Debunking Economics - the podcast

Even the most ardent free marketeer accepts that there is some degree of subsidy needed to support low income earners or necessary industries that are not commercially viable. This has particularly been the case through the pandemic. But what’s the best way of applying these subsidies? If you pay directly to companies will you be inhibiting efficiencies and competition. If you pay directly to cons...

From day one economics students are taught that their discipline is all about the optimal allocation of resources. The concept of scarcity is at the very heart of how we are supposed to think. And yet, as Prof Steve Ken explains this week, that scarcity doesn’t really exist. There’s plenty of people available to do jobs, there’s masses of untapped energy potential from the sun. This challenges the...

Canada and the west coast of the US have been hit with extreme heat the last week. The town of Lytton in British Columbia reached 49.5C, the result of a heat dome caused by static high-pressure. It’s another reminder that the world has to act on climate change. This week the ECB’s Christine Lagarde talked about how the EU needs to see around €330 billion every year by 2030 to achieve Europe's clim...

Businesses and politicians have worked tirelessly to reduce the power of workers and dissemble unions. Of course, nobody was better at it than Margaret Thatcher. But has she, and all those did their damnedest to reduce the power of unions, actually done the country a disservice? Do economies function better with strong unions? Are they the necessary counter to a system that allows companies a...

Boris Johnson has enjoyed photo opportunities this week with Australian Prime Minister Scott Morrison with the announcement of an ‘in-principle’ free trade agreement between the two countries. It’s the first new one for the UK outside those that already existed through the EU. Great news for biscuit eaters, because Tim Tams are so much better than Penguins. But it’s seen as bad news by UK farmers...

The world is fixated with the present. We want to earn money quickly and spend it quickly. CEOs don’t care about much beyond their stock options, politicians only work to getting re-elected, consumers want instant gratification. It’s no wonder then that we’re not prepared to make compromises for long term consequences, like climate change, because the economic system we use has no way of managing...

Today on the podcast Phil Dobbie talks to Steve Keen about the value of things. Supposedly, price is a substitute for value, meaning if someone is prepared to pay more for something then they must value it more. But as they discuss, that only applies if everyone has the same amount of money. A poor household will place greater value, as a proportion of their wealth, on heating their home. A rich h...

US inflation is now running at 4.2% on an annual basis, and producer prices the world over have been rising as input costs for product creep up. How much of this will be passed on to the consumer as companies struggle to absorb these costs – and what impact will these higher prices have on demand? Central banks are all toeing the same line, that rising inflation is only transitory, driven by suppl...

This pandemic has been massive amounts spent by governments, and a chunk of that government debt is being bought by central banks. But with central banks buying up government bonds, whilst maintaining low interest rates, who is really benefiting? The answer, of course, is the wealthy. This week Steve Keen explains why the current situation is widening inequality, with the central banks at the fron...

There seems to be an assumption by many that the crisis we have experienced will quickly bounce back. Output will resume, demand will return, everyone will be back in work and the economy will rapidly expand back to where it was before COVID. Central banks appoint to supply chain disruption in the short term that might create transit inflation, but that’s the only obstacle to the road to recovery....

There’s one clear difference between this recession and almost all those that have gone before. This time there was a pandemic involved, which hit demand and supply equally. So are there any similarities between this global recession and those that have gone before. Phil Dobbie puts the question to Steve Keen in this latest Debunking Economics podcast. Hosted on Acast. See acast.com/privacy for mo...

40 world leaders go together virtually this week, for a bit of an impromptu climate summit called by Joe Biden, before the next big climate conference (COP26) in Glasgow in November. In this edition of the Debunking Economics podcast, Phil Dobbie asks Steve Keen whether Bill Gatesd has the right approach. He advocates removing the green premium. His argument is, we don’t choose zero carbon em...

Janet Yellen has repeatedly called for countries to raise their corporate taxes, so they are in-line with the increases she has planned for the US. There’s also been a call for companies to be taxed where they earn their revenue, rather than declaring profits in countries where tax is lowest. Her reasoning is transparent, of course. She wants to raise corporate taxes in the US and doesn’t want cou...

