#economic theory

[benjaminallhope-fulltimemind]

here's a fun little definition to help people understand what inflation is, please follow and reblog for more

/credit: Lily Orchard

[wiserebeltiger]

I hope Trump puts Nancy Pelosi in prison for insider trading! I’d fucking enjoy that shit!

[haggishlyhagging]

Anyone who has played the board game Monopoly is well versed in the dynamics of Success to the Successful: players who are lucky enough to land on expensive properties early in the game can buy them up, build hotels, and reap vast rents from their fellow players, thus accumulating a winning fortune as they bankrupt the rest. Fascinatingly, however, the game was originally called ‘The Landlord's Game’ and was designed precisely to reveal the injustice arising out of such concentrated property ownership, not to celebrate it.

The game's inventor, Elizabeth Magie, was an outspoken supporter of Henry George's ideas, and when she first created her game in 1903, she gave it two very different sets of rules to be played in turn. Under the 'Prosperity' set of rules, every player gained each time someone acquired a new property (echoing George's call for a land value tax), and the game was won (by all) when the player who had started out with the least money had doubled it. Under the second, ‘Monopolist’ set of rules, players gained by charging rent to those who were unfortunate enough to land on their properties and whoever managed to bankrupt the rest was the sole winner. The purpose of the dual sets of rules, said Magie, was for players to experience a practical demonstration of the present system of land grabbing with all its usual outcomes and consequences and so understand how different approaches to property ownership can lead to vastly different social outcomes. ‘It might well have been called “The Game of Life”’, remarked Magie, ‘as it contains all the elements of success and failure in the real world.’ But when the games manufacturer, Parker Brothers, bought the patent for The Landlord's Game from Magie in the 1930s, they relaunched it simply as Monopoly and provided the eager public with just one set of rules: those that celebrate the triumph of one over all.

-Kate Raworth, Doughnut Economics: Seven Ways to Think Like a 21st Century Economist

[omegaphilosophia]

The Philosophy of Abundance

The philosophy of abundance is a perspective or worldview that emphasizes the inherent richness, generosity, and potential for growth and fulfillment in the world. It contrasts with scarcity mentality, which focuses on limitations, competition, and the belief that resources are finite and insufficient for everyone's needs. The philosophy of abundance encompasses various principles and beliefs that shape attitudes, behaviors, and perceptions towards life, prosperity, and well-being. Here are some key aspects of the philosophy of abundance:

Gratitude and Appreciation: The philosophy of abundance encourages individuals to cultivate gratitude and appreciation for the abundance already present in their lives, including relationships, experiences, opportunities, and resources. By focusing on what one has rather than what is lacking, individuals can experience greater satisfaction and fulfillment.

Positive Mindset: Adopting a positive mindset is central to the philosophy of abundance. It involves cultivating optimism, hope, and belief in one's ability to create and attract abundance in various areas of life, such as wealth, health, relationships, and personal growth. Positive thinking can lead to increased resilience, motivation, and creativity in overcoming challenges and pursuing goals.

Abundance Mentality: Abundance mentality is the belief that there is more than enough to go around for everyone, and that success and prosperity are not zero-sum games. It entails embracing a mindset of abundance in which opportunities, resources, and possibilities are plentiful and accessible to those who seek them. This mindset fosters collaboration, generosity, and a willingness to share and support others in their pursuits.

Law of Attraction: The philosophy of abundance is often associated with the law of attraction, which posits that individuals can attract positive or negative experiences into their lives based on their thoughts, beliefs, and intentions. By focusing on abundance and visualizing desired outcomes, individuals can purportedly manifest their dreams and goals more effectively.

Generosity and Sharing: Embracing abundance involves being generous and open-handed with one's time, energy, talents, and resources. Acts of kindness, compassion, and generosity contribute to the circulation of abundance in the world and create a ripple effect of positive impact on others. Giving without expecting anything in return fosters a sense of interconnectedness and abundance consciousness.

Growth Mindset: The philosophy of abundance encourages a growth mindset, characterized by a belief in the capacity for learning, development, and improvement over time. Embracing challenges, seeking opportunities for growth, and embracing failure as a stepping stone to success are key aspects of a growth-oriented approach to life.

