The Top 10 Unsolved Questions in Economics

The Top 10 Unsolved Questions in Economics There are many problems in the economic world that have yet to be solved, and fortunately, Wikipedia  has compiled a list of the greatest ones to date - from what caused the Industrial Revolution to whether or not money supply is endogenous. Although great economists like Craig Newmark and members of the AEA have taken a stab at solving these tough issues, the true solution to these problems - that is to say the generally understood and accepted truth of the matter - has yet to come to light. To say a question is unsolved implies that the question potentially has a solution, in the same way 2x 4 8 has a solution. The difficulty is, most of the questions on this list are so vague that they cannot possibly have a solution. Nevertheless, here are the top ten unsolved economic problems. 1. What Caused the Industrial Revolution? Although there are many factors at play in causing the Industrial Revolution, the economic answer to this question has yet to be sussed out. However, no event has a single cause - the Civil War was not wholly caused by slavery and World War I was not wholly caused by the assassination of Archduke Ferdinand. This is a question without a solution, as events have numerous causes and determining which ones were more important than others naturally involves some subjectivity. While some might argue that a strong middle-class, mercantilism and the development of an empire, and an easily moveable and growing urban population who increasingly believed in materialism led to the Industrial Revolution in England, others might argue the countrys isolation from European continental problems or the nations common market led to this growth. 2. What Is the Proper Size and Scope of Government? This question again has no real objective answer, because people will always have differing views on the argument of efficiency versus equity in governance. Even if a population managed to fully understand the exact trade-off that was being made in each case, the size and scope of a government largely depend on its citizenrys dependence on its influence. New countries, like the United States in its early days, relied on a centralized government to maintain order and oversee rapid growth and expansion. Over time, it has had to decentralize some of its authority to the state and local levels in order to better represent its vastly diverse population. Still, some might argue the government should be larger and control more due to our reliance on it domestically and abroad. 3. What Truly Caused the Great Depression? Much like the first question, the cause of the Great Depression cant be pinpointed because so many factors were at play in the eventual crash of the United States economies in the late 1920s. However, unlike the Industrial Revolution, whose many factors also included advances outside of economy, the Great Depression was primarily caused by a catastrophic intersection of economic factors. Economists commonly believe five factors ultimately resulted in the Great Depression: the stock market crash in 1929, over 3,000 banks failing throughout the 1930s, reduction in purchasing (demand) in the market itself, American policy with Europe, and drought conditions in Americas farmland. 4. Can We Explain the Equity Premium Puzzle? In short, no we have not yet. This puzzle refers to the strange occurrence of returns on stocks being much higher than returns on government bonds over the past century, and economists are still baffled by what could truly be the cause. Some posit that either risk aversion may be at play here, or antithetically that large consumption variability accounted for the discrepancy in return capital. However, the notion that stocks are riskier than bonds isnt enough to account for this risk aversion as a means to alleviate arbitrage opportunities within a countrys economy. 5. How Is It Possible to Provide Causal Explanations Using Mathematical Economics? Because mathematical economics relies on purely logical constructions, some might wonder how an economist might use causal explanations in their theories, but this problem isnt quite that difficult to solve. Like physics, which can provide causal explanations like a projectile traveled 440 feet because it was launched at point x from angle y at velocity z, etc., mathematical economics can explain the correlation between events in a market that follow the logical functions of its core principles. 6. Is There an Equivalent of Black-Scholes for Futures Contract Pricing? The Black-Scholes formula estimates, with relative accuracy, the price of European-style options in a trading market. Its creation led to a newfound legitimacy of the operations of options in markets globally, including the Chicago Board Options Exchange, and is often used by participants of options markets to predict future returns. Although variations of this formula, including notably the Black formula, have been made in financial economic analyses, this still proves to be the most accurate prediction formula for markets around the world, so there is still yet to be an equivalent introduced to the options market. 7. What Is the Microeconomic Foundation of Inflation? If we treat money such as any other commodity in our economy and as such is subject to the same supply and demand forces, reason would suggest it would be just as susceptible to inflation as goods and services are. However, if you consider this question like one considers the question of which came first, the chicken or the egg, it may be best left as a rhetorical one. The basis, of course, is that we do treat our currency like a good or service, but where this originates doesnt truly have one answer. 8. Is the Money Supply Endogenous? Wikipedia follows up this question with a simple statement: Mainstream economics claims that it is; post-Keynesian economics claims that it is not. However, the issue isnt uniquely about endogeneity, which, strictly speaking, is a modeling assumption. If the question is properly constructed, I think this could be considered one of the key problems in economics. 9. How Does Price Formation Occur? In any given market, prices are formed by a variety of factors, and just like the question of the microeconomic foundation of inflation, theres no true answer to its origins, though one explanation posits that each seller in a market forms a price depending on probabilities within the market which in turn depends on the probabilities of other sellers, meaning that prices are determined by how these sellers interact with one another and their consumers. However, this idea that prices are determined by the markets overlooks several key factors including that some goods or service markets dont have a set market price as some markets are volatile while others are stable - all depending on the veracity of information available to buyers and sellers. 10. What Causes the Variation of Income Among Ethnic Groups? Much like the causes of the Great Depression and the Industrial Revolution, the exact cause of income disparity between ethnic groups cannot be pinpointed to a single source. Instead, a variety of factors ​are at play depending on where one is observing the data, though it mostly comes down to institutionalized prejudices within the job market, availability of resources to different ethnic and their relative economic groups, and employment opportunities in localities featuring varying degrees of ethnic population density.