You might have thought that digital currencies were the domain of cryptocurrency evangelists, and were largely stores of wealth rather than money used for transactions. Now, it seems, central banks everywhere are investigating digital currencies as part of their modus operandi. Most money in central banks is digital, of course, so when they discuss digital money what exactly are they talking about...

Last week we looked at how economics text books that taught us the law of demand, and how fundamentally flawed it was. Today, equally as useless, the law of supply, with the supply curve representing the marginal cost of producing goods. Steve explains how its is flawed because of the assumption that as you produce more of something the cost of production rises. Phil asks, how does that relate to...

Steve Keen believes the way we look at economics is wrong from the ground up. Take the demand curve, for example. It shows how, when prices fall demand goes up, and vice versa. Whilst it works at an individual level, but attempts by theoreticians to demonstrate that this works at the aggregate level have all failed. In this episode we look at the Sonnerschein-Mantel-Debreu theorem, which looks at...

Post Brexit we were promised a global Britain. It’s got off to a bad start with a massive fall in exports to the EU in the first month of this new utopia. Meanwhile, there seems to be a lot of talk about Britain accepting inward investment, in particular encouraging foreign firms to list on the London stock exchange. This week Phil Dobbie discusses the various types of foreign trade, from inward t...

The UK chose to respond to a global pandemic by reducing the amount of money given in foreign aid. Yet COVID-19 is attacking every country in the world. So is climate change. And there will be other viruses to come. For example, Ebola is reported to be out of control in West Africa right now. It is not as infectious as COVID-19, but its fatality rate is way higher (maybe as much as 50 percent). So...

The UK won’t see an end to lockdown measures until July, but after that the hope of many is that the economy will bounce back quickly. The Bank of England governor has called it a coiled spring. Many are comparing it to the roaring twenties. Part of the reason for this optimism is the argument that many people in the country have saved money during the lockdown, because they haven’t been able to s...

Australians can no longer turn to Facebook for news. From today they have banned Aussies from posting links to news sites on their platform, or for Facebook users anywhere linking to Australian news content. Australian treasurer Josh Frydenberg says these actions demonstrate that the big social media players wield too much power and control. Facebook has taken this stance because they don’t believ...

In 2019 Greta Thunberg spoke to politicians at the UN Climate Week, saying they were promoting fairy tales of eternal economic growth. The next year we saw GDP in advanced economies fall by around five percent. Was this a win for the green movement? James Strain, a Debunking Economics Podcast listener, suggested we talked about the need for de-growth. He said, “It seems to me that this is imp...

There was a bit of argy-bargy on the share markets in America last week, when a bunch of day traders set to take on Wall Street, particularly the hedge funds who were shorting stock on Gamestop, amongst others. Were the day traders the bad guys in this scenario? Did the retail traders know what they were getting themselves in for? In this episode Prof Steve Keen suggests maybe the Robin Hood retai...

Remember a time when central banks pretended to be independent, insulated from day-to-day politics? That had all but disappeared before COVID, but the pandemic was the final nail in the coffin of central bank independence. Instead, they have been colluding with governments to provide the mechanism to issue more public sector debt. Monetarism can’t resolve this crisis, so central banks’ usual tools...

Last weekend, Lord Sumption, was talking about why a lockdown harms everyone when the virus mainly ills people who are old or who have with debilitating conditions. He suggested we shouldn’t have lockdowns, because the lives lost were of less value than the rest of us. He isn’t the first to suggest that some lives are worth more than others. In fact, he argues we place a value on human life to det...

One big problem as we emerge out of the COVID crisis is, even if we have money we’ll be reluctant to spend it. So, how can the government get us to step up our spending? The answer, perhaps, lies in Austria in the 1930s, when the Mayor of Wörgl issued his town’s own currency, with built in demurrage. Could a new, parallel currency be the way to increase the velocity of money and help the economy b...