Tag: economics

Spending money we don’t have, on things we don’t need, to create impressions that won’t last, on people we don’t care about

18th October 2010


I’ve wondered for some time now, why a mainstream political party doesn’t use an alternative measure to GDP as a major plank of its political platform (e.g. Genuine Progress Indicator, or Index of Sustainable Economic Welfare). The use of GDP growth as a barometer of societal well-being is entirely inappropriate, a view supported by none other than the principal architect of the concept, Simon Kuznets. Bhutan has its Gross National Happiness but for everyone else, the growth of GDP remains the key macroeconomic indicator. The arguments presented in Tim Jackson’s new book Prosperity Without Growth warrant serious consideration. This TED talk draws on the key themes of his book.

Interesting economics

26th March 2009


Image source: minnpost.com

An article was published in The Australian yesterday entitled Dismal science of economics faces dilemma. This will come as no surprise to anyone and the piece might easily have been published 30 odd years ago. Indeed, if economics courses were priced on the free market, you probably couldn’t give them away. That there are any economics courses in universities at all can be attributed to the fact the discipline remains a compulsory core component of many business degrees. Its inclusion keeps aging academic economists in work (although many would probably rather be somewhere else than in front of 400 disengaged first year undergrads), and then there is the sense that there might just be something useful in the study of economics, despite the fact it is has succeeded in boring students half to death for generations.

The dismal science, as it was first referred to by Thomas Carlyle in the 19th century, is just as dismal an experience for economics students in the 21st century, but it need not be. The key — to state the bleeding obvious — is to make economics interesting, and to do this, it must be useful. The fact is, the dismal experience of learning economics is only matched by the dismal performance of economics as a science. The latest global economic crisis has focused the mind on this issue, but many commentators continue to view the crisis in economics too narrowly. It is not just about greedy financiers wreaking havoc. The problem is broader and deeper, and about the very survival of life on this planet. The field of vision of economics needs to be expanded and integral to a new approach is the analysis of the impact economic activity has on community and the environment. In the Australian article, Joshua Gans is reported to have said that he rejects the idea that an emphasis on the environment is either new or outside the scope of conventional economics. If this is the case, I’d like to know which university in Australia currently offers a first year economics course which does what he claims because I bet it would interesting economics, that students can relate to, see the point of, and readily apply in their lives.

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The poverty of economic history

2nd December 2008

http://recessionhistory.info/wp-content/uploads/2008/03/recessionjobhunters.jpg
Image source: recessionhistory.info

The biggest problem with governments is that they are run by politicians whose first concern is the electoral cycle. The second biggest problem is that these politicians tend to have advisors with economics degrees from top universities where the economic history courses have limited appeal alongside the finance-oriented courses that are viewed as ‘hard science’. It is for this reason that history repeats itself as governments do not learn from previous mistakes. The fact that Paul Krugman feels compelled to write an article in the IHT today defending the case for a large fiscal deficit is testimony to this, as is the almost apologetic way the Rudd government in Australia has mentioned the ‘d’ word in recent days.

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A green ‘new deal’

4th November 2008

GND
Image source: neweconomics.org

I am a little perturbed by the reactionary position taken by some on the right of the political spectrum, that the economic downturn is reason enough to shelve plans for ecological tax reform (e.g. the Liberal Party in Australia). On the contrary, the economic crisis is an opportunity to do something to engineer radical change, hence the appeal of what some people are referring to as the Green New Deal. The New Economics Foundation in the UK is one group that is doing some interesting work in this area.

New Report on the Costs of Climate Change

5th June 2008

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Image source: nrdc.org

The Cost of Climate Change: What We’ll Pay if Global Warming Continues Unchecked is a study of the costs of inaction for the US economy by Frank Ackerman and Elizabeth A. Stanton, commissioned by the Natural Resources Defense Council (NRDC). The report presents a detailed analysis of four major categories of climate costs, and a comprehensive modelling of the impacts of climate change on the economy as a whole.

Under business-as-usual conditions, with no new climate policies, the four cost categories – increased hurricane damages, residential real estate losses due to sea-level rise, increased energy costs, and water supply costs – will add up to $1.9 trillion (in today’s dollars), or 1.8 percent of U.S. output per year by 2100.

The modeling employs the PAGE model used in the Stern Report, a revised version of which forecasts even greater impacts of as much as 3.6 percent of U.S. GDP, or $3.8 trillion in today’s dollars, by 2100.

John Kenneth Galbraith, 1908-2006

30th April 2006


Image source: www.dradio.de

The great John Kenneth Galbraith died yesterday at the ripe old age of 97. An intellectual hero of mine, Galbraith is up there with Herman Daly and Joan Robinson in terms of people who have most influenced my thinking. This ABC Late Night Live podcast on J.K. Galbraith is well worth listening to. A short video clip from the BBC also gives a good overview of his contributions.

Apart from his prolific writings as an academic economist, Galbraith also served as a public servant and as an advisor to a number of Democrat presidents. As Ambassador to India he once described the Indian polity as “functional anarchy”. More recently, when asked his opinion of Dubya he said: “I never thought that I would yearn for Ronald Reagan.”

The poverty of neo-classical economics

23rd October 2004

Bjorn Lomborg takes a custard pie in the face at Border’s bookshop in Oxford
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Image source: http://www.mylinkspage.com/lomborg.html

An article published in The Guardian today pours scorn on the so-called Copenhagen Consensus, and not before time in my opinion. It has always been a mystery to me why The Economist insists on giving someone like Bjorn Lomborg so much air play when he has so little academic credibility. Without the help of The Economist, it is highly unlikely that Lomborg would have had sufficient sway to get eight Nobel prize winning economists to work together on this project where they get to decide how best to spend a hypothetical US$50bn dollars in order to advance global welfare. Tom Burke makes this point in his article, This is neither scepticism nor science – just nonsense, but more importantly draws attention to the limitations of applying cost-benefit analysis to the huge global challenges of hunger, water, migration and climate change, in order to rank them in terms of value for money. As Burke points out: ‘It is a vanity of economists to believe that all choices can be boiled down to calculations of monetary value.’ A stable climate, he observes is ‘a system condition for civilisation’.

This, in fact, is what differentiates environmental economists (operating within the neoclassical economics paradigm) and ecological economists. As Clive Hamilton writes of the former in The Mystic Economist (1994, p. 83), it is ‘breath-taking for its faith in humanity’s ability to control the natural world. With global climate change, we are talking about change to a complete system of unimaginable complexity; a system whose intricacies we have barely begun to understand. Who can possibly predict the consequences of global warming except at the crudest level?’

An economic analysis of Janet Jackson’s bosom

6th February 2004

As a person who never feels truly happy unless I am depriving myself of some sort of pleasure, I have been a long time subscriber to The Economist. This magazine has, for many years, thoroughly irritated me with its pious, supercilious, and doctrinaire attitude to certain issues. In recent times, however, I’ve begun to feel increasingly cheated by its seemingly enlightened approach. There have been a number of articles that question the orthodoxy and then … this week … (shock, horror) they seem to have developed a sense of humour with an article entitled Transatlantic cleavage. It would now appear that a subscription to The Spectator is my only option.
Yours, ‘Disgusted’, Tunbridge Wells.

Gas Guzzlers 1 – 0 Common Sense

31st October 2003

Just when I was getting excited about the prospect of a paradigm shift in the editorial policy of The Economist, I’ve been brought back down to earth with a bump.

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