Real-World Economics Review

from Lars Syll Why would an academic profession sanction the use of theories based on crassly unrealistic assumptions? It is not an intuitively attractive idea. One suspects that the underlying reason is: economists are, in the main, committed to the defense of propositions that cannot be generated by models based on realistic assumptions. For example, a long string of unrealistic assumptions are necessary to generate the desired conclusion that unregulated financial markets perform...

from Erik Reinert and issue 92 of RWER In complete contradiction to the ruling practice of the Marshall Plan at the time, Paul Samuelson started building what was to become Cold War economic theory with two articles in The Economic Journal in 1948 and 1949. Communism advanced under the utopian slogan “from each according to his ability, to each according to his needs”. With his renewed interpretation of David Ricardo, Paul Samuelson produced a counter-utopia: under the standard...

from Ann Pettifor and issue 92 of RWER Today as the world endures the crisis of a global pandemic, “an old order is ending in convulsions”. So writes Rebecca Spang, historian of the French revolution in The Atlantic (Spang, 2020). In the 1790s, money, debt and the non-payment of taxes by France’s rentiers, played a critical role in revolutionizing France. Today purveyors of money and debt – creditors, investors and speculators – both avoid taxes and prey on a global economy radically...

from  Norbert Häring Developing countries are trying to contain the corona pandemic under the most adverse conditions. In the middle of this, the World Bank is proposing that the water supply of slum dwellers be cut off, if their landlords do not pay the water bill. It is an inhumane philosophy of development that is behind such monstrosities. For about two decades, the World Bank’s philosophy has been “sustainable development”; “sustainable” in the sense of profitable in the long run....

from Dean Baker I have written before on the post-pandemic economy and how it should actually provide enormous opportunities, but it is worth clarifying a few points. First and most importantly, there is an important measurement issue with GDP that people will need to appreciate. It is often said that GDP is not a good measure of well-being, we see this in a very big way in the post-pandemic period. It is likely that many of the changes in behavior forced by the pandemic, first and...

from Peter Radford A couple of things before we get started:  when I say that economics is not history, I mean exactly that.  Geology is not history either.  That is not the same as saying that economics ought pay no heed to history.  Let’s not get confused over that.  Economics is its own discipline with rules and territory that its exponents determine.  That might frustrate or annoy some of us who would like to think of it more broadly, but it’s up to us to find doors to open to help in...

I speak with Dean Baker, US economist and co-founder of the Center for Economic and Policy Research based in Washington, D.C. Dean is widely regarded as one of the first economists to have discovered the existence of the US housing bubble. I learn what indicators led him to make that call and what lessons his experience holds for future bubble-seers. Topics discussed - What problem is Dean working at the moment that excites him the most? [3:20] - The story of Dean selling his house in...

I speak with Dean Baker, US economist and co-founder of the Center for Economic and Policy Research based in Washington, D.C. Dean is widely regarded as one of the first economists to have discovered the existence of the US housing bubble. I learn what indicators led him to make that call and what lessons his experience holds for future bubble-seers. Topics discussed - What problem is Dean working at the moment that excites him the most? [3:20] - The story of Dean selling his house in...

from Lars Syll Being a true expert involves not only knowing stuff about the world but also knowing the limits of your knowledge and expertise. It requires, as psychologists say, both cognitive and metacognitive skills. The point is not that true experts should withhold their beliefs or that they should never speak with conviction. Some beliefs are better supported by the evidence than others, after all, and we should not hesitate to say so. The point is that true experts express...

from James Galbraith and Jaehee Choi and issue 92 of RWER In the years following World War II the division of labor between neoclassical micro- economics and pseudo-Keynesian macroeconomics was pioneered at MIT and disseminated worldwide from there. Macro held a narrow strip of economic territory: unemployment, inflation, interest rates and money supply, the business cycle, the rate of growth and their interrelations through the quantity theory, the Phillips Curve and Okun’s Law. The...