Posts Tagged ‘ economics ’

Everything popular is wrong: Malinvestment and consumers

June 3, 2014
posted by

Ludwig von Mises Institute Ludwig von Mises Institute
by J. Dayne Girard  

"Malinvestment, while misunderstood by many, is nonetheless an easy concept to grasp. Imagine that the government decided that cars were unsafe and, therefore, more people should drive trucks. To encourage the use of trucks over cars, the government offers easy credit to truck buyers through a federal truck loan program. The easy credit creates an artificially high demand for trucks, increasing revenue and profits for truck manufacturers at the expense of other industries. The easy credit encourages more people to buy trucks than would otherwise buy them. That’s malinvestment in a nutshell -- capital being diverted from somewhere to somewhere else through government intervention." (06/03/14)

http://tinyurl.com/ktvszjy  

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Piketty on Kuznets

June 3, 2014
posted by

Scott Sumner EconLog
by Scott Sumner  

"I have two big objections with Pikitty's characterization of Kuznets---the overall impression he creates, and the specific use of the term 'optimistic.' In fact, Kuznets was extremely pessimistic about income inequality in the third world, and didn't think simplistic free market policies would work." (06/02/14)

http://econlog.econlib.org/archives/2014/06/pikitty_on_kuzn.html  

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Chances are that you have no more expertise in economics than you have in astrophysics

June 2, 2014
posted by

Robert Higgs Independent Institute
by Robert Higgs  

"Look, I’m not going to lie to you: I’m an economist. I’m not bragging about this professional status; it’s simply a fact. If I were a plumber or a carpenter, I’d admit being one just as readily. Now, tens of thousands of other people also say that they are economists, but scarcely any of them is so in more than a nominal sense. They may have a Ph.D. in economics, yet it remains the case that their ideas about economics are no better than your average crackpot's. The overwhelming part of what people learn in graduate school in economics is mathematical mumbo-jumbo whose substance boils down -- if it boils down to anything, rather than simply evaporating -- to what F. A. Hayek called the pretense of knowledge." (05/29/14)

http://tinyurl.com/q7xhjtg  

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Cliches of progressivism #7: The free market ignores the poor

June 1, 2014
posted by

Foundation for Economic Education Foundation for Economic Education
by Leonard E. Read  

"Once an activity has been socialized, it is impossible to point out, by concrete example, how men in a free market could better conduct it. How, for instance, can one compare a socialized post office with private postal delivery when the latter has been outlawed? It’s something like trying to explain to a people accustomed only to darkness how things would appear were there light. One can only resort to imaginative construction." (05/30/14)

http://tinyurl.com/l2hxxaw  

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Thomas Piketty wants to keep billions of people poor to stop a few from becoming rich

May 30, 2014
posted by

Robert P. Murphy Rare
by Robert P. Murphy  

"French economist Thomas Piketty’s Capital in the Twenty-First Century is an almost 700-page book written by an academic economist, filled with historical statistics and theoretical discussions of 'Cobb-Douglas production functions.' And yet, it somehow was the #1 bestselling book on Amazon. What the heck is going on here? The answer is the conclusion Piketty draws: He wants the governments of the world to coordinate their efforts, sharing financial information among themselves so that no human being on Earth can hide from confiscatory taxes on both wealth and income. It is because today’s self-described 'progressives' share Piketty’s hatred for economic inequality that they celebrate his book." (05/29/14)

http://tinyurl.com/lpgzxs6  

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Natural disasters don’t increase economic growth

May 27, 2014
posted by

Ludwig von Mises Institute Ludwig von Mises Institute
by Frank Hollenbeck  

"Hurricane season is nearly upon us, and every time a hurricane strikes, television and radio commentators and would-be economists are quick to proclaim the growth-boosting consequences of the vicissitudes of nature. Of course, if this were true, why wait for the next calamity? Let’s create one by bulldozing New York City and marvel at the growth-boosting activity engendered. Destroying homes, buildings, and capital equipment will undoubtedly help parts of the construction industry and possibly regional economies, but it is a mistake to conclude it will boost overall growth." (06/27/14)

http://tinyurl.com/lwmkue7  

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Immortal Keynes?

