10 ms·

The Economy

211 points by Turukawa 9y ago

jasode 9y ago
For added context about core-econ.org, there was a recent related discussion (not a dupe): https://news.ycombinator.com/item?id=15222819 https://news.ycombinator.com/item?id=15222819
soVeryTired 9y ago
Nice to see an economics textbook get money creation more or less right for once. On the other hand they haven't been able to shake off the classical view of the consumer as a utility-maximising robot (where utility is conveniently unobservable). So a step in the right direction but a lot further to go.
- jljljl 9y ago
  Is there an alternative view of the consumer that produces useful results?
  - soVeryTired 9y ago
    The one used by advertising: the one that understands something about human nature.
    - jljljl 9y ago
      I don’t think advertising really contradicts the model: advertising grows demand for a good by increasing an individuals perceived or realized utility for the product.
      - goialoq 9y ago
        That's the key: that perceived/predicted and realized utility are different, and we focus too much on consumers horrible mismeasure of predicted utility.
      - soVeryTired 9y ago
        But that's part of the problem: utility isn't observable so it's actually very difficult to refute the model. Unless of course you posit a specific functional form for the utility function. Then you'll just have lots of trouble fitting any data you collect.
        jljljl 9y ago
        I don’t think economists believe there is a specific functional form for the utility function (although it often has certain properies). It’s more just a useful concept for representing customer preferences.
- goialoq 9y ago
  Hmm? Even among fans of the book, the book's incorrect explanation of money creation is the main criticism: https://mainlymacro.blogspot.co.uk/2017/09/the-core-economicscurriculum-designed.html https://mainlymacro.blogspot.co.uk/2017/09/the-core-economic...
  - digi_owl 9y ago
    That seems to focus on the wrong section. Section 10.8 illustrates how commercial banks create money by lending. What the blog entry you linked to talk about is government deficits, and how the textbook clash with the MMT idea of governments regulating the money supply via expenditure and taxes (effectively creating money as they buy goods and services, and destroy it via taxation).
  - soVeryTired 9y ago
    I was really just referring to the fact that in section 10.8 they ditched the fractional reserve / money multiplier story that you find in eg. Mankiw's book. I honestly don't know enough about government budget constraints to comment on the mainly macro post, or other aspects of MMT in general.
    - neffy 9y ago
      The standard fractional reserve/money multiplier story is provably wrong, in several different ways. With a pen and paper for example, work through what happens when loans are repaid with that cascade of banks. They missed a note that money is destroyed when the capital is repaid, and it wouldn't have hurt to discuss loan defaults, but as set out, it is definitely an improvement on the old incorrect description. (Which appears to have originated as a copy and paste error from Keynes original description in the Macmillan report.)
- bllguo 9y ago
  Hm. Care to qualify your statement? What do textbooks get wrong about money creation?
  - stephen_g 9y ago
    A lot of them use the completely invalid 'money multiplier' model, which doesn't follow double-entry accounting rules. Even worse is the high-school kind of 'intermediary model', which imagines that banks lend out the money that people deposit in them. But when a bank creates a mortgage (which is an asset to them), it has to create a corresponding liability (which is the deposit). They can't lend existing deposits out (or any fraction of them), because it would be a liability with a matching liability. This means some surprising things - banks don't actually need any existing deposits at all to lend, and they temporarily create new deposits (which has the same status as 'real' money) when they lend. This money, as well as the debt created at the same time, both disappear as the loan is repaid in equal measure. The way it all works is that because the banks are all transferring a lot of money between themselves, the amount of reserves (and cash, but it's mainly central bank reserves) that they actually need to make payments is only a fraction of the total volume being created and transferred. If they don't have the reserves, they can just borrow them from another bank or the central bank, or on money markets. Of course, it's handy for them for people to deposit money in their bank because it's a cheap way for the bank to get liquidity. This isn't 'fractional reserve' by the way - that comes from the fact that banks in the US are required by the Fed to have a certain minimum amount of central bank reserves (10% of the amount of their deposits). That is just a measure to ensure they have enough liquidity though. The incorrect 'money multiplier model' comes from a misunderstanding of fractional reserve banking. Most countries don't even have a reserve requirement, instead having capital adequacy requirements.
- digi_owl 9y ago
  Had too look around a bit but indeed chapter 10 on banks and credit talk about how commercial banks effectively print money as they extend loans. Just wish they would drop the whole "patient and impatient agents" stuff. I fear this will be another Keynes where over time orthodox economists will find a way to warp of redefine the text into something that simply restate their old beliefs.
achou 9y ago
