I want to learn the basics of economics. Help a brother out.

Okay - will ask - what do serious students of economics think of Paul Krugman?

Ok, it depends. He did a great job in International Economics and Economic Geography. Something good also in macroeconomics, especially international macro. He was quite good in currency crises.

Then, you should consider what he says in his blog. I think he must be very simple in explanations, therefore sometimes he makes bad mistakes.

Anyway, I think he is 70-80% right, and 20-30% wrong.

He is also very selfsure, but someone told me that when he was a graduate student here at MIT he was the smartest. Probably not the one with best grades, but with best insights.

One thing that always fascinated me was the concept of "utils" whereby your purchasing habit governed by how much utility you gain figuring in the price you pay. Can you expand on that? I try to tell my mom about that but been like 30 years so forgot much of it.

It's quite simple. We assume people have certain preferences with some properties. (mainly completeness and transitivity). Then, it is difficult to work with preferences, therefore we assume to have a function u:X->R , such that u(x)>u(y) iff x is preferred to y. That is whenever I prefer x to y then I attach an higher value to x than to y.

Note that utility is only a rank ( it is ordinal : 1st, 2nd ... choice) and not cardinal .

BRG/253: You were hinting at this: our current system in the USA is not a pure capitalist system due to immense government intervention. With that said, even as a libertarian, I'm not sure I'd like to live in a "pure" "completely efficient" capitalist market. It would be absolutely cut-throat.NJ Possible: Even in a quasi-free market, mistakes will be made (think about a pro athlete that signs a big multi-year contract and than doesn't deliver). I can't justify executive's pay (or athlete's pay) and I can't say I'm sure I'd want to tinker with it. In my heart of hearts, I'd like a more flat compensation model where there isn't a huge spread between executive and the rank-and-file. BUT understand the path of an pre-executive and the seemingly "good" work they did with the intention that if they have a career of great work they might get a shot at a corner office/executive suite. That level of compensation drives people to work pretty hard which in turn drives innovation/commerce.On the one hand, it sucks for those of us that aren't as driven/smart that we'll be "stuck" in the middle compensation tier. On the other hand, the economy doesn't drive itself and everyone benefits from better and cheaper products.

NJ Possible wrote:

Thanks, though I was referring to executives being rewarded handsomely regardless of their company's success. Not gov't bailouts, which are a bit outside the normal business cycle. I'm curious what folks who know more think about its impact on a free market. Thanks

BRG/253 wrote:

You need to get your definitions right. Corporate bailouts are not a function of the free market, but acts of government interference in the market. In a proper free market, which we do not have, failed businesses would be allowed to go bankrupt, the incompetent people would lose their positions and competent people would come in and replace them. Our current government policy of rewarding failure definitely does not work (at least if a healthy, rational, successful, fair economy is your standard of success), but you must understand that the problem is caused by government, not the market.

First of all I'm not studying Business Economics, so I am a little bit out of my field.Anyway, there are a lot of professors who try to find something useful in the way bonuses are conceived; especially those in Business Schools.In Economic Depts things are more blurry. My opinion is that there is no clear relation between productivity and pay after a certain point, therefore it could be that bonuses are too high and not so useful.Anyway, ask me about something else. I'm studying to become a macroeconomist, not an expert in salaries and bonuses.

NJ Possible wrote:

Thanks, though I was referring to executives being rewarded handsomely regardless of their company's success. Not gov't bailouts, which are a bit outside the normal business cycle. I'm curious what folks who know more think about its impact on a free market. Thanks

BRG/253 wrote:

You need to get your definitions right. Corporate bailouts are not a function of the free market, but acts of government interference in the market. In a proper free market, which we do not have, failed businesses would be allowed to go bankrupt, the incompetent people would lose their positions and competent people would come in and replace them. Our current government policy of rewarding failure definitely does not work (at least if a healthy, rational, successful, fair economy is your standard of success), but you must understand that the problem is caused by government, not the market.

About Gov't bailout I would say that the worst moments of the crisis started exactly when the Government refused to bail out Lehman.

Ok, there are a lot of concerns about Moral Hazard and so on...

But I think W.Bagehot's adage is still right: lend freely, against any good collateral at penalty rate.

The thing that was missing is the penalty rate. The point is that the Gov't should achieve extremely high profits because of the extremely high cost suffered because of TARP. It's the only way to mitigate the Moral Hazard danger.

But no everyone here thinks like this.

trance dance turn in shawowski wrote:

BRG/253: You were hinting at this: our current system in the USA is not a pure capitalist system due to immense government intervention. With that said, even as a libertarian, I'm not sure I'd like to live in a "pure" "completely efficient" capitalist market. It would be absolutely cut-throat.

There is a recent paper by prof Acemoglu [http://economics.mit.edu/files/8086] about cut-throat capitalism, that basically states that cuddly capitalism economies ( like those in Europe) live thanks to cut-throat capitalism countries like US.

I don't agree 100% with it, but if you want you can read it.

Krugman is the world's worst economist, wrong 100% of the time. His intentions are bad. At best, he's a social climber who takes whatever position brings him the most prestige regardless of the truth. At worst, he is motivated by a hatred of the egoism and induvidualism inherent in capitalism, and is simply out to destroy those things. He's like witch doctor who sticks pins in the minds of his followers, or even a psychopath who murders for kicks. He's a bad, bad guy.

All you need to know right here:

http://ocw.mit.edu/courses/economics/index.htm

Oh yeah, and Paul Krugmann is a SAINT.

a macro guy wrote:

Krugman is the world's worst economist, wrong 100% of the time. His intentions are bad. At best, he's a social climber who takes whatever position brings him the most prestige regardless of the truth. At worst, he is motivated by a hatred of the egoism and induvidualism inherent in capitalism, and is simply out to destroy those things. He's like witch doctor who sticks pins in the minds of his followers, or even a psychopath who murders for kicks. He's a bad, bad guy.

