Real-World Economics Review

from Lars Syll If you have an apple and I have an apple and we exchange these apples then you and I will each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas. George Bernard Shaw Adam Smith once wrote that a really good explanation is “practically seamless.” Is there any such theory within one of the most important fields of social sciences — economic growth? In Paul Romer’s Endogenous Technological...

from Jeff Ferry  For the last 90 years, the United States has pursued and advocated free trade. For the last 60 of those 90 years, American workers and other observers have watched America lose high-paying jobs to imports and asked: can this really be good for the American economy? Professional economists have answered, virtually unanimously, that yes, it is good, due to something called the Law of Comparative Advantage. They are wrong. Their free trade theory, based on the so-called...

Dean Baker’s article is two posts below this post.  Here is an article from CEPR about the suspension. Washington, DC — The Center for Economic and Policy Research (CEPR) expresses concern at the sudden and disturbing temporary suspension of Dean Baker’s Twitter account today. Baker, who co-founded CEPR with Mark Weisbrot in 1999, and who currently works with CEPR as a senior economist, had his Twitter account, @DeanBaker13, “permanently suspended” without warning earlier today, only...

from Asad Zaman The prescriptions of Development Economics were applied to generate growth in Pakistan in the 1960s by a group of expert economists from Harvard. As already discussed, these theories focus on the accumulation of capital, rather than the lives of human beings. Pakistani economist Mahbubul-Haq saw through the mathematical formulations to the heart of the strategy proposed for growth. He wrote: “ It is well to recognize that economic growth is a brutal, sordid process....

from Dean Baker It’s more than a bit bizarre that until Elon Musk bought Twitter, most policy types apparently did not see a risk that huge platforms like Facebook and Twitter could be controlled by people with a clear political agenda. While just about everyone had some complaints about the moderation of these and other commonly used platforms, they clearly were not pushing Fox News-style nonsense. With Elon Musk in charge, that may no longer be true. Musk has indicated his fondness...

from Lars Syll Ce qui fait l’unité de la discipline est plutôt l’identification causale, c’est-à-dire un ensemble de méthodes statistiques qui permettent d’estimer les liens de cause à effet entre un facteur quelconque et des résultats économiques. Dans cette perspective, la démarche scientifique vise à reproduire in vivo l’expérience de laboratoire, où l’on peut distinguer aisément la différence de résultat entre un groupe auquel on administre un traitement et un autre groupe semblable...

from Asad Zaman Milton Friedman was a powerful magician. His words charmed people into believing that night was day, against the evidence of their own eyes. Friedman’s maxim that “inflation is everywhere and always a monetary phenomenon” is widely believed by economists, even though it is abundantly obvious that costs of production, especially energy costs, play a major role in creating inflation.                                              Pinochet meets Friedman (STF/AFP/Getty...

from Dean Baker We should all recognize that Sam Bankman-Fried is much smarter than the rest of us. After all, outwardly he looks to be one of the biggest frauds of all time. By the age of 30 he amassed a fortune that dwarfs that of your average billionaire. He did it by running a crypto Ponzi-scheme. While claiming to be using his wealth to support philanthropies that were carefully selected to maximize human welfare, he was actually living a high life-style with his friends. Now that...

from Lars Syll When it comes to modelling yours truly does see the point emphatically made time after time by e. g. Paul Krugman about simplicity — at least as long as it doesn’t impinge on our truth-seeking. ‘Simple’ macroeconomic models may of course be an informative heuristic tool for research. But if practitioners of modern macroeconomics do not investigate and make an effort of providing a justification for the credibility of the simplicity assumptions on which they erect their...

from Dean Baker The World Health Organization is in the early phases of putting together an international agreement for dealing with pandemics. The goal is to ensure both that the world is prepared to fend off future pandemics by developing effective vaccines, tests, and treatments; and that these products are widely accessible, including in low-income countries that don’t have large amounts of money available for public health expenditures. While the drafting of the agreement is still in...