Real-World Economics Review

from Norbert Häring The hypocrisy of a working group led by the European Central Bank (ECB) on the preservation of cash, which is dominated by banks who at the same time continue to wage their war on cash, has been exposed by cash industry group ESTA in a report. ESTA sent the report to this working group – after it had recently left it in protest. As a part of its cash strategy, which the ECB Governing Council adopted last September and which it has been hiding in the depths of the ECB’s...

Inspired by a tweet (I probably spend too much time on Twitter), I wanted to understand why health insurance doesn't extend to our eyes and teeth, why the US doesn't have a more robust public health system (thanks racism), how healthcare and drugs got to be so expensive (thanks Bob Dole), and what healthcare looks like in a "post-COVID" world. The tweet: https://twitter.com/stepville/status/1397760624449359882 <br> Connect with Dean Baker on the internet:...

from Peter Radford When a large corporation goes on the hunt for a lower cost base of operations I doubt whether it thinks it will be penalized for what is a rational and frequently made decision.  After all if you can make the same revenue and reduce your costs your profit goes up. Yeah.  Capitalism 101.  If we all go about life in this way, and if we believe Adam Smith, all this pursuit of self-interest will shower society with the glories of social benefits previously unheard of. I...

from Lars Syll The gender pay gap is a fact that, sad to say, to a non-negligible extent is the result of discrimination. And even though many women are not deliberately discriminated against, but rather self-select into lower-wage jobs, this in no way magically explains away the discrimination gap. As decades of socialization research has shown, women may be ‘structural’ victims of impersonal social mechanisms that in different ways aggrieve them. Wage discrimination is unacceptable....

from Dean Baker If the waitress works in an upscale restaurant and earns a decent living, there is a good chance that she is paying a higher tax rate than a private equity partner. The reason is that private equity (PE) partners get most of their pay in the form of “carried interest.” This is money that is paid to them as a share of the returns on the money they manage. Since private equity partners are rich and powerful, their carried interest payments are taxed at the capital gains tax...

from Dean Baker There is plenty of evidence at this point that CEO pay bears little relationship to returns to shareholders. Yet, it is an article of faith in policy circles, especially progressive policy circles, that companies are being run to maximize returns to shareholders. This is why I loved this story. According to the NYT, Chad Richison, the CEO of Paycom, had a pay package that was worth $211 million. When it came up for vote of shareholders in a say-on-pay ballot, it was voted...

from Ikonoclast  (originally a comment) If history follows the path Thomas PIketty noted, it will take a major war or revolution to change matters. Each time profit rises faster than the overall rate of growth we get a war, like WW1 or WW2 or a great depression like most of the 1930s. Sometimes we get the depression, then the war. Piketty noted that under capitalism’s axioms: If R (rate of return on capital) is Greater Than G (growth in inflation adjusted dollars) then inequality...

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,...