Foundations of Real-World Economics: What Every Economics Student Needs to Know

Cover
Half Title
Title Page
Copyright Page
Table of Contents
List of Figures
List of Tables
List of Illustrations
Chapter 1: Welcome to Real-World Economics
	My Credo
	Humanistic Economics
	A Primer on Blackboard Economics
	Toward a Paradigm Shift in Economics
	Real-World Economics Is Preferable
	Simple Is for Simple Minded
	“It’s Only a Model!”
Chapter 2: Markets Are Neither Omniscient Nor Omnipotent
	Markets Are Not Created by Divine Power
	The Downside of Free Markets
	Government Is an Essential Component of the Economy
	Markets Have Limitations
	The “Achilles Heel” of Markets
	Morality Should Take Precedence over Markets
	Economics Is a Social Science and Not a Natural Science
	Ideology Is Unavoidable
Chapter 3: The Nature of Demand
	What Is Scarce?
	Consumer Sovereignty and Endogenous Tastes
	Wants and Basic Needs
	The Metaphor of the Invisible Hand
	The Magic of Competition
	Consumerism
Chapter 4: Homo Oeconomicus Is Extinct: The Foundations of Behavioral Economics
	Utility Maximization
	Optimization Is Impossible for Finite Minds
	Our Brain Is Imperfect
	Neuroeconomics
	Bounded Rationality
	Satisficing Instead of Optimizing
	Biases and Wonders of Intuition
	Heuristics
	Framing, Accessibility, and Anchoring
	Prospect Theory
	Behavioral Economics
	Cognitive Endowment
	Genetic Endowment
Chapter 5: Taste Makers and Consumption
	The Influence of Corporate Power
	Interdependent Utility Functions
	Society
	Culture
	Fairness
	Efficiency vs. Equity
	Self-Interest and Altruism
	Positive and Normative Economics
	Expected vs. Realized Utility
	Imperfect Information
	Signaling
Chapter 6: Firms and Imperfect Competition
	Firms
	The Illusion of Perfect Competition
	Imperfect Competition: Oligopolies and Monopolies
	Prices
	Equilibrium and Disequilibrium
	Adverse Selection
Chapter 7: Returns to the Factors of Production
	Marginal Theory
	Wages
	The Returns on Capital
	Profits
	Institutions as Capital
	Intangible Forms of Capital
	Natural Resources
	Income Distribution
	The Second Gilded Age
	Growth in Welfare
	Ethics and the Skewed Distribution of Income
Chapter 8: The Case for Oversight, Regulation, and Control of Markets
	Principal-Agent Problem
	Moral Hazard
	Transaction Costs
	Opportunistic Behavior
	Regulation in the Public Interest
	Regulatory Capture
	Moral Constraints
	Market Failures
	Exploitation
	Time and Space
	Path Dependence
	Limits and Standards
Chapter 9: Microeconomic Applications on and off the Blackboard
	Minimum Wage Is Good Economics
	Price Controls Can Be Good
	Unions and Countervailing Power
	The American Medical Association Is a Cartel
	Discrimination Is Pernicious
	Redistribution Would Help
Chapter 10: What Is Macroeconomics?
	Keynes the Savior
	Keynesian Fiscal Policy
	Monetary Policy
	The Liquidity Trap
	Neoclassical Synthesis
	The Monetarist Counterrevolution
	A Macroeconomic Policy Void
	GNP Is an Estimate of Production and Not of Welfare
	Production Possibilities Frontier
Chapter 11: Macroeconomics Part II
	Unemployment and Underemployment
	The Natural Rate of Unemployment
	Economic Growth
	Economic Growth Does Not Increase Life Satisfaction
	Technological Change Is a Two-Edged Sword
	Missing Markets
	Environment
Chapter 12: Macroeconomics Part III
	The Government Is Part of the Solution
	The Challenges of Keynesian Fiscal Policy
	Crowding Out
	The Threat of a Mushrooming National Debt
	Taxes Are Good for Us
	Savings or the Lack Thereof
	Inflation and Deflation
	Nominal vs. Real Wages
	The Obama Stimulus
Chapter 13: International Trade: Open Economy Macroeconomics
	The Theory of Comparative Advantage
	The Effects of Tariffs on Welfare Are Complicated by Underemployment
	Free Trade Is Not an Engine of Growth
	The Protection of Infant Industries
	Unbalanced Trade Creates Underemployment
	Import Certificates Are the Only Safe Way to Eliminate the Trade Deficit
	New Trade Theory
Chapter 14: The Financial Crisis of 2008
	Preliminaries
	Financial Innovations
	Double Trouble: Greenspan’s Bubbles
	Early Warnings Fell on Deaf Ears
	The Minsky Moment: The Meltdown of 2008
	Thirty-One Factors That Contributed to the Crisis
	The Bailout: A Crisis Obama Wasted
	Nationalization of the Banks as Pre-privatization
Chapter 15: Conclusion: The Foundations of Real-World Economics
	Imaginary vs. Real Markets
	The Inconvenient Truth about the Current State of the U.S. Economy
	The U.S. Economy Is Facing 14 Headwinds, None of Which Is Fixable in the Foreseeable Future
Index