Category: Economic Theory
The analysis published under this category are as follows.
Friday, October 01, 2010
Inflationism and Government Intervention Roots of the Great Depression / Economics / Economic Theory
By: MISES
Lionel Robbins writes: I want to start by saying something about the phrase "poverty in plenty" of which we hear so much. I cannot help thinking that it may be misleading to some readers. The object of this series is to explain why the economic machine sometimes produces so much less than it could produce, in spite of the fact that so many people consume so much less than they could consume.
Sunday, September 26, 2010
The Economic Impact of More Trade Agreements / Economics / Economic Theory
By: Pravda
Mauro Dias Lourenço writes:In the second half of the twentieth century, Brazil was one of the countries that grew fastest on the planet, especially until 1979, which includes the period of the so-called "economic miracle," from 1967 to 1973. The fact that the phenomenon coincided mostly with the period of military dictatorship (1964-1985) does not mean that resulted from an authoritarian regime in which the State has stimulated the development.
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Saturday, September 25, 2010
Is a Flat Tariff the Answer to America’s Trade Mess? / Economics / Economic Theory
By: Ian_Fletcher
The House Ways and Means Committee has finally approved a bill that would attempt to crack down on Chinese currency manipulation, a key cause of America’s trade deficit, by threatening China with retaliatory tariffs. Leaving aside the bogeyman of a trade war—which China is unlikely to start as the nation running the trade surplus and thus the nation having something to lose—this raises the obvious question of whether tariffs are a plausible long-term solution to America’s trade problems. What would happen, that is, if America reverted to its historical norm (from Independence to after WWII) of being a tariff-protected economy?Read full article... Read full article...
Friday, September 24, 2010
Partial Equilibrium Analysis – Part 2 / Economics / Economic Theory
By: Andy_Sutton
In the first part of this series, we took at a look at Partial Equilibrium (PE) analysis in terms of analyzing a particular good or service rather than macroeconomic aggregates. What PE allows us to do as well is to both qualitatively and quantitatively assess the true effects of taxes and subsidies. We can also answer whether or not taxes and subsidies represent Pareto efficiencies. For our example we chose to look at the area of gasoline taxes. Many state governments are considering increasing gasoline taxes in the face of collapsing tax receipts. Intuitively, it would seem that such measures would be penny-wise and dollar foolish, but let’s use PE and see if that bears out conventional wisdom.
Monday, September 20, 2010
The Empirical Case against Government Stimulus / Economics / Economic Theory
By: Robert_Murphy
Economists in the Misesian tradition stress the primacy of theory in the social sciences. When trying to figure out the Great Depression, for example, we can't approach the topic with a blank slate and let the facts "speak for themselves." Mises argued that in order for us to even know which facts to consider as relevant, we need to have an antecedent body of deductive insights.
Saturday, September 18, 2010
Economics vs. Fakeonomics, Free Trade Skepticism / Economics / Economic Theory
By: Ian_Fletcher
We skeptics of free trade are used to being told, “You don’t understand economics.” In fact, one major reason I wrote the book Free Trade Doesn’t Work was simply to expose, once and for all, that there do exist extremely serious and intellectually reputable arguments, within the confines of accepted mainstream economics, which question free trade. And indeed they exist.Read full article... Read full article...
Friday, September 17, 2010
H.G. Wells's Socialist Critique of Capitalism / Economics / Economic Theory
By: MISES
Paul A. Cantor writes: "One might wonder whether these intellectuals are not sometimes inspired by resentment that they, knowing better what ought to be done, are paid so much less than those whose instructions and activities in fact guide practical affairs. Such literary interpreters of scientific and technological advance, of which H.G. Wells, because of the unusually high quality of his work, would be an excellent example, have done far more to spread the socialist ideal of a centrally directed economy in which each is assigned his due share than have the real scientists from whom they have cadged many of their notions." —Friedrich Hayek, The Fatal Conceit
Friday, September 17, 2010
John’s Economic Worldview / Economics / Economic Theory
By: Doug_Wakefield
Today, we are faced with a period in world history of unprecedented change. Carl Jung, who worked with Sigmund Freud and is known today for his work in humanistic-existential psychology, believed that man perceived change as “death”. Dr. Janice Dorn, who has coached hundreds of professional traders since the mid ‘90s, stated to me in an interview for my December 2006 newsletter entitled Mindgames, that we avoid change because “it is incredibly difficult to shift paradigms, which of course is the way in which we perceived the world.”