Environmental Stewardship: Abundance philosophy extends to the natural world, emphasizing the importance of environmental stewardship, sustainability, and responsible use of resources. Recognizing the Earth's abundant natural resources and biodiversity, individuals are called to protect and preserve the planet for future generations.

Overall, the philosophy of abundance promotes a mindset of abundance, gratitude, generosity, and possibility, inviting individuals to embrace the richness and potential inherent in every aspect of life.

[futurebird]

Dumb Money

Money spent buying things is good for an economy & even stands a chance of increasing egalitarianism. In contrast, money invested is far more chaotic— And yet? When people run out of things to buy it is said then they must invest. And when invested in by others? well then you must reshape your actions, not even to the whims of your investors but rather to serve the legally binding needs of the “bottom line.” A line which may, when best served, lead you to discover yourself enacting cruelties you could not have managed to imagine (much less perpetrate) for the pedestrian, greedy task of merely increasing your own money. No, now you commit atrocities with all the credulous honor of a high priest in the name of shareholders and “fiduciary responsibility.”

Herein, at last, we see the corporation: opening its eyes, becoming a sentient, ravenous creature of abstractly defined desires. The first AI running on a mechanical computer made of the actions and choices of thousands of people.

I’m not so naive to suggest no joint ventures or limited liability should exist. It’s true sometimes people have a good idea, but no money— a goal of great expense, raising capital to make it happen then is only right.

I wish simply there was more care for how we shape the creatures we choose to embody— a need not just to raise money, but also to earn trust of a kind of quorum of individuals ready to take responsibility for the new monster. No more illusions of magic boxes where one would place a sum of money at night to then find it increased by dawn.

What I’m saying is in essence this: those we call “investors” are often not invested in the companies they realize at all! Many of these would be horrified by the ‘work’ their money has enabled. Or disgusted with the frivolous and intrinsically fraudulent character of the corporate projects they have sponsored; this system so designed to make exploitative extraction, liquidation mines and even pure con jobs not just easy, but inevitable, ordinary, and most conveniently morally distant.

[religion-is-a-mental-illness]

By: Roland Fryer

Published: May 9, 2024

The anti-Israel protests on college campuses present a puzzle for observers of academic norms and mores. Today, even relatively minor linguistic infractions, like the failure to use someone’s preferred pronouns, are categorized as abuse at many elite institutions, some of which even define potentially offensive speech as “violence.” One need not even speak to run afoul of campus speech codes; I recently participated in a training in which we were warned of the consequences of remaining silent if we heard someone “misgender” someone else.

Definitions of “harmful” speech have become so capacious that one assumes they include antisemitism. In some cases, they surely do: A university wouldn’t take a hands-off approach to a student or faculty member who expressed prejudice against Jews in the manner of Archie Bunker or the Charlottesville marchers. Yet that’s what many of them have done when faced with protesters’ speech that is offensive to Jews, even when it crosses the line into threats, intimidation and harassment.

At a December congressional hearing, the presidents of Harvard, Penn and MIT struggled to answer when Rep. Elise Stefanik (R., N.Y.) asked whether “calling for the genocide of Jews” violates the schools’ “code of conduct or rules regarding bullying and harassment.” Two of the presidents lost their jobs, but the central question remains unresolved: How could it be that the university is zealous about policing pronouns but blasé about the advocacy of hateful violence?

For someone who prides himself on adherence to fact, reason and rationality, trying to follow the logic of university decision-making over the past five years has been a mind-bending experience. But universities are also political entities, where competing interests vie for influence over the function and purpose of the institution. In the case of the protests, two competing interests have made themselves heard most loudly: students and faculty who are hostile to Israel and alumni donors who see the protests as antisemitic. Caught between them are administrators, who must figure out how to balance these interests without entirely losing the faith of either group.

This dynamic can be explained by economic theory. In the early 1970s, economist Michael Spence introduced the concept of signaling, which has since become one of the foundations of information economics and earned Mr. Spence the 2001 Nobel Memorial Prize in Economics. This seminal concept helps explain how individuals and organizations communicate their attributes or intentions in situations of information asymmetry.

The best-known application is the job market. Employers and potential employees face a situation in which applicants have more information about their productivity than the employer, since the employer can’t directly observe those qualities before hiring. To overcome this asymmetry, job seekers engage in signaling—taking actions that can credibly convey information about their abilities. Such signals include everything from educational credentials to the way the applicant dresses for an interview.

