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.
Riots are shocking events where the ordinary rules of society break down. London 2011 was gripped by the sight of burning cars and hooded youths looting shops. But why do riots happen? What reason could there be for such destruction? Is it poverty and unemployment? Are people alienated from society? Or was it simple opportunism by criminals? Are they provoked by police brutality? Or did the police do too little to stop them? Are they the sign of a breakdown in morality? Are they a product of a “culture of dependency”? Or do some people just want to see the world burn?
Continue reading “What Causes Riots?”
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”
There is a lot of debate over the minimum wage. An internet search of the topic will return with almost unanimous condemnation of it. It is blamed for unreasonably pushing wages too high and causing unemployment. It is decried as a major cause of economic problems rather than the solution. However, these arguments are based upon over simplified ideas and graphs. Now, most of them look nice and are easy to understand, but they should be judged on how well they describe the real world. The simple fact is they don’t really. Continue reading “The Advantage Of The Minimum Wage”
It is often claimed that this recession is hitting all of us. It is said that the rich suffer just as much as anyone else, if not more. It is argued that we all must make a sacrifice as we are all in this together. However this simply isn’t true. In fact this crisis is resulting in even further increases in the gap between rich and poor. Inequality and poverty are rising to even higher heights. Austerity is making the poor suffer the most while leaving the rich untouched. Quite simply the rich are getting richer while the poor are getting poorer. Continue reading “Rich Get Richer – Poor Get Poorer”
I have just finished reading How Rich Countries Got Rich . . . And Why Poor Countries Stay Poor by Erik Reinert. The book is interesting for it engages what should be the main question of economics, why are some countries rich and other countries poor? This crucial question is woefully under researched and barely discussed in mainstream economics. I have completed two years of economics study in university without yet having heard an explanation for this phenomenon.
Reinert’s main argument is that the wealth of a nation is based upon the economic activities it specialises in. Poor countries are poor because they specialise in agriculture and the production of raw materials. This is an economic dead end as it does not allow for increases in productivity or innovation, which is how countries get rich. On the other hand, rich countries got rich by industrialising and building up a manufacturing base. Continue reading “How Rich Countries Got Rich . . . And Why Poor Countries Stay Poor”
It seems quite obvious what the cause of famines are. They are caused by a natural disaster (flood, drought, disease etc) destroying crops. With less food more people go hungry, hence starvation occurs. It seems very simple and straight forward. But Amartya Sen has proposed a radical new explanation. He argues that it is not a lack of food that causes famines, but rather an inability of people to purchase the food. Continue reading “A Surprising Cause Of Famines”