nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2023‒04‒03
five papers chosen by
Karl Petrick
Western New England University

  1. Objectivity in Economics and the Problem of the Individual By Davis, John B.
  2. The Key to Managing Inflation: Higher Wages By Fix, Blair
  3. Has the Time Come for Excess Profit Taxes? By Shafik Hebous
  4. Going Green: Estimating the Potential of Green Jobs in Argentina By Manuela María Cerimelo; Pablo De la Vega; Natalia Porto
  5. Slavery and the British Industrial Revolution By Heblich, Stephan; Redding, Stephen J; Voth, Hans-Joachim

  1. By: Davis, John B. (Department of Economics Marquette University)
    Abstract: This paper addresses objectivity in economics. It criticizes a closed science, ‘view from nowhere’ conception of economics and defends an open science, ‘view from somewhere’ conception of objective science. It ascribes the first conception to mainstream economics, associates it with its principle practices – reductionist modeling, formalization, limited interdisciplinarity, and value neutrality – and argues their foundation is the Homo economicus individual conception. Two problematic consequences of adopting this stance are: (i) value blindness regarding the range and complexity of human values; (ii) fatalism regarding human behavior associated with employing a tenseless representation of time. The paper contrasts the principle practices of an open science, view from science conception – complexity modeling, mixed methods, strong relationships to other disciplines, and value diversity – and argues their foundation is a socially and historically embedded economics individual conception that avoids the value blindness and fatalism problems.
    Keywords: objectivity in science, science practices, Homo economicus, value-blindness, fatalism, science bubble
    Date: 2023–03
  2. By: Fix, Blair
    Abstract: For the last few months, I’ve been diving into the economics of inflation. In this post, I’m excited to review some forgotten history. Our journey starts with a basic question: what is the key policy tool for managing the rate of inflation? According to mainstream economics, the key tool is the rate of interest. Hike this rate, economists argue, and you will cool an overheated economy, solving the problem of inflation. As you probably know, I don’t think much of this idea. (Criticism here and here.) And so I’ve been looking for alternative theories of inflation management. After months spent in the library stacks, I’m happy to report that I’ve discovered some lost theory. During the mid-20th century, it seems that while most economists were jumping on the interest-rate bandwagon, a few researchers went in the opposite direction. They proposed that inflation could be treated with a dose of wage hikes. Needless to say, this alternative theory remains virtually unknown. And on its face, it seems absurd. But as I’ll show, the wage-hike approach is strongly supported by evidence. Using standard economic tools, I find that rapid wage growth tends to be followed by a drop in inflation. The message? Policy makers should reverse course. Instead of greeting inflation with a dose of interest-rate hikes, governments should reach for the wage-rate lever. Hike wages as fast as possible, and you will surely reduce inflation.
    Keywords: inflation, wages
    JEL: E31 J3
    Date: 2023
  3. By: Shafik Hebous
    Abstract: Excess profit taxes (EPTs) emerge as an option to contribute to the extra needed revenues, avoiding a general increase in corporate tax rates, while having the prospect to serve as a gateway to converge toward a permanent efficient rent tax in lieu of the corporate income tax. General unilateral (temporary or permanent) EPTs would face the same international pressures from profit shifting and tax competition as the existing corporate income tax, calling for international coordination. A coordinated EPT on multinational enterprises can take the form of a formulary apportionment approach that allocates the EPT base using sales by destination.
    Date: 2023
  4. By: Manuela María Cerimelo; Pablo De la Vega; Natalia Porto
    Abstract: This paper aims to identify and characterize the potential of green jobs in Argentina, i.e., those that would benefit from a transition to a green economy, using occupational green potential scores calculated in US O*NET data. We apply the greenness scores to Argentine household survey data and estimate that 25% of workers are in green jobs, i.e., have a high green potential. However, when taking into account the informality dimension, we find that 15% of workers and 12% of wage earners are in formal green jobs. We then analyze the relationship between the greenness scores (with emphasis on the nexus with decent work) and various labor and demographic variables at the individual level. We find that for the full sample of workers the green potential is relatively greater for men, the elderly, those with very high qualifications, those in formal positions, and those in specific sectors such as construction, transportation, mining, and industry. These are the groups that are likely to be the most benefited by the greening of the Argentine economy. When we restrict the sample to wage earners, the green potential score is positively associated with informality.
    JEL: E20 Q50 J80
    Date: 2022–11
  5. By: Heblich, Stephan (University of Toronto and NBER); Redding, Stephen J (Princeton University, NBER and CEPR); Voth, Hans-Joachim (University of Zurich, CEPR and CAGE)
    Abstract: Did overseas slave-holding by Britons accelerate the Industrial Revolution? We provide theory and evidence on the contribution of slave wealth to Britain’s growth prior to 1835. We compare areas of Britain with high and low exposure to the colonial plantation economy, using granular data on wealth from compensation records. Before the major expansion of slave holding from the 1640s onwards, both types of area exhibited similar levels of economic activity. However, by the 1830s, slavery wealth is strongly correlated with economic development – slave-holding areas are less agricultural, closer to cotton mills, and have higher property wealth. We rationalize these findings using a dynamic spatial model, where slavery investment raises the return to capital accumulation, expanding production in capital-intensive sectors. To establish causality, we use arguably exogenous variation in slave mortality on the passage from Africa to the Indies, driven by weather shocks. We show that weather shocks influenced the continued involvement of ancestors in the slave trade; weather-induced slave mortality of slave-trading ancestors in each area is strongly predictive of slaveholding in 1833. Quantifying our model using the observed data, we find that Britain would have been substantially poorer and more agricultural in the absence of overseas slave wealth. Overall, our findings are consistent with the view that slavery wealth accelerated Britain’s industrial revolution.
    Keywords: slavery, industrial revolution, trade, nance JEL Classification: J15, F60, N63
    Date: 2023

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