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The “unidimensional” view of development | Real-World Economics Review Blog
from Ted Trainer and RWER issue 111 The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2024 (economists like to refer to this as a straight Nobel Prize – it isn’t) was awarded to Daron Acemoglu, Simon Johnson and James Robinson. According to the press release the prize was awarded for helping…
Debunking mainstream economics | Real-World Economics Review Blog
from Lars Syll An economic theory that does not go beyond proving theorems and conditional ‘if-then’ statements — and does not make assertions and put forward hypotheses about real-world individuals and institutions — is of little consequence for anyone wanting to use theories to better understand, explain or predict real-world phenomena. Building theories and models…
In Trump’s competition with China, China is winning | Real-World Economics Review Blog
from Dean Baker Donald Trump doesn’t have much interest in numbers and the real world, but that is where the rest of us live so it is worth checking in periodically. Trump and many others — including many Democrats — are anxious to see the United States as engaged in a Cold War-type competition with China. I have…
A fork in American history | Real-World Economics Review Blog
In the United States, income inequality rose steadily from the 1980s onward (as shown by the blue line). But, at least on paper, it’s easy to imagine a version of the US in which this experiment didn’t’ happen. For example, the red line imagines a world in which US income inequality remained fixed at the…
Well said Ha-Joon Chang! | Real-World Economics Review Blog
from Peter Radford I shouldn’t. But I will Well, well. Is there life in economics yet? Not so fast. My own journey into the swamp of economics began in the late 1980s when, out of the blue, my boss at the bank decided that because I had attended LSE I ought to be conversant with…
Credit, capital, and the engine of war: | Real-World Economics Review Blog
from Asad Zaman and WEA Pedagogy Blog Money Transformed in Early Modern Britain A Guided Reading of Glyn Davies’ A History of Money, Part 3 For millennia, money was anchored in the tangible: silver, gold, cattle, grain. It served religious rituals, enabled imperial taxation, and, above all, funded the machinery of war. But with the arrival of the Industrial…
DeLong steps in it | Real-World Economics Review Blog
from Peter Radford This is second stab at a question that vexes me … I have been reading too many historians lately. So when I read the usually very smart Brad DeLong say something that seems straight from Hayek I get a greater jolt than I used to. And that’s saying something. This is what…
The possibility of the impossibility of economics | Real-World Economics Review Blog
from Lars Syll Economic models are not expected to be even approximately true, and Hausman’s idea that even the ceteris paribus laws in economics are vague as to what exactly has to be equal makes it clear that economic laws must be abstract rather than idealized. This leads us to the question: What are the…
“Crypto” is Silicon Valley speak for waste, fraud, and abuse | Real-World Economics Review Blog
from Dean Baker The Republicans in Congress, along with many Democrats, are rushing ahead with legislation to promote crypto currencies in various ways. Their motivation is not hard to understand; they got hundreds of millions of dollars in campaign contributions from the industry. In terms of economic policy, the effort to promote crypto is taking the country…
Prodding Krugman | Real-World Economics Review Blog
from Peter Radford Paul Krugman has been on a mission lately. He has been writing extensively about inequality in America. As we all know it’s an ugly picture, and as we would all expect Krugman has dug out endless statistics to demonstrate just how ugly. From my perspective inequality is the most salient economic fact…
Science, politics, and ideology in economics | Real-World Economics Review Blog
from Lars Syll During my whole career, I have considered myself somewhat of a schizophrenic, which might be a universal characteristic. On the one hand, I was interested in science qua science, and I have tried — successfully I hope — not to let my ideological viewpoints contaminate my scientific work. On the other, I felt deeply…
The Strain is too much | Real-World Economics Review Blog
from Peter Radford Picking up where I left off … And, just for fun … We need more billionaires! No. Really. That’s the message delivered by Michael Strain last week in the Financial Times. After all, where would be without them? Strain is, as we all know, associated with the American Enterprise Institute, and is…
Mainstream economics — kick it over! | Real-World Economics Review Blog
from Lars Syll The more I learned about economics, the more I discovered a landscape that is surpassingly strange. Like the land of Mordor, it is dominated by a single theoretical edifice that arose like a volcano early in the 20th century and still dominates the landscape. The edifice is based upon a conception of…
GOP spending bill: how many people have to die? | Real-World Economics Review Blog