The book touches lightly upon advertising and how it can affect demand: http://www.core-econ.org/the-economy/book/text/07.html#711-product-selection-innovation-and-advertising http://www.core-econ.org/the-economy/book/text/07.html#711-p... This strikes me as a very important subject, one that I heard little about in my (limited) economics courses. Anyone know of good references to how economics treats the ability of firms to affect demand? Nearly every company has a marketing department. Some of the largest companies on the planet make all their money from other firms' desire to influence demand. Is there any work at the intersection of evolutionary psychology, economics, and advertising?
- roymurdock 9y ago
  You're entering the world of behavioral economics and heuristics, championed most extensively by Kahneman and Tversky. Here's an overview: https://www.behavioraleconomics.com/introduction-behavioral-economics/ https://www.behavioraleconomics.com/introduction-behavioral-...
amelius 9y ago
I like how they want to change the way economics is taught. However, I'd like to see more assumptions to be made explicit. For example, why is money the way it is? Why is it simply a scalar, that is transferred from one person to the next? What other constructs can we come up with for money?
- pzone 9y ago
  It's a very basic introductory level text. If you want more detailed answers to questions like that, ask a professor or do a bit more study. Anyway "why don't we have vector money" is a fairly interesting brain teaser. The way I'd think about that sort of question theoretically is: suppose we tried to actually implement a system like that. Why would people find it annoying / inefficient and go back to the way things were before? Here's how I imagine it going. First, there would have to be an exchange rate between a_dollars and b_dollars, just like for any currency where you want to trade goods priced in one currency for different goods priced in another currency. Then, because it's inconvenient to hold a_dollars and b_dollars, people would just choose to hold onto whichever one was more convenient for them, and make exchanges when necessary. This means whole geographical areas would just use the same currency, because it's just simpler and easier to discard whichever currency is unused. At this point, we enter into the question of optimal currency areas - and basically the whole situation collapses to entire country using a single currency.
- dredmorbius 9y ago
  I'd suggest William Stanley Jevons, Money and the Mechanism of Exchange for a clear foundational explanation of money, that still underlies much present discussion. Chapter V in particular, on the qualities of the material of money, provides a vital set of properties which apply whether you're looking at specie, fiat, or other forms of currency: utility and value, portability, indestructability, homogeneity, divisibility, stability of value, and cognisability. https://archive.org/details/cu31924013816172 https://archive.org/details/cu31924013816172 What other concepts do you have in mind?
anon1385 9y ago
Simon Wren-Lewis has written a bit about this here: https://mainlymacro.blogspot.co.uk/2017/09/the-core-economicscurriculum-designed.html https://mainlymacro.blogspot.co.uk/2017/09/the-core-economic... He's broadly supportive but points out that section 14.8 isn't correct.
misterbishop 9y ago
Malthus in, Marx out.
nolemurs 9y ago
I looked at the table of contents, and concluded I didn't really need to look further. This isn't an economics textbook - it's a propaganda piece. Section 1.1 of an economics textbook should not be about "Income Inequality." Any sane treatment would first provide some necessary context and theory to make a discussion of income inequality meaningful. I don't care where you are on the political spectrum, if your goal is to teach rather than indoctrinate this isn't how you start.
- SubiculumCode 9y ago
  Frequently, economic theory is driven by judgments about what is valuable in an economic system, beliefs about how the world operates (e.g. rational self-interest for a classic), and unfortunately, worldviews that align with the financial interests of those who back the economic research. I hope I have not maligned everyone in economics, because there is good work...it is just that the good work is not always the most influential.
  - goialoq 9y ago
    Economics is a mathematical science that is tortured into a practical policy regime. Economists say that misapplications aren't their fault, and policy makers say that they are just applying economics. The problem isn't with economics, per se, it's that economics is given a privileged spot in the curriculum over, say, "socioeconomics"
    - jimmytidey 9y ago
      This may be the view of some economists, but certainly not all of them. Many notable economists promote the view that economics is overly mathematical and ought to do more to reflect real world behaviour. Ostrom's Law captures this beautifully: "A resource arrangement that works in practice can work in theory"
- goialoq 9y ago
  It's a fair point, but the solution isn't obvious. This book leads with Big Issues before explaining context and background, making it inaccessible to people who aren't already versed in the basics. But other (orthodox) intro books/courses never get to the big issues, leaving students with a stunted misunderstanding of how economics works in the real world and an overconfidence that they know how everything works. I'd like to see a book like this blended with an orthodox textbook.
niuzeta 9y ago
