Very interesting links

Following my previous post on the Debt Reduction Taskforce, I thought I would provide some links that explain my views on monetary theory more explicitly. Essentially, the money multiplier is a myth, and money is created first by debt, and reserves are accumulated after the fact if necessary - try Bill Mitchell’s blog for an explanation of Modern Monetary Theory (which is close to my personal views), and this site for more detailed discussion on the multiplier myth.

Ross Gittins reiterates my population growth arguments

Environmental concern and unemployment – a negative correlation. We are all too happy to worry ourselves about the environment when the going is good, but in a recession we suddenly shuffle the environment down our list of concerns.

Update on skills shortage and emigration of Australian trained professionals. This recent research suggests that “positive selectivity is stronger where the reward to skill in the destination is relatively large”. Translation: those who pay get the skills they desire.

Economists applying statistical techniques to strange social phenomena - worship and sacrifice:
The theory we test is that, when faced with uncertainty, individuals attempt to engage in a reciprocal contract with the source of uncertainty by sacrificing towards it. In our experiments, we create the situation whereby individuals face an uncertain economic payback due to “Theoi” and we allow participants to sacrifice towards this entity. Aggregate sacrifices amongst participants are over 30% of all takings, increase with the level of humanistic labelling of Theoi and decrease when participants share information or when the level of uncertainty is lower. The findings imply that under circumstances of high uncertainty people are willing to sacrifice large portions of their income even when this has no discernable effect on outcomes.

The Superstar Effect – when you receive massive gains from being marginally better than second best. The paper is here. I read once that the Beatles were probably underpaid for the wellbeing they imparted on the masses through their music. My view was that they earned a pretty penny. They were probably only a little better than the next band that would have formed and become an international sensation had the Beatles never existed. In the purest economic sense they were superstars.