Category: Economic Theory
The analysis published under this category are as follows.
Tuesday, May 20, 2014
Balcerowicz’s Polish Big Bang versus Ukraine / Politics / Economic Theory
By: Steve_H_Hanke
On May 21, 2014, Leszek Balcerowicz will receive the 2014 Milton Friedman Prize for Advancing Liberty during a dinner at the Waldorf-Astoria Hotel in New York. The prestigious annual award by the Cato Institute carries with it a well-deserved check for $250,000.
For those who might have forgotten the accomplishments of my long-time friend, allow me to suggest that, in Balcerowicz’s case, a picture is literally worth a thousand words.
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Tuesday, May 20, 2014
The Successor to Keynes - Capital in the Twenty-First Century / Economics / Economic Theory
By: Casey_Research
By Jeff Thomas, International Man
Europe is abuzz with Capital in the Twenty-First Century by French economist Thomas Piketty, released in Europe in March of this year and now a best-seller. It has since crossed the Atlantic and is already the number-one best-seller for booksmith Amazon. It has been called a “blockbuster” of a book, and many reviewers believe that it has the ability to revolutionise the study of economics.
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Monday, May 19, 2014
How Fractional Reserves and Inflation Cause Economic Inequality / Economics / Economic Theory
By: MISES
Andreas Marquart writes: Mises Institute:How would you translate your new book’s title into English?
Andreas Marquant: I would like to say The State Causes the Poverty It Later Claims to Solve. This is the title of my article on mises.org last December. An even better title could be The Austrian Answer to Thomas Piketty.
MI: Your book addresses the issue of income inequality. Is income inequality a bad thing?
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Saturday, May 17, 2014
How the Free Market Ends Discrimination / Politics / Economic Theory
By: Thomas_J_DiLorenzo
When Branch Rickey integrated major league baseball in 1947 by hiring the great Jackie Robinson to play first base for the Brooklyn Dodgers, he did not do so because he was forced into it by any “civil rights” law. The federal civil rights laws at that point were almost twenty years into the future. Nor was he motivated by a sudden enlightenment on the issue of race. As the president and general manager of the Brooklyn Dodgers, Rickey was paid to make the Dodgers as profitable as possible. In order to do that, he had to recruit and develop the best baseball players he could find, regardless of skin color or anything else. He succeeded immediately with the hiring of Robinson, as the Dodgers went to the World Series in that year, in no small part due to the efforts of Jackie Robinson.
Thursday, May 15, 2014
What Bugs University Academic Economists / Economics / Economic Theory
By: Gary_North
For over 40 years, I have watched university economists attack Murray Rothbard in print. They never laid a glove on him.
They had certain things in common. They never published anything comparable to his book, Man, Economy, and State (1962). They never published anything comparable to America’s Great Depression (1963). They did not publish widely in any mainstream scholarly journals. Their existence was not acknowledged by Keynesians. But they knew Rothbard was a second rater, and some of them even said so.
Wednesday, May 14, 2014
Feudalism and Cronyism in Machiavelli’s Italy / Economics / Economic Theory
By: MISES
Jo Ann Cavallo writes: Although liberty is a recurring concern in Machiavelli’s writings, there is no consensus regarding either the definition of the concept or its relevance for his overall political thought. One direction of Machiavellian interpretation that has gained prominence in recent decades has focused on the concept of “libertas” in relation to a republican mode of government, even though Machiavelli’s use of liberty cannot be simply equated with republicanism. In tracing the various occurrences of the term in Machiavelli’s political works, Marcia Colish has pointed out that in the context of internal affairs “Machiavelli often connects libertà with certain personal rights and community benefits that characterize free states regardless of their constitutions.” She specifies, in fact, that “he clearly identifies freedom with the protection of private rights.”[1]
Monday, May 12, 2014
How Consumers Rule In a Free Economy / Economics / Economic Theory
By: Christopher_Westley
One of my favorite economists in the history of economic thought is the great Austrian, Carl Menger (1840-1921). While the mainstream of the economics profession acknowledges Menger’s place due to his contribution to the Marginalist Revolution in the 1870s, it otherwise ignores him because his theoretical framework does not lend itself to policy prescriptions. In an era in which the economics profession largely views itself as a shadow branch of government which is itself charged with managing the economy, thinkers like Menger (and those who work in his tradition) are not going to be extolled or studied in the same way that thinkers like Irving Fisher, John Maynard Keynes, Milton Friedman, or Paul Krugman have been.
