Two leading British economists who’ve launched a scathing critique of the unrealistic assumptions their peers have added to conventional economics to make it more tractable mathematically have not spared one of my great favourites: “behavioural economics”. It has lost its way, too.The economists are Professor John Kay of Oxford University and Professor Mervyn King, a former governor of Britain’s central bank, the Bank of England....
Saturday, January 30, 2021
Wednesday, January 27, 2021
Sorry, the economy's bum does look big. We've put on a lot of weight
If you’re like many readers, you think economists and business people are obsessed with gross domestic product and dollars, dollars, dollars. So, as a never-to-be-repeated offer, today I’m going to write not about what Australia’s production of goods and services is worth, but what it weighs.Believe it or not, Dr Andrew Leigh, a federal Labor politician and former economics professor, is just publishing the paper Putting the...
Sunday, January 24, 2021
The economy doesn’t work well without good public servants
You’d hope that one of the big things Scott Morrison learnt in 2020 was to have more respect and trust in his public servants. After all, they must get much of the credit for helping him – and the premiers – respond to the pandemic far more successfully than most other rich countries. What Morrison did right was take their advice.Morrison began his time as Prime Minister by making his disrespect and distrust of public servants...
Friday, January 22, 2021
Why economists get so many of their predictions wrong
Sometimes the study of economics – which has gone on for at least 250 years – can take a wrong turn. Many economists would like to believe their disciple is more advanced than ever, but in the most important economics book of 2020 two leading British economists argue that, in its efforts to become more “rigorous”, it’s gone seriously astray.The book is Radical Uncertainty: Decision-making for an unknowable future, by Professor...
Wednesday, January 20, 2021
Deeper causes of America's troubles are economic and social
The older I get the more I prefer movies where nothing much happens. I’m increasingly impatient with car chases, gunfights and sword fights. I like movies that look at people’s lives and the way their relationships develop. Truth be told, I prefer escapist movies, but make an exception for those that help me better understand the difficulties encountered by people living in circumstances very different to mine. They may not be...
Saturday, January 2, 2021
Why much of what we're told about taxes is off beam
There are lots of ways to describe the subject matter of economics, but the ponciest way is to say it’s about “the study of incentives”. It’s true, but a less grandiose way to put it is that conventional economists are obsessed by prices and not much else.If you’ve heard someone being accused of knowing “the price of everything, but the value of nothing”, that phrase could have been purpose-built for economists. Read on and you’ll...
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