Wednesday, 18 January 2017

Dear Oxfam, There Is No Inequality Crisis

In January every year the conspiracy think-tank Oxfam publishes a report claiming that some number of billionaires own as much as the world's poorest 50%. This year the number they cranked out is 8  and the top 1% owns more than the rest of the planet combined. Wow, goes every indignant left-leaning person from the Guardian's editors to Social Justice Warriors on every political site across the globe. That's so unfair, and so bad, and capitalism has obviously failed. Oxfam describes the distribution as 'obscene'; here's Max Lawson, Oxfam's head of policy:
There are different ways of running capitalism that could be much, much more beneficial to the majority of people.

Monday, 16 January 2017

Emerging From a Bubble

This Bubble was not one of those exciting financial market or property ones that I enjoy discussing. This Bubble was called 'dissertation', a rather lengthy essay worth almost 17% of my entire university degree. It has kept me very occupied since September, and has completely absorbed me for the last few weeks. Daunting task, and most days since September, and every day since Christmas have I been reading, counting, writing, regressing, handling data-series, analysing, proof-reading, referencing and finally a few days ago handing it in. Such a relief.

Sunday, 1 January 2017

Summarizing 2016

It's that time of year, and I thought I'd make a brief note of how 2016 turned out.  
  • I have written about 8 university essays, including around half a dissertation. 
  • I posted 28 articles and blogs on, of much varied quality, as well as 102 blog posts on Life of an Econ Student.
  • Read something like 85 journal articles or chapters in academic books.
  • Read at least 11 academic books in full, and on average probably halfway through another 5-6 books (among which are McCloskey, Shaikh, Mokyr, King)
  • The only fiction I managed to read this year was all four books of the Inheritance series (about Eragon and his dragon Saphira), which I devoured in a week or so. #PostExamDestress
  • Judging by my library history, I have taken out about 90 books from the university library (both Sydney and Glasgow).
  • I spent about £250 on books and £320 on clothes (continuing the strange trend from last year when spending on clothes exceeded spending on books); little over £3000 on food/drinks, about £5000 on rents and about £4000 on various trips
  • I added 220 new songs to my Spotify playlists, 2 new countries and 1 American state to my list and in total 16 flights.

Wednesday, 21 December 2016

How Rich Is Mr. Darcy?

Pre-Christmas chill has meant picking up my lovely edition of Pride & Prejudice. There's something about the language and the beautiful words that capture me  Jane Austen was onto something. Anyways, I started to think about the numbers and the incomes she reports throughout the book (and remembered how Piketty used them to portray how capital simply "earns its return r"). One of the first things we learn in the book is that insanely rich Mr. Bingley has let Netherfield, and he has "four or five thousand a year" (chapter 1). In chapter 7 we're told that Mr. Bennet (Lizzy's, the protagonist's, father) earns £2000/year and that his father-in-law left them £4000. In chapter 16 we also learn that Mr. Darcy, the rich proud and unpleasant fellow we initially loath, has £10k/year. It is never really explained or described how they earn this, and Piketty infamously argues that it was normal for capital to simply reproduce at some percent every year  so normal, in fact, that it's superflous for Austen to even describe it. 

Monday, 19 December 2016

If You've Never Missed a Flight, You're Spending Too Much Time at Airports

Waiting in a basically empty terminal for a flight not scheduled to depart for another hour reminded me of something Dr. Jordan Ellenberg convincingly discussed in his brilliant book How Not to Be Wrong: The Hidden Maths of Everyday Life. Back in October I thought I praised his book slightly too much, only to realize that I had forgotten to discuss this point.

In one of his chapters he discusses the optimal time to arrive at airports before the flight departures. He uses expected utility theory (for all its problems...) to suggest that maybe those hours waiting in the departure area or simply wandering the airport are pretty much wasted and could be avoided by showing up later  which also means that from time to time you may miss a flight or two. This is how Business Insider summarized the point when his book came out:

Friday, 16 December 2016

The Ins and Outs of Closing Fiscal Deficits

A range of well-respected economists, including Harvard economist Alberto Alesina whom I had pinned down as a Nobel candidate, just last week published an article (available here) that ought to cause some storm among academic economists. The snappy title of their paper on this politically-infected topic of fiscal policy is appealing enough: "Is it the 'How' or the 'When' that matters in fiscal adjustments?"

Tuesday, 13 December 2016

The Firefighter Analogy

In former Fed chair Ben Bernanke's 2015 autobiography of the financial crisis, The Courage to Act, he tells a a very self-righteous story of how he and his team saved the world from an even worse financial crisis. That conclusion is dubious on many grounds, as well as slightly too boastful for my taste; even Mervyn King in his End of Alchemy ridicules those kinds of stories coming out of the GFC.

However self-centered Bernanke's book might be, and for all its economic flaws, there is one particular idea that comes back over and over in other circumstances. I'm sure Bernanke didn't invent this analogy, but I have come to always associate it with him; I'm of course talking about Moral Hazard and the Firefighter Analogy. This is how Bernanke recounts it:

Tuesday, 6 December 2016

The Most Important Econ Books of 2016

We are slowly moving towards that time of year when we look back and summarise the most important events that have occured over the last twelve months. Of course, Life of an Econ Student wouldn't be much of a an econ blog if it didn't supply a list of our beautiful field. Unfortunately I see that both the Financial Times and Tyler Cowen at Marginal Revolution beat me to this, and I'm happy that they, at least partly, agree with my choices.

Of course, this list is entirely biased by my interests (banking, money, econ history, inequality) and my current experiences. Enjoy!

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.