4 Ways We Are Not Rational And How It Affects Economics

At the core of economics (especially economics teaching) is the idea that people are fundamentally rational, self-interested, utility maximising individuals who make decisions after logically considering all the relevant facts. As these people know best what’s best for themselves, these decisions are optimal for society. However, one of the newest and fastest growing school of thought is the Behavioural School which uses the insights of psychology to show that this simply is not the case. These insights are sometimes viewed only in isolation or glossed over as minor trivia. However, when you put all the different pieces together, you see that the conclusions are far reaching for how the economy operates. Continue reading

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Are Interest Rates Really That Important?

There is something I never got about interest rates. There is a consensus across economists that interest rates have a very important impact on the economy. Economists of all stripes agree that lower interest rates boost economic growth and higher rates reduce growth. Some go as far as saying that it is through interest rates and monetary policy (not spending and fiscal policy) that governments should manage the economy. It’s a standard classroom exercise to draw curves showing the impact of interest rates on growth. Too low interest rates are one of the main factors blamed for causing the bubble and resulting recession. But I always felt that something didn’t quite add up and I began to doubt how important interest rates really are. Continue reading

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How Many Catholics Are There In Ireland?

Now this question probably seems a bit pointless for a blog. Can’t you just Google the answer and be done? According to the 2011 Census, 3,861,335 people or 84% of the population of the Republic described themselves as Catholics. This figure is often used to describe Ireland as a Catholic country and to defend the role of religion in Irish society, ranging from Church control of the vast majority of schools, whether abortion should be kept illegal or the religious references in the Constitution (if you don’t know, the opening line is: “In the Name of the Most Holy Trinity, from Whom is all authority and to Whom, as our final end, all actions both of men and States must be referred”). But if Irish people are overwhelming Catholic, then it seems obvious that Ireland would have a strong Catholic ethos. Continue reading

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Response To The Criticism Of Esperanto

Something I’ve been quite interested in lately is the language of Esperanto, an invented language which aims to promote global communication through a simple, neutral and logical language. However, it is hardly the most popular of hobbies and so I am a bit shy about mentioning it. It can also provoke strong negative reactions and sniggering from some people. As an Esperanto course is currently being developed in Duolingo, a lot more people are coming in contact with Esperanto or hearing about it for the first time. A lot of them are skeptical about Esperanto. So I thought I’d make a post dealing with all the criticism of Esperanto and my response to them. Continue reading

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Both The State And The Market Are Based On Coercion

It is common to hear people on the internet complain about the power of the state. It is regularly denounced for forcing people to obey its laws and pay taxes. Libertarians criticise this use of coercion and regularly compare it to a gang of thieves or the mafia. Many advocate that we either abolish or minimise the size of the state and replace it with a world where everything is based on voluntary co-operation and you are free to do what you want so long as it does not harm anyone (known as the Non-Aggression Principle). It seems like a simple choice between peaceful liberty or violent oppression. It is a handy debating trick as it allows libertarians to paint themselves as defenders of freedom while opponents look like tyrants. As nice as it sounds, it suffers from the fatal flaw that the market is just as reliant on the coercion as the state is. Continue reading

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Why Competition Alone Is Not Enough

Free marketers view competition as the solution to most if not all problems in the market. If a business is charging too high a price or selling poor quality products then a new business can simply enter the market and take its place. If workers are mistreated or underpaid, then there will be an incentive for competitors to offer better conditions. Competition will cure all problems, prevent excessive profits, exploitative wages, protect the environment, increase your IQ and make you ten years younger (you may think I’m being facetious, but I have yet to come across a problem that libertarians haven’t claimed competition would solve). Continue reading

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Why Economics Is Not A Science

Economists like to pride themselves on their job and how scientific it is. Politics might be full of emotional rhetoric and unthought out ideas, but economists rely solely on cold hard facts. Flicking through my old textbooks, I see many references to “thinking like an economist” where we were supposed to cast aside fallacies and view the world with a rational and scientific eye. If only it were so. In reality, economics lacks the basis in real world evidence, the scientific method, and predictive power to be considered a science and is instead a highly politicised topic. Continue reading

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