(Part 3) Top products from r/Economics

I'd start from reading Economics Help blog. I find it fairly objective and Tevjan writes very clearly. Econlib has very useful library of articles, but overall that website is fairly libertarian in its views. (Not that I'm saying it's bad, but it's useful to know where they are coming from).

As for books, I'd recommend firstly some basic textbooks - you can buy them for cheap used. As for pop science books, I find Naked Economics the best one I've read. It covers the orthodox economics fairly well. As for heterodox Economics and criticism of neoclassical economics, I'd read first Economyths and then How Rich Countries Got Rich and Why Poor Countries Stay Poor. Of course you can read the classical literature of Economics, such as Keynes, Hayek and Friedman, but I wouldn't dwell on them too much as the research has progressed a lot since them. Nobel Prize website has all the nobel prize of economics lectures on their webpage and all of them are worth reading (though some of them are more about finance, than economics) - here are couple of them worth reading.

There are several academic articles (usually working papers) that you can find online easily as well. Best one I can think of currently is Behavioral Economics: Past, Present and Future which summarises the field of Behavioral Economics very well. Joseph Stiglitz keeps a lot of his academic papers on his website for free download as well, so they are worth reading. There is a free e-book online too, that's more so about politics than economics, but still a great read; Dean Baker's Conservative Nanny State.

I'll try add some more resources when I have time.

Edit: P.S. If you are interested, I have a bunch of papers and articles on my computer as well that I can send.
Edit2: IDEAS keeps a list of academic articles on their site, but that will require some effort from your part because you essentially have to use search.

Edit3: If you are into something more specific there are good books about Evolutionary Economics and Complexity Theory, Economics of Knowledge, Economics of Strategy, Economics of Information Age and Economic and Technological History. All of these are excellent books that I recommend and quite beginner-friendly.

You might find Karl Marx a fun read if you're curious. In Capital, vol 1 #3 plays a significant or even primary role in the development of capitalism, which I think is for the most part true.

Another good read is The Mystery of Capital (definitely not a Marxist book) which notes that part of the disparity between the 'developed' and 'developing' world is that there is all kinds of wealth in the developing world that is simply unaccounted for (property rights, for instance), and in a sense, the success of capitalism in the developing world depends on how well capitalism can be exported. You could argue Muhammad Yunus won the Nobel Peace prize for finding a workable way to export capitalism.

This was tailing off by the early 1980s for sure, but it was very much the norm in the 1960s and 1970s for families to be single-earning.

As citation, I give you Elizabeth Warren's The Two-Income Trap.

Your experience with "primary breadwinner" and "part-time" is probably a good illustration of this. Such an arrangement allowed families to get that "little extra", like a swimming pool, or a better vacation, but was not necessary to pay the basic bills.

Keep in mind that the "telephone operator" job that your mother had is gone, and the best comparable job might be call-center worker, for minimum wage.

I would argue that some of the "living inflation" has taken place in direct response to the reduction in public service funding that took place in the late 70s/early 80s. The anti-tax movement was targeting local services. Where I live, in Massachusetts, they took aim at the public sector employees in a big way. What ultimately happened was that public services used to be pretty standard between communities before 1980, but after 1980, due to Proposition 2.5 which actually capped property taxes at 2.5% of the assessed property value in a community, many communities (usually larger urban) had to dramatically scale back services. What happened next was economic flight/sorting based on rationing of services - the people who wanted the good services (primarily schools) fled to the towns that were willing to pay for these services. That resulted in massive differences in property values between communities, which resulted in even more economic segregation.

In Massachusetts, that translates into communities which everyone wants to live in but can't afford, and communities which are very affordable but no one wants to live in them. Families wind up stretching themselves to the point where they are buying $500k houses, for which they need $150k in income to support - and they are unwilling to settle for a $150k house because those communities have lousy schools and copious amounts of poor people (plus brown people to boot).

Paul Heyne's the Economic Way of Thinking is just GREAT. It is the fundamental practical viewpoints to problems of the world through an economic lens. It's a very entertaining book and if you look up Paul Heyne, you'll find all kinds of cool bits of things he has to say.

Also, never forget that Wikipedia is a powerful tool. The article of The History of Economic Thought will give you everyone who has majorly contributed an idea to the discipline, what was surrounding them when they did it.

Never be afraid to ask questions and never be afraid to challenge the models. You may very well create one for yourself that changes everything one day.

