Wednesday, December 12, 2018

Dean Baker — Trade: It’s Still About Class, Not Country

It is truly incredible that most of the advocates of this trade policy do not even seem to understand the class nature of their agenda, equating the interests of a tiny group at the top with the interests of the whole country....
Truthout
Trade: It’s Still About Class, Not Country
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

See also

Robert Reich
China Tariffs are a Regressive Tax on Americans, and Risk a Recession

Matias Vernengo — Middle Income Trap or the Return of US Hegemony

Short essay in Spanish for the special (40 year anniversary of the journal Coyuntura y Desarrollo, published by the Fundación de Investigaciones para el Desarrollo, FIDE). It is essentially a critique of the concept of middle-income trap and the idea of how the demographic transitions (discussed herebefore) affect the process of development. It suggests that the deindustrialization of the Latin American periphery results as much from the decisions in the hegemonic country to open up China, as from the decisions of the local elites to adopt neoliberal policies to punish its labor class. It is also noted that the deindustrialization of the central countries (particularly the US) should be taken with a certain degree of skepticism (see this old post), since manufacturing output went up (even if manufacturing employment has gone down, at least since the entry of China in the WTO), and the US maintains a significant leadership in key industrial sectors (let alone the military; see also this more recent post).
Naked Keynesianism
Middle Income Trap or the Return of US Hegemony
Matias Vernengo | Associate Professor of Economics, Bucknell University

Aleksandr Neukropny — Why Russia Has No Right to Surrender to the West


Oh, my. The Fourth Reich? And not Germany this time?

Times are getting rude.

The Vineyard of the Saker
Why Russia Has No Right to Surrender to the West
Aleksandr Neukropny
Translated by Ollie Richardson & Angelina Siard

See also

The Ghion Hournal
Destroying The Laws
Rainer Shea

See also

The National Interest
Don't Let Ukraine Drag America into War
Ted Galen Carpenter, a senior fellow in security studies at the Cato Institute and a contributing editor at the National Interest


Steve Roth — Actually, Only Banks Print Money


Actually, not really. Only governments have "printing presses" and other attempts to "print money" are called counterfeiting. Steve Roth knows this, of course, so he must being using "printing money" in another sense. Banks don't have printing presses in the basement, literally or figuratively. Governments that issue their currencies as government liabilities do.

Banks increase M1 money supply by adding assets as receivables to their balance sheets as receivables  and booking corresponding liabilities as payables. The reverse shows up on the borrower's balance sheet. Both sets of books are in balance, with net zero on the respective balance sheet. Credit and debit entires match. Now the bank has an asset on its balance sheet and the customer has a credit in a deposit account. So even though the net is zero in the financial system, purchasing power increases in nongovernment owing to the increase in M1 money supply as a result of the deposit in the customer's deposit account.

Why is this not a form of "printing money" then, as Steve Roth claims?

When a central bank issues the government's currency it creates liabilities on its balance sheet and assets on the balance sheets of banks as deposits at the central bank. Assets increase in nongovernment as a whole without a corresponding liability in nongovernment. There is a change in aggregate nongovernment financial assets.

When banks create a deposit by extending a loan, there is no change in aggregate net financial assets in nongovernment. The net is zero. When central banks deficit spend, there is. The net is the amount of the deficit.

A currency is the unit of account that which the government sets and which it accepts as payment of obligations it imposes on nongovernment, chiefly taxes but also tariffs, fees and fines. When banks settle accounts with the government as proxies for customers, they have to settle in the government's liabilities, either cash or bank reserves in the central bank payments system. This is what "printing money" implies. 

All currency users including banks have to obtain the currency as government liabilities, and the only source is government issuance of the currency through spending or lending, since only government can create government liabilities. In modern monetary production economies, governments delegate this power to their central bank as the government's financial agent. 

The currency sovereign's ability to create its own liabilities is unlimited. The constraint is the availability of real resources for sale in the currency, since over-issuance risks inflation. Correspondingly, under-issuance risks contraction and ultimately deflation.

For example, when a taxpayer pays taxes to the government that issues the currency, one of two things happen. Either the taxpayer pays in cash at a government office, or tenders payment through a bank, e.g., a paper check or electronic check. If cash, that cash is deducted from currency in circulation, reducing M1. 

If by check, the check has to clear in the government's payment system. In this case, the government charges the bank's account in the payments system and the bank corresponding charges the customer's account at the bank. If there are insufficient funds in the customer's account, then the bank bounces the check and the funds are not deducted from the banks' account at the central bank. This illustrates the huge difference in kind between the "money" banks generate through credit issuance in M1, and the "money" that the government issues through its financial agent, the central bank.

What happens if the bank doesn't have enough funds in its account at the central banks to cover its obligations? Either the bank borrows in the interbank market at the policy rate set the central banks sets, or the central bank just lends the funds to the bank so the payment system to clear. But the bank is charged a penalty rate set above the policy rate to discourage this, and a bank that abuses the "discount window" risks its standing and ultimately its position in the payments system.

Again, a pseudo-problem arises from using "money" without a proper technical definition, or else not paying attention to the existing definitions. Similar problems arise with other key financial and economic terms, such "the interest rate," "capital," and "saving."

SteveRoth is correct that loans creating deposits adds to the M1 money supply, but this is not currency issuance in the customary meaning of the phrase. Government's issuance of liabilities in the government's unit of account is not the same as banks creation of its own liabilities in the government's unit of account, which the bank cannot issue, being currency users and not issuers. 

If banks could "print money" in the sense of issue currency as the government creates its own liabilities by marking up accounts on its spreadsheet, banks' risking would not risk insolvency owing to default on loans they extend. This is not the case. Conversely, government bonds are default-risk free since the government can always issue currency to cover its obligations to security holders.

