Real-World Economics Review

from Lars Syll Beneath the civic ideal of taxation as a collective, equitable endeavour lies an entrenched hypocrisy: the architecture of modern tax codes serves not the public good but the consolidation of private wealth. The progressivity of income tax is hollowed out at the uppermost tiers, where income is largely derived from capital — […]

from Dean Baker I have tremendous respect for both Paul Krugman and former FTC Commissioner Lina Khan. That is why it was frustrating to see their brief discussion of pharmacy benefit managers (PBMs) in a longer interview that Krugman did with Khan. Khan noted how, in her role as FTC commissioner, she sought to crack down on […]

from Asad Zaman Conventional university education is obsolete. The typical student earning a bachelor’s degree studies the equivalent of roughly forty textbooks over eight semesters. Today, however, any intelligent teenager with access to ChatGPT — trained on millions of books and articles — can surpass that graduate in a contest of factual knowledge. The model […]

from Paul Krugman Earlier today, Donald Trump posted on Truth Social, A whole civilization will die tonight, never to be brought back again. Not going to be a problem if we ever do get the war crimes trial that all of this deserves. A statement of motive, intent is completely clear. I don’t need to […]

from Lars Syll What economics does is to convert open systems into closed systems by excluding ‘moves’ which would render the system unstable. Dictators ‘freeze the frame’ by order: economists do it by ‘modelling.’ They model the world as a giant computer network in which every possible move has been programmed, and anything outside the […]

from Dean Baker There is an effort by several progressive unions and other organizations to put a 5% wealth tax for the state’s billionaires on California’s ballot this fall. It’s not clear they will succeed in getting it on the ballot or how the initiative will do (I’m in), but Donald Trump has already one-upped them. […]

from Lars Syll ‘Rigorous’ and ‘precise’ economic models cannot be considered anything else than unsubstantiated conjectures as long as they aren’t supported by evidence from outside the theory or model. To my knowledge, no in any way decisive empirical evidence has been presented. No matter how precise and rigorous the analysis, and no matter how […]

from Dean Baker A weather person who told us to bundle up for the cold weather, but also be sure to drink plenty of fluids to protect against the heat, would not be taken very seriously. That is roughly the state of economics when it comes to basic demographic questions. On alternate days the economy […]

Source: Gabriel Zucman  

from Lars Syll ‘Rigorous’ and ‘precise’ economic models cannot be considered anything else than unsubstantiated conjectures as long as they aren’t supported by evidence from outside the theory or model. To my knowledge, no in any way decisive empirical evidence has been presented. No matter how precise and rigorous the analysis, and no matter how […]

from Dean Baker A bit less than 20 years ago, a nationwide housing bubble collapsed, giving us the Great Recession. Millions of homeowners had their houses foreclosed. We had high unemployment for the better part of a decade. And the subsequent falloff in construction created the basis for another extraordinary run-up in house prices during […]

from Lars Syll Defenders of microfoundations and their rational expectations-equipped representative agent’s intertemporal optimisation often argue as if sticking with simple representative agent macroeconomic models does not impart a bias to the analysis. Yours truly unequivocally rejects that unsubstantiated view. These defenders often also maintain that there are no methodologically coherent alternatives to microfoundations modelling. […]

from Dean Baker Going cold turkey on trade with the United States would be painful for our former allies, but fortunately, it is not necessary. For all his ignorant bluster, Donald Trump is not about to cut off trade with the rest of the world. Furthermore, even though Trump may not realize it, his “punitive” […]

from Asad Zaman and WEA Pedagogy Blog An archaeology for deprogramming Econ 101—and a practical agenda for heterodox coordination   How GFC 2007 Tore the Veil of Money In 2007–08, money stopped behaving like a neutral “veil” and reappeared as the thing that actually moves the world: refinancing capacity, collateral chains, margin calls, forced sales, bank […]

from Lars Syll Neoclassical economics is known for its illicit use of garbled language which hides and convolutes instead of explains … An interesting example is the chapter by Edward Prescott, titled ‘RBC Methodology and the Development of Aggregate Economic Theory’. Let’s first give the floor to him, mind that ‘leisure’ means ‘measured unemployment’: “What […]

from Peter Radford I have been busy, so I have not been here lately … But: I have nothing to say about the Epstein files. Except: that the Epstein files have a lot to say about America [and the western world generally] Those files are a testimony to the enormous corruption of our elite.  It […]

from Lars Syll Perhaps the foremost financial crisis theorist of our time, Hyman Minsky, had as his central idea that crises are endogenous (system-internal) phenomena where stability creates instability and reduces safety margins for financial transactions with excessively high leverage effects. During the upswing phase of financial bubbles, safety margins shrink, and even the smallest […]

from Dean Baker There is a widely told story among elite pundit types that the US economy is soaring ahead, and Europe’s economy is mired in stagnation. As is the case most of the time when there is an elite consensus, it is wrong. A new post by Seth Ackerman shows that the differences in growth, and […]

from J Komlos and  RWER issue 112 Komlos (2024b) notes that technological disruption, hyper-globalization, neoclassical economic policies, and the financial crisis set the stage for populism. He argues that populism is rooted in grievances based on inequality and defines it as an exclusionary anti-elitist political ideology. Populism undermines democracy by weakening countervailing institutions and targeting minorities, […]

from Lars Syll While the United States often symbolises extreme wealth concentration, the perception of Sweden as an egalitarian utopia requires re-examination. In recent decades, economic inequality in Sweden has grown at a rate that, in some respects, rivals that of the US. Although Sweden maintains a robust social safety net, the underlying income inequality […]