Real-World Economics Review

from Peter Radford “Even someone as smart as Larry Summers.”   Power can flummox even the best economist.  A typical explanation of events in an economy makes scant reference to the way in which power distorts the wondrous smooth motions that so obsess the discipline.  It’s almost as if human relationships don’t exist in those wonderful models they are all so proud of.  For the rest of us, power is central.  It takes little time to realize that establishing an imbalance can have all sorts...

from Shimshon Bichler and Jonathan Nitzan A lot has been written on the imminent decline of pharmaceuticals: their falling production, reduced R&D, declining innovation, the opioid crisis, patent cliffs, biting competition from generic drugs, growing opposition to IPR. The list goes on. Top Guns Judging by the yardsticks that matter the most, though – namely, the companies’ relative profit and relative capitalization – pharmaceuticals are doing just fine. In fact, based on these...

from Ikonoclast  (originally a comment) . . . what really counts is the amount of coal, oil and gas we are burning and thus how much CO2 we are releasing into the atmosphere. The benign Holocene is ending. Scientists have declared we have already entered a new era, the Anthropocene. The climate, and thus weather patterns, of the benign (for humans at least) Holocene were a resource for human civilization. It is common mistake, and one I long made, to pay attention only to primary input...

from Dean Baker In recent weeks there have been several articles noting the enormous wealth that a small number of people have made off of the vaccines and treatments developed to control the pandemic. Many see this as an unfortunate outcome of our efforts to contain the pandemic. In that view, containing the pandemic is an immensely important goal, if some people get incredibly rich as result, it’s a price well worth paying. After all, maybe we can even tax back some of their wealth...

from Ikonoclast (originally a comment) It’s strange in a time of gross over-population that dystopian fiction so often focuses on hypothesized fertility crises. We see this in The Handmaid’s Tale and Children of Men, for example. This is when the real problem is of course the diametric opposite. The earth has a vast over-population crisis of humans and an accelerating decline of all other forms of life (the sixth mass extinction). It leads me to wonder if genuine fears are deflected by an...

.[embedded content] from Lars Syll From a theoretical perspective, Simpson’s paradox importantly shows that causality can never be reduced to a question of statistics or probabilities. To understand causality we always have to relate it to a specific causal structure. Statistical correlations are never enough. No structure, no causality. Simpson’s paradox is an interesting paradox in itself, but it can also highlight a deficiency in the traditional econometric approach towards causality....

from Jonathan Nitzan and Shimshon Bichler Liberals insist that capitalism lifts all boats. It doesn’t, certainly not in the U.S. Since 1880, ‘real’ total returns on the S&P 500 rose, on an annual average, 4.6% faster than U.S. ‘real’ wages. The total returns/wage ratio today is 1,166 greater than in 1880.

from Lars Syll Researchers often determine the individual’s contemporary IQ or IQ earlier in life, socioeconomic status of the family of origin, living circumstances when the individual was a child, number of siblings, whether the family had a library card, educational attainment of the individual, and other variables, and put all of them into a multiple-regression equation predicting adult socioeconomic status or income or social pathology or whatever. Researchers then report the...

from Ken Zimmerman (originally a comment) Following the ‘Great Depression’ excessive wealth required justification. Otherwise those who possessed it were looked on as freeloaders and featherbedders who played no or little useful part in society. FDR came from one of America’s wealthiest family’s but proved himself by his work ethic, care for ordinary Americans, and work to save the USA. Even the wealthy who wanted to be ostentatious feared public rebuke and legal punishments if they...