[Published in Pearls & Irritations today 25 June. My pre-election attempt (the previous post) didn’t make it.]
Stratospheric housing prices are perhaps the most critical domestic issue in Australia. Not only are a collapse of the housing bubble and a recession now threatening, but homelessness and rent stress, unaddressed and exploited, can quickly fester into ugly politics. The elephant in the room is the excessive money created by under-regulated commercial banks.
Housing prices are a prime driver of severe inequality and a serious threat to the stability of the Australian economy. Rises in interest rates threaten to collapse the very high levels of household mortgage debt and bring on a serious recession. The dream of home ownership is disappearing for many.Continue reading →
[Published in Real World Economic Review #95, Davies, Geoff (2021) “A modest proposal for generating useful analyses of economies: a brief note.” real-world economics review, issue no. 95, 22 March, pp. 118-123, http://www.paecon.net/PAEReview/issue95/Davies95.pdf. Some other comments are at https://rwer.wordpress.com/comments-on-rwer-issue-no-95/ and https://rwer.wordpress.com/2021/03/25/a-modest-proposal-for-generating-useful-analyses-of-economies/.
This is written for ‘heterodox’ economists, those who recognise mainstream (neoclassical) economics is nonsense, but who seem to flounder around not knowing what to do instead. It is a little more technical than my usual posts, but the message does not depend on the details.]
I propose that economists leave philosophy alone for a while and instead try analysing some actual economic observations.
I have observed much discussion among heterodox economists about what science comprises, whether one could do “scientific” economics, and what ontology, epistemology, etc, etc, might be involved. If, for example, economies are historically contingent, how could one hope to do a rigorous analysis. I have also observed much concern about the complications of people and societies and the resulting alleged need for elaborate statistical analyses to extract an object of interest, followed by the construction of an elaborate mathematical model that includes many nuances of human behaviour.
I think the challenge is not nearly so daunting. An economic analysis does not have to emulate the precision of (some) laboratory physics to be useful. It does not have to yield a literal prediction. If one steps out of the equilibrium mindset of the neoclassical mainstream one can find obvious phenomena crying out for explanation, a financial market crash for example.
[This is a talk given to the Canberra Hub of New Economy Network Australia, 23 June 2019 on the topic ‘What could our economy look like in 2030?’ Check out NENA, I think it is a very promising network.]
At present our economy is structured and managed in ways that subvert the many good things people like us are trying to do.
I think it is possible to change that, so the larger economy supports clean, local, healthy living, strong communities and a thriving planet.
First, a few examples of good things that are already happening and just need to be promoted, examples involving food and energy: Continue reading →
The economic ‘reforms’ of the 1980s are supposed to have set Australia up for an unprecedented run of prosperity: 27 years, and counting, without a recession. The economy’s robustness is supposed to have saved us from the Global Financial Crisis. In fact our economy has been unstable, and its performance has been mediocre verging on anaemic. Any appearance of robust prosperity is due to a huge run-up of debt, some direct intervention, high immigration, overwork, selective blindness and over-active imaginations.
[This longish essay was just published at Real World Economics Review Blog. It is addressed to the “heterodox” community, those diverse economists of various schools that are not the dominant neoclassical school, though otherwise it is not particularly technical.]
Much of the current discussion of reforming economics focusses on the need for pluralism, particularly in teaching curricula, and very recently again on RWER. Pluralist teaching is seen as challenging, because heterodox economic ideas are diverse, have little coherence, and are to a significant extent mutually incompatible.
This theme crops up frequently in discussions on RWER. Now Cameron Murray, in the first issue of Inside, published by the Institute for Dynamic Economic Analysis, proposes to identify over-arching themes that can bring out the relationships among the various approaches. This is commendable but it will not, on its own, result in a reformed economics.
[Probably last post until Sept – see previous post. The tax-cutting mania may have started in California, so it’s fitting if CA shows the way back. It was always nonsense. The real reason is to shrink government. Governments get in the way of rich people making money, because a few of the things they do are good for the rest of us. Well, used to be good for the rest of us. So Jerry Brown may be among the most subversive people on the planet at the moment, because he’s showing government isn’t all bad. It can do good stuff. Of course the lesson will probably be lost on Oz for another decade, it usually takes about that long.]
How Jerry Brown Got Californians to Raise Their Taxes and Save Their State
There’s a case to be made that Jerry Brown is the most successful high-profile Democrat in America today. And there is simply no debating that, after four decades in the national limelight, he stands out as an intellectually dynamic and politically untethered leader in a time of gridlock, frustration and dysfunction.
Non-mainstream economists are all-too aware of the failure of mainstream economists to anticipate, let alone avoid, the Global Financial Crisis and the ensuing Great Recession. The mainstream profession is also failing to fix the problem, and is actually making it worse.
It is hard to get alternative views heard, and the mainstream carries on almost totally unperturbed, despite being centrally responsible for a global disaster. This is of course extremely frustrating.
After reading yet another cri de coeur from yet another frustrated economist, I thought perhaps we need to spell out the message in all bluntness