tag:blogger.com,1999:blog-378357508228064599.comments2024-02-02T16:01:04.939-05:00potential economicspotenteconhttp://www.blogger.com/profile/14638964804532367632noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-378357508228064599.post-9012205594290900742013-04-23T17:31:51.870-04:002013-04-23T17:31:51.870-04:00Regardless of "actual" economic activity...Regardless of "actual" economic activity (and growth), there is a quantifiable amount of money that gets created through loans (via fractional reserve lending) and then destroyed by loan payments. If "growth" means willingness of bankers to loan funds, then the current debts may be paid back but only by further borrowing. But if this borrowing is on better or equal terms then perhaps it's sustainable?potenteconhttps://www.blogger.com/profile/14638964804532367632noreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-28411949663698062412013-04-22T22:47:08.349-04:002013-04-22T22:47:08.349-04:00Re: your 4th point on interests, isn't the ide...Re: your 4th point on interests, isn't the idea that as long as there is economic growth, everyone can win? But the game changes when growth stops?<br /><br />Fun TED talk, especially the part on the monopoly of economists.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-62425687724711363982013-03-29T14:14:25.149-04:002013-03-29T14:14:25.149-04:00Definitely agree about expanding credit not being ...Definitely agree about expanding credit not being a "real" source of growth. Your point is important not only because debt is a time-bounded solution (debt comes due and can't increase forever) but also because debt has distributional consequences of its own (assuming borrowers are borrowing at rates above inflation).potenteconhttps://www.blogger.com/profile/14638964804532367632noreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-72348682083479497052013-03-29T12:59:26.111-04:002013-03-29T12:59:26.111-04:00Wait, I'm paying for this?Wait, I'm paying for this?MAWGhttps://www.blogger.com/profile/04167694200613078368noreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-2210208466033856662013-03-25T21:03:15.222-04:002013-03-25T21:03:15.222-04:00Great post and some really interesting points you ...Great post and some really interesting points you bring up with respect to Noah's comments. I agree with most of our post, but there are two things that I might object to: First, expanding credit creates demand in the short run, but it is not sustainable in the long run, as we've seen both in the Great Depression and the 2008 Financial Crisis. Credit has a role in bridging economic possibilities over time and perhaps even as an occasional policy lever to mitigate the peaks and troughs of major economic cycles, but it cant grow forever, because its growth increases its own fragility. We need real sources of growth, which investment in technology and human capital as well as the reduction of inequality itself can be parts of the solution. <br /><br />The second thing I would push back on a little is that I appreciate the distinction you are making between inequality of wealth and of income, suggesting that it is the inequality of income that creates the inequality of wealth. That is true to some extent, but the inequality of wealth also causes the inequality of income. Those with more wealth can invest in financial instruments that produce larger and larger shares of their income taxed at lower rates. So, my point is not to discount your distinction, but to suggest it goes both ways. Bluenoreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-33506486243440486962013-03-14T14:40:03.410-04:002013-03-14T14:40:03.410-04:00By extending the thought experiment to the extreme...By extending the thought experiment to the extreme case, in which poor people save their entire income, you clearly demonstrate the absurdity of the argument that inequality can be overcome through savings. I think the other side of Smith's argument, that poor people need to get better returns on their assets, is equally absurd. For one thing, even staggering returns on the savings of the poor would not help close the gap with barely modest returns on the invested wealth of the rich. For another thing, one of the key takeaways of the Rich Dad book series (not an authority, but insightful), is that most high-yield investment opportunities are only available to investors who are already wealthy, either by law or by practicality given the size or complexity of investment required.<br /><br />The role of markets in inequality is challenging. Although I don't have an answer to your puzzle of how to foster equality in a capitalist society, I would like to point out that neoclassical economic models are overt in their use of efficiency as the outcome to maximize. Such theories do not attempt to address the proper balance in the tradeoff between efficiency and equity. That assessment is our responsibility as citizens.TWBnoreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-81397838162870850852013-02-19T20:16:41.421-05:002013-02-19T20:16:41.421-05:00Do you remember the Charlie Mingus quote that Gram...Do you remember the Charlie Mingus quote that Grams had posted in her painting area:<br /><br />Creativity is more than just being different. Anybody can plan weird; that's easy. What's hard is to be as simple as Bach. Making the simple, awesomely simple, that's creativity. MAWGhttps://www.blogger.com/profile/04167694200613078368noreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-90199671856139574292013-01-24T16:31:24.183-05:002013-01-24T16:31:24.183-05:00Err, straight from structurally unemployed to empl...Err, straight from structurally unemployed to employed, that is.