Palgrave Dictionary of Economics

This is one of my go-to sources for in-depth introductions and entries on complex economic and financial topics. 


Palgrave Dictionary of Economics online here. You get the idea in the screen cap:

 

The Case of Brazilian Inflation: Perception Problem or Stealth Devaluation?

For decades, Brazil suffered from inflation. So much so, that public confidence in the currency (the cruzeiro) suffered. Prices continually rose from week to week.

So Brazil printed a new currency that always stayed at a fixed rate: The Unit of Real Value. (By the way, this is why the Brazilian currency is called a real).

If eggs cost 20 cruzeiros, they cost 2 URVs. If eggs cost 40 cruzeiros next, they still cost 2 URVs. Eventually, people started using the Real and inflation abated.

Or so the story goes.

Here's a good basic summary of the situation from NPR
A more detailed academic version is here.

Being a cynical sort, I ask myself if this wasn't a stealth devaluation of the currency? Goes beyond an innocous perception problem. Think about that.

Tax Incentives for Corporations

full article here.

For about 25 years, corporations have been the recipient of tax breaks from different locations seeking to attract them. The argument goes that the jobs and development would more than offset the loss of tax revenue.

It appears increasingly true that this is not the case. Operations offer jobs, but these are low-paying temp jobs. And the amount of infrastructure necessary to support the corporations are not paid for by taxing the low-quality jobs. And since the workers are paid nothing, there is no real development.

The article above references the case of the small community outside of Chicago that has turned into a distribution center.

Word of the Day: Rentier

Rentier (REN-TEE-AY from the French) is an important concept. It refers to wealth created by control of the economy, not capitalist competition and innovation. By definition, competition would produce lower prices and promote innovation, but the rentier faction captures government and passes regulations to quash such things.

In short, their wealth is an artificial construct protected by law. They may act like capitalists, but they are not. They derive their income from rents, not real achievements.


Michael Hudson has a fascinating article detailing the need to take such things into account in economic models.  Because economists are lousy at predicting human corruption and irrationality!

Here's the introduction:

"By promoting a misleading view of how the economy works, the above omissions lead to a policy that fails to prevent debt bubbles or deal effectively with the ensuing depression. To avoid a replay of the recent financial crisis – and indeed, to extricate economies from their present debt strait-jacket that subordinates recovery to the overhang of creditor claims (that is, saving the banks from taking a loss on their bad loans and gambles) – it is necessary to explain how credit creation inflates housing and other asset prices, while interest and other financial charges deflate the “real” economy, holding down commodity prices, shrinking markets and employment, and holding down wages in a downward economic spiral. We are dealing with two price trends that go in opposite directions: asset prices and commodity prices. It therefore is necessary to explain how credit expansion pushes asset prices up while simultaneously causing debt deflation."

One View of UBI

who-really-stands-to-win-from-universal-basic-income

Interesting article that breaks down the history of other universal basic income programs throughout the centuries. The article argues that the most effective use of this program is providing a supplement to people's income to remove them from survival mode and get them starting businesses or pursuing life plans.

Mathematics and Logic for Economics

Here's where those books on formal mathematics in economics are (official heading is economics mathematical).

Covers the use of symbols, rules of formal logic, sets, differential equations, theorems, variables and more. Check out one and curl up with it in front of the fire!

08-09 Financial Crisis Subject Headings

Read up on the  2008 – 2009 crisis and figure out the housing bubble, derivatives, sovereign debt, personal debt, TARP and more. 

Our subject headings:

the best one: US Financial Crises

Global Financial Crisis

Financial Crises United States History

Book Review: Any Way You Slice It: The Past, Present, And Future Of Rationing

This is a short, well-written interesting book that presents rationing in a favorable light. 

We live in an increasingly managed economy and technocratic age, so the notion of planned economies is an important one. There are really two reasons to ration.  One is actual shortage of a good (such as fuel or food in wartime) and the other is a desire to alter human behavior by making something expensive or rewarding behavior. 

Very often, the free market can produce pretty strange results and the book provides some examples of this . Case in point - the case of quinoa. Cultivated for centuries by Peruvian highlanders, Westerners now outbid natives for the grain.  The result is a change in diet to other foods for the natives - ironic that while surrounded by fields of quinoa. Another example is Egypt, where the author asserts that there's much organic agriculture that is exported to Europe while Egyptians are forced to import bread of low quality.

So do you ration the imported food, the native food, what? And what would be fair and moral? This book will help you think about these issues.

The book also discusses when people will accept rationing and when will they reject it. Another concept discussed here is dealing with underground economies.

The author does not really address situations where rationing has failed or produced tragic outcomes.

The ethics of an unelected technocracy (who in reality are often immune or exempt from rationing) deciding what behavior is to be altered is also not addressed. It is, after all, basically a pro-technocrat, pro-rationing book.

Co-Op Societies

here are all of our links related to co-ops, credit unions and the like!

Capital In The 21st Century

A recent book by French scholar Thomas Piketty is getting a lot of attention.  Everyone knows that the current system is producing very high levels of economic inequality.  This book deals further into the reasons why it provides an ultimate critique of capitalism itself. 

