Tuesday, September 26, 2017


I have today completed the manuscript of my latest book AN AUTHENTIC ACCOUNT OF ADAM SMITH. 
It now awaits editorial editing and feedback, and then my re-writing to accommodate the editor's comments and advice.
This may take some time...

Wednesday, September 13, 2017


My absence from posting these weeks is down to my intense preparation of my manuscript  of ‘AN AUTHENTIC ACCOUNT OF ADAM SMITH’ for press.

Apologies for this situation, but the book must come first, just like a new born baby...though my wife tells me I don't know the half of it.


Monday, August 21, 2017


Oliver Reynolds posts (21 August) on FOCUS ECONOMICS HERE
Bounty or burden? The impact of refugees on European economies is far from clear
Avindar Mohamad was 18 years old when he was forced to flee with his family from his hometown of Aleppo after the Syrian civil war broke out in 2011. Until then, he had led a relatively comfortable life: His father worked as a baker, and his mother had a job at a large pharmaceutical company. When the conflict started, his father flew ahead to Denmark, while Avindar sought refuge in neighboring Lebanon along with his mother and two sisters. It was only several months later that the family finally found itself together again, this time on Danish soil, under Denmark’s family reunification program.
In recent years, the number of people like Avindar seeking asylum in the European Union has skyrocketed, from around 200,000 in 2006 to around 1.3 million in both 2015 and 2016 according to Eurostat figures. The continent has witnessed one of the largest forced migrations since World War II, as civil war in Syria and Iraq and instability in Afghanistan have led to a wave of refugees moving westwards in search of safety. Unlike Avindar and his family, many have been forced to make the journey on foot. The potential effect of this surge in refugees on the economies of European countries is still very much up in the air, with a multitude of factors at work.
The economic impact is likely to be slightly positive in the short-term. All the refugees arriving in the European Union need to be housed and fed. Their medical needs must be addressed, and both children and adults have to be educated in preparation for entry into local labor markets. Before they are ready to work, financial support is also necessary. The ensuing boost to government spending and fiscal transfers will give domestic demand a shot in the arm. According to estimates from the IMF, by the end of 2017 GDP in Austria, Germany and Sweden—the main destination countries for refugees—will have been boosted by 0.5%, 0.3% and 0.4%, respectively. In Germany, by far the largest recipient in absolute terms, refugee-related expenditure amounted to more than EUR 20 billion last year. 
In the longer term, the picture becomes far murkier. This isn’t just because little is known about the current cohort of refugees, such as their average level of education or how long they will remain in their host countries. It is also because the long-term economic impact of refugees rests largely on how successful countries are at weaving them into the economic fabric of their societies. The more refugees who find jobs, and the better paid these jobs are, the greater the positive impact on labor supply, the public coffers and economic growth. 
Upon arrival, however, asylum seekers face myriad problems which hinder their integration into the labor market. Many find that the qualifications they held in their home countries are no longer recognized, and even those who hold valid qualifications are faced with a language barrier; the vast majority of the refugees who have reached the European Union in the last few years lack basic competence in their host country’s language. The process of applying for and being granted asylum is also a protracted one, often lasting around six months. In some European nations, it is even longer, as the sudden influx of refugees has led to a huge backlog of unprocessed claims. In many countries, asylum seekers are not normally allowed to work while their claims are being processed, increasing the risks of demotivation and deskilling. Even in Germany, which is known for the efficiency of its bureaucracy and labor market, only around 500,000 of the 1.2 million refugees had completed the first stages of the integration process and signed up as job seekers by March 2017. Of these refugees, a mere 12% had found employment.
arduous task. Studies from many developed countries have repeatedly shown that refugees tend to earn less, have worse employment prospects and hold lower occupational status than native workers or economic migrants. Even in Sweden, a country with a relatively strong track record of integrating refugees, a study of those arriving between 1997 and 2010 found that fewer than 20% had found employment after one year. Ten years down the line, only between 50% and 60% were working, significantly below the corresponding figure for Swedish natives. 