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-88911096283918125662013-01-24T16:30:47.152-05:002013-01-24T16:30:47.152-05:00I'd be curious to see if there is any discussi...I'd be curious to see if there is any discussion about the turning point where the marginal unemployed worker goes from being structurally unemployed to cyclically unemployed, and what policies (training?) are suggested for converting structurally unemployed workers to cyclically unemployed. Or can you go straight from structurally unemployed to unemployed?TWBnoreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-65361516915870625102012-12-24T14:16:23.361-05:002012-12-24T14:16:23.361-05:00That's a fair point. Out of the universe of th...That's a fair point. Out of the universe of things that one might get paid for, the subset that one actually can get paid for is quite limited, particularly given the messy reality of needing to get hired by picky employers to do most of them. So you already have quite limited access to ways to get paid from the outset, and then you have to compete for the right to get paid to do one of the few things remaining. Look at blogging, for instance, where I'd guess that fewer than one in a couple thousand people have distinguished their blogs sufficiently to derive income from writing them.TWBnoreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-1611889470780903312012-12-20T13:52:12.940-05:002012-12-20T13:52:12.940-05:00This is a distinction I want to get into further i...This is a distinction I want to get into further in other posts focusing more on the labor side, but I think actually IS hard to get paid for your work. Or rather, it's not so hard to get paid for work per say, because work is could be informally defined as "something we would probably not be doing if we were not getting paid." However, out of all the things we can and would like to do, it's a pretty limited subset that we can get paid for. And we get paid for them *because* we have some market power.<br /><br />You can only talk about market power in labor markets in a limited way, because you end up bumping into minimum wages and what qualifies as earning "a living" and that sort of thing. These are socially determined because you don't have an easy formula for costs like you do in a business. (This idea was a big take-away from Assumptions.)potenteconhttps://www.blogger.com/profile/14638964804532367632noreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-40400290197142009302012-12-20T13:04:29.979-05:002012-12-20T13:04:29.979-05:00Even though most readers are probably already up o...Even though most readers are probably already up on the concept, it might be helpful to talk about the opportunity cost component of earning zero rents. Otherwise it could seem like the theory says nobody earns a living without having market power. It's not really getting paid for your work that's hard; My interpretation is that what's hard is getting paid more than the minimum amount required to incentivize you to undertake the work.TWBnoreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-76173185815129483232012-11-19T19:51:54.863-05:002012-11-19T19:51:54.863-05:00I'd just add that the gains from the specializ...I'd just add that the gains from the specialization that results from trade not only assume easy shifting to the new specialized industry for employment, but they also assume redistribution of gains. This true of any "creative destruction" argument and while may be plausible within some countries, international re-distribution, unfortunately, strikes me as pure fantasy.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-13681818916402994162012-10-22T10:24:38.556-04:002012-10-22T10:24:38.556-04:00Does it look to you as if labor's income share...Does it look to you as if labor's income share rises leading up to each recession, peaks coincident with the recession, and then declines sharply after? Or am I looking at the graphical representation of the data in the Cleveland Fed paper with major selection bias?TWBnoreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-47238092119775476262012-10-11T16:37:49.246-04:002012-10-11T16:37:49.246-04:00An important follow up question would be'what ...<br>An important follow up question would be<br>'what would economics look like if it took politics into account' (or has it already exist? I want to say Marx, but now I am thinking, 'how can economics take politics into account without being ideological?)(a topic for a future post?)<br><br>It is interesting that this post precedes the post on equilibrium (since in a broader sense, general equilibrium theory aims at linking 'everything' together)<br><br>And the yin and yang image was quite striking as well. I don't know much about Chinese philosophy and medicine either but...I know that a number of ailments and diseases are thought to be caused by an imbalance between theses to elements. Could political and economic failures be explained through the lens of too much politics, not enough economics, or the reverse.