Sunday, November 23, 2014

John Gray — A Point of View: The writer who foresaw the rise of the totalitarian state

The 19th Century Russian novelist Fyodor Dostoyevsky wrote about characters who justified murder in the name of their ideological beliefs. For this reason, John Gray argues, he's remained relevant ever since, through the rise of the totalitarian states of the 20th Century, to the "war against terror".
When liberalism becomes illiberalism.

BBC News Magazine
A Point of View: The writer who foresaw the rise of the totalitarian state
John Gray

Saturday, November 22, 2014

David Glasner — Misunderstanding Reserve Currencies and the Gold Standard

In Friday’s Wall Street Journal, Lewis Lehrman and John Mueller argue for replacing the dollar as the world’s reserve currency with gold. I don’t know Lewis Lehrman, but almost 30 years ago, when I was writing my book Free Banking and Monetary Reform, which opposed restoring the gold standard, I received financial support from the Lehrman Institute where I gave a series of seminars discussing several chapters of my book. A couple of those seminars were attended by John Mueller, who was then a staffer for Congressman Jack Kemp. But despite my friendly feelings for Lehrman and Mueller, I am afraid that they badly misunderstand how the gold standard worked and what went wrong with the gold standard in the 1920s. Not surprisingly, that misunderstanding carries over into their comments on current monetary arrangements.
Uneasy Money
David Glasner | Economist at the Federal Trade Commission

Dr. Housing Bubble — The middle class migration out of California

People look at population growth in California and see nothing that stands out. Digging into the numbers you find some interesting figures. First, the main reason California is actually growing is because of international migration. California for well over a decade is losing domestic residents. That is, “domestic” Californians on a net basis are heading out of the state. On a more micro level, you are seeing the middle class either being phased out of the state or being pushed into lower priced inland regions. It is an interesting trend that is also happening in the tech hungry Bay Area. Housing continues to be an important topic because the vast majority of income is spent on housing. California has one of the highest percentage of families spending half or more of their monthly income on either rent or housing payments. In places like Los Angeles the main international migration is coming from Asia. You also see this driving up real estate values in certain areas and this contributes to domestic out migration. The migration numbers are interesting and shed light on this global trend.
Dr. Housing Bubble
The middle class migration out of California: While domestic migration is up, foreign migration is filling the gap.

RT — ‘We will hunt you down’: KKK threatens to shoot Anonymous ‘n***** lovers’

Getting ugly out there.

‘We will hunt you down’: KKK threatens to shoot Anonymous ‘n***** lovers’

Anonymous: KKK members may have infiltrated Ferguson cop support group

BBC News — Ukraine crisis: Lavrov warns over Russia 'regime change' goal

Western sanctions against Russia over its role in Ukraine are aimed at forcing regime change in Moscow, Foreign Minister Sergei Lavrov says. 
Speaking to foreign policy advisers in Moscow, Mr Lavrov referred to calls for sanctions "that will destroy the economy and cause public protests". 
On Thursday, President Vladimir Putin said Moscow must guard against a "colour revolution".
BBC News
Ukraine crisis: Lavrov warns over Russia 'regime change' goal


Lavrov accuses West of seeking 'regime change' in Russia
Polina Devitt

China cannot afford to let regime change happen in Russia and won't.

Russia knows this.

Vineyard of the Saker
Observations on President Putin’s call upon US not to meddle in Russia affairs
Peter Koenig

The History of a Dangerous Idea: Mark Blyth Talks Austerity, Greece and the Global Economic Crisis — Michael Nevradakis interviews Mark Blyth

Economist, professor at Brown University and author ofAusterity: The History of a Dangerous Idea, Mark Blyth talks with Truthout about the historical origins of austerity as an economic idea, how previous attempts to enforce austerity policies were catastrophic, and the worldwide economic crisis today.
The History of a Dangerous Idea: Mark Blyth Talks Austerity, Greece and the Global Economic Crisis
Michael Nevradakis, Truthout | Interview — MPs debated money creation and society

Watch the debate and read the transcript 
The debate was opened by Steve Baker at 11.18am. Shadow Treasury Minister, Catherine McKinnell, responded to the debate on behalf of the Opposition. The Economic Secretary to the Treasury, Andrea Leadsom, responded to the debate on behalf of the Government. 
Watch Parliament TV: MPs debate money creation and society, Thursday 20 November 2014 
Read the debate in Hansard. 
Read Commons Hansard: MPs debate money creation and society, Thursday 20 November 2014
MPs debated money creation and society


Background and prognosis.

