Merryn Talks Money Why Economists Are Looking at Economics All Wrong
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Apr 11, 2025 
James Galbraith, an economist and professor at the University of Texas, argues that most economists are trapped in outdated models that misinterpret economic dynamics. He highlights how economies do not naturally reach equilibrium, likening them instead to living systems. The conversation critiques traditional models, emphasizing the importance of sustainable resource management and the challenges of energy transition. Galbraith also discusses the economic misallocation in the U.S. and its implications for societal well-being, inflation, and population trends.
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Equilibrium Economics
- Economists often view economies in terms of equilibrium, as if they tend towards stability.
- However, Galbraith argues that this is a flawed model, as nothing in nature tends towards equilibrium.
Resource Degradation
- Economies, like living systems, consume high-quality resources and degrade them in the process of doing work.
- Standard economic models often overlook the crucial role of resource scarcity and quality.
Ghost Towns
- Galbraith uses the example of abandoned gold mining towns to illustrate the importance of resources.
- When the gold mines were depleted, the towns' economies collapsed, highlighting resources' crucial role.