from Dean Baker That’s the question Republicans in Congress are debating as they struggle to put Donald Trump’s “Big Beautiful Bill (BBB)” in final form to pass and send to his desk in the next few days. The essence of the bill should be well known at this point. It extends Trump’s 2017 tax cuts…
How capitalism shapes our world—And how we can reshape it | Real-World Economics Review Blog
from Asad Zaman Prologue: The North Star Is it truly necessary for billions to live in poverty while a few enjoy unimaginable wealth? Could the world be different—and could we help make it so? Utopians dream of a better world but lack a route map. Pragmatists move with precision but forget to ask where they’re…
Econometrics — a severe case of mock empiricism | Real-World Economics Review Blog
from Lars Syll According to Guy Routh, econometrics is nothing but “mock empiricism, with statistics subjected to econometric torture until they admit to effects of which they are innocent.” Similarly, Mark Blaug in his The Methodology of Economics argued that econometric testing is like “playing tennis with the net down.” Although these are rather harsh judgments, I…
The world is facing a looming crisis of inequality | Real-World Economics Review Blog
Dear World Leaders, There is a crisis in multilateral cooperation and in the financing of global public goods and development aid — one that is compounding the already worsening challenges of poverty, ill health, illiteracy, and environmental breakdown. From surging droughts and floods to raging fires, the evidence of our planetary emergency is clear. Unfortunately,…
Unchecked concentration of wealth is eroding US democracy | Real-World Economics Review Blog
As the world watches Donald Trump and Elon Musk publicly fight over the sweeping legislation moving through Congress, we should not let the drama distract us. There is something deeper afoot: unprecedented wealth concentration – and the unbridled power that comes with such wealth – has distorted our democracy and is driving societal and economic tensions. Musk, the…
Behavioural economics — devoted to ideas it is supposedly attacking | Real-World Economics Review Blog
from Lars Syll Behavioral economics is still ‘in a relationship’ with orthodox economics and, in a relationship, one makes compromises … We all know how stubborn the other side in this relationship is: standard economics will always ‘rationalize’ behavior wherever it can and will only recognize ‘irrationality’ when there is clear and convincing evidence of…
China now projected to grow three times as fast as the United States | Real-World Economics Review Blog
from Dean Baker The World Bank came out with its updated projections for economic growth for 2025. They showed slower growth for pretty much the whole world. The main factor in the slowing is the tariffs that the Trump administration has imposed on most of our trading partners, as well as their retaliation. Perhaps not surprisingly, the…
Madmen in authority | Real-World Economics Review Blog
from Lars Syll The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct…
How monetary myths conceal power | Real-World Economics Review Blog
from Assad Zaman Modern economics rests on a dangerous illusion: that abstract, universal laws—derived primarily from the European experience—can be applied across all societies, times, and contexts. This false assumption has allowed economists to present their theories as objective and value-neutral, masking the deeply political and historical foundations of economic life. In an earlier post Reclaiming…
The problem with equilibrium models | Real-World Economics Review Blog
from Lars Syll Economic theory is built on equilibrium assumptions. Perhaps this term once connoted the rest point of a dynamic process. But in modern parlance, an equilibrium assumption posits a relation between the beliefs and behavior of different agents without explicitly describing a process which causes this relation to hold. Competitive equilibrium assumes prices…
So-called reforms reinforced underdevelopment | Real-World Economics Review Blog
from Fidel Aroche Reyes and RWER #110 During the 20th century, many poorer countries adopted economic strategies for development. Europe experienced a rise in living standards; more recently, several Asian nations, such as China, Taiwan, and South Korea, have successfully overcome underdevelopment through focused economic policies, while most other Asian countries have made significant strides…
Big guns on trade: Ricardo via Malkiel | Real-World Economics Review Blog
from Peter Radford Wheeling out the big guns at last! It’s taken a while, but we’ve arrived. At long last we have an article in the Financial Times — our bastion of global financial goings-on — that explains David Ricardo to those who need to know. Better late than never. Even better: the article is…
Neoliberal economics — fiction based on absurd assumptions | Real-World Economics Review Blog
from Lars Syll ‘Rigorous’ and ‘precise’ economic models cannot be considered anything else than unsubstantiated conjectures as long as they aren’t supported by evidence from outside the theory or model. To my knowledge, no in any way decisive empirical evidence has been presented. No matter how precise and rigorous the analysis, and no matter how…