The Mystery of Capital by de Soto is one of the best books for understanding legal structures and their place in making capitalism work. He is great at writing so non economists can understand. I always recommend this book to all my non-econ friends.

I'll be wrapping up a B.S. in Economics with a minor in statistics this December.

Books:

• One of the best books that I've found is The Armchair Economist by Stephen Landsburg. It's very low tech. which makes it very accessible with respect to the rest of the subject.
  
• I've heard good things about both Naked Economics: Undressing the Dismal Science and New Ideas from Dead Economists
  
• http://www.amazon.com/The-Armchair-Economist-Economics-Everyday/dp/1451651732/ref=pd_sim_b_2
  
• http://www.amazon.com/Naked-Economics-Undressing-Science-Revised/dp/0393337642/ref=pd_bxgy_b_img_b
  
• http://www.amazon.com/New-Ideas-Dead-Economists-Introduction/dp/0452288444/ref=pd_bxgy_b_img_b
  
• You can get all three of these in a "bundle deal", and this is a great starting point written in laymen's terms.
  
  
  I also highly recommend the Open Course series to develop the fundamental skillset. You can generally get these texts cheap:
  
  
• Intro Micro/Macro: http://ocw.mit.edu/courses/economics/
  
• Money and Banking: http://www.virtualprofessors.com/financial-markets-yale-shiller (Shiller is a very famous financial economist)
  
• As always, the Khan Academy is a great intro resource http://www.khanacademy.org/#microeconomics
  
  
  Blogs are also okay, but be wary of partisan biases. These are what I check daily:
  
  
• Krugman (Left wing biased) - http://krugman.blogs.nytimes.com/
  
• Cowen/Tabarrok (Libertarian biased) - http://marginalrevolution.com/
  
• Scott Sumner (NGDP Targeting biased) - http://www.themoneyillusion.com/ (possibly my favorite)
  
• Greg Mankiw (GOP biased) - http://gregmankiw.blogspot.com/
  
• Karl Smith/Ozimeck (Interesting) - http://blogs.forbes.com/modeledbehavior/
  
• Jodie Beggs (Interesting) - http://www.economistsdoitwithmodels.com/
  
• Becker/Posner (Law and Econ) - http://www.becker-posner-blog.com/
  
• Brad Delong runs a famous blog, and there is never a shortage of highly qualified economists willing to tell you what they think you should believe.
  
  
  
  Ultimately when it comes to econ, there's no perfect substitute for a set of intro micro/macro texts and a university framework. This is contrary to what most pundits/americans seem to believe (seemingly everyone has strong opinions on issues best-explored in an economic framework, no matter how little they've studied it). Also, it's important to note that 98% of what's posted on this subreddit is NOT what economists are talking about. This subreddit is full of news links to stories that promote partisan agendas.
  
  
  
  I'll also warn you that any legitimate study of economics requires a decent handle on math. Through at least half the calc sequence. "Good economists are reborn as physicists, mediocre economists are reborn as psychologists, and bad economists are reborn as sociologists."

Excellent question. I get it. So do these people. And these. And these. And these. And this guy. And this guy. And him. And a bunch of others.

I had the benefit of working on Wall St. for a few years and saw the kind of people running the financial system. The computer scientists were for the most part typical idealistic and/or pragmatic computer scientists. But many of the finance guys were reckless greedy assholes looking to make money by tricking other people out of it, rather than by making or contributing anything of value. For anyone curious, Satyajit Das's book Traders, Guns, and Money provides a good description of who we're bailing out, and why. They're laughing all the way to the bank.

> If nothing else, would you agree that "taxing the rich" is not at all anywhere close to a viable solution to the depth of America's financial predicament?

"Would you agree that 1 thing out of the 23489178 outlandish things the commentator said is true?" Well, maybe, but his credibility is shot already at that point. I won't trust any of his stats after that.

> By the way, those accounting trick's your talking about help by allowing the company to make more profit off the same capital ratios.

I didn't mean to imply that derivatives are always bad, but there are many types that simply exist to evade taxes and trick lenders into thinking you're a less risky investment than you are. Forgotten subprime mortgages and credit swaps already? If you're unfamiliar with the blatant theft that goes on (like 'fixed income' contracts where all the terms cancel out to make 0 -- I'm not kidding) I'd suggest reading Trader's Guns and Money, written by well known derivatives expert Satyajit Das: http://www.amazon.com/Traders-Guns-Money-unknowns-derivatives/dp/0273704745

Edit, one important and relevant point from the book: It doesn't help make them make more profit. It helps them take what someone tells them is a lower amount of risk according to a complex model that is usually wrong and really results in greater risk.

