing a fully general counter-argument. But this is exactly my point: with enough sophistication, you can make Econ-101 arguments either way. I have already seen a clever Econ-101 argument against the anti-malaria nets. What I need is a reality check.