May 27, 2014
posted by

Sheldon Richman Future of Freedom Foundation
by Sheldon Richman  

"Whatever you may think of Keynesian economics, you have to give it credit for one thing: its staying power. You can’t watch a news program without hearing pundits analyze economic conditions in orthodox Keynesian terms, even if they don’t realize that’s what they’re doing. One TV personality says that the rejection of Keynes indicates a disbelief in all science! What accounts for this staying power?" (05/23/14)

http://fff.org/explore-freedom/article/tgif-immortal-keynes/  

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Sheldon Richman on the Scott Horton Show

May 27, 2014
posted by

The Scott Horton Show
by  

"Sheldon Richman, vice president of The Future of Freedom Foundation, discusses the incredible staying-power of Keynesian economics despite its fundamental flaws." [Flash audio or MP3] (05/23/14)

http://scotthorton.org/interviews/2014/05/23/052314-sheldon-richman/  

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Piketty vs. Giles

May 26, 2014
posted by

Robert P. Murphy Free Advice
by Robert P. Murphy  

"Let me emphasize my main position: I am not an expert on the various estimates of wealth concentration. So I don’t know how to referee on the specific allegations. However, let us not forget that Piketty clearly put in bogus information on both the minimum wage and tax rates that served his narrative. Those weren't transcription errors. In fact, they're so bad that I don't even know what to make of them. However, what is really frustrating in the reaction to the FT bombshell is people saying, 'Well, in the grand scheme Giles isn't really challenging Piketty’s main thesis.' Huh?" (05/24/14)

http://consultingbyrpm.com/blog/2014/05/piketty-vs.-giles.html  

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Piketty on inequality

May 22, 2014
posted by

Randall Holcombe Independent Institute
by Randall Holcombe  

"When one looks at the remarkable accomplishments of capitalism, an economic system that is roughly 250 years old, among its top accomplishments is how much it has done to improve the standards of living of average citizens and the working class. The rich have always been very comfortable, and capitalism has brought a level of comfort to working-class people today that would have been unimaginable to even the most well-off people a century and a half ago. Why should average citizens be concerned about the wealth of the very well-off if the system that makes them well-off produces prosperity for everyone? Evidence suggests that most people are not that concerned." (05/21/14)

http://blog.independent.org/2014/05/21/piketty-on-inequality/  

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Shocking quotes from Thomas Piketty

May 20, 2014
posted by

Robert P. Murphy Mises Canada
by Robert P. Murphy  

"Here at Mises Canada I’ve already tackled some of the serious theoretical problems underlying Thomas Piketty’s analysis scream in his bestseller Capital in the Twenty-First Century. However, I want to alert the innocent bystander to the shocking disregard for property rights and basic financial privacy that pervades the book. The quickest way to do this is simply reproduce some of the more alarming quotations, which I’ve done below." (05/19/14)

http://mises.ca/posts/blog/shocking-quotes-from-thomas-piketty/  

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Piketty’s Capital in the Twenty-First Century

May 19, 2014
posted by

LIbertarianism.org
by  

"Scott Winship joins Aaron and Trevor to discuss Thomas Piketty's book Capital in the Twenty-First Century. Why is Piketty's book getting so much attention in America? What does Piketty get right and wrong in his book? Piketty seems to be predicting the inevitable collapse of capitalism ... but is inequality really getting worse?" [Flash audio or MP3] (05/19/14)

http://tinyurl.com/pw7d2jx  

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What is monetary policy?

