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Articles by shamyshabeer

Brexit – Who Wins and Loses

5 days ago

By Elliott Morss, Morss Global Finance
Introduction
In all likelihood, Brexit is coming. What will its effects be and what countries will be injured the most? It clearly “depends.” While it is apparent that the UK would like trade linkages to remain the same, numerous Economic Union (EU) members have been piqued by Brexit and want to strip away some of the UK’s trade benefits. At least they do as a starting point for negotiations. Below, the benefits and costs of a breakup are examined.

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So Far
Initially, the sense was that Brexit would weaken Britain. This resulted in a weaker Pound: down nine percent against the Euro and twelve percent against the Dollar. And as a result, the UK’s

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Why Long-Run Theories of Profit and Accumulation Fall Short

6 days ago

By Philip Pilkington
Nothing gets heterodox economists quite so fussed as the long-run theory of the rate of profit. Yet, Keynes did without one altogether and when examined closely there is no way that such a theory can say anything tangible about the real world. In order to lay this out I am going to take my leave from Joan Robinson’s excellent book Economic Heresies: Some Old-Fashioned Questions in Economic Theory.

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When Robinson discusses Keynes she says that he had no real interest in a long-run theory of profits and accumulation. In the long-run, Keynes famously said, we are all dead. All that matter is short-term analysis. Crucially Keynes thought that profits and

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Angst in America, Part 4: Disappearing Pensions

7 days ago

By John Mauldin, Thoughts from the Frontline

“Companies are doing everything they can to get rid of pension plans, and they will succeed.”– Ben Stein
“Lady Madonna, children at your feet Wonder how you manage to make ends meet Who finds the money when you pay the rent? Did you think that money was heaven sent?” -– “Lady Madonna,” The Beatles

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There was once a time when many American workers had a simple formula for retirement: You stayed with a large business for many years, possibly your whole career. Then at a predetermined age you gratefully accepted a gold watch and a monthly check for the rest of your life. Off you went into the sunset.
That happy outcome was probably never

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Krugman Uses ISLM to Proclaim Looming Fiscal Crisis, Denounces Those Who Don’t Use ISLM

13 days ago

By Philip Pilkington
Editor’s note:  This was written in March 2014.
Some people often ask why I complain about Krugman. “Hey Phil, Krugman is a good guy. He likes government spending. You like government spending. Therefore you must like Krugman,” says our budding young Socrates. Well, I’ll tell you why: because Krugman is a pretty awful economist who pushes completely outdated views and tricks people into thinking that they’re cutting edge. Anything that is of interest he poaches from elsewhere, typically engages in dubious accreditation and ultimately gets it wrong.

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The reason for this? Because Krugman loves models and hates books. He loves little simplifications of the world

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A Stroll through US Trade Statistics, and How It Always Balances

19 days ago

By Timothy Taylor, Conversable Economist

"America’s commerce with the rest of the world must be and always is balanced when taking into account investment flows as well as the exchange of goods and services. … [O]ne key insight for public policy is that the total outflow of dollars each year from the United States to the rest of the world is matched by an equal inflow of dollars from the rest of the world to the United States. There is no need to worry about a `leakage’ of dollars siphoning off demand from the domestic economy. Dollars spent on imported goods and services return to the United States, if not to buy US goods and services, then to buy US assets in the form of an inward flow of investment. … When we account for all the dollars flowing into the United States, with an

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Some Metaphors Are Better Than Others: Deirdre McCloskey and the Capital Debates

20 days ago

By Philip Pilkington
Fixing the Economists Article of the Week
Well, my previous piece on the work of Deirdre McCloskey generated some discussion. I just thought that perhaps I should lay out what I find problematic about her work.

