Tag Archives: Economics

Going beyond growth: Why do economists have all the fun?

By Pearson Scott Foresman [Public domain], via Wikimedia Commons

What’s in a job title? If an academic came on the radio, TV or wrote a piece in a newspaper, would their title as a ‘sociologist’, ‘political scientist’, or ‘economist’ make a difference to the credence afforded to them? Of course it would. Economists trump the lot. Before he or she (it’s usually ‘he’) has uttered a word, an Economist appears more professional, more impressive, schooled in the hard science of trade and finance, rather than the wishy-washy relativists of the ‘soft’ social sciences like er… me.

Policy-makers and the media listen to economists, and the policy prescriptions they offer often have far-reaching social, political and even environmental implications. Economists know that unlike they will get an audience, as shown last week when Thomas Piketty, Ha-joon Chang and 75 other economists wrote an open letter to George Osborne last week, criticising his policy to bury Keynesian economics forever by banning future governments from ever running budget deficits. It made the news in a way that 77 sociologists never would.

The prominence of economists in policy-making and in the media is of interest to me because it might help explain our obsession with GDP growth. We hear politicians talk about ‘going for growth’, or aspiring to a ‘growth-based recovery’. Growth wins elections, growth keeps governments in power. We rarely question it, but there are reasons to be sceptical about our obsession with it. Last year’s report by the IMF, suggesting that inequality is bad for growth and more unequal economies are more prone to booms and busts, caused quite a stir mainly due to the fact that it was written by respected economists and played into the idea that growth is always the goal. Anti-poverty charity Oxfam welcomed the report, saying it shows “extreme inequality is damaging not only because it is morally unacceptable, but it’s bad economics”, also echoing esteemed economist Joseph Stiglitz’s view that despite strong average GDP growth in the United States since the 1980s, incomes have not increased for the vast majority of Americans. Take-home messages: Inequality is bad for growth, and the benefits of growth often only reach the few, not the many. (more…)

Nudging might be sexy, but it isn’t enough.

Image courtesy of http://www.speroforum.com/a/NTUACKIKDY21/74868-Good-nudge-bad-nudge-Dont-get-too-comfortable#.VV8W4PlVhBc

Last week I went to a workshop in London about nudging, titled “Silver Bullets Need A Careful Aim. Dilemmas in applying behavioural insights”. It was very interesting, and my gratitude goes out to the organisers who put together a really interesting day focused on the ethics and effectiveness of ‘Nudge’, which, seven years after Thaler and Sunstein’s book of the same name was published, still seems to be capturing the imagination of academics, marketers and policy-makers.

(If you have no idea what ‘Nudge’ means, check my previous post here) (more…)

Who might run the show in a post-cash world?

Is cash on the way out? In my own daily routines, I find myself using coins and notes less and less, to the point when I am often stuck for a pound coin to use the lockers at the swimming pool, or I audibly ‘tut’ when shopkeepers tell me there’s a charge for using my card. I just don’t carry cash very often. In fact, I don’t even physically use my debit card very often. I’ve got so used to using my phone or computer to buy stuff that I’ve learnt my 16-digit card number off by heart – a ‘skill’ which is either impressive or just a bit worrying.

Maybe this is a sign that I’m moving up the social hierarchy. After all, using less cash is associated with higher socio-economic status according to the Payment Council, so perhaps I’m moving up the foodchain. Or, as I’ve often feared, I’m not that special at all. This is a change which is affecting most people as we move into a world of contactless payments and methods of moving money around which might shake up those much-beloved institutions: The Banks. (more…)

The (Broken) Economics of Professional Sports Stadiums

Great American Ballpark

The wide world of sports has had a bad week for public relations. First, the Miami Dolphins hazing fiasco occurred, which was analyzed by my colleague Cliff Leak in “Man up: NFL Hazing and Jonathan Martin’s ‘Man Card’.” Next, the Atlanta Braves announced they would be vacating Turner Field, their stadium of 17 years, to move into a new stadium in 2017. The Braves are leaving downtown Atlanta to move North to the suburbs in Cobb County. The Atlanta Braves move is particularly surprising because they are leaving a relatively new stadium and they are taking baseball to the suburbs, making it difficult for the lower class to enjoy a game. But the real issue with the Braves’ move is associated with their reason to move. The Atlanta Braves organization is moving because the city of Atlanta will not provide taxpayer money to upgrade the current stadium. The Atlanta Braves are the latest team, owned by millionaires or billionaires, to threaten to move or actually move if the taxpayer does not provide them with a new home. (more…)

Neoliberalism and Inequality: A Recipe for Interpersonal Violence?

(If you are interested in this post, please see my earlier post on neoliberalism)

Source: Microsoft Clip Art

Based on recent research, there appears to be a link between the ideals of neoliberalism and increasing rates of inequality. Navarro (1998) argues, for instance, that neoliberal policies have contributed to growing inequalities around the globe and to worsening living conditions for the majority of the world’s people. For her part, George (1999) agrees and blames increasing inequality on the common neoliberal practices of placing public wealth into private hands, approving tax cuts for the wealthy, and pushing wages down for the non-elite. And, unfortunately, evidence suggests that inequality may mediate the relationship between neoliberalism and a third variable: interpersonal violence. In this regard, Krug et al. (2002:1086) write that “economic conditions [i.e., inequality] are both the causes and the effects of violence” with those on the poorer end of the spectrum experiencing the most violence. Other scholars, too, have found that inequality is positively correlated with violent crime rates (see Fajnzylber, Lederman, and Loayza 2002). Considering these findings, it appears that as neoliberalism becomes more prominent in a country, it can be expected that inequality and, as a result, interpersonal violence within that country will increase. In an attempt to demonstrate this argument, I will review these relationships before providing a brief case study to demonstrate how these variables may be interrelated. (more…)

