Real-World Economics Review

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...

real-world economics review Please click here to support this journal and the WEA – Subscribers: 26,498       subscribe      RWER Blog     ISSN 1755-9472– A journal of the World Economics Association (WEA)  14,588 members, join         – Sister open access journals:  Economic Thought   and    World Economic Review     back issues Issue no. 77  10 December 2016download the whole issue Human growth and avoiding European disintegration: lessons from Polanyi          2Jorge Buzaglo         ...

from David Ruccio Certainly not by mainstream economists—not if they continue to defend their turf and to attack the new literature on “Slavery’s Capitalism” with the vehemence they’ve recently displayed. It makes me want to forget I ever obtained my Ph.D. in economics and the fact that I’ve spent much of my life working in and around the discipline. A recent article in The Chronicle of Higher Education [ht: ja] highlights Edward E. Baptist’s novel book, The Half Has Never Been Told...

from Asad Zaman This post, 6th in a sequence about Re-Reading Keynes, continues to borrow heavily from Brian S. Ferguson, “Lectures on John Maynard Keynes’ General Theory of Employment, Interest and Money (1): Chapter One, Background and Historical Setting” University of Guelph Department of Economics and Finance Discussion Paper No. 2013-06. However the first three paragraphs are mine. Distinguishing between ideologies and science: Deduction: According to Lionel Robbins, economic theory...