I find it very dubious that the "Income Inequality" sits at the very first section, and "Supply-and-demand" at the eighth. I'm no established economist, but my understanding is you start at the foundational idea then move on to the its ramifications and symptoms. Why does the income inequality deserve the first seat? It definitely is one of the greatest(if not the greatest) issues of our generation, but must it precede foundations? Skimming through the "Income Inequality" section did not make it better - first exercise asks "What do you think the figure would've looked like in 14th century - I imagine it's to highlight how it's "unfair" now compared to the previous history? It talks about the 90/10 ratio and the word "richest" appears 21 times in the first page alone. "richest 10%" being 11 of them. I understand the study of economics is more about interpretation of the data and interpolation of trends based on (often seemingly ideological) school of thought, but this first look betrays a specific narrative.
- dimitar 9y ago
  This is not that unusual - in fact in the first edition of the famous textbook by Samuelson and Nordhaus, the Supply and Demand chapter is at page 447 of 622 [1]. For quite a long time it was thought that it was better to begin with macro issues and then discuss micro. [1]: https://books.google.bg/books?id=ITXUAAAAMAAJ&pg=PP1&redir_esc=y https://books.google.bg/books?id=ITXUAAAAMAAJ&pg=PP1&redir_e...
- notahacker 9y ago
  The obvious riposte is that the fact that money/resources are not equally distributed is foundational to the economic concept of demand (viz. "the amount of money/resources an entire market is willing to exchange for something, constrained by potential market participants' initial money/resource allocations"), particularly as the notion of economic demand is frequently elided with "what the public wants in proportion to how much they want it" to push an alternative specific narrative. (I'm less impressed with the rest of what I'm skimming through of the early chapters than I thought I might be, but not even the most value-free and purely technical approach to teaching how an economy is believed to work is free from narrative implications)
- gregimba 9y ago
dcgudeman 9y ago
Positioning this "course" like an objective treatment of economics is the kind of subtle academic dishonesty that breeds anti-intellectualism. Most people recognize the difference between this and a real textbook even if they can't articulate it. They just end up distrusting academics in general which hurts us all.
- jimmytidey 9y ago
  This is a real text book. It is written by a wide range of eminent economists from world leading institutions, with the aim of instructing students. A book created by experts in their field with a view to teaching students about the issues that concern them most is not anti intellectual. I can only assume wrongly believe yourself to be in possession of an objective understanding of economics which disagrees with this text book (which you've read, right?). Sorry to go so mad on this one, but it really is just a different view on economics. It ought to be welcomed.
  - jnordwick 9y ago
    This book is definitely created with an agenda and trying to force a point of view to lead readers to be left wing economists. It seems more like an indoctrination attempt especially when you read the leading questions asked in the text.
    - ue_ 9y ago
      >a point of view to lead readers to be left wing economists. Oh come on, that's ridiculous. If you think Keynesianism is "left wing economics", you've got another thing coming: Marxian economics has been excluded from the discourse such that almost every university will describe its department as neoclassical or Keynesian. And this book isn't even a Marxist one. It contains no seething critiques of the capitalist mode of production. The beginning to left wing economics is Marx, even if you don't accept his theory of value. This text is not such a beginning. If you want an opinionated guide to capitalism, read Capital Vol. I by Karl Marx (1867)[0]. [0] https://www.marxists.org/archive/marx/works/1867-c1/ https://www.marxists.org/archive/marx/works/1867-c1/
ChuckMcM 9y ago
Is this a work of fiction? I was skimming along and this popped out : "Street protests erupted in South Africa, and both the European Union and the World Health Organization announced their support for the South African government’s position. Al Gore, then US vice president, who had represented the interests of pharmaceutical companies in negotiations with South Africa, was confronted by AIDS activists chanting, ‘Gore’s greed kills!’ In September 1999, the US government—previously the drug companies’ strongest ally—said that it would not impose sanctions on poor countries that are affected by the HIV epidemic, even if US patent laws were broken, so long as the countries abided by international treaties governing intellectual property." Really? President Gore? Alternate history perhaps? EDIT: (Yes I know Al Gore was VP but missed the word "vice" when skimming the content, thanks for the corrections)
- thinkling 9y ago
  Did you misread? > Al Gore, then US vice president,
- michaelt 9y ago
  Perhaps you're too young to know this, but before he was a film maker Al Gore was vice president to Bill Clinton [1], from 1993 to 2001. [1] https://en.wikipedia.org/wiki/Vice_Presidency_of_Al_Gore https://en.wikipedia.org/wiki/Vice_Presidency_of_Al_Gore
- SaintGhurka 9y ago
  The piece you pasted says "vice president".
- ChuckMcM 9y ago
  Ah yes, the hazards of skimming. We'll just leave this here so that others don't make the same mistake I did.
beebmam 9y ago
Keep in mind this is absolutely a political text, and should be criticized as such. We should be skeptical of the claims in this document, just as we are skeptical of Marx's work.
- wwweston 9y ago
  What are you/we skeptical about in Marx's work?
  - MarkPNeyer 9y ago
    As a historical deterministic, he doesn't believe in or account for risk. The labor necessary to create an object needs to include all the failed attempts to create objects. If you're a determinist, risk loses meaning, and thus capital seems to serve no purpose.
    - wwweston 9y ago
