Download: PDF | EPUB I’ve been writing about inflation for the better part of three months. It’s been exhausting. Most of my time has been spent debunking misconceptions promoted by mainstream economists. Fortunately, I’m ready to move on. What’s interesting about inflation is not the fact that prices rise.
Download: PDF | EPUB To manage inflation, governments have a simple tool at their disposal: raise wages as fast as possible. — Milton Fryman For the last few months, I’ve been diving into the economics of inflation. In this post, I’m excited to review some forgotten history. Our journey starts with a basic question: what is the key policy tool for managing the rate of inflation?
Download: PDF | EPUB If you’re just tuning in, I’ve spent the last few months debunking some common misconceptions about inflation: Is inflation a uniform increase in prices? No. Inflation is wildly differential. Is inflation driven by an ‘over-heated’ economy? No. Inflation tends to come with economic stagnation.
Download: PDF | EPUB They did not mind stating apparently opposed truths; they knew that they could give to men a higher truth, in which the contradictories became two sides of the same truth. — Rev. Stopford A. Brooke, 1872 Whenever inflation rears its head, the call soon comes to raise interest rates. The rationale is simple. Higher interest rates put a damper on the supply of money. And this monetary clamp slows inflation.
Download: PDF | EPUB In my last post, I looked at the relation between economic growth and inflation. As per usual, the evidence didn’t sit well with mainstream economics. According to standard theory, there is a trade off between low inflation and high economic growth. The idea is that you can have one or the other, but not both. So if you want to keep inflation low, you have to ‘cool off’ the economy by slowing economic growth.
Download: PDF | EPUB [I]nflation in the midst of stagnation is not an anomaly. If anything, it is the general rule. — Nitzan and Bichler, 2009 As much of the world grapples with post-Covid price gouging, it seems like a good time to revisit our understanding of inflation.
And just like that, another year is over. I’ll remember 2022 as the year I unwittingly stepped into the world of pop psychology. My post on the Dunning-Kruger effect was meant as a humorous aside from my main work in political economy. Instead, that piece became my most-read post ever — pretty much dwarfing everything else I wrote in 2022. It’s an interesting demonstration of what drives attention on the internet.
Download: PDF | EPUB In November 2021, I wrote a post called ‘The Truth About Inflation’. At the time, inflation fears were heating up. And as usual, mainstream economists were missing the bus. Sure, economists pointed to the consumer price index and said, “Look, it’s going up!” But they didn’t look under the hood of this index to see the big picture. Despite what economists proclaim, inflation is not a uniform increase in prices.
Download: PDF | EPUB If an unmarked package arrived at your door, how would you figure out what was inside? The catch is that you cannot open it. As a social scientist, I deal with this ‘black-box’ problem all the time. I (metaphorically) watch people go to work at firms. And I see them come home with income. Then I try to picture the ‘machine’ that gave people money.
Download: PDF | EPUB Are you an aspiring academic? If so, this manual will reveal the secret to maximizing your scholarly output. Follow my advice, and you too can become an academic hyper-producer. The golden rule: Don’t do research Newcomers to the academy typically think that the recipe for success is to ‘do high-quality research’. Nothing could be more false.
Download: PDF | EPUB Environmentalists often argue that if we accounted for the ‘true’ costs of the fossil-fuel business, the industry would go bankrupt. While I understand this sentiment, I think the idea of ‘true’ costs is dubious. Costs exist not because they are ‘true’, but because someone has the power to enforce them. (That’s why Apple can impose a 30% commission on everything in its app store.