EconAir

NOTE:  I wrote this is 2018.  OK, who do you fear more, big government or big business?   Historically, Americans saw a relatively small government with regulatory powers as a check on monopoly and big business.  But the rise of big government because of the Great Depression, World War II, the Cold War, and the Great Society changed that.  Government became much bigger. There was a consensus that we had to spend a lot of money for national and international security during the Cold War. But the expansion of the social welfare state and environmental regulations changed attitudes towards the federal government. The two largest programs of the social welfare state, Social Security and Medicare, have been financed by very large tax increases. These tax increases are somewhat offset by federal income tax cuts. Since the 1980s, there has been a well-financed campaign to roll back the regulation of big business, especially the ...

Adam Smith - Our Founding Father INTRODUCTION   This essay on Adam Smith and his famous example of a pin factory also serves as an introduction to some of the themes in the over 100 essays in this blog.   Adam Smith wrote the  Wealth of Nations  during the beginning of the Industrial Revolution. It was published in 1776. The dynamics of the Industrial Revolution continue to be a disruptive force; because of AI, it might be even more disruptive in the future.   ADAM SMITH’S PIN FACTORY   Adam Smith’s description of a pin factory is on the first page of  The Wealth of Nations .  (Chapter 1 – “Of the Division of Labour”)  Drawings of pin factories of this period show workers using hand tools. Smith says the process can be broken down into 18 distinct steps, including packaging the pins. Smith mentions that pin factory workers were poorly paid, despite their high productivity.    Adam Smith says he visited a pin factory empl...

Age and Class in America             As an economist, I define class in economic terms. In the past, income and income inequality were usually the main determinants. Now it is a combination of income and wealth (actual and potential) as more Americans grow old and retire.   There are four classes in America:   1) seniors over 65 with assets (wealth) and their inheriting children or relatives. Demographically, the fastest growing age group.The number of seniors is expected to double over the next 35 years while the number of all Americans is expected to decrease.           Total U.S. household net worth reached a record  $166.7 trillion  in the first quarter of 2026, according to the   Federal Reserve's Financial Accounts of the United States . This reflects the total value of all assets (like real estate, equities, IRAs, and bank deposits) minus all liabilities (like m...

  A play about John Maynard Keynes recently opened in London. People are paying to see a play about an economist? I hope it’s a comedy. Or at least a musical like  Hamilton .   Keynes was born in England in 1883. He was educated at Eton and Cambridge. His father was a professor at Cambridge. His mother was mayor of Cambridge in 1932-33. He died Lord Keynes in 1946. A member of the establishment.   He spent the first years of his professional life analyzing and writing about monetary theory and probability theory. This was in an environment in which the English economy was at the end of 100 years of political and economic dominance of the global economy (including English colonies) through advanced manufacturing technology, exports, and overseas capital investment. But already, by 1910, Germany and the United States had larger industrial output with better and more innovative technology (new industries and better manufacturing systems). England was falling behind. The...