Economics for the Intelligent Amateur

The Misery Index has been gaining traction as of late with its biggest increase since the early 1990’s. For those not in the know, the Misery Index isn’t a measure of how grumpy people are, but is simply the sum of the inflation and the unemployment rate.

This misery index has been rising for the US, Canada and the Eurozone as a whole. Factors such as a “jobless recovery” boost it, and it played a major factor in both President Carter’s election (where he made frequent mention of its level of 13) and his subsequent loss four years later (when it was at over 20). With elections coming up for many in government, you can be sure more than one politician will be eyeing this Misery Index.

For those of you who remember your Economics classes, however, this might sound eerily familiar. Perhaps you were taught that inflation coupled with unemployment equaled something called Stagflation. Well, not exactly. Although there are many different “exact” definitions of stagflation, it is currently calculated by using inflation and average hourly earnings. So while the word seems to have gone out of fashion as of late, you are still somewhat correct, so we still want to re-hatch an old cartoon of ours for you:

Here at Dumbagent we’ve enjoyed following the live streaming and tweeting of the World Economic Forum (WEF). Technology is definitely one of the winners, at least in getting the message across. From what we hear, in fact, the technology subject was one of the few that wasn’t gloomy.

One of our favorite quotes from the end of the WEF is from @TheEconomist:
The 2010 #WEF ends with panel on values with Archbishop of Canterbury and 6 Global Change Makers aged 16-19, and incredibly impressive.

Sounds quite novel. Unfortunately the main problem of these panels is that many good ideas are thrown about and little follow up is taken; a fact reiterated by the 17 year old Iraqi disabilities advocate. One wishes David Allen could appear and assign a list of actionable items to each of the parties.

Of course, the fact that these international talks between G20/Business/ and many other types of leaders and journalists is even occurring is an encouraging fact. We have noticed a lack of coverage in the mainstream media here in the US (Obama’s meeting with House Republicans and the iPad both stole the day) so next year we plan on providing more details.

And, so as not to end on a cynical note, here is a quote from @davos:
Only in Davos: debate at my table btw an archbishop, a Crown prince, a Jordanian businessman, a Bhuddist monk

Let’s hope this meeting provides more than memorable quotes.

We warned readers several months ago to expect an onslaught of books talking of the evils of the free markets and (fallaciously) talking up Behavioral economics as the mutually exclusive counterpoint. So we can’t help feeling somewhat vindicated by the fact that How Markets Fail, by John Cassidy, does just this.

In all fairness, Cassidy does believe that the markets tend to work well, only that they fall far short of what is needed. Of course, he then neglects to explain what exactly is needed, and how much and by whom, but rather talks of the evils of “the market” when it comes to the environment, healthcare, CEO salaries, etc. He seems to forget that the market is comprised of individual players and is not a big monster operating willy nilly (although many would agree with his point of view over ours).

We do give him special mention, however, due to his analysis on Adam Smith’s “Wealth of Nations”. Few, if any, economists, let alone columnists writing about economics, have actually read the WoN and are able to address Smith’s views (such as how he stated banks should not make loans to speculators). For those of you interested in the history of economics, we recommend reading the first part of this book. The rest regurgitates much of the same dribble we’ve been hearing and will no doubt continue to hear.

We are proud to announce that we are now available on Kindle. If you would like to keep up to date with posts while on the go, you can search for “Dumb Agent” and have access to our articles everywhere. These articles are downloaded to your device so once you have them you can read them even without wireless access.

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Enjoy!