<br><br>Thank you for writing this blogErnesthttp://www.blogger.com/profile/08393070532668604352noreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-54244402547881879062012-10-01T22:14:52.018-04:002012-10-01T22:14:52.018-04:00I like the framework of internal vs. external mark...I like the framework of internal vs. external market incentives, although I'll have to think through it a bit more. From what I can recall, the typical discussion is that prices are the predominant channel for transmitting incentives to market participants, in which case we would have to look to the determinants of the market price to better understand the internal or external incentives guiding the market.<br><br>Somewhat tangentially, I see the question of external regulation leading to the question of market definition. How do we identify the boundaries of the market we wish to regulate, and on what level? For instance, say there is a market for gasoline. Could we consider that a submarket of the broader market for oil, which itself is a submarket of the broader market for energy and so forth? And then could submarkets for gas be something more specific, like filling station nozzles? And of course externally influencing one market likely has knock on effects to markets for complementary or substitute goods. I suppose the inframarginal principal suggests we should target the narrowest effective group we can identify.<br><br>Sorry if this is going a bit astray from the discussion of sustainable equilibria. I guess in my head I see the issue of market definition as connected to the topic because the more interwoven and nested markets are the harder it is for me to think about an equilibrium for a single market in isolation. I'm maybe picturing something like dropping a bucket of dice, where they all end up with an equilibrium side up, but they are influenced by internal factors (shape, weight), each other (bumping on the way down), and external factors (the floor) in reaching that equilibrium.TWBnoreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-82765633492624515462012-10-01T10:15:45.222-04:002012-10-01T10:15:45.222-04:00I think part of Polanyi's point is that there ...I think part of Polanyi's point is that there is never really a self-regulating market, because even the archetypical libertarian market still presumes government does a few things, and does them well. Or if you have pre-capitalist societies, exchange is governed by reciprocation or other social convention. Or if you have an entrepot trading economy that exists solely to faciliate exchange, you still can't have a market without powerful extra-market forces, like the city guards or maybe the mafia guy who keeps order.<br><br>So it's not so much a question of identifying a self-regulating market as asking what incentives are provided internally in markets and what must necessarily be imposed externally. Maybe another way of phrasing the sustainable equilibrium issue, then, is whether those internal incentives consistently override changes in external incentives.acshttp://www.blogger.com/profile/09712373541961585662noreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-85612561966372734172012-09-30T21:29:48.327-04:002012-09-30T21:29:48.327-04:00How do we know a self-regulating market when we se...How do we know a self-regulating market when we see it? If such markets do exist, how do we know when they are in equilibrium given that economies and markets don't have natural stopping points but are constantly in motion?<br><br>It seems that the discussion of economic forces may be a useful way to think about the pressures pushing prices in one direction or another, but it is harder to accept that there is an actual point where those forces precisely balance.TWBnoreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-56831957530860107672012-08-13T12:30:01.235-04:002012-08-13T12:30:01.235-04:00To add to the powerlessness list. The oppositie of...To add to the powerlessness list. The oppositie of aging, youngness, also can make people powerless.gwenhttp://www.blogger.com/profile/09753331518900141010noreply@blogger.comtag:blogger.com,1999:blog-378357508228064599.post-50572616555557086142012-08-07T10:58:00.444-04:002012-08-07T10:58:00.444-04:00What you seem to be hinting at is that power is (o...What you seem to be hinting at is that power is (often) rooted in one's credibility (the faith that others have in one's ability to be economically productive, use force, and influence the life of others in general...)<br><br>I especially liked the final discussion of the redistribution of power.<br>The historical (power) struggle between "weak" and "strong" classes or individual has been extensively discussed, notably (and quite controversially) by Nietzsche <br>(http://en.wikipedia.org/wiki/Master%E2%80%93slave_morality)<br><br>(I am pointing at his writings because they are an interesting read, obviously I don't think it should become the dominant view!)Anonymousnoreply@blogger.com