Category: Economic Theory

Discussion of various points of free markets. See Government Economic Policy for US Government’s significant role.

An Empire of Wealth. John Steele Gordon

I didn’t start with a specific intent to find fault with the economic narrative. On the whole there’s much to admire about the book; nonetheless, the antagonism to the Glass-Steagall Act was striking in revealing Gordon’s short-sightedness. Totally oblivious to the coming financial crisis, with banks taking massive risks with depositors money that the government, not banks, had to guarantee.

Inflation Measurement

The sticker shock you get in the grocery store is apparent inflation. Real inflation occurs when your income can’t buy the same daily goods with your salary or when you have to work longer to earn enough to purchase that market basket.

Minimum Wage Increases GDP

When the minimum wage is raised, don’t overlook the effect on GDP. Money is being transferred (in the starkest version) from the owner’s profits to the worker’s pocket. The owner’s consumption of his excess income is much less than the worker’s consumption requires. More of the worker’s income goes into economic activity, increasing GDP rather than going to the owner’s savings.