However, there is much that nations can do to help refugees integrate more seamlessly into society. For instance, Germany’s integration law, which was approved by its parliament in 2016, provides culture and languages classes for newcomers. This policy is similar to Sweden’s longer-standing introduction program, which includes an interview with the Public Employment Service (PES) in order to create a tailored action plan for each refugee, and provides personalized training, employment assistance, and financial and housing support. Special measures in the labor market could also be considered, in order to overcome any initial jitters employers may have about hiring refugees. Wage subsidies for firms who hire refugees have proven effective in several Nordic countries. The experience of refugees in the Netherlands has shown that work at temporary agencies can be another useful stepping stone, helping new arrivals adjust to labor market conditions. Enabling asylum seekers to hit the ground running and apply for jobs upon arrival, provided certain conditions are met, would also help; this is currently the case in Sweden, for example.
Policies which boost the labor market participation rate more generally will likely have an outsized effect on refugees. Improving the geographical mobility of migrants, making labor markets suppler and thus more adaptable to tumultuous technological change, and avoiding welfare traps due to an overlap between the benefit system and the tax system would all help refugees get their foot on the employment ladder. 
While the successful integration of refugees poses a challenge to policymakers, it could pay dividends in the long term. Europe is ageing fast, with the old-age dependency ratio in the EU-28 forecast to soar from 28.8% in 2015 to 50.3% by the middle of the century. Many pension and healthcare systems across the continent are already creaking under the strain of having to provide for so many retirees. The most recent wave of refugees arriving in Europe could help alleviate this burden to an extent. Most refugees are young: Around 50% of those who have sought asylum in the EU over the last few years are between 18 and 34, while nearly one-third are younger than 18. They are also likely to have higher fertility rates than native-born citizens. Both of these factors should help slow the rate of ageing and lessen the impact of the transition of our greying societies. The IMF estimates that the current influx of refugees could reduce pension spending by 0.25 percentage points of GDP by 2030 for the EU as a whole, and by more for large recipient countries. 
Whatever the net impact of refugees on the macroeconomy, this question is far from being at the forefront of people’s minds. Instead, most people are much more preoccupied with how refugees could affect their daily lives, and whether they will have to compete with them directly for jobs. This fear helps partially explain the recent rise in popularity of far-right parties, such as the Swedish Democrats in Sweden, or the AfD party in Germany. On this issue, concerns are only partly justified. Research has shown that displacement effects can exist, and domestic workers with similar skillsets to newcomers are more likely to lose out, while other types of workers gain. However, the time horizon, state of the economy and the flexibility of labor markets are all key factors, and these effects are rarely felt in the long run in growing economies where workers can move smoothly between jobs. 
Over four years after he arrived, Avindar has integrated well into Danish society. He is training to become an IT technician, and in the meantime works part-time at a local supermarket to help pay the bills. He has learned the local language, has a close group of Danish friends, and pays taxes. Avindar is, in short, one of the lucky ones. He is young, and his family was wealthy enough to travel directly to Denmark, rather than embark on a perilous journey across the continent. The Danish economy is also fortunate to have him. By learning a trade, working and paying taxes, Avindar is making a positive contribution to his host country. The economic impact of many others may be less clear-cut. But the experience of people like Avindar shows that, with a well-functioning labor market and the right public policies in place, it is possible for refugees to become integrated into both society and the economy.  
recommend readers follow the link and read the whole of Oilver Reynolds article (and subscribe to Focus Economics). I shall try to place this subject in its proper context of human history,
The debate on the migration of refugees from war-torn countries is warming up and balanced researched reporting is required rather than hasty political stances giving credibility to ignorant racial prejudice.
This context includes the long view of human history:
In the 16th and 17th centuries, European explorations found vast near empty territories in the Americas, South Asia, Australasia and the Pacific, which were followed by what became vast European migrations to occupy these territories as well as to militarily overawe populations in Africa, Asia and the Americas.
Current migration flows into Europe are redistributing world populations from wars, invasions, political disorders and persecutions, and their attractiveness from visual observations on world television and WWW.

