Economics Potpourri
Editor's Digest: A review of recent research and commentary
Is the entire field of macroeconomics hogwash?
Reuven Brenner doesn’t go quite that far, but he does cast radical doubt on much of what the profession does. The problem is that “all things rooted in aggregates are opinions, not science, even when they wear the mask of science.”
Which is right, economic data or public opinion?
Scott Winship offers insight into the apparent divergence between polling data and economic reality. “Dissatisfaction with ‘the way things are going in the United States’ is a feeling based on perception. Crucially, what people perceive to be true about ‘the way things are going’ may not be accurate. They are likely to be very familiar with how things are going for them and their family. But they may be less familiar with how things are going outside their home and community.”
Do blacks earn less than whites?
The racial income gap is a much-discussed phenomenon in American economic life, but as Ian Rowe points out, other factors are more important than race. “While a person’s race matters increasingly less, there are community level characteristics whose absence or presence more directly drive individual prospects of upward or downward mobility.”
Who are America’s billionaires?
Preston Brashers and Alexander Frei analyze the identity and role of America’s billionaires. Among the findings that may come as a surprise is the dynamic nature of the country’s great fortunes. “Of the approximately 97 still-living billionaires on the 2005 Forbes 400 list who inherited fortunes, less than half are still on the list today.”
Does the division of labor have a dark side?
Free-market economists champion the advances in efficiency and productivity provided by increasingly specialized labor in the modern world. But the reality of trade-offs is also a principle of market economics, and as Michael Munger admits in his reflection on the subject, the advances generated by the division of labor have come with weaknesses such as vulnerability. “The drawback is that we have to depend on each other; the benefit is that we are able to depend on each other.”
Is the market miraculous?
Barry Brownstein waxes poetic about the social nature of the market economy. “Humans already cooperate and communicate in miraculous ways through the mechanism of the price system. If you believe someone must be in charge of coordinating human action, you will never notice the marvels all around you.”