Debunking Economics - the podcast

Steve and Phil critique our systemic over-reliance on Gross Domestic Product (GDP) as the definitive baseline for comparing global economies and measuring societal well-being. The discussion underscores a fundamental flaw in neoclassical modeling: while GDP measures raw industrial output, it completely fails to reflect actual public welfare due to stark differences in income distribution, unpriced volunteer and domestic labour, and varying national structures of public service delivery. For instance, a per-capita GDP comparison artificially flatters the United States over Europe or China simply because American citizens are forced to spend massive out-of-pocket sums on privatised health care, transport, and education—essential services that are heavily subsidised or provided entirely free by the state elsewhere. Would it be more worthwhile to measure something fundamental, like the relative happiness of a nation. Steve argues that GDP still has a place, but it should never be used on its own. That’s just lazy. Hosted on Acast. See acast.com/privacy for more information.

This week Phil and Steve dig into the storm of controversy over Australia's new budget rules targeting property speculators. The Labor government has scaled back negative gearing and abolished the 50% capital gains tax discount for established dwellings—major tax shelters that have historically rewarded people for gambling on rising asset prices rather than working productive jobs. Steve demonstrates that the country's absurd house-price-to-income ratio is driven entirely by the acceleration of private mortgage debt, heavily fueled by decades of destructive government policies designed to protect the wealth of baby boomers. Phil notes that while these changes may discourage real estate hoarding, Australia's massive, housing-reliant pool of intergenerational wealth still avoids inheritance taxes. So, is this a smart move by the Australian government, and could curbing the rentier class finally force the financial system to back local innovation instead of property speculation? Hosted on Acast. See acast.com/privacy for more information.

This week Phil challenges Steve on how the futures market handles terminal risk, pointing out that oil prices slope downward over time simply because traders blindly assume the Strait of Hormuz will reopen. Steve agrees and tears into the financial sector, explaining that modern pricing models dangerously mistake unquantifiable "uncertainty" for manageable "risk" by using flawed Gaussian distributions that erase the possibility of catastrophic, extreme events. Phil notes that the financial system's obsession with short-term hedging actually prevents behavior change and masks physical scarcity, leading corporations to scrap vital emergency buffers like PPE or fuel reserves in the name of market efficiency. Ultimately, Steve warns that while Western economies face a massive financial crash when these paper bets collide with zero physical supply, nations like China are strategically bypassing the market system altogether by stockpiling massive, real-world physical buffers of grain and energy to survive the looming collapse. Hosted on Acast. See acast.com/privacy for more information.

This week Phil and Steve dismantle the structural shift of the global economy toward a permanent state of debt dependence. Following a critique of Steve’s recent debate on the Piers Morgan show and a revisit to last week’s discussion on th link between energy and productivity, they look at how policy since the 1980s aggressively incentivizes borrowing over saving. Steve argues that the banking sector now functions primarily to inflate asset bubbles—particularly in housing—rather than funding productive industry, effectively conditioning entire generations to rely on debt-fueled asset growth for wealth. By debunking the neoclassical "savings myth," they show how the broader economy is dangerously fragile to any slowdown in the relentless creation of new debt. Hosted on Acast. See acast.com/privacy for more information.

In this episode of Debunking Economics, Steve Keen dismantles the mainstream economic obsession with "Total Factor Productivity" (TFP), labeling it a mythical construct that ignores the laws of physics. He argues that economists historically "fudged" data to credit an abstract idea of technology for growth, while in reality, productivity gains are almost entirely a function of increasing the energy throughput of machinery. Keen asserts that "labor without energy is a corpse" and "capital without energy is a sculpture," emphasizing that real output only rises when we design machines capable of converting more energy into useful work. The discussion concludes that as the global economy faces energy supply shocks and shifts from fragile "just-in-time" efficiency toward localized resilience, we must brace for a structural decline in traditional productivity, as "resilience" is effectively the physical price paid for security in a less stable world. Hosted on Acast. See acast.com/privacy for more information.