Real-World Economics Review

from Lars Syll Public debt is normally nothing to fear, especially if it is financed within the country itself (but even foreign loans can be beneficent for the economy if invested in the right way). Some members of society hold bonds and earn interest on them, while others pay taxes that ultimately pay the interest on the debt. The debt is not a net burden for society as a whole since the debt ‘cancels’ itself out between the two groups. If the state issues bonds at a low-interest rate,...

from Dean Baker It is standard for economic reporters to treat higher stock prices as good news. A rising stock market is often touted in the same way that job gains or GDP growth are touted, as evidence of a stronger economy. This can be true. When the economy is growing at a healthy pace, the stock market is usually rising also. But the link is far more tenuous than is generally recognized. The market is in principle a measure of expected future profits. Policies that redistribute...

from Peter Radford Economists have been talking about complexity for a very long time.  This may surprise many of you given the state of mainstream economics, but it is true.  A good place to discover a preliminary history of complexity in economics would be the short volume edited by David Colander published in 2000.  The papers it contains were all presented at a History of Economics Society Conference in 1998.  Colander provides a good introduction and tries to put complexity into the...

from Lars Syll Alex Rosenberg — chair of the philosophy department at Duke University, renowned economic methodologist and author of Economics — Mathematical Politics or Science of Diminishing Returns? — had an interesting article on What’s Wrong with Paul Krugman’s Philosophy of Economics in 3:AM Magazine a couple of years ago. Writes Rosenberg: When he accepts maximizing and equilibrium as the (only?) way useful economics is done Krugman makes a concession so great it threatens to...

from Norbert Häring Ten years ago, the Rockefeller Foundation published the eerily prescient, autocratic Lock-Step-Scenario and, apparently, has been working to make it true. The most recent initiative in this regard is a cooperation of the Rockefeller-funded GAVI immunization alliance with Mastercard and a biometric ID company named TrustStamp. Before getting to this cooperation, let me briefly remind you of a selection of the assumptions of the Lock Step scenario builders have made...

from David Ruccio Since the first of June,Lost my job and lost my room.I pretend to try,Even though I tried alone. — Sufian Stevens, “Flint (For the Unemployed and Underpaid)” Yesterday morning, the U.S. Department of Labor (pdf) reported that, during the week ending last Saturday, another 1.3 million American workers filed initial claims for unemployment compensation. That’s on top of the 48.7 million workers who were laid off during the preceding fifteen weeks. Here is a breakdown of...

from Lars Syll The atomic hypothesis which has worked so splendidly in Physics breaks down in Psychics. We are faced at every turn with the problems of Organic Unity, of Discreteness, of Discontinuity – the whole is not equal to the sum of the parts, comparisons of quantity fails us, small changes produce large effects, the assumptions of a uniform and homogeneous continuum are not satisfied. Thus the results of Mathematical Psychics turn out to be derivative, not fundamental, indexes,...

from Dean Baker I have written many times that I thought the focus on wealth inequality, as opposed to income inequality, was misplaced. There are many practical, political, and legal problems associated with taxing wealth that are considerably smaller when we talk about altering the economic structures that redistribute so much income upward. But beyond the issue of whether inequalities of income or wealth are more easily tackled, there is also a very strange argument for focusing on...

from Peter Radford The economy as a sea of information, constantly churning, far from equilibrium, with computation its key activity.  It is complex.  It is inscrutable to any method that fails to accommodate its multitude of layers, interconnections, feedback loops, and constant dynamism.  Since reading Ilya Prigogine ages ago I have never understood how anyone could not view the economy through such a lens.  The interplay between creative forces needed to sustain life and the constant...

from Robert Wade and RWER issue no.92 The bottom line is that North and South are coherent blocs in important ways. The income gap between the North-South blocs is – persistently – larger than the income gaps within them. If we plot the share of world population living in countries arranged by average income we see a pronounced bimodal distribution, with not much population in between. Countries of the North enjoy common economic benefits from their superior position in the world...