The author argues that extreme inequality is a system design of capitalism and the last few decades of relative equality are not representative.

Link to all Piketty books here.

Book Review: Francis Fukuyama Trust

Why are some societies more economically successful than others?  It is an age old question and Francis Fukuyama believes the issue is trust.

Find his book here. 

Trust allows larger scale economic enterprises beyond the immediate family.  But how does this occur? Fukuyama argues that large private organizations like guilds or church based civic Associations are key. If the state replaces these organizations, trust withers. Somewhat confusingly the author argues that individual rights taken to an extreme are also to blame. Perhaps the author is suggesting a return to paternalistic corporatism?

Read a review here.

A Critical View of The New Middle-Class Day Labor

The Baffler magazine has an essay entitled The Crowdsourcing Scam.

Crowdsourcing here means contract labor for the middle class: you know, Amazon or Uber or the like posts a lists of tasks and people bid on doing them. Right now these are data entry tasks and Uber car rides, but expect this to extend to everything....

Herbalife, Pyramid Schemes and John Oliver's Take

Multilevel marketing, or for some people, pyramid schemes, have been in the news recently. Tune in for a lively critique of this business model.

Freeters - Japan's Part Time Underclass

There's a growing underclass of part-time workers in Japan.  Called Freeters, they tend to be intelligent, educated university graduates from middle class homes, but cannot find fulltime positions.

Update: the original video I embedded has been removed but here's a link to all YouTube videoes on freeters.

Money Changes You (but not the way you think): The Case of Ancient Sparta

Many societies have attempted to control how money is earned, saved and spent.

This seems to have been an attempt to create a centrally planned economy, to create a certain psychological state in the citizen, and to keep wealth within the national borders.

Here is the case of ancient Sparta.  According to Plutarch, the semi-legendary founder of Sparta, Lycurgus, mandated that money be iron trinkets rather than the more common gold and silver of the time.

You couldn't possess gold and silver, or any other objects that conceivably could store value, And the iron trinkets themselves were treated in such a way they could not be melted down and made into other iron objects.

It was difficult to earn, spend or save other kinds of money outside the official rules. It might be done, but was difficult and also illegal. 

So you're stuck doing what the system wants you to do.

And most people won't even think to notice this.

Koch Support of Florida State University Economics Department

Presented for your information.  The Economics Department at Florida State University will apparently be largely funded by the Koch family.  This support will include strict oversight of publications and hires by the department by the Koch foundation. 

Please read the article for more information. 

John Nash and Game Theory

John Nash, a principal originator of game theory, and the subject of the Oscar-winning film A Beautiful Mind was recently killed in an automobile accident.

John Nash titles here. Our copy of a Beautiful Mind here.

Among many contributions, Nash was famous for the Nash equilibrium in game theory. From the obituary in the Guardian:

“In his discipline, he gave his name to the Nash equilibrium – a position in a situation of competition or conflict in which both sides have selected a strategy, but where neither side can then independently change their strategy without ending up in a less desirable position.”

The Sharing Economy

You have heard of these companies: Uber, airbnb, Lfyt and more. If ordinary people just have unused seats in their cars and empty beds in their houses, the thinking goes, why not just rent them out for less than you'd pay for an actual taxi or hotel room?

The services have caught on because we live in a time of shrinking salaries  - thus the need for both cheaper products and services, as well as the need to make money on the side. 

For many Americans, this economic and social innovation has been quite useful. It's an interesting sign of the times and how we are responding to a disguised economics problem.

Links:

The sharing economy is about desperation.
NPR list of links about the sharing economy.

The Hedge Fund That Also Made Cars

Porsche, The Hedge Fund That Also Made Cars

The luxury car manufacturer generated $13.5 BN in pre-tax profit, and sold a record 98,652 automobiles -- a staggering $136K profit per car sold. Even for a luxury brand, the numbers seemed nearly impossible. Upon closer inspection, $11.5 billion dollars of that profit wasn’t from selling cars -- it was from speculating on financial derivatives: Porsche was furtively amassing a sizable position in call options to buy up Volkswagen shares. As a report from the BBC put it, Porsche was “a hedge fund with a carmaker attached.”

In 2008, the car business was good, but the financial engineering business was even better.

Alfred Marshall, Early Theorist Of Economic Development

All Alfred Marshall books here. 

From Gale:


The English economist Alfred Marshall (1842-1924) was the founder of the "new economics." He rejected the traditional definition of economics as the "science of wealth" to establish a discipline concerned with social welfare.

In 1890 Marshall's Principles of Economics was welcomed enthusiastically by economists and a popular audience as a revolutionary work in economics.

The content and method of Marshall's economics were largely original, but his basic assumptions were derived from the 19th-century belief that social reform depended initially upon the reform of character. He never doubted that every man sought his own, or at least his children's, best interest; that "work" purified human nature, stimulating personal and social progress; or that capitalism would be inherently progressive if it was made more efficient.