The Financial Times — FT Alphaville
Private money vs totally-public money, plus some history
Izabella Kaminska

Pepe Escobar — Washington plays Russian roulette

Bleak assessment.

Asia Times Online — The Roving Eye
Washington plays Russian roulette
Pepe Escobar

Matthew Lynch — 5 Reasons Bilingual Education Should Be Mandatory from Kindergarten On Up

What is your opinion on mandating bilingual education programs?
No brainer. Spanish especially, since it is a very easy language to learn and highly useful in the Western Hemisphere.

I would go further have introduce a program in language skills where children from pre-K learn the basics of language by imitating the sounds of a variety of languages, especially those that are likely to be useful later in life.

And, yes, I am thinking in particular of Chinese, which is a difficult language to learn because meaning depends on tonal difference of the same syllable. This is relatively simple for young children to pick up and very difficult to master later in life. Obviously, Chinese is going to be increasingly important as this century progresses.

If a person learns a second language very young and also how to pronounce the sounds of different languages, language learning is relatively simple.

Lynch lists five reasons for this but there are many more. In fact, speaking more than one language even reduces one's chances of dementia.

5 Reasons Bilingual Education Should Be Mandatory from Kindergarten On Up
Matthew Lynch, Ed.D. | editor of The Edvocate,

Friday, November 21, 2014

Tyler Cowen — Deirdre McCloskey has a 55-page review essay on Piketty

Download link at his place.

Marginal Revolution
Deirdre McCloskey has a 55-page review essay on Piketty
Tyler Cowen | Holbert C. Harris Chair of Economics at George Mason University and serves as chairman and general director of the Mercatus Center

Andy Peters — Morning Scan: Fed Wonders if It's 'Captured'; Commodity Holdings Questioned

The Fed established a team in Washington to review whether it's too cozy with the banks it regulates. The New York Timesdescribed the review as a "surprise announcement." The Fed's inspector general will simultaneously conduct a similar review, looking specifically at whether "top officials were hearing all the opinions of Fed bank examiners." The moves were announced Thursday, ahead of Fed Governor Daniel Tarullo's and New York Fed President William Dudley's testimony on Friday before a Senate committee. Dudley is expected to be questioned aggressively about whether the Fed is guilty of "regulatory capture." Among the areas to be studied in the Fed's internal review is whether board members are supplied with adequate information to make sound oversight decisions. Lawmakers will have plenty of ammunition to level charges that the Fed has been captured, from the secret recordings of Fed conversations about Goldman Sachs, to the recent revelation that a Goldman employee received confidential information from a Fed worker about a bank the Fed regulates.
American Banker
Morning Scan: Fed Wonders if It's 'Captured'; Commodity Holdings Questioned
Andy Peters

Jeffrey Sachs — China’s New Global Leadership

Jeff Sachs gets this about right. Now if he would just get his economics right.

Project Syndicate
China’s New Global Leadership
Jeffrey D. Sachs | Professor of Sustainable Development, Professor of Health Policy and Management, and Director of the Earth Institute at Columbia University, is also Special Adviser to the United Nations Secretary-General on the Millennium Development Goals

Randy Wray — Founder of PayPal Says Taxes Drive Money

 Peter Thiel been reading Warren Mosler?

Great Leap Forward
Founder of PayPal Says Taxes Drive MoneyL. Randall Wray | Professor of Economics, University of Missouri at Kansas City

Michigan Citizen — Court rules Michigan has no responsibility to provide quality public education

In a blow to schoolchildren statewide, the Michigan Court of Appeals ruled on Nov. 7 the State of Michigan has no legal obligation to provide a quality public education to students in the struggling Highland Park School District.
A 2-1 decision reversed an earlier circuit court ruling that there is a “broad compelling state interest in the provision of an education to all children.” The appellate court said the state has no constitutional requirement to ensure schoolchildren actually learn fundamental skills such as reading — but rather is obligated only to establish and finance a public education system, regardless of quality. Waving off decades of historic judicial impact on educational reform, the majority opinion also contends that “judges are not equipped to decide educational policy.”…
The decision dismisses an unprecedented “right-to-read” lawsuit filed by the ACLU of Michigan in July 2012 on behalf of eight students of nearly 1,000 children attending K-12 public schools in Highland Park, Mich. The suit, which named as defendants the State of Michigan, its agencies charged with overseeing public education and the Highland Park School District, maintained that the state failed to take effective steps to ensure that students are reading at grade level.

