Friday, December 30, 2016

Dickens on seeing the poor

Tim Taylor - Charles Dickens sums up Victorian-era economics the way only he can. Man, he really punches hard too:

Here's a piece by Dickens written for the weekly journal Household Words that he edited from 1850 to 1859. It's from the issue of January 26, 1856, with his first-person reporting on "A Nightly Scene in London." Poverty in high-income countries is no longer as ghastly as in Victorian England, but for those who take the time to see it in our own time and place, surely it is ghastly enough.

Economists might also wince just a bit at the reaction of some economists to poverty, who Dickens calls "the unreasonable disciples of a reasonable school." Dickens writes: "I know that the unreasonable disciples of a reasonable school, demented disciples who push arithmetic and political economy beyond all bounds of sense (not to speak of such a weakness as humanity), and hold them to be all-sufficient for every case, can easily prove that such things ought to be, and that no man has any business to mind them. Without disparaging those indispensable sciences in their sanity, I utterly renounce and abominate them in their insanity ..."

One of the problems I have with learning nothing but pre-Depression economics throughout undergrad is that nobody seems to really have the slightest clue how miserable the world was for the masses before the Depression, so they teach the most abominable nonsense with a completely straight face. After the break, read some more Dickens:

Monday, December 12, 2016

Testing the high-wage economy hypothesis

I was reading "Global Economic History: A Very Short Introduction", where the high-wage economy thesis is introduced. Seemed perfectly reasonable and intuitive to me. But, here's a good article on that topic:

Notes on Liberty - testing the HWE hypothesis.

Unfortunately, too much of it boils down to the unfortunate fact that the historical data is so bad, whatever facts we may apply to the question are drowning in thick bands of noise.

Sorry I haven't been posting for a while, btw: I was (and still am, but not as much) busy with exams.

The book above is very good btw.

Sunday, December 11, 2016

theory of financial bubbles

Noah Smith - a better theory of financial bubbles.

How about starting with the idea that money doesn't vanish on its own, and assets are priced in money?

Seriously, if you have a finite stock of assets (real estate, stocks, bonds and gold), and the total world stock of money has to own all of them all the time, wouldn't that explain asset appreciation?

I'm not just mixing up real vs nominal either, because there's nothing that says e.g. the nominal price of US real estate has to go up at the same rate as the nominal price of US consumer goods.

In fact, real estate appreciating vs consumer goods (combined maybe with the aggregate value of real estate in a period vs aggregate value of consumer goods consumed per period) would be an indicator of income inequality, wouldn't it?