Real-World Economics Review

from Lars Syll [Jevons] is a man of some ability, but he seems to me to have a mania for encumbering questions with useless complications, and with a notation implying the existence of greater precision in the data than the questions admit of.  John Stuart Mill Fixation on constructing models — “implying the existence of greater precision in the data than the questions admit of” — showing the certainty of logical entailment — realiter simply collapsing the necessary ontological gap...

from Maria Alejandra Madi Regarding Western democracies, Steven Levitsky and Daniel Ziblatt, two Harvard scholars, think that the answer is yes. They base their answer on decades of study and a wide range of historical and modern cases, from 1930s Europe to modern Hungary, Turkey, Venezuela, North and South America. Instead of a revolution or a military takeover, the authors believe that there will be a steady and slow breakdown of long-standing democratic rules and institutions. For...

from Dean Baker Of course, the New York Times did not headline a piece this way, but that would have been a more accurate headline of an article it ran last weekend discussing a turn away from “neo-liberal” policies. As I pointed out in a quick Twitter thread, that piece misrepresented a set of policies that have the effect of redistributing income upward as “free market” policies. This is wrong in a way that is very convenient for the proponents of these policies. The massive upward...

from Maria Alejandra Madi and WEA Pedeaogy Blog Podcasts, which can now be easily accessed online, have had a recent surge in popularity, which may be attributed to their convenience. These podcasts discuss a wide range of topics that are related to the professional and academic spheres. The issue that naturally emerges is what exactly makes it qualified to be regarded as a scholarship approach. To put this another way, what exactly is it about this method that qualifies it to be used as...

from Dean Baker People routinely tout Biden’s efforts to bring back manufacturing jobs as a way to rebuild the middle class and reduce inequality. Whatever the motives, there is not much reason to believe that it will have this effect. When the United States opened up its market to freer trade in manufactured goods, through trade deals like NAFTA and admitting China to the WTO, manufacturing workers had a substantial pay premium over workers in the rest of the private sector. This was...

from Lars Syll Fitting a model that has a parameter called ‘probability’ to data does not mean that the estimated value of that parameter estimates the probability of anything in the real world. Just as the map is not the territory, the model is not the phenomenon, and calling something ‘probability’ does not make it a probability, any more than drawing a mountain on a map creates a real mountain … In summary, the word ‘probability’ is often used with little thought about why, if at all,...

from Blair Fix In the last few months, there have been a string of open letters from tech leaders warning that artificial intelligence could lead to a ‘profound change in the history of life on Earth’. According to some insiders, AI poses an extinction risk, on the same level as pandemics and nuclear war. I think this scaremongering is nonsense. It plays into popular science fiction tropes about machines conquering humanity. But the problem with these scenarios is that when you look at...

from Dean Baker Fear the rich, not AI It is really painful to see the regular flow of pieces debating whether AI will lead to mass unemployment. Invariably, these pieces are written as though the author has taken an oath that they have no knowledge of economics whatsoever. The NYT gave us the latest example on Sunday, in a piece debating how many jobs will be affected by AI. As the piece itself indicates, it is not clear what “affected by AI” even means. What percent of jobs were affected...

Kindle $4.99  Paperback  $11.99  “No one does more than Lars Syll to identify and communicate the limitations of modern economics. An impassioned call and compelling sustained argument for economists to stop dwelling on the intricacies of irrelevant models and concern themselves with rest of the social reality.” –  Tony Lawson, Cambridge University “Lars Syll’s new book gets to the heart of what’s methodologically wrong with mainstream economics and maps out foundations for a critical...

from Asad Zaman and the WEA Pedagogy Blog In my previous post (The Religion of Economics), I explained why economic is a religion, even though it claims to be a science. This religion preaches a toxic morality, where the goal of life is maximization of personal pleasure, with no moral or social constraints. Some months ago, I read an article which suggested that we should do a cost/benefit analysis of economic theory itself – how much harm it has caused, versus any benefits that it has...