For anyone wanting a good read on disruption The Innovator's Dilemma will certainly clear a lot of things up about emerging markets replacing existing ones. It uses great examples even if they are a little dated.

http://www.amazon.com/The-Innovators-Dilemma-Revolutionary-Business/dp/0062060244

New Ideas From Dead Economists
amazon link

It was required for an Econ 101 class I had, and does a great job of covering the bases for each school of thought. It isn't very in depth, but can get you started pretty well.

I'd recommend Freakonomics because it shows economics as the awesome discipline it really is.

> It’s different this time.

It bugs me when people cite earlier technologies disrupting the labor market saying that the scale of automation we're faced with isn't going to be a problem. We're making machines that can think now (edit: made exaggeration, but machines are getting smarter at a much faster pace) , it's completely different now.

Also, I recommend this book.

People who bought this book also bought: Why the Real Estate Boom Will Not Bust - And How You Can Profit from It: How to Build Wealth in Today's Expanding Real Estate Market

Hey! it's the new reality! P/E 300 here we come!

In the mean time, just to make sure you won't sell early, check out some mandatory reading:

http://www.amazon.com/Dow-2008-Different-This-Time/dp/1893958701

Somewhat more speculative http://www.amazon.com/Dow-40-000-Strategies-Profiting/dp/0071351280/ref=pd_cp_b_2

and somewhere in between http://www.amazon.com/Dow-36-000-Strategy-Profiting/dp/0609806998/ref=pd_cp_b_3


and of course http://www.amazon.com/Real-Estate-Boom-Will-Bust/dp/0385514352/ref=pd_cp_b_0

Intermediate Microeconomics by Hal Varian was quite useful for a course I took.

I prefer Matt Ridley's view. The world is rapidly getting better at a quicker pace by virtually any metric.

Ravi Batra - http://www.amazon.com/Great-Depression-1990-Ravi-Batra/dp/0440201683

Yeah, the great depression of the 90's...

You'll probably get bored if you just try to 'learn' a textbook. If I were you I'd subscribe to the economist. If you read 3 or 4 issues comprehensively you should begin to understand how things work. Then you can decide if you're still interested enough to learn the theory.

p.s This assumes you're interested in macro, if it's micro then there's no substitute for a textbook. If you're maths is up to it and you don't get bored easily then http://www.amazon.com/Intermediate-Microeconomics-Modern-Approach-Eighth/dp/0393934241/ref=sr_1_1?s=books&ie=UTF8&qid=1302690035&sr=1-1

Big would be the amount of debt used to fuel it relative to income. The sub prime mortgage crisis was around 120% by my recollection (could be off by 10%) and Australia is currently at 130% (again could be off). So the shocks around the globe likely wont be comparable, since the Australian market is much smaller, but for those of us in the market a pop wouldn't be so good.

Most of these ideas of mine are paraphrased or inspired by the book This Time is Different: https://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691152640

A better (contemporary and with more hindsight) battle would be Sowell vs Piketty.

They don't?

http://www.amazon.com/Basic-Economics-4th-Ed-Economy/dp/0465022529/ref=dp_ob_image_bk

There is that book, too, but the one person was thinking of is more recent and is literally called “This Time Is Different .”

Read this

https://www.amazon.com/Second-Machine-Age-Prosperity-Technologies/dp/0393350649

A Random Walk Down Wall Street

These guys:

http://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393072231

> https://www.amazon.com/Are-Missing-Real-Estate-Boom/dp/0385514344

he was right for 2 more years!

• Quantative Trading by Edward Chan
  
  
• Beat The Forex Dealer by Agustin Silvani
  
  
• The Creature from Jekyll Island by G. Edward Griffin
  
  
• Freakonomics by Steve Levitt
  
  
• Hot Commodities by Jim Rogers
  
  

Additionally, there's quite a bit of evidence that the "two income household" is financially far more "unstable" (i.e. at risk) than a two parent, single-income household... so much so that even E. Warren (hardly an anti-feminist) referred to it as a "trap". (Cf the title of her 2004 -- i.e. pre housing bubble/bust era -- bestselling book "The Two Income Trap", and her hour-long 2007 Berkeley lecture expanding on the same basic material.)

Basically a fat lot of nothing has been gained (for families) by wives entering the workforce.

