Real-World Economics Review

from Dean Baker I’m not worried at this point about a deflationary spiral, but I see what, to my view, is a plausible scenario where the CPI actually goes negative in the next twelve months. I go through the categories and my predictions component by component below, but there are four main items driving the story that I’ll mention here. First, I assume a sharp reversal in new and used car prices. The 11.1 percent increase in the former and 31.4 percent increase in the latter, have added...

Apology from the editor This post has been withdrawn on grounds of misattribution.  But the readers’ comments, which relate to the section beginning on page 50 titled “Adam Smith and the Birth of Western Economics” in Economies and Cultures: Foundations of Economic Anthropology by Richard R Wilk and Lisa C. Cliggett | Jan 2, 2007 have been retained. 

from Lars Syll “Mediation analysis” is this thing where you have a treatment and an outcome and you’re trying to model how the treatment works: how much does it directly affect the outcome, and how much is the effect “mediated” through intermediate variables … In the real world, it’s my impression that almost all the mediation analyses that people actually fit in the social and medical sciences are misguided: lots of examples where the assumptions aren’t clear and where, in any case,...

from Katharine Farrell    If economics is indeed concerned with how humankind goes about sustaining its own life, day to day, then representing that complexity must be built into the ontology of economic models.  Adjustments to variables, parameters and reference data can all contribute to improving models, but they do not necessarily address the ontological limitation that, in the original liberal theory “representation, [read that of Jevons and Walras] the economic process neither...

from James Galbraith Economics is a policy discipline. It is engaged with the problems, large and small, of social organization and the general good. As such it co-evolves with circumstances. It is historically contingent. The application of economic ideas to specific problems under specific circumstances may succeed or fail, and in the latter case, people with different ideas normally rise to prominence. Capitalism is an economic system whose characteristics and problems have preoccupied...

from Peter Radford Brian Arthur tells us that technology most often advances in the form of domain shifts.  In his narrative technologies cluster in related groups he calls domains.  So individual technologies might advance through a tweak here or there, but the economy advances through a shift from one cluster of technologies to another. I like this idea.  Especially when we then broaden the topic to use technology as a background against which we view a particular slice of history....

This graph shows how in the USA the share of total net worth held by the 50th to 90th wealth percentiles has decline drastically in the last two decades. https://www.trustnodes.com/2021/07/11/americas-middle-class-drastically-shrinks

from Lars Syll Few volumes in contemporary economics have been more lauded, and have summarised a zeitgeist, as much as Abhijit Banerjee and Esther Duflo’s Poor Economics … The implicit premise of the book is that interventions that work in one place can be expected to work in another. This presumes not only that the results of such “micro” interventions are substantially independent of the “macro” context, but also that a focus on such interventions, as opposed to those which reshape...

from Dean Baker The development of the new variant, which was first discovered in South Africa, can be attributed to our failure to open-source our vaccines and freely transfer technology, contrary to claims from the pharmaceutical industry and its political allies. Their big talking point is that South Africa currently has more vaccines than it can effectively use at the moment. This claim ignores two important points. The first is that we really don’t know where this strain originated....

from Asad Zaman A previous post Quotes Critical of Economics collected assorted quotes which are useful in writing up different kinds of critiques of economics. In addition, I collected quotes from Romer’s Trouble With Macro which are sharply critical of economics. In terms of the “Loyalty, Voice, Exit” paradigm, I look for “Exit” quotes, which suggest that we need to throw out the entire discipline and rebuild on new foundations; for a proposed alternative, see “Uloom-ul-Umran: An...