Real-World Economics Review

from Alicia Puyana While the 2008 crisis called into question the fundamentals of economic theory over which the model of global growth had been sustained for the last three and a half decades, today we witness the crisis of liberal democracy and neo-liberal economics (Bauman, 2016), of the Social Democracy doctrine, the New Labor and waning The Third Way, as well as the fading out of the unrestricted support of globalization (Rodrik, 2017). Some foresee it as the end of the Pax...

from PeterRadford I always use some famous Chicago School economist as my representative fool when I am describing mainstream economics to my uninitiated friends. How does one, after all, defend such a ludicrous body of thought? By reference to Monty Python? Here is Gary Becker explaining why mainstream theory is so ridiculous: “The combined assumptions of maximizing behavior, market equilibrium, and stable preferences, used relentlessly and consistently, form the heart of the economic...

from David Ruccio Skellington is right: in my post on Tuesday, I did not separate out people at the very top from the rest of those at the top. That’s because, in the data I presented, those in the top 0.1 percent were included in the top 1 percent. Unfortunately, I don’t have the same kind of breakdown in the composition of incomes as I used in those charts. What I do have are data on the shares of income and wealth for the top 0.1 percent versus the remainder of the top 1 percent (so,...

from Lars Syll In Dani Rodrik’s Economics Rules it is argud that ‘the multiplicity of models is economics’ strength,’ and that a science that has a different model for everything is non-problematic, since economic models are cases that come with explicit user’s guides — teaching notes on how to apply them. That’s because they are transparent about their critical assumptions and behavioral mechanisms. Hmm … That is at odds with yours truly’s experience from studying mainstream economic...

from David Ruccio Who’s running away with the surplus, those at the top or those at the very top?   In a new study on “income inequality in the 21st century,” Fatih Guvenen and Greg Kaplan note that recent increases in inequality in the United States need to be understood in terms of trends of and, especially, within the top 1 percent. That’s particularly true when, instead of using Social Security data (which capture labor income), they turn to Internal Revenue data (which capture all...

from Mark Weisbrot If the first round of the French presidential election on Sunday is now too close to call, that’s partly because of Jean-Luc Mélenchon’s last-minute surge in the polls. The media describe him as a populist from the far Left, and as he has risen, attacks on him have intensified. One common criticism is that his economic proposal to jump-start growth in France while reducing mass unemployment and inequality is pie in the sky. Is it, though? Mr. Mélenchon would certainly...

from Thomas Palley A key element of Trump’s political success has been his masquerade of being pro-worker, which includes posturing as anti-globalization. However, his true economic interest is the exact opposite. That creates conflict between Trump’s political and economic interests. Understanding the calculus of that conflict is critical for understanding and predicting Trump’s economic policy, especially his international economic policy. As part of maintaining his pro-worker...

from Lars Syll It takes some courage, maturity, and perception for the self-discovery that one is engaged in a fraudulent enterprise … Our teachers never talked about ideologies or the larger issues, and seemed content with discussing arcane mathematics — DELIBERATE deception involves knowing the truth and then using lies to hide it.This does not seem to be the modus operandi. Rather, after the initial discomfort of swallowing certain absurd framing ideas wears off, one learns to believe...

from Peter Radford When, for reasons too byzantine to recount here, I decided to re-engage with economics a couple of decades ago I did so through the prism of business. After all I had just finished a stint in banking and was thinking about the way in which the rise of digital technology would change the way in which business is conducted. The reason for this point of re-entry was that I believed then, and still do, that economies are movements of information as much as, if not more...

from Robert Locke The management principles Trump evokes in Think Big and Kick Ass are those for self-enrichment reminiscent of robber barons during the Gilded Age. In his election campaign Trump promised to use his knowhow to restore prosperity to the dispossessed white middle class in rust belt communities. Will his management principles, if they served him and other billionaires well, do the same for the white middle class communities? This is a question economists seldom ask since...