And arguably things have been made worse for nearly all workers because of that.

Feminists, of course, have a hard time really accepting that -- and they nearly always seek (often in a highly contortionist fashion) to place blame on other factors. Doubtless there ARE other factors (trade policies, monetary policies, tax policies, etc) also at play, but one cannot ignore feminism's impact in that it is part of the supply/demand situation in regards to labor; it is an objective verified FACT that despite all of the aforementioned "policies", and despite the recent downturn, there are even still MORE adults in the US workforce NOW (and not merely in numbers, but as a percentage of the population) than there ever were prior to 1980, and yet the actual take home pay for the middle class has deteriorated.

An interesting counterbalance is The Rational Optimist. The world is using more resources, but GDP and energy seem to be decoupling, clean energy sources are starting to take off, and technology keeps moving on. If we get the incentives right (revenue neutral carbon tax ideally, also smart city policies) there isn't any real reason that we have to be doomed to a resource collapse.

As you mention, energy prices have recently collapsed and may stay depressed for a while. It reminds me about the Population Bomb that never really happened.

Investing is about the long, how much risk you're willing to assume, and how much volatility you can emotionally handle.

7% is hard today, 10 years ago 10% wasn't abnormal. Averaging over the years and you get ~7%...so you have to take the downs with the ups.

Check out A Random Walk Down Wallstreet

People who make their living selling financial snake oil want you to think investing is a mystical or incredibly difficult or arcane process. But it's really not. That book breaks it down in plain english and provides a map for investing. It's an easy read.

Return of Depression Economics by Paul Krugman.

> The NAR, however, said the price surge did not suggest another housing market bubble was building, noting that the inflation-adjusted median price was below its peak in 2006.

So it's not a bubble because prices are not more irrational than the all-time bubble. Got it.

[NAR chief economist statements at the peak of the bubble were also that there was no bubble. He even wrote the dumbest book of all time: https://www.amazon.com/Are-Missing-Real-Estate-Boom/dp/0385514344

Such shills.]

> Yet, there’s a reason that during World War II, the government built aircraft factories and allocated scarce materials like steel and rubber through the War Production Board.

Why didn’t they just say “Request For Proposal: Fighter Jets”. Aren’t we contracting that out now?

> …there’s a reason that large businesses have professional managers to plan their operations, and don’t rely on internal markets.

Large corporations start to have the same problems of central planning that communist countries have. Management becomes a bottleneck. It can be very hard to create the right ecosystem for innovation (read The Innovator’s Dilemma). In the interest of avoiding redundancy, balkanization, cannabalizing revenue, big companies often create a situation where they can’t innovate. Many of the biggest corporations in the US 30 years ago are no longer on top.

> In a world of low interest rates, which seem to be here for the foreseeable future, there is no danger of a runaway debt spiral.

The damage caused to a country by this kind of debt crisis and runaway inflation is so catastrophic that we should be very risk averse. What makes these spending plans different from when Zimbabwe/Argentina/Greece/Venezuela got into trouble?

Also, carbon tax is not the only proposal. I wish cap and trade had more legs, but seems like that ship has sailed. I also wish we would allow the price of energy to vary with supply and demand. There’a problem with renewable energy that the wind isn’t always blowing and the sun isn’t always shining. Let prices drop when there’s excess supply. There are lots of automated, energy-intensive tasks that can be programmed to be done only when prices drop. Data centers doing heavy computing. Laundry. Some kinds of manufacturing and chemical processing.

And nuclear energy should be on the table.

The banks don't have enough liquidity. Where I live I talked to the bank manager where I bank at, and the banks in our community had just finished a tour reviewing all of the banks. She told me that ALL of the banks scored poorly in the amount of reserves on hand. They would all fail if there was a run on the banks. If the banks have a crisis there would be no money injected into the system from new loans given out. Money would be scarce; thus resulting in deflation. The inflation will happen when all the governments around the world dump their U.S. Treasuries, or if the U.S. dollar loses its world reserve currency status. With these conditions combined we will have deflation with inflation. There is very little money, and yet the money that is in circulation would be rapidly inflating.

Dr. Ravi Batra discusses this in his book in "The Great Depression of 1990". He acknowledged the seriousness of this economic scenario as far back as the 1980's when he wrote his book.

https://www.amazon.com/GREAT-DEPRESSION-1990-Ravi-Batra/dp/0440201683

Latewire's summary of what FNMA and FLMC are are beyond reproach. To add, however, they weren't the only brokerages who made really poor decisions as far as lending.

