Here's some weekend reading:
New Deal Demoncrat - patterns of consumer spending show there's no recession near. So quit piddling your panties, Whitey.
Mark Thoma - Krugman on the mutability of wages. It's nice to see academia rewriting its beliefs on minimum wages. Now maybe they can rewrite their first-year economics textbooks so that they're not churning out an army of tens of thousands of neocons every year.
Simon Wren-Lewis - should we aim for budget surpluses? Important point that the clueless tend to ignore:
Firms typically plan to live with permanent debt, because [the debt] has paid for [the firm's] capital. The state has plenty of productive capital. To put the point in distributional terms, if we paid back most government debt within a generation, we would be giving that capital to later generations without them making any contribution towards it.But even my own prof (a sessional) didn't understand that government spending produces physical and human capital (among other things), so I doubt you'll find many people understanding what you just said, Simon. But it doesn't matter; the situation isn't so complex. Osborne is simply out to destroy the UK the way Brownback destroyed Kansas.
Uneasy Money - some thoughts on secular stagnation. Here, he defines SecStag as a condition of flattened labour productivity. Well, productivity per worker is entirely dependent on physical capital per worker and human capital per worker: so who in the US has been spending on physical and human capital? Governments have cut capex and education spending to the bone, corporations are funneling their money into buybacks and buyouts, and real estate & finance have drawn too large a share of the investment pie into nonproductive assets.
So basically, the productivity flop is entirely the result of neocon ideology.
CK Murray - Adam Smith's pin factory and the division of labour. Adam Smith's pin factory example of "division of labour" is bullshit, and here's why:
people can equally divide their own labour across different tasks through time. The 18 distinct operations Smith recounts could just as easily be conducted by the same labourer on 18 different days to generate the same output per person over an 18 day period as in the case where labour is divided between workers.The problem with Smith's story arises because economists, for the past several hundred years, have been incapable of working with any model that has a t in it, because they are shitty at calculus.