Real-World Economics Review

from Maria Alejandra Madi Bank transactions by internet and mobile banking have sharply increased since the 2008 global financial crisis. In this digital environment, new technologies – such as advanced analytics and big data, in addition to the use of robotics, artificial intelligence, besides new forms of encryption and biometrics – have been enabling changes in the provision of financial products and services. The current wave of financial innovations is being increasingly oriented to...

from David Ruccio Sometimes you just have to sit back and admire capitalism’s ingenuity. It’s able to make profits twice over. First, capitalists know that, when they keep workers’ wages down—even when there’s “full employment”—they can make spectacular profits. And, second, they can make additional profits by loaning money to those same workers, who are desperate to purchase goods and services and send their children to college, thereby financing the demand for the goods and services...

from C. P. Chandrasekhar The big news late in June 2017 was that the Serious Fraud Office (SFO) in the UK had charged four former senior executives of Barclays bank, including its former chief executive, John Varley, with fraud committed almost a decade earlier, during the global financial crisis of 2008. This is the first chief of an institution embroiled in the 2008 financial crisis who faces criminal (as opposed to civil) proceedings. How long the investigation will take and what the...

from Lars Syll Of course the more immediate target of Davidson in his formulation of the argument in the early 1980s was not Samuelson, but Lucas and Sargent and their rational expectations hypothesis … This was indeed the period when new classical economics was riding at its highest point of prestige, with Lucas and Sargent and their rational expectations assumption apparently sweeping the boards of any sort of Keynesian theories. Curiously, they did not seem to care whether the...

from Edward Fullbrook It seems generally agreed that populism tends to rise up after a prolonged period in which governing elites have blocked from public discussion the declining economic welfare of a significant proportion of the population. These declines take two forms, usually simultaneously and interdependently: A decline of income and wealth in absolute terms and/or relative to the elites and their agents. A decline in key characteristics of employment through time (quality,...

from David Ruccio Mainstream economists have been taking quite a beating in recent years. They failed, in the first instance, with respect to the spectacular crash of 2007-08. Not only did they not predict the crash, they didn’t even include the possibility of such an event in their models. Nor, of course, did they have much to offer in terms of explanations of why it occurred or appropriate policies once it did happen. More recently, the advice of mainstream economists has been...

from Asad Zaman In response to a comment by David Chester regarding Adam Smith and the Invisible Hand, I am reproducing the section in the paper which deals with this issue. This answers his question about how what is attributed to Adam Smith differs from what he actually said. [Excerpt from the paper: Failures of the Invisible Hand] Section 6: Recent Vintage of the Invisible Hand The main goal of this section is to show that the modern interpretation of the IH is relatively recent. The...

from Lars Syll Most mainstream economists are reluctant to have a methodological discussion. They usually think it’s too ‘risky.’ Well, maybe it is. But on the other hand, if we’re not prepared to take that risk, economics can’t progress, as Tony Lawson forcefully argues in his Essays on the Nature and State of Modern Economics: Twenty common myths and/or fallacies of modern economics 1. The widely observed crisis of the modern economics discipline turns on problems that originate at the...

from Peter Radford OK, let me get back to it: I have just read a set of short papers over at a journal aptly named Democracy. The papers are held together under the banner:Symposium: has Economics Failed Us? Naturally that question was sufficient to get my attention, but reading through the material was so depressing. Why? Because there was Jason Furman offering a defense that has all the hallmarks of an economics profession steadfastly denying its own reality. Dean Baker was brilliant in...

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...