      Interesting and plausible criticism. I suspect it's not accurate to characterize Marx as a total determinist either in a sociopolitical sense (I think his "inevitable victory" rhetoric is largely cheerleading and IIRC he acknowledges class warfare could end badly for everybody) or an economic sense, where his observations and criticisms about economic dynamics are no more deterministic than any other economic model (and in fact derived from accepted models). But I honestly haven't thought much about whether he fully appreciates the risk-bearing role of capital and that seems like an interesting insight worth exploring. You know of any texts/places where people discuss that?
- dredmorbius 9y ago
  POLITICAL œconomy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign. -- Adam Smith, Wealth of Nations, Book IV, Introduction http://oll.libertyfund.org/titles/smith-an-inquiry-into-the-nature-and-causes-of-the-wealth-of-nations-cannan-ed-vol-1 http://oll.libertyfund.org/titles/smith-an-inquiry-into-the-... Economics is political (and much of politics is about economics), and always has been.
wslh 9y ago
Is it available in EPUB or MOBI formats? I cannot find any reference to Kindle or any other ebook devices or format.
Nokinside 9y ago
Quickly skimming the book, it seems mixed back. First complaint is that online eBook without search and links for definitions seems to remove value from the book. It seems like the authors are trying to insert current interests and advances in economics into introductory level book. Sometimes it succeeds, sometimes it fails. The goal is admirable. I think this book might be good on the side when reading more conventional book if it had good search function, and links to terms and definitions and links in the glossary.
csomar 9y ago
Is this about economics, macro-economics, micro-economics, finance, or simply income inequality? This looks like a "populist" site. It teaches you a "lot" about income inequality but it doesn't stress on important matters. This is totally subjective but, for me, the most important concept in the economics of the 21st century is "banks printing money out of thin air". All money, in fact, is not the same. Even though, on the small scales it looks like it is. The site do talk about it here: http://www.core-econ.org/the-economy/book/text/10.html#108-banks-money-and-the-central-bank http://www.core-econ.org/the-economy/book/text/10.html#108-b... But given its importance, it seems highly buried: Like, hey look there, here is how we print money. That's it. The implication of the monetary policy is huge. It explains why our system can collapse of the mistakes of other people completely non-related to you. I still find the Khan Academy videos on Economy the best, simplest and most informative out there on the Internet. Really worth to watch.
khana 9y ago
This effort is good in the sense that we're using the game theoretic slowly moving away from a God-ful society to one that is about network node density at scale.
WalterBright 9y ago
> In 1973 and 1974, OPEC countries imposed a partial oil embargo in response to the 1973–4 Middle East war George Reisman in "Capitalism" writes that the oil price shocks were due to Nixon placing price controls on oil. More evidence for this view is that when Reagan signed an Executive Order eliminating them, gas lines disappeared overnight and did not return. http://www.presidency.ucsb.edu/ws/?pid=43912 http://www.presidency.ucsb.edu/ws/?pid=43912
- dredmorbius 9y ago
  Gas lines were not extant continuously from 1973 - 1982. They existed, briefly, at the height of both the original Arab Oil Embargo induced oil shock, and after the Iranian Revolution when Iranian exports to the US were curtailed. A number of factors, including US-Saudi relations (cemented after 1973), and the on-lining of both North Sea and Alaskan North Slope oil, brought down global oil prices, which would not be responsive to just US actions. See the BP Annual Statisical Review of Energy for any recent year for a global price history of oil dating to 1859 in both real and nominal terms.
  - WalterBright 9y ago
    Shortages (gas lines) were not caused by price hikes or the Saudis or the Iranians. They were caused by the US government allocating fixed amount of gas to each gas station. Reagan eliminated the allocation system at the stroke of a pen, and the lines vanished overnight, never to return. He also eliminated the price controls, which drastically curtailed the Cartel's influence over gas prices, which never returned, either. The whole gas problem of the 1970's was something the US imposed on itself. You are correct that the lines were not there continuously - but they were a recurring chronic problem, seemingly striking at random. There was also the peculiar phenomenon of lines in California with simultaneous gluts in Florida. The DoE proved to be hopelessly inept at allocating gas according to demand. Note that we still have gas "shocks" today, like a refinery blowing up or being incapacitated by a hurricane. The result is a modest increase in prices for a few months, and no lines or shortages whatsoever. (There were some brief lines when the hurricanes rolled ashore, but those are cases where the weather cut the supply lines rather than the government.)
taysic 9y ago
I can't speak on how economics is taught as I never took a class on it. But I can say "Basic Economics" by Thomas Sowell is one of the best books I've read. It could easily be a textbook.
- dredmorbius 9y ago
  Sowell's version of economics is exceptionally ideological and partisan. As would be pretty much any other author associated with the Cato Institution (as is Sowell), or the broader Mont Pelerin movement, including Milton Friedman and Howard Hazlett. Their treatments are popular, amongst a certain set. This deosn't make them accurate.
ohdrat 9y ago
There's a bunch of money hidden offshore.

