Real-World Economics Review

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from Jayati Ghosh One of the enduring myths about capitalism that continues to be perpetuated in mainstream economic textbooks and other economic pedagogy is that labour supply is somehow exogenous to the economic system. The supply of labour is typically assumed (especially in standard growth theories) to be determined by the rate of population growth, which in turn is also seen as “outside” the economic system rather than in interaction with it. The reality is of course very different:...

from Lars Syll In their latest book, Think Like a Freak, co-authors Steven Levitt and Stephen Dubner tell a story about meeting David Cameron in London before he was Prime Minister. They told him that the U.K.’s National Health Service — free, unlimited, lifetime health care — was laudable but didn’t make practical sense. “We tried to make our point with a thought experiment,” they write … Rather than seeing the humor and realizing that health care is just like any other part of the...

from Asad Zaman Global experience shows that market economies create massive inequalities, enriching the top one per cent, while leaving the bottom of the population far behind. One key to prosperity is to provide productive jobs for all who would like to participate in the production process. Unfortu­nately, contemporary macroeconomics, which was blind to the possibility of the global financial crisis, is not equipped with the ideas and tools required to create full employment....

from Lars Syll Although I never believed it when I was young and held scholars in great respect, it does seem to be the case that ideology plays a large role in economics. How else to explain Chicago’s acceptance of not only general equilibrium but a particularly simplified version of it as ‘true’ or as a good enough approximation to the truth? Or how to explain the belief that the only correct models are linear and that the von Neuman prices are those to which actual prices converge...

from Lars Syll [embedded content]

from Dean Baker The April jobs report was, for the most part, pretty good news. The overall unemployment rate fell to 3.6 percent, a level not seen in almost 50 years. The survey of businesses showed the economy generated more than 260,000 new jobs in the month — a very strong pace of job growth. While not great, the average hourly wage grew 3.2 percent. That is more than a percentage point above the 2 percent inflation rate, meaning that wages are at least rising faster than prices, and...

from Ken Zimmerman After the cognitive revolution, Sapiens invented questioning and then questions. And Sapiens questioned everything. What happens next? Why did this happen rather than something else? Will each human die, when, and why? Who invented humans? Why were humans invented? What are the answers? One of the answers humans invented to deal with this and similar questions is randomness. Other inventions to deal with Sapiens’ questioning are chance, mathematics, and probability....