Real-World Economics Review

from C.P. Chandrasekhar and Jayati Ghosh In discussions of global inequality, there is general agreement that, whatever else may have happened, within-country inequality has increased in most cases, even as between-country inequality has come down. But overall, because of the recent emergence of countries with large populations like China and India, there has actually been some reduction in global inequality, because of increasing incomes in the  “middle” of the global distribution. Chart...

“I apprehend that bank notes, bills, or cheques, as such, do not act on prices at all. What does act on prices is Credit, in whatever shape given, and whether it gives rise to any transferable instruments capable of passing into circulation or not.” John Stuart Mill, 1848 “The relation of changes in M (money) to Y (income) and r (the interest rate) depends, in the first instance, on the way in which changes in M come about.” John Maynard Keynes, 1936 John Cochrane has an interesting post...

from David Ruccio For the first time in American history, students in more than half of all U.S. states are paying more in tuition to attend public colleges or universities than the government contributes. The privatization of public education has been under way for decades but this inflection point was hastened by deep cuts states made to their higher-education appropriations in the midst of the Second Great Depression. For the United States as a whole, according to a new report from...

from Eli Cook   A few years ago, I opened my review of Thomas Piketty’s Capital in the 21st Century in the Raritan Quarterly Review with this “bait and switch” vignette. I thought the striking similarities between George and Piketty revealed that while history does not repeat itself, the “Pikettymania” that washed over the world in 2014 might bring forth once more an era in which – much like during the “Gilded Age” of Henry George – economic inequality was at the forefront not only of...

from Lars Syll Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each​ competitor has to pick not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of...

from Mark Weisbrot Talk of trade wars and falling skies has taken up much space in the media since Donald Trump first announced tariffs on imported steel and aluminum on March 1. But such fears are highly exaggerated, which should not be surprising in a country where the benefits of a succession of misnamed “free trade” agreements have been grossly exaggerated for decades. Within weeks of announcing the tariffs, the administration had already exempted most of the major suppliers of steel...

from Lars Syll Half a century ago there were widespread hopes game theory would provide a unified theory of social science. Today it has become obvious those hopes did not materialize. This ought to come as no surprise. Reductionist and atomistic models of social interaction — such as the ones mainstream economics and game theory are founded on — will never deliver sustainable building blocks for a realist and relevant social science. That is also — as yours truly argues in the latest...

from Dean Baker The explosion in the pay of corporate CEOs is well documented. While the heads of major corporations were always well paid, we saw their pay go from 20- to 30-times the pay of ordinary workers in the 1960s and 1970s to 200- or 300-times the pay of ordinary workers in recent years. Paychecks of more than $20 million a year are now standard, and it’s not uncommon to see a top executive haul in more than $40 or $50 million in a single year. Soaring CEO pay is an important...

from Asad Zaman The root cause of our hopelessly defective economic theories is a fundamentally misguided model of human behavior. Modern economic theory assesses the impact of policies by replacing all human beings with homo economicus, which is a brain connected to a mouth and stomach. Because the heart and soul of human beings is removed from the picture before the economist begins his calculations, economists are routinely baffled by behavioral economics, based on actual behavior...

from Lars Syll This is not new to most of you of course. You are already steeped in McCloskey’s Rhetoric. Or you ought to be. After all economists are simply telling stories about the economy. Sometimes we are taken in. Sometimes we are not. Unfortunately McCloskey herself gets a little too caught up in her stories. As in her explanation as to how she can be both a feminist and a free market economist: “The market is the great liberator of women; it has not been the state, which is after...