Debunking Economics - the podcast18 Sep 2024

The Aggregate Problem

The UK’s unemployment rate is 4.1%, the inflation rate is growing at 3.1% and the economy is growing at 0.6% quarter on quarter. That’s how the economy is doing, what more do we need to know?

Well, it would be useful to know whether the unemployed are predominantly in certain income groups, or that income growth was greater in particular parts of the economy Like, more for capitalists and less for workers?

As Steve and Phil discuss this week, economists are building business models built on aggregates. Breaking down aggregate data into functions in society, or income, will add a lot of extra complexity to models, but they would do a much better job of showing us what’s going on. For example, central bank policy right now aims to restrict spending and wage growth to tame inflation. But, even if that was the cause of inflation, what if those creating inflation by spending more on services, are distinct from those facing the consequences of central bank policy, losing jobs and paying higher mortgages?

Steve points out that as the economy slows – and it has to because of climate change - knowing the distribution of income and consumption becomes vitally important. Unless we are prepared to see the rich grow richer at the expense of everyone else.

Economic models are built on aggregates of key variables. Those aggregates hide distribution impacts. That makes it easier for central banks to pursue monetary policy without worrying about the consequences.

Hosted on Acast. See acast.com/privacy for more information.

Denne episoden er hentet fra en åpen RSS-feed og er ikke publisert av Podme. Den kan derfor inneholde annonser.

Episoder(522)

The always moving equilibrium

Equilibrium is a fantasy—and this conversation explains why. Phil and teve explore how the belief that markets naturally self-correct has shaped economic policy, contributed to the failure to anticipa...

16 Sep 36min

What did Keating do for Australia?

Paul Keating is often sold as the man who modernized Australia - but what if the reforms that made him legendary also helped create the financialized, boom-and-bust economy we live with today? Steve a...

9 Sep 42min

The risks of hedging

In this episode, Prof Steve Keen and host Phil explore the complexities of hedging, its applications, pitfalls, and its impact on markets and the economy.Hedging, rife in the financial and commercial ...

2 Sep 28min

Burnham on Buying British

The UK Prime Minister Andy Burnham has said he wants government departments to focus on buying British, The UK state spends roughly £300bn to £400bn a year on public procurement—and currently treats i...

25 Aug 40min

Ways to foster innovation

Unless you are one of the tech bros, it is difficult for anyone to push on with innovative ideas, probably why the world seems reliant on the US for the next big thing. If you not running a Megacap ge...

18 Aug 39min

Do we actually need bonds?

There’s only one reason a government issues bonds. It’s so their account with the central bank is not overdrawn. It’s only regulation that stops the central bank from saying a rapidly expanding defici...

13 Aug 40min

A reality check on bonds and government spending

A listener (Doug) left a comment on YouTube saying I assume Phil intends to play "devil's advocate" when he speaks as though taxes are necessary for money issuance by governments with sovereign curren...

4 Aug 53min

AI, inequality and basic income

Phil happened upon a book to Australian economist Joshua Gans (and Andrew Leigh) called Innovation & Inequality – how to create a future that is more Star Trek than Terminator. He discusses some of th...

29 Jul 44min