Real-World Economics Review

from Ikonoclast (originally posted as a comment) The key obstacle to theoretical progress is the fact that economics is both a prescriptive and a descriptive discipline. We have not developed an economic ontologly to deal with this issue. The real economy is a real system. The natural environment is a real system. The set of legal laws, legal property relations, institutional arrangements, financial rules and calculations which we innovate and use as “rules and score-keeping of the game”...

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from David Ruccio There are lies, there are outrageous lies, and there are statistics. — Robert Giffen, Economic Journal (1892) Are U.S. unemployment numbers rigged? Sure, they are! They’re not rigged in the way Paul Krugman implied last Friday (“This being the Trump era, you can’t completely discount the possibility that they’ve gotten to the BLS”). Or in the way former General Electric CEO Jack Welch suggested back in 2012 (when he asserted that the Obama White House had manipulated the...

from Lars Syll The simple question that was raised during a recent conference … was to what extent has — or should — the teaching of economics be modified in the light of the current economic crisis? The simple answer is that the economics profession is unlikely to change. Why would economists be willing to give up much of their human capital, painstakingly nurtured for over two centuries? For macroeconomists in particular, the reaction has been to suggest that modifications of existing...

from Peter Radford I don’t often comment on politics here, but I want to record my thoughts as I watch the extraordinary convulsions running through America at the moment. First: racism is a basic fact of American life.  It has been apparent to me since I moved here.  White America simply doesn’t want to be forced to engage with it, so it ignores all the plentiful evidence that it exists.  It is too painful and too difficult to deal with, no matter how sympathetic people are, so they want...

from Lars Syll Voltaire once said of the Holy Roman Empire that it was “Neither Holy, nor Roman, nor an Empire”. Something similar might be said of Modern Monetary Theory … It is neither modern, nor genuinely monetary, and it is at least as much a set of policy proposals as a theory. It might be thought that “modern” refers to the fiat money world in which we have lived since major currencies broke with gold convertibility in the 1930s … In fact, however, it is a kind of inside joke,...

from David Ruccio Where did all the capitalist surplus in the United States go last year? Well, as in recent years, a large portion was paid to the Chief Executive Officers of the nation’s largest corporations, the ones that make up the S&P 500. According to the Wall Street Journal, median pay of the CEOs of those corporations reached an astronomical $13.1 million, setting a new record for the fifth year in a row. Most S&P 500 CEOs got raises of 8 percent or better during the...

from Peter Radford I was having a conversation this morning in which I argued the word “capitalism” has no meaning.  Or, perhaps, it has too many meanings.  It is a fraught one as well.  People get vexed in its presence.  I ought also have said the same thing about the word “labor”. Both words are relics of the early years of industrialization when they meant more to those throwing them around back then.  In our contemporary economy they mean rather less.  To me they reference things...

from Lars Syll [embedded content] A great video, but — there’s always a but — unfortunately also not without some analytical shortcomings. The point of making a randomized experiment is often said to be that it ‘ensures’ that any correlation between a supposed cause and effect indicates a causal relation. This is believed to hold since randomization (allegedly) ensures that a supposed causal variable does not correlate with other variables that may influence the effect. The problem with...

from David Ruccio [embedded content] More than 50 years ago (on 14 April 1967), Martin Luther King Jr. delivered one of his famous speeches, on “The Other America,” at Stanford University.* King patiently explained to the audience of students and faculty members that, while in his view “riots are socially destructive and self-defeating,” they are “in the final analysis. . .the language of the unheard.” Today, as protestors take to the streets across America, in response to the recent...