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Peter T What was the minimum wage in the mid 19th Century? And when was the French Revolution? When was the Russian revolution? Are these facts perhaps relevant to the decision whether their might be other causes of the things you have observed than what you suppose.
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I don't like the use of the term "working class" here. It is not what you mean (most people think of working class as being blue collar). What you really mean is just people who get most of their income from wages. i.e. Most of us.
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And speaking of Luxembourg - I note the curiously high levels of this particular statistic for Luxembourg (probably due to a large number of very high earners) and Korea (no idea why).
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By the way, this problem with size, is even more critical when it comes to international trade. I've seen people seriously take the ratio of imports to GDP as a measure of openness to trade as though this measure was equally applicable to Brasil and Luxembourg.
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One thing I will say here, is that you should be a little careful with this statistic. The USA is by far the largest (in population anyway) of the OECD countries, and with that size comes diversity. How would the EU look as a single country on that list? This doesn't mean that the US couldn't do a lot more for its poorest citizens.
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I'm not sure if Peter T is an alias for Peter Thiel himself, but he really has do better than that as a reply. He is suggesting he doesn't know his economics. And he comes across not as a (G)libertarian, but as a Marxist.
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I think the best analogy is with Astronomy. You can do a lot of astronomy without physics and chemistry (look out there and describe what you see). But to understand what is going on you need some physics and chemistry. But of course a lot of our understanding of physics comes from astronomy. The economy is pretty much the same. Macro and micro don't precede one another, they develope together. But I'm with Robert, the position that the Chicago school holds is incoherent. First they adopt a lot of simplifying assumptions, on the (always shaky) grounds raised by Friedman that "good enough as if" modelling was the best you could hope for. Then they insist of rigour in some selected areas (where the selection seems rather arbitrary).
Toggle Commented 2 days ago on 'The New Classical Clique' at Economist's View
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It is not only that, it has to do with firm culture and policy. In the 1950s the typical Chief Executive was an engineer who had risen through the ranks of the firm he was now running. And most likely he lived in the same area as many of his employees. Now, the typical Chief Executive is recruited from outside, is an MBA from an elite university, and lives in an elite conclave. This is not just a case of social seperation, it is also the result of a policy of deliberately selecting for ruthlessness and lack of empathy (sorry that should be "concern about the bottom line").
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I really find it distressing that there is a modern tendency to see "politics" as about people and labels instead of about policy. It is a very poor way of thinking about things.
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Main Street Muse, DavidS 1. The US has (and very often has had) a divided government. The Administration is NOT the same thing as the government. 2. Using the word "Republican" (the Party of Lincoln and Teddy Rooseveldt) in the way you are using it is inappropriate.
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I read the Liberty Street Economics piece and thought it was a good example of what is wrong with DSGE models. They happily explain how the model illustrates the sources of the recession in terms of things that are external to their model - "shocks" - (because it can't by definition be because of things that are internal to their model). Sort of misses the whole point about what happened in the first place.
Toggle Commented 6 days ago on Links for 9-25-14 at Economist's View
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John Johnson, PLEASE don't talk about government as though it is a unified agent with a single continuing purpose. Individuals may be like that, but government isn't. What you are saying makes absolutely no sense if you actually look at the institutions involved and their dynamics.
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It is simpler still, they should have abandoned GE - it is a useless idea. GE not only doesn't exist it can't exist (the preconditions are not met). They need to think in terms of pure system dynamics models with heterogenous agents (and add things like endogenous innovation and product life cycles). In other works modern ecology.
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Rich bad parents, can outsource the parenting.
Toggle Commented 6 days ago on 'Hungry Children in America' at Economist's View
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Roman Phonics, you do know what thread hijacking means?
Toggle Commented 7 days ago on 'Credibility' at Economist's View
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If there is a GE it is an emergent property, (that is the dynamic reactions of agents move economic variables in the direction of a GE), so that it must be unnecessary to impose it on the model. But we know from experience within the economy that there are both negative feedbacks (price mechanism) and positive feedbacks - expectations, uncertainty. Undamped positive feedbacks will always come to dominate at some point. http://www.spiegel.de/wirtschaft/wolfgang-muenchau-ueber-fehler-in-prognosen-der-oekonomen-a-986405.html
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I keep saying, the problem is the GE. There is NO GE. Imposing on the model is a mistake from the start.
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Simply unbelievable. I wonder if this has something to do though with something quite different - age. I guess my Mum (over 80) thinks like this, the world to her is still something like it was in the 70s.
Toggle Commented Sep 22, 2014 on Paul Krugman: Those Lazy Jobless at Economist's View
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Great to see Mark Thoma highlighting two of my favourite blogs - Chris Dillow's Stumbling and Mumbling and Steve Waldman's Interfluidity. Unfortunately, I think they are are far too subtle thinkers for many here.
Toggle Commented Sep 22, 2014 on 'Capitalism & the Low-Paid' at Economist's View
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As usual absolutely brilliantly argued by Steve Waldman. These are the key sentences in my view: "Like the excellent Ed Dolan, I favor a basic income large enough to matter but not sufficient for most people to live comfortably. The right way to understand a basic income as a matter of economics, and to frame it as a matter of politics, is this: A basic income serves to increase the ability of workers to negotiate higher wages and better working conditions. Market labor is always “optional” in a sense, but the option to refuse or quit a job is extremely costly for many people. A basic income would reduce that cost. People whose “BATNA” is starvation negotiate labor contracts from a very weak position. With a basic income somewhere between $500 and $1000 per month, it becomes possible for many workers to hold off on bad deals in order to search or haggle for a better ones. The primary economic function of a basic income in the near term would not be to replace work, but to increase the bargaining power of low income workers as a class."
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I would also point out that the whole concept of "cost" is difficult to use in the context. Remember one person's cost (an accounting concept) is always another person's income. The real question is "cost" for WHOM!
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Yes, people don't understand what economic growth means, including economists. In fact its meaning is so fuzzy that I think we should find a better concept to replace it.
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"Contemporary computer science seeks to overcome Polanyi’s paradox by building machines that learn from human examples, thus inferring the rules that we tacitly apply but do not explicitly understand" So ... the argument is that we need not worry so much about the problem of the substitution of machines for labour, but they working on making sure we will need to worry about it in the future? That is reassuring for those of us over 50, but no so reassuring if we have children.
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Why would anybody take anything written in an opinion piece for the Washington Post seriously? Especially by Donald Luskin!
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pgl - but a monetarist would tell you that (ignoring supply side effects for the moment - and remember to a monetarist demand side effects mostly dominate - monetary policy can always offset fiscal policy changes).
Toggle Commented Sep 14, 2014 on 'Taxes and Growth' at Economist's View
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