Month: November 2013
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Real Businessmen Respond to Quantity Signals, Not Price Signals
Update: “Lord Keynes” provides a great explication of Kaldor’s theoretical work on this subject. Back in the day when I was running a high-tech conference company, we had a favorite (and actually rather cruel) interview question: “What’s the best price for a conference?” There was only one right answer: “The price that makes us the…
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“Businesses Hire When They are Swamped with Demand, Not When They Have High Profits”
Mike Sankowski has been banging his spoon on the high chair about this forever. And rightly so. Repeat after Mike. And keep repeating it to anyone who will listen. The “higher-corporate-profits = jobs” meme is perhaps the most pernicious falsehood in political economics. How Business Owners Think For almost ten years I was co-founder and…
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“Supply” and “Demand” for Financial Assets
Okay, once again I’m going to sacrifice my body here, risk looking stupid by asking what seems to me to be a vexatious question. Here’s the setup: When you exchange some of your money (bank deposits) for some shares of Apple stock, those shares aren’t removed from the supply of Apple shares. (Likewise your “money”;…
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Health Insurance Plan Comparison Calculator. Plus…Hamlet!
Gentle Readers: Sorry to be incommunicado for so long. I’ve been working hard on a couple of projects. I built a spreadsheet for myself a few years ago to compare health-insurance plans — cost versus financial exposure/protection. I just built it out into a web app that others can use, and I’ve posted it here.…
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A Short Economic Explanation of Nearly Everything
Simple explanations are always suspect. So do with this what you will. It’s my basic framework for thinking about how economies work. It of course doesn’t explain everything; the headline here is tongue-in-cheek. But I find it very useful in thinking about everything else. This thinking clashes quite definitively with traditional economic teachings. But it…
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Labor Power and Economic Growth
Lane Kenworthy has done some of the best work on this subject. Read all his stuff. One great piece, on determinants of growth: Institutions, wealth, and inequality Only one institutional factor is strongly supported as a determinant of growth in prosperous countries, according to Lane’s really excellent statistical work: “corporatist concertation.” Corporatist concertation is not…
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Secular Stagnation: A Three-Decade Overcorrection
Larry Summers’ recent speech (and Paul Krugman’s paean to it) have brought the issue of secular, decades-long stagnation to the front of the econoblogosphere agenda. Tyler Cowen, of course, made it prominent some time ago. But he posited a tech cause: we’ve picked the low-hanging innovation fruit. Summers, Krugman, et. al. suggest that policies and…
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What’s “Scarce” These Days? Borrowers, Spenders, and (Hence) Profitable Investments
For the moment, let’s go with old saw that “economics is the study of scarcity.” (Though I disagree with it; the proper study of economics is human reaction functions.) What’s scarce these days? Certainly not supply. In an 80%-service economy suffering high unemployment and a unprecedentedly low labor/population ratio, higher demand for massages is not…