May 18, 2014
posted by

Scott Sumner EconLog
by Scott Sumner  

"When I use the term 'monetary policy' it refers to actions taken by the monetary authority aimed at influencing the supply or demand for base money, with the ultimate objective of influencing a broader set of macro variables, such as inflation or NGDP growth. I don't like it when people mix up monetary policy with other policies, such as banking regulation. On the other hand the dictionaries don't seem to agree with me." (05/16/14)

http://econlog.econlib.org/archives/2014/05/what_is_monetar.html  

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Piketty’s pretense of morality in the quest for equality

May 18, 2014
posted by

Cato Institute Cato Institute
by James A. Dorn  

"Piketty’s mantra is that 'capitalism and markets should be the slave of democracy and not the opposite.' He wants to promote 'progressive' policies so that 'democracy can regain control over capitalism and ensure that the general interest takes precedence over private interests, while preserving economic openness.' Yet, his planned redistribution via government taxation of income and wealth would undermine the fabric of civil society, stem economic growth, and diminish economic and personal freedom. Government power would rise and human liberty decline." (05/14/14)

http://tinyurl.com/mte6qcl  

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Piketty’s Capital, part 1

May 16, 2014
posted by

Randall Holcombe Independent Institute
by Randall Holcombe  

"Thomas Piketty's Capital in the Twenty-First Century is a surprising best-seller (how many economics books make the New York Times best-seller list?) and has been getting lots of press lately. Reading it, I have some comments and observations, which I will make in a series of posts rather than in one extended review. I’m figuring there’s a limit to how much readers of The Beacon will want to slog through at one time. It’s economics, after all, and my experience is that people don’t have a high level of tolerance for abstract economic commentary." (05/14/14)

http://blog.independent.org/2014/05/14/pikettys-capital-i/  

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How economists treat interest

May 14, 2014
posted by

Robert P. Murphy Free Advice
by Robert P. Murphy  

"Economists often make a distinction between an actual market price in a transaction, versus a 'hypothetical price' that we imagine must be the case in order to complete our model. For example, suppose we have a group of potential workers and potential employers, and that we know their preferences for leisure/wages and output/money. Every day we can compute what the market-clearing wage is. Now suppose that on a religious holiday, the market-clearing wage is $82/hour, at which price the total quantity supplied and demanded of labor is 0 hours. (Nobody wants to work on this very holy day, and the wage needs to be $82/hour in order to make no employer want to hire even a single hour of labor.) So it’s fine to academically say, 'The wage is $82/hour even though no wages are paid,' but on the other hand, in the real world we would have no way of actually knowing that." (05/14/14)

http://tinyurl.com/lu7pxfx  

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A note on the “real” rate of interest

May 14, 2014
posted by

Robert P. Murphy Free Advice
by Robert P. Murphy  

"Suppose the nominal interest rate is 10%. So you lend someone $100 today, and get paid back $110 next year. Ah, but in the meantime, 'prices' have risen by 3%. So, we say that the 'real' or 'inflation-adjusted' interest rate is actually only about 7%. More specifically, most economists would look at a basket of consumer goods to gauge the 'price level' and say that it has risen 3%.
So if you step back and consider, what we’re ultimately doing is figuring out how many more units of consumption goods people get, if they are willing to postpone consumption for a year." (05/12/14)

http://tinyurl.com/kcnjakq  

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Never debate the impact of a price change

May 13, 2014
posted by

Scott Sumner EconLog
by Scott Sumner  

"There as been a lot of recent discussion about the 'Neo-Fisherite' claim that higher interest rates lead to higher inflation. Noah Smith has a good summary. Unfortunately the debate has been marred by a lack of precision. What is being held constant when we talk about higher interest rates, and what is allowed to change?" (05/13/14)

http://econlog.econlib.org/archives/2014/05/never_debate_th.html  

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Twelve issues with Piketty’s capital