new issue of RWER | Real-World Economics Review Blog
real-world economics review issue no. 110, May 2025 download whole issue The 2024 Nobel Prize for Economics: an example of how conventional economics misrepresents realityTed Trainer 2 Why only innovations based on degrowth principles can stopfurther ecological and social destructionFelix van Hoften and Rob van der Rijt 10 Neoclassical economics drives…
China adds more than $400 billion to GDP in Q1, Trump loses $25 billion | Real-World Economics Review Blog
from Dean Baker Donald Trump is not very good with arithmetic, but that is not a reason the rest of us should not use it. The US economy shrank at 0.3 percent annual rate in the first quarter. This figure needs the usual caveats. This is preliminary data that may be revised substantially in the next two…
The sorry state of economics | Real-World Economics Review Blog
from Lars Syll Page after page of professional economic journals are filled with mathematical formulas leading the reader from sets of more or less plausible but entirely arbitrary assumptions to precisely stated but irrelevant theoretical conclusions … Year after year economic theorists continue to produce scores of mathematical models and to explore in great detail…
What Keynes meant by ‘We simply do not know’ | Real-World Economics Review Blog
from Lars Syll With the words ‘We simply do not know,’ Keynes describes in his General Theory what he calls ‘objective uncertainty.’ There is simply no way in which one can foresee certain events or developments because they are objectively unknown. The past does not predict the future. This constitutes a fundamental break with the dominant neoclassical…
A, belated, response to Wolf | Real-World Economics Review Blog
from Peter Radford It is a question of distribution. A friend of mine, here in Vermont, has disrupted my enjoyment of a pleasant spring morning by reminding me of what Martin Wolf says about populism. Specifically he referred me to pages 180-181 of the Wolf book “The Crisis of Democratic Capitalism”. I wish he…
Weekend read – Economics after empire: Rebuilding the discipline on moral foundations | Real-World Economics Review Blog
from Asad Zaman and WEA Pedagogy Blog Section 1: Introduction — Questioning the Grand Narrative According to the standard narrative, Europe’s rise was driven by superior institutions, rational governance, and scientific advancement. Wealth, power, and modernity are seen as the natural outcomes of internal European virtues—innovation, efficiency, and discipline. Implicitly or explicitly, social sciences –…
Garbage Time: running out the clock on America? | Real-World Economics Review Blog
from Peter Radford “Do you not weep? Other sins only speak, murder shrieks out” Webster is well known for the darkness of his plays. When he says murder shrieks out, I wonder which murder he is referring to. Or, perhaps, what is being murdered? These are dark days for freedom and democratic governance. Yes. I…
Economics textbooks — peddling lies about money and finance | Real-World Economics Review Blog
from Lars Syll For several years now, yours truly has been teaching an introductory economics course every fall for future social studies teachers. Alongside a few of my own books, Klas Eklund’s Vår ekonomi (Our Economy) is also on the reading list. The book was released in its 16th revised edition in December 2024—an impressive feat and…
The deep roots of fascist thought | Real-World Economics Review Blog
from Blair Fix For decades, the word ‘fascist’ existed solely as a hyperbole — a term meant to insult rather than describe. But lately, politics have grown so hyperbolic that the label looks increasingly sincere. For example, when a powerful man advocates far-right politics and brazenly performs Nazi salutes in front of a cheering crowd, it…
Rational expectations, uncertainty, and learning | Real-World Economics Review Blog
from Lars Syll The rational expectations hypothesis presupposes — basically for reasons of consistency — that agents have complete knowledge of all of the relevant probability distribution functions. When trying to incorporate learning in these models — trying to take the heat of some of the criticism launched against it up to date — it…
American plutocracy | Real-World Economics Review Blog
Now to American plutocracy. As the bottom panel in Figure 3 illustrates, the fall and rise of Republican fortunes mirrors another important U-turn: the fall and rise of US income inequality, measured here in terms of the top 1% share of income. Figure 3: In postwar American, the fall and rise of the Republican party mirrors the…
The economic fallout of European rearmament | Real-World Economics Review Blog
from C. P. Chandrasekhar With US President Donald Trump leaning towards Russia when advocating a stop to the war in Ukraine and making clear that the US will no longer foot the bill to ensure Europe’s security, talk of “Russian expansionism” in Europe has become louder. This has fuelled calls for Europe to rearm itself. However, there…