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Please share this article – Go to very top of page, right hand side for social media buttons.The problem with McCloskey is that she practices a sort of false postmodernism of the most insipid kind. Now, I’m not one to throw around that term too much — I greatly admire many of the post-structuralist philosophers. What I mean when I say that is that McCloskey reduces everything to literary criticism and then consigns rational debate to the bin.
I think that this is disingenuous in the extreme because, of course, she herself as a working economist

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Angst in America, Part 3: Retiring Broke

21 days ago

By John Mauldin, Thoughts from the Frontline

“The trouble with retirement is you never get a day off.”– Abe Lemons
“Retirement at sixty-five is ridiculous. When I was sixty-five I still had pimples.”– George Burns

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“To be, or not to be, that is the question:Whether ’tis nobler in the mind to sufferThe slings and arrows of outrageous fortune,Or to take Arms against a Sea of troubles,And by opposing end them.”
– Shakespeare, Hamlet

Today we continue looking at angst in America, the financial worries that so afflict us here in the world’s largest economy and by extension in much of the developed world. We may be the envy of the world in some ways, but we also have no shortage of stress. Today we’ll look at some data on retirement savings – or lack thereof.
Let’s start by

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Economic Growth in the US: A Tale of Two Countries

23 days ago

From Voxeu.org
— this post authored by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman
Appeared originally at Voxeu.org 29 March 2017
The rise of economic inequality is one of today’s most hotly debated issues. But a disconnect between the different data sets used to measure and understand inequality makes it hard to address important economic and policy questions. In this column, the authors highlight the findings from their attempt to create inequality statistics for the US that overcome the limitations of existing data by creating distributional national accounts.

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The rise of economic inequality is one of the most hotly debated issues today in the US (Furman 2016) and indeed

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Empty Rhetoric: On the Work of Deirdre McCloskey

27 days ago

By Philip Pilkington
Fixing the Economists Article of the Week
Yesterday I read a short pamphlet by Deirdre McCloskey entitled The Secret Sins of Economics. You can get it here for free in PDF form. A friend of mine told me a while ago that I would like McCloskey. He told me she writes very well and has a take on economics similar to my own.

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Well, he was half correct; she does write very well. I would also say that she is quite well read. But her take on economics is very far from my own. In the pamphlet she claims that the two things that economics is often attacked for by other social sciences is not its gravest sin; these two things are, of course, quantification and

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Men Without Work

27 days ago

By John Mauldin, Thoughts from the Frontline
I have been promising a review of Nicholas Eberstadt’s very important book, Men Without Work: America’s Invisible Crisis.  The book is relatively short at 216 pages, but it is packed with meaty facts and insights.

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One of the reasons I seldom read an actual physical book anymore is because I can highlight text and make notes in my Kindle app on my iPad and then find those notes and highlighted sections on my Amazon page for later review. I actually highlighted 36 pages with 22,000 words from this book to go back and review. And while I will be using a lot of quotes in this letter, I hope this simply spurs you to order the book and read it

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The Job Guarantee, Wage-Price Inflation And Alternative Solutions: Part 2

March 22, 2017

By Philip Pilkington
I’ve got quite a response to my last piece on the Job Guarantee program and it’s possible influence on wage-price spirals. Some of the kickback I received is, I think, based on a misunderstanding. A few people seemed to think that the JG program itself might induce a wage-price spiral. This is not what I was saying at all.

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What I was really saying is that a JG program, as it provided continuous full employment, would lead to a sharp increase in worker bargaining power. If an external shock — like an oil price shock or a substantial currency devaluation — caused inflation to bounce workers may then try to push the costs of the inflation onto capitalists through increases in wages. The capitalists may then try to push these costs back onto the workers and

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Angst in America, Part 1: Aimless Men

March 21, 2017

By John Mauldin, Thoughts from the Frontline

“America was not built on fear. America was built on courage, on imagination and an unbeatable determination to do the job at hand.” – Harry S. Truman
“Unemployment is a weapon of mass destruction.”– Dennis Kucinich

“Depression Breadline,” 1991, by George Segal
Follow up:

“Ever since 2000, basic indicators have offered oddly inconsistent readings on America’s economic performance and prospects. It is curious and highly uncharacteristic to find such measures so very far out of alignment with one another. We are witnessing an ominous and growing divergence between three trends that should ordinarily move in tandem: wealth, output, and employment. Depending upon which of these three indicators you choose, America looks to be heading up,

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Tax Reform: The Good, the Bad, and the Really Ugly, Part Five

March 10, 2017

By John Mauldin, Thoughts from the Frontline

“A tax loophole is something that benefits the other guy. If it benefits you, it is tax reform”– Russell B. Long
“Corporate tax reform is nice in theory but tough in practice.”– Andrew Ross Sorkin

