Igor Insanic’s Post

 Positioning of Economics and its Impact and Development in the Twenty-First Century  Economics, the science dealing with the production, distribution and consumption of goods and services is one of the key determinants of civilization evolution. Economics is study and science of how people decide to employing its principles and practices in politics, business, and personal and public life with regards to making choices concerning policy measures, investments, and savings. In the 21 st century making sense of economics https://lnkd.in/eDxxnMcD

I took the time to read "Rethinking Economics or Rethinking My Economics?" by Angus Deaton, published in the IMF's Finance & Development Magazine, https://lnkd.in/dEWRNbcy, and he clearly states what every young person is feeling about the state of the economy. Angus Deaton's Central Arguments • Economics Successes, Yet Shortcomings: Deaton acknowledges that economics has made significant theoretical and empirical contributions to our understanding of the world. Yet, he argues the field is facing disarray, particularly due to its failure to predict the financial crisis and its potential role in exacerbating it. • Importance of Changing Views: He believes economists should be open to questioning assumptions and changing their opinions as circumstances evolve. • Overemphasis on Markets: Deaton suggests economists overstressed the virtues of free and competitive markets, along with technological innovation. This led to downplaying the role of power in influencing things like price and wage setting, where technology develops, and even altering the very rules of economic systems. • Inequality and Power: Without a focus on power dynamics, Deaton contends it becomes impossible to fully understand the complexities of inequality and ethics within modern capitalism. An increased focus on market efficiency has inadvertently become a free license to plunder. Free market capitalism is not the solution to the worlds problems.

June 23rd (Sunday): Normative and Positive In the introductory chapters of introductory-level modern economics textbooks, explanations of normative economics and positive economics invariably appear, and the importance of distinguishing between the two is emphasized. According to economist Kotaro Suzumura, normative economics is "the field of economics that evaluates the merits and demerits of economic institutions and policies, and designs and implements methods to improve the defects of existing institutions and policies." The question of "how things should be" inevitably involves value judgments, and theoretical analysis and evaluation are conducted based on these judgments. On the other hand, positive economics is "the field of economics that aims to elucidate what actual phenomena are like, or by what mechanisms such phenomena occur." This field of economics seeks to clarify facts such as "what the phenomena are like and by what mechanisms they occur." When designing policies such as economic policy, energy policy, and environmental policy, both normative economics and positive economics approaches are necessary. However, in practice, this is fraught with many difficulties, and it is hard to say that it is always implemented. There are many reasons for this, including a fundamental lack of understanding of the distinction between the two types of economics, intentional disregard due to efficiency prioritization under time constraints, and the fact that policies are designed based on political maneuvering, with economic rationale being an afterthought. In Japan in the 1990s, numerous think tanks sprang up like bamboo shoots after the rain, leading to a period where the quality of these think tanks varied greatly. Some disreputable think tanks would unhesitatingly print and distribute promotional pamphlets with phrases like "We provide theoretical support to protect your entity's interests." It was a time when those who did not understand intelligence were selling wisdom. In the current era, one would think that such uninformed think tanks no longer exist in Japan, but what do you think? In Japan, the reason behind the saying "politics costs money" lies here. The amended Political Funds Control Act focuses primarily on those who collect and spend the money. However, the real issue persists because there are those who exploit these funds, which is why the problem of "politics costs money" never goes away.

Debunking Robert Reich for Debunking Economics Reich argues economics is just 'political economy.' But positive economics works hard to establish facts without value judgments intruding (another great commentary from Jack Mintz of the Fraser Institute) Market failure and redistribution have become the basis for endless government intervention in the economy. Too many public economists still presume a benevolent, all-knowing dictator will allocate resources to their best possible uses and redistribute wealth fairly and impartially. But governments are far from all-knowing or fair. Soviet economists thought they could allocate resources by gathering enough information. But shelves were often bare, or unwanted inventories piled up. It takes the “invisible hand” of a market economy to allocate resources best. Public economics lacks an adequate theory of government failure. Politicians are not benevolent: they try to stay in power by winning elections. Bureaucracies make decisions for personal aggrandizement, not just public interest. Nobelist James Buchanan (1919-2013), who criticized welfare economics for lacking a theory to explain government behaviour, helped found “public choice theory” to understand government behaviour. It leads to proposals such as limits on taxation to make unbounded government growth more difficult. So far, however, public choice theory has had a limited effect on the profession. Most public economics textbooks still focus on market failure, with government failure largely ignored. Economics is most successful when it does positive analysis. Normative economics puts insufficient weight on government failure and limiting government intervention. Robert Reich might think economics is only about political economy, but we left that world years ago.