211 points by Turukawa 9y ago

For added context about core-econ.org, there was a recent related discussion (not a dupe): https://news.ycombinator.com/item?id=15222819 https://news.ycombinator.com/item?id=15222819

soVeryTired 9y ago

Nice to see an economics textbook get money creation more or less right for once. On the other hand they haven't been able to shake off the classical view of the consumer as a utility-maximising robot (where utility is conveniently unobservable). So a step in the right direction but a lot further to go.

jljljl 9y ago
Is there an alternative view of the consumer that produces useful results?
- soVeryTired 9y ago
  The one used by advertising: the one that understands something about human nature.
  - jljljl 9y ago
    I don’t think advertising really contradicts the model: advertising grows demand for a good by increasing an individuals perceived or realized utility for the product.
    - goialoq 9y ago
      That's the key: that perceived/predicted and realized utility are different, and we focus too much on consumers horrible mismeasure of predicted utility.
    - soVeryTired 9y ago
      But that's part of the problem: utility isn't observable so it's actually very difficult to refute the model. Unless of course you posit a specific functional form for the utility function. Then you'll just have lots of trouble fitting any data you collect.
      - jljljl 9y ago
        I don’t think economists believe there is a specific functional form for the utility function (although it often has certain properies). It’s more just a useful concept for representing customer preferences.
goialoq 9y ago
Hmm? Even among fans of the book, the book's incorrect explanation of money creation is the main criticism: https://mainlymacro.blogspot.co.uk/2017/09/the-core-economicscurriculum-designed.html https://mainlymacro.blogspot.co.uk/2017/09/the-core-economic...
- digi_owl 9y ago
  That seems to focus on the wrong section. Section 10.8 illustrates how commercial banks create money by lending. What the blog entry you linked to talk about is government deficits, and how the textbook clash with the MMT idea of governments regulating the money supply via expenditure and taxes (effectively creating money as they buy goods and services, and destroy it via taxation).
- soVeryTired 9y ago
  I was really just referring to the fact that in section 10.8 they ditched the fractional reserve / money multiplier story that you find in eg. Mankiw's book. I honestly don't know enough about government budget constraints to comment on the mainly macro post, or other aspects of MMT in general.
  - neffy 9y ago
    The standard fractional reserve/money multiplier story is provably wrong, in several different ways. With a pen and paper for example, work through what happens when loans are repaid with that cascade of banks. They missed a note that money is destroyed when the capital is repaid, and it wouldn't have hurt to discuss loan defaults, but as set out, it is definitely an improvement on the old incorrect description. (Which appears to have originated as a copy and paste error from Keynes original description in the Macmillan report.)
bllguo 9y ago
Hm. Care to qualify your statement? What do textbooks get wrong about money creation?
- stephen_g 9y ago
  A lot of them use the completely invalid 'money multiplier' model, which doesn't follow double-entry accounting rules. Even worse is the high-school kind of 'intermediary model', which imagines that banks lend out the money that people deposit in them. But when a bank creates a mortgage (which is an asset to them), it has to create a corresponding liability (which is the deposit). They can't lend existing deposits out (or any fraction of them), because it would be a liability with a matching liability. This means some surprising things - banks don't actually need any existing deposits at all to lend, and they temporarily create new deposits (which has the same status as 'real' money) when they lend. This money, as well as the debt created at the same time, both disappear as the loan is repaid in equal measure. The way it all works is that because the banks are all transferring a lot of money between themselves, the amount of reserves (and cash, but it's mainly central bank reserves) that they actually need to make payments is only a fraction of the total volume being created and transferred. If they don't have the reserves, they can just borrow them from another bank or the central bank, or on money markets. Of course, it's handy for them for people to deposit money in their bank because it's a cheap way for the bank to get liquidity. This isn't 'fractional reserve' by the way - that comes from the fact that banks in the US are required by the Fed to have a certain minimum amount of central bank reserves (10% of the amount of their deposits). That is just a measure to ensure they have enough liquidity though. The incorrect 'money multiplier model' comes from a misunderstanding of fractional reserve banking. Most countries don't even have a reserve requirement, instead having capital adequacy requirements.
digi_owl 9y ago
Had too look around a bit but indeed chapter 10 on banks and credit talk about how commercial banks effectively print money as they extend loans. Just wish they would drop the whole "patient and impatient agents" stuff. I fear this will be another Keynes where over time orthodox economists will find a way to warp of redefine the text into something that simply restate their old beliefs.

achou 9y ago

The book touches lightly upon advertising and how it can affect demand: http://www.core-econ.org/the-economy/book/text/07.html#711-product-selection-innovation-and-advertising http://www.core-econ.org/the-economy/book/text/07.html#711-p... This strikes me as a very important subject, one that I heard little about in my (limited) economics courses. Anyone know of good references to how economics treats the ability of firms to affect demand? Nearly every company has a marketing department. Some of the largest companies on the planet make all their money from other firms' desire to influence demand. Is there any work at the intersection of evolutionary psychology, economics, and advertising?

