Real-World Economics Review

from Hardy Hanappi and Real-World Economics Review For human societies, contrary to other species, the direction of their development is always co-determined by the way that their members produce a shared interpretation of their environment in order to achieve a common goal[1]. How to find a commonly shared view of our global society has become increasingly difficult in the decades since 1945. One reason certainly is the development of the global production system itself, which rapidly...

Take a tour of CO2 since 800 thousand years ago. pic.twitter.com/PJonTpxrQI — Kris Karnauskas (@OceansClimateCU) December 4, 2019

from Lars Syll Logic, n. The art of thinking and reasoning in strict accordance with the limitations and incapacities of the human misunderstanding. The basic of logic is the syllogism, consisting of a major and a minor premise and a conclusion – thus: Major Premise: Sixty men can do a piece of work sixty times as quickly as one man. Minor Premise: One man can dig a post-hole in sixty seconds; Therefore- Conclusion: Sixty men can dig a post-hole in one second. This may be called syllogism...

from Blair Fix Let’s talk econophysics. If you’re not familiar, ‘econophysics’ is an attempt to understand economic phenomena (like the distribution of income) using the tools of statistical mechanics. The field has been around for a few decades, but has received little attention from mainstream economists. I think this neglect is a shame. As someone trained in both the natural and social sciences, I welcome physicists foray into economics. That’s not because I think their approach is...

from Lars Syll There really is something about the way macroeconomists construct their models nowadays that obviously doesn’t sit right. In mainstream economic theory models largely function as a substitute for empirical evidence. One might have hoped that humbled by the manifest failure of its theoretical pretences during the latest economic-financial crises, the one-sided, almost religious, insistence on axiomatic-deductivist modelling as the only scientific activity worthy of pursuing...

from Ken Zimmerman  (originally a comment) If you had asked somebody 100 years ago, ‘How’s the economy doing?’ they would not have known what you were talking about. At the time, people talked about things like banking panics, and national wealth, and trade. But, according to Zachary Karabell, this thing we call the economy — this thing that we constantly measure with specific numbers — was not really invented until the 20th century. Specifically, around 1930. “It was invented because of...

from Ikonoclast  (originally a comment) I think I can give an example of why economic reductionism or economic simplism or economism do not work. It revolves around the fact that the world, even the socioeconomic world, is extremely (if not infinitely) complex and endlessly changing and mutating. There are numerous gradations and changes to every phenomenon possible. About 25 years ago, I commissioned a house to be built. About 25 weeks ago I commissioned a landscape (hardscape and...

from Lars Syll The kinds of laws and relations that economics has established, are laws and relations about entities in models that presuppose causal mechanisms being atomistic and additive. When causal mechanisms operate in the real world they only do it in ever-changing and unstable combinations where the whole is more than a mechanical sum of parts. If economic regularities obtain they do it (as a rule) only because we engineered them for that purpose. Outside man-made “nomological...

from Dean Baker As can be easily shown the bulk of the upward redistribution from the 1970s was not due to a shift from wages to profits, it was due to an upward redistribution among wage earners. Instead of money going to ordinary workers, it was going to those at the top end of the wage distribution, such as doctors and dentists, STEM workers, and especially to Wall Street trader types and top corporate management. If we want to reverse this upward redistribution then we have to take...

from Peter Radford If you were to ask me what the greatest intellectual error of the past fifty years has been I wouldn’t hesitate.  Shareholder value.  It’s an easy response.  Yes, it reflects my own curious interest in the fundamentals of business and its intersection with economics, but it is also emblematic of so much more. Derived as it is from the wrong turn in economics and politics in the middle of the last century it carries with it so many of the ill founded ideas that have...