A Brief Examination of Neoliberalism and Its Consequences

Source: 2bgr8STOCK

Starting in the second half of the 20th century, neoliberalism became increasingly prominent as a form of governance in countries around the world (Peters 2001). Originally, the roots of neoliberalism were planted by a classical political economy theory which advocated for markets (and thus people) to be completely liberated from any type of governmental interference (Smith 2009). “Free” competition and “free” enterprise were promoted as manners in which economies should be allowed to grow. Martinez and García (2000) contend that this “liberal” type of economic theory began to be adopted in the West throughout the 1800s and into the early part of the 1900s. The Great Depression of the 1930s and the development of Keynesian economics, though, temporarily slowed down the advancement of liberal economics. In recent decades, however, there has been a revival of economic liberalism (or, neoliberalism) on a truly global level as countries around the world now either choose or are forced to engage in neoliberal governance. As a result of the growing hegemonic prominence of neoliberalism, there have been vast changes at the national-level, the international-level, and the individual-level.

At the national-level, neoliberal ideas have drastically changed how states operate. By heavily promoting market-based economies that highly value competition and efficiency, neoliberalism has moved countries closer to adopting social Darwinism. Under Thatcher and Reagan, for instance, Peters (2001) argues that neoliberalism directly led to the economic liberalization/rationalization of the state, the restructuring of state sectors, and the dismantling of the welfare state. As a consequence of these changes, the U.S. and the U.K. have seen things like the abolishment of subsidies and tariffs, the corporatization and privatization of state trading departments, a sustained attack on unions, and the individualization of health, welfare, and education. Although the idea that markets should fully dictate governments would have seemed ludicrous in prior decades (George 1999), Bourdieu (1999b) contends that neoliberalism as a form of national governance has become a doxa, or an unquestioned and simply accepted worldview. Harvey (2005) is thus not surprised that the ideas of capitalism have been infused into political, social, and cultural institutions at the state-level. By placing a mathematical quality on social life (Bourdieu 1999a), neoliberalism has encouraged formerly autonomous states to regress into penal states that value production, competition, and profit above all else, including social issues.


Progressing from game theory to agent based modelling to simulate social emergence

This article discusses some of the fundamental flaws in game theory and discusses agent based modelling as a successor to model social emergence.

Axelrod (1984) made a major contribution to Game Theory in his book “Evolution of Cooperation” but thirteen years later he, dissatisfied with game theory, moves onto agent based modelling to rework his view of cooperation in his book in 1997 “The complexity of Cooperation: Agent-based Models of Competition and Collaboration”.  In a similar move, the Santa Fe Institute in the US was established in 1984 to grapple with complex social issues and used agent based modelling amongst other techniques to “collaborate across disciplines, merging ideas and principles of many fields — from physics, mathematics, and biology to the social sciences and the humanities — in pursuit of creative insights that improve our world”.  Additionally, the EU acknowledges the failure of traditional economics so adopts agent based modelling.

Agent based modelling captures the interaction between agents to simulate emergence whether at the physical or social level. NetLogo  provides an extensive library of simulations of both physical and social emergence that shows the diversity of application of agent based modelling.  These sample simulations can be readily tailored to meet the needs of social scientists.  The software is free and there is a thriving enthusiastic community support group.

Why is there a move by a prominent game theorist, the Santa Fe Institute and the EU to agent based modelling?  The article Game Theory as Dogma by Professor Kay (2005) discusses ample reasons to search for alternative techniques to model competition and collaboration  and emergence in general.  For instance.

The trouble with game theory is that it can explain everything. If a bank president was standing in the street and lighting his pants on fire, some game theorist would explain it as rational. (Kay 2005, p. 12) (more…)

“Deserving” and “Undeserving” Welfare

Over a decade since the 1996 welfare reform bill, welfare is in the news again.  The latest controversy is over laws that seek to limit what welfare recipients can spend money on.  This comes shortly after state legislatures passed laws to require drug testing of welfare recipients.  These new laws are not a direct attack on what remains of anti-poverty programs in America.  Instead, these initiatives allow for both a deserving and an undeserving poor.  A moral evaluation of the poor, however, contributes to the notion that poverty as an individual failing rather than a social problem.   (more…)

Austerity and the Double-Movement

After the French elected Socialist Francois Hollande in a rebuke of austerity policies gripping Europe, news headlines issued reports of worried markets.  The fear, among some, is that the new president would act in such a way, or more precisely that the public was acting in such a way that, would spook markets.  Some economists, most notably Princeton professor and Nobel prize winner Paul Krugman, have argued against austerity in favor of government stimulus to push economic demand and growth.  Krugman has made frequent reference to the Great Depression-era economic theories of John Maynard Keynes.  While Keynes is important here, a less noted theorist – Karl Polanyi, is, in my view, more apt to the particular electoral impulses unfolding across Europe. (more…)

Immigration and Racialized Politics

found at http://www.seiu.org/2011/04/immigrant-history-immigrant-future.php

If you asked Americans to pick which political party they considered pro-immigration and which one they considered anti-immigration most would agree that the Republican Party is anti-immigration and the Democratic Party is pro-immigration.  Like abortion politics, this does not mean that every Democrat is pro-immigration and every Republican anti-immigration.  Still, the divide between the parties appears to be growing starker as voters either sort themselves into parties due to their stance on immigration or solidify their stances on immigration as a result of their party affiliation.  While many of us may take this alignment for granted, founders of the anti-immigration movement did not see this party alignment as inevitable and such an institutional arrangement was not deliberate.  Instead, the current situation, I believe, points to the outsized role racialized politics play in the American political system. (more…)