May 12, 2014
posted by

Eamonn Butler Adam Smith Institute
by Dr. Eamonn Butler  

"Piketty’s thesis is that the rate of return on capital exceeds the general rate of growth (r > g). So, barring wars, capital owners accumulate a larger and larger share of the world’s wealth. 1. This theory does not fit the facts." (05/12/14)

http://tinyurl.com/luxh5h8  

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Pricking the Piketty bubble

May 12, 2014
posted by

Spiked
by Sean Collins  

"Piketty’s single-minded concern with lessening income and wealth inequalities is myopic. It leads him virtually to celebrate the wartime years of 1914 to 1945, because that period reduced the gap between rich and poor. What really matters are significant increases in absolute living standards for the masses, which includes leisure time as well as pay, and can come from both individual advancement as well as improvements in social conditions. Yet, for all his reams of statistics, Piketty has remarkably little to say about those on middle or lower incomes. Instead, he asks us to examine forensically the wealth of the one per cent, which, in the absence of any higher purpose, begins to feel like vicariously watching reality TV shows about celebrities in mansions. The over-hyped reaction to Piketty in the US and UK has little to do with the merits of the book itself, and much more to do with the current preoccupations of the Anglo-American elite." (05/09/14)

http://tinyurl.com/mm6j4be  

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Piketty-Piketty

May 8, 2014
posted by

Don Boudreaux Cafe Hayek
by Don Boudreaux  

"I’m nearly finished reading Piketty’s tome. I share the above paragraph with you because it condenses and conveys well in less than a single page much of Piketty’s world view. The following list is not meant to be an exhaustive enumeration of all relevant angles of Piketty’s world view (as I understand that view from having now read his monster book). Only some of the most important aspects of that view are indeed here." (05/07/14)

http://cafehayek.com/2014/05/piketty-piketty.html  

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When ideologies change

May 7, 2014
posted by

Scott Sumner EconLog
by Scott Sumner  

"Over the past 5 years I've done a number of posts discussing a strange phenomenon. My views on money/macro are in many respects quite close to the consensus view of 2007: 1. Fiscal stimulus is ineffective. 2. Monetary stimulus can be highly effective at the zero bound. 3. Low interest rates and a fast rising monetary base do not imply 'easy money.' And yet by early 2009 my views were widely regarded as heterodox, even bizarre." (05/07/14)

http://econlog.econlib.org/archives/2014/05/when_ideologies.html  

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A quick question for those who consider competition to be sometimes tortious

May 1, 2014
posted by

Don Boudreaux Cafe Hayek
by Don Boudreaux  

"If I understand Steve Landsburg’s argument, sometimes investors’ or entrepreneurs’ failure to account for the lost value of a rival’s (or of rivals’) investments creates social waste. This waste is the destruction of the value of rivals’ productive capital assets when the additional net social value of the new investment is less than the amount of social value of the ‘older’ assets that is destroyed by the new investment. I believe that Steve is mistaken. I promise to write more in-depth on this matter when my current flurry of busy-ness subsides, but I want here, before I forget it, to ask a question that just occurred to me about this matter." (05/01/14)

http://tinyurl.com/pf284eu  

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Compton and Long Beach togetha on this one: Piketty has no clue about capital

April 30, 2014
posted by

Robert P. Murphy Free Advice
by Robert P. Murphy  

"It’s rare that you will see Peter Klein and James Galbraith agree, but they do. And after getting my own copy of Capital in the 21st Century, I can join the party: Thomas Piketty doesn’t have the foggiest idea what economists are arguing about when they bring up concerns over aggregation in capital theory." (04/29/14)

http://tinyurl.com/n556kmh  

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Piketty gets it wrong

April 23, 2014
posted by

Michael D. Tanner Cato Institute
by Michael D. Tanner  

"For those who believe in the redistribution of wealth, the hero of the hour is Thomas Piketty, the French economist whose book Capital in the Twenty-First Century provides a serious critique of inequality in modern capitalist economies and warns that market economies 'are potentially threatening to democratic societies and to the values of social justice on which they are based.' To remedy this, he argues for a globally imposed wealth tax and a U.S. tax rate of 80 percent on incomes over $500,000 per year. The Left has been rapturous." (04/23/14)

http://www.cato.org/publications/commentary/piketty-gets-it-wrong  

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