When I encountered Mr. Spence’s model in graduate school, I was mesmerized. My doctoral dissertation extended his work to understand underinvestment in education in some black communities. The basic economics also seem applicable to what’s going on now on college campuses.

The key idea is that the protests present university administrations with a two-audience signaling quandary: Behaviors that appease students may anger alumni, and vice versa. Like a job applicant’s potential productivity, university administrators’ political preferences are hidden from students and alumni, but they may signal them in various ways. They may choose a liberal commencement speaker rather than a conservative one, they may create programs that emphasize “inclusiveness,” and so on. Students and alumni observe these strategic disclosures of preference, and each group decides whether to accept the decision or agitate against it.

University administrators whose preferences align most closely with their alumni will ignore the students and simply do what they think is best, as the University of Florida’s president did when he banned encampments and declared that the school is “not a daycare.” Those whose views align with the protesting students will do the opposite.

But most top administrators don’t have such strong preferences. They will engage in a high-wire act of trying to appease both students and alumni. If students decide “safety first” is the most important initiative on campus, administrators—even if they disagree—will adopt stances consistent with that and hope the alumni don’t revolt too much. If a few months later students set up encampments and chant anti-Israel slogans, then administrators will also adopt stances consistent with that and, again, hope the alumni don’t complain too much.

The congressional hearings revealed that this signaling strategy was at work. The three presidents would risk alienating students if they disavowed anti-Israel slogans and alumni if they endorsed them. So they offered lawyered-up equivocations that signaled confusion and weakness.

Economic theory can explain why the situation on so many campuses has spiraled out of control and why no interested party—neither students nor donors nor seemingly anybody else—has anything good to say about how administrators are handling the protests. But economics can’t address the more essential issue at play, which is moral. Elite universities decided years ago that they would adopt a basic principle: Any speech act that attacks, questions or even declines to affirm the self-understood identity of another constitutes harm worthy of punishment.

I may not like that principle, but it’s now a fait accompli. And if you’re going to punish one person who violates it, you have to punish everyone who violates it. To permit attacks on one identity group while prohibiting attacks on others is worse than hypocrisy—it is profoundly immoral. If administrators had the courage of their stated convictions, if they had principles rather than merely gestures meant to signal their status as good liberals, the most egregious antisemitism on campus would have been stopped before it could snowball.

Mr. Fryer is a professor of economics at Harvard, a founder of Equal Opportunity Ventures and a senior fellow at the Manhattan Institute.

[depresstrogen]

Being an anarchist and an economist is so weird because my professor will introduce some core concept that 40% of the entire field is built around and I'm just like, "I disagree"

[mrdestiny543]

Jordan Peterson

[ere-the-sun-rises]

This is actually a perfect example of (what I call) the Golden Toilets Fallacy. It goes like this:

Rich people are rich bc they started a business and have people working for them. -> You're poor bc you lack the drive to start a business and have people work for you. = You stay poor bc you're a lazy, worthless prick.

That's the rhetoric, right? Okay then. Say for sake of argument, I snap my fingers and we go to a world just like ours but where everyone's rich and we only have time to ask them one question each. You might waste yours asking how everyone got rich. My question would be this:

Who cleans your golden toilets?

I already know from my own world it certainly can't be other rich people. And custodial work is a baseline job that is needed everywhere and performed by the workers of any labour job. Cooks clean stoves, retail workers take out trash, janitors clean windows, manufacturing workers scrub machinery, truck drivers hose down their rigs.

The answer is that someone has to scrub the toilets.

It's not possible for everyone to be rich, and it's not reasonable for everyone to run a business. You need ground-level people to make any business run, people who are willing to do the labour that allows everything to run. And there is no cutting out the middle man either - shutting down box stores in favour of online vendors means that former retail workers' jobs are replaced in warehousing staff.

Rich people do not clean other rich people's golden toilets, so labourers should be justly compensated for the fact they're doing the work their rich executives refuse to do - especially since when we withhold that work, they don't even know how to clean the gold properly.

[wiserebeltiger]

AI might destroy technological art (film, tv), but lead to a revival of non-technological art (poetry, novels, music).