You're basically asking "what caused the housing bubble" and the simple answer is

1. banks^1 loaned money to people who shouldn't borrow money because they created ways^2 to securitize (create investable, bettable product) absolutely everything, including the likelihood of risky mortgages being paid back.
   
   
2. Banks create investment vehicles whose risk is not assessed on the basis of whether or not mortgages will get paid or housing prices will drop, but whether or not 30-year mortgages will continue to be paid off every 3 years or whether or not housing prices will continue to rise over 7% a year.
   
   
3. People who borrowed money who shouldn't have default on their mortgages (surprising damn near everyone)
   
   
4. Banks that backed these securities based on the risk that housing prices would never, ever, ever go down again end up utterly and completely screwed^3
   
   
5. Governments (not just the US) step in to provide solvency to the market to avert global Thunderdome
   
   Against that backdrop, FNMA and FLMC aren't exactly minor players, but they're mostly guilty of "me-tooism." The real problem is that while Bear Stearns and Deutsche Bank can fuck up, the government thrifts are, as Latewire mentioned, supposedly overseen (at a more and more and more diminishing level) by the government. In essence, DHL can fuck up and that's a bummer. When the USPS fucks up, there will be congressional inquiries. This does not make their crimes worse. It does not make their crimes better. It does, however, make their crimes more kabuki.
   
   

1. For "banks" see "any financial institution, be it a hedge fund, Savings & Loan, insurance firm, what-have-you whose money is made by calculating risk in financial transactions because
   
   
2. Any dividing line between a "bank" and an "insurance" firm was erased with the repeal of Glass-Steagall
   
   
3. This stuff is actually fascinating reading, particularly to anyone even vaguely interested in finance. My two favorites of the moment are IOU and The Big Short, both of which are written from a decidedly human perspective and with a great deal of insight. MY takeaway? There's a great line in The Big Short where Michael Lewis compares stock traders and bond traders, saying that stock traders are like exotic island creatures that grew up in an environment with no predators while bond traders tend to be the most ruthless sharks in an environment where "kill or be killed" has been more than an evolutionary pressure, it's been a passionate avocation since the dawn of time. The stock market is regulated due to millions of personal investors such as yourself, which means its behavior is politicized. The bond market, on the other hand, is ruled by large institutions with no oversight who write their own rules and make their money entirely by screwing others. And, frankly, as the stock market is a pimple on the ass of the bond market, and since the "stock price" of a "bond company" is about as meaningless as meaningless could be, investing in FNMA or FLMC without any insider information or a healthy and jaded comprehension of the bond market is pretty much the equivalent of pinning the tail on the donkey and hoping that, rather thank kicking you, it turns around and hands you money.

This is a paper-thin treatment of the Argentine devaluation and currency crisis. There's no real attempt to explain the causes beyond handwringing about irresponsibility and globalisation. To be sure, the South American currency crisis wave is complex and many things exacerbated it but in Argentina's case I believe the lion's share of the problems can be attributed to it's government's dogged persistence in keeping its currency pegged to the US dollar. This initially led to lots of US investment and goods coming into Argentina cheaply, however when the wider South American crisis hit, Argentina found itself with a massively overvalued currency which made its exports impossibly expensive and meant that imported goods were much cheaper than anything the Argentines could hope to make domestically.

Even the author's vague, bet-hedging statement that "The one thing
everyone agrees on, however, is that there is no easy fix." becomes laughable within a few months of the publication of this article. After a sudden shock right after the devaluation, Argentina experienced a huge surge in growth driven by a boom in exports facilitated by the currency devaluation (GDP growth was 8 or 9% for years from 2002, more than making up the lost output).

There is a cautionary tale in Argentina's crisis, but it's one about the folly of attempting to maintain a fixed exchange rate (in Argentina's case, with the US dollar) and the economic depression that can result. If anybody wants to understand what's driving the Eurozone crisis right now, then you can do a lot worse than looking at Argentina and the practical difficulties it had devaluing its currency without everybody trying to convert it to US dollars first. Krugman's Return of Depression Economics, while updated with a new chapter in 2008, is a 2000 book about the wave of international currency crises in the 1990s which manages to be both detailed and accessible to the non-economist (Krugman-haters can quit their bellyaching too: international currency crises are absolutely a field which Krugman has a major academic specialisation in).