“Money from nothing” – newspaper article by Dirk Ehnts — via econoblog101

German daily newspaper Die tageszeitung published my article on money creation last weekend (here). This is the translation from German into English (also available as a pdf): (Translation of http://www.taz.de/!5422477/ by Dirk Ehnts, author) Debate on money creation at the ECB Money is created from nothing The consequences are shocking. The mainstream view of economics is […]

via “Money from nothing” – my newspaper article translated into English — econoblog101

Instability: poverty and low skill push Britain to Brexit — via INCOMESCO blog

A report on the causes of BREXIT has been published. According to this report, Brexit was the reason of ‘Poverty, Low Skills and Lack of Opportunities’. The research was accomplished by Goodwin, M, and Heath, O (2016) for the JRF Organisation. ‘This report provides unprecedented insight into the dynamics of the 2016 vote to leave […]

via Instability: Poverty and low skill push Britain to Brexit — INCOMESCO

On human flourishing

Some inspiring words from Nobel prize-winning economist Edmund Phelps, as quoted in Will Hutton‘s How Good Can We Be (p.172):

“[Flourishing is] the heart of prospering – engagement, meeting challenges, self-expression and personal growth…a person’s flourishing comes from the experience of the new: new situations, new problems, new insights and new ideas to develop and share. Similarly, prosperity on a national scale – mass flourishing – comes from broad involvement of people in the processes of innovation; the conception, development and spread of new methods and products – indigenous innovation down to the grass roots.”

Hutton follows with his own take on the mass flourishing which he sees as an essential outcome of the good economy and society:

“…the smart economy, resting on innovation, is coterminous with a society that ceaselessly and restlessly sponsors mass flourishing: they are indispensable and interdependent concepts. This was the heart of the Enlightenment – makers, inventors and philosophers all interconnected, daring to think, to understand and to challenge old boundaries, infecting each other with the enthusiasm for the new while being part of a greater social awakening that affected everyone. This spirit imbued every branch of British economic and social life in the late eighteenth century; it was this as much as cheap labour, water mills and Europe’s first single national market that triggered the Industrial Revolution. Every age is different, but what is not different are the interdependencies between the economic and social that animate and lift the human spirit.”

Prosperity, congestion, and the case for regional policy

Economic prosperity has its downsides. In the UK, London and the South East have proved to be the most dynamic parts of the country in generating income and wealth in recent decades. But the way such outcomes have been managed has left these regions with a now all too familiar problem: congestion.

It is not just the roads. There is also a housing shortage, which has contributed to soaring house prices, particularly in London, where average prices have roughly doubled since the recession.

There are different ways to look at these kinds of outcomes. We could call them symptoms of ‘overcrowding’: there are too many people. Alternatively one could praise the job-creating capacity of the UK economy, and particularly in these regions. Job-creation attracts workers from other regions of the country, as well as from abroad; immigration plays a role. Continue reading

Anwar Shaikh on Keynes and Classical economics (and much else)

A series of interesting short videos featuring Anwar Shaikh of the New School, an economist I greatly admire, where he discusses his influences and aspects of his life’s work.

His magnum opusCapitalism, was published last year, and I have written on parts of it several times on this blog.

For those who don’t want to go through them all, I can recommend as a taster video number nine (of eleven), ‘Keynes and Classical Economics’, where he discusses the links he makes between the ideas of Keynes on aggregate demand, and competition and profitability in the work of Marx and the Classical economists. To reach this, press play, then skip forward between videos using the player controls.

Trickle-down versus trickle-up economics

From the blog of Michael Pettis (the link to the full post is highlighted):

Does cutting taxes on the wealthy lead to greater growth?

“Policies that increase income inequality can in some cases lead to higher savings, higher investment, and greater long-term growth. But, in other cases, such policies either reduce growth and increase unemployment or force up the debt burden. What determines which of these outcomes takes place is whether or not savings are scarce and have constrained investment.”

To give you a better idea of the argument, here is his conclusion. Pettis’ post may debunk the shibboleths of both left and right, while providing scope for reconciliation:

“Trickle-down economics does indeed work, as does its opposite, trickle-up economics, depending on underlying conditions that are not hard to specify. The key is the relationship between desired investment and actual investment. When the former exceeds the latter, policies that increase income inequality will generally cause savings to rise and expenditures to shift from consumption to investment; this leads to higher future growth that will eventually more than compensate ordinary and poor households for the increase in income inequality.

When desired investment is broadly in line with actual investment, however, there is no trickle-down effect. Policies that increase income inequality must permanently lower growth in the long run, although, in the short run, lower growth can be postponed by an increase in the debt burden.

In advanced economies, like those of the United States and Europe, there is no savings constraint on desired investment, so income inequality can only result in higher debt or higher unemployment and slower growth. It is only in developing countries that income inequality may boost growth, although in countries that have pursued the Gerschenkron model of forcing up domestic savings, like China has, actual investment can substantially exceed desired investment. This makes the reduction of income inequality or the channeling of wealth from the state to ordinary and poor households an urgent matter.”