Most economic concepts are pretty dry, but the Impossible Trinity sounds like one of those dilemmas where you are in a burning house and can only save two out of three people. The term refers not to religion (that Trinity is impossible in its own way) but international trade and how governments can only two out of three options, each of which is desirable in its own way. The three options are fixed exchange rates, independent monetary policy and free movement of capital. If they don’t sound that exciting, they are crucial to understanding the crisis with the Euro and what we can do about it. Continue reading “The Impossible Trinity”
There are few things in life as soul-crushing and depressing as being unemployed. In our modern society, people are defined by their work; your job is who you are. Those without a job are therefore excluded from society and feel as though their very identity is in question. Words cannot fully express the overwhelming sense of shame and humiliation that the unemployed feel. Even in times of severe recession they still blame themselves. There is a severe stigma attached to unemployment that makes them outsiders in society. Unemployment is a social curse that robs people of their dignity and self-respect. Continue reading “The Shame Of Unemployment”
One of the most controversial aspects of Ireland’s tax policy is its extremely light taxation of corporations. Corporate tax is only 12.5% and many corporations pay even less than that. Some would even go as far as to call Ireland a tax haven. Others defend it by claiming low taxes attract foreign investment which creates employment and provides tax revenue. Is it dishonest to aid corporations in their avoidance of paying their fair share or are low taxes necessary to keep the economy internationally competitive? Continue reading “Treasure Ireland”
Abolish government regulation of food, what could possibly go wrong? Over the last few weeks the Irish and UK food industry has been rocked by the discovery that many beef products actually contained horse meat. This has raised all such of questions and it is highly likely that other frauds were committed. In this context, it is worth examining why we have government intervention in the economy. It is regularly asserted that the government is only a burden on the private sector and that we would all benefit if the market was left alone. Do consumers need the government to protect them from unscrupulous businesses or can the market regulate itself? Continue reading “Horse Burgers And Food Regulation”
A guest blog I did for a new group, Irish Student Left Online, on the Anglo Promissory Note. Its a specifically Irish issue, but basically a private bank made reckless gambles and was about the go bankrupt when the Irish government bailed it out. It will cost 30 billion euro to wind down the company (as in return for 0 benefit). It been a huge problem figuring how we should pay this and this week the government finally got an agreement with the ECB to delay repayments for 30 years. I discuss whether or not this a good deal.
In his debut for the ISLO Robert Nielsen goes through the bizarre and tragic nature of the recent “deal” on the Promissory Notes. Robert blogs over here normally.
Whenever discussing the banks people often preface their comments by saying that they don’t know much about economics. It is assumed that the bank bailout only seems absurd due to a lack of economic knowledge, that in actual fact the government is following well-established economic principles. As an economics student, let me tell you that nothing is further from the truth. There is no economic logic or theory behind the government’s
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In Chapter 9 and 10 (I combined them as they’re quite similar) of “Predictably Irrational” by Dan Ariely, the concept of how are expectations affect our decision making is discussed. We are not rational actors making choices in a vacuum but rather we are deeply affected by our expectations. If we expect a movie to be good, then it often is. This placebo effect is always to be found with prices. If we pay more for something, we value it more and get more from it. This creates serious problems for those who claim that market distortions will be corrected by market forces pushing a return to equilibrium. Continue reading “Predictably Irrational Chapters 9 & 10 – The Effect Of Expectation & The Power Of Price”
On this blog I have been very critical of mainstream economics, to the point that I feel most of it should be thrown out. I believe the orthodox theory of demand, supply, labour theory, wages, recessions, competition and information are fundamentally flawed. The obvious question is, if we are to ditch these unrealistic and useless theories, what do we replace them with? I cannot only criticise and knock down, I also have to create. I believe we should replace the current theory based on graphs of supply and demand with one based on power. The economy is not governed by unseen and unchangeable impersonal forces but by the competition of different sources for power. I believe neo-classical economics has outlived its usefulness and instead should be replaced with “The Theory of Power”. Continue reading “A New Economic Theory”
On this blog I have discussed a lot of economic theories and ideas. I wrote about many flaws in the market, problems of competition, the need for the government etc. But all of that is hypothetical so I decided to use some practical examples. Over the next couple of posts I will apply economic theory to different parts of the economy. It’s not going to be a rigorous examination, more just things I notice during the day. I’m a firm believer in the relevance of economics and that it must be based on the real world. The best way to test a theory is to see how it matches the real world. Continue reading “Applying Economics To Bacon”
Being poor is expensive. Not only do you have less money to get by with but everything also costs more. The secret to getting rich is in economies of scale and bulk buying, something the poor simply can’t afford. As they’re stuck trying to make ends meet day-to-day, they can’t invest in the future and so are stuck with false economies that cost them more in the long run. This is the source of the counter-intuitive saying that “You have to be rich to be poor.”
Whenever I tell people that I’m studying economics they usually ask me how to solve the recession or what to do about the banks. Each time I’m embarrassed over the fact that we have never even mentioned these issues in lectures. In my course I have basically been taught that the free market is the most efficient and best system in the world and trouble always results when it is interfered with. In my textbooks recessions are not mentioned, they do not happen. There is no explanation of unemployment, the biggest issue of our times. There is no mention of profit, the heart of capitalism. Nor do they talk about banks or money or advertising or how systems are guided by power relations. No mention is made of poverty, in effect ignoring three-quarters of the world.
Continue reading “What Economics Doesn’t Talk About”