Biography of Jorge Luis Borges (1899-1986)

Biography of Jorge Luis Borges (1899-1986) Jorge Luà ­s Borges was an Argentine writer who specialized in short stories, poems, and essays. Although he never wrote a novel, he is considered one of the most important writers of his generation, not only in his native Argentina but around the world. Often imitated but never duplicated, his innovative style and stunning concepts made him a â€Å"writer’s writer,† a favorite inspiration for storytellers everywhere. Early Life Jorge Francisco Isidoro Luà ­s Borges was born in Buenos Aires on August 24, 1899, to middle-class parents from a family with a distinguished military background. His paternal grandmother was English, and young Jorge mastered English at an early age. They lived in the Palermo district of Buenos Aires, which at the time was a bit rough. The family moved to Geneva, Switzerland, in 1914 and remained there for the duration of the First World War. Jorge graduated from high school in 1918 and picked up German and French while he was in Europe. Ultra and Ultraism The family traveled around Spain after the war, visiting several cities before moving back to Buenos Aires in Argentina. During his time in Europe, Borges was exposed to several groundbreaking writers and literary movements. While in Madrid, Borges participated in the founding of Ultraism, a literary movement that sought a new sort of poetry, free from form and maudlin imagery. Together with a handful of other young writers, he published the literary journal Ultra. Borges returned to Buenos Aires in 1921 and brought his avant-garde ideas with him. Early Work in Argentina: Back in Buenos Aires, Borges wasted no time in establishing new literary journals. He helped found the journal Proa, and published several poems with the journal Martà ­n Fierro, named after the famous Argentine Epic Poem. In 1923 he published his first book of poems, Fervor de Buenos Aires. He followed this with other volumes, including Luna de Enfrente in 1925 and the award-winning Cuaderno de San Martà ­n in 1929. Borges would later grow to disdain his early works, essentially disowning them as too heavy on local color. He even went so far as to buy copies of old journals and books in order to burn them. Short Stories by Jorge Luis Borges: In the 1930s and 1940s, Borges began writing short fiction, the genre which would make him famous. During the 1930s, he published several stories in the various literary journals in Buenos Aires. He released his first collection of stories, The Garden of Forking Paths, in 1941 and followed it up shortly thereafter with Artifices. The two were combined into Ficciones in 1944. In 1949 he published El Aleph, his second major collection of short stories. These two collections represent Borges’ most important work, containing several dazzling stories that took Latin American literature in a new direction. Under the Perà ³n Regime: Although he was a literary radical, Borges was a bit of a conservative in his private and political life, and he suffered under the liberal Juan Perà ³n dictatorship, although he was not jailed like some high profile dissidents. His reputation was growing, and by 1950 he was in demand as a lecturer. He was particularly sought after as a speaker on English and American Literature. The Perà ³n regime kept an eye on him, sending a police informer to many of his lectures. His family was harassed as well. All in all, he managed to keep a low enough profile during the Perà ³n years to avoid any trouble with the government. International Fame: By the 1960s, readers around the world had discovered Borges, whose works were translated into several different languages. In 1961 he was invited to the United States and spent several months giving lectures in different venues. He returned to Europe in 1963 and saw some old childhood friends. In Argentina, he was awarded his dream job: director of the National Library. Unfortunately, his eyesight was failing, and he had to have others read books aloud to him. He continued to write and publish poems, short stories, and essays. He also collaborated on projects with his close friend, the writer Adolfo Bioy Casares. Jorge Luis Borges in the 1970’s and 1980’s: Borges continued to publish books well into the 1970’s. He stepped down as director of the National Library when Perà ³n returned to power in 1973. He initially supported the military junta that seized power in 1976 but soon grew disenchanted with them and by 1980 he was openly speaking out against the disappearances. His international stature and fame assured that he would not be a target like so many of his countrymen. Some felt that he did not do enough with his influence to stop the atrocities of the Dirty War. In 1985 he moved to Geneva, Switzerland, where he died in 1986. Personal Life: In 1967 Borges married Elsa Astete Milln, an old friend, but it did not last. He spent most of his adult life living with his mother, who died in 1975 at the age of 99. In 1986 he married his longtime assistant Maria Kodama. She was in her early 40’s and had earned a doctorate in literature, and the two had traveled together extensively in previous years. The marriage lasted only a couple of months before Borges passed away. He had no children. His Literature: Borges wrote volumes of stories, essays, and poems, although it is the short stories that brought him the most international fame. He is considered a groundbreaking writer, paving the way for the innovative Latin American literary boom of the mid-to-late 20th century. Major literary figures such as Carlos Fuentes and Julio Cortzar admit that Borges was a great source of inspiration for them. He was also a great source for interesting quotes. Those unfamiliar with Borges works may find them a little difficult at first, as his language tends to be dense. His stories are easy to find in English, either in books or on the internet. Here is a short reading list of some of his more accessible stories: Death and the Compass: A brilliant detective matches wits with a cunning criminal in one of Argentinas best-loved detective stories.The Secret Miracle: A Jewish playwright sentenced to death by the Nazis asks for and receives a miracle...or does he?The Dead Man: Argentine gauchos mete out their particular brand of justice to one of their own.