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Essays - Magic Money, and More - for Today!

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This page is now color-coded for items Annie thinks may help bring general readers into an economist's thought-process. She suggests they start by reading the blue texts, highlighted in yellow, and following the links if they wish.

 

The "Magic..." essays were inspired by questions and comments from friends and neighbors about government policy during the pandemic. Annie used to teach this sort of fun stuff! If you think the pandemic is over,

you are welcome to limit your attention to the discussion of today's challenges, per the color-coding.

Most of these essays are for general readers - little or no economics required.

The Book Review - Essential Adam Smith, below - is background information about Adam Smith,

the so-called father of modern economics,

by an eminent author (not by Annie). All Annie did was review the book.

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Book Review: The Essential Adam Smith -see link below


What He Said May Not Be What you Think

Annie's first foray into presenting complex economic ideas to creative artists resulted in the essay at the link above. One page wasn't enough. More pages added below.

The History/Herstory page on this website puts these ideas into a larger historical context

Annie learned Economics in graduate school at the University of Maryland, College Park (near Washington, DC). General readers may not know that there are many sub-specialties in Economics. So, here are a few ways in which Annie's writing crosses specialties:

International Economics - Empirical validity of the Prebisch-Singer hypothesis explained. Suggest we challenge mercantilism on the part of large businesses, as well as large countries. Suggest we recognize the difference between the theory of comparative advantage and modern trade practices.

Economics of Emerging Markets - Candidate offered for the moment of "take-off." (Explaining why some countries grow but others don't has eluded many! See Foreign Affairs, January 2020 - The Future of Capitalism.)

Global Dualism, a.k.a. inequality, explained, by INDUSTRY, not by country. Suggestions offered, for effective policies to counter this "natural" tendency in market systems, as currently structured.

Labor Economics - Conundrum explained - high average wages in cities, but little regional variation in wages, for workers of similar socioeconomic status. Conundrum explained - why cities grow, long-term - using economic theory rather than the "gravity model." Conundrum explained - education-biased technological change, along with wealthy internet gurus having little more than a high school education.

Rural and Urban Planning - Conundrum explained - there are many public services in wealthier regions, but fewer in poorer regions. Suggest relaxing requirement for constant coefficients in Input-Output models.

Comparative Economic Systems - The "Stockholm School" and non-equilibrium economics modeled successfully, with a role for what is lost as well as a role for what is gained. Suggest intersectoral discussion and coordination rather than top-down planning (which latter was a major component in the collapse of the Soviet Union).

The Micro-Foundations of Macroeconomics - Role for money, in a model that falls traditionally in (non-monetary) microeconomics, explains how inequality increases under current institutional structures in market systems.

Behavioral Economics - Explains the role of incentives in buying, selling, and making rules. Reminder that Adam Smith warned against allowing "dealers," that is, commercial business leaders, to make the rules.

Economic Growth Theory - Explains the development of inequality over time in free-market systems, and the lack of "trickle-down." Explains how this process falls under the radar of mainstream economic modeling.

Economics of Public Policy - reminds politicians that there are more important matters than cost-benefit analyses, or economic growth. Adam Smith's "Invisible Hand" was never intended to operate in an ethical vacuum. See this page - Book Review - The Essential Adam Smith)​.

Magic, Money and the Pandemic

The "Magic..." essays were inspired by questions and comments from friends and neighbors about government policy during the pandemic. These essays address monetary policy (central banking and the Fed), fiscal policy (government budgets), fiat money (including dollars and bitcoin), and inflation (price-level changes). They present accepted teachings in economics, for the general reader, with a few thoughts on the pandemic and its challenges tossed in.

Do you know that modern financial systems often encourage both debt-financing and avoidance of financial crises, by "creating" money?

See also essays on basic

economic concepts for general readers, above

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Magic Growth and the Path of Change

These essays, for general readers, are based on accepted teachings, Annie's research, and Annie's reading on contemporary matters. Each essay includes a brief section explaining how it might differ from convention, if it does.

How do we feel about cuddly robots given to children and seniors, to help meet their needs? Perhaps robots are better than nothing, but is it OK, really?

The discussion of farm incomes, poverty traps, and differences in regional growth rates, on pages 34 to 43, in both the link above and that below, may be understood by non-economists.

Annie's "Model" and Today's Challenges

As news reports become more disturbing, Annie invites you to understand and reflect on the implications of her "model" 

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More - 

Annie made a couple of numerical examples to illustrate her model. If you understand graphs, you should see from the figures at the blue link (left) what her theory implies. She could be wrong. She hopes you will think for yourself.

Annie's examples are typical of graphs you might see in a Principles of Economics textbook, illustrating a point. However, Annie's point is different from what is customarily presented in beginning economics textbooks. If you are a real, serious economist, please see the summary column of conundrums explained, at the top right of this page. You will see, there, why you need to take Annie's model seriously.

The second link at left - The Fighting Fed - discusses a banking dilemma. Different industries face different challenges; helping some may occur at the expense of others, contrary to Adam Smith's ideal.

 

Annie's "tweaks" to current policy recommendations may be found in the Theory and Reality series of essays; in particular at the end of the "Q and A - Theory and Reality" essay.

Summary:  Annie calls the two sectors in her model “money-magnet” industries, and “resource-losing” industries. [That's industries, not countries.] They each benefit more, or less, from global economic policies, because they each face a different financial environment. We might wish to treat them differently - different market-based policies might be appropriate for each - just as different human beings, facing different environments, benefit differently from them.

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