Fear of inflation again appears to be rising to a fever pitch. Yet confusion about it persists, both among the uninitiated and the cognoscenti. It calls for a quick review of the basics. My students invariably state that inflation means the value of their money is going down. But of course, it is not what it means. Erosion of monetary value is a mere consequence. They will also sometimes claim that they can no longer afford Knicks tickets due to …
Path Dependence and the Folly of Incrementalism
“History matters” (Robert Jensen) I am currently teaching a seminar entitled “Rethinking Progress.” One recurring topic in our discussions is the modern world’s present rate of technological advance in the absence of commensurate progress in the social sphere. My students sense an ominous imbalance and probable environmental overshoot. I want them to see the folly of incrementalism as a solution, yet do not want them to see me as preaching revolution. I therefore believe an understanding of path dependence to …
The Inevitability of a (Probably Massive) Green New Deal
February 21, 2021Did I get your attention? Ok, let me preface by adding “at some point” to the title. After all, to say that the present political climate in Washington makes a Green New Deal impossible might even be an understatement. And there really is nothing inevitable about such a policy breakthrough. One could alternatively imagine an endless political war of attrition. Yet most thinking people are coming to realize, however slowly, that continuing to ignore the global environmental crisis spells ruin …
The 1.9 Trillion-Dollar Question
February 14, 2021The truth is that approval of the Biden Administration’s proposed stimulus package is inconceivable without major revision. We know that. But let us for the moment ignore the partisan political challenges that make passage impossible. Pretend, in other words, that Congress is unified and ready to rubber stamp whatever plan Biden advances. The 1.9 trillion-dollar question then becomes whether the size of his present proposal is too large – or not large enough. The political arguments on each side are …
Is Progress “Progressive?”
February 6, 2021It is not only because I am presently running a seminar on progress that I write about it here, although it has inspired me. Economic progress is a subject that has interested me for my entire career, and much of my research and writing is devoted to it. But progress is an idea that goes far beyond economics. It is, for example, related to politics, which is from where we hear the term “progressive.” But is progress progressive? What does progress even …
Revenge of the Little Guy
February 1, 2021By now everyone has heard about the recent “assault” on Wall Street by legions of day traders. Coordinating purchases over Reddit and using the Robin Hood app, possibly a few million individuals bought large quantities of shares from GameStop as well as other companies like Blackberry, AMC Entertainment, and Nokia, pumping up their prices as much as 300 percent – and much more in the case of GameStop. The surge in their share prices caused hedge funds like Melvin, Point72, …
Remember Climate Change?
January 31, 2021“I’ve starred in a lot of science fiction movies and, let me tell you something, climate change is not science fiction. This is a battle in the real world, it is impacting us right now.” (Arnold Schwarzenegger) The current pandemic has made us mostly, at least temporarily, forget climate change. Climate change will be with us for a long time to come, so keeping it newsworthy was challenging even before Covid-19 hit us. But it is important not to forget about it. …
Paradox of Thrift No Longer
January 7, 2021I want to try to bring together a few points about which I’ve posted previously. My motivation is to address an important article last week in the New York Times (January 1st) by Neil Irwin and Weiyi Cai. Perhaps its early for such a declaration, but the phenomenon they reveal might require a rethinking of Keynes’s celebrated “paradox of thrift.” The authors point out that much of the recent stock market boom can be attributed to an inordinate increase in …
GDP Growth: Seriously Flawed but Not Going Anywhere
December 31, 2020“Where do people earn the Per Capita Income? More than one starving soul would like to know.” (Eduardo Galeano) U.S. GDP plunged in the second quarter of 2020 at an annualized rate of 31.7 percent. From the standpoint of history, the report was shocking (although perhaps not surprising, given the abrupt policy response to the pandemic). Equally shocking (and unsurprising) was the news for the third quarter, which reported an unprecedented growth rate of 33.1 percent. Yet for most people …
Could We Have Too Much Fiscal Policy?
December 3, 2020President-elect Biden’s formation of his economic “team” has been dominating the headlines. Unduly, I aver, because there are far more pressing issues than which Wall Street or otherwise pro-business cronies Biden ends up selecting. Most notably, of course, is the matter of another desperately needed stimulus package. Against all odds, it appears that moderate Senate Democrats and Republicans are working together on a compromise bill. Just yesterday the group, led by Senators Collins (R-Maine) and Warner (D-Virginia), proposed a $900 …