31 January 2014
30 January 2014
Paul Krugman & The Nature Of Economics
Chris Dillow
So, it could be that "columnist Krugman" and "textbook Krugman" are both right, but they are describing different states of the world - and different facts require different models; I fear that Krugman's excessively combatative style is ill-judged in this context.
Why stopping the next financial crash is an impossible dream
John Aziz
As the mid-20th century economist Hyman Minsky put it, stability is destabilizing. The American economy experienced a period of relative stability from the end of stagflation in the early 1980s until the 2008 financial crash. Ben Bernanke called this period The Great Moderation. But how do people react to a stable world? Very often, they become more tolerant of risky behavior.
29 January 2014
28 January 2014
27 January 2014
The Anti-Scientific Revolution in Macroeconomics
So did plagues kill off part of the work force? Did termites eat part of the capital stock? Did technology retrogress? No, no. no. On the last point, has anyone noticed that the iPhone was introduced in 2007, and that the whole smartphone/tablet revolution has more or less coincided with a period of terrible economic performance?
So what did happen? Keynes offered an answer: it is, in fact, possible for economies to suffer from an overall lack of demand. Other people had said things along these lines, but Keynesian economics put it front and center.
This really was an intellectual revolution; indeed, while I’m generally against scientific pretensions, it amounted to a scientific revolution, something like plate tectonics in geology. Suddenly the seemingly inexplicable — what elevates mountain ranges? what explains periods of economic retrogression? — became comprehensible.
The Vicious Circle of Income Inequality
Robert Frank
Wealthy people don’t choose just any architects, artists, lawyers, plastic surgeons, heart specialists or cosmetic dentists. They seek out the best, and the most expensive, practitioners in each category. The information revolution has greatly increased their ability to find those practitioners and transact with them. So as the rich get richer, the talented people they patronize get richer, too. Their spending, in turn, increases the incomes of other elite practitioners, and so on.
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