roymurdock 9y ago
You're entering the world of behavioral economics and heuristics, championed most extensively by Kahneman and Tversky. Here's an overview: https://www.behavioraleconomics.com/introduction-behavioral-economics/ https://www.behavioraleconomics.com/introduction-behavioral-...

amelius 9y ago

I like how they want to change the way economics is taught. However, I'd like to see more assumptions to be made explicit. For example, why is money the way it is? Why is it simply a scalar, that is transferred from one person to the next? What other constructs can we come up with for money?

pzone 9y ago
It's a very basic introductory level text. If you want more detailed answers to questions like that, ask a professor or do a bit more study. Anyway "why don't we have vector money" is a fairly interesting brain teaser. The way I'd think about that sort of question theoretically is: suppose we tried to actually implement a system like that. Why would people find it annoying / inefficient and go back to the way things were before? Here's how I imagine it going. First, there would have to be an exchange rate between a_dollars and b_dollars, just like for any currency where you want to trade goods priced in one currency for different goods priced in another currency. Then, because it's inconvenient to hold a_dollars and b_dollars, people would just choose to hold onto whichever one was more convenient for them, and make exchanges when necessary. This means whole geographical areas would just use the same currency, because it's just simpler and easier to discard whichever currency is unused. At this point, we enter into the question of optimal currency areas - and basically the whole situation collapses to entire country using a single currency.
dredmorbius 9y ago
I'd suggest William Stanley Jevons, Money and the Mechanism of Exchange for a clear foundational explanation of money, that still underlies much present discussion. Chapter V in particular, on the qualities of the material of money, provides a vital set of properties which apply whether you're looking at specie, fiat, or other forms of currency: utility and value, portability, indestructability, homogeneity, divisibility, stability of value, and cognisability. https://archive.org/details/cu31924013816172 https://archive.org/details/cu31924013816172 What other concepts do you have in mind?

anon1385 9y ago

Simon Wren-Lewis has written a bit about this here: https://mainlymacro.blogspot.co.uk/2017/09/the-core-economicscurriculum-designed.html https://mainlymacro.blogspot.co.uk/2017/09/the-core-economic... He's broadly supportive but points out that section 14.8 isn't correct.

misterbishop 9y ago

Malthus in, Marx out.

nolemurs 9y ago

I looked at the table of contents, and concluded I didn't really need to look further. This isn't an economics textbook - it's a propaganda piece. Section 1.1 of an economics textbook should not be about "Income Inequality." Any sane treatment would first provide some necessary context and theory to make a discussion of income inequality meaningful. I don't care where you are on the political spectrum, if your goal is to teach rather than indoctrinate this isn't how you start.

SubiculumCode 9y ago
Frequently, economic theory is driven by judgments about what is valuable in an economic system, beliefs about how the world operates (e.g. rational self-interest for a classic), and unfortunately, worldviews that align with the financial interests of those who back the economic research. I hope I have not maligned everyone in economics, because there is good work...it is just that the good work is not always the most influential.
- goialoq 9y ago
  Economics is a mathematical science that is tortured into a practical policy regime. Economists say that misapplications aren't their fault, and policy makers say that they are just applying economics. The problem isn't with economics, per se, it's that economics is given a privileged spot in the curriculum over, say, "socioeconomics"
  - jimmytidey 9y ago
    This may be the view of some economists, but certainly not all of them. Many notable economists promote the view that economics is overly mathematical and ought to do more to reflect real world behaviour. Ostrom's Law captures this beautifully: "A resource arrangement that works in practice can work in theory"
goialoq 9y ago
It's a fair point, but the solution isn't obvious. This book leads with Big Issues before explaining context and background, making it inaccessible to people who aren't already versed in the basics. But other (orthodox) intro books/courses never get to the big issues, leaving students with a stunted misunderstanding of how economics works in the real world and an overconfidence that they know how everything works. I'd like to see a book like this blended with an orthodox textbook.

niuzeta 9y ago

I find it very dubious that the "Income Inequality" sits at the very first section, and "Supply-and-demand" at the eighth. I'm no established economist, but my understanding is you start at the foundational idea then move on to the its ramifications and symptoms. Why does the income inequality deserve the first seat? It definitely is one of the greatest(if not the greatest) issues of our generation, but must it precede foundations? Skimming through the "Income Inequality" section did not make it better - first exercise asks "What do you think the figure would've looked like in 14th century - I imagine it's to highlight how it's "unfair" now compared to the previous history? It talks about the 90/10 ratio and the word "richest" appears 21 times in the first page alone. "richest 10%" being 11 of them. I understand the study of economics is more about interpretation of the data and interpolation of trends based on (often seemingly ideological) school of thought, but this first look betrays a specific narrative.

