Real-World Economics Review

Next year we’ll witness the hundreth anniversary of the Russian Revolution. Here a link from the Marginal Revolution blog. Below a letter by Pjotr Aleksejevitsj Prpotkin, a leading anarchist and one of the keenest scientific minds of the decades around 1900, to Vladimit Iljitsj Lenin. Note that he wrote this as early as March 1920, note also that at this time a civil war not completely unlike the present turmoil in Syria was raging in Russia. Read especially the last part. From Selected...

New paperback from WEA BooksNarrative Fixation in Economics by Edward Fullbrook Here are the book’s various Amazon pages: United States $20, Brazil, Canada, France, Germany,  India,  Italy,  Japan,  Mexico,  Spain,  United Kingdom £15 ContentsPreface Chapter 1: The narrative pluralism of physics Chapter 2: Intersubjective reality, intrasubjective theory Chapter 3: Concealed ideology Chapter 4: From the natural to the social Chapter 5: Narrative rationality Chapter 6: What is the...

Oké. I’m a teacher. So, I’m primed and educated to be an arrogant nitpicker. But let’s make the best of a this dire situation and trash the work of Ferdinando Giugliano and Christian Odendahl who defile the language of scientific economics. Which is not just a mistake but a dangerous act which might cause misunderstandings and destructive economic policies. On the website of the Centre for European Reform they state about Italy: “But Italy mostly has itself to blame. The abysmal...

from David Ruccio Where does all the surplus in the U.S. economy go? Well, a large chunk of it is captured by the top 1 percent, whose share of national income almost doubled between 1970 and 2014—from 11 percent to 20.2 percent. Equally interesting is the composition of that growing share of national income, which we can decompose thanks to new data from Thomas Piketty, Emmanuel Saez, and Gabriel Zucman. One way of making sense of the way the top 1 percent manages to capture a...

Are neoclassical macro models post-truth? It might very well be. The ‘workhorse’ neoclassical macro  ‘DSGE’ models used by for instance central banks state that lower real wages will solve unemployment, largely because these lower wages will entice ‘marginal’ workers, like the elderly and women to leave the labor force (read this, by Lawrence Christiano, Mathias Trabandt and Karl Walentin (2011). Less workers, unemployment solved! But does this also happen? Ehhmmm…no (graph2). After...

from David Ruccio Neil Irwin is right: “Poor and working-class Americans have fallen behind over the last generation, receiving few of the gains of an expanding economy.” So, he wants to devise a tax plan to change that. The problem is, Irwin only looks at raising the income of the bottom 20 percent of families to where they would be if they shared equally in the gains since 1979.  So what would it all cost? The Tax Policy Center crunched the numbers: The policy would deplete federal...

According to Polanyi: [T]he victory of fascism was made practically unavoidable by the liberals’ obstruction of any reform involving planning, regulation, or control. (Polanyi 1944, p. 257) The direction and content of socioeconomic development in the EU have been essentially determined by market laissez-faire, ultimately dictated by the financial markets’ irrational, manic-depressive psychology. The institutions and the economics of the orthodoxy, which form the constitutional...

from David Ruccio My students are worried—many of them obsessed by the possibility—they’re not going to be better off than their parents. As it turns out, they’re right.   According to new research by Raj Chetty et al. (pdf), the rates of “absolute income mobility” (the fraction of children who earn more than their parents) have fallen from approximately 90 percent for children born in 1940 to 50 percent for children born in the 1980s. And the likelihood is, that rate is going to fall...

from Dean Baker Economists are not very good at economics. We repeatedly get reminded of this fact when we see the economy act in ways that catch the bulk of the profession by complete surprise. The most obvious example is the housing bubble, whose collapse gave us the financial crisis and the Great Recession. Almost no economists saw the bubble or the potential hazards posed by its bursting. But this is just the beginning of what economists got wrong in recent years. Not only did the...

ht graph: @lugaricano The IMF is totally right: the EU is mistreating Greece – and the EU knows. The IMF is also right about this: Greece is – even within its budgetary confines – also mistreating its poor as too much money is flowing to the rich (graph). From the IMF website: The IMF is not demanding more austerity. On the contrary, when the Greek Government agreed with its European partners in the context of the ESM program to push the Greek economy to a primary fiscal surplus of 3.5...