Real-World Economics Review

from Norbert Häring Ride-hailing platform operator Uber is often accused of undermining labor market regulations and of overpricing in times of peak demand by “surge prcies”. Uber counters such accusations not only with high-profile lobbyists, but also with the help of top-notch economists, who cooperate in exchange for exclusive data and lucrative consultancy assignments. Even reputable journals publish such sponsored analyisis as if it was science. A recent paper by renowned MIT...

from David Ruccio The United States is now more than eight years out from the end of the Great Recession and the one-side nature of the recovery is, or at least should be, clear for all to see.   Even as unemployment has dipped below the so-called “natural rate,” workers are far from recovering all they’ve last in the past decade. According to the official data illustrated in the chart above, the labor share of national income remains just above the lowest level it reached in the entire...

As I stated yesterday we will publish some ideas about the future of the ECB. Yesterday some ideas of Willem Buiter were published. He wanted to abolish national central banks, to change the mandate, more transparency and an end to the prohibition of monetary financing. Today: Richard Werner. He warns us that it’s not just about the central bank but also about the ‘normal’ banks. More localism is needed. And the ‘tool’ credit guidance plus more localized banking may be more important...

from Dean Baker It is a bit incredible that we are again being told that tax cuts directed primarily toward the wealthy will create a surge of investment and growth, thereby benefitting everyone. The Republicans may have the power to push their tax cut through Congress, but the claim that ordinary workers will benefit is not the sort of thing that serious people should take seriously. The GOP’s basic story is that a cut in the corporate income tax will lead to a huge burst of investment....

The future of Europe is at stake. Yesterday, the European commission published a Roadmap for deepening Europe’s Economic and Monetary Union. coincidentally, the German Handelsblatt ‘EZB Schattenrat’ (‘ECB shadow council’, of which I’m a member) today discussed the ideal European Central Bank. The coming days I will post some (written) remarks made by members of the shadow council as well as some stuff relating to the Roadmap. No mention will be made of individual verbal remarks. Recurring...

from David Ruccio If you read the business press in the United States (e.g., the Wall Street Journal), you’ll find something along the lines of the following argument: the fact that U.S. worker productivity rebounded in the third quarter while hourly wages rose moderately is a sign “the economy is strengthening.” But look at the numbers. Nonfarm business sector productivity (the blue line in the chart above) rose 1.5 percent (from the same quarter a year ago) while real hourly...

from Peter Radford OK, let’s all calm down. The Republican tax plan is now in its last stages of design. The two versions that exist need to be stitched together and then the compromise version passed in both houses of Congress. The law as we currently know it is a classic piece of plutocratic largesse. It will fail in its supposed intentions: it will not do much at all for the economy. It gives rich people and large corporations big dollops of cash and a slew of new loopholes to feather...

from Lars Syll Important and far-reaching problems still beset regression analysis and econometrics — many of which basically is a result of unsustainable ontological views. Most econometricians have a nominalist-positivist view of science and models, according to which science can only deal with observable regularity patterns of a more or less lawlike kind. Only data matters and trying to (ontologically) go beyond observed data in search of underlying real factors and relations that...

from Asad Zaman The title is an inversion of De-Finetti’s famous statement that “Probability does not exist” with which he opens his famous treatise on Probability. My paper, discussed below, shows that the arguments used to establish the existence of subjective probabilities, offered as a substitute for frequentist probabilities, are flawed. The existence of subjective probability is established via arguments based on coherent choice over lotteries. Such arguments were made by Ramsey,...

from David Ruccio One of the rationales for the great Republican tax heist of 2017 is that American corporations desperately need tax relief.  However, as is clear from the chart above, the current corporate tax rate is already very low—not absolutely (since it was in fact lower in 2009, when corporate profits fell during the Great Recession), but certainly in comparison to the rest of the postwar period.* Today, the effective corporate tax rate in the United States is only 20.4 percent,...