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“I hold it that a little rebellion, now and then, is a good thing, and as necessary in the political world as storms in the physical. Unsuccessful rebellions, indeed, generally establish the encroachments on the rights of the people, which have produced them. An observation of this truth should render honest republican governors so mild in their punishment of rebellions, as not to discourage them too much. It is a medicine necessary for the sound health of government.” – Thomas Jefferson, in a letter to James Madison. January 30,

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Thinking Makes It So: The IMF Bailout of the UK in 1976 and the Rise of Monetarism

March 9, 2017

By Philip Pilkington
Monetarism began it’s rise to world prominence in the ever-conservative Bundesbank in 1974. But it would be the government of Margaret Thatcher in the UK, elected in 1979, that would truly launch monetarism in central banking. After Thatcher’s monetarist experiment undertaken between 1979 and 1984, every economics student would be taught to recite the various monetary aggregates by heart for at least a decade or two.

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This is what accounts for the monetarist bent we see in the economists of the last generation. Basically any economist trained between roughly 1980 and 1995 would be heavily exposed to monetarist dogma. And only those that read alternative accounts of money creation — namely, the theory of endogenous money — would be fully immunised. This

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Trump, Ryan, and Price: Can They Make the Healthcare Numbers Add Up?

March 9, 2017

By Elliott Morss, Morss Global Finance
Introduction
During his campaign, Trump said he would get rid of Obamacare on his first day in office. He did not and instead suggested that he might keep part of the Affordable Care Act (ACA). He then said he will not enforce the penalties for those who do not sign up for healthcare insurance.

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And last week, he conceded: …it’s an unbelievably complex subject. Nobody knew that health care could be so complicated.” Oh? But Trump continues to insist his legislation will provide lower cost health insurance for all. Is there any way he can do this?

If Trump is going to bring down health care costs, his policies must address the causes for their growth. So far, the only thing we have heard from Trump and other Republicans on how they plan

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Tax Reform: The Good, the Bad, and the Really Ugly, Part Four

March 4, 2017

By John Mauldin, Thoughts from the Frontline

“The values to which people cling most stubbornly under inappropriate conditions are those values that were previously the source of their greatest triumphs over adversity.”– Jared Diamond, Collapse, 2005
Tax reform means, “Don’t tax you, don’t tax me. Tax that fellow behind the tree.”– Russell B. Long, Democratic Senator from Louisiana, longtime chairman of the Senate Finance Committee (and a strong believer in capitalism who was a champion of tax breaks for businesses)

Follow up:
This letter turns out to be the penultimate installment in my now five-part series on tax reform. Part one was an introduction and a discussion of some of the problems of the proposed border adjustment tax. Part two went further into the proposed reforms and

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When Marxists Deploy the Quantity Theory of Money and Other Economic Nonsense

March 2, 2017

By Philip Pilkington
Article of the Week from Fixing the Economists
It’s truly infuriating to watch left-wingers talk absolute nonsense when discussing the economy. I encounter it all too often. What you generally get is a hodge-podge of incoherent economic ideas — usually incorporating the worst aspects of right-wing doctrines like monetarism — topped off with a general hand-wave that, well, capitalism is full of ‘contradictions’ and doesn’t work anyway so what’s the use of discussing it in any detail.

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Joan Robinson — probably the Post-Keynesian economist who dealt with the left in the most depth (I think others just get peeved) — noted this time and again. In her Open Letter From a Keynesian to a Marxist she mocked the tendency of left-wing economists to simply worship at

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Consumer Spending Increase Saves 4Q 2016 GDP Estimate from a Decline

March 1, 2017

By Rick Davis, Consumer Metrics Institute
February 28, 2017 – BEA Revision Revises 4th Quarter 2016 GDP Growth To 1.85%: In their second estimate of the US GDP for the fourth quarter of 2016, the Bureau of Economic Analysis (BEA) reported that the US economic growth rate was +1.85%, essentially unchanged from the +1.87% previously reported but down by nearly half (-1.68%) from the prior quarter.