Technological art forms are more at the whim of ever-changing technology, and are more likely to be outmoded, it turns out, than timeless, unaffected-by-technology mediums like poetry (carried by oral tradition, expression of individual without technological aid).

Of course, every art form is indirectly technological. Novels needed the steam printing press. Music needs the instrument. Poetry needs all the technology that maintains a literate, functional society (no poet without windmill or bus).

[haggishlyhagging]

The Circular Flow diagram depicted labour appearing—hey presto!—fresh and ready for work each day at the office or factory door. So who cooked, cleaned up, and cleared away to make that possible? When Adam Smith, extolling the power of the market, noted that it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, he forgot to mention the benevolence of his mother, Margaret Douglas, who had raised her boy alone from birth. Smith never married, so had no wife to rely upon (nor children of his own to raise). At the age of 43, as he began to write his opus, The Wealth of Nations, he moved back in with his cherished old mum, from whom he could expect his dinner every day. But her role in it all never got a mention in his economic theory, and it subsequently remained invisible for centuries.

As a result, mainstream economic theory is obsessed with the productivity of waged labour while skipping right over the unpaid work that makes it all possible, as feminist economists have made clear for decades. That work is known by many names: unpaid caring work, the reproductive economy, the love economy, the second economy. However, as economist Neva Goodwin has pointed out, far from being secondary, it is actually the ‘core economy,’ and it comes first every day, sustaining the essentials of family and social life with the universal human resources of time, knowledge, skill, care, empathy, teaching and reciprocity. And if you have never really thought of it before, then it's time you met your inner housewife (because we all have one). She lives in the daily dealings of making breakfast, washing the dishes, tidying the house, shopping for groceries, teaching the children to walk and to share, washing clothes, caring for elderly parents, emptying the rubbish bins, collecting kids from school, helping the neighbours, making the dinner, sweeping the floor and lending an ear. She carries out all those tasks—some with open arms, others through gritted teeth—that underpin personal and family well-being and sustain social life.

We all have a hand in this core economy, but some people (like Adam Smiths mum) spend far more time in it than others. Time may be a universal human resource, but it varies hugely in terms of how we each get to experience and use it, how far we control it, and how it is valued. In sub-Saharan Africa and South Asia, time spent in the core economy is particularly visible because, when the state fails to deliver and the market is out of reach, householders have to make provision for many more of their needs directly. Millions of women and girls spend hours walking miles each day, carrying their body weight in water, food or firewood on their heads, often with a baby strapped to their back—and all for no pay. But this gendered division of paid and unpaid work is prevalent in every society, albeit sometimes less visibly so. And since work in the core economy is unpaid, it is routinely undervalued and exploited, generating lifelong inequalities in social standing, job opportunities, income and power between women and men.

By largely ignoring the core economy, mainstream economics has also overlooked just how much the paid economy depends upon it. Without all that cooking, washing, nursing and sweeping, there would be no workers—today or in the future—who were healthy, well-fed and ready for work each morning. As the futurist Alvin Toffler liked to ask at smart gatherings of business executives, ‘How productive would your workforce be if it hadn't been toilet trained?’ The scale of the core economy's contribution is not to be dismissed lightly, either. In a 2002 study of Basle, a wealthy Swiss city, the estimated value of unpaid care being provided in the city's households exceeded the total cost of salaries paid in all of Basle's hospitals, day care centers and schools, from the directors to the janitors. Likewise, a 2014 survey of 15,000 mothers in the United States calculated that, if women were paid the going hourly rate for each of their roles—switching between housekeeper and daycare teacher to van driver and cleaner—then stay-at-home mums would earn around $120,000 each year. Even mothers who do head out to work each day would earn an extra $70,000 on top of the actual wages, given all the unpaid care they also provide at home.

Why does it matter that this core economy should be visible in economics? Because the household provision of care is essential for human well-being, and producivity in the paid economy depends directly upon it. It matters because when—in the name of austerty and public sector savings—governments cut budgets for children's daycare centres, community services, parental leave and youth clubs, the need for care-giving doesn't disappear: it just gets pushed back into the home. The pressure, particularly on women's time, can force them out of work and increase social stress and vulnerability. That undermines both well-being and women's empowerment, with multiple knock-on effects for society and the economy alike. In short, including the household economy in the new diagram of the macroeconomy is the first step in recognising its centrality, and in reducing and redistributing women's unpaid work.