However, because bank credit increases M1, which adds to purchasing power in nongovernment, bank lending can affect the price level and spur inflation. Similarly, contraction in bank lending that is not offset is deflationary.

Steve Roth also thinks that issuance of government securities to offset deficits, which is mandatory in the US, sterilizes those funds so that they don’t add to money in the sense of M1. This is not the case. The funds that government injects increase M1 since currency is issued by crediting deposit account, which adds to M1. 

Taxes subtract from both M1and also aggregate nongovernment financial assets. Payment for purchase of newly issued government securities decreases M1, but those government liabilities are simply switched from deposit accounts in the payments system to time deposits at the central bank. The amount of nongovernment net financial assets remain the same in aggregate.

Moreover, government securities are the most liquid form of financial asset after cash, short term bills are essentially cash equivalents, and government securities are the best form of collateral, spending is not affected by draining the monetary base as deposit accounts at the central bank to time deposits at the central bank. 

Issuance of government securities does not sterilize deficit spending. There are other reasons to issue government securities, but this is not one of them. Chiefly, government securities issuance drains the monetary base, facilitating the central bank hitting its target when not paying interest on excess reserves and not choosing to set the policy rate to zero. Government securities also provide interest-bearing default-free risk instruments for the financial community and nongovernment savers. Issuance of government securities is not necessary operationally. It is a policy choice, hence political.

Ok, this looks like semantics and logic-chopping. But it is not. It’s just as important to create conceptual models that are correct as it is formal models. This means weeding out the weasel words, clarifying concepts and getting description right. Some formalism in needed in this regard, but it is not econometric but double-entry accounting. This requires thinking in terms of T-accounts, and that needs to be check by writing it out.



Asymptosis
Actually, Only Banks Print Money
Steve Roth

Zero Hedge — Fed Net Worth Turns Negative Following Record $66BN In Paper Losses Tyler Durden

What immediately caught the attention of financial analysts is that the gaping Q3 loss of over $66 billion, dwarfed the Fed's $39.1 billion in capital, leaving the US central bank with a negative net worth, which would suggest insolvency for any ordinary company, but since the Fed gets to print its own money, it is of course anything but an ordinary company as Bloomberg quips.
Commenting on the Fed's paper losses, former Fed Governor Kevin Warsh told Bloomberg that "a central bank with a negative net worth matters not in theory. But in practice, it runs the risk of chipping away at Fed credibility, its most powerful asset.’’
...a negative net worth is sure to raise eyebrows especially after Janet Yellen said in December 2015 that "capital is something that I believe enhances the credibility and confidence in the central bank."…
This is also a reason central banks still hold gold, which Keynes called "the barbarous relic." Makes no sense in a modern monetary system for currency sovereigns, but whatever — perception is reality.
While a central bank can operate with negative net worth, such a condition could have political consequences, Tobias Adrian, financial markets chief at the IMF said. “An institution with negative equity is not confidence-instilling,’’ he told a Washington conference on Nov. 15. "The perception might be quite destabilizing at some point."

Links — 12 December 2018

Fort Russ News
MAJOR: Ukraine’s President Describes WAR Against Russia
Paul Antonopoulos


SI


RT
Beijing warns against ‘bullying’ its citizens amid ongoing US-Huawei saga

economicintesect.com
The U.S. vs. China: A Great Experiment vs. A Great Civilization!
Frank Li | Chinese ex-pat, Founder and President of W.E.I. (West-East International), a Chicago-based import & export company, B.E. from Zhejiang University (China) in 1982, M.E. from the University of Tokyo in 1985, and Ph.D. from Vanderbilt University in 1988, all in Electrical Engineering
Paul Street


TASS

Sputnik International
Moscow: US House's Resolution on Nord Stream 2 Shows Dishonest Competition

The Natonal Interest
Is Russia a U.S. 'Adversary' or Just a 'Competitor'?
Nikolas K. Gvosdev, a contributing editor at the National Interest and professor of national-security studies at the U.S. Naval War College

Zero Hedge
"Stronghold Of Evil" - Russia Slams America's Illegal Syrian Occupation
Tyler Durden

ECNS
Yuan internationalization making steady progress
Xinhua

ECNS
China issues white paper on human rights progress over 40 years of reform, opening up
Xinhua

Ecns
China slams use of bringing up human rights issues with political motives as 'immoral'

Ecns
China needs 216 new airports by 2035: report
Xinhua

The Conversation
Canada needs its own Green New Deal
D.T. Cochrane | Lecturer in Business and Society, York University, Canada

Sputnik International
Venezuela's Maduro Accuses John Bolton of Plotting to Assassinate Him

Russia Insider
Blockchain Technology Revolutionizing Russian Banking and Securities
bne IntelliNews

Counterpunch
AFRICOM: A Neocolonial Occupation Force?
Eric Draitser

Salon
Mike Pompeo gets grilled on Fox News, undercuts CIA intelligence on Khashoggi murder

Popular Resistance
For The First Time Social Media Outpaces Print Newspapers As News Source
Elisa Shearer, Pewresearch.org

Asia Times
China said to rethink ‘Made in China 2025’ under US pressure

One America News Network
Exclusive: China makes first major buy of U.S. soybeans since Trump-Xi meet
Karl Plume




Joe McGooch - The Great Smart Meter Swindle


  • More ways in which the corporations can spy on you and collect data, would you believe? And they sell the data on. They say it's free fitment, but the £11 billion cost is being added to our bills.  The radiation emissions can also affect your health. 