“Let’s remember it was the state that turned the entire district over to a for-profit charter management company with no track record of success with low performing schools,” said Moss. “It is the state that has not enforced the law that requires literacy intervention to children not reading at grade level. It is the state’s responsibility to ensure and maintain a system of education that serves all children.”
Michigan Citizen
Court rules Michigan has no responsibility to provide quality public education
The Michigan Citizen
h/t Clonal

David Ellerman — Double-entry Bookkeeping: The Mathematical Treatment

Double-entry bookkeeping (DEB) implicitly uses a specific mathematical construction, the group of differences using pairs of unsigned numbers (“T-accounts”). That construction was only formulated abstractly in mathematics in the 19th century—even though DEB had been used in the business world for over five centuries. Yet the connection between DEB and the group of differences (here called the “Pacioli group”) is still largely unknown both in mathematics and accounting. The precise mathematical treatment of DEB allows clarity on certain conceptual questions and it immediately yields the generalization of the double-entry method to multi-dimensional vectors typically representing the different types of property involved in an enterprise or household. 
This publication represents success in a long struggle, stretching over three decades, to get the mathematical treatment of double-entry bookkeeping published in an accounting journal. Although the mathematical treatment and generalization of DEB was previously published in book form and in math and operations research journals, it seems to have been repeated blocked by the repeated refereeing of the author of the failed previous attempt at multi-dimensional DEB (see p. 493 in the paper). 
Click here to download the reprint.
David Ellerman
Double-entry Bookkeeping: The Mathematical Treatment

RT — New Tax Law to Reverse Capital Outflows, Bring Billions to Russian Treasury

The new law requiring that all foreign dealings now be reported, aims to prevent major capital outflow (estimated at $200 billion in 2014)….

Russia’s upper house of parliament has approved an “anti-offshore” law requiring individual and corporate taxpayers to report foreign profits. The Russian government aims to prevent capital outflow via “offshores,” estimated at $200 billion in 2014.
The law requires Russian tax authorities to be notified of all foreign dealings. The government believes it will return $3.1-4.2 billion in tax revenue to the Russian state budget.…
According to some experts, over $2 trillion has flowed offshore out of Russian jurisdiction in recent years, TASS reports. Even the most moderate estimates put the figure at between $800 million and $1 trillion.…
Legislators believe that 20-30 percent of capital outflow can return to the country via taxes.

Offshore companies are used to blanket the activities of companies that wish to keep ownership details anonymous or as an outlet for criminal activities such as tax evasion and corruption.…
Russia’s largest car-maker, AvtoVaz announced in May that it will drop its offshore status and re-register in Russia. Many of Russia’s biggest state companies- Rusal, Evraz, Russian Railways, and Metalloinvest generate a lion’s share of their profits outside of Russia.

Eric Schliesser — The Technocratic Conception of Politics (The Economists and Rawls redux)

By a 'technocratic conception of politics,' (recall) I mean to capture the following three features of an enduringimage of politics present in (social) science:

first, it is characterized by the ideal that with social knowledge and its progress, substantial political disagreement can be eliminated.…
…second, this ideal of conflict-free politics presupposes … considerable value-unanimity in society.… 
Third, the conception requires an image of science in which one of the central aims of policy scientists is to achieve consensus (or lack of disagreement).
In short, this is the assumption of the possibility of achieving a universally true conceptual model free of the cognitive-volitional-affective-sensory biases of ideology. This assumption is based on a level of symmetry that evidence does not support.

The assumption of universalizability of knowledge is grounded in an assumption of methodological individualism, namely, that human individuals are "atomic" in the sense of "rational" human behavior being capable of being modeled in terms of a representative agent. What this type of thinking leads to is generalization from introspection on the part of theorists, assuming lack of bias even admitting bounded rationality: Rational individuals will come to the same conclusion based on the same information. This assumes away ideological bias, as well as the logical problems associated with criteria being foundational to the construction of different world views and ideologies.