Wednesday, September 15, 2010
Economic Thought in Ancient Greece / Economics / Economic Theory
By: MISES
Jesús Huerta de Soto writes: The intellectual odyssey that laid the foundations for Western civilization began in classical Greece. Unfortunately, Greek thinkers failed in their attempt to grasp the essential principles of the spontaneous market order and of the dynamic process of social cooperation which surrounded them. While we must acknowledge the important Greek contributions in the areas of epistemology, logic, ethics, and even the conception of natural law, the Greeks failed miserably to see the need for the development of a discipline, economic science, devoted to the study of the spontaneous processes of social cooperation that comprise the market.
Sunday, September 12, 2010
Where Krugman Went Wrong on Economic Stimulus / Economics / Economic Theory
By: Professor_Emeritus
Paul Krugman, writing in The New York Times on September 5 under the title "1938 in 2010", chastizes president Obama's economists once more for doing what they have promised not to do: to repeat the mistakes of president Roosevelt's economists in 1937 in pulling back fiscal stimulus too soon. According to Krugman, while president Obama's policies have limited the damage from the financial crisis to the economy, they have been too timid in opening the spigots to make money flow, as shown by levels of unemployment that is still disastrously high and increasing. He advocates applying more stimulus, nay, a burst of deficit-financing of the same order of magnitudes as that during World War II, which can amount to roughly twice the value of GDP, or $30 trillion.
Sunday, September 12, 2010
Western Economies Don't Need a Manufacturing Industry / Economics / Economic Theory
By: Phill_Tomlinson
A common assumption among many commentators is that Western countries need a manufacturing base. We have these trade and budget deficits because we don't 'produce' anything tangible. I suppose 200 years ago the same people would have said we need an agricultural base and not this 'phoney' manufacturing industrialisation many nations embarked towards. I disagree with Peter Schiff, Americans don't need manufacturing any more than a country used to employ huge numbers of the population in the agricultural sector. They just need to do things that other nations can't. The service sector is not a drag on the economy, its a path to further prosperity and represents an increase to a nations living standards.
Wednesday, September 08, 2010
The Ultimate Source of Profit and Loss on the Market / Economics / Economic Theory
By: MISES
The changes in the data whose reiterated emergence prevents the economic system from turning into an evenly rotating economy and produces again and again entrepreneurial profit and loss are favorable to some members of society and unfavorable to others. Hence, people concluded, the gain of one man is the damage of another; no man profits but by the loss of others.
Wednesday, September 08, 2010
Real Bank Credit and Real GDP Growth, Michael Boskin’s Summer of Economic History Amnesia / Economics / Economic Theory
By: Paul_L_Kasriel
Monetarism, In a September 2 op-ed commentary in the WSJ ("Summer of Economic Discontent"), Michael Boskin, former chairman of the President's Council of Economic Advisers under Bush 41, compares the anemic current economic recovery with vibrant ones, such as the recovery that commenced in the first quarter of 1983, when Martin Feldstein was chairman of President Reagan's Council of Economic Advisers. Mr. Boskin intimates that the reason the current economic recovery is so feeble is because of economic policies being pursued by the current presidential administration.
Sunday, September 05, 2010
The Economic Insane Asylum / Economics / Economic Theory
By: D_Sherman_Okst
In a Nutshell: Our economy is really an insane asylum run by lunatics.
Common Sense: No problem can be fixed before a solution is formed. No solution can be formed until the underlying problems are clearly identified.