Smart' Meters are the biggest scam, scandal, and swindle ever perpetrated on the general public. This video explains why that is the case, what to do if you are told you need to have a smart meter installed, and what to do if you already have a smart meter.

Josh Ryan-Collins - Looking forward: housing should be more than a financial asset

It looks like the British Conservative Party is beginning to realize that there are no votes to be had in high house prices anymore.

The over 50's vote predominantly Tory believing that high house prices had made them rich. Yes, on paper, but can they ever realize the money because where are they to live when they sell their home. And every time they moved to the housing ladder they became clobbered with a huge mortgage again making them poor causing them to go without and work excessive hours. What a life?

Well, I absolutely hated the high house price game because it caused new to spend too much time at work when I loved my leisure time. 

There are reasons for optimism when it comes to affordable housing in the UK, despite the state of crisis that currently engulfs the sector. For the first time in decades, both major political parties seem to have realised that the housing market is fundamentally broken and that it is a domestic political priority.

The Conservative Party has finally accepted that not everyone can own a home, and that the provision of decent-quality rental and public housing is a necessity. The decision to finally lift the cap on local authorities’ ability to borrow to invest in new development is perhaps the biggest sign of this change, of course, although much more investment from central government is likely to be needed.

Equally promising are signs that the land problem is being better understood, with Labour investigating a serious property wealth tax, and Sir Oliver Letwin’s review of land value capture pulling no punches. Moreover, as the level of homeownership falls, it is likely there will soon be an electoral majority in favour of reducing house prices.

Social Housing


Dean Baker - Trade: It’s Still About Class, Not Country

Trump's new trade deals with China could turn out bad for American workers.

Let’s start with the issue of forced technology transfer. Boeing is upset, because under the current rules, if they set up shop in China, they are going to have to partner with a company that is likely to be a competitor a few years down the road.
Suppose tough-talking Trump forces China to accept rules that prohibit these mandated partnerships. Under his new deal, if Boeing wants to set up shop in China it just starts building a new facility, no partner needed.
Standard economics would tell us that this will make Boeing and other US companies more likely to set up operations in China. This is obviously good from the standpoint of Boeing’s profits, but why exactly should US workers be happy about a change that will facilitate the outsourcing of US jobs?

CEPR

Janet Adamy and Paul Overberg - The Loneliest Generation: Americans, More Than Ever, Are Aging Alone

Loneliness undermines health and is linked to early mortality—and baby boomers are especially feeling the effects


Modern life is lonely - and we didn't evolve to live like this. In our ancient tribes the elderly lived alongside their families and were never lonely. Elders were respected for their wisdom and loved for their many stories where the dragons they had fought got bigger and more menacing by the year. 

Modern Life is Rubbish is the title of one of Blur's albums.

 In tribal societies if your house got burnt down everyone in the village would help help you build a new one. 

No one bartered or sold people stuff. If you needed a new pair of shoes one of the friends would probably give you a pair, but the next day you might help him in his field. People had great friendships.

Young inexperienced mothers were never left alone with young, difficult to manage children as the extended family and also the tribe would all help out. Grandmothers and Great grandmothers with a lot of experience would help the young mothers and so the offspring would get a very secure and more nurturing environment leading to them becoming far healthier and happy adults. 

Everyone had a job, and as long as you did your best to contribute the differences in output from people was tolerated. There was the perfect blend of conservatism and socialism. 

Of course modern life has many advantages and many of us wouldn't be here without modern technology and healthcare, but have we lost something in the process? Something vital?

Carl Jung asked how much more consciousness can mankind tolerate? The animals have no idea what death means, and they cannot see into the future and worry. WW3? And they have no idea of future horrible diseases. 

Many people in the West have no religious faith now. In Europe two thirds have no faith, but in the US two thirds do have a faith, but it is said that one of those thirds also have no faith even though they go to church. Faith helped people cope with life. 

Loneliness can lead to depression and chronic diseases.

This is one of the reasons that I think the Job Guarantee is such a good idea. Lots of people living on their own without work will be able to not only earn a bit of money but also be able to get out and meet people. And for those who are not well enough to get out they can have people who are  on the Job Guarantee come around to keep them company, or do some tidying up for them, maybe do the garden, or even cook them a meal. 

The  dialectic process: thesis (modern society), antithesis (loneliness, lack of social life), Synthesis ( the Job Garantee, maybe?)

Okey, enough of my yacking, here's the article.

Danny Miner, a 66-year-old retired chemical plant supervisor, spends most days alone in his Tooele, Utah, apartment, with “Gunsmoke” reruns to keep him company and a phone that rarely rings.
Old age wasn’t supposed to feel this lonely. Mr. Miner married five times, each bride bringing the promise of lifelong companionship. Three unions ended in divorce. Two wives died. Now his legs ache and his balance is faulty, and he’s stopped going to church or meeting friends at the Marine Corps League, a group for former Marines. “I get a little depressed from time to time,” he says.
Baby boomers are aging alone more than any generation in U.S. history, and the resulting loneliness is a looming public health threat. About one in 11 Americans age 50 and older lacks a spouse, partner or living child, census figures and other research show. That amounts to about eight million people in the U.S. without close kin, the main source of companionship in old age, and their share of the population is projected to grow.
 The Wall Street Journal

Angelique Chrisafis - Macron’s appeal to French from behind gold desk leaves gilets jaunes unimpressed

Flaunting Élysée Palace’s gilded rooms does little to quell ‘president of the rich’ tag


Talk about backfiring? 
It was the most important TV appearance of Emmanuel Macron’s presidency: the 40-year-old former banker had to prove to an angry nation that he was not an arrogant “president of the rich” and that he understood ordinary French people’s struggle to make ends meet.
Yet Macron’s choice to deliver his prerecorded speech on social inequality from one of the most opulent and golden rooms in the luxurious, 365-room Élysée Palace was not lost on gilets jaunesprotesters who have been occupying protest barricades on rural roundabouts.
The Guardian

