From Lars Syll
One way that inequality precipitates debt bubbles begins with “relative deprivation.” This concept concerns the discontent people feel when they compare their socio-economic status, measured by income, wealth, consumption, or other indicators of perceived economic welfare, with that of their richer counterparts. Economists have suggested several ways that this discontent may translate into indebtedness. One theory holds that people of a given income level may try to increase spending to match the higher consumption of those just above them. This in turn leads others just below the group in question to spend more, and so on, in what has been termed an “expenditure cascade.” Another theory focuses on the increased supply of high-status goods and services that flow into the

Oíche Chiúin, Stille Nacht, Silent Night

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The history of random walks

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Entertaining and informative at the same time. Great!
In case you know some Python you could try this little code snippet that yours truly wrote to simulate and plot a special kind of random walk called ‘Brownian motion.’

Andreas Cervenka och den svenska bostadsbubblan

Andreas Cervenka har i sin senaste bok försökt beskriva den svenska bostadsbubblan och vad som ytterst skapat den. Några av de orsaker han lyfter fram är:
♦ Riksbankens långvariga låg-räntepolitik som gjort det billigare för hushåll att låna pengar och därigenom också drivit upp efterfråga och pris på bostäder.
♦ De snabbt ökande bostadspriserna har lett till att svenska hushåll har bland de högsta skuldkvoterna i världen. Denna skuldsättning skapar en hög grad av sårbarhet för ekonomin om boräntorna stiger eller om bostadspriserna faller.
♦ Det svenska skattesystemet med kraftiga ränteavdrag och avsaknad av fastighetsskatt har gjort det billigare att äga bostäder och bidragit till stigande priser.
♦

Debunking the balanced budget superstition

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The balanced budget paradox is probably one of the most devastating phenomena haunting our economies. The harder politicians — usually on the advice of establishment economists — try to achieve balanced budgets for the public sector, the less likely they are to succeed in their endeavour. And the more the citizens have to pay for the concomitant austerity policies these wrong-headed politicians and economists recommend as “the sole solution.”

One of the most effective ways of clearing up this most serious of all semantic confusions is to point out that private debt differs from national debt in being external … A variant of the false analogy is the declaration that national debt puts an

Ernst Wigforss — konsten att häva en depression

I det senaste avsnittet av podden Vi bygger landet presenteras och diskuteras Ernst Wigforss bidrag till arbetarrörelsens kamp för full sysselsättning och den ekonomiska politiken.
Väl värt att lysssna på!
Ernst Wigforss kunde som Sveriges finansminister under stora delar av mellankrigstiden och de tidiga åren efter andra världskriget bidra till att omvandla Sverige till en modell för socialdemokratin genom sin innovativa ekonomiska politik. Hans ekonomiska tänkande var i mångt och mycket rotat i keynesianska principer redan innan dessa blivit allmänt accepterade i och med publiceringen av Keynes General Theory år 1936. Han insåg — liksom den så kallade Stockholmsskolan, med ekonomer som Erik Lindahl och

From Lars Syll
Pretending that the distribution of income and wealth that results from a long set of policy decisions is somehow the natural workings of the market is not a serious position …
Pretending that distributional outcomes are just the workings of the market is convenient for any beneficiaries of this inequality, even those who consider themselves liberal …
But we should not structure our understanding of the economy around political convenience. There is no way of escaping the fact that levels of output and employment are determined by policy, that the length and strength of patent and copyright monopolies are determined by policy, and that the rules of corporate governance are determined by policy. The people who would treat these and other policy decisions determining the

How inequality causes financial crises

One way that inequality precipitates debt bubbles begins with “relative deprivation.” This concept concerns the discontent people feel when they compare their socio-economic status, measured by income, wealth, consumption, or other indicators of perceived economic welfare, with that of their richer counterparts. Economists have suggested several ways that this discontent may translate into indebtedness. One theory holds that people of a given income level may try to increase spending to match the higher consumption of those just above them. This in turn leads others just below the group in question to spend more, and so on, in what has been termed an “expenditure cascade.” Another theory focuses on the increased

Cui honorem honorem — Gisèle Pelicot

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Income inequality and the saving glut of the rich

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Svensk penningpolitik — en intellektuell hönsgård

Om man i en demokrati skall överlåta viktiga beslut till experter bör detta bygga på att det faktiskt existerar en någorlunda säkerställd kunskap hos den kår av experter som skall fatta besluten. När det gäller penningpolitiken visar den omfattande debatten inom ekonomkåren att så inte är fallet. Man kan jämföra det rådande kunskapsläget inom penningpolitiken med en situation där man som förälder kommer med sin telning akut till sjukhuset och möts av fyra läkare varav två föreslår akut operation och två föreslår att man ska ge barnet en värktablett och åka hem.
Man kan jämföra det rådande kunskapsläget inom penningpolitiken med en situation där man som förälder kommer med sin telning akut till sjukhuset