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Sunday, September 05, 2010
Stimulus and Full Employment, Averting the Great Depression Again / Economics / Economic Theory
By: Mike_Shedlock
In multiple posts Paul Krugman is saying "I told you so". For example, please consider Nobody Could Have Predicted
Friday, September 03, 2010
Bad Monetary Policy Is Redundant / Economics / Economic Theory
By: MISES
George F. Smith writes: A great thinker once wrote that "all things useful are of such a nature that where there is too much of them they must either do harm, or at any rate be of no use, to their possessors."[1]
Having experienced the harmful results of a paper currency manufactured at will, early US statesmen tried to forbid it from ever happening again. Article I, Section 10 of the Constitution specified that no state shall "make any Thing but gold and silver Coin a Tender in Payment of Debts," while the
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Friday, September 03, 2010
If a Pure Market Economy Is So Good, Why Doesn't It Exist? / Economics / Economic Theory
By: MISES
Edward Stringham and Jeffrey Rogers Hummel writes: If a pure market economy is so good, why does it not already exist? If governments are so bad, why are they dominant throughout the world today? Indeed, is the widespread adoption of free markets ever likely to occur?
Many recent authors, including Tyler Cowen,[1] Cowen and Daniel Sutter,[2] Randall G. Holcombe,[3] and Andrew Rutten[4] question the feasibility of a pure libertarian society.[5] They maintain that such a system cannot arise or persist because some people will always have both the incentive and the ability to use force against others. These authors offer several reasons why, even if society starts out in a perfect libertarian world without any states (as Murray Rothbard and others advocate),[6] competing groups will eventually form a coercive government.
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Friday, September 03, 2010
Neo-Keynesian's, Signs of an Evil Economy / Economics / Economic Theory
By: Richard_Daughty
I am standing on the corner of the street, doing my duty to "give back" to society, in this case by yelling at morons passing by in the cars, "We're freaking doomed, you moron! Your own stupid government has destroyed you by letting the foul, fetid, festering Federal Reserve create too much money that they stupidly, stupidly, stupidly did as part of the stupid neo-Keynesian econometric theoretical lunacy that has mesmerized them, so that a shiny computer in front of a neo-Keynesian econometric economist is like a shiny toy in front of a monkey, and which has mesmerized the Fed and the government for similar reasons, and with similar results, in that the toy is now broken, the monkey cut its hand on the broken toy, the cut is infected, and there is a good chance that the monkey will die a horrible, painful death! Hahaha! How do you like them apples? Horrible, painful death! We're freaking doomed, including you and your hotshot car with the radio turned up real loud, trying to drown me out! And stop honking at me! I have rights, you moron!"
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Monday, August 30, 2010
Partial Equilibrium Economic Analysis, Part I / Economics / Economic Theory
By: Andy_Sutton
One of the many tools available to economists and analysts in determining the suitability of fiscal or economic policy is partial equilibrium (PE) analysis. However, many scoff at the notion of using partial equilibrium simply because many of its assumptions are deemed to be too unrealistic. However, for taking a look at the potential benefits (or costs) of a policy such as a tax on a single good, PE is a very valid construct. One of the biggest hot button topics these days in nearly every state is how to raise revenue (rather than cutting costs). One of the traditional cash cows for states is in the form of gasoline taxes. The same goes for the Federal government in this regard. However, as we all know, simply arbitrarily and capriciously taxing a product is not necessarily efficient. In fact it usually isn’t.
Wednesday, August 25, 2010
Economic Science and Theory: The Special, the Sublime, the Climax / Economics / Economic Theory
By: Pravda
The existence of the universe is something extraordinary!
The countless conjectures (mainly scientific) on the intrinsic characteristics of the universe and also the attempts to understand it have followed the history of mankind. This direction has been the role of Physical Science (prominently, but also chemistry) the "lady" of understanding the laws and forces that comprise the cosmos.
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