Sunday, 4 December 2016

Exchange Rate Arguments and Cognitive Dissonance

A while back I had an argument with my flatmate about how the quality of the content in The Economist has gotten worse. I used to enjoy their writings a lot, and it definitely contributed to my decision of pursuing an economics degree. A few years ago, when my understanding of economics was basically non-existent, their authoritative writings was simply mind-blowing. Epic. Such a good education, and I read their articles as often as I could. Nowadays, I increasingly find their stories bouncing between implausible, boring and superficial. Of course, my knowledge has multiplied and I am hence no longer their prime audience. Nevertheless, you would expect a much higher standard.

Saturday, 3 December 2016

The Humble Economist

Most of my friends would consider this title a contradiction in terms. A laughable description, perhaps even ironic. And I would agree. Very few economists are humble, yours truly included. We draw conclusions on theory or evidence, more or less rigorous, we play amateur political philosophers from time to time  what my lefty/sociology friends like to call 'Economic Imperialism'  and we make positive or normative judgements about individuals' psychology. We design models, often highly-sophisticated mathematical models, capturing various parts of the world, trying to imitate the world and its vast outcomes as (in)accurately as possible.

But the real task of a real economist is to reach the following insight:

Sunday, 27 November 2016

Why Trump Will Be a Good Force for Liberty

Back in June 2016 when most of my libertarian friends were mistakenly celebrating Brexit, I opposed them with the following very simple argument: The European Union has, on net, been a force for freedom and free trade, and against state abuse of power, taxation and money printing (David Howden & Huerta de Soto are among the famous Austrians pointing to this). Leaving the Union is likely to bring back the monetary and fiscal nationalism, beggar-thy-neighbour policies and protectionism Europe's history has been filled with for the last century or so. Ironically, libertarians who are used to spotting Nirvana Fallacies while debating lefties, were projecting all kinds of nirvana-like states of a post-Brexit Britain.

Monday, 21 November 2016

Economists vs. The Public

As was demonstrated in the Trump-mania, there is a mismatch between "experts/establishment" and the "general public" in many places of world: Brexit and Trump are simply the most recent and evident examples. I am very much enjoying the show, the only sane way of dealing with politics, but does this mean I buy the entire anti-establishment, stagnant-wages, manufacturing-workers-in-Pennsylvania story?

Of course not.

Thursday, 17 November 2016

When the World Backfires on You

The world is fundamentally uncertain, as economists from Keynes to Mises to Knight embraced vigorously. Since then, economists and their love for mathematical precision have tended to lose this conviction. Events in the world are not, as intro-level econ courses would suggest, evenly scattered into nice well-known distributions whose proportions and features we are well aware of. It is not the case that every unknown future is reducible to quantifiable risk based on long-term, long-time averages the way insurance companies meticulously gather statistics on past events to profitably guess their future outcomes. Uncertainty isn't risk, and cannot be assumed to be.

Monday, 14 November 2016

Krugman + Trump = Love?

In the aftermath of the U.S. Election, the renewed discussions of Trump's potential fiscal stimulus made me think of an awkward bed-fellow of his. Remember how Paul Krugman, the most viscious of hypocritical high-profile pseudo-economists, has been calling for additional fiscal stimulus for years? How odd. Shouldn't he secretly approve of Trump?

Sunday, 13 November 2016

Off With Their Heads!

The left's relationship with the alleged Inequality Disaster is strange to be sure. Whatever happened - inequality caused it: financial crises, stagnant economies, Trump's rise to power, rain in Glasgow or my dirty clothes. All inequality's fault. Nevermind that there's a million ways measurements can go wrong, and don't forget to faithfully chant Oxfam's mindless wealth inequality figures. The solution? Confiscatory taxes, Piketty-style, and if it doesn't work shout 'OFF WITH THEIR HEADS' and start preventing people from getting rich in the first place.

Wednesday, 9 November 2016

Can't Stump The Trump!

It is a truth universally acknowledged that a blogger in the era of Trump must be writing about the election. But first, some caveats. I do this for mainly three reasons: 
  1. Any trend or person that drives my indignant and beloved friends on the left as crazy as Trump does must be at least applauded and appreciated for his work;
  2. Like many successful economists, I wanna play amateur political philosopher from time to time;
  3. I see this strange dissonance among my fellow university students, who on the one hand go out of their way to convince everyone about the value of diversity and equality and different perspectives, yet they refuse to engage with the most striking differing perspective; that their worldview is narrow and thoroughly rejected by most “normal” people. By bus-drivers and factory workers and plumbers and cleaners, and especially blue-collar workers i.e. those people that ended up voting for Brexit and Trump. I wanna try to mend that misunderstanding. 
Last caveat: I can hold two thoughts in my head at once. By defending and applauding and explaining Trump’s achievements, I am by no means endorsing his idiotic economic policies or myths about free trade, globalisation or China. He’s becoming a politician, and as such I have a mountain of disdain for him already.

