Homines libenter quod volunt credunt
Posted in Institutions, Macroeconomics, Regulation, Welfare State on Oct 12th, 2012
For much of the 20th century, if one was to look at the share of national income that ended up in the pockets of “capitalists” versus in the hands of laborers, you would have seen something very surprising given the conventional wisdom. What you would have seen is that in evil, greedy, capitalist America, workers […]
Posted in Macroeconomics, You Can't Have it Both Ways on Sep 27th, 2012
If you read editorials on energy development in the United States you will surely see that folks regularly celebrate the potential for the new “Green Economy” to deliver money and jobs in a way that would make Santa Claus envious. OK, fine. Let’s just believe that for the time being. Assume that the planners get […]
Posted in labor markets, Macroeconomics on Sep 17th, 2012
In case some of my readers want to see “Conservative” economists who would provide it: The recession of 2007-09 witnessed high rates of unemployment that have been slow to recede. This has led many to conclude that structural changes have occurred in the labor market and that the economy will not return to the low rates of […]
Posted in Macroeconomics, Politics on Sep 17th, 2012
I sure do miss the days of 4% real GDP growth. Remember, that’s the growth rate assumed by the Administration years ago that would prevail today. Kudos to readers who can dig up some of those old growth projections in a chart that was floating around. I went to the White House site and instead […]
Posted in Macroeconomics on May 12th, 2012
I apologize for the simple wonky post on the weekend and that you will not get to enjoy a pithy observation on this otherwise fine weekend. The “government budget identity” is simply a way to think about how a government can finance its expenditures. Suppose a government is required to help us build bridges and […]
Posted in Classical Liberalism, Macroeconomics, Politics on Apr 16th, 2012
Religious worship of the multiplier can very quickly devolve into a way to justify dishonesty in the market. I wished Keynesians would recognize this. Think of how such reasoning might go (from the standpoint of a businessman, no friend you should note, of capitalism): Businessman: “Gee, I have a product that some people like. If […]
Posted in Macroeconomics, Methodology on Apr 9th, 2012
Via Tyler Cowen, the very worthy Steve Randy Waldman discusses the Post-Keynesian argument for fiscal policy, even when we are not at the zero bound: Post-Keynesians did predict a crisis, on broadly the terms that we actually experienced. They argue that there are adverse side effects to using monetary policy to manage aggregate demand. Although […]
Posted in Macroeconomics, Price System, You Can't Have it Both Ways on Mar 22nd, 2012
The foundation of modern macroeconomic theory (yes theory, the empirical work is scant) is based on the idea that prices (nominal) are sticky. Simplifying greatly, if you adhere to a classical view of the world where all agents have perfect information (no good economist assumes this of course, but it makes a nice straw man […]
Posted in Economics Problems, Economists, Macroeconomics on Mar 14th, 2012
I am sure my readers would wrinkle their eyebrows upon utterance of the name Brad DeLong. After all, this is a guy who regularly calls all Republicans hacks and does not shy away from throwing his opponents under the ad hominem bus. But that does not mean you ought not read some of the things […]
Posted in Macroeconomics on Feb 14th, 2012
Be careful when you read people talking about aggregate demand shortfalls. When you hear it, they are about to recommend expansionary fiscal or monetary policy to “reinstate” aggregate demand. But demand is not demand is not demand. Remember your micro. How do we define demand? It is both your willingness AND ABILITY to pay for […]