-Kate Raworth, Doughnut Economics: Seven Ways to Think Like a 21st Century Economist

[mary-the-cryptofascist]

Food $200

Data $150

Rent $800

Bottle of Water $4391

Utility $150

someone who is good at the economy please help me budget this. my neofamily is dying

buy two bottles of water

no.

shoutout to neopets economics

[omegaphilosophia]

Theories of the Philosophy of Microeconomics

The philosophy of microeconomics encompasses various theories and approaches that seek to understand the principles, assumptions, and implications of individual decision-making within the context of markets and economic systems. Some key theories in the philosophy of microeconomics include:

Rational Choice Theory: Rational choice theory posits that individuals make decisions by maximizing utility or satisfaction given their preferences, constraints, and available information. It assumes that individuals act in their self-interest and make choices that maximize their well-being.

Marginalism: Marginalism examines how individuals make decisions at the margin, weighing the benefits and costs of small changes or incremental units of goods and services. It emphasizes the importance of marginal analysis in determining optimal decision-making and resource allocation.

Utility Theory: Utility theory explores the concept of utility as a measure of satisfaction or happiness derived from consuming goods and services. It investigates how individuals allocate their limited resources to maximize utility, subject to budget constraints and preferences.

Consumer Choice Theory: Consumer choice theory analyzes how consumers make decisions about what goods and services to purchase based on their preferences, budget constraints, and the prices of goods in the market. It explores consumer behavior, demand curves, and the determinants of consumer choice.

Production Theory: Production theory examines the behavior of firms and producers in allocating resources to produce goods and services. It analyzes the relationship between inputs (such as labor and capital) and outputs, the concept of production functions, and the factors influencing production decisions.

Market Equilibrium: Market equilibrium theory explores the interaction of supply and demand in determining prices and quantities exchanged in markets. It examines how markets reach equilibrium through the adjustment of prices and quantities to balance supply and demand.

Game Theory: Game theory studies strategic interactions between rational decision-makers, such as individuals, firms, or governments, in competitive or cooperative settings. It analyzes the outcomes of strategic interactions, including the Nash equilibrium, cooperation, and competition.

Information Economics: Information economics investigates the role of information and uncertainty in economic decision-making. It examines how individuals gather, process, and act on information in markets, the impact of asymmetric information on market outcomes, and the role of signaling and screening mechanisms.

Behavioral Economics: Behavioral economics integrates insights from psychology and economics to study how cognitive biases, heuristics, and social factors influence economic behavior. It challenges the assumptions of rationality and explores deviations from standard economic models.

Welfare Economics: Welfare economics evaluates the efficiency and equity of resource allocation in economic systems. It assesses the welfare implications of market outcomes, including market failures, externalities, income distribution, and the role of government intervention.

These theories and approaches in the philosophy of microeconomics provide frameworks for understanding individual decision-making, market dynamics, and the allocation of resources in economic systems.

[settlercolonialismisbad]

I very much appreciate how Moist breaks down concepts in such a way as to make people question the whole system. the Golden Boy of endless possibilities makes us believe that he can change things and so once he has buy-in, he just does it. Just reimagines the whole damn economy and communication system over the course of two books because he dared to believe he could, and people dared to trust him.

"Good heavens, potatoes are worth more than gold!"

"Surely not!"

"If you were shipwrecked on a desert island, what would you prefer, a bag of potatoes or a bag of gold?"

"Yes, but a desert island isn't Ankh-Morpork!"

"And that proves gold is only valuable because we agree it is, right? It's just a dream. But a potato is always worth a potato, anywhere. Add a knob of butter and a pinch of salt and you've got a meal, anywhere. Bury gold in the ground and you'll be worrying about thieves forever. Bury a potato and in due season you could be looking at a dividend of a thousand percent."

Terry Pratchett, Making Money

[economicsinaction]

Economics is getting reduced to data analysis 

Increasingly, the theory or `thinking’ is missing in economics, and the research in the discipline is getting limited to data analysis.  One reason is the doubts on the usefulness of theoretical frameworks of the discipline. It started with macroeconomics. Macroeconomic behaviour cannot be modelled as that of individuals and firms. It is a system wherein the behaviour all individuals, firms and…