Tag Archives: Economics

Time for another crash? On Black Friday 1929 market fundamentalist wet dreams of eternal growth took a serious hit. The stock market bubble exploded and crashed. Today​ we have a stock market situation much reminding of that in 1929. The Shiller P/E ratio is now even higher than that year. Those of us who know our Keynes-Fisher-Kindleberger-Minsky and have not completely forgotten all about economic​ history are starting to worry …...

I think there is an element of truth in the view that the superstition that the budget must be balanced at all times [is necessary]. Once it is debunked, [it] takes away one of the bulwarks that every society must have against expenditure out of control. There must be discipline in the allocation of resources or you will have anarchistic chaos and inefficiency. And one of the functions of old fashioned religion was to scare people by sometimes what might be regarded as myths...

On the real-world irrelevance of game theory It has been argued that some ascription of rationality plays a crucial role in particular in game theoretic modeling from a participant’s point of view. However, ascribing some kind of ideal reasoning process symmetrically to all players in the game, it becomes very unclear whether we as analysts can truly adopt a participant’s attitude to such an idealized interaction. After all, we are as a matter of fact only...

Keynes and the ‘natural’ rate of interest Keynes’s signal contribution was to switch the emphasis from interest rate adjustments to changes in income as the key macroeconomic adjustment mechanism. In so doing, he argued that the interest rate and asset prices adjust to clear balance sheets incorporating stocks, not flows, of financial claims. He pioneered national income accounting which now reveals the importance of leakages due to business saving, taxes,...

Guest post by Jeff Mosenkis of Innovations for Poverty Action. Two Ebola survivors are suing the government of Sierra Leone in international court to discover what happened to missing millions of dollars meant to compensate and support survivors like them. Many had their clothes burned in the effort to fight the spread of the disease, and survivors were promised a support package that often failed to materialize. More than 30 percent of the resources donated to the government were...

Guest post by Jeff Mosenkis of Innovations for Poverty Action. Two Ebola survivors are suing the government of Sierra Leone in international court to discover what happened to missing millions of dollars meant to compensate and support survivors like them. Many had their clothes burned in the effort to fight the spread of the disease, and survivors were promised a support package that often failed to materialize. More than 30 percent of the resources donated to the government were...

Guest post by Jeff Mosenkis of Innovations for Poverty Action. Two Ebola survivors are suing the government of Sierra Leone in international court to discover what happened to missing millions of dollars meant to compensate and support survivors like them. Many had their clothes burned in the effort to fight the spread of the disease, and survivors were promised a support package that often failed to materialize. More than 30 percent of the resources donated to the government were...

Dani Rodrik’s Ten Commandments Dani Rodrik is not satisfied with the critique of mainstream economics put forward by yours truly and other mostly non-orthodox economists. So he has put up a list of ten commandments for economists, hoping thereby to somehow ‘save’ mainstream ‘the model is the message’ economics from​ the critique. The two central commandments are 3. Make your model simple enough to isolate specific causes and how they work, but not so simple...

The truth about the minimum wage It has been more than eight years since many of the United States’ cashiers, dishwashers, janitors, lifeguards, baggage handlers, baristas, manicurists, retail employees, housekeepers, construction laborers, home health aides, security guards, and other minimum-wage workers last got a raise. The federal minimum wage now stands at just $7.25. In real terms, these workers’ earnings have declined by nearly 13 percent since the...

Modern economics — an intellectual game without practical relevance Modern economics is sick. Economics has increasingly become an intellectual game played for its own sake and not for its practical consequences for understanding the economic world. Economists have converted the subject into a sort of social mathematics in which analytical rigour is everything and practical relevance is nothing. To pick up a copy of The American Economic Review or The...