Austrian Economics is a school of economic thought that emphasizes individual action, subjective value, and the role of time and uncertainty in economic decision-making. Here are some key points about Austrian Economics: It originated in Vienna, Austria in the late 19th century, with Carl Menger as its founder. Austrian economists believe in methodological individualism, focusing on how individual choices drive economic phenomena. They emphasize the subjective theory of value, arguing that the value of goods and services is determined by individual preferences rather than any inherent quality. Austrian Economics is skeptical of mathematical modeling and empirical testing in economics, preferring logical deduction from basic principles. It strongly advocates for free markets and minimal government intervention in the economy. The school has made significant contributions to theories of entrepreneurship, capital, and business cycles. Austrian economists are often critical of central banking and advocate for sound money policies, sometimes supporting a return to the gold standard. Key figures in the development of Austrian Economics include Ludwig von Mises and Friedrich Hayek. While influential in certain circles, particularly among libertarians and some conservatives, Austrian Economics is considered heterodox and has faced criticism from mainstream economists for its methodology and some of its conclusions.

My new essay/manifesto on the economics of human flourishing. “The economics of human flourishing is about building bridges between academic disciplines to create a holistic understanding of how economics helps understand how people can fulfill their human potential. Instead of being against something—against some idea or against scare resources—we need to be for someone, for people finding their path to flourishing, for helping to remove barriers and uncover paths that lead to more upward mobility, achievement, and human flourishing.”

Beyond Efficiency: A More-human Economics  There is a growing consensus that the economics profession must be open to new ideas and frameworks if it hopes to solve the world’s biggest problems #imf #imfblog

Concept of Economics

Austrian economics is a school of thought that emphasizes the importance of individual action, subjective value, and the role of entrepreneurship. Originating in the late 19th century, it has significantly influenced economic theory and policy. 💡📈 At the heart of Austrian economics are several key principles: Subjective Value Theory: Value is determined by individual preferences rather than inherent characteristics of goods. Each person assigns value based on their unique circumstances and needs. 🎯💰 Methodological Individualism: Economic phenomena can only be understood by analyzing the actions and decisions of individuals. 👤✨ The Role of Entrepreneurship: Entrepreneurs drive economic growth by identifying opportunities and innovating. 🚀🔍 Austrian economics includes several important theories: The Business Cycle Theory: Proposed by Mises and Hayek, this theory suggests that economic cycles result from excessive credit expansion, leading to malinvestment and recession. The 2008 financial crisis is a practical example. 📉🏡 Time Preference Theory: Individuals prefer goods sooner rather than later, influencing interest rates and savings. Lower time preference encourages long-term planning and capital accumulation. ⏳💸 The Cantillon Effect: This theory explains how changes in money supply affect different sectors unevenly. Those who receive new money first benefit more, potentially leading to inequality. 💵🔄 Austrian economics traces its roots to thinkers like Carl Menger, who introduced marginal utility. Ludwig von Mises advocated for free markets, emphasizing economic calculation in "Human Action." Friedrich Hayek critiqued centralized planning in "The Road to Serfdom" and received the Nobel Prize in 1974. 🏆📖 Austrian economists argue that economic cycles are driven by government intervention and central banking. They contend that artificially low interest rates lead to malinvestment, creating unsustainable booms and busts. 🌍💬 Understanding Austrian economics encourages critical thinking about government policies and their impacts. Exploring this field further can lead to a deeper understanding of the forces shaping our world. 📖✨

As a Master's student in Applied Economics, I came across an enlightening article by Angus Deaton called "Rethinking My Economics." It challenges our understanding of markets, emphasizing the importance of power dynamics in setting prices and wages, and how these influence inequality within capitalism. Deaton calls for a revival of ethics and philosophy in economics, urging us to think beyond income-based utilitarianism and consider what truly constitutes human well-being. This perspective is crucial for us as future economists, as it shapes how we approach economic efficiency, social justice, sustainability, and individual liberty. This article is not just an academic read; it's a call to action for economists to introspect and adapt. As we delve deeper into our studies, we should be inspired to contribute to an economic paradigm that values both efficiency and equity. #RethinkingEconomics Check out Deaton's article below: