Economics in Action

Sheila C. Bair, who chairs the US Federal Deposit Insurance Corporation (FDIC), has another string to her bow: she’s the author of Isabel’s car wash, a children’s book in which little Isabel borrows money and washes cars so she can buy a doll.

It’s not every day you see a children’s book taken apart for its assumptions about consumer behaviour and the private sector, but that’s just what reviewer Glenn Fleishman does, with tongue somewhat in cheek. Fleishman seems exasperated that plenty of adults’ understanding of money and markets is no more sophisticated than Isabel’s Car Wash, and that some of those adults have responsible jobs.

Is this economics explained in one picture?

Who would you give the iPod to?

Hat tip @gregmankiw

What does economics teach? Why study economics? What’s the big deal? In a lecture by Robert P. Murphy of the ‘Mises Institute’ he explains ‘The Core of What Economics Teaches’ in yet another fascinating video.

Graffito of Keynes, photographed by r2hox, via Wikimedia Commons

John Maynard Keynes was born in 1883 the same year that Karl Marx died, and whilst both wrote critiques of the capitalist system here the similarities end. Marx was an angry loner, his ventures and business failed and the majority of his life was spent in exile. Working anonymously and alone in  the British library, Marx spent many years sculpting his theories about the inevitable overthrow of the free market system. Perhaps the saddest thing is that Marx never lived to see his theories proved wrong.

Keynes was very different, a dashing figure and a brilliant economist, who could also mix with the elite of British society. Keynes attacked the inequalities and inefficiencies of the capitalist system it didn’t stop him from making a small fortune speculating on the foreign exchange markets.

Keynes was also a visionary, while the Allies were clamoring reparations to be imposed on Germany he saw that they would be would be impossible to repay claiming that it would reduce (more…)

It is debatable whether economics should actually be defined as being a science. After all, unlike Chemistry or Physics in which you type in some numbers, solve a complex equation and Bob’s your uncle there’s the answer. Economics involves an argument. Whereas science  attempts to prove something is irreversibly, permanently, and everlastingly true. Economics will rarely give a simple answer. Ask 5 economists a question and the joke goes-you’ll get 6 different answers.

Because of this economics has provided us with a wide variety of rich and interesting characters and over the next few weeks we hope to introduce you to some of them!

Is economics useless?

So given all the recent ‘mess’ in world economy what value does ‘modern’ economics have to offer us?  Well it depends on who you ask. Here Stephanie Flanders offers some news and views on whether economics is a ‘busted flush’.

For those of you who don’t/cant be bothered to read the whole thing her argument in a paragraph

‘So, all in all, not an edifying list of complaints. But does that mean economics is a busted flush? I’m afraid not, because even if you think economics got a lot of this stuff wrong, you’d be hard-pressed to understand – or to fix – what’s happening in the global economy today without it. ‘

Maybe it’s not such a good time to be an economist. But it’s one helluva time to study economics.

http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/07/is_economics_a_busted_flush.html