Tuesday, December 11, 2018

Links — 11 Dec 2018

On the Economy
Nick Hanauer’s Progressive Labor Standards: A bold idea to do more than just repair the damage.
Jared Bernstein | Senior Fellow at the Center on Budget and Policy Priorities and former Chief Economist and Economic Adviser to Vice President Joe Biden in the Obama Administration

econintersect
How Where You're Born Influences The Person You Become
Samuel Putnam, Bowdoin College and Masha A. Gartstein, Washington State University

Valdai Discussion Club
Imperialism, Geopolitics and Religion: The Split Between Moscow and Constantinople
Dimitris Konstantakopoulos

Fort Russ News
DEFYING NATO: Greece and Russia Discuss Increased Cooperation in Defense Sector
Paul Antonopoulos

Fort Russ News
West is Concerned About Growing Cooperation Between Russia and Turkey
Paul Antonopoulos

Caitlin Johnstone — Rogue Journalist
Assorted Thoughts On Politics, Humanity, And The World
Caitlin Johnstone

Geopolitics Alert
Opinion: Six Reasons Behind Saudi Arabia’s War on Yemen
Damir Nazarov

Economic Policy INstitute
Aluminum tariffs have led to a strong recovery in employment, production, and investment in primary aluminum and downstream industries
Robert E. Scott, Senior Economist and Director of Trade and Manufacturing Policy Research

Reuters
Trump says would intervene in arrest of Chinese executive
Tyler Durden

RT
Goose-stepping in 2018: Chile’s military parade looks a lot like a Nazi one (VIDEO)

TASS
Putin pays last respects to human rights activist
 



Jeffrey D. Sachs — The War on Huawei

The Trump administration's conflict with China has little to do with US external imbalances, closed Chinese markets, or even China’s alleged theft of intellectual property. It has everything to do with containing China by limiting its access to foreign markets, advanced technologies, global banking services, and perhaps even US universities.…
The Trump administration, not Huawei or China, is today’s greatest threat to the international rule of law, and therefore to global peace.
Containing China (and Russia) to mantain and extend US global hegemony.

Project Syndicate
The War on Huawei
Jeffrey D. Sachs | Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, and Director of Columbia’s Center for Sustainable Development and of the UN Sustainable Development Solutions Network

See also at Project Syndicate

China’s Boldest Experiment
Dani Rodrik | Professor of International Political Economy at Harvard University’s John F. Kennedy School of Government

See also
Chinese experts have said that Beijing was trying to separate Meng's arrest from the trade negotiations, but also warned that public anger in China over Canada's move could compel officials there to take measures that would further sour U.S.-China ties and endanger talks.…
This is the most significant item in the report. The Chinese are very nationalistic and conservative, and they are extremely sensitive to humiliation. The Chinese government also has its ears to the ground regarding the public mood.

CBC (Canada)
Canadian ex-diplomat Michael Kovrig detained in China
Reuters

Max Lawson — Is Meritocracy the new Aristocracy? And the 11 Tricks that Elites use to capture Politics.


In reading this, it is good to realize that feudalism was justified by the religious paradigm then prevalent in Europe. It was based on the great chain of being, with God (the Lord) at the top and the king as God's earthly simulacrum. This implied the divine right of kings, kings being temporal lords.

Today, the great chain of being has been replaced by naturalism as the overarching paradigm owing to science replacing religion as authoritative. The concept of person has been submerged in the concept of the individual. While individuals are unique, persons are identical in sharing the same human nature.

Human beings have two aspects, particular and universal. Individuals are particular, being unique in their accidental properties and relations. Persons are universal, sharing human nature and consequently human essential properties and relations.

When naturalism and individualism become foundation in the overarching paradigm, meritocracy as rule by the evolutionary winners seems as natural as nobility by birth, which at least contained the notion of noblesse oblige, even if it was not always honored.

What is the basis for equality of persons as the foundation for human rights when individualism eclipses personalism? Then, the matter becomes one of positive law that is arbitrary.

The complement of individualism, which only partially true, is personalism. Personalism was assumed by most of the Enlightenment thinkers upon whose works modern democracy and law and based. Personalism is also a key fundamental of social justice and Catholic social teaching in that is emphasizes the inherent dignity of persons that is inviolable morally. According to Kant, “Act so that you use humanity, as much in your own person as in the person of every other, always at the same time as end and never merely as means.”
This brilliant essay by Peter Adamson, who for many years’ wrote Unicef’s State of the World’s Children report, starts with a very similar story. His argument is a powerful and interesting one. What if meritocracy is simply another form of class oppression, and in some ways an even more dangerous one? It is an excellent, subtle yet powerfully argued paper, and I would really recommend reading the whole thing. He points out that the word meritocracy was originally conceived as negative. It was intended as a warning that the ‘re-stratification of society based on ‘intelligence + application = merit’ would produce a society of arrogant, insensitive winners, and angry desperate losers.
The philosopher john Rawls was very clear on this too: ‘meritocracy still permits the distribution of wealth and income to be determined by the natural distribution of abilities and talents. It is therefore arbitrary from a moral perspective’....
Firstly we know that a huge amount of what we call merit is based on our upbringing, our parents and our home background…
But secondly, we also know, although it remains contentious, that some intelligence is genetic. It remains contentious as it is used by defenders of inequality- people are rich because they are cleverer- that genetic differences in intelligence explain why certain people are in charge. But Adamson’s point is that even if this is true in some instances, it does not make it morally right.…
At least with class or feudalism, the injustice of the system was very clear and based on obviously flimsy foundations like inherited wealth that did not stand up to scrutiny. With meritocracy, the poor are devalued because they are less clever and less able....
This week our team in Latin America and the Caribbean published a great paper, which looks at 13 instances of pro-rich tax and spending policy and political action in the region and dissects the way in which the state has been ‘captured’ by elite interests.
They break down the process of state capture into 11 different methods deployed by elites, and then look at how many of the 13 cases employed these methods....
For me this final one tips over also into the capture of ideas rather than the capture of the state. The use of resources by elites to change the way people think is perhaps the most powerful tool at their disposal.
We all can see the undue power of elites in everyday life, but this level of analysis of methods and dissection of the levers of influence is rare, and very practical if we want to change things for the better....
Oxfam Blogs — From Poverty to Power
Is Meritocracy the new Aristocracy? And the 11 Tricks that Elites use to capture Politics.
Max Lawson, Oxfam GB