Friday, April 18, 2014
Cognitive Dissonance on Minimum Wages and Maximum Rents / Economics / Economic Theory
By: MISES
Gary Galles writes: “Many cities are pricey places to live.” That was the opening line and major premise of a recent Los Angeles Times opinion piece advocating that high-cost cities raise minimum wages to mitigate the problem. I was struck by the fact that for years, the exact same basis was used by the same left liberal groups to justify rent controls. Apparently, high costs of living, largely caused by a panoply of government taxes, regulations, and restrictions, justify still more government-imposed coercion in both the labor and housing markets. Unfortunately, those government “solutions” are not only based on flaws in basic economic logic, but they are mutually contradictory.
Friday, April 18, 2014
The Sad State of the Economics Profession / Economics / Economic Theory
By: Frank_Hollenbeck
It is not an exaggeration to say the current reputation of economists is probably just below that of a used car salesman. The recent failures of economic policies to boost growth or employment have tarnished this image even more. This, however, is in sharp contrast to the past when economists were seen as the intellectual roadblock to popular misconceptions, bad ideas, or more importantly, government policies sold to the public on false assumptions. Popular slogans such as “protecting American jobs” play on nationalism, but in reality only serve special interests. The economist of the past would never have hesitated to highlight the fallacies in such reasoning.
Thursday, April 10, 2014
For More Jobs and Stability, Set the Economy Free / Economics / Economic Theory
By: MISES
John P. Cochran writes: The headline in the print edition of theDenver Postof an associated press story on the nominationof Janet Yellen highlights a quote from President Obama, “She understands the human cost when people can’t find a job.” This statement about then-new Fed Chair Yellen, which emphasizes Yellen’s Keynesian-based commitment to the unemployment prong of the Fed’s dual mandate, underlies why some economists feared that no matter how bad policy might have been during Bernanke’s tenure, policy is likely to get worse rather than get better from a sound money perspective during a Yellen reign. Her empathy for the unemployed was clearly present in her remarks following her first official policy meeting which as reported by the Wall Street Journal “were a notable affirmation of her commitment to low rates until the economy is much stronger.” She emphasized, “The recovery still feels like a recession to many Americans, and it also looks that way in some economic statistics.” She then chose to support her remarks not with usual econ jargon and statistics, but“Ms. Yellen instead exhibited a personal touch ... by coloring her comments with experiences of three people who had struggled to gain full-time work.”
Thursday, April 10, 2014
Entrepreneurship: The Driving Force of the Economy / Economics / Economic Theory
By: Peter_G_Klein
Author of The Capitalist and the Entrepreneur, Peter Klein has published numerous books and articles on entrepreneurship from an Austrian perspective. Dr. Klein, who is executive director and Carl Menger Research fellow at the Mises Institute, was interviewed in late 2013 by eTalk’s Niaz Uddin on the topic of entrepreneurship:
Niaz Uddin: Tell us about entrepreneurship. What are the different contexts of entrepreneurship?
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Monday, April 07, 2014
How Minimum Wage Laws Increase Poverty / Politics / Economic Theory
By: George_Reisman
An Open letter to Thomas Perez, U.S. Secretary of Labor
Dear Secretary Perez:
Raising the minimum wage is a formula for causing unemployment among the least-skilled members of society. The higher wages are, the higher costs of production are. The higher costs of production are, the higher prices are. The higher prices are, the smaller are the quantities of goods and services demanded and the number of workers employed in producing them. These are all propositions of elementary economics that you and the President should well know.
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Sunday, April 06, 2014
We Don’t Need “Animal Spirits” to Understand Economics / Economics / Economic Theory
By: MISES
Per L. Bylund writes: A recently published article at The Week, titled “How can we unleash positive animal spirits into the economy? Change the narrative,” provides a clear example of what’s wrong with the perception of economics and why modern economic approaches, possibly aiming to amend the shortcomings“identified” by this perception, is at a loss of explaining anything important.
