Real-World Economics Review

from David Ruccio Adam Smith’s Wealth of Nations makes for uncomfortable reading these days. That’s because, as my students this semester have learned, the father of modern mainstream economics—who has become so closely (and mistakenly) identified with the invisible hand—held a narrow theory of money and advocated extensive regulation of the banking sector. This is contrast to the obscene growth of banking in recent decades, which Rana Foroohar reminds “isn’t serving us, we’re serving...

from Lars Syll As we all know, neoliberalism is nothing but a self-serving con endorsing pernicious moral cynicism. But it’s still sickening to read its gobsmacking trash, maintaining that unregulated capitalism is a ‘superlatively moral system’: The rich man may feast on caviar and champagne, while the poor woman starves at his gate. And she may not even take the crumbs from his table, if that would deprive him of his pleasure in feeding them to his birds. David Gauthier Morals by...

from Peter Radford One reason I have not been very communicative in the past two months is my disgust at the state of the nation. America is simply not the place I came to live in back in the late 1970’s. It is a tired, aging, and deeply unsettled country grappling with an identity crisis and its steady loss of economic energy. America as a myth was always built around the notion that it was a “land of opportunity”. That opportunity was open to as many interpretations as there were people...

from David Ruccio We’ve been hearing this since the recovery from the Second Great Depression began: it’s going to be a Golden Age for workers!   The idea is that the decades of wage stagnation are finally over, as the United States enters a new period of labor shortage and workers will be able to recoup what they’ve lost. The latest to try to tell this story is Eduardo Porter: the wage picture is looking decidedly brighter. In 2008, in the midst of the recession, the average hourly pay...

from Lars Syll There has always been some level of scepticism about the ability of economists to offer meaningful predictions and prognosis about economic and social phenomenon. That scepticism has heightened in the wake of the global financial crisis, leading to what is arguably the biggest credibility crisis the discipline has faced in the modern era. Some of the criticisms against economists are misdirected. But the major thrust of the criticisms does have bite. There are seven key...

from Peter Radford Allow me to break my silence for a moment and comment on David Brook’s latest apology for the status quo. I realize others have already done so, but I feel compelled to add to the discussion. First: by way of explanation for my absence. I have been busy elsewhere, and especially busy looking at the future of the workplace. Second: it is because of this detour that I want to take a shot at Brooks. Let’s recapitulate Brook’s argument. He takes a look at the last couple of...

from Caroline Freund When I was an undergraduate studying economics in the 1980s, I got an early lesson in how men view women in the workforce. I was writing a thesis about the well-known phenomenon of women being paid less than men for the same jobs. One of my professors challenged the basic premise that bias was a possible reason for the wage gap. If women really did get paid less for the same work, he argued, a smart company would hire all women and undercut its competitors. No...

from Lars Syll A typical modern approach to writing a paper in DSGE macroeconomics is as follows: o to establish “stylized facts” about the quantitative interrelationships of certain macroeconomic variables (e.g. moments of the data such as variances, autocorrelations, covariances, …) that have hitherto not been jointly explained; o to write down a DSGE model of an economy subject to a defined set of shocks that aims to capture the described interrelationships; and o to show that the...

from Robert Locke Recently there has been a spate of postings and comments in the rwer blog about economics as science; they invariably deal with the relative degree of autism of orthodox economics along the lines that originally spawned the post-autistic economics movement, the rwer and the blog. The subject debated is the relative failure of an economics discipline based on the behavior of individuals in markets to guide policy formulation in the real world. For historians the birth of...

from David Ruccio Back in 2011, thousands of Chilean students participated in protests against the high cost of higher education. The most famous took place in front of La Moneda, the president’s palace, dancing to Michael Jackson’s “Thriller.” According to the latest statistics from the OECD report, “Education at a Glance 2017,” the costs of a college education in Chile were still very high in 2015-16. But they’re still not as high as in the United States, where it costs more to go to...