dimitar 9y ago
This is not that unusual - in fact in the first edition of the famous textbook by Samuelson and Nordhaus, the Supply and Demand chapter is at page 447 of 622 [1]. For quite a long time it was thought that it was better to begin with macro issues and then discuss micro. [1]: https://books.google.bg/books?id=ITXUAAAAMAAJ&pg=PP1&redir_esc=y https://books.google.bg/books?id=ITXUAAAAMAAJ&pg=PP1&redir_e...
notahacker 9y ago
The obvious riposte is that the fact that money/resources are not equally distributed is foundational to the economic concept of demand (viz. "the amount of money/resources an entire market is willing to exchange for something, constrained by potential market participants' initial money/resource allocations"), particularly as the notion of economic demand is frequently elided with "what the public wants in proportion to how much they want it" to push an alternative specific narrative. (I'm less impressed with the rest of what I'm skimming through of the early chapters than I thought I might be, but not even the most value-free and purely technical approach to teaching how an economy is believed to work is free from narrative implications)
gregimba 9y ago

dcgudeman 9y ago

Positioning this "course" like an objective treatment of economics is the kind of subtle academic dishonesty that breeds anti-intellectualism. Most people recognize the difference between this and a real textbook even if they can't articulate it. They just end up distrusting academics in general which hurts us all.

jimmytidey 9y ago
This is a real text book. It is written by a wide range of eminent economists from world leading institutions, with the aim of instructing students. A book created by experts in their field with a view to teaching students about the issues that concern them most is not anti intellectual. I can only assume wrongly believe yourself to be in possession of an objective understanding of economics which disagrees with this text book (which you've read, right?). Sorry to go so mad on this one, but it really is just a different view on economics. It ought to be welcomed.
- jnordwick 9y ago
  This book is definitely created with an agenda and trying to force a point of view to lead readers to be left wing economists. It seems more like an indoctrination attempt especially when you read the leading questions asked in the text.
  - ue_ 9y ago
    >a point of view to lead readers to be left wing economists. Oh come on, that's ridiculous. If you think Keynesianism is "left wing economics", you've got another thing coming: Marxian economics has been excluded from the discourse such that almost every university will describe its department as neoclassical or Keynesian. And this book isn't even a Marxist one. It contains no seething critiques of the capitalist mode of production. The beginning to left wing economics is Marx, even if you don't accept his theory of value. This text is not such a beginning. If you want an opinionated guide to capitalism, read Capital Vol. I by Karl Marx (1867)[0]. [0] https://www.marxists.org/archive/marx/works/1867-c1/ https://www.marxists.org/archive/marx/works/1867-c1/

ChuckMcM 9y ago

Is this a work of fiction? I was skimming along and this popped out : "Street protests erupted in South Africa, and both the European Union and the World Health Organization announced their support for the South African government’s position. Al Gore, then US vice president, who had represented the interests of pharmaceutical companies in negotiations with South Africa, was confronted by AIDS activists chanting, ‘Gore’s greed kills!’ In September 1999, the US government—previously the drug companies’ strongest ally—said that it would not impose sanctions on poor countries that are affected by the HIV epidemic, even if US patent laws were broken, so long as the countries abided by international treaties governing intellectual property." Really? President Gore? Alternate history perhaps? EDIT: (Yes I know Al Gore was VP but missed the word "vice" when skimming the content, thanks for the corrections)

thinkling 9y ago
Did you misread? > Al Gore, then US vice president,
michaelt 9y ago
Perhaps you're too young to know this, but before he was a film maker Al Gore was vice president to Bill Clinton [1], from 1993 to 2001. [1] https://en.wikipedia.org/wiki/Vice_Presidency_of_Al_Gore https://en.wikipedia.org/wiki/Vice_Presidency_of_Al_Gore
SaintGhurka 9y ago
The piece you pasted says "vice president".
ChuckMcM 9y ago
Ah yes, the hazards of skimming. We'll just leave this here so that others don't make the same mistake I did.

beebmam 9y ago

Keep in mind this is absolutely a political text, and should be criticized as such. We should be skeptical of the claims in this document, just as we are skeptical of Marx's work.

