First Event of the Year: Economics for Real People

Seminar 1: Economics for Real People

Have you thought that economics seems divorced from the real world?  In next Tuesday’s presentation and discussion, we’ll look at the importance of economic ideas.   John Maynard Keynes said that…

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

We will be taking a brief look at who those economists were and how their ideas have shaped societies over the last few centuries.  What are some general principles that we can use to asses the merits of these ideas?  We will also have some tips to help those new to university survive economics and more…

Date: Tuesday 30th March

Location: UOA Business School OGG

Room: B5 260-051

Time:6pm

Entry is Free

Great Myths of the Great Depression

Students today are often given a skewed account of the Great Depression of 1929-1941 that condemns free-market capitalism as the cause of, and promotes government intervention as the solution to, the economic hardships of the era. In this essay based on a popular lecture, Mackinac Center for Public Policy President Lawrence W. Reed debunks the conventional view and traces the central role that poor government policy played in fostering this legendary catastrophe.

Read more here http://fee.org/wp-content/uploads/2008/12/greatmythsdepression2008feemcppfinalweb.pdf

Global Debt Crisis

http://mises.org/daily/4151

With all the attention being focused on whether or not there will be a sustainable recovery in 2010, the potential for a wave of sovereign-debt crises following the wake of the global recession has just recently started to appear on people’s radar screens. Yet, such a wave should not be surprising.

As historical research conducted by University of Maryland economist Carmen Reinhart and Harvard University economist Kenneth Rogoff shows, financial crises are usually followed by government-debt crises. This starts as private debt is shifted onto the balance sheet of the government, through bailouts and purchases of toxic debt. The government-debt problem is then made worse as the economic downturn leads to an increase in expenditures in the form of unemployment benefits and stimulus spending, coupled with a decrease in tax revenues.

Not only does this historical trend align with the American experience in the aftermath of the financial crisis, but it is being replicated in Europe and Asia too. It makes us painfully aware of some of the costs of Keynesian fiscal stimulus, and it clearly displays how a short-run fix turns out to be a long-term problem. The Keynesian long run will dawn upon us much sooner than mainstream economists believe.

So far the looming sovereign-debt crisis — i.e., the series of fiscal crises around the world leading to calls for restructuring of public debt and to the potential of outright defaults — has made itself felt most strongly along the periphery of the world economy, not the least along the rim of the European Union. It has been at the forefront of political events in Greece.

CNBC recently published a list of the top ten government-debt issuers most likely to default, that is, countries with the highest sovereign-credit risk. Topping the list is, perhaps not surprisingly, Hugo Chavez’s Venezuela. Further down the list we find (in descending order of how likely they are to default), Ukraine, Argentina (where the Kirchner government recently made a move against its own central bank, and is on a fast path toward the third debt crisis in two decades), Pakistan, Latvia, Dubai, Iceland, Lithuania, California (which, alarmingly, has a 19-percent likelihood of defaulting, according to this ranking), and, of course, Greece, which has been at the center of media attention for the last few weeks.

Smells Like Bacon