Category: economics

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Europe has had several years of experience with harsh austerity programs, and the results are exactly what students of history told you would happen: such programs push depressed economies even deeper into depression. And because investors look at the state of a nation’s economy when assessing its ability to repay debt, austerity programs haven’t even… Continue reading Untitled

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District 12 is a quintessential extractive economy. It’s oriented around a coal mine, the kind of facility where unskilled labor can be highly productive in light of the value of the underlying commodity. In a free society, market competition for labor and union organizing would drive wages up. But instead the Capitol imposes a single… Continue reading Untitled

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The Spanish government, fearful of the bond markets, enacted tough austerity budget measures that decreased Spanish people’s incomes and therefore demand for the products of Spanish firms. This has pushed the country deeper into recession, so it should come as little surprise that their bond sales are now going poorly. That’s counterproductive austerity at work.… Continue reading Untitled

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We’ve had dire warnings about runaway inflation for more than three years at this point. When do people start to consider that maybe they have the wrong model? Floodgates – NYTimes.com

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when the rating agencies upgraded the UK outlook, the Cameron government hailed this as proof that austerity was working; when they downgraded it due to poor economic performance, the Cameron government declared that this showed the need for even more austerity. It’s Always Time For Austerity – NYTimes.com The beatings will continue until moral improves.

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Remember how Ireland’s vigorous recovery proved Keynesian economics — and smarty-pants Keynesian economists — wrong? (via The Irish Model Continues to Shine – NYTimes.com)

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If you want to grow slightly alarmed about the American future, contemplate not just the scale of our trade deficit with China but the fact that our largest export to them by a wide margin is soybeans. America’s Customers Are Mostly Nearby

Mankiw: Capital Gains vs. Ordinary Income, a little puzzle on policy.

Mankiw: Capital Gains vs. Ordinary Income, a little puzzle on policy.

If you have a job, the money you are paid for your work is ordinary income. If you buy an asset at one time and sell it later for a higher price, the profit you made from holding it is a capital gain. But is it really that easy? Consider five examples, and see if you can identify what is ordinary income and what is a capital gain.

Really great explanation. A must read.