Real-World Economics Review

from David Ruccio The story currently being peddle by the folks at Bloomberg [ht: ja] is that the American middle-class is currently suffering, as the enormous wealth they managed to accumulate during the past few years is now dwindling. And that crisis—the end of their “once-in-a-generation wealth boom”—is what they will take into the midterm elections. There is a kernel of truth in that story but it is overshadowed by all that it leaves out. The small sliver of truth? Yes, as we can see...

from Lars Syll Page after page of professional economic journals are filled with mathematical formulas leading the reader from sets of more or less plausible but entirely arbitrary assumptions to precisely stated but irrelevant theoretical conclusions … Year after year economic theorists continue to produce scores of mathematical models and to explore in great detail their formal properties; and the econometricians fit algebraic functions of all possible shapes to essentially the same...

Herman Daly (1938-2022) was an early supporter of and a frequent contributor to the Real-World Economics Review, and the week before last, eleven days before he died age 84, he submitted an essay to RWER with this email. Dear Edward, I hope that you are well and surviving still in our disintegrating world.  RWER continues as a voice of sanity.  I am still kicking, but slowly, which has its benefits. Attached is an article that I am submitting to RWER. Suggestions welcome. All good...

from Norbert Häring The Council for Inclusive Capitalism with the Vatican turns two. After his famous verdict “This economy kills,” Pope Francis seems to now be offering big capitalists a spiritual platform for polishing their public image. Unless, the commitments that corporate CEOs post on this platform are seriously intended to make the world a better place? Let’s take a look. It’s a contrast that could hardly be greater: In late 2013, Pope Francis condemned predatory capitalism and...

from David Ruccio In a recent article in The Intercept, Jon Schwarz [ht: db] arrives at a perfectly reasonable conclusion—but, unfortunately, he makes a real hash of the data concerning changes in wealth ownership in the United States. Schwarz starts with the fact that the total amount of wealth owned by the bottom 50 percent of the U.S. population has doubled since the first quarter of 2020 (in other words, during the pandemic). He then takes issue with the idea that economic growth...

from Lars Syll Some economists seem to be überjoyed by the fact that they are using the same ‘language’ as real business cycles macroeconomists and that they therefore somehow can learn something from them. James Tobin obviously did not find any need to speak the RBC ‘language’: They try to explain business cycles solely as problems of information, such as asymmetries and imperfections in the information agents have. Those assumptions are just as arbitrary as the institutional rigidities...

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Financial wizardry recently caused massive problems for UK pension funds and the Bank of England. The Bank of England forces pension funds to take part in ‘LDI’ contracts which aim to insure possible future liquidity problems. These contracts however lead to real liquidity problems, which forced the Bank of England to intervene to prevent a market melt down. The solution became the problem. Deputy Governor John Cunliff of the Bank of England stated: ...

from Peter Söderbaum and WEA Commentaries current issue Introduction In all societies there is a tension between democracy and dictatorship. In some countries democracy is well institutionalized and the threat of dictatorship is successfully kept at a distance. In other societies, a system close to dictatorship is quite established and democracy is regarded as a threat. Today, we witness a confrontation between Russia, a nation close to dictatorship and Ukraine which appears to move...

from Lars Syll This year’s Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel honours Ben Bernanke, Douglas Diamond and Philip Dybvig. In the view of the Royal Swedish Academy of Sciences, the laureates ‘have significantly improved our understanding of the role of banks in the economy’. But what is the role of banks in the economy? The academy describes it this way: ‘To understand why a banking crisis can have such enormous consequences for society, we need to know...