I enjoy reading economist Greg Mankiw because he often makes conservative political views understandable for me — even if rarely agreeable. He misses the mark completely in a recent NYTimes opinion on competition between governments. I am especially astounded how the counter-arguments are right there in his own article, but he fails to notice them. Let me start with his main statement:

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The Guardian has a very informative article on how supermarkets have taken over the country (in this case of course the UK), virtually wiping out small shops and changing communities for the worse. Some of the numbers:

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Via Chris Bertram on Crooked Timber I read an article by David Graeber, a social anthropologist, called „On the Invention of Money – Notes on Sex, Adventure, Monomaniacal Sociopathy and the True Function of Economics“. It is sufficiently long to really cover all these topics, and I agree with Bertram that it is „one of the most informative and entertaining pieces I’ve read in a long while“. Do read the whole thing!

The core argument is about how money came to be — which in most economic textbooks is explained as a logical development from a barter trade system, where you have to find somebody with a complementary need and offer in the marketplace. But this assumption about our economic past is soundly refuted by actual anthropological and historical research. It is very fascinating to follow the research as to what are actual probable pathways to money usage. And how economic activities were organized before that tells us a lot about how the economic system shapes even deep-rooted human qualities. The bottom line there is that behavior in accordance with „Homo Oeconomicus“ models probably only really came about after markets were invented. And it is because economists cannot (or don’t want to) imagine a human being with different ways of decision-making that they persist on the „money developed from barter trade“ myth despite solid evidence to the contrary. This is, again, in the service of not acknowledging the own status as a „reflexive“ social science which not only describes but also strongly influences human behavior and social processes.

So, first of all, how did people go about their business before money was around?

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Following my economic observations and reflections on Development Aid here in Tanzania, I did some reading on microcredit, which seemed to me now maybe one of the most sensible things to do to stimulate development. My first-hand impression of some other obvious choices has not been very good so far — I am quite doubtful of the real-life benefit of the secondary education the students get in the school I am teaching in, for instance.

The articles I found convinced me that I wasn’t wrong entirely thinking microcredit could help. But there’s a big BUT, or a number of them actually. An article in the New Yorker from 2008 titled What Microloans Miss provides a very readable introduction, but my primary source is an article called Microfinance Misses Its Mark from Aneel Karnani, published in the 2007 issue of the Stanford Social Innovation Review. It says that, first of all, microcredits help the not-so-poor better than the poorest:

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Special thanks to Matze for pointing me to the first ever (even though humorous) example of something I have been asking and looking for for a long time: In allusion to the „Reflexive Social Psychology“ I had the pleasure to attend with Heiner Keupp in Munich I’d like to call it „Reflexive Economics“.

The idea is to, as a social scientist, be aware of the impact of one’s theorizing in the „object“ studied, and also of the fact that you are subject and object of your theories at the same time, because as a social (and in our times also unavoidably economical) being you are always also explaining your own behavior. Let’s have more of that, and more serious!

But this is a good start. The topic chosen as a humorous exercise in the article by Ariel Rubinstein titled „Freak-Freakonomics“, published in Economists’ Voice in 2006, is the hugely popular 2005 book „Freakonomics“ by Levitt and Dubner, which I partly read and (I think like Rubinstein) both enjoyed and felt a little uneasy about.

Let’s start with his definition of the problem of lacking reflexivity:

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One thing that living in a poor, rural part of Africa certainly does change is my perspective on economy. While I feel confident to say that the huge majority of things on sale in Germany, the US, or most of Europe don’t do much to improve people’s well-being or happiness (and many probably make it worse, at least if you take into account the work done to pay for them, and their effect on the environment) things are very obviously different here.

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Thanks to Matze, I finally ended up reading an article which I’m sure I had opened before but couldn’t remember anything from, I suppose it was a victim to one of my old laptop’s many out-of-battery shutdowns. It’s „Golden Oldies (Wonkish)“ by Paul Krugman, who I usually enjoy reading but find slightly too absorbed in contemporary economic policies. Not so this time, where he deals a blow to contemporary Economic Science that in most part applies to other social sciences as well, especially Psychology.

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After recently meeting a bunch of people who have to go without meals frequently, I was naturally very interested to read an article on reasons and solutions for world hunger, by two researchers from the „Abdul Latif Jameel Poverty Action Lab, or J-PAL“ at the MIT, which is an excerpt from a recent book they wrote.

After some more illustrative than enlightening back an forth on the „hunger-based poverty trap“ (poor people cannot eat enough to be strong enough to earn enough to eat enough) and examples of how poor people make choices that cause malnutrition themselves (spending money on tasty but little nutritious food or on non-food luxuries, mostly entertainment and drugs) they get to the point, and a quite interesting one. Here are some of the central ideas.

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Greg Mankiw points to an interesting disagreement among high-profile blogging economists about whether it is possible to tax rich people who don’t consume very much (or who consume the same before and after the tax), or more precisely who actually pays if you do.

As I had previously tweeted, I was quite surprised by Joseph Stiglitz‘ remark that in his opinion there are some convictions that all serious economists should share: „resources are limited, incentives matter“. The context was that he didn’t agree with what many other distinguished economists held should be supported by everybody in the profession. Now, the problem with this greatest common denominator of his is that it is barely more than what I remember from a textbook as the definition of the discipline as being concerned with scarcity.

Is the situation of economics really so dire that after decades of science dealing with numbers from complete (non-inferential, every psychologist’s dream) real-world datasets, basic public policy issues are still in the realm of ideology? It seems so. Now, before (as usual …) arguing for a constructivist turn, let me put some of the central irreconcilable statements side by side:

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Greg Mankiw points to four economists‘ interpretations of the old Christmas story of Ebenezer Scrooge. The first one, by Paul Krugman, does not really talk much about Scrooge at all, but is an interesting read for it’s coverage of systematic media manipulation by the Political Right in the US (demonstrated on the issue of an allegedly expanding government workforce under President Obama).

The second, by David Henderson, stays closer to the story, and tries to make an interesting point. The claim is that increasing government welfare is actually the „scroogeish“ thing to do, contrary to what many would think at first, and that it is individual charitable giving that follows the true spirit of Christmas. These two approaches are polarized as coercion vs. compassion. I’m blogging about it because I think it is a recurrent theme in discussions, and maybe one issue where political „left“ and „right“ are truly separated by contradicting perspectives.

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