Relevant and even prescient commentary on news, politics and the economy.

More Reflections on the Circular Flow of National Income

After posting an article about how imports create saving for investment, a conversation was started. The conversation led to doing more research and developing new explanations to understand the basic circular flow model. This is actually a very important issue to get right. The circular flow is such a basic part of understanding the economy. […]

Economics is the Study of Human Reaction Functions

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 […]

Institutions and markets

David Zetland at Aguanomics ponders the interplay of institutions and markets (reposted with authors permission). LocaL conditions in this context are those conditions in a watershed area. This is what I mean by institutions I wrote this for some partners on our water project, and I post it here because it seems to give a […]

Can Spain Achieve What Ireland And Latvia Did?

From Social Europe Journal comes more analysis of using Ireland as the standard success story for austerity (re-posted with permisson from the author and SEJ): Can Spain Achieve What Ireland And Latvia Did? BY RONALD JANSSEN Advice from a ‘very serious European’. Picking up on the IMF’s report on the Spanish economy and its call […]

Les Misérables

Via Alternet comes this quote from Victor Hugo in Les Miserables: Victor Hugo described this war with the poor in Les Misérables as one between the “egoists” and the “outcasts.” The egoists, Hugo wrote, had “the bemusement of prosperity, which blunts the sense, the fear of suffering which is some cases goes so far as […]

Ireland, Krugman, Kenneth Thomas

Paul Krugman points to Angry Bear Kenneth Thomas in this piece in the New York Times on the use of Ireland as somehow a success story of what are failed policies regarding employment: Ireland Is The Success Story Of The Future, And Always Will Be Via Mark Thoma, Kenneth Thomas analyzes the latest attempt to […]

CORRECT PREDICTIONS AND THE STATUS OF ECONOMISTS

Vis Brad Delong’s post on CORRECT PREDICTIONS AND THE STATUS OF ECONOMISTS Paul Krugman is certainly right that history has judged, and that the judgment of history is for James Tobin over Milton Friedman so completely that there is not even a smudge left where Friedman’s approach to a monetary theory of nominal income determination […]