Real-World Economics Review

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...

from David Ruccio We need to fundamentally reject our “free trade” policies and move to fair trade. Americans should not have to compete against workers in low-wage countries who earn pennies an hour. We must defeat the Trans-Pacific Partnership. We must help poor countries develop sustainable economic models. Sanders’s critique is buttressed by the conclusion of the latest report from the Economic Policy Institute, that the gaps between the richest and poorest families have grown in...

from David Ruccio Mainstream economics has clearly had a great fall. Just two days ago, I argued that—after the crash of 2007-08 and, now, Brexit—mainstream economists have had “nothing to offer, either in terms of insight or a path moving forward.” Also recently, Antonio Callari challenged Brad DeLong’s attempt to reduce economics to the mainstream debate between supply-siders and demand-siders and his argument that there’s no room for economists as public intellectuals. Now, Mark Thoma...

Should European countries accept free in-migration of people? Hmmm… many countries should focus on the problem of how to totally discourage out-migration. In many countries the young and well-educated have left in droves because of boom-bust crises followed by austerity, this despite unfavorable demographics. Latvia, Estonia, Bulgaria, Lithuania are examples – but even in Germany the ‘Harz-reform’ of around 2000 was followed by high net out-migration of Germans.  States should be...