Real-World Economics Review

from Dean Baker With inflation remaining stubbornly high for longer than I, and many others, expected, I want to take another stab at the argument of the inflation hawks. As a jumping off point, I will use the argument put forward by Larry Summers and Jason Furman, probably the two most prominent and coherent economists arguing that we have underestimated the risks of persistently high inflation.[1] There are three main components to the Summers-Furman (SF) argument. (Their arguments are...

from Maria Alejandra Madi and WEA Pedagogy Blog Hayek proposed the abolition of the government’s monopoly on the issuance of fiat money in his book “Denationalisation of Money: The Argument Refined” (1976). In reality, his support for a complete privatization of the money supply stemmed from his dissatisfaction with the management of central banks, which, in his opinion, had been heavily influenced by political considerations. As a result, the ultimate goal of Hayek’s denationalisation of...

from Lars Syll Breaking news! Using advanced multiple nonlinear regression models similar to those in recent news stories on alcohol and dairy and more than 3.6M observations from 1997 through 2012, I have found that drinking more causes people to turn into men! Across people drinking 0-7 drinks per day, each drink per day causes the drinker’s probability of being a man to increase by 10.02 percentage points (z=302.2, p<0.0001). Need I say, profound implications for public health...

from Nat Dyer Famously, Queen Elizabeth II asked professors at the London School of Economics (LSE) in 2008 why they did not notice the crisis coming. The moment has become a founding story of ‘new economics’. In the aftermath, the net was cast wide to catch those who did anticipate parts of the crisis. Many names have been put forward including Dean Baker, Steve Keen, Nouriel Roubini, Ann Pettifor, Raghuram Rajan, and Hyman Minsky. But, a name that’s missing from virtually every list was...

from Dean Baker The news media have been constantly hyping inflation in recent months. While everyone has been seeing the huge rise in gas prices over the last year (that’s what happens when the world reopens after a pandemic), used car prices have risen almost as rapidly. From December 2020 to December 2021 they rose 37.3 percent. This accounted for 1.03 percentage points of the 7.0 percent overall inflation in the last year. We know the story of these price increases. A fire in a...

from Lars Syll Piketty argues that the higher income share of wealth-owners is due to an increase in the capital-output ratio resulting from a high rate of capital accumulation. The evidence suggests just the contrary. The capital-output ratio, as conventionally measured has either fallen or been constant in recent decades. The apparent increase in the capital-output ratio identified by Piketty is a valuation effect reflecting a disproportionate increase in the market value of certain...

from Dean Baker and WEA Commentaries There have been numerous news articles in recent years telling us that China faces a demographic crisis. The basic story is that the market reforms put in place in the late 1970s, together with the country’s one-child policy, led to many fewer children being born in the last four decades. As a result, the number of current workers entering retirement exceeds the size of the cohorts entering the workforce, leading to a stagnant or declining workforce....

from Lars Syll [embedded content]

from David Richardson and RWER #98 To the extent they are taxed at all, capital gains are only taxed on realisation. In that way avoidance avenues can take place by simply not realising capital gains. The arguments against taxing gains as they accrue are pragmatic. It would be difficult to measure the value of assets each year to calculate tax liabilities. If capital gains are difficult to tax because they are difficult to value, then perhaps wealth should be taxed instead. Wealth could...

from Maria Alejandra Madi According to ILO, the COVID-19 epidemic was changed from a public health disaster to an employment and social crisis. The pandemic has had a devastating impact on worldwide public health, employment, and daily life. In this scenario, a lack of comprehensive policy initiatives exacerbates inequality and limits overall workplace growth. Among the most significant labor-market outcomes, we can recall: 1. Because many firms, particularly micro and small businesses,...