Category: Economic Theory
The analysis published under this category are as follows.
Thursday, November 01, 2012
The Conundrum of Malaysia's proposed Minimum Wage / Economics / Economic Theory
By: Sam_Chee_Kong
Due to the scarcity of resources such as labor it is common for the government at times intervenes into the markets with the objective to prevent prices from rising and dropping too much from the equilibrium price. The Government can influence the market supply and demand through setting the price floors and price ceilings in the market.
An example of price ceiling will be the rent controls on housing. By imposition of the rent control, the government hope to provide affordable housing for the lower income group. Similarly the imposition of minimum wage is another form of setting the price floor. This will help prevent wages from going below a certain level set by the government. The Government hope that such a move will help alleviate the income and also ease the burden of the lower income group.
Read full article... Read full article...
Monday, October 29, 2012
Measuring GDP, Economics of Assumptions and Investing in an Uncertain World / Economics / Economic Theory
By: John_Mauldin
“As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality.” – Albert Einstein
“To trace something unknown back to something known is alleviating, soothing, gratifying and gives moreover a feeling of power. Danger, disquiet, anxiety attend the unknown – the first instinct is to eliminate these distressing states. First principle: any explanation is better than none… The cause-creating drive is thus conditioned and excited by the feeling of fear …"– Friedrich Nietzsche
Read full article... Read full article...
Friday, October 26, 2012
A New Model for Capitalism - How to Spark an Economic Boom Without Increasing Debt / Economics / Economic Theory
By: Nadeem_Walayat
The UK and US economies are stagnating whilst much of the euro-zone economies are in the grips of an economic death spiral of ever greater economic austerity in response to ever increasing debt to GDP ratios as economies contract.
The solution as far as the west is concerned has been one of printing money (electronically) to monetize government debt via the bailed out banks which is highly inflationary as the money printing is not backed by any real economic activity and hence continues to drive an exponential inflation mega-trend resulting in real terms loss of purchasing power for all workers and savers.
Read full article... Read full article...
Tuesday, October 23, 2012
Why Estonia Is Beating the Eurozone Economy / Economics / Economic Theory
By: Frank_Shostak
Against the background of a severe economic crisis in the eurozone, one is surprised to find a member of the euro area that is actually showing good economic performance. This member is Estonia. In terms of so-called real gross domestic product (GDP) the average yearly rate of growth in Estonia stood at 8.4 percent in 2011 against overall eurozone performance of 1.5 percent. So far in 2012 the average yearly growth stood at 2.8 percent in Estonia versus -0.2 percent in the eurozone.
Saturday, October 20, 2012
The Growth Recession, Can the Fed Create Demand? / Economics / Economic Theory
By: John_Mauldin
The Hoisington Quarterly Review and Outlook is one of the cornerstones of my reading on where the economy is headed. Van Hoisington and Lacy Hunt do a masterful job of turning data points into cogent, well-argued themes.
This month they waste no time in dissecting the Fed’s recent move to QE3 and similar efforts in Europe, arriving at the conclusion that “While prices for risk assets have improved, governments have not been able to address underlying debt imbalances. Thus, nothing suggests that these latest actions do anything to change the extreme over-indebtedness of major global economies.”
Read full article... Read full article...
Friday, October 19, 2012
Another Numerologist Gets Nobel Economics Prize / Politics / Economic Theory
By: Ed_Bugos
Witness the latest economist to win the Nobel Prize from the Swedes, who I’m certain lead the world in economic nonsense, for allegedly solving the unsolvable knowledge and calculation problems of central planners.
Huh?
Rather than explaining all that is wrong in their problem solving, in the interest of brevity let me just ask: did you mean you didn’t know Ludwig von Mises showed that this kind of thing was impossible almost 100 years ago?
Read full article... Read full article...
Wednesday, October 10, 2012
Counterproductive Minimum Wage Mandates / Economics / Economic Theory
By: BATR
Working for wages has never been the path for significant wealth. Most people are not equipped nor do they have the inclination to be engaged in business endeavors that will earn them a viable living. The reluctance that most workers bring to their occupation stems from their inability or unwillingness of properly understanding the related components that are essential in creating wealth. While many view work as a curse, the indispensable reconciliation for a practical and tolerable acceptance of universal plight is that no one is owed a living.
Read full article... Read full article...
Wednesday, October 03, 2012
What Parenting Teaches us About Economics / Economics / Economic Theory
By: William_Bancroft
Recent BBC documentaries on the great economists have created quite a buzz in the UK. No doubt the shows are proving popular on the BBC’s international channels too. The sorry state of the global economy and withered trust in economics today prompts another look at the giants of this social science. The usual names are re-examined, including John Maynard Keynes and Friedrich Hayek.
Monday, September 24, 2012
Keynsian Animal Spirits / Economics / Economic Theory
By: Alasdair_Macleod
The BBC is running a three-part series on notable economists, starting with Keynes. There were a number of errors made, but I shall ignore those and address two Keynesian fallacies. The first was that Keynes correctly anticipated the economic and political consequences of the Versailles Treaty, which inflicted punitive reparations on Germany: this was true. It was bizarrely extrapolated to the current situation, concluding that Germany must reduce its prosperity and economic power to a level closer to that of the other Eurozone countries in the interests of economic balance.
Read full article... Read full article...
Friday, September 21, 2012
Do Trade Deficits and Surpluses Matter? / Economics / Economic Theory
By: Ian_R_Campbell
Why read: Because I believe that where a country runs continuous net trade deficits and increasing net cumulative trade deficits that is a bad thing in the context of the economic well-being of that country. Others disagree, and in the current economic environment where the United States - still the world's most important economy - continuously:
Wednesday, August 29, 2012
Nazi Economics, a Lesson from History / Economics / Economic Theory
By: Bill_Bonner
Adam Tooze, a British historian, has written a marvelous book on the Nazi economy, The Wages of Destruction. He shows that, far from illustrating the success of intelligent central planning, the German economy of the Third Reich was a disaster. The National Socialists – or “Nazis” – had their plans for Germany. They were determined to put them into practice, regardless of what the Germans may have wanted for themselves. They fiddled with one sector after another.
