Economics in Action

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One of the first scholars to grace our lovely discipline was Thomas Malthus. An early proponent of “The end is nigh” syndrome he is mainly remembered for his essay on Population- where he argued the human race was doomed because the population was increasing at a faster rate than our capacity to grow food. Unsurprisingly it was Malthus who claimed for economics the label “The Dismal Science”.

The communist Lenin sharply criticized Malthus theory calling it a “reactionary doctrine” and “an attempt on the part of bourgeois ideologists to exonerate capitalism and to prove the inevitability of privation and misery for the working class under any social system”- and if you don’t understand what that means, don’t worry neither do we.

Fortunately Malthus displayed a trait that many economists would later share – he was wrong. The population didn’t starve and in fact during the nineteenth century the forces of capitalism flourished creating unprecedented wealth for those who owned the means of production. To find why we will need to look at our next great economist Adam Smith.

In the latest of our podcasts supporting the Royal Economic Society Conference 2008 Romesh Vaitilingam talks to Ben Lockwood about the effect of the European Single market on alcohol and tobacco taxes.

In the wake of Alistair Darling’s swingeing increases on duty on alcohol in Wednesdays budget comes a new report examining why duty may not have been increased as much as governments would have liked and implying that these new duties may not raise as much revenue as the Chancellor is expecting.

The research by Giuseppe Migali and Ben Lockwood, presented at this Royal Economic Society’s 2008 annual conference, finds that the completion of the European Unions single market which removed all restrictions on trade in goods between member countries meant that the UK government has not been able to raise alcohol and tobacco duty as much as it might like.

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The Economist is running a feature article on how the world is, gradually and unevenly, becoming more prosperous and peaceful. Yes, wars and genocides are happening right now. Yes, huge numbers live in extreme poverty and millions of children die each year from preventable disease. However, the figures brought together in this article show that, while those things are horrible, far fewer people are experiencing them than in previous decades. Public health, birth control, immigration and Middle East conflict are among the issues touched on.

It’s not easy being a pirate on the high seas. There is always a possibility that your crew will kill you and take your share of the loot. Since piracy is criminal by definition, you can’t call on the police or courts to enforce contracts. So a pirate ship needs a way of keeping order, just as a country does.

Economist Peter T. Leeson of West Virginia University has released a working paper arguing that 17th Century pirates actually used constitutional democracy, achieving this before either the USA or England. This is is an important recurring theme in economics: how self-interested individuals can work together to achieve a common good.

Read More: An-arrgh-chy: The Law and Economics of Pirate Organization (Abstract of the paper on Social Science Research Network)

Peter T. Leeson (2007) An-arrgh-chy: The Law and Economics of Pirate Organization (full paper in PDF format)

In the second of a series of interviews with economics researchers at the Royal Economic Society Conference 2007, Romesh Vaitilingam talks to Richard Kneller about the effect of exchange rate movements on UK exports.

Changes in exchange rates have little impact on UK manufacturing exports and are likely to have only a modest effect in reducing the countrys record trade deficit, according to research by Dr Richard Kneller and colleagues, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick.

Dr Kneller said:

The findings may surprise many people intuitively you would expect a strong pound to be bad for exports and a weak pound to lead to much greater exports. (more…)

Volatile Bangladesh pins hopes on an economist Associated Press proclaimed this month, headlining the story of how the country’s former central bank head Fakhruddin Ahmed was called in to lead its interim government and rescue scheduled elections.

In fact, Bangladesh turned not once, but twice, to an economist to resolve its political deadlock. Dr Ahmed, who worked at the World Bank after his economics PhD from Princeton, took the job after it was turned down by Professor Muhammad Yunus, awarded this year’s Nobel Peace Prize for pioneering micro-credit at the Grameen Bank.

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