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Although there was no material change in the headline number, the composition of that number was revised in several ways. Consumer spending on goods and services was revised upward by an aggregate of +0.35%. Meanwhile fixed commercial investment, inventories and governmental spending were revised in aggregate downward by -0.37% — completely offsetting the consumer gains. The

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Wasteful Health Care Spending

February 28, 2017

by Timothy Taylor, Conversable Economist
The high costs of health care are not just an issue for the United States, but for countries all over the world. The OECD addresses the issue of How to Tackle Wasteful Health Care Spending in a January 2017 (which can be ordered or read online for free here).

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Here’s a taste of the findings from the "Foreword":
Across OECD countries, a significant share of health care system spending and activities are wasteful at best, and harm our health at worst. One in ten patients in OECD countries is unnecessarily harmed at the point of care. More than 10% of hospital expenditure is spent on correcting preventable medical mistakes or infections that people catch in hospitals. One in three babies is delivered by caesarean section, whereas

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Democratic Development Lowers the Cost of Credit

February 26, 2017

from Voxeu.org
— this post authored by Manthos Delis, Iftekhar Hasan, and Steven Ongena
The positive relationship between democratic development and economic outcomes is well established. Using three decades of international data, this column identifies a new channel for this effect – the cost of credit to corporations. It also analyses loan pricing in Turkey to reveal a substantial rise in the average cost of lending after the attempted coup d’etat in July 2016. Together, these results highlight how efficiency in loan pricing results in a comparative advantage for firms in democratic countries over those in less democratic or authoritarian countries.

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The interplay between political institutions and economic outcomes has been at the centre of economic analysis since the

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Tax Reform: The Good, the Bad, and the Really Ugly, Part Three

February 24, 2017

By John Mauldin, Thoughts from the Frontline
Today we come to part 3 of my tax reform series. So far, we’ve introduced the challenge and begun to describe the main proposed GOP solution. Today we’ll look at the new and widely misunderstood “border adjustment” idea and talk about both its good and bad points. What follows may make more sense if you have first read part 1 and part 2.

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Next week we’ll explore what I think would be a far superior option, though one that is based on the spirit of the current proposal. If House leadership thinks they can get the present proposal through (doubtful), then they should stop messing around and do something really controversial by changing the entire terms of engagement. As my friend Newt Gingrich has often told me, “John, real change

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China, Russia, and the United States: Are They Superpowers?

February 23, 2017

By Elliott Morss, Morss Global Finance
Introduction
Every so often, it is worth standing back and asking where is the world going. A recent book and set of interesting articles on global futures by Dr. Frank Li provides a good starting point. Li focuses on three “kingdoms” – China, Russia and the US. He argues they are the most important global players. A good starting point but worth exploring further.

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The Three Kingdoms
Table 1 provides data on Li’s three kingdoms along with data on the European Union and India.
Table 1. – Socioeconomic Indicators, 2017 Source: IMF
I believe Europe remains important. Problems in Europe started the two world wars. The creation of the European Union was intended to prevent that from ever happening again. But as I have written, Britain is

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A New Era of Central Banking?

February 22, 2017

By Philip Pilkington
As I noted in my last post the Bank of England have released an official policy document that concedes that much of Post-Keynesian endoegnous money theory is indeed correct. Interestingly, they have also released some Youtube clips with the authors where they expound on their work in more details. You can watch these videos at the BoE website here.

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The videos are fascinating. The language the authors use — which contains references to ‘fiat money creation’ and money as IOUs — is straight out of either David Graeber’s book Debt: The First 5000 Years or MMT. If I were to guess I would say that it is some combination of both.
This is an enormous step forward. But I found it particularly interesting how young the authors in the videos were. One of them must

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Bank of England Endorses Post-Keynesian Endogenous Money Theory

February 16, 2017

By Philip Pilkington
Article of the Week from Fixing the Economists
Well, the Bank of England has finally come out and said it: loans create deposits; banks create money and don’t simply lend out savings; and the money multiplier in the economics textbooks is false. Actually, we’ve known this for a long, long time. While the BoE report references much Post-Keynesian work — including early work by Nicholas Kaldor and Basil Moore’s path-breaking 1988 book Horizontalists and Verticalists — they would have done well to look up the findings of the Radcliffe Commission in the UK in 1957 (I have written about this extensively here).

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It is fantastic that the BoE has finally decided to lay its cards on the table and be honest with the public about how money is created.

