Real-World Economics Review

from Maria Alejandra Madi In the post-war boom era of 1945 to 1971, the U.S. surplus was at the center of the global economic order. Throughout the Bretton Woods period, the United States recycled part of its surplus via foreign direct investment – mainly in Western Europe and also in Japan. Within the system of international economic flows, the U.S. exported goods to the rest of the world and also finance these purchases.  Besides, the United States created demand for the exports of...

It’s hard not to notice, during the American Presidential election drama, that despite all the debates and speeches, and multiple candidates, the terms “Neoliberalism” and “austerity” have yet to be employed, much less explained, these being the two necessary words to describe the dominant economic “regime” of the past 35 years. And this despite the fact that most observers recognize that a “populist revolt” driven by economic unhappiness is underway via the campaigns of Donald Trump and...

from Dean Baker Paul Krugman actually did not make any predictions on the stock market, so those looking to get investment advice from everyone’s favorite Nobel Prize winning economist will be disappointed. But he did make some interesting comments on the market’s new high. Some of these are on the mark, but some could use some further elaboration. I’ll start with what is right. First, Krugman points out that the market is horrible as a predictor of the future of the economy. The market...

from Michael Hudson Review of William Goetzmann, Money Changes Everything:How Finance Made Civilization Possible (Princeton University Press, 2016) Debt mounts up faster than the means to pay. Yet there is widespread lack of awareness regarding what this debt dynamic implies. From Mesopotamia in the third millennium BC to the modern world, the way in which society has dealt with the buildup of debt has been the main force transforming political relations. Financial textbook writers tell...

from David Ruccio This is my own chart—showing the dramatic changes in the average incomes of the bottom 90 percent, the top 10 percent, and the top 1 percent—from the World Wealth and Income Database. Incomes are in thousands of real 2015 dollars. Thus, for example, the average income of the bottom 90 percent fell between 1979 and 2015 (from $34.6 thousand to $33.2 thousand), while the average income of the top 10 percent rose (from $149.1 thousand to $273.8 thousand) and that of the...

Exhibit 1. Economic growth became norm only after industrial revolution Looking further back in history, however, we can see that economic stagnation due to a lack of borrowers was much closer to the norm for thousands of years before the industrial revolution in the 1760s. As shown in Exhibit 1, economic growth had been negligible for centuries before that. There were probably many who tried to save during this period of essentially zero growth, because human beings have always been...

from David Ruccio The problem of the growing gap between the small group of haves and all other Americans is (as I noted a week ago) so bad even the International Monetary Fund is sounding the alarm.  Despite the ongoing expansion, the U.S. faces a confluence of forces that will weigh on the prospects for continued gains in economic well being. A rising share of the U.S. labor force is shifting into retirement, basic infrastructure is crumbling, productivity gains are scanty, and labor...

from Asad Zaman This post was meant to provide a framework for further elaboration of the idea of ET1% — the Economic Theory of the top 1% — as one ingredient of a Meta-Theory of Economics. However, covering necessary preliminary background already took up more than a thousand words, so this project has been deferred for a later post. The goal of this post is to explain why we need to focus on Meta-Theoretical aspects of social science, rather than whether or not economic theories are...

Does, contrary to the assumptions of many economic models, ‘involuntary unemployment’ exist? Of course. We measure it (for the definition see below). And in the USA it is going down. About two months ago I posted this graph, which showed that what I call involuntary unemployment in the USA tended upwards. Two months of additional data show that this was, fortunately, just a hiccup – though the decline is not as fast as it used to be. Some musings about models and measurement, starting...

The UK environmental accounts.“Energy consumption from renewable and waste sources has been increasing since 1990; reaching a record high of 14.4 million tonnes of oil equivalent in 2014. These sources contributed 7.1% of total energy consumption.Emissions of greenhouse gases have decreased since 1990; peaking in 1991 at 845.2 million tonnes of carbon dioxide equivalent and falling to 608.6 million tonnes of carbon dioxide equivalent in 2014. This is the lowest level since 1990. The...