The Irish Labour Party is in dire straits. Its vote has collapsed from 19.7% in the 2011 general election to only 7% in last months local election, causing its leader Eamon Gilmore to resign. Now there is a leadership election ongoing between Joan Burton and Alex White, both of which are making bland statements about what they would do as leader (neither have mentioned any policies or anything concrete). But is this simply a case of rearranging chairs on the Titanic and finding someone to take the poisoned chalice and lead Labour into election meltdown? Continue reading “Can The Labour Party Be Saved?”
Just as all political debates inevitably end with someone making a Hitler comparison, all debates with libertarians sooner or later involve the claim that taxation is theft. It doesn’t matter whether you are discussing the welfare state, universal healthcare or a TV licence, at some point a libertarian will accuse the government of acting like the mafia and stealing people’s money (just the last day a commenter asked me to “stop promoting the use of force against me or my family“, by which he meant don’t regulate bitcoin). Of course we all know this argument is melodramatic hyperbole, but it would be useful to spell out why. Continue reading “Why Taxation Is Not Theft”
There are many arguments that can be used against gun control and while I disagree with them all, some are plausible. However, there is one that is so completely absurd that it hardly deserves the dignity of a rebuttal. This is the notion that genocides were preceded by gun control and that taking away people’s guns is the first step towards taking away their freedom and finally their lives. This argument is filled with so much paranoia and historical inaccuracies that it is a wonder that anyone takes it seriously. Yet American politics is so extreme that a fanatical argument like this can find widespread support among conservatives. Continue reading “The Genocide And Gun Control Myth”
The government has been celebrating Ireland’s recent exit from the Troika bailout and have proclaimed that Ireland is now on the road to recovery. The Taoiseach addressed the nation to celebrate the regaining of Ireland’s economic sovereignty. But are we out of the woods yet? Is Ireland facing a new dawn that leaves the nightmare of the recession behind or is it only a mirage of false hope while we are still stuck in the mud? Continue reading “On The Road To Recovery Or The Road To Nowhere?”
There is a peculiar argument against stimulus called the Ricardian Equivalence. It argues that if individuals have rational expectations, then when the government gives the economy a boost during a recession by cutting taxes or deficit spending, individuals will know that this deficit will have to be paid off at a later date and therefore the extra money will merely increase savings. This increase in saving will cancel out any stimulating effect the deficit might have. In other words it doesn’t matter whether taxes are raised now or later, the effect will be the same. In 2010, the President of the European Central Bank, Jean-Claude Trichet and current head of the IMF, Christine Lagarde both mentioned the Ricardian Equivalence as a reason why they didn’t support a stimulus. Continue reading “Time To Bury The Ricardian Equivalence”
(This is the original draft of an article I wrote for the University Observer. A counter argument was also written.)
Whenever someone tells you there is no other option, don’t believe them. There are always other options and when people pretend otherwise its usually because they want to shut the debate down. So when Michael Noonan grimly announces that we have no choice but to implement austerity, we shouldn’t blindly accept this. There is always an alternative. Continue reading “Austerity Isn’t Working”
Few economists openly admit to believing in Say’s Law anymore. It is generally considered a relic of the past, a once dominant theory that had faded away. Although it was prominent in the 19th century, it was swept away in the Keynesian revolution like so much of Classical economics. However, economic theories never die. Say’s Law lives on in conservatives think tanks like the Heritage Foundation and when Marco Rubio (who many favour as the next Republican candidate for President) rose to reply to Obama’s State of the Union address, it was Say’s Law he invoked. Even in the world of economics, some economists unconsciously channel the spirit of Say when they preach about the worries of crowding out and through Walras’ Law which is just a weak version of Say’s. This year’s joint winner of the (pretend) Nobel Prize in Economics Eugene Fama constructed an argument against government stimulus (unconsciously) based more or less on Say’s Law. Continue reading “Say It Isn’t So”
On the weekend I saw the new film “Elysium” starring Matt Damon. I was blown away by it and its social commentary. Although at times it resembles an action film, it is in reality an allegory for our present times. It is a warning of what our future could be. Set in the year 2154, the world looks like Republicans and libertarians won the fight to dismantle the government. The inequality between the 1% and the rest has been driven to its extreme and all the rich people have evacuated Earth and are now living in a space shuttle named Elysium. Meanwhile Earth has descended to the level of an abandoned Third World ghetto.
The crisis has given rise to a range of new ideas and theories to replace the discredited view of the economy. The newest and most imaginative of these is known as Modern Monetary Theory (MMT) and is one of the first theories to owe its growth to the internet. Without a doubt MMT is radical and completely turns established economic thinking on its head. If it is correct then it would change the way we think about the economy forever.
Economics is a broad and vast field comprising intricate areas that would take years to master. This makes it very hard to summarise or reduce it to a simple point. However, if there was one simple lesson that I wished everyone knew about economics, one easy sentence or sound bite that could explain the essential core to people who know nothing else about economics, it would be: “My spending is your income”. This simple point, properly understood, explains everything you need to know about the important policy issues of the economy. It doesn’t explain everything, but it explains the important parts.
My Spending Is Your Income