These movements of populations are an integral and ancient consequence of human life that have a long and deep history going back a million of more years since various members of what became the human species left Africa and spread themselves, albeit thinly, across reachable continents and contested, often violently, with other species that were already in place from their own earlier evolutionaty development.
The modern wave of spreading population movements is now underway and can be expected to continue. Remember. We humans are all immigrants no matter where we reside.

Friday, August 18, 2017


Jacob Heilbrunn post a review of a new Princeton University Press book (17 August) in The National Interest HERE
Dennis C. Rasmussen, The Infidel and the Professor: David Hume, Adam Smith, and the Friendship that Shaped Modern Thought (Princeton: Princeton University Press, 2017), 336 pp., $29.95. 
No one went to greater lengths to defend David Hume’s posthumous reputation than Smith. Always more prudent than Hume—who was known as “the Great Infidel” and deemed unfit for tutoring the young—Smith, a venerated professor of moral philosophy at the University of Glasgow, was guarded in conversation about his religious skepticism. But after Hume’s death, Smith shed his habitual caution and composed a highly controversial supplement to Hume’s brief memoir My Own Life. It was called a Letter to Strahan. In it, Smith described Hume’s final months, emphasizing his affability and serenity in the face of illness and impending death. He observed,Though Mr. Hume always talked of his approaching dissolution with great cheerfulness, he never affected to make any parade of his magnanimity. He never mentioned the subject but when the conversation naturally led to it, and never dwelt longer upon it than the course of the conversation happened to require…
…Boswell, who visited Hume on his deathbed and wrote a famous account of it, was astounded by Hume’s phlegmatic acceptance of his demise. Dr. Johnson was not.
…In The Infidel and the Professor, Dennis C. Rasmussen explores the bromance between David Hume and Adam Smith. They bolstered each other’s careers, belonged to the Select Society club in Edinburgh and corresponded regularly on a variety of topics, ranging from moral philosophy to history to economics. Both also lived for a time in France, where they were celebrities and where Hume briefly became friends with Jean-Jacques Rousseau. Rasmussen, a professor of political science at Tufts University, deftly examines not only Hume and Smith’s personal relationship, but also the indispensable part that they played in shaping the Scottish Enlightenment. The result is a valuable study of the rise of the liberal tradition.
On the face of it, Scotland was an unlikely candidate to spawn such intellectual titans. Hume himself said that Scotland had been “the rudest, perhaps, of all European Nations; the most necessitous, the most turbulent, and the most unsettled.” But Hume’s and Smith’s lifetimes coincided with a new era of economic prosperity and cultural glories. Edward Gibbon remarked in 1776—the year the first volume of his The Decline and Fall of the Roman Empire appeared, along with Smith’s The Wealth of Nations, not to mention Thomas Paine’s Common Sense—that he had “always looked up with the most sincere respect towards the northern part of our island, whither taste and philosophy seemed to have retired from the smoke and hurry of this immense capital.” Some of the leading luminaries included Adam Ferguson, William Robertson and Dugald Stewart. Most were employed by the university, the law, church or medicine. According to Rasmussen, this helps to explain why their “outlooks generally lacked the subversive edge that was so conspicuous among the Parisian philosophes, causing the more radical side of Smith’s and especially Hume’s thought to stand out in starker relief.”
Hume, who was born in 1711, entered Edinburgh University at the age of ten, where he studied Latin, Greek, logic, metaphysics and the natural sciences. Religious precepts infused his courses. Hume was unimpressed. He instructed a friend in 1735 that “there is nothing to be learnt from a Professor, which is not to be met with in Books.” Upon graduation, he devoted eight years to private study, then spent three years in France, where he wrote the first two volumes of A Treatise of Human Nature… 
…Hume’s luminous essays quickly earned him both applause and notoriety, not least his sallies against miracles. “A skeptic to the end,” writes Rasmussen,
Hume never claims that miracles are impossible; to insist on their impossibility would be nearly as dogmatic as to insist on their reality. Rather, he “merely” argues that it is never reasonable to believe a report of a miracle having occurred.

Looks worthy of reading. I  have ordered my copy, which I shall read and comment upon, if able, on LOST LEGACY

Friday, August 11, 2017


Roshan Thiran posts (11 August) on LeaderEconomics HERE
What Adam Smith Teaches Us About Becoming Happierarticle
“Never complain of that of which it is at all times in your power to rid yourself.” – Adam Smith
Over the past few years, I have written about great leaders like Gandhi, Ben Franklin, Steve Jobs and others who have shown great leadership. Recently, I have been reading about others who may not have led a nation or an organisation, but from whom we can nevertheless learn great leadership lessons.
Adam Smith, the Scottish philosopher and economist, the father of modern economics and the man who coined the term the “invisible hand of the market” is one of them.
Smith remains one of the most important thinkers in addressing a question that is still as pressing today as it ever was: How can human values and the needs of business work together to create prosperous and civilised societies?
…. For Smith, the reality was much less black-and-white. Corporations, he believed, don’t corrupt our world – they simply serve our appetites and supply whatever it is we demand. The answer to society’s problems does not lie in getting rid of capitalism, but instead in learning how to make better use of it.
Smith (1723-1790) was born in Kirkcaldy, an industrial town in Scotland. At the age of 14, he attended the University of Glasgow before going on to study at Oxford. In 1748, he taught at the University of Edinburgh, where he met and befriended the philosopher and economist David Hume.
In 1759, Smith published the first of his notable works, The Theory of Moral Sentiments, a book which examines how we can lead a good life.
In 1776, his best known work, An Inquiry into the Nature and Causes of the Wealth of Nations (known as The Wealth of Nations) was published, and is considered a seminal work that shaped modern economic thinking.
At the time, a nation’s economic wealth was determined by the amount of gold and silver it possessed, but Smith argued that the true wealth of a nation was measured in its production and commerce.
Today, we refer to this measurement as the gross domestic product.
Capitalism is Good?
In the age of consumerism, Smith believed that capitalism was ultimately a force for good in the world. The creation of wealth helped societies look after their weakest members through the provision of hospitals, welfare systems, and other means of support. But Smith also felt that capitalism fell somewhat short in its role of meeting demands and serving appetites.”
Adam Smith never “coined the term the “invisible hand of the market”. He used it as a metaphor for a consequence of a merchant's action in investing his capital in an economy. These claims are of recent vintage owing the wholly fabricated claims by Paul Samuelson from 1948 to 2010.
 Adam Smith never referred to “capitalism”. Nor did anybody else until well into the 19th century - the word ‘capitalism’ was first used in English in 1833 - 43 years after Smith died. It was also rarely used until the 1870s.
Adam Smith never taught at the University of Edinburgh. He delivered an annual series of public lectures on Rhetoric and Jurisprudence in the City of Edinburgh for private fees from 1748-51. This is a fact despite recent wholly erroneous claims made by some inventive Edinburgh students.
Adam Smith corresponded and met with David Hume privately and they remained life-long friends. David kept a room for Adam Smith in his Edinburgh home. They shared similar private views on religion and moral philosophy.