Richard Murphy — The Reality Is Everything Must Change

I would suggest there are three things we know.
The first is that climate change is real. The result is that nothing can stay the same.
The second is that neoliberalism has reduced most people to living in states of profound insecurity. Ignore that poverty is supposedly being beaten. This is almost for nought if the result is disabling fear for future well-being. This cannot persist because people will not tolerate it. We are seeing that, very widely.
Third, our economic and social orders do, then, have to change, and profoundly. This is not an option. It is an absolute necessity. And what we know is private capital has ceased to be available for active investment it is now almost solely directed to rent seeking. In that case it is only state created funding that can create this process of change.
To put this another way, what may be the biggest programme of change ever known in human history is required in very short order. We need new energy systems; transformation of our housing stock; new transport infrastructure; radically different approaches to food that might even require rationing if we cannot create change any other way; different ways of working and new ways of using leisure time. As I suggested, everything must change....
How to do all this? Only state created funding can create the finance needed for this change. What we need is not just a Green New Deal but Green Quantitative Easing too to fund it. If this was wartime funding would be found for the crisis we face. It always has been. Well, this may be worse than war. This is life itself we are fighting for, on all fronts. The time for prevarication is over. The time for pussy- footing with new taxes to extract a little more from the rich is yesterday’s news. There is no time for that. This is the time to create money for change. And, if need be, to restrict money creation for other reasons....
How to do all this? Only state created funding can create the finance needed for this change. What we need is not just a Green New Deal but Green Quantitative Easing too to fund it. If this was wartime funding would be found for the crisis we face. It always has been. Well, this may be worse than war. This is life itself we are fighting for, on all fronts.... 
"Green quantitative easing"?  When tried, quantitative easing has been a bust. It's a path to nowhere. Prefacing QE with "green" does exactly what?

"Overt money financing"? It's got a nice ring to it. And happens to be the way to get the job done.

Naked Capitalism
The Reality Is Everything Must Change
Richard Murphy, a chartered accountant and a political economist, Professor of Practice in International Political Economy at City University, London, Director of Tax Research UK, a non-executive director of Cambridge Econometrics, and a member of the Progressive Economy Forum. Originally published at Tax Research UK

Bill Mitchell — US labour market moderated in November and considerable slack remains

Last week’s (December 7, 2018) release by the US Bureau of Labor Statistics (BLS) of their latest labour market data – Employment Situation Summary – November 2018 – showed that total non-farm payroll employment rose by 155,000 and the unemployment rate was essentially unchanged at 3.7 per cent. Participation was steady. While the US labour market is reaching unemployment rates not seen since the late 1960s, the participation rate is still well below the pre-GFC levels and a substantial jobs deficit remains. Other indicators suggest there is still considerable slack in the labour market, especially outside the labour force (marginal workers) and among the underemployed. Taken together, the US labour market moderated in November but remains some distance from full employment.
Bill Mitchell – billy blog
US labour market moderated in November and considerable slack remains
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Kevin Vincent - More on the amazing PoNS device

This is not on politics or economics, so this comes under the 'anything' category that Mike Norman said was okay. It's important to me because my dad suffered from multiple sclerosis most of his adult like. 


Monday, December 10, 2018

Kit Knightly — The EU and the warning signs of Fascism


Sure sounds like incipient fascism to me. But, hey, it couldn't happen here, could it?

The Duran
The EU and the warning signs of Fascism
Kit Knightly | co-editor of OffGuardian (UK)

Zero Hedge — This is What The "Trade" War With China Is Really All About

What is really at the basis of the ongoing civilizational conflict between the US and China, a feud which many say has gradually devolved into a new cold war if few top politicians are willing to call it for what it is, are China’s ambitions to be a leader in next-generation technology, such as artificial intelligence, which rest on whether or not it can design and manufacture cutting-edge chips, and is why Xi has pledged at least $150 billion to build up the sector.
But, as the FT notes, China’s plan has alarmed the US, and chips, or semiconductors, have become the central battlefield in the trade war between the two countries.…
The risk is that an overly aggressive posture would backfire, and force China to become entirely self sufficient, because in the long term, analysts said, a US export ban would likely cement Beijing’s resolve to cultivate a wholly home grown semiconductor industry along every step, from design to fabrication to packaging.
“In the short term, US export controls can seriously set back Chinese progress on semiconductors. In the longer term, it’s hard to say if China will be permanently set back,” said Gavekal’s Wang, noting that fear of US export controls helped marshal the resources that shaped Japan’s most dominant semiconductor equipment players.
“The more tightly the US controls these goods, the more important it becomes for China to make these goods itself.”

