For over a century macroeconomists have dominated the field of Economics in the Western World. I predict this is going to change in this century and that microeconomics will make a come-back.
The sub-field of microconomics itself was actually founded decades earlier than the sub-field of macroeconomics by a Cambridge College professor in England named Alfred Marshall.
In the late 19th century, Alfred Marshall wrote his famous book, Principles of Economics, and in his classrooom Marshall taught microeconomics to his students.
Marshall invented the field of microeconomics in reaction to the popularity of Karl Marx’s book, Das Kapital, a book that was critical of the capitalism that Adam Smith had advocated in Smith’s earlier book, the Wealth of Nations, published in 1776, the year of the American Revolution.
Marshall’s microeconomics teachings shunned the simple arithmetic examples that Karl Marx relied on to support Marx’s theories that rich people were cheating the factory workers who had made them rich. Fast forward to the next century!
In the early 1930’s, the United States fell into a GREAT DEPRESSION, far worse than any we have seen since.
That’s when Lord John Maynard Keynes, a student of Alfred Marshall’s at Cambridge, created and taught the sub-field of macroeconomics.
Keynes overcame Marshall’s reluctance to use arithmetic by using a form of mathematics called ‘calculus’ to support Keynes’ theories. Keynes’ theories became the mainstream thinking of the economists during the Great Depression and afterwards.
Meanwhile in the mid-twentieth century, conservative followers of Adam Smith’s economics at the University of Chicago economics department were still using simple arithmetic just like Karl Marx had done.
For almost a hundred years now Lord Keynes’ flashy macroeconomics and ‘econometrics’, along with President Franklin Roosevelts’ “New Deal”, were considered successes that saved the U.S. Economy in the mid-twentieth century.
Nevertheless a minority of conservative economists on both the West and East Coasts of this country at Stanford University, University of Virginia and other Southern colleges, and George Mason University near Washington, D.C. published books which challenged the ideas of the Keynesian economists.
Some of these minority economists’ arguments were quite credible, others weren’t.
I know because I created numerous back-of-the-book indexes for all kinds of economics professors for over twenty-five years in the late 20th century: Keynesian liberals, Chicago conservatives, and ultra-conservative libertarians.
Macroeconomics and Microeconomics – The Differences
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Our Country is BEING ATTACKED!
By whom? by Saudi Arabia and Russia. Have you heard anything about this? Other than that the U.S. oil producers have been driven into paying their customers to take their oil so they can avoid storage costs for it? Do you know what caused this glut on the market? Probably not!
In mid spring 2020 Saudi Arabia sent 20 oil tankers speeding towards the Gulf Coast of the U.S. They are planning to arrive in Texas and Louisiana in May in order to flood the oil market in the U.S. and drop prices of U.S. oil even further than today’s prices.
This in a time when streets in the country are filled with parked cars that are not going anywhere! Continue reading →
Dear Readers of Brucenomics
I started this blog as a newsletter that I sent to a few friends as the ‘Financial Crisis’ of 2007-9 began. It grew from there and landed me on Huffington Post for a couple of years.
Ever since the elections of 2016, politics has swamped economics in people’s minds. Plus, for the past four years I’ve been through medical crises that made it impossible to keep on blogging at my former pace. And now I’m involved in a new project of writing a book.
But today, we’re in a whole new era of crises that is going to blow traditional economics thinking apart.
So I’ve decided that with Brucenomics, I’m going to continue to try to suggest novel ways we can make our economic system better.
I’ve just put up a post titled Wake Up America!” for what do “after the COVID-19” period.
Previous blog posts I recommend reading for discussion of what to do after this crises include “Fault Lines”- Parts One – Three, and “Six ideas To Improve Our U.S. Economy”
But we have to change our thinking right now
In fact, I think Americans are going to have to let go of some of our pride in our work as the sole source of our meaning to others in this society.
“Welfare” is supposed to denote a healthy existence for people, not connote a dirty word.
Also, we are too attached to the word “independence”. Now that we are all becoming quarantined at home we will learn just how dependent we are on other people’s help to get through this crises.
Many of us will not be able to get through without help. How can we build goals of service in our lives to others and make our society stronger?
And why not aim for a world where we work less and have more time for others and ourselves to be who we want to be?
Future plans for Brucenomics
However, what I really want to cover most in Brucenomics is what I wrote about for Huffington Post years ago. That is how freelancers can survive in this crisis.
Self-employed professionals, and owners of sole-proprietorships and small LLCs are an endangered species that make up well over 10 percent of our economy by now.
While corporations are being handed tons of money, the bottom 10 percent, the self-employed, won’t even get loans from the banks that are handing out zero interest loans to ‘small businesses’ and huge corporations both of which have many employees.
Why do I say that? Because self-employed business owners have been classified by the IRS for tax purposes as half employer and half employee.
We are required to pay the full amount of payroll taxes, while employees only pay half. This is patently unfair and why so many “small businesses” fail.
Giving tax credits to self-employed business owners for their expenses of doing business often results in those business owners putting business debt on their own personal credit cards and then not having enough money to pay for their SE tax bill or business expenses during economic downturns.
The IRS even encourages this practice by allowing tax deductions for personal credit card fees and interest.
There is talk by Republicans in Congress and our President about paying both employers and employees a cash payment. This is insane for the situation we are in right now.
Requiring employees to work in order to get paid by employers who will get reimbursed by the government is just not possible. It is the employees who cannot go to work and get paid right now who need the money to pay their bills.
If they go through with this, you can bet, Congress will probably treat self-employed as if we were either only employers or only employees. This is how we are regarded today by the IRS for self-employed (i.e., FICA) taxes.
Self-employed cannot deduct the costs of our own labor on our business’ income-tax form. We have to keep working or our business goes under.
We need to insist that self-employed sole owners of a business must be allowed to get full payroll tax relief during this crisis and like employees be able to collect Social Security when we retire..
Too, self-employed people need loans just as much as anyone else, but rarely can get them.
A self-employed business or even a small business with an employee or two, cannot survive without both working and paying bills for the overhead costs of their business.
Meanwhile corporations will pay nothing for the costs of workers and management wages and salaries that the government will give them loans for.
This is why all of us need to protect self-employment: Without both the employer and employee halves of a self-employed business owner there will be no self-employed businesses left standing.
Please speak up if you are self-employed! We need spokespersons who can get the attention of Washington D.C.—or self-employment for many will not survive this crises.