Category: Economic Theory

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

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.

Aggregate Effects of the Top 1%

Consumers drive 70% of GDP. Earners in the top 1% of income have received 93% of the income growth since the depths of the Great Recession (Bloomberg). A surprising fact about those high earners. They only consume 21% of their income (Tax Policy Center).

Class Warfare and Status Quo

This detail from an illustration in a 1911 Industrial Workers of the World publication depicts a class of workers struggling to hold up finely dressed elites while they drink and dine. Rhetoric about class warfare has waxed and waned in American politics, and is frequently employed by both sides in debates about tax law and other economic policies.

Both sides use the term class warfare. Once that alarm is raised, neither side listens to the other’s argument, contradictory claims are left hanging

Aggregate Effects in the National Economy

Some people argue that raising the minimum wage will hurt the lowest tier of workers because it will cut the number of jobs that are available to them, yet the statistics show that does not happen. How can such a reasonable line of logic fail to lead to a valid conclusion?

Euro Divergence

When you strip away all the non-economic aspects in Euroland and just focus on the currency, they basically have created fixed currency ratios (only to a single standard rather than to each other’s currencies). Fixed exchange ratios (a la SNAKE) always fail, because there remains different inherent productivity rates which must alter exchange rates –…

Grand Pursuit – Sylvia Naser

Subtitle – The Story of Economic Genius I’m about ¾ finished.  Too much biographic detail, gives context for economic problems arose in, but too much biography obstructing the view of the theory for my taste. Pre-WWI Panics. Slowly, dawning recognition of relationship between falling prices, amount of currency in circulation Post-WWI Hyperinflation. Printing of money…

Failure of Old Solutions

In the ’30s when it was like this before, it didn’t end until bigger worries overshadowed the economic problems of low demand and declining prosperity. The increasing of tariffs and austerity programs made the Great Depression worse.