There's also a link to download Kenneth Boulding's Economics as a Moral Science.

Eric Schliesser | BOF Research Professor in Philosophy and Moral Sciences, Sarton Centre for History of Science, Ghent University, Belgium

Yves Smith — Masaccio: Piketty Shreds Marginal Productivity as Neoclassical Justification for Supersized Pay

Yves here. One of the main agendas of neoclassical economics is to give Panglossian defenses of the current order a veneer of intellectual legitimacy. If our system is the result of individuals and businesses behaving in logical ways, at least in the minds of economists, surely the outcome is inevitable, and therefore virtuous, or else those operators would do things differently. The Big Lie in all of this is that neoclassical economics takes power completely out of the equation. While it does assume selfishness, in that everyone is out or himself to maximize his utility, it also assumes atomized actors who lack the power to influence markets. As we wrote in ECONNED: 
To put it another way: the neoclassical paradigm is that of pure competition, where providers are mere price takers and cannot influence market dynamics. But that is a profoundly unattractive business proposition.Even if one were to wave a wand and reconfigure the modern economy along those lines, it would in short order coalesce into larger units as individuals did deals (either via alliances or merging operations) to gain the advantages of greater size, and sought to distinguish their offerings to give them pricing power. And differentiation doesn’t necessarily mean having unique products, but can come through the service related to the products. For instance, convenience stores charge more for staples like milk by virtue of location (on highways where there are no alternatives nearby) or being open at 3:00 a.m.
Yet larger enterprises, or indeed anywhere group ties matter, are weirdly disturbing to neoclassical loyalists. One of the reasons they cling so fiercely to ideas like individuals as the locus of activity, along with rationality and welfare-maximizing results (despite the considerable distortions that result) is that they believe any other stance would support a restriction of personal rights. (An aside: this view is counterfactual. Societies where social bonds have broken down and many individuals are isolated are in fact much more subject to totalitarianism and manipulation by propaganda.)
One widely repeated bit of propaganda in the US is that how much people earn reflects their worth in an economic sense. Given how important business is in American society, maintaining this belief is critical to maintaining legitimacy; otherwise, more and more people would see corporate executives not as captain of enterprise but individuals by luck or connivance, got in a position where they could exploit a system that gives them control over assets and cash flows with perilous little in the way of controls over them (there is a vast literature on principal/agent issues in large corporations).
Here, Ed Walker explains how Piketty took a wrecking ball to the ideas that compensation at the top end of the pay spectrum has anything to do with the type of performance economists care about: marginal productivity. It is telling that this part of Piketty’s argument hasn’t gotten the attention it warrants.
Naked Capitalism
Masaccio: Piketty Shreds Marginal Productivity as Neoclassical Justification for Supersized Pay
Yves Smith 

Jim Rogers is always good for a laugh. Ha! Ha!

Guys like Jim Rogers are geniuses because they understand marketing. They keep repeating their message over and over and over again, even though nothing they predict ever happens.

Same Reason Our Schools Are Failing Our Students? Mismanaging Planet Kindergarten.

   (Commentary posted by Roger Erickson)

Since motivation drives continued innovation.

The law of multi-level selection? Those who know WHY they work/fight/learn will always run circles around those who only know how?

No consensus Desired Outcome?  Then aggregates display lagging orientation to why or how to accomplish ... what? The awesome return on coordination is possible only when aggregates are working towards a consensus Desired Outcome.

Meanwhile, past history repeatedly shows that all individuals learn best & fastest via unbiased exposure to context. That's why Froebel invented Kindergarten. The same lesson applies for individual aggregates, not just the individual components of aggregates.

Surely that reminds you of biology (including, eventually, the human species), which was left - initially unbiased - in a safe environment (planet earth), where it could learn all on it's own - without outside bias or micromanagement? Which idiot ever said there was any conflict between religion & the scientific method?

For gods so loved the world ... that they didn't try to micromanage it's development?

Yes, everything we ever needed to know we're learning here, from one another. Only one question. Will humans ever stop fighting, and graduate from planet Kindergarten?