Tuesday, 8 November 2016

Life of an Econ Student Celebrates 1 Year

Here we are. Never did I thought I could fruitfully run a blog for an entire year. I was surprised that after 6 months I still had fresh ideas to blog about and commitment to actually write about them. Imagine my surprise now, having writting a hundred posts of varying quality, with another 35 unfinished ideas waiting in my beautiful Google Keep; material for good posts, like my reading lists, is growing faster than I can write them.

A year ago, I started this blog for mainly three reasons: 1) a distraction from doing things I should be doing (studying, working, cleaning the flat...), 2) in a personal style, keep in touch with people that felt extremely far away from me at the time, and 3) develop a platform to write, practice discipline and writing. I quickly stopped doing (2) since that purpose was better served in other ways. To this day, I often use Life of an Econ Student as therapy, ranting over senseless lectures, great books or impressive journal articles.

Sunday, 6 November 2016

How to Strawman Mainstream Economics

I have a lot of criticism towards the very vague term 'mainstream economics' (not 'NeoClassical', guys..). Its emphasis of mathematical rigour and lack of economic history are probably the two most crucial ones. I mean, there is a reason I'm committing time and effort to the Real World Economics Society, attenting Rethinking events and the annual conference we organise at the University (Glasgow Economic Forum, March 11-12, 2017  don't miss out!); people in these circles tend to be slightly more interested in actually discussing economic ideas than your average utility-maximising economics professor, even though this commitment means I have to put up with an above-average number of marxists. Well worth it.

Wednesday, 2 November 2016

Bono, Deaton and Malign Aid

Shortly after Angus Deaton was announced winner of the Nobel Prize in Economics little over a year ago, I found this review article he wrote for the Review of Austrian Economics in 2015. Pretty strange, right? To have a well-known mainstream economist publishing in the one of the two major outlets for writing in Austrian Economics.

Obviously, I decided to have a look.

Sunday, 30 October 2016

Accurate But Attractive

In an article a few years ago in the Scandinavian Economic History Review (2012, vol.. 60), 3 historians described what they believed to be the future of their respective field; Geoffrey Jones, a business historian at Harvard, Marco van Leeuwen, a social historian at Utrecht, and Stephen Broadberry, an economic historian now at Oxford, wrote a section each describing the relevance of their fields from the inside and what they thought might happen to it in the future.

Friday, 28 October 2016

Mismeasured: The Case of British Inequality

In preparing for an upcoming Uni essay on inequality, I was reading through contributions by various American economists talking about inequality especially John Cochrane's amazing rant (also available on his blog, The Grumpy Economist). The collection of essays itself, published last year by the Hoover Institution at Stanford University was originally a series of lectures in memory of Gary Becker.

What particularly stood out to me in Cochrane's text was a point I have repeatedly made in the past; So what? Does it matter to us if inequality has increased? For most people, economics professors and media pundits alike, the question is meaningless and somehow self-evident. Of course it does – and governments need to do something about it! In our Post-Piketty, Post-GFC era there isn't even much discussion over the objective issue: has inequality even increased? Measured from when and where?

Tuesday, 25 October 2016

The Gift That Keeps on Giving

When people I meet talk about Sweden, or when I read people from the rest of the world on the topic of Sweden I generally get one out of two things: a) your country, with its large governments and welfare systems and gender equality must be paradise, and b) some spin-off of the 'migrant crisis', per-capita immigration rates or rape crisis. Oh, yeah. And ABBA and IKEA and H&M and Avicii or so. 

Roughly speaking, none of those are true (except the ABBA and IKEA and H&M and Avicii...). And since one of my favourite bloggers, Dan Mitchell, published a post debunking (a) yesterday, I'll briefly discuss that one. This is how Mitchell begins his post:

Saturday, 22 October 2016

Why Econ History Matters

Today was one of Glasgow University's several Open Days for prospective students. In other words, our beautiful Hogwarts campus was filled with tiny teenagers  not even Freshers!  often accompanied by varying degrees of excited parents. As the Economic and Social History (ESH) department had asked me to speak to interested students at the Subjects Fair, I spent the entire morning telling everyone I met why economic history matters and why ESH is the best thing you can study at Glasgow.

Wednesday, 19 October 2016

On the Clash Between Pluralism and Diversity

Coming back from intense weekends with Rethinking Economics people in the beautiful Peak District has raised a whole range of questions for me, again illustrating my cynical qualms about the entire movement. I'll go into those issues in a further post. For now, I wanna discuss the relationship between diversity and pluralism, as understood in the context of economic ideas. 

Monday, 17 October 2016

The Use and Abuse of 'Neoclassical Economics'

This is a post about words and wording rather than content. But since words and language matter for how we understand the object in consideration, the distinction doesn't really hold. But I believe it conveys the intention; I wanna talk about the misuse of the word 'Neoclassical'  not primarily the contents or methods or elements that characterises it.