From Lars Syll

It is a great fault of symbolic pseudo-mathematical methods of formalising a system of economic analysis … that they expressly assume strict independence between the factors involved and lose all their cogency and authority if this hypothesis is disallowed; whereas, in ordinary discourse, where we are not blindly manipulating but know all the time what we are doing and what the words mean, we can keep “at the back of our heads” the necessary reserves and qualifications and the adjustments which we shall have to make later on, in a way in which we cannot keep complicated partial differentials “at the back” of several pages of algebra which assume that they all vanish. Too large a proportion of recent “mathematical” economics are mere concoctions, as imprecise as the

Economics — a pseudo-analogy with physics

I also want to emphasise strongly the point about economics being a moral science. I mentioned before that it deals with introspection and with values. I might have added that it deals with motives, expectations, psychological uncertainties. One has to be constantly on guard against treating the material as constant and homogeneous in the same way that the material of the other sciences, in spite of its complexity, is constant and homogeneous. It is as though the fall of the apple to the ground depended on the apple’s motives, on whether it is worth while falling to the ground, and whether the ground wanted the apple to fall, and on mistaken calculations on the part of the apple as to how far it was from the

Panelsamtal om svensk finanspolitik

Clarté Lund bjuder in till en samtalsserie i tre delar om visionär ekonomi. Det första panelsamtalet berör ekonomisk politik och det nya omtalade balansmålet i det finanspolitiska ramverket. Varför fick vi inte ett underskottsmål och vad för konsekvenser får detta för ett Sverige med enorma investeringsbehov? Med hjälp av sakkunniga panelister kommer vi att fördjupa oss i ämnet och reda ut vad som står på spel.
MEDVERKANDE
Lars Pålsson Syll är professor i samhällskunskap på Malmö Universitet och är doktor i både ekonomisk historia och nationalekonomi. Pålsson Syll är engagerad i debatten kring det nya finanspolitiska ramverket och har i flera publikationer ifrågasatt neoklassiska antaganden som drivit den ekonomiska

Pretending that the distribution of income and wealth that results from a long set of policy decisions is somehow the natural workings of the market is not a serious position …
Pretending that distributional outcomes are just the workings of the market is convenient for any beneficiaries of this inequality, even those who consider themselves liberal …
But we should not structure our understanding of the economy around political convenience. There is no way of escaping the fact that levels of output and employment are determined by policy, that the length and strength of patent and copyright monopolies are determined by policy, and that the rules of corporate governance are determined by policy. The people who would treat these and other policy decisions determining the

Årets ‘Nobelpris’ i ekonomi — gammal skåpmat!

Bo Rothstein, seniorforskare i statsvetenskap vid Göteborgs universitet, har två invändningar mot att Kungl. Vetenskapsakademien delar ut 2024 års ekonomipris till den amerikanska forskartrion Daron Acemoglu, Simon Johnson och James A. Robinson. 

– Jag kan inte se att de har kommit med någonting teoretiskt nytt. Denna idé om institutionernas betydelse fick ju Douglass North ekonomipriset för redan för 31 år sedan

Hans andra invändning handlar om hur institutionell kvalitet och ekonomisk utveckling kopplas till demokrati.

– Många slår på trumman för att om vi bara får demokrati så kommer allt att lösa sig. Jag är rädd för här att det är otroligt populärt hos alla anslagsgivare och biståndsorganisationer

From Lars Syll
Economists have sometimes misled us with their belief that it is their job to tell “white lies” to scare the population into “behaving themselves.”
We think that is the wrong approach. This book trusts you, the reader, with that truth. We trust you to do what you can to spread the truth and to hold policymakers accountable.
The truth is that government faces political constraints. It faces resource constraints. It faces technological constraints.
But it does not, cannot, face financial constraints. Whatever is doable is financially affordable.
Take that idea and run with it.

Germany’s ‘debt brake’ — a ridiculously bad idea

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Pourquoi la dette publique n’est pas un problème.

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Une des erreurs fondamentales dans le débat actuel sur la dette publique et le déficit budgétaire est de ne pas distinguer entre différents types de dettes. Même s’il est vrai qu’à l’échelle macroéconomique, les dettes et les actifs s’équilibrent nécessairement, il est loin d’être insignifiant de savoir qui détient les actifs et qui supporte les dettes.
Pendant longtemps, on a hésité à augmenter la dette publique, car les crises économiques sont encore largement perçues comme résultant d’un excès de dettes. Mais c’est précisément ici que la répartition des dettes entre en jeu. Si l’État, en période de récession, ’emprunte’ de l’argent pour investir dans les infrastructures

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Films can touch us in many different ways. Many are little more than pure time-fillers and escapism. But there are also a few — very few — films that truly mean something. The ones that deeply penetrate our souls and shake us to our core.
Kjell-Åke Andersson’s adaptation of Göran Tunström’s masterpiece The Christmas Oratorio — with divinely gifted music by Stefan Nilsson — is one such film. One of the saddest and almost unbearably moving films I know. But perhaps also the most beautiful. A film about the infinite strength and power of love.

