The 2013 Nobel Memorial Prize in Economic Sciences was announced on October 15 and won by a trio of financial economists: Eugene Fama, Robert Shiller and Lars Peter Hansen. Fama is the mastermind behind the ‘efficient-market hypothesis’, which will be familiar to all who have taken at least a first-year finance subject, whilst Shiller is a primary critic of the hypothesis and instead espouses the idea of ‘irrational exuberance’ in markets (read: stock markets are generally overvalued as investors underestimate the risk of incurring a loss).
What a joke.
Really, there isn’t anything else that can be said about the latest fiscal crisis in the United States. With the federal government shutting down most operations on the 1st of October, as the House of Representatives (controlled by the Republicans) and the Senate (controlled by the Democrats) couldn’t agree on a Continuing Resolution for the 2014 fiscal year.
The number of Americans who said, ‘yes, I am happy with my life’ peaked in 1956, but ever since then has fallen slowly but steadily. During this time our levels of world GDP per capita have increased dramatically, and according to the non-satiation principle of conventional microeconomics, our experience of higher utility means that should all be happier – yes?
We live in a finite world of perpetual economic growth. Levels of material wellbeing have never been so high. The walls between trading nations have been removed thanks to globalisation and technology. Why then does the economically paradoxical notion of ‘happy peasants and frustrated millionaires’ exist? Happiness economics takes a new approach to assessing welfare based on expansive notions of utility. Conventional economics has the aim of the efficient allocation of scarce resources to satisfy infinite needs. If increasing utility does not fundamentally achieve individual happiness, then what is the point of it all?
This article forms part of an ongoing series looking at economic issues as Australia heads into the Federal Election. More coverage can be found on the Election 2013 page of ESSA’s website.
This election campaign has already seen its fair share of gaffes, negative ads and costings claims. Perhaps it’s time we debated the pressing need to reform our tax system, starting with the GST.
As I watched ABC’s Q&A Monday episode, The National Economic Debate, I sat despairing at yet another missed opportunity to talk ambitiously about policy reforms in Australia. After an excellent question from the crowd about the merits of reforming the Goods and Services Tax (GST) to broaden its base and potentially increase the rate (whilst concurrently reducing and eliminating other inefficient and distortionary taxes), both Treasurer Chris Bowen and Shadow Treasurer Joe Hockey manoeuvred their way out of discussing what is a sensible reform. It was arguably the most disappointing element of what was a very entertaining and substantive debate between Bowen and Hockey that covered the breadth of economic issues facing Australia.
Recently China’s president Xi Jinping was quoted in saying that China’s GDP growth will be subdued in the foreseeable future, relative to the rapid growth in the past decade. China’s official newspaper Xinhua has put the internal target at 7.5% p.a. for 2013 from a 7.8% p.a. actual figure achieved in 2012, and many are undoubtedly aware that this is a 13-year record low. Exactly how much has the world’s second largest economy grown by and how has China done it?
On Thursday night, ESSA finished the year in style by celebrating all that ESSA has achieved in 2012 with ESSA Year in Review and the inaugural launch of our print publication Equilibrium.
The night began with out-going President Karen Lee looking back on ESSA’s journey from an idea in her first year to a thriving society at the end of her time at university. Karen looked back across ESSA’s achievements in its first year; Trivia with Economics Alumni, Q&A, our Website Re-launch and of course the inaugural edition of Equilibrium.