At the end of the day, however, it is a simple question of money, because if China is willing to throw enough money at the problem, the solution will come. And as we showed back in May, China has every intention of not only matching, but surpassing total US military spending, and in light of the importance of an autonomous, self-reliant semiconductor industry, one can argue that much of this spending will go toward beating the US where it truly matters...in the technological arms race.
Because remember what Bank of America's Michael Hartnett said half a year ago: for all the talk of the escalating confrontation between the US and China, the "trade war" of 2018 should be recognized for what it really is: "the first stage of a new arms race between the US & China to reach national superiority in technology over the longer-term via Quantum Computing, Artificial Intelligence, Hypersonic Warplanes, Electronic Vehicles, Robotics, and Cyber-Security."
Which is why, at this point delaying Beijing may be the best option for the US which is slowly but surely losing its one insurmountable technological advantage. But while that may win the short-term battle, will it merely lead to an even faster victory for China in the war, both trade and, eventually, real.
Zero Hedge

Yannick Slade-Caffarel — The nature of heterodox economics revisited

While the mainstream is defined by an insistence on method, the heterodoxy is defined by a concern with reality. What is so powerful about the conception, and what seems to have been almost entirely ignored, is what comes next.
The implication of Lawson’s conception is that heterodox economics encompasses all those researchers that desire to study economic phenomena in accordance with our best understanding of how social phenomena exist. What method they decide to use is not a factor in determining whether or not a researcher is heterodox. However, Lawson’s assessment also identifies what specific methodological issues might be impeding heterodox economists from achieving that goal. For Lawson is arguing that in most instances, mathematical modelling of the sort used in economics is inappropriate for studying social phenomena. And he is imploring those heterodox economists who use such methods to pay attention to that probable mismatch.
Lawson’s conception of heterodox economics includes, in the simplest terms, all those economists who are trying to be realistic. This seems relatively uncontentious. However, the conception also shows that methods of mathematical modelling that seem to be used increasingly by heterodox economists are not going to get them any closer to that goal. Indeed, this assessment, while providing a useful definition, also serves, perhaps most importantly, to identify why heterodox economics is not in good shape.
Progress in Political Economy
The nature of heterodox economics revisited 
Yannick Slade-Caffarel | PhD Candidate at the King's Business School, King's College London, a visiting doctoral student at Sciences Po Paris, and an active member of the Cambridge Social Ontology Group

Kevin Barrett - Trump’s Attorney General nominee Barr a drug dealing assassin?

At the top are some pretty nasty people. The world is a dangerous place.

Anybody who thinks Trump is out to drain the swamp and bust the Deep State just got a dose of reality medicine, in the form of Trump’s nomination of swamp monster William Barr as our next Attorney General.
According to former Bush-CIA black ops specialist Chip Tatum, Barr was part of Operation 40, an Agency-linked criminal gang that moved huge quantities of drugs and was involved in many high-level political assassinations, including those of the Kennedies, Swedish Prime Minister Olof Palme, and dozens of others. Ironically, Trump—who tossed a few rhetorical punches at the Bush Crime Family during the 2016 Republican primaries—has just nominated a man who represented the Bush CIA drug cartel, both within the CIA itself (1973-1977) and later when he served as “Opium Poppy” Bush’s Attorney General.
David “DC Dave” Martin sends the following snippet of Tatum’s conversation with FBI investigator Ted Gunderson:
* * *
Chip Tatum: Several of the members that I flew to this meeting in El Ocatal – here are the people who were there: it was General NoriegaMike Harari, who was a retired Mossad agent assigned to Gen. Noriega, Felix RodriguezJoe Fernandez, who was the CIA station-chief in Costa Rica, Gen. Gustavo Alvarez, who was the U.S. – or the Honduran Army chief of staff, and a guy named William Barr, who represented the assets of this enterprise.
Gunderson: Now, wait a moment. William Barr used to be attorney general of the United States.
Tatum: He later became, under his boss George Bush, the attorney general of the United States, that’s correct.
Gunderson: That’s right. He replaced Thornburgh, wasn’t it?
Tatum: Yes, I believe so.
Gunderson: Well, isn’t that interesting? …so we have Vice President Bush, we have Ollie North, we have William Barr involved in the drug-operation. It’s that simple, isn’t it?
Yes, it is.
So why would Trump fire Jeff Sessions and appoint a depraved denizen of the Deep State to replace him? Because Trump is the slimiest, scaliest reptile from the deepest darkest part of the Deep State swamp. If you haven’t figured that out yet, you aren’t paying attention.
Note that Trump has been slyly boasting of his swamp creature status for years. Watch him rapturously identifying with the title character in his favorite poem, “The Snake.”
 Veteran's Today

Planet Free Will — “The Police Were Out For Blood”: Viral Video Shows French Police Toss Man In Wheelchair to Ground During Yellow Vest Uprise


Putin did it?

Planet Free Will
“The Police Were Out For Blood”: Viral Video Shows French Police Toss Man In Wheelchair to Ground During Yellow Vest Uprise

SouthFront — SYRIAN WAR REPORT – DEC. 10, 2018: U.S. OFFICIALLY ACCUSES ASSAD, RUSSIA OF STAGING CHEMICAL ATTACK IN ALEPPO


False false flag.  Neocons in charge in the US now. This means war.

