Macroeconomics: Back to Square One

I agree with the harsh judgment that Lucas and Sargent (1979) made about the macromodels of their day– that they relied on identifying assumptions that were not credible. The situation now is worse. Models make assumptions that are no more credible and far more opaque.

I also agree with the harsh judgment that Lucas and Sargent made about the predictions of those Keynesian models, the prediction that an increase in the inflation rate would cause a reduction in the unemployment rate.

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The mind of Plato, Jefferson and Hume. Who is right?

…one of the greatest truths in psychology is that the mind is divided into parts that sometimes conflict. To be human is to feel pulled in different directions, and to marvel—sometimes in horror—at your inability to control your own actions. The Roman poet Ovid lived at a time when people thought diseases were caused by imbalances of bile, but he knew enough psychology to have one of his characters lament: “I am dragged along by a strange new force. Desire and reason are pulling in different directions. I see the right way and approve it, but follow the wrong”.

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Moral Universals

“In his great philosophical work An Enquiry Concerning the Principles of Morals, David Hume speculated on the universal nature of human morality: “The notion of morals implies some sentiment common to all mankind, which recommends the same object to general approbation, and makes every man, or most men, agree in the same opinion or decision concerning it” Is there a moral sentiment common to all humans? Are there moral universals?

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Freedom by accident, or the roots of Western legal tradition

“Perhaps the most distinctive characteristic of the Western legal tradition is the coexistence and competition within the same community of diverse jurisdictions and diverse legal systems. It is this plurality of jurisdictions and legal systems that makes the supremacy of law both necessary and possible”