The Political Economist

In the previous text I presented several economic hypotheses explaining why the developed world has entered what could possibly be a prolonged period of economic stagnation. In today's text ( note: long read ) I will present my own opinion, arguing that what we are experiencing is a temporary slowdown which could last for several decades, but one that could also provide the greatest opportunity for the next huge boost in living standards. I hypothesize that the underlying factor behind both the current temporary stagnation (particularly in productivity and real wages) and the upcoming rise in living standards is - technology .  As I've emphasized several times on the blog before, I believe we are currently, for the past 30 years, in the period of the Third Industrial Revolution . And in our times, it's only heating up, with the potential to bring to some new disruptive innovations that could change our world as much as the previous two industrial revolutions had. The ...

Atkinson, Anthony (2015) Inequality. What Can Be Done? Harvard University Press & Atkinson, Anthony (2008) The Changing Distribution of Earnings in OECD Countries. Oxford University Press The first two books, both written by the same author, Oxford economics professor Sir Tony Atkinson , will be reviewed jointly. The reason is that the earlier book, The Changing Distribution of Earnings in OECD Countries is more a case study summary of the empirical facts behind the rise of inequality in the West in the past century, the point of which is again summarized in the first few chapters of the author’s latest book Inequality . Basically the earlier book is a very detailed portrayal of the worrying inequality trend in the case of 20 OECD economies. It has two main parts – the first which depicts both the theoretical arguments and the summary of the historical trends for all the given countries, and the second which (on over 200 pages) details all the data, the graphs and the ind...

In my  last book review  I summarized a very interesting book called The Spirit Level by Richard Wilkinson and Kate Pickett . In it the authors propose a solution that would not only lower inequality and thus correct many of the negative social outcomes related to it (but not caused by it, mind you; they don't prove causality), but also change the entire system of values in society, so that people would be less profit-oriented and would increase their levels of interpersonal trust (among other things).  Their big idea is to introduce democratic employee ownership . Hence the title: The John Lewis economy (the John Lewis Partnership is the famous UK example of an employee-owned firm ; it allows all of its employees to share the firm's profits and have oversight over management decisions through several democratic mechanisms of corporate governance). It's a belated comment since I wanted to write a piece about this ever since 2012, when UK deputy PM Nick Clegg  o...

It's holiday season, and the Olympic games have just started, I know, but I read this great piece in last week's the Economist and I just had to share it with my readers. It is possibly one of their best briefing articles to date, as it tackles a very important contemporary phenomenon of a newly arising political divide across the developed world (that was the cover of the entire issue, pictured below). The left vs right is passé, so 20th century. The new distinction is open vs closed. Or in other words, liberal vs national-socialist (OK, maybe not that far away from early 20th century).  One group is against immigrants, in favor of closing the borders, advocates protectionism, and fears competition (a typical merger between left and right collectivism), while the other group is for open borders, in favor of free trade, in favor of competition and against protectionism. One group advocates and feeds from fear - fear of immigrants and foreign competition taking away dome...

The link between income and happiness  has been one of the most hotly contested relationships among social scientists. Many researchers from various branches of social sciences have repeatedly denied the existence of a causal relationship between income and happiness (despite overwhelming evidence on how the  great rise in living standards  was led by the significant increase of post-Industrial Revolution incomes per capita), with the obvious normative conclusion being that having more money is not that important to us after all.  Well it just happens that it is important. In an article published last month in the New Yorker entitled "The Case for Free Money" , the author  James Surowiecki  (the Wisdom of Crowds guy) makes a compelling case in favor of universal basic income - a policy proposal (rejected in a referendum in Switzerland earlier this year) where every adult citizen of a country would each year receive a guaranteed basic income. I...

I'm running behind with the reviews (still keeping track with the book readings though), so I'll publish the next two in space of only a week. Today it will be Gladwell's three books: Outliers , Tipping Point , and Blink (in the order that I've read them), while for next time it will be Roth's Who Gets What , and Surowiecki's Wisdom of Crowds .  Gladwell, Malcolm (2008) Outliers. The Story of Success . Little Brown Of all his books, in my opinion, this one ranks top. In Outliers, his third book, Gladwell wants to redefine our understanding of success. The brilliant writer that he is, he takes us through a fascinating journey linking together the little bits and pieces into an overreaching yet slightly simplistic theory about luck, opportunity, hard work, intelligence, heritage, and cultural legacy, all of which are important factors that explain why some people succeed (and are thus considered " outliers ").   Although this is far from a ...

In this blog post I will make a brief digression from my usual economics topics.  A year has passed since National Geographic published an issue with the following disturbing cover, featuring a couple of conjectures all too familiar and all too frustrating to professional scientists and science enthusiasts: "Why Do Many Reasonable People Doubt Science?" , National Geographic, March 2015 In a really good op-ed , author Joel Achenbach of the Washington Post goes through a variety of misconceptions and doubts modern science has to fight against. The most obvious examples are listed on the cover. These include - but are not limited to - (i) the non-existence of climate change (never mind the thousands of state-of-the-art research papers that proved otherwise. Don't trust Al Gore on this, check out for yourself here , here ,  here , or here ), (ii) that GMO is evil (what does this even mean? Again, the scientific evidence is quite clear on this), (iii) that th...