Category: Economics

LemonisMarcus2I’ve written before on how television can be a powerful tool for illuminating the deeper significance of daily work and the beauties of basic trade and enterprise. Shows like Dirty Jobs, Shark Tank, Undercover Boss, and Restaurant Impossible have used the medium to this end, and today at The Federalist, I review a new contender in the mix.

CNBC’s The Profit is arguably the best reality show currently on television. Starring Marcus Lemonis, a Lebanese-born American entrepreneur and investor, each episode highlights an ailing businesses in desperate need of cash, care, and wisdom.

By the end, we get a remarkable view into the types of struggle, pain, glory, and redemption that occur across countless businesses every single day.

The show counters a host of false stereotypes about business, three of which I highlight in my piece. But one that is perhaps more popular and pernicious than all is the notion that business and is necessarily driven by greed and selfishness.

On the contrary, I argue, selfishness kills and service prospers: (more…)

Blog author: jsunde
Wednesday, May 20, 2015

economicman (1)“As a social psychologist, I have long been amused by economists and their curiously delusional notion of the ‘rational man.’” writes Carol Tavris. “Rational? Where do these folks live?”

In a review of behavioral economist Richard Thaler’s new book, Misbehaving: The Making of Behavioral Economics, Tavris notes how economists are slowly beginning to see — or, one could argue, finally returning to the notion — that the discipline ought treat man as more than a mere robot or calculator.

“Researchers in this field are making up for lost time,” Tavris continues, “or perhaps realizing that they are social psychologists after all.”

As human beings who arrogantly and often wrongly consider ourselves “sapiens,” we simply don’t match the model of human behavior favored by economists, one that “replaces homo sapiens” (whom Mr. Thaler calls Humans) with “a fictional creature called homo economicus” (whom he calls Econ). “Econs do not have passions; they are cold-blooded optimizers,” he says. “Compared to this fictional world of Econs, Humans do a lot of misbehaving”—thus the book’s title.

The problem, Mr. Thaler argues, is that although economists “hold a virtual monopoly” on giving policy advice, the very premises on which that advice rests are deeply flawed. That is why “economic models make a lot of bad predictions”: some small and trivial, some monumental and devastating. “It is time to stop making excuses,” he admonishes his colleagues. Mr. Thaler calls for an “enriched approach to doing economic research, one that acknowledges the existence and relevance of Humans.” By injecting economics with “good psychology and other social sciences” and by including real people in economic theory, economists will improve predictions of human behavior, make better financial and marketing decisions, and create a field that is “more interesting and more fun than regular economics.” In that way, Mr. Thaler believes, economists will finally produce an “un-dismal science.”


tppThe controversial Trans-Pacific Partnership (TPP), backed by many Republicans and President Obama, hit a snag Tuesday when key Democrats spoke out against the agreement.

What exactly is the TPP? It is a free trade agreement with 12 nations (including China and Japan) that purports to increase economic growth, jobs and free trade. However, there is much opposition in Congress.

Leading opponents of the measure in the Senate have pushed for additional protections for U.S. workers and address concerns about alleged foreign-currency manipulation by China that makes American products too expensive.

“It’s a betrayal of workers and small business in our communities to pass fast track, to put it on the president’s desk without enforcement  … and without helping workers,” Sen. Sherrod Brown, D-Ohio, told The Washington Post.


poor-working-class-family-after-the-days-workCapitalism is routinely blamed for rampant materialism and consumerism, accused of setting society’s sights only on material needs and wants, and living little time, attention, or energy for much else. But what, if not basic food, shelter, and survival, was humanity so preoccupied with before the Industrial Revolution?

As Steve Horwitz argues in a preview of his forthcoming book, Hayek’s Modern Family, our newfound liberty and accelerated activity in the Economy of Creative Service has actually freed us to devote more to other spheres of stewardship, not less:

Prof. Harry Veryser stars in a new video from ISI that explores some of the lessons about private property, rights, responsibilities, and stewardship that can be gleaned from the thought of Thomas Aquinas.

For a much more in-depth exposition of the connections between and lessons from Aristotle, Augustine, and Aquinas, check out John Mueller’s Redeeming Economics (ISI, 2010). For more, check out a slate of review essays on Mueller’s book published in Research in the History of Economic Thought & Methodology, including a piece by me, “The Economies of Divine and Human Love.”

walmart-lowwagesAs Elise pointed out earlier today, economist Donald Boudreaux completely eviscerates former Labor Secretary Robert Reich’s call to raise the federal minimum wage to $15 an hour. As Boudreaux says, “Reich’s video is infected, from start to finish, with too many other errors to count.”

But Boudreaux also wrote a letter to Reich countering the economically ignorant (though increasingly popular!) claim that “we subsidize low wage employers” like Wal-Mart, McDonald’s, and almost every mom-and-pop business in America through government welfare programs such as food stamps, Medicaid, and housing assistance. As Boudreaux says to Reich:

fight forRobert Reich seems to be a smart man. He served under three presidents, and now is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California, Berkeley. His video (below) says raising the minimum wage is the right thing to do. Unfortunately, he gets it all wrong.

Donald Boudreaux of the Cato Institute notes a couple of errors in Reich’s thinking. First,

Ignoring supply-and-demand analysis (which depicts the correct common-sense understanding that the higher the minimum wage, the lower is the quantity of unskilled workers that firms can profitably employ), Reich asserts that a higher minimum wage enables workers to spend more money on consumer goods which, in turn, prompts employers to hire more workers.  Reich apparently believes that his ability to describe and draw such a “virtuous circle” of increased spending and hiring is reason enough to dismiss the concerns of “scare-mongers” (his term) who worry that raising the price of unskilled labor makes such labor less attractive to employers.