Real-World Economics Review

from Norbert Häring Four years ago, I framed it as a question: “George Soros‘ INET: An institute to improve the world or a Trojan horse of the financial oligarchy?” Today I would not use a question mark any more.Frances Coppola came to a similiar conclusion after attending the big INET gathering in Edingburgh in October. On her blog Coppola reports about the conference of the Institute for New Economic Thinking, bankrolled initially by George Soros. He was joined by other hedge fund...

from Dean Baker Before anyone starts jumping off buildings, let me give you a few items to think about. 1) The stock market is not the economy. It moves in mysterious ways that often have little or nothing to do with the economy. In October of 1987 it plunged more than 20 percent in a single day. GDP grew 4.2 percent in 1988 and 3.7 percent in 1989. The market did recover much of its value over this period, but we don’t know whether or not it will recover the ground lost in the last week...

from David Ruccio Must come down. . . I’m not referring to karma or the application of Newton’s law of universal gravitation. No, it’s just the way capitalism works. Take the stock market, for example. Last Friday, the Dow Jones Industrial Average closed down 666 points, or 2.5 percent, its biggest percentage decline since the Brexit turmoil in June 2016 and the steepest point decline since the 2008 financial crisis.  The large decline is really no surprise, since the U.S. stock market—a...

From Yanis Varoufakis At the source a link to the UK House of Commons discussion where this idea was put forward can be found. Britain used to have wage councils that set the minimum wage per sector. Mrs Thatcher saw to it that they were abolished, together (effectively) with trades unions and council houses – thus yielding the present Precariat-Proletariat whose palpable anger and frustration is evident across the land. There is no doubt that we need to bring back a modernised for of...

It seems that at this moment in time lower unemployment does not lead to higher inflation but to increasing wages, lower profits and increasing productivity. Since 2008, the (European) world has been characterized by high unemployment, a double dip (2008-2013), a historically unprecedented stalling of productivity and low interest rates. This situation seems to be changing. Since 2014, employment is increasing and unemployment is declining. New growth sectors (like ‘information and...

from Dean Baker The stock market tumbled by 2.0 percent on Friday. Given that the top 1.0 percent hold a grossly disproportionate share of stock wealth, this means they took a big hit. Are we more equal as a society now? Those who like to focus on wealth measures on inequality would have to say yes. And if the market continues to fall (not a prediction, but it certainly is possible that the correction will continue) then we will see further gain on the inequality front. Suppose it falls...

from Lars Syll What does concern me about my discipline … is that its current core — by which I mainly mean the so-called dynamic stochastic general equilibrium approach — has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one … While it often makes sense to assume rational expectations for a limited application to isolate a particular mechanism that is distinct...

The Indian experience suggests that the obsession with digital transactions as a marker of social and material progress may be misplaced and even counterproductive. Indeed, policy attempts to push a rapid transition to cashlessness may be both infeasible and regressive. Cashlessness relies on very substantial development of infrastructure, universal access to banking, and strong and reliable internet connectivity — and while it provides convenience, it also can lead to greater monitoring...

from David Ruccio Much has been made of the rise of populism in recent years and the threat it poses to liberal democracy. My view is that liberal critics of populism, standing on their heads, get it wrong. If made to stand on their feet, they’d have to admit that populism actually represents the failure of liberal democracy. Populism has experienced a resurgence of late—in Hungary, Britain, France, Turkey, the United States, and elsewhere—especially the form of populism variously...

On this blog neoclassical economics are regularly discussed. Thorstein Veblen is credited with introducing, around 1900, the phrase ‘neo-classical’ (see the excerpt below). A lot of his criticisms of neo-classical authors still apply today: they assume what they should explain. The Keynes in the text is the father of John Maynard Keynes. Veblen was a very talented writer – which shows when you read the excerpt (and the entire text) twice. From the website of the AFEE. Of the foundations...