2/4/2018 Intermission




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The Nature of Economics (7)

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The Nature of Economics (7) Neoclassical economics does not consider efficiency of the whole economy because the production function and utility function are exogenously given. Since I do not think that this point is made clear in books or papers, I would like to discuss it in some detail. Consider two economies E1 and E2. The workers in E1 are more cooperative and hard-working. Those in E2 are selfish and lazy. Hence, the labor productivity in the firm in E1 is higher for equally given levels of physical inputs. However both economies are efficient in neoclassical economics! Both E1 and E2 are efficient as far as all firms maximize their profits subject to exogenously given (different) production functions! It is obvious that E1 is more affluent than E2. I would like to emphasize that efficiency differs from affluence in neoclassical economics. Next consider two economies E3 and E4. The people in E3 are more harmonious and other-regarding within the household. Those in E4 ar...
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27/3/2018 American Obsession (2)

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The fundamental and implicit principle of US policy toward Japan has been to weaken her military and economic power in order to maintain its supremacy. Against international law USA established after WWII the new Japanese constitution that renounces the right of belligerency. USA enforced strict censorship over Japanese media for several years after WWII. It tried to build up an image that Japan’s militarism caused the ‘Pacific War’ and prohibited criticizing its occupation policy. Censorship obviously contradicts the fundamental principle of free society, which USA was going to build for Japan after WWII. What USA does often contradicts what it says. For example, it criticized Japan for not declaring war before attacking Pearl Harbor by naming it a sneaky attack. How many times did it declare war? USA is always obsessed with the idea that it needs to get rid of obstacles to maintaining the position of number one. Japan has long been such an obstacle. Ezra Vogel’s Japan as Numb...
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15/1/2018 Why neoliberalism is harmful (2)

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Neoclassical economics has firms and households but does not consider their efficiency. Its object of analysis is market efficiency only. What a narrow worldview it is! Relying on neoliberalism, therefore, implies regarding the world as made up of only markets. Our society is made up not only of markets but also of households, firms (organizations), schools, hospitals, governments, communities, social & natural environments, and so forth. Neoclassical economics, however, has a systematic theory only about markets. It can teach in its own way how one should behave in markets but it cannot do so for households, firms (organizations), schools, hospitals, governments, communities, or environments since it has no theories about these. Therefore, neoclassical economics considers only partial efficiency, i.e. the efficiency of the markets only. We need to consider, however, total efficiency, i.e. the efficiency of whole society including households, firms (organizations), schools,...
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