Tag Archives: Economics

On limits of the system — Keynes and Marx  [embedded content]

 If failing to understand some basic Keynes­ian relations is a part of the explanation of what happened, there was also another, and more subtle, story behind the confounded economics of austerity. There was an odd confusion in policy thinking between the real need for institutional reform in Europe and the imagined need for austerity – two quite different things … An analogy can help to make the point clearer: it is as if a person had asked for an antibiotic for his fever,...

Fundamental uncertainty due to unknown and unknowable future events prevents rational calculations from accurately anticipating the future. This implies that the expectations that intentionally rational actors hold are not of the kind assumed by rational expectations theory. The proposition developed in the paper states instead that expectations are fictional in the sense that they are based on pretensions of future states of the world. Understanding decision processes based...

Demand effects in the long run In the standard mainstream economic analysis — take a quick look in e.g. Mankiw’s or Krugman’s textbooks — a demand expansion may very well raise measured productivity in the short run. But in the long run, expansionary demand policy measures cannot lead to sustained higher productivity and output levels. In some non-standard heterodox analyses, however, labour productivity growth is often described as a function of output...

Raj Chetty — big data ‘solutions’ to poverty Chetty’s pitch to the nation is that our problems have technocratic solutions, but at times I sense that he is avoiding an argument. Surely our neighborhoods can be improved, and those improvements can help the next generation achieve better outcomes. But what of the larger forces driving the enormous disparities in American wealth? Poor people would be better off if their children had better prospects, but also...

A slope even non-economists can loveGuest post by Jeff Mosenkis of Innovations for Poverty Action First, please pass along to your skiing friends that the owner of the ski treehouse above in Whitefish, MT (Glacier National Park adjacent) is offering to donate proceeds to the non-profit I work for, IPA, from any rentals between now and Jan 31. (Instructions here)Among other things, IPA’s been investing in expanding the things that academics don’t always have incentives to do, hiring Ph.D.s...

Why philosophy and methodology matter for economics A critique yours truly sometimes encounters is that as long as I cannot come up with some own alternative to the failing mainstream theory, I shouldn’t expect people to pay attention. This is, however, to totally and utterly misunderstand the role of philosophy and methodology of economics! As John Locke wrote in An Essay Concerning Human Understanding: The Commonwealth of Learning is not at this time...

The essence of neoliberalism The neoliberal utopia evokes powerful belief – the free trade faith – not only among those who live off it, such as financiers, the owners and managers of large corporations, etc., but also among those, such as high-level government officials and politicians, who derive their justification for existing from it. For they sanctify the power of markets in the name of economic efficiency, which requires the elimination of...

What will it take for the euro to survive? [embedded content]

Wirtschaftsweise — ganz neue Töne Am Mittwoch hat der Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung sein Jahresgutachten vorgestellt … In diesem Gutachten nun wird das vielleicht wichtigste angebotspolitische Symbol einer kritischen Betrachtung unterzogen: die Schuldenbremse. Eine Mehrheit der Ratsmitglieder verteidigt sie zwar noch, aber diese Mehrheit ist stark geschrumpft. Von den fünf Räten sprechen sich nur drei für die...