Ed Gillespie: "An Obamacare Do-Over" (or "We DON'T Need Death Panels")

Big news out of the right today on a potential GOP alternative to the ACA from Ed Gillespie (worked in Bush II Admin) who recently ran in Virginia for a US Senate seat (lost but close).

Op-Ed at the NYT here.

Gillespie proposes a very fiscal friendly alternative to the current very fiscal UN-friendly ACA.  This may be a roll out of the non-libertarian branch of the GOP's 2017 election healthcare platform.

Here's the deal:
Republicans must have a plan that addresses the concerns that led to Obamacare’s enactment in the first place: rising costs, too many uninsured people and a lack of protection for patients with pre-existing conditions. 
My plan begins by addressing an anachronistic aspect of the tax code that’s rooted in World War II wage and price controls. Those who get health insurance through their employer get a tax break, but those who purchase it on their own generally do not. 
While preserving the tax break for employer-based insurance, my plan would offer health-insurance tax credits for all individuals and families who buy insurance on their own. 
The tax credit would be $1,200 per year for those under 35 years of age, $2,100 for those 35 to 49, and $3,000 for those 50 or older, plus $900 per child. For a family of four headed by two 40-year-old parents, the tax credit would be like having $6,000 in cash to spend on health insurance.  If the family found a plan they liked for less, they could put the difference in a health savings account to help cover out-of-pocket expenses.  
These tax credits would benefit everyone...
OK so from a fiscal perspective, there are about 110M households in the US, so if we assume the average credit per household at $4k per year (the "typical" US household not qualifying for the full $6k in Gillespie's example), this would result in an increase in the leading fiscal flow to the non-government of about $450B annual; or in excess of a 10% increase to the present leading flows of about $4.2T annual.

This 10% leading flow increase imo would at the same time be enough to get us out of the current fiscally induced general economic muddle-thru malaise as well as result in better US healthcare REAL outcomes.

The libertarian nut-jobs on both the left and right are the only thing standing in the way of this type of proposal becoming a reality.

This NYT op-ed from Gillespie stands in SHARP contrast to an infamous previous NYT op-ed by left-libertarian moron nut-job Democrat Ratner here sub-titled "We Need Death Panels" (SCAAAARRRRRYYYY!!!!!! THESE LIBERTARIAN MORONS WILL KILL US ALL OFF!!!!!).

Whether this proposal from GOPer Gillespie or some other non-libertarian-nut-job Democrat derivative that one-ups it, the best approach would be for the government authority to simply provide the citizens with the leading flow of USD settlement balances to purchase robust healthcare from their providers of choice.

Again, the only thing standing in the way of our achievement of this improvement to the current socio-economic condition for US citizens are the intransigent anti-authority libertarian nut-job morons among us.

Thursday, November 20, 2014

"Neo-con" tweets...

Interesting tweets from "Mr. Neo-con" himself William Kristol; I guess the right "neo-cons" are not "Wall Street" oriented...

Hard to understand in light of Tom's post below that has Jeb Bush the darling of Wall Street.  Tom's BI story could be a Hilary plant.

See #4 here:

And this one where Kristol has Hilary as the "Goldman Sachs" candidate:

I guess the strategy for both sides may be to "run against Wall Street"?

This is more evidence that the right at least recognizes that the left has developed a vulnerability with the socio-economic justice cohort of US voters.

Elena Holodny — The World Economy Is Slowing

Manufacturers around the world have confirmed that economic activity is slowing down everywhere.
Business Insider
The World Economy Is Slowing
Elena Holodny

Colbert report has some fun with libertarians..

Colbert report does a reverse JFK; i.e. "not because it is hard but because it is easy!"

Good to see some mainstream push-back against libertarian morons at least.

Pretty funny.


Colin Campbell — Jeb Bush Is Reportedly Making 'Secret Visits' To Wall Street To Prepare For A 2016 Campaign

Looking like Jeb's in if he wants to be.
If he runs, Bush, the son of former President George H.W. Bush and the brother of former President George W. Bush, is expected to heavily court the Republican establishment and business community.