The Vineyard of the Saker
U.S. Officially Accuses Assad, Russia Of Staging Chemical Attack In Aleppo
The Saker

See also

SourhFront
Ukrainian Air Force Deployed Combat Drones To Carry Out Chemical Provocation In Donbass: DPR Military

Col. W. Patrick Lang — An editorial on Trump's methods

I have seen this kind of methodology many times before in the world of sole owner entrepreneurial business. In that world egotism is king and the owner/wheeler dealer stands alone surrounded by underlings and consultants. For him they are nothing. They are expendable assets who exist only to serve his egocentric will and interests. They are there to be useful to him and can be disposed of whenever they are not. Trump operates exactly that way. Subordinates are disposable at will. Institutions mean nothing to such a man. He needs a secretary to run errands for him, not a chief-of-staff who will inevitably wish to be a "player." Anyone who takes the job is a fool.
"You're fired."

Sic Semper Tyrannis
An editorial on Trump's methods
Col. W. Patrick Lang, US Army (ret.)
At the Defense Intelligence Agency, Lang was the Defense Intelligence Officer (DIO) for the Middle East, South Asia and counter-terrorism, and later, the first Director of the Defense Humint Service. At the DIA, he was a member of the Defense Senior Executive Service. He participated in the drafting of National Intelligence Estimates. From 1992 to 1994, all the U.S. military attachés worldwide reported to him. During that period, he also briefed President George H. W. Bush at the White House, as he had during Operation Desert Storm.

He was also the head of intelligence analysis for the Middle East for seven or eight years at that institution. He was the head of all the Middle East and South Asia analysis in DIA for counter-terrorism for seven years. For his service in the DIA, Lang received the Presidential Rank Award of Distinguished Executive. — Wikipedia

RT — Russian media covered the Yellow Vest protests; now France is investigating Russian ‘interference’


It's becoming clearer that "Russian interference" means RT and Sputnik journalism rather than hacking and "dirty tricks." Russian state-sponsored media are covering news that the Western news media is either blacking out completely, suppressing, or spinning according to the controlling narrative.

RT
Russian media covered the Yellow Vest protests; now France is investigating Russian ‘interference’

See also

RT
WikiLeaks skewers Guardian writer for zany theory that RT is, wait for it... reporting news

See also

SouthFront
Ukraine’s SBU, British Media, US Think Tank: Russia Is Behind “Yellow Vest” Protests In France

Christopher Black — CANADA’S PRIME MINISTER AND FOREIGN MINISTER TAKE CHINA HOSTAGE IN “RULES-BASED ORDER” PLOT

“It is clear the US is pushing the battle line to our door … We can completely regard the US arrest of Meng Wanzhou as a declaration of war against China.”
So read an editorial in the Global Times of China on December 6, the day after Meng Wanzhou, chief financial officer of the Chinese company Huawei was taken hostage by the Canadian and American governments on December 1. The daughter of the founder of China’s largest telecommunications company was arbitrarily arrested and detained by Canadian police in Vancouver in transit between planes on December 1 on the pretext of a US extradition request....
The gloves are coming off.

Dances with Bears
CANADA’S PRIME MINISTER AND FOREIGN MINISTER TAKE CHINA HOSTAGE IN Christopher Black, Canadian attorney

Caitlin Johnstone — How Plutocratic Media Keeps Staff Aligned With Establishment Agendas

The way I see it there are only two possible explanations for the unanimous consensus in mass media on these issues:
Explanation 1: The consensus exists because the mass media reporters are all telling the truth all the time.
OR
Explanation 2: The consensus exists because there is some kind of system in place which keeps all mass media reporters lying to us and painting a false picture about what’s going on in the world.
Those are the only two possibilities, and only one can be true, since any mixture of the two would result in the loss of consensus.
Most mainstream westerners harbor an unquestioned assumption that Explanation 1 is the only possibility.
I don't think that this binary is necessarily follows. There is at least one other alternative.

Based on my training in logic and philosophy, systems thinking, cognitive studies, and related subjects,  I think highly likely  that many if not most reporters do believe that they are telling the truth. I don't mean to imply that this covers all of them, for example, those on the payroll of intelligence services, who may believe in the cause but not the content. That this happens is no longer conspiracy theory. And a journalist doesn't have to be a bot for intel either to be so devoted to the cause of "patriotism" to find it "virtuous" to shape the narrative.

This has an explanation that can only be surfaced in the scope of this comment. It's a huge subject and one that is absolutely essential in approaching the historical dialectic.

This "paradox of truth" is the result of alternative world views. German has a term for this—Weltanschauung It is an import into English. Google Translate renders Weltanschauung as "world view," but "world view" is relatively rare in  English while Weltanschauung is common in German.

World views —Wittgenstein called them "world pictures" (Weltbilder) — are ways of "seeing as" through the lens of language, where meaning is determined largely by use in context. This can be expressed as ideology, but world views are the ground of ideologies and as such are not articulated themselves since they are the lenses through which all of us "see" the world as a system.

It's not just reporters here. Journalists are embedded in a social system. Everyone acquires a world view shaped through "nurture"—family background, education, enculturation, tradition, institutional influences, class, etc. Everyone is also influenced by nature in the sense of inherited disposition. While every individual is unique as an individual, we are "the same" as human persons in sharing "human nature."

The notion that the mind is a mirror-like reflection of "reality" is called naive realism. That is not the way it works. "Reality" is perspectival. Whoever controls the narrative controls the mass perception of reality based on the norms of the world view. "Truth" is a social phenomenon that is socially constructed.

Of course, this doesn't mean there is no truth. It only means that reaching is it limited by bounded rationality.  There is a price to pay for do so and most are unwilling to pay the price. So they go along (with group-think) to get along.

At the same time as being unique individuals and human persons (presumably sharing equal rights), humans are highly social animals and shaped by their social milieu and its influences. An individual's world view grows out of this soil, and people tend to gravitate toward others like them and affiliate with those who share similar views based on a common world view.

