Real-World Economics Review

from Dean Baker For the last quarter century, those of us hoping we could slow global warming were anxious to see a quick conversion to electric vehicles (EVs). If we could get most people using electric vehicles, and have the energy coming from clean sources, we could radically reduce greenhouse gas emissions. The problem was that EVs were considerably more expensive than their conventional counterparts. There were savings in operation due to lower maintenance, and the electricity...

from Dean Baker The New York Times reported that Jim Simons, the founder of Medallion hedge fund, died this week. As a result of his fund, according to the article, he accumulated more than $20 billion over his lifetime. Simons was a math genius who had made many important breakthroughs in various areas of math. Back in the 1980s, he decided that he could make far more money on Wall Street than in doing math at a university. He thought that with sophisticated algorithms and cutting-edge...

from Peter Radford You can’t fight a war without understanding your enemy.  That’s an adage as old as war itself.  Which means it’s very old. Joe Stiglitz doesn’t understand his enemy. Now, that’s an odd thing to say bout someone who’s worldview is hardly a secret.  Stiglitz has given it his best shot for decades.  He’s one of the few big name economists worth reading on a regular basis.  But that doesn’t mean he always says things that add up. He’s a roll lately and his latest book is...

from Lars Syll It’s hard not to agree with DeMartino’s critique of mainstream economics — an unethical, irresponsible, and harmful kind of science where models and procedures become ends in themselves, without consideration of their lack of explanatory value as regards real-world phenomena. Many mainstream economists working in the field of economic theory think that their task is to give us analytical truths. That is great — from a mathematical and formal logical point of view. In...

Planet is headed for at least 2.5C of heating with disastrous results for humanity, poll of hundreds of scientists finds 

from C. P. Chandrasekhar and Jayati Ghosh Once again, low and middle income countries (LMICs) are at the brutal receiving end of the fickle trajectory of international capital flows. As Figure 1 indicates, net financial flows to such countries, which increased rapidly after the Global Financial Crisis that began and was created by advanced economies, peaked in 2014. Thereafter, they have been on a downward trend, which has accelerated dramatically from 2021, to the point that they turned...

from Lars Syll In mainstream economics, there’s — still — a lot of talk about ‘economic laws.’ The crux of these laws — and regularities — that allegedly exist in economics, is that they only hold ceteris paribus. That fundamentally means that these laws/regularities only hold when the right conditions are at hand for giving rise to them. Unfortunately, from an empirical point of view, those conditions are only at hand in artificially closed nomological models purposely designed to give...

from Crelis Rammelt and current issue of RWER Our presumed dominion over nature is an illusion. No matter how clever technological innovations may seem, they remain subject to the laws of thermodynamics. Consequently, a growth-centered capitalist economy finds itself trapped in futile attempts to completely decouple itself from nature – aiming for a 100% circular, service-oriented and zero-waste existence. This obsession stems from an incapacity to imagine an economy that does not grow,...

from Lars Syll No sooner had I finished my comment on the irrelevancy of economics but I had confirmation — albeit unwittingly — in this morning’s Financial Times.  There on the editorial page was a short column by Soumaya Keynes talking about the rise of Hank. For those of you not on the cutting edge, “Hank” stands for Heterogeneous Agent New Keynesian, as in a complicated model of the economy. Hank is a whole new way of looking at model economies, with the really big breakthrough being...

from Peter Radford What are we to say of a discipline that steadfastly ignores reality in its pursuit of ever more formality in its methods? Wow. Steve Levitt has really shaken me. I come not to mock, but to follow up … Stand up and take a bow Ben Moll!  You daring soul. Clearly I need to explain. No sooner had I finished my comment on the irrelevancy of economics but I had confirmation — albeit unwittingly — in this morning’s Financial Times.  There on the editorial page was a short...