Adam Smith did not believe “that capitalism was ultimately a force for good in the world”. He supported free markets and thought that “merchants and manufacturers” were often tempted to reduce competition so that they could raise prices to the deteriment of consumers’ interests.

Wednesday, August 09, 2017


My Post on Paul Samuelson's Awesome Error has been picked up by other Blogs. Thank you very much.
If you notice any others, drop me a line ..... Thank you

Tuesday, August 08, 2017


Gregory Mason, an associate professor in the department of economics at the University of Manitoba, posts (8 August) in Winnipeg Free Press HERE
“Raising minimum wage won't fight poverty”
… “This is an example of a self-organizing mechanism, otherwise known in economics as a Nash equilibrium. John Nash, the subject of the movie A Beautiful Mind, won the Nobel Prize for realizing that our individual decisions must account for the decisions of everyone else driving or participating in the economy. A steady state, or sustainable equilibrium, occurs where each of us makes the best decision in the context of everyone else’s best decision.
The "invisible hand" is another possible way of describing a Nash equilibrium. Ascribed to Adam Smith, the popular understanding is that Smith viewed the economy guided as if by an invisible hand.
Further, coupled with his idea that each of us acting in our own self-interest will collectively produce the highest well-being for society, it is an easy leap to conclude that Smith defended a non-interventionist and laissez-faire economic policy.
In fact, part of this story is bunk. Adam Smith only mentions the invisible hand three times in his important books. Indeed, he seems not to have seen this as a useful or central idea. It was contemporary economists who linked the idea of a self-organizing market to the invisible hand, possibly to justify non-intervention in market processes.
Gregory Mason’s article is another piece of evidence that economists are slowly waking up to the major error in attributing to Adam Smith the false idea that he believed that there was a special role for his use of the “invisible hand” as other than as a rhetorical metaphor. 
The incorrect attribution to Adam Smith began in the late 19th century (from the 1870s) and later flowered after Paul Samuelson (1948) wrongly attributed false meaning to Smith’s reference to an “invisible hand” that supposedly had remarkable powers well beyond anything envisaged by Adam Smith.
Today, the error is unbiquitous across, and beyond economics.
Adam Smith never “viewed the economy guided as if by an invisible hand”. Such an assertion treats Adam Smith’s use “of an invisible hand” as a simile, not a metaphor. (See: Adam Smith. Lectures on Rhetoric and Belles Lettres, Oxford University). 
Moreover, Nash Equilibrium has nothing to do with anything Adam Smith wrote, as Gregory Mason correctly states. 
Moreover,  “It was contemporary economists who linked the idea of a self-organizing market to the invisible hand, possibly to justify non-intervention in market processes.”  

To which “contemporary economists” linked Nash Equilibrium idea of a “self-organinising market”? Certainly, none of Smith’s contemporaries mentioned Smith’s use of the invisible hand. Only in the mid-20th century was that assertion made and believed, thanks to Paul Samuelson’s awesome reputation legitimising his wholly invented error.


Rudolf E. Havenstein  posts (7 August) on ALTERNATIVE ECONOMICS HERE
"I believe in the invisible hand of capitalism." 
Leon Cooperman [https://t.co/qs0GnKj7bI]
SAD. If its down too an oath swearing “I Believe” imposture its no longer economics, nor any form of science. 
Like the ’tooth fairy” at the bottom of the garden, it is for young children, not adults. 
Rudolph E. Haverstein should rename his blog: 
An Alternative to Economics ...