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Tax Reform: The Good, the Bad, and the Ugly, Part Two

February 14, 2017

By John Mauldin, Thoughts from the Frontline

“Taxation is the price we pay for failing to build a civilized society.” – Mark Skousen
“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”– Ronald Reagan

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Taxation is almost never an exciting subject, nor do we want it to be. The best tax system would be silent and unobtrusive. It would raise enough revenue to cover essential government functions and not a penny more. Sadly, our US system is nowhere near the ideal.
In part one of this series, I talked about whether the new tax proposals would actually create jobs and discussed the proposed “Border Adjustment Tax” and some of its possible complications. In part

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Wine Descriptors Reconsidered

February 12, 2017

By Elliott Morss, Morss Global Finance
Introduction
There are many ways to portray wines. Most have limited value because they do not help drinkers distinguish between wines they like and dislike. This piece reviews the descriptors in use and suggests ones that will be helpful. Before looking at what can be done, consider first the current practice.

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Completely Useless Descriptors
Some time back, Richard Quandt wrote an oft-quoted piece: “On Wine Bullshit: Some New Software?” In it, he listed 143 useless descriptors. The following quote wherein he discusses descriptors applied to a Chateau d’Yquem and a Santenay Gravières provides a good sense of his thinking:

“Consider the Yquem. The eight flavors are honey, raisin, jam, quince, fig, hazelnut, orange and mandarin. The last

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Tax Reform: The Good, the Bad, and the Ugly: Part One

February 10, 2017

By John Mauldin, Thoughts from the Frontline

Vizzini: He didn’t fall?! Inconceivable!Inigo Montoya: You keep using that word. I do not think it means what you think it means. – From The Princess Bride
“A tariff is a scale of taxes on imports, designed to protect the domestic producer against the greed of his consumer.” – Ambrose Bierce
“Vast possibilities matured into realities before their very eyes. Nevertheless, they saw nothing but cramped economies struggling with ever-decreasing success for their daily bread.” – Joseph Schumpeter on the Industrial Revolution

Follow up:
The usual thrust of this letter is economics, finance, and investing. Lately, however, the political process has been invading my normal domain – sometimes to the dismay of some of my readers. I get that

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Thirlwall’s Law in Historical Context

February 9, 2017

By Philip Pilkington
Fixing the Economists Article of the Week
There has been some reticence on the blogs to discuss Thirlwall’s Law and I myself have also been somewhat reluctant to deal with it in any great detail (although I did hint at some problems with it in this post). I think it might be worth discussing it in more depth, however, because I think that the model it is based on is actually quite interesting — albeit misleading. I will rely for this exposition on a very succinct account of the model in a recent paper by Thirlwall entitled Kaldor’s 1970 Regional Growth Model Revisited.

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At the beginning of the paper Thirwall notes the assumptions made by the model. He writes,
The first proposition of the model is that regional growth is driven by export growth. Kaldor

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Marginalist Microeconomics is a Highly Normative Ethical Doctrine

February 2, 2017

By Philip Pilkington
Fixing the Economists Article of the Week
In a recent post Lord Keynes raises the question of the so-called ‘law’ of diminishing marginal utility. The ‘law’ states that we will derive ever diminishing satisfaction from the acquisition of a good or service. Lord Keynes notes that this is true for some goods — like washing machines — but may not true of others. He gives a number of examples — such as addictive arcade games and drugs — that seem to defy the ‘law’.

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I think that it is interesting to note that all the examples he gives might be considered in some way to be ‘pathologies’. I don’t mean that they would be taken to be pathologies by marginalist economic theory — although they undoubtedly would — but rather that they would generally be taken to

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Post-Real Economics

February 2, 2017

By John Mauldin, Thoughts from the Frontline

“Too large a proportion of recent ‘mathematical’ economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.” – John Maynard Keynes
“Simplicity does not precede complexity, but follows it.” – Alan Perlis
“Stop trying to change reality by attempting to eliminate complexity.”– David Whyte

Follow up:
One of the most important concepts that my economic, philosophical, and political mentors have drilled into my head is this simple statement: Ideas have consequences.  As a corollary to that, bad ideas have bad consequences.  Mauldin’s corollary is that bad ideas can often

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