It is a great fault of symbolic pseudo-mathematical methods of formalising a system of economic analysis … that they expressly assume strict independence between the factors involved and lose all their cogency and authority if this hypothesis is disallowed; whereas, in ordinary discourse, where we are not blindly manipulating but know all the time what we are doing and what the words mean, we can keep “at the back of our heads” the necessary reserves and qualifications and the adjustments which we shall have to make later on, in a way in which we cannot keep complicated partial differentials “at the back” of several pages of algebra which assume that they all vanish. Too large a proportion of recent “mathematical” economics are mere concoctions, as imprecise as the initial

The history of econometrics

There have been over four decades of econometric research on business cycles …
But the significance of the formalization becomes more difficult to identify when it is assessed from the applied perspective …
The wide conviction of the superiority of the methods of the science has converted the econometric community largely to a group of fundamentalist guards of mathematical rigour … So much so that the relevance of the research to business cycles is reduced to empirical illustrations. To that extent, probabilistic formalisation has trapped econometric business cycle research in the pursuit of means at the expense of ends.
The limits of econometric forecasting have, as noted by Qin, been critically pointed out many times

I alla moderna människors liv behövs det tid för andhämtning och reflektion. Och ibland — när alla möjliga och omöjliga måsten och krav från omgivningen bara blir för många och högljudda — kan det vara skönt att dra sig undan lite grand och slå av på takten för en stund.
Alla har vi väl olika sätt att göra det på. Själv brukar jag gå in på SVT Play och titta på Gubben i stugan — Nina Hedenius underbara dokumentärfilm om den pensionerade skogsarbetaren Ragnars liv i Dalarnas finnskogar.
Enkelt. Vackert. En lisa för själen.

Wir sparen uns zu Tode: Gegen die Schuldenbremse

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Viele Politiker und mediale ‘Experten’ scheinen (oder wollen) nicht verstehen, dass ein entscheidender Unterschied zwischen privaten und öffentlichen Schulden besteht. Wenn eine Einzelperson versucht zu sparen und ihre Schulden zu reduzieren, kann das durchaus vernünftig sein. Aber wenn alle dies tun, sinkt die gesamtwirtschaftliche Nachfrage, und das Risiko einer steigenden Arbeitslosigkeit wächst.
Eine einzelne Person muss ihre Schulden immer zurückzahlen. Aber ein Staat kann seine alten Schulden jederzeit mit neuen Schulden begleichen. Der Staat ist keine Einzelperson. Staatsschulden sind nicht wie private Schulden. Die Schulden eines Staates sind im Wesentlichen eine Schuld an sich

Die hinkende Logik hinter der Schuldenbremse

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Uncertainty, learning, and rational expectations

The rational expectations hypothesis presupposes — basically for reasons of consistency — that agents have complete knowledge of all of the relevant probability distribution functions. When trying to incorporate learning in these models — trying to take the heat of some of the criticism launched against it up to date — it is always a very restricted kind of learning that is considered. A learning where truly unanticipated, surprising, new things never take place, but only rather mechanical updatings — increasing the precision of already existing information sets — of existing probability functions.
Nothing really new happens in these ergodic models, where the statistical representation of learning and

Time is on my side

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Top 100 Economics Blogs

Mainstream economics has sadly made economics increasingly irrelevant to the understanding of the real world. Trying to contribute to making economics a more realist and relevant science, yours truly launched this blog in March 2011.
Now, thirteen years later and with millions of page views, yours truly’s blog is ranked on Top 100 Economics Blogs.

I am — of course — truly awed, honoured and delighted.

Being a class mongrel

We were working class, and you don’t lose that. Later on, I bolted on middle classness but I think the working-class thing hasn’t gone away and it never will go away. Quite a few of my interactions and responses are still the responses I had when I was 18 or 19. And the other things are bolted on and it is a mix. It is what it is, and a lot of people are like that. I’m a class mongrel.
Melvyn Bragg

Most people think of social mobility as something unproblematically​ positive. Sharing much the same experience as the one Bragg describes, it is difficult to share that sentiment. Becoming — basically through educational prowess — part of the powers and classes that for centuries have oppressed and belittled the working classes can be

I sin senaste bok — Superrika och jämlika — argumenterar Daniel Waldenström för att vi i Sverige idag är mer jämlika än någonsin. De flesta andra jämlikhetsforskare delar inte denna uppfattning. Vad stämmer egentligen? I dagens Starta Pressarna gästades Daniel Suhonen av Daniel Waldenström och medie- och kommunikationsvetaren Axel Vikström.

I Tidningen Näringslivet kunde vi för några år sedan läsa en intervju med Waldenström, där denne gång på gång bagatelliserade den ökade inkomst- och förmögenhetsklyftan i Sverige under de senaste 40 åren. Enligt Waldenström har efter 00-talet ”inkomstskillnaderna faktiskt inte ökat särskilt mycket alls.” De som påpekar att ojämlikheten de facto ökat kraftigt även de senaste två decennierna, sysslar enligt Waldenström bara med