Recently, California’s legislature decided that by 2022 the state’s minimum wage will rise to $15 from currently $10. A number of cities, including San Francisco, have already started hiking their own minimum wage. Thus, a Harvard-linked study of the effects of these regional minimum wage hikes on restaurant closures met with great media interest in California and beyond. The popular anarcho-finance website Zero Hedge titled “Harvard Shock Study”. Breitbart found its own anti-elite twist with the headline “Harvard Research: Minimum Wage Hikes Put Non-Elite Restaurants Out of Business”. We take a closer look at the findings of the study.
On Monday the World Bank made it official that Paul Romer will be the new chief economist. This nomination can be seen as a big step back toward the infamous Washington Consensus, which World Bank and IMF seemed to have left behind. This is true, even though Paul Romer has learned quite well to hide the market fundamentalist and anti-democratic nature of his pet idea – charter cities – behind a veil of compassionate wording.
Presentation for the seminar “Economics and Power” on 23 March 2015, House of Lords, London: Ladies and Gentlemen, To pay tribute to the Marxist jargon, in which Lord Skidelsky has phrased the title of my subject, I would like to start with a quote from Karl Marx: “The ideas of the ruling class are in every epoch the ruling ideas. … The ruling ideas are nothing more than the ideal expression of the dominant material relationships, … the relationships which make the one class the ruling one, therefore, the ideas of its dominance.” In my own words, that means that not all economic ideas are created equal.
Fabian Lindner of the German macro-economic research institute IMK has submitted a very timely and well-argued piece to the World Economic Reviw: “Does Saving Increase the Supply of Credit? A Critique of Loanable Funds Theory”. He takes on influential theses of luminaries from Larry Summers, over Ben Bernanke to Hans-Werner Sinn by tracing them back to the loanable-funds-fallacy – a fallacy which still rules standard textbooks. His main proposition is simple and not refutable: firms and economies do not operate at full capacity. All research and surveys show that