Saturday, September 26, 2009
Nobel Prizes should be awarded for originality of ideas. A professor may be very famous because of his expertise on Keynesian economics but that alone should not qualify for a Nobel. Give him a summa cum laude, if ever. The award in this case should go to Keynes and not to the person who has mastered Keynesian economics? Furthermore, the award should be given to something that is not very obvious almost everyone knows it. The Agency Problem for example is an "obvious" idea. Not worth a Nobel. The pricing of options in Black-Scholes is an example of a Nobel idea. Recently, the ones making rounds in the global crisis today is Keynesian. Govt intervention via pump priming methods are Keynesian. That is a good economic theory. (There was no Nobel yet in 1936, only in 1969) In our internet times, the people are so rich, they have forgotten about poverty in the poor countries. The embarrassing black eye of the economic theories today is the rising poverty and the absence of a specific solution to poverty. If you read the textbooks, the solution to poverty is education. But what about the people, the greater number of the populations who are just workers with no education? They are the general rule, they are not the exceptions. Are they hopeless? They cannot get the education that will make them richer. The greater number of the people will always be poor, and as a group, they will always be there even if some member of the group will go up the economic ladder via education. What is the solution to the poorest of the poor who will be domestic helpers for life? Telling them to educates themselves is giving them a solution for the few, not the many. This must be addressed by economics. There is wealth in this world but the distribution is very inequitable and this is demonstrated in Third World countries. Poverty will always be there but there must be a wholesale way to reduce it. Why is it that being poor in a First World country is still desired by people from Third World countries? Engineers in Third World countries go the First World countries to work as dishwashers. Teachers do the same and work are domestic helpers. This is a reality that so far has not been addressed by economic theory. Enter Hyperwage Theory.