"He will get the backing," SkyBridge Capital founder Anthony Scaramucci told Business Insider last month. "People will be stepping over themselves."
Business Insider
Jeb Bush Is Reportedly Making 'Secret Visits' To Wall Street To Prepare For A 2016 Campaign
Colin Campbell

David Ellerman — Talk on property theory at UMKC, Nov. 2014

These are the slides, with some minor additions and editing, for a talk On Property Theory given at the University of Missouri at Kansas City Economic Department November 17, 2014.
Glad to see Ellerman at UMKC.

The link at the page does not work as of now. Here is the correct link to download the slides.

David Ellerman
Talk on property theory at UMKC, Nov. 2014

Talk on Alienation versus Delegation at Troy University

Kimball Corson — The Core Problem Of The World Economy And With Capitalism Is Income Distribution

The core problem worldwide is productive capacity has largely out run the capacity of consumers to buy the goods and services capable of being produced. 
The core problem creating this situation are the skewed distributions of income worldwide. High income earners and banks are hoarding money and not lending or spending it. A continuing economic malaise results. 
The core problem worldwide is productive capacity has largely out run the capacity of debt ridden and poorly paid workers/consumers to buy the goods and services capable of being produced. A decade or so ago, producers sought out new middle class consumers in developing countries to avoid the impact of the imbalance in their home countries, but that option is now waning. This leaves few good investment opportunities worldwide and the problem is fast becoming one that is global.…
Income distribution problems are the world's core problem, I suggest….
Capitalism as we know it is in trouble.
Wandering the Oceans
The Core Problem Of The World Economy And With Capitalism Is Income DistributionKimball Corson

Andrew Lainton — Is Piketty the New Malhus?

Lets generalise Malthus’s argument, to look not just at land rent but all quasi rents on assets which though scarcity tend to return yield returns greater than g. 
All such asset purchases will deduct from savings and investment. If we take the proportion of wealth invested in assets as A then the correct expression is not S=I but S(1-A)=I. Of course we also need to consider the investment of yields from assets. So you can modify this through a geometrical expansion (effectively getting an NPV) adding interest as a term.
So we can see that rentier income r>g is deflationary, it reduces aggregate demand. One might indeed argue that the growth in debt over the 20th Century has been a means of compensating for this deflation and once this stops – as per now through austerity – we get deflationary stagnation. Of course assets cant inflate in price forever above their real returns, we get bubble and bust.
Decisions, Decisions, Decisions
Is Piketty the New Malhus?
Andrew Lainton

IDEA — Steve Keen in Beijing - Beijing Normal University, November 24-29

1) Lecture for Faculty & Graduate Students in BNU: Dragging economics into the 20th century with basic system dynamics for economics. November 26, 13:30-15:10 p.m., Room 217, Yingdong Building,

2) Lecture for New Economics Reading Group: How endogenous money alters macroeconomics. November 29, 9:30-11:30 a.m., Room 217, Yingdong Building,

3) Short Course, Room 205, 4th Teaching Building
Lecture 1: Failure of old paradigm and promising alternative paradigm: (1) Macroeconomics before crisis and after crisis, (2) Financial Instability Hypothesis, (3) Intro of Modeling Minsky.

Lecture 2: From linearity to nonlinearity: (1) The importance of nonlinearity, (2) 3 dimensions plus mixing for complexity, (3) Debt cycles.
Lecture 3: From equilibrium approach to nonequilibrium approach: (1) Foundations of non-equilibrium economics, (2) Examples of non-equilibrium economic process. November 25, 19:00-21:30 p.m. Room 106, 4th Teaching Building.

Lecture 4: From real economics to monetary economics: (1) Essential role of endogenous money in Minsky’s FIH, (2) Integrating endogenous money into macroeconomics
IDEA Economics: Institute for Dynamic Economic Analysis
Steve Keen in Beijing - Beijing Normal University, November 24-29
Alan Harvey

Peter Cooper — It Doesn’t Have To Be This Way

There is really only one other employer capable of stepping up to the plate when the private sector is in the doldrums: the government. And there is really only one entity that can gift us extra spending money: the government. As far as large customers go, there are two that can partly take our place in the market. One is the government through public consumption and investment. The other is the “rest of the world”. Foreigners provide a market for our exports. This looks promising until it is realized that not every country can rely on export demand to trade themselves out of trouble. The exports of one country are the imports of another. For the world as a whole, there is no net impact on demand or employment.
It Doesn’t Have To Be This Way
Peter Cooper