Nothing drives me more insane than the awkward and mistaken use of 'Neoclassical' to capture the mainstream practice of contemporary economics. Critics of its contents loudly and indignantly call for change, but stubbornly and mistakenly brand this mainstream economics 'Neoclassical'. In the midst of their intellectual confusion, they add insult to injury by loosely treating it as a catch-all for whatever bad idea they happen to disagree with.

Saturday, 15 October 2016

Ellenberg and the Magnificient World of Math

Jordan Ellenberg is the prolific mathematician at University of Wisconsin-Madison, whose Slate columns and best-seller How Not To Be Wrong - The Hidden Maths of Everyday Life* has captured more than my own heart (see interviews by NPRThe Guardian and Slate.com for more media coverage). 

Before the first fifty pages were over, he had already re-awakened my teenage spirit (the hatred towards certain math problems that I probably never entirely let go of), strawmanned a blogger I adore (Dan Mitchell), discussed the Laffer curve and sparked nationalist interest by naming his first chapter "Less than Sweden". Moreover, he reminded me of something mind-blowing a friend once told me, and disproved Steve Keen's seemingly bulletproof attack on neoclassical economics (pp. 47-48) by refering to an early-19th century mathematician (Augustin-Louis Cauchy, famous for introducing the notion of limit into mathematics).

In other words, he had me at hello.

Tuesday, 11 October 2016

Obama's Mindblowing Contradictions Pt. 2

This post is a continuation of Barack Obama's horribly inaccurate piece in The Economist ("The Way Ahead") the other day, where I decided to pick about 12 points where he is seriously mistaken or internally contradictory. It's quite an astonishing read, and rather patronising to see how the leader of the free worlds thinks so lowly of his subjects (the first post is found here: "Obama's Mindblowing Contradictions Pt. 1")

Monday, 10 October 2016

And the Nobel Prize in Economics goes to...

Every year I get equally excited ("Eurovision for Economists"...?), and every year these two seriously annoying things happen:
  1. Some pundit tells me that it isn't really a Nobel Prize but only the Swedish Central Bank's prize in honour of Alfred Nobel. As if I didn't know that. The importance of a prize comes from how people treat it; and economists/media treat the Swedish Riksbank Prize as a Nobel Prize, giving an awful lot of attention to the winner and his/her research. Hence, it matters. Grow up. 
  2. Someone will downplay the importance of the prize, either argue that we also need prizes for sociology, gender studies, psychology and political sciences, or that even Hayek argued against the institution of the prize, because it confers authority on economists in very unhelpful ways. 

Sunday, 9 October 2016

Obama's Mindblowing Contradictions Pt. 1

I'm stunned. Speechless, even. And clearly suffering from some emotional roller-coaster syndrome. First, I find that the New York Times published an Op-ed by McCloskey last month, praising capitalism and markets. Someone at NYT must have been asleep at the wheel (I'm sure Krugman is furious...). Then I see the Hillary-Wikileaks-so-called-'Scandal' that she secretly dreams of free trade "powering growth and opportunity to every person in the hemisphere". (Now Krugman surely had a heart attack).

Thursday, 6 October 2016

Immigration and Romer

Like many economists, I have this love-hate relationship to disputes over immigration and so I tend to stay away from them (admittedly, I do occasionally write about them: see here and here). My reasons for this are fairly simple; the topic is controversial in a tainted and unhelpful way, but mostly because the disputes mainly lie outside the scope of economics (namely culture, politics, political sovereignty etc). When economists point to some economic aspect of immigration, or some economic process affected by immigration, proponents or opposers take that as firm evidence one way or another, and entrench their political views further. Hardly useful and not exactly something I happily contribute to. As Greg Mankiw pointed out a few years ago, in his wildly controversial article Defending the One Percent:

Monday, 3 October 2016

Romer, Macro and the Blogosphere

There are few economics articles I laugh my way through; Shake my head in disbelief, cry out in frustration or harass everyone about the naivity of some defunct economist's argument all happens quite a lot - but Paul Romer's The Trouble With Macroeconomics had me laughing on every other page. If you're like me, a sucker for sarcasm, I'm sure you'll love it to.

Wednesday, 28 September 2016

Economic Pluralism is Like Teenage Sex

Despite the clickbait nature of the title, I am actually trying to make a serious point here. Stay with me, OK?

The failure to understand that the history of economic disputes contains a variety of competing theories from many schools of thought, is one of the major shortcomings by the ruling mainstream. It implicitly and explicitly assumes its untouchable position in the Ivory tower of academia, flat-out ignoring the history of ideas or frankly anything that doesn’t involve insane amounts of fairy-tale equations and the intersection of two made-up curves.

Sunday, 25 September 2016

Love, the Efficient Market Hypothesis and Berkson's Fallacy

Waking up the day after a late-night out always makes me slightly melancholic... which obviously means we're discussing the Efficient Market Hypothesis (EMH). The EMH is this decades old idea about the perfect efficiency of asset markets, arguing that all (publicly) available information is already priced into any asset. In other words, it's impossible to "beat the market" since the market at any given moment is correctly priced.