One of the logical functions of a world view is to provide criteria for judging. These criteria become ideological norms. They are privileged assumptions whose function is similar to definitions, axioms, postulated and stipulated rules in a formal system, forming the logical structure of the system.

In addition, there is also professional investment involved. Hiring and promotion is based on holding the "correct" positions with respect to the norm.
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"— Upton Sinclair, I, Candidate for Governor: And How I Got Licked (1935), ISBN 0-520-08198-6; repr. University of California Press, 1994, p. 109. (Wikiquote)
This is just the way highly organized social systems operate logically. Those people that don't fit into a system or are unwilling to conform to it are forced out of it, like parasites attacked by an immune system before they can kill the host.

So it is not surprising that most of journalists, professors, and other influencers are bots of the system.  Academic training is largely about acquiring the "normal" paradigm and being able to function seamlessly in it. That is just the way the system works. It is also a reason for system rigidity, dysfunction, recurrent breakdowns, and eventual transformation or collapse.

I think that Caitlin Johnstone would largely agree with this based on other things she has written. It is also contained to some degree in this post. I am just trying to clarify an important point that is not understood widely enough even though it is "old knowledge."

Caitlin Johnstone — Rogue Journalist
How Plutocratic Media Keeps Staff Aligned With Establishment Agendas
Caitlin Johnstone

Xinhua — Xi stresses human rights development in Chinese context

President Xi Jinping pledged to uphold the path of human rights development that fits the Chinese context and promotes well-rounded human development.
Xi, also general secretary of the Communist Party of China (CPC) Central Committee, made the statement in a congratulatory letter to a symposium marking the 70th anniversary of the Universal Declaration of Human Rights in Beijing Monday.
In the letter, Xi called the declaration a significant document in the history of human civilization and recognized its profound impact on the development of the human rights cause around the world.
Chinese people will work with people of other countries to uphold the common values of humanity, which are peace, development, equality, justice, democracy and freedom, to safeguard human dignity and rights, to promote fairer, sounder and more inclusive global human rights governance, and to build a community with a shared future for humanity, he said.
Noting that the CPC has always taken human development as its goal, Xi said hundreds of millions of Chinese people have had their lives improved since the founding of the People's Republic of China in 1949, particularly over the past four decades of reform and opening-up.
China has been combining the principle of human rights' universality with the reality of modern times and staying committed to a path of human rights development that fits the Chinese context, Xi said in the letter.
China adheres to a people-centered vision of human rights, considers the rights to subsistence and development as the primary and basic human rights, and works for coordinated development of the people's economic, political, social, cultural and environmental rights, the letter read.
Xi also called on people who work in the human rights research field to make greater contributions for the sake of diverse human civilizations and the world's human rights cause...
Ecns
Xi stresses human rights development in Chinese context
Xinhua

Brian Romanchuk — Paperback Edition Of Breakeven Inflation Analysis Now Available

My latest book Breakeven Inflation Analysis (link to book description page) is now available as a paperback at online stores. It is available at the regional Amazon sites, as well as being listed on some other retail book websites.
Bond Economics
Paperback Edition Of Breakeven Inflation Analysis Now Available
Brian Romanchuk

Michael Roberts — Back to Front


Marx's economic theory is based on his theory of the commodity and how profit is extracted as surplus value based on commodification. Thus, profit (along with profit rate) is the economic driver, which Marx expresses in the expression, M - C - M', meaning that financial investment of money–M–is used to produce commodities for consumption–C– that leads to return on investment as profit extracted as surplus value from the process–M'. Since this is not earned through productive work it is "economic rent" in the sense of classical economics, in which economic rent figured prominently. Marx did not come up with the idea. Rather, he sought to produce a more rigorous account of it.

Conventional monetary policy is based on keeping the interest rate lower than the profit rate, so as not create liquidity preference that overly encourages saving and stifles productive investment. While this may be a factor, it is not the factor, or even the most important factor, which is a reason that monetary policy doesn't work very well if relied on as a policy tool.

Michael Roberts argues that Keynesian fiscal policy that takes demand as the driver as is not necessarily successful either, since the driver isn't money rather than the interest rate. Rather, according to Marxian analysis, the issue is the inherent contradictions in the structure of capitalism as a modification of feudalism. Ownership of capital was substituted for, or melded with ownership of land as a source of rent extraction.

In this view, what is required is a entirely fresh approach based on removing the bias introduced by flawed institutional arrangements, especially bourgeois property ownership, that found the current system on expropriating surplus value as economic rent. 

Such a system is not only unfair to workers, but it is also dysfunctional as an economic system. This dysfunctionality leads to political problems, which Marx believed could only be addressed through revolution, since the ownership class as he knew it then would never acquiesce to reform through the political process. But not much has changed in this regard, other than the appearances. The system still depends on rent extraction. What's new is financialization, digitization, and some of the forms that monopolization takes.

While may have conditions have changed drastically since Marx wrote, his analysis of capitalism and its discontents still holds the day, since it is a work in political economy rather than economic theory.  Macroeconomics deals with socio-economic systems that involves much more than abstract economic relations since they are historical and dynamic. 

Marx and other classical economists like Smith understood this. But the other classical economists were products of their class and remains essentially true to it. Marx, however, broke the mold in claiming that class was the problem. He concluded that an inherently dysfunctional system would either change or be changed. He did not think that the owners of the system would be up for change it themselves, based on noblesse oblige, for example.

Interestingly, Marx lived shortly after the American and French revolutions, which were still lively in memory and certainly shaped his thinking, especially since he was historically inclined having been trained in Hegel. 

Now we see the uprising in France where La Marseillaise is again being sung in the streets, this time not against feudal rule but neoliberal.

Michael Roberts Blog
Back to Front
Michael Roberts