Real-World Economics Review

from Dean Baker The concept of “free trade” has acquired near religious status among policy types. All serious people are supposed to swear their allegiance to it and deride anyone who questions its universal benefits. Unfortunately, almost none of the people who pronounce themselves devotees of free trade actually do consistently advocate free trade policies. Rather they push selective protectionist policies, that have the effect of redistributing income to people like them, and call...

Hi from Marxloh! I’m finding myself with junior in Marloh (to watch Schalke ’04)and it happens to be the most steampunk city I’ve ever been. It is part of Duisberg, a city inside the ‘Ruhrgebiet’, the German equivalent of the USA rust belt except that it’s not rusty but Europe’s largest steelhub (according to a sign along the road). Marxloh, which became a suburb for labourers can nowadays really be called Little Turkey (with capitals. It’s population increased from 352 in 1895 to 35.872...

from Lars Syll In opening the conference, Frank Morris mentioned his disappointment or disillusionment – which many others share – that the analytical success of the 1960s didn’t survive that decade. I think we all knew, even back in the 1960s, that as Geof put it, “inflation doesn’t wait for full employment.” These days inflation doesn’t even seem to care if full employment is going along on the trip … The question is: what are the possible responses that economists and economics can...

Action! ‘the campaign to demand that the ECB publish the legal opinion it commissioned on whether its closure of Greece’s banks in 2015 was… legal’. Sign! Europe is waking up to its gargantuan, awkward and 100% home made bad private debts problem. Any solution requires writing down hundreds of billions of debt. Michael Hudson on ‘clean sheet’ debt policies in Mesopotamia. Fun fact: cuneiform records show that clerks had to master compound interest calculations. Low interest policies of...

from David Ruccio Greece is a perfect example of how to turn a bad economic situation into something even worse. As Reuters reports,  Rescue funds from the European Union and International Monetary Fund saved Greece from bankruptcy, but the austerity and reform policies the lenders attached as conditions have helped to turn recession into a depression. As a result, the poverty rate in Greece almost doubled (between 2008 and 2015), rising from 11.2 percent to 22.2 percent. And average...

from Lars Syll A couple of years ago yours truly had a discussion with the chairman of the Swedish Royal Academy of Sciences (yes, the one that yearly presents the winners of The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel). What started the discussion was the allegation that the level of employment in the long run is a result of people’s own rational intertemporal choices and that how much people work basically is a question of incentives. Somehow the argument...

from Norbert Häring Microsoft’s Bill Gates is one of the richest and most influential people on earth. He announced in 2015 that his Bill & Melinda Gates Foundation was aiming at achieving full digitalization of the payment systems of India and other populous developing countries by 2018. This “financial inclusion” program for India dates back to well before Narendra Modi came to power. It was elevated to official US policy by Executive Order in 2012, because the President saw vital...

“Our major competitor is cash. Cash is what we seek to eliminate” Recently, the Indian government overnight abolished most cash. With dire consequences. What are the economic consequences, why did the Indian government do this? Economies like those of India have, for a bunch of reasons, often relatively high rates of inflation. After the abolishing of cash, India suddenly experienced ‘ugly’ deflation (‘ugly’ i.e. provoked by a fall in demand as well as contributing to this fall in...

from Maria Alejandra Madi By 2020, the largest pools of pension fund assets are projected to remain concentrated in the US and Europe. In North America, pension fund assets reached $19.3 trillion in 2012 and PwC estimates that by 2020, pension fund assets will rise by 5.7 percent a year to achieve over $30 trillion of the $56.5 trillion in total global assets, more than 50 percent of the global total. Indeed, according to the PwC report, Asset Management 2020: A Brave New World,...

from Dean Baker Yes, as Un-American as that may sound, Bill Gates is proposing a tax that would undermine Donald Trump’s efforts to speed the rate of economic growth. Gates wants to tax productivity growth (a.k.a. “automation) slowing down the rate at which the economy becomes more efficient. This might seem a bizarre policy proposal at a time when productivity growth has been at record lows, averaging less than 1.0 percent annually for the last decade. This compares to rates of close to...