Wednesday, March 26, 2014
We Do Not Live in a Post-Scarcity World / Economics / Economic Theory
By: William_Anderson
Jeremy Rifkin long has perfected the art of adding two and two and getting five. In the 1980s, he claimed that entropy made it impossible for a free economy to exist, and therefore Rifkin concluded the state needed to plan and run things. How the state would triumph over the second law of thermodynamics is anyone’s guess. He later declared that a new “hydrogen economy” was just around the corner — government just needed to engage in central planning and order hydrogen to be our new fuel of choice.
Wednesday, March 26, 2014
Minsky’s Financial Instability Hypothesis / Economics / Economic Theory
By: John_Mauldin
Looking back, I see that I have mentioned the name Hyman Minsky in no fewer than ten Thoughts from the Frontline letters in just the past two years; and his name has popped up in all four letters so far this month, most notably on March 1, when we brought back one of my most popular pieces, “Black Swans and Endogenous Uncertainty” (the “sandpile” letter) and last week, when the letter was titled “China’s Minksy Moment?”
I wasn’t consciously aware of how often I had trotted Minsky out as I sat (somewhat unstably, I have to admit) atop a headstrong horse in the foothills of the Argentine Andes the other day; but my precarious situation did somehow get me thinking of Minsky’s Financial Instability Hypothesis, and it occurred to me that both you and I might learn something by going right back to its source, which turns out to be a rather unprepossessing five-page paper Dr. Minsky published at Bard College in 1992.
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Sunday, March 16, 2014
Why Government Cash Hand Outs Does Not Help Alleviate Poverty / Economics / Economic Theory
By: Sam_Chee_Kong
The current rise in the cost of living in Malaysia can be attributed to the past policies of our Government. It can be traced back to the Global Financial Crisis in 2008. During that time a lot countries are badly affected and Malaysia is not spared either. The prices of commodities plunged due to reduced demand in the global marketplace. Since Malaysia’s economy depended much on commodity exports especially palm oil and rubber, it is badly affected. Malaysia’s economy recorded a 7.5% GDP growth at the beginning of 2008 but has since deteriorated to negative growth of 6.2% in 2009. This can be shown by the following graph.
Thursday, March 13, 2014
John Rawls and Market Anarchy / Politics / Economic Theory
By: David_Gordon
Gary Chartier in this impressive book has put readers doubly in his debt. Chartier strikes at the heart of the vastly influential political philosophy of John Rawls. Libertarians can only applaud him for this, but we have even more reason to be grateful to Chartier. Having neatly dispatched Rawls, Chartier goes on to offer a strong defense of market anarchy.
Thursday, March 13, 2014
Inflating Assest Prices - Why the Wealth Effect Doesn’t Work / Economics / Economic Theory
By: MISES
Chris Casey writes: Higher equity prices will boost consumer wealth and help increase confidence, which can spur spending. — Ben Bernanke, 2010[1]
Across all financial media, between both political parties, and among most mainstream economists, the “wealth effect” is noted, promoted, and touted. The refrain is constant and the message seemingly simple: by increasing people wealth through rising stock and housing prices, the populace will increase their consumer spending which will spur economic growth. Its acceptance is as widespread as its justification is important, for it provides the rationale for the Federal Reserve’s unprecedented monetary expansion since 2008. While critics may dispute the wealth effect’s magnitude, few have challenged its conceptual soundness.[2] Such is the purpose of this article. The wealth effect is but a mantra without merit.
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Sunday, March 09, 2014
Robert Johnson: New Perspectives For Economics / Economics / Economic Theory
By: Jesse
Some of Johnson's remarks are extraordinarily insightful.
I enjoyed his comments on the modern preoccupation with modeling. But I do think his looking back to the Thirty Years War for the trend towards abstract theory over the empirical method in general is a bit of a stretch. But it was kind of cool to think about it.
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Sunday, March 09, 2014
Economic Myth Busters – The Minimum Wage / Economics / Economic Theory
By: Andy_Sutton
It has been quite some time since we did a ‘Myth Busters’, even though there obviously remains quite a bit of mythology. So we’re going to chop away at it piece by piece and demonstrate once again that the media, government, and what I like to the call the ‘establishment’ (which is the concatenation of the aforementioned and the banksters) couldn’t give a rip about the truth. The establishment only cares about what is expedient and convenient for itself.