Wednesday, April 1, 2015

Simon Glendinning — Five Things You Need To Know About The Philosophy Of Europe

1. Europe enters philosophy in the context of a distinctively philosophical conception of human history. 
2. For philosophy, the history of Europe unfolds within universal history. 
3. Philosophical history of the world (universal history) has Europe at the head. 
4. Philosophical history of the world is also a discourse of Europe’s modernity 
5. The discourse of Europe’s modernity is… falling apart.
Social Europe Journal
Five Things You Need To Know About The Philosophy Of Europe
Simon Glendinning | Professor of European Philosophy at the European Institute of the London School of Economics and Political Science

Bernanke goes Natural






















"Hey bro, betcha I can chug this between 0.00 and 0.25 seconds!"

We hear the word 'natural' all the time in our busy modern lives: natural remedy, natural ingredients, all-natural, natural grains, etc. However, as any savvy shopper and/or reader of Consumer Reports knows, the word "natural" has no meaning when applied to consumer products. There is no one industry or governmental definition or standard of what consists of "natural", so corporations can, and do, freely slap the "natural" label on just about anything they want.

However, this blog post isn't going to be about lying advertisements, because I don't have the rest of the decade to sit at this computer. No, this post is about the annoying tendency of economists to use the word "natural" in their field of study, even though it almost never applies. Economics is a study of human systems; systems that have been deliberately contrived in some way or another by human activity. Nothing about economic systems are natural, since both property rights and currency, the two building blocks of any "market" system, always have a governmental orgin. The structure, distribution, and quantity of property rights and currency are dependent on government policy, and by proxy, the people who hang around the halls of power when these policies are made.


So it was with slight annoyance/great frustration/indignant fury/neurotic hysteria that I read this recent blog post by former Federal Reserve Chair Ben Bernanke. It seems Bernanke is the latest of the Bearded Jewish Economists (BJE) to join the blogosphere (welcome Ben!), but unfortunately he got off to a bad start. In his very first day of blogging, he decided to dive into the topic of what the "natural" rate of interest is, and the economic theories that compete to decide what this "natural" rate is. No amount of verbal contortions could get Bernanke around the fact that there is simply no such thing as a "natural" rate of interest on currency, for the simple reason that currency itself is not natural. US Dollars don't fall out of the sky or grow on trees, nor did they ever shoot out of the end of Moses' staff. Currencies are simply the products of the entities that issue them, governmental or not. As long as the issuer of said currency does not promise to convert that currency, on demand at some fixed rate, into something else, than that currency has no natural "own" rate, aka interest rate.

Just like the letters in this sentence, US dollars cost nothing to produce. They are merely typed into existence by government employees. Therefore, they carry no "natural" rate of interest or growth, any more than the letters in this sentence can naturally grow. When I come back and re-read this blog post in 6 months, it will have the same amount of letters in it (unles i mak sum editts, off cours). This also happens to be the case with my savings account-- barring any deposits/withdrawals, the balance in my savings account will have the same amount of dollars in it in 6 months, because the rate of interest paid on that account is so low that it only amounts to a few dozen cents per year. This is not because the "natural" rate of interest on my savings account has changed, or there is something unusual about Wells Fargo Account #2248-955118-89! (not my real account number). This is simply because the Federal Reserve, you know, that organization that Mr. Bernanke used to be the head of, has decided that current interest rates should be next to zero. And while I happen to like this zero rate policy (because I believe that no one is entitled to earn any particular rate of interest on federally insured bank deposits that just sit around doing nothing), I don't pretend that it is in any way "natural."

This near zero rate is not any more or less natural than if it was, say 18%, as it was during the Paul Volcker days. Although Volcker raised rates this high in order to destroy labor unions, the middle class, America, etc. nobody claimed that they were "unnatural." The rate in 1982, as it is now, was just A POLICY CHOICE MADE BY OLD WHITE GUYS. It wasn't delivered to them by Jesus. The men and women (ok, mostly men) on the FOMC just pick a number for the overnight interest rate and tell the New York Fed to fiddle around on their computers until that becomes the rate. The only thing natural about this process is that old white men are always in charge (kidding). If the government wants the interest rate on its own liabilities (US dollars) to be zero, than it can be zero; if it wants the rate to be 40%, it can be 40%.  Neither rate is natural.

Going a little deeper, the Wicksellian Monetarists, of which Bernanke appears to be one, believe that at any one time there is a "natural" rate of interest that will lead to full employment. A few of the obvious problems with this Wicksellian or IS/LM theory are that-

1) it was devised under a gold standard economic system which was completely different and no longer exists

2) no one can seem to agree what full employment really is

3) what employment metric do you even use to define "full"

4) We now live in a world with fiat currencies, and computers, and global trade, and robots, and a global labor force, and highly interconnected banking systems, and, and, and.....

One sentence of his blog really set me off, however. According to BB,

"Government spending and taxation policies also affect the equilibrium real rate: Large deficits will tend to increase the equilibrium real rate (again, all else equal), because government borrowing diverts savings away from private investment."

Really Ben? Does your entire career in economics not indicate to you that this isnt the case? If anything, the trend lines during your ENTIRE economic career would indicate THE OPPOSITE:


Thankfully, Mr. Bernanke did get some things right, like saying that the Fed has no choice but to set SOME short term interest rate. However, as far as I can tell, he didnt take the next step and assert that the Fed's short term rate influences the entire yield curve of both paper and capital markets (the latter less directly):


And that's just the effect of the federal funds rate changing. What Bernanke doesnt say is that the Fed can (and has, in the Eccles era) target any point along the yield curve it wishes. It can announce price targets and buy/sell till that target is hit, or simply offer its own long-term term deposits at some rate. For example, if the Fed wanted to set the floor for 30-year mortgages at 8%, it could offer 30-year term deposits at 8%, ensuring no 30-yr mortgage would ever be issued at less than 8%.

So if your forehead has not yet connected with your desk, you are now better at macroeconomics than most of 'em. Now go have yourself a cool, crisp, refreshing can of Natural Light*.



*disclaimer: It is none of these things**

**things includes "beer"

Nicholas Fitz — Economic Inequality: It’s Far Worse Than You Think

In a candid conversation with Frank Rich last fall, Chris Rock said, "Oh, people don’t even know. If poor people knew how rich rich people are, there would be riots in the streets." The findings of three studies, published over the last several years in Perspectives on Psychological Science, suggest that Rock is right. We have no idea how unequal our society has become.....
Scientific American
Economic Inequality: It’s Far Worse Than You Think
Nicholas Fitz, graduate student at the National Core for Neuroethics at the University of British Columbia
h/t Mark Thoma at Economist's View

Dirk Ehnts — Open letter in the FT: inject newly created money directly into the real economy

The problem is: the euro zone has been constructed so that there is no spender-of-last-resort. The ECB is not allowed to directly finance governments, and hence all government can go bankrupt. Even the German government bonds are not risk-free. It is time to rