894 Posts Found

This lack of direct disagreement between advocates and critics of NAFTA reflects standard economic theory, which predicts both “gains from trade,” meaning higher total income and more efficient production, and “trade adjustments,” including job losses and salary cuts for some. “Trade adjustments” sounds pleasantly minor and temporary, but though economists do not like to say so out loud, their texts explicitly confirm that losses can … [ Read more ]

Content: Quotation | Author: Jonathan Schlefer | Source: The Atlantic Monthly | Subject: Economics

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New research from Arvind Krishnamurthy argues that the rapid adoption of financial innovations—in this case, subprime mortgage-backed securities—set the stage for crisis. His report with coauthor Ricardo J. Caballero found that when popular new financial instruments behave unexpectedly, investors flee the market. The liquidity supply tightens, making it hard for market participants to get the capital they need.

Content: Article | Authors: Arvind Krishnamurthy, Ricardo J. Caballero | Source: Kellogg Insight | Subjects: Economics, Finance

Whether or not they have ever studied economics, many people seem at least implicitly committed to the idea of homo economicus, or economic man—the notion that each of us thinks and chooses unfailingly well, and thus fits within the textbook picture of human beings offered by economists.

If you look at economics textbooks, you will learn that homo economicus can think like Albert Einstein, store as … [ Read more ]

Content: Quotation | Authors: Cass R. Sunstein, Richard H. Thaler | Source: Deloitte Review | Subject: Economics

Venkat Rao has started an exploration of the changing nature of careers with a micro-level view of its archetypal figure, the cloudworker. In this second part in the series, let’s take a look at how the cloudworker fits within the economy. The main argument of this article is that the dominant distinction in labor economics, unemployed vs. employed, is slowly getting displaced by a more … [ Read more ]

Content: Article | Author: Venkatesh Rao | Source: ribbonfarm | Subject: Economics

There is a stream of research — which economists routinely ignore, reject, or are unable to process — that shows self-interest is not hardwired but is in fact a social norm that gets stronger or weaker depending on the assumptions that people hold about their own behavior and those around them.

Content: Quotation | Author: Robert I. Sutton | Source: Harvard Business School (HBS) | Subjects: Economics, Organizational Behavior

Economists celebrate the market as a device for regulating human interaction without acknowledging that their enthusiasm depends on a set of half-truths: that individuals are autonomous, self-interested, and rational calculators with unlimited wants and that the only community that matters is the nation-state. However, as Stephen Marglin argues, market relationships erode community. In the past, for example, when a farm family experienced a setback–say … [ Read more ]

Content: Book | Author: Stephen A. Marglin | Subject: Economics

To me, the essence of development is changing the quality of life of the bottom half of the population. And that quality is not to be defined just by the size of the consumption basket. It must also include the enabling environment that lets individuals explore their own creative potential. This is more important than any mere measure of income or consumption.

Content: Quotation | Author: Muhammad Yunus | Source: strategy+business | Subjects: Economics, International

We have to remember in thinking about all of these things that the financial markets, for the most part, lend long and borrow short. So there are always going to be periods, unavoidably, in which expectations change for one of a million different reasons and you find people in a position where it’s hard to renew short-term loans to finance long-term debt. But we can … [ Read more ]

Content: Quotation | Author: Allan Meltzer | Source: strategy+business | Subject: Economics

[Adam] Smith rejects interventions that exclude the market—but not interventions that include the market while aiming to do those important things that the market may leave undone.

Content: Quotation | Author: Amartya Sen | Source: The New York Review of Books | Subjects: Capitalism, Economics

While a number of socialist critics, most notably Karl Marx, influentially made a case for censuring and ultimately supplanting capitalism, the huge limitations of relying entirely on the market economy and the profit motive were also clear enough even to Adam Smith. Indeed, early advocates of the use of markets, including Smith, did not take the pure market mechanism to be a freestanding performer of … [ Read more ]

Content: Quotation | Author: Amartya Sen | Source: The New York Review of Books | Subject: Economics

Smith viewed markets and capital as doing good work within their own sphere, but first, they required support from other institutions—including public services such as schools—and values other than pure profit seeking, and second, they needed restraint and correction by still other institutions—e.g., well-devised financial regulations and state assistance to the poor—for preventing instability, inequity, and injustice.

Content: Quotation | Author: Amartya Sen | Source: The New York Review of Books | Subjects: Capitalism, Economics

Even though people seek trade because of self-interest…nevertheless an economy can operate effectively only on the basis of trust among different parties.

Content: Quotation | Author: Amartya Sen | Source: The New York Review of Books | Subjects: Economics, Trust

Historically, capitalism did not emerge until new systems of law and economic practice protected property rights and made an economy based on ownership workable. Commercial exchange could not effectively take place until business morality made contractual behavior sustainable and inexpensive—not requiring constant suing of defaulting contractors, for example. Investment in productive businesses could not flourish until the higher rewards from corruption had been moderated. Profit-oriented … [ Read more ]

Content: Quotation | Author: Amartya Sen | Source: The New York Review of Books | Subjects: Capitalism, Economics

The antidote to capitalism, written by one of its best critics, who just happened to be a Marxist. An unconventional perspective, but a valuable one. Unlike many books on economics, this one by the late Andrew Glyn has charts that are blissfully self-explanatory and place the current crisis in a long historical context.

Content: Book | Author: Andrew Glyn | Subject: Economics

It doesn’t matter where scientific discoveries and breakthrough technologies originate—for national prosperity, the important thing is who commercializes them. The United States is not behind in that race.

Content: Article | Author: Amar Bhidé | Source: McKinsey Quarterly | Subjects: Economics, International

The financial crisis—which almost no one predicted—has only heightened disagreement among experts claiming to know what makes the world go round.

Content: Article | Author: Peter Coy | Source: BusinessWeek | Subject: Economics

The most devastating stock market crash in the history of the United States;
Its from a PBS documentary. This particular part is from episode 5 of the series titled Cosmopolis. [Hat tip to FinanceProfessor.com]

Content: Multimedia Content | Source: PBS | Subjects: Economics, Finance, History

In one of a series of interactive presentations, McKinsey director Rob Latoff offers insight into the industry cost curve, a business school classic for understanding pricing. By bringing discipline and a practical set of definitions to bear, this framework can be applied to real-world, competitive markets.

Content: Article | Author: Rob Latoff | Source: McKinsey Quarterly | Subjects: Economics, Pricing, Strategy

The U.S. system of security law was designed more than 70 years ago to regain investors’ trust after a major financial crisis. Today we face a similar problem. But while in the 1930s the prevailing perception was that investors had been defrauded by offerings of dubious quality securities, in the new millennium, investors’ perception is that they have been defrauded by managers who are not … [ Read more ]

Content: Article | Author: Luigi Zingales | Source: Social Science Research Network (SSRN) | Subjects: Economics, Finance