Says John Aziz, “Economics, broadly defined, is the study of human action and interaction.” Which reminds me to post this, which has been long brewing in my head. More carefully and precisely defined, I posit the title of this post: Economics is (should be) the study of how individuals and groups react to changing circumstances (which circumstances include […]
It can be tough to articulate a cogent argument against high-frequency trading in the context of highly liquid, efficiently functioning securities markets, but I think Rajiv Sethi has done so (riffing off Michael Lewis’s typically scathing and revealing article on Goldman’s recent bad behavior). In brief, in my words: 1. Value investors are trying to buy shares in […]
I see this logical error so constantly, almost every day, that I feel the need to reiterate. Personal saving, virtuous and useful as it is for individuals, does not increase investment. This is what I call the “lump of money” fallacy (a.k.a. the loanable funds model). Ask yourself: If you transfer $10K from your bank […]
A few people have asked me to provide a quick introduction to Edward Lambert’s recent work on Effective Demand, which work I’ve mentioned a few times. That’s ironic, because I made those mentions in hopes that more-accomplished others would do the same for me. That help hasn’t been forthcoming, because quite a bit of work […]
I just got an email from LIS (the group that runs the Luxembourg Income Study and Luxembourg Wealth Study) giving notice of a new book: Income Inequality: Economic Disparities and the Middle Class in Affluent Countries Contrary to the title, there’s a whole section on wealth inequality. The book’s 17 chapters by 17 established researchers/research […]
Lots of desperation talk these days by Republicans hoping to win future national elections by increasing their share of the “missing” white vote, while ignoring all those brown people. (Sean Trende’s piece seem to be the epicenter at this moment.) Nate Cone drives a very effective stake through the heart of that zombie ambition here, with […]
Frances Coppola sums up and expresses a great deal of great thinking in her recent Pieria piece, The wastefulness of automation. I’d like to highlight one point, one that I’ve been pondering for a long time. There’s one area where machines — until they get sentient — can’t replace people (here from her response in comments): only […]
It’s really hard to kill this meme. Note the label on this graph from today’s Free Exchange post: Now change that heading to read “Business borrowing.” Sort of gives a different impression, right? The idea that the problem’s on the supply side is pervasive, and false or at least wildly overblown. Lending rates are at […]
Or: Why Banks Aren’t Like People Steve Keen does a good job of addressing Paul Krugman’s befuddlement with Richard Koo’s balance-sheet-based thinking, here, with detailed models showing how funds flow and stocks change over time. I’d like to address it more succinctly and I hope intuitively, by pointing out a simple misunderstanding that Paul shares […]
In his Defending the One Percent paper, Greg Mankiw is rather grudgingly acknowledging rent-seeking (and -getting) in the financial industry, and the allocation of top talent to that industry. He sez: The last thing we need is for the next Steve Jobs to forgo Silicon Valley in order to join the high-frequency traders on Wall Street. […]