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Pandemic Musings

Summary:
From Peter Radford and WEA Commentaries I have been digging around a fair bit lately trying to understand the role of economics in the extent of the inequality being laid bare by the pandemic — more on that later.  A few interesting nuggets worthy of a quick note popped out along the way. Thomas Phillipon opens chapter one of his recent book this way: “The big debates in economics are about growth and inequality.  As economists, we seek to understand how and why countries grow and how they divide income among their citizens.  In other words, we are concerned with two fundamental issues.  The first is how to make the pie as large as possible.  The second is how to divide the pie.” Presumably his approach ignores the ugly dismissal of inequality by the likes of Lucas who said it was of

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from Peter Radford and WEA Commentaries

I have been digging around a fair bit lately trying to understand the role of economics in the extent of the inequality being laid bare by the pandemic — more on that later.  A few interesting nuggets worthy of a quick note popped out along the way.

Thomas Phillipon opens chapter one of his recent book this way:

“The big debates in economics are about growth and inequality.  As economists, we seek to understand how and why countries grow and how they divide income among their citizens.  In other words, we are concerned with two fundamental issues.  The first is how to make the pie as large as possible.  The second is how to divide the pie.”

Presumably his approach ignores the ugly dismissal of inequality by the likes of Lucas who said it was of no enduring interest.  Or words to that effect.  Distribution is one thing.  Inequality is another.  Sliding back and forth between the two words elides the moral centerpiece of the discussion: what level of inequality is acceptable?  Economics, once it adopted the marginal method, has avoided such a discussion and has, instead, hidden behind the “it’s the way the world works” argument.  In other words it took an ideological stance under the guise of scientific discovery.  Even today we can easily find economists blithely arguing that people get paid equivalent to their contribution.  As if calculating said contribution is that simple.  As if that’s the only factor in determining pay.  As if  … well you get the picture.

Economists are fond of playing neat tricks like this.

They stumble on something pretty useful, marginalism being one example, they elevate it to become a universal truth impervious to attack, and then they assume they know something about the world that others just don’t “get”.  read more

Peter Radford
Peter Radford is publisher of The Radford Free Press, worked as an analyst for banks over fifteen years and has degrees from the London School of Economics and Harvard Business School.

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