I have just accepted an offer to become Head of the School of Economics, History and Politics at Kingston University in London. I will take up the appointment in time for the Autumn term, which starts on September 23rd.
Kingston will respond positively to calls from students for genuine reform of economics education—like those made by the Post-Crash Economics Society in Manchester, and the International Student Initiative for Pluralism in Economics (which was launched only days ago).
These student calls for genuine reform are timely, because though there are some initiatives for reform, academic economics has, if anything, become more hostile to criticism of the mainstream and to presentation of alternative perspectives than it was before the crisis.
And good on them for it! Academic economists are ignoring or minimizing the need for change, just as they did 40 years ago when I was one of the revolting students. So students are taking their demands to hear other stories read from other than the Neoclassical songbook to the streets–and the web and newspapers.
Today 42 different student groups around the world have launched the “International Student Initiative for Pluralism in Economics”. They have penned an Open Letter on the need for pluralism, which will be published in a number of newspapers today–May 5th 2014. The opening paragraph of the letter is (with two points highlighted in italics):
Last week I showed that Australia’s net government debt to GDP ratio is nothing to panic about when compared to the rest of the world. We’re currently at under 12 per cent, whereas most OECD nations have ratios of 50 per cent and above.
But maybe that’s one reason Australia’s economy is relatively strong.
I also showed that most countries aren’t like businesses in that most countries have a net negative equity position — their liabilities exceed their assets — which is a situation that would have most companies on their way to being declared bankrupt.
This is a talk about what the economic consequences could be of Australia’s ambition to achieve a permanent government surplus of 1% of GDP. I present a very simple Minsky model in which banks lend money to the private sector, and the government both spends and taxes the private sector. I then explore 4 scenarios: a balanced budget; a permanent surplus of 1% of GDP with no change in bank behavior; a permanent surplus of 1% of GDP with a significant increase in bank lending; and a permanent deficit of 1% of GDP. The results are not what proponents of government surpluses expect.
Ask any politician if governments should run surpluses and the answer is likely to be a resounding yes, with the rationale being that governments should “live within their means”.
Precisely this reason was given by the Australian National Commission of Audit, which has been charged by the Abbott government with the task of suggesting ways to rein in government spending. Its first report gave as the very first of its “Principles of good government” the mantra that governments should:
Live within your means. All government spending should be assessed on the basis of its long-term cost and effectiveness and the sustainability of the nation’s long-term finances (Executive Summary, National Commission of Audit).
I’m speaking at two events this weekend:
Northside Forum: “THE AGE OF ENTITLEMENT IS OVER” So claims our Treasurer, but for whom?:
Saturday May 3rd, 12-2pm, Function Room at the Union Hotel, North Sydney, 271 Pacific Hwy, North Sydney 2060
The launch of Geoff Davies’ book Sack the Economists:
Sunday, 4th May 2014, 3:30 for 4 pm, Gleebooks, 49 Glebe Point Road, Glebe NSW
Follow the links above to book a place.
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In his latest blog, Paul Krugman slings off at non-mainstream economists — and the students at Manchester University campaigning for change to the economics curriculum — for wanting fundamental change in economics. paraphrasing his argument, it is:
No need for change, boys and girls: mainstream economics has everything under control. We missed the crisis just because we failed to observe the shenanigans in the shadow banking system. Once we realised our observational errors, we had all the necessary tools and knew what to do (oh, and what the rebels said would happen didn’t anyway, so there!). The status quo is fine: move along folks, nothing to see here…
Professor John Komlos has just released a new textbook on economics which breaks away from the mold of producing clones of Samuelson’s genre-defining opus. Its title is “What Every Economics Student Needs to Know and Doesn’t Get in the Usual Principles Text”. At a price of $26.55 via Amazon, it is priced to be an affordable supplement to a standard textbook. Given the failings of the discipline that were so vividly highlighted by the global financial crisis, this book is well worth considering as an alternative to the Neoclassical monoculture that dominates economic tuition today.
The following blurb is lifted from John’s website:
I will launch Sack the Economists, by Geoff Davies, on Sunday 4 May (3:30pm for a 4pm start) at Gleebooks, 49 Glebe Point Road Glebe NSW 2037 Sydney. The event is free, but an RSVP is required here or via phone at 02 9660 2333. Following is an edited extract pertaining to Thomas Piketty’s recent best-seller. I hope to see Sydney-side readers of this blog at the launch.]
This is a guest post from Geoff Davies
There is no end of commentary about China’s real estate bubble, with an even split between those who believe it may pop at any moment, and others who argue it never will.
The alternative ploy — that it doesn’t exist — doesn’t get same airing that it did in the US before the subprime crash. Instead, the “it’s a bubble, but it won’t burst” case is that the bubble is too important to China’s continued growth to be allowed to burst, and — unlike the US — China has the wherewithal to keep it going, at least for a while. (See There will be no Minsky moment for China, March 25; China Can’t Afford to Let Its Housing Bubble Pop, January 30;Templeton Braving China’s Housing Bubble, February 28; Chinese Property Sector Will Not Implode Like America’s Subprime Market, March 11.)