Lars P. Syll

That’s how it goes when you prefer to read Ayn Rand A couple of years ago the former chairman of the Fed, Alan Greenspan, wrote in an article in the Financial Times, speaking of the continually increasing demands for stronger regulation of banks and finance: Since the devastating Japanese earthquake and, earlier, the global financial tsunami, governments have been pressed to guarantee their populations against virtually all the risks exposed by those...

Why the euro divides Europe The ‘European idea’—or better: ideology—notwithstanding, the euro has split Europe in two. As the engine of an ever-closer union the currency’s balance sheet has been disastrous. Norway and Switzerland will not be joining the eu any time soon; Britain is actively considering leaving it altogether. Sweden and Denmark were supposed to adopt the euro at some point; that is now off the table. The Eurozone itself is split between...

A gender tax to address gender pay gap In dem Café Handsome Her in Melbourne, Australien, können Kaffee und Snacks für männliche Gäste mehr kosten – wenn sie wollen. Und das hat gute Gründe. Die Inhaberinnen des Cafés im angesagten Stadtteil Brunswick bitten männliche Kunden, rund 18 Prozent mehr zu zahlen, damit sie „das geschlechtsspezifische Lohngefälle reflektieren“. In Australien verdienen Männer durchschnittlich 17,7 Prozent mehr für ihre...

Krugman and Mankiw on loanable funds — so wrong, so wrong A couple of years ago — in a debate with James Galbraith and Willem Buiter — Paul Krugman made it perfectly clear that he was a strong believer of the ‘loanable funds’ theory. Unfortunately, this is not an exception among ‘New Keynesian’ economists. Neglecting anything resembling a real-world finance system, Greg Mankiw — in his intermediate textbook Macroeconomics — more or less equates finance to...

The loanable funds hoax The loanable funds theory is in many regards nothing but an approach where the ruling rate of interest in society is — pure and simple — conceived as nothing else than the price of loans or credits set by banks and determined by supply and demand — as Bertil Ohlin put it — “in the same way as the price of eggs and strawberries on a village market.” It’s a beautiful fairy tale, but the problem is that banks are not barter institutions...

DSGE ​​models — worse than useless The main point of this book is to serve as an antidote to the intellectual poison of the erroneous’veil of ignorance’ aphorism … Accordingly [it] rejects as erroneous the standard macroeconomic model, whose assumptions have been built into DSGE models. Among other conceptual absurdities, such as the assumption that economic actors consist of identical omniscient ‘rational agents’ all of whom have perfect information about...

If bonus or “incentive pay” schemes work so well for senior executives and bankers, why does everyone not get them? The conventional answer is that a bonus scheme or incentive plan will indeed encourage the recipients to make more money for the shareholders or clients on whose behalf they act … A classic paper on the “principal-agent problem” … by Bengt Holmstrom and Paul Milgrom pointed out that the conventional answer makes the mistake of assuming that jobs are simple and...

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How rigged markets make the rich richer Markets are never just given. Neither God nor nature hands us a worked-out set of rules determining the way property relations are defined, contracts are enforced, or macroeconomic policy is implemented. These matters are determined by policy choices. The elites have written these rules to redistribute income upward. Needless to say, they are not eager to have the rules rewritten — which means they also have no...

Former Swedish minister of finance showing off … Anders Borg, the former minister of finance in Sweden, shocked the guests at a party last weekend in the archipelago of Stockholm. According to sources, Borg exposed his penis, threw sexist slurs at female guests and threatened the host. ”I feel a lot of disappointment and regret my behaviour”, Borg wrote in a Facebook post. A party in the archipelago of Stockholm last Friday got out of hand. One of the...