Tuesday, August 28, 2012
Sandeep Jaitly, Ludwig von Mises, Ayn Rand and the Gold Standard Institute / Politics / Economic Theory
By: Darryl_R_Schoon
The Gold Standard Institute intends to bring truth into the open… and allow..people to make up their own minds…Far from us to try to impose our ideas on anyone!
Rudy Fritsch, Gold Standard Institute
Read full article... Read full article...
Monday, August 27, 2012
Dancing on the Grave of the Keynesian Economic System / Politics / Economic Theory
By: Gary_North
The collapse of the Soviet Union in December of 1991 was the best news of my lifetime. The monster died. It was not just that the USSR went down. The entire mythology of revolutionary violence as the method of social regeneration, promoted since the French Revolution, went down with it. As I wrote in my 1968 book, Marxism was a religion of revolution, and Marxism died institutionally in the last month of 1991.
Wednesday, August 15, 2012
What We Can Learn from a Great Economist / InvestorEducation / Economic Theory
By: David_Gordon
Although Leland Yeager calls himself a fellow traveler of the Austrian School (p. 100), rather than a full-fledged member of it — he is a fellow traveler of the Chicago School as well — no reader of his essays can fail to note one respect in which he resembles two quintessential Austrian economists, Ludwig von Mises and Murray Rothbard. Like them, Yeager is a scholar of enormous learning, a fact in evidence in each of the 28 essays of his collected here. As an example, few of his colleagues, one suspects, would know that "Thomas Hobbes … suggested that one might test whether a piece of abstract philosophizing means anything by seeing how readily it could be translated from the original language into another" (p. 267, n. 2).
Wednesday, August 15, 2012
Mind the Theory / Economics / Economic Theory
By: Thorsten_Polleit
The saying that things may work nicely in theory, but do not necessarily work in practice is well known.[1] It is typically meant to disparage the importance of theory, suggesting it would be too far removed from practical matters to help in solving the issue at hand.
The Prussian philosopher Immanuel Kant (1724–1804), in his 1793 essay "On the Popular Judgment: 'This May Be True in Theory, But It Does Not Apply in Practice,'" responded to such criticism; in fact, he responded with his essay to criticism leveled against his ethical theory by the philosopher Christian Garve (1742–1798).
Read full article... Read full article...
Thursday, August 09, 2012
Why Keynesians Hate the Gold Standard / Economics / Economic Theory
By: Gary_North
Recently, the leftist London Guardian posted an article against the nineteenth-century gold coin standard. The author, who seems recently to have begun shaving, has provided a highly useful summary of the Keynesian case against the gold coin standard. His article is a fine mixture of familiar old canards and creative new errors. His name is Duncan Weldon.
Mr. Weldon has not written a book, so it is difficult for me to know exactly what his monetary theory is. He was the unknown Keynesian in the 2011 BBC debate between two teams of economists at the London School of Economics: The Keynes vs. Hayek debate. I assume that Robert Skidelsky, his partner, thought he was an up-and-coming economist. Skidelsky is the author of a multi-volume biography of Keynes.
Read full article... Read full article...
Monday, August 06, 2012
The Future of the Austrian Economic's School / Economics / Economic Theory
By: Gary_North
On Saturday, July 28, I spoke to a group of almost 150 mostly undergraduates at the Mises Institute. They had flown in from across the USA and from 20 foreign countries. It was a week-long seminar. I was the final speaker.
It is an amazing experience for an anti-Communist of my generation to speak with a Chinese student studying economics in the USA.
Read full article... Read full article...
Wednesday, August 01, 2012
Escape From Economics / Politics / Economic Theory
By: Paul_Craig_Roberts
Readers ask me from time to time to recommend a book from which they can learn about economics.
The problem with reading a book to learn economics that is taught in the universities and practiced in Washington is that economics is now a highly formalized subject based on abstract models and assumptions and has been mathematized. It is not that the subject is totally useless and without any applicability to real world problems. Rather, the problem is that the discipline both lags an ever-changing world and got some things wrong at the beginning. Consequently, learning economics places one inside a box where some of the tools and understanding provided are outdated and incorrect.
Read full article... Read full article...
Monday, July 09, 2012
The Unseen Hand in Economic Progress / Economics / Economic Theory
By: Alasdair_Macleod
The assessment of economic growth based on Gross Domestic Product is a fallacy, because GDP is merely a measure of the amount of money in an economy. The one thing it does not measure, which is central to economic progress (note progress, not growth), is the level of entrepreneurial activity. This has important implications for the efficacy of government interventions and solutions to the current economic crisis.
Read full article... Read full article...
Wednesday, July 04, 2012
Krugman's Icelandic Economic Miracle Debate, Round 2 / Economics / Economic Theory
By: EconMatters
Paul Krugman has long been an advocate of Keynesian economics, and a proponent of aggressive and expansionary fiscal policy drawing parallels between Japan's decade-long deflation and the current Great Recession. Krugman also has also been writing quite extensively using Iceland as the poster child on the benefits of currency devaluation. Krugman's latest endeavor on the so-called 'Icelandic Miracle' was when he posted on his NYT blog last month with the following chart showing the seemingly much better GDP growth from Iceland compared to Ireland, Estonia, Lativa, and Lithuania, the countries either in Euro or has a currency pegged to the Euro. He then rhetorically remarked: