Economics

20

Do we need social stock exchanges?

Cross posted from The Conversation by Danielle Logue, Senior Lecturer in Strategy, Innovation & Organisation at University of Technology, Sydney & Markus A. Höllerer, Senior Scholar at UNSW Australia Public interest in the development of global impact investing received a significant boost last year, due to an international campaign to divest in fossil fuels by

79

Target the rentseekers, not workers on tax

Cross posted from The Conversation by Warwick Smith, Research economist at University of Melbourne Tax is back in the spotlight with coalition MPs and the Australia Institute talking about getting rid of some of the exemptions to the GST. There has also been a lot of talk about whether or not corporate Australia is paying their fair share

31

Cash or copyright or real creativity?

Cross posted from The Conversation by Dan Hunter, Dean, Swinburne Law School at Swinburne University of Technology Imagine you were asked to write a law that encouraged creativity. What would it look like? Whatever your answer, it’s pretty clear that it wouldn’t look like copyright. Which is weird, right? Because copyright is supposed to be the

58

Job survival in the 21st century

Cross posted from The Conversation: by David Tuffley, Lecturer in Applied Ethics and Socio-Technical Studies at Griffith University It is a sobering thought that in ten years, around 65% of the jobs that people will be doing have not even been thought of yet, according to the US Department of Labor. In Australia, there are reports that up

17

Debunking Economics graphic novel needs help

A group of economic operatives have joined forces to mobilise the economics community through the IDEAeconomics initiative. Influential thinkers including Ann Pettifor, Michael Hudson, Dirk Bezemer, James Galbraith, Steve Keen and others, are promoting  a dynamic monetary view of the economy – hence the full name Institute of Dynamic Economic Analysis – and are advancing practical policies that

11

And the ersatz Nobel goes to…

FTAlphaville explains: The 2014 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to Jean Tirole, a French professor of economics at the Toulouse School of Economics for his analysis of market power and regulation. As the release from Nobelprize.org explains, Tirole’s contribution comes in figuring out the costs of information asymmetry

37

It really does pay to be a central banker

by Chris Becker In case you missed this – on the back of my suggestion that perhaps the RBNZ and RBA should merge given the former’s credibility comparative advantage over the latter, at least currency wise – The Australian reported Captain Glenn’s pay-package yesterday: The Remuneration Tribunal, that decides his salary, determined an increase of 2.4

23

Forecasting the failure of economics

by Chris Becker A very dry article via CBS popped up in the Twittersphere today that tried but failed to explain the inability of economics – as a profession – to forecast: The Queen of England famously asked why economists failed to foresee the financial crisis in 2008. “Why did nobody notice it?” was her question when

236

Housing shortage chimera rises

By Philip Soos and Paul D. Egan Over recent weeks, commentators have repeatedly claimed Australia’s high housing prices are due to a supply shortage. Former Treasurer Peter Costello blamed surging housing prices on a shortage, as did Alan Kohler. Treasurer Joe Hockey has a similar perspective, claiming: It is just an infinite mantra for international

130

Reconciling the economics of debt

Currently there is worldwide concern about debt. It is widely claimed that the mainstream economic community could not see the financial crisis coming because it ‘looked through’ money and debt to the real economy. And since debt, or in fact the dynamics of debt, seem to be important factors in the crisis, this was a failure of

42

Unraveling pension-system confusion

I’m constantly surprised at how fundamental concepts in economics are so easily confused as soon as they are applied to real life policy. Take the issue of fully-funded versus pay-go pension systems. In a pay-go system, pensions are paid to qualifying individuals each year by the government out of general revenues. In the fully-funded system

59

Can a nation save?

I want to offer here a brief analysis of how I think about saving and investment, and why it is important to be very clear about these concepts in policy discussions. Usually economists equate saving and investment when they shouldn’t. I find it easier to think of savings as not consuming today in order to

58

Unique economics of health care

I was prompted to write this follow-up on health economics after seeing a recent post by blogger Noah Smith, who weighs in with some reasonable views after some intense criticism of the ‘freakonomic’ Chicago-boy Steven Levitt. In a meeting with UK PM David Cameron, Levitt and his co-author apparently made some rather absurd remarks about

81

Piketty’s wealth tax is real, and it works

As the Piketty-train rolls on it leaves behind it a trail of confusion in economic circles about the proposition to reduce inequality via a global wealth tax. Economic thinking, it seems, floats on the political tide. The authors of this paper in 2006 noted that:r …at present there appears to be little interest in the

92

Poverty is not “complex”

Poverty is a social issue that usually attracts the label ‘tough problem’. Sometimes, when a bit of flair is in order, it is labelled ‘complex’ or ‘multi-dimensional’. This strikes me as a major cop out. Reducing or eliminating poverty is not ‘tough’ in any technical sense. The ‘tough’ part is our moral baggage – the

13

The basic flaw in all economic modelling

The Lucas Critique is summarised by Mark Buchanan as follows: Any prior regularity that might have existed in a set of data had been present only in the context of the policies prevailing in the past. Change the policies and those changes, by influencing the way people act and anticipate the future, may well strongly

12

The civil war within economics

Manchester University’s Post-Crash Economics Society (PCES) released a report recently into the way economics is currently taught at Manchester, which is relevant to economics teaching at universities worldwide. Their well articulated advocacy for pluralism in economics teaching, where neoclassical approaches are just one of many analytic techniques in the curriculum, has tapped into the current

5

RBA economics competition

From the RBA today: The Reserve Bank of Australia has launched this year’s RBA/ESA Economics Competition, in conjunction with the Economic Society of Australia (ESA) and the UNSW Economics Society. The competition invites students to write an essay on a topical economic issue affecting Australia. This year, the competition topic is Australian Productivity Growth. Judges will

22

Corrupting Piketty in the 21st century

The media attention surrounding French economist Thomas Piketty’s new book Capital in the 21st Century is growing ever more fervent. Here are my two cents. To me three things are clear to be about this book. First, it is a timely reminder that distribution of resources within society matters. This is especially important for an

17

Robinson: An introduction to economic doctrine

Imagine a modern economics textbook comprising of three parts, with the last two being Analysis and Modern Problems. What do you think would the first part would be called? I doubt your answer was Economic Doctrines. But that’s exactly how Joan Robinson began her textbook An Introduction to Modern Economics back in 1973. For Robinson,

14

Understanding the confidence fairy

One strange claim in the economic debate that followed the financial crisis was the impact of uncertainty on the path of investment and subsequently the recovery in economic activity. Taking just one example, it was claimed here that “fiscal policy uncertainty has directly harmed the American economy by increasing the unemployment rate by 0.6%, or

75

Was Marx right…about America?

Cross-posted from Yves Smith at Naked Capitalism. We participated in a Room for Debate forum at the New York Times, on the topic of “Was Marx Right?” Readers are likely to say, “But of course!” Yet Marx had such a large opus and his forecasts were so bold that any fair reading has to come

54

Spartan morality and utilitarian fantasy

I want to show how the morality on display in the movie 300, in which babies are cast into a chasm for minor deformities or other weaknesses and illnesses, is easily compatible with utilitarian logic. In doing so I hope to show that utilitarianism provides completely insufficient scaffolding around moral reasoning to eliminate almost any

3

Wrong lesson from Adam Smith’s pin factory

We commonly use stories to teach new ideas, but all too often end up taking the wrong lessons from them. My favourite example is the Coase theorem. Economics textbooks describe theorem as saying that it doesn’t matter where you place the liability for pollution, because in a world of zero transaction costs the right to pollute