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Real-World Economics Review

Inequality and climate change

from David Ruccio The effects of climate change are, as we know, distributed unequally across locations. Therefore, the damages from climate change—in terms of agriculture, crime, coastal storms, energy, human mortality, and labor—are expected to increase world inequality, by generating a large transfer of value northward and westward from poor to rich countries. What about within countries—specifically, the United States? A new report, published in Science, predicts the United States...

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Economics as a religion

from Lars Syll Contrary to the tenets of orthodox economists, contemporary research suggests that, rather than seeking always to maximise our personal gain, humans still remain reasonably altruistic and selfless. Nor is it clear that the endless accumulation of wealth always makes us happier. And when we do make decisions, especially those to do with matters of principle, we seem not to engage in the sort of rational “utility-maximizing” calculus that orthodox economic models take as a...

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Women at work: global highlights

from Maria Alejandra Madi The roots of gender and poverty studies began with Pearce (1978) who coined the expression ‘feminization of poverty’. Pearce considered female-headed families, excluding poor women who live in male- headed families, based on the argument that the proportion of families headed by women among the poor has been  increasing since the 1950s. In her opinion, women have become poorer because of their gender. The recent dynamics of the global labour market has reinforced...

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Modern economists: The Inept Firefighters’ Club

from Dean Baker Suppose that our fire department was staffed with out-of-shape incompetents who didn’t know how to handle a fire hose. That would be really bad news, but it wouldn’t be obvious most of the time because we don’t often see major fires. The inadequacy of the fire department would become apparent only when a major fire hit and we were left with a vast amount of unnecessary death and destruction. This is essentially the story of modern economics. The problem is not that modern...

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Rocking the boat

from David Ruccio As I argued a couple of days ago, recent events—such as Brexit, Donald Trump’s presidency, and the rise of Bernie Sanders and Jeremy Corbyn—have surprised many experts and shaken up the existing common sense. In short, they’ve rocked the neoliberal boat. The question is, where does this leave us? Thomas Edsall thinks it means we’ve reached the end of class-based politics. I’m not convinced. Yes, the response to the problems with neoliberal globalization has challenged...

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Why not even Paul Krugman is a real Keynesian

from Lars Syll Keynes’s insights have enormous practical importance, according to Lance Taylor and Duncan Foley … But isn’t Keynes now mainstream? No, say Foley and Taylor. The mainstream still sees economies as inherently moving to an optimal equilibrium … It still says demand causes short-run fluctuations, but only supply factors, such as the capital stock and technology, can affect long-run growth. EVEN PAUL KRUGMAN, a self-described Keynesian, Nobel laureate, and New York Times...

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(Modified) Irish national income Q1, 2017.

To circumvent the internationally approved rules of national accounting, irish economists developed new national income indicators: Modified Gross National Income and Modified Total Domestic Demand. They were right to do this. And these are not minor changes. Modified Income is almost a third (a third!) lower than ‘normal’ income. AlsoIn today’s quarterly results, the modified Total Domestic Demand indicator decreased by 2.7% in Quarter 1 2017, while the traditional indicator decreased by...

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How rich would Bill Gates be without his copyright on Windows?

from Dean Baker Suppose we lived in a world where Bill Gates could not get copyright or patent protection for Windows and other Microsoft products. Anyone who wanted could duplicate these products without charge, sending Bill Gates a thank you note, if they were so inspired. In that world, Bill Gates would certainly not be the world’s richest human with a fortune of more than $70 billion. Even without copyright protection Mr. Gates would probably still be doing fine — he seems reasonably...

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‘Money as electricity’ – redux

The heterodox heritage of economic statistics is underestimated. Too often I encounter the idea that heterodox economics does not provide an alternative to mainstream economics, let alone economic measurement. Ahem. Instead of ignoring (data on) unemployment (Robert Lucas!) or ignoring (data on) money and the monetary system (more on this below), it were heterodox economists who set out to measure it. To quite an extent, economic statistics are the heterodox alternative people want to...

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Technology, employment, and distribution

from David Ruccio New technologies—automation, robotics, artificial intelligence—have created a specter of mass unemployment. But, as critical as I am of existing economic institutions, I don’t see that as the issue, at least at the macro level. The real problem is the distribution of the value that is produced with the assistance of the new technologies—in short, the specter of growing inequality. David Autor and Anna Salomons (pdf) are the latest to attempt to answer the question about...

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