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from Dean Baker In his Washington Post column today George Will told readers that the problem of rising costs in the U.S. health care system is simply a case of Baumol’s disease. This refers to the problem identified by economist William Baumol (who recently died), that productivity in the service sector tends to rise less rapidly than productivity in the manufacturing sector. The implication is that if workers get paid the same in both sectors, then the cost of services will always rise...

from Lars Syll Some commentators on this blog — and elsewhere — seem to have problems with yours truly’s critique of the overly debonair attitude with which mathematics is applied to economics. In case you think the critique is some odd outcome of heterodox idiosyncrasy, well, maybe you should think twice …

from Asad Zaman Goethe starts his famous East-West Divan with a poem about the journey (Hegire), both physical and spiritual, from the West to the East. In this essay, we consider the analogous journey from Western to Eastern conceptions of development. This involves switching from viewing humans as producers of wealth, to viewing wealth as a producer of human development. To start with the Western conceptions, both Adam Smith and Karl Marx defined economic growth as the process of...

from Lars Syll The main reason why the teaching of microeconomics (or of “ micro foundations” of macroeconomics) has been called “autistic” is because it is increasingly impossible to discuss real-world economic questions with microeconomists – and with almost all neoclassical theorists. They are trapped in their system, and don’t in fact care about the outside world any more. If you consult any microeconomic textbook, it is full of maths (e.g. Kreps or Mas-Colell, Whinston and Green) or...

Going from bad to worse, so the way things are going seems the contribution to year over year GDP growth in q2 from credit expansion will be less than it was in q1: Never yet seen a current account surplus like this and a weak currency? (Euro area surplus = rest of world deficit, etc.) And the pressure has been building for over 3 years now as fear drivenportfolio selling, worked to keep the currency down:

from David Ruccio Most of us are pretty cautious when it comes to spending our money. The amount of money we have is pretty small—and the global economic, financial, and political landscape is pretty shaky right now. And even if we’re not cautious, if we’re not prudent savers, then no harm done. Spending everything we have may be a personal risk but it doesn’t do any social harm. It’s different, however, for the global rich. The individual decisions they make do, in fact, have social...

The Minnesota Star Tribute has a bizarre story entitled Minnesota bill against female genital mutilation raises opposition. It begins: Opposition from some members of Minnesota’s immigrant and refugee communities is slowing the momentum of a bill that would impose stiff penalties for parents involved in cases of female genital mutilation. Let’s call it like it is: there are people who are opposed to a law designed to reduce child abuse, and in particular, the...

from Dean Baker In the years since the 2008 economic crisis, financial transactions taxes (FTTs) have gone from a fringe idea to a policy that is in mainstream policy debates. They are seen as a way to both raise large amounts of money and to slow the pace of churning in financial markets. For this reason, most progressive Democrats have come out in support, and even the Clinton campaign provided a hat-tip to some form of taxation on high frequency trading. This is a welcome change from...

from Peter Radford Just how pejorative must we be in order to get attention? There are silly things in economics that need to be weeded out, so that something better can emerge. Sometimes I just say the whole thing is a waste of time, after all economics is not simply a body of thought, but it is also a social phenomenon, it has its own language, its own self-referential estimate of quality, its own hierarchy, and its own history that locks it tightly along a specific path. And, frankly,...