Explain me why. If you studied macro , and I stress IF, you should know that intentions are not interesting. He could have the worst intentions, but if he acts AS IF he didn't , it is not interesting. Friedman docet...

Anyway, this is not EJMR and I'm not interested in discussing about/defending Paul Krugman.

You'll find right wing types who probably haven't read a lot of economic literature trying to say one school of thought is right and the other is wrong. They make blanket statements about economists whose work they haven't really read and label them as socialists. Free market good. Government intervention bad. Things are more complex than this. All that you need is in the MIT open course link.

There is also Coursera, EdX, and Udacity which are mooc carriers that all have free online courses with video lectures if you prefer that.

Here are all of the economics courses available on Coursera:

https://www.coursera.org/category/economics

basic principles regarding supply and demand can explain a lot, this gets more complex as you delve into what exactly makes supply / demand and how it is quantified.

Ex: dumb broad complains about how pro athletes make too much money. this can be explained and justified using basic supply and demand.

1. People like pro football

2. People spend lots of money on football, TV, tickets, jerseys, etc.

3. NFL (main supplier of football) makes lots of money - limited supply / monopoly of the "product" coupled with high demand results in high price/profit

4. Owners/media/League gets a lot of money, but they make so much alot of money is left over as well

5. Players get a lot of money

6. bingo

alot of economics is common sense as well

I agree with your supply/demand chain regarding pro athletes (though I'm not sure if its directed at my comment earlier which was in regards to a "dud"-athlete that gets signed and doesn't perform).I'm going to parallel your chain for executive-pay for discussion purposes:1. People like products/consuming2. People buy products3. Corporations make lots of money selling products4. Owners (generally shareholders not necessarily executives/CEO) like that their corporations make money and hire management to expand business. #. I would add: a limited pool of candidates with the business knowledge/desire/competency to run these corporations (#or at least give the shareholders/board members the impression that they can#)5. High demand from corporations of skilled leader + limited pool of candidates = highly compensated executivesExceptions are many (corporate favoritism/politics/nepotism) but they do not disprove the general theory.

econmist wrote:

basic principles regarding supply and demand can explain a lot, this gets more complex as you delve into what exactly makes supply / demand and how it is quantified.

Ex: dumb broad complains about how pro athletes make too much money. this can be explained and justified using basic supply and demand.

1. People like pro football

2. People spend lots of money on football, TV, tickets, jerseys, etc.

3. NFL (main supplier of football) makes lots of money - limited supply / monopoly of the "product" coupled with high demand results in high price/profit

4. Owners/media/League gets a lot of money, but they make so much alot of money is left over as well

5. Players get a lot of money

6. bingo

alot of economics is common sense as well

DoctorWatts wrote:

Have you actually read this yourself or are you just posting something you found through google? I don't mind either way, I'm just curious. This looks like it could be a good place to start based on the reviews.

Read it. The great thing about this book is that it starts you off understanding that economics should MAKE SENSE. That way when you encounter bullshit, you'll be aware right off the bat that it's bullshit.

Check out the Mises institute online! some great stuff about Austrian economics

http://mises.org/page/1443/What-is-Austrian-Economics

Thanks for sharing, I read through the first few pages, it looks interesting. We have a difference of definitions regarding "cut-throat." On a relative basis, I'll agree with the paper's authors that the USA is more capitalist ("cut-throat") than Swed/Finl/Norw/Swit.On a absolute basis, my definition of "cut-throat" capitalism doesn't look like the USA as the USA has: state-intervention, welfare, minimum wage, employment laws, state-project-funding, etc.All this talk of cut-throat; remember when M.Centrowitz did the throat-cut gesture at the end of a race while at Oregon? That was sick.

MIT_graduate wrote:

trance dance turn in shawowski wrote:

BRG/253: You were hinting at this: our current system in the USA is not a pure capitalist system due to immense government intervention. With that said, even as a libertarian, I'm not sure I'd like to live in a "pure" "completely efficient" capitalist market. It would be absolutely cut-throat.

There is a recent paper by prof Acemoglu [http://economics.mit.edu/files/8086] about cut-throat capitalism, that basically states that cuddly capitalism economies ( like those in Europe) live thanks to cut-throat capitalism countries like US.

I don't agree 100% with it, but if you want you can read it.

MIT_graduate wrote:

Explain me why. If you studied macro , and I stress IF, you should know that intentions are not interesting. He could have the worst intentions, but if he acts AS IF he didn't , it is not interesting. Friedman docet...

Economics cannot be amoral. Intentions are everything because they define the terms of success or failure. An anti-capitalist egalitarian like Krugman, who is motivated by envy, will say that a given policy "works" if it cripples business and makes it harder for entrepreneurs to make money. His bromides about caring about the welfare of others are thoroughly fraudulent. The policies that he advocates make it much more difficult for businesses to satisfy consumer demands and employ people profitably, blatantly reducing the opportunities and quality of life available to everyone. He is a wealth-hater, like all Keynesian pseudointellectuals.

Sweet Nell Fenwick wrote:

Definitely read Economics In One Lesson by Henry Hazlitt before delving into anything involving economic calculation or mathematical modeling such as econometrics.

Here it is in PDF:

http://c457332.r32.cf2.rackcdn.com/pdf/books/Economics_in_one_lessonOCR.pdf

Here is a .doc version you can load and convert to a format for your phone.