wwweston 9y ago
What are you/we skeptical about in Marx's work?
- MarkPNeyer 9y ago
  As a historical deterministic, he doesn't believe in or account for risk. The labor necessary to create an object needs to include all the failed attempts to create objects. If you're a determinist, risk loses meaning, and thus capital seems to serve no purpose.
  - wwweston 9y ago
    Interesting and plausible criticism. I suspect it's not accurate to characterize Marx as a total determinist either in a sociopolitical sense (I think his "inevitable victory" rhetoric is largely cheerleading and IIRC he acknowledges class warfare could end badly for everybody) or an economic sense, where his observations and criticisms about economic dynamics are no more deterministic than any other economic model (and in fact derived from accepted models). But I honestly haven't thought much about whether he fully appreciates the risk-bearing role of capital and that seems like an interesting insight worth exploring. You know of any texts/places where people discuss that?
dredmorbius 9y ago
POLITICAL œconomy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign. -- Adam Smith, Wealth of Nations, Book IV, Introduction http://oll.libertyfund.org/titles/smith-an-inquiry-into-the-nature-and-causes-of-the-wealth-of-nations-cannan-ed-vol-1 http://oll.libertyfund.org/titles/smith-an-inquiry-into-the-... Economics is political (and much of politics is about economics), and always has been.

wslh 9y ago

Is it available in EPUB or MOBI formats? I cannot find any reference to Kindle or any other ebook devices or format.

Nokinside 9y ago

Quickly skimming the book, it seems mixed back. First complaint is that online eBook without search and links for definitions seems to remove value from the book. It seems like the authors are trying to insert current interests and advances in economics into introductory level book. Sometimes it succeeds, sometimes it fails. The goal is admirable. I think this book might be good on the side when reading more conventional book if it had good search function, and links to terms and definitions and links in the glossary.

csomar 9y ago

Is this about economics, macro-economics, micro-economics, finance, or simply income inequality? This looks like a "populist" site. It teaches you a "lot" about income inequality but it doesn't stress on important matters. This is totally subjective but, for me, the most important concept in the economics of the 21st century is "banks printing money out of thin air". All money, in fact, is not the same. Even though, on the small scales it looks like it is. The site do talk about it here: http://www.core-econ.org/the-economy/book/text/10.html#108-banks-money-and-the-central-bank http://www.core-econ.org/the-economy/book/text/10.html#108-b... But given its importance, it seems highly buried: Like, hey look there, here is how we print money. That's it. The implication of the monetary policy is huge. It explains why our system can collapse of the mistakes of other people completely non-related to you. I still find the Khan Academy videos on Economy the best, simplest and most informative out there on the Internet. Really worth to watch.

khana 9y ago

This effort is good in the sense that we're using the game theoretic slowly moving away from a God-ful society to one that is about network node density at scale.

WalterBright 9y ago

> In 1973 and 1974, OPEC countries imposed a partial oil embargo in response to the 1973–4 Middle East war George Reisman in "Capitalism" writes that the oil price shocks were due to Nixon placing price controls on oil. More evidence for this view is that when Reagan signed an Executive Order eliminating them, gas lines disappeared overnight and did not return. http://www.presidency.ucsb.edu/ws/?pid=43912 http://www.presidency.ucsb.edu/ws/?pid=43912

dredmorbius 9y ago
Gas lines were not extant continuously from 1973 - 1982. They existed, briefly, at the height of both the original Arab Oil Embargo induced oil shock, and after the Iranian Revolution when Iranian exports to the US were curtailed. A number of factors, including US-Saudi relations (cemented after 1973), and the on-lining of both North Sea and Alaskan North Slope oil, brought down global oil prices, which would not be responsive to just US actions. See the BP Annual Statisical Review of Energy for any recent year for a global price history of oil dating to 1859 in both real and nominal terms.
- WalterBright 9y ago
  Shortages (gas lines) were not caused by price hikes or the Saudis or the Iranians. They were caused by the US government allocating fixed amount of gas to each gas station. Reagan eliminated the allocation system at the stroke of a pen, and the lines vanished overnight, never to return. He also eliminated the price controls, which drastically curtailed the Cartel's influence over gas prices, which never returned, either. The whole gas problem of the 1970's was something the US imposed on itself. You are correct that the lines were not there continuously - but they were a recurring chronic problem, seemingly striking at random. There was also the peculiar phenomenon of lines in California with simultaneous gluts in Florida. The DoE proved to be hopelessly inept at allocating gas according to demand. Note that we still have gas "shocks" today, like a refinery blowing up or being incapacitated by a hurricane. The result is a modest increase in prices for a few months, and no lines or shortages whatsoever. (There were some brief lines when the hurricanes rolled ashore, but those are cases where the weather cut the supply lines rather than the government.)

taysic 9y ago

I can't speak on how economics is taught as I never took a class on it. But I can say "Basic Economics" by Thomas Sowell is one of the best books I've read. It could easily be a textbook.

dredmorbius 9y ago
Sowell's version of economics is exceptionally ideological and partisan. As would be pretty much any other author associated with the Cato Institution (as is Sowell), or the broader Mont Pelerin movement, including Milton Friedman and Howard Hazlett. Their treatments are popular, amongst a certain set. This deosn't make them accurate.

ohdrat 9y ago

There's a bunch of money hidden offshore.