Demand, Supply And Fairness

Economics is all about supply and demand. Textbooks are full of examples of these two balancing each other out. However there is a third factor that is forgotten. That is fairness. People are guided by how fair they think something is or is not. Businesses often don’t raise their prices even when demand rises because it is seen as being unfair. Similarly customers often resent higher prices if they feel there is no justification for it. Economists obey the laws of supply and demand, sometimes ordinary people don’t. Continue reading “Demand, Supply And Fairness”

We Need To Talk About Travellers

We need to talk about Travellers. We need to talk about the way we treat them, the way we view them. The way we discriminate against them. The hatred and bigoted prejudices we hold against them. The way we exclude them from our society, pretend they aren’t there. The way we mock their culture, the way they talk, the way they look. Travellers are people too, just as human as you or I, but most people view them parasites on society. Most of my friends openly describe Travellers as violent, drunken scumbags. We need to talk about our own Apartheid system with our own inferior underclass. We need to talk about Travellers. Continue reading “We Need To Talk About Travellers”

The Man Who Saw The Crash Coming

The financial crash in 2008 came as a surprise to most economists. The believed markets were sufficient and will produce prosperity for all if left to their own devices. However one little known economist had predicted it and developed a theory explaining it. He devised a theory explaining how lenders become lax with their standards, over optimistic and over extend themselves leading to a crash. Even more impressively he did this back in the 70s and 80s so can’t be accused of jumping on the bandwagon. His name is Hyman Minsky (1919-1996) and the theory is called “The Financial Instability Hypothesis”. Continue reading “The Man Who Saw The Crash Coming”

Misunderstanding Hayek And The Road To Serfdom

“The Road To Serfdom” by Fredrick Hayek is a disappointing book. Conservative bloggers often race about it claiming it has great insights into modern politics. While I disagree with the Austrian school of economics I read it to here the other point of view. I found it a boring, out dated book that didn’t have anything particularly original or insightful to say. It’s mainly concerned with saying a totalitarian state where the government controls everything doesn’t work (you don’t say). The book might have been relevant when it was published, but I am at a loss to see its use today.

I think to a large extent Hayek has been misunderstood. I have regularly heard people use Hayek to criticize the growth of the state or the Obama administration. Yet Continue reading “Misunderstanding Hayek And The Road To Serfdom”

The Money Illusion

What if I told you about an economic theory that assumed every person in the economy understood economic terms and kept up to date with the state of the economy? To be exact, what if I told you about a theory that assumed everyone in the economy based their decisions on the rate of inflation? You’d (rightly) say that was a daft and unrealistic assumption completely out of touch with how real people think. The reason for this is due to what is known as the Money Illusion. Continue reading “The Money Illusion”

If We Were Rational . . .

Modern economics textbooks assume all people are rational. By this they mean we are logical and only do things that are in our interests. Yet once you close the textbook and enter the real world you find numerous exceptions to this rule. The world is full of people acting irrationally and doing things no textbook can explain. If we were rational then the world would be a unrecognisably different place.

If we were rational there would be no war. Continue reading “If We Were Rational . . .”

Obama Is Not A Socialist

Obama is regularly described as a Socialist or Marxist or Communist. This is an extremely outrageous and daft claim not supported by the least amount of evidence. It is only believed by a delusional fringe of the far right, not by anyone who has examined the facts. If you do you will see that Obama is actually a centrist moderate, whose desire for bipartisanship has not been met halfway. Others claim he was a member of a Communist party in his youth or was friends with Communists (these are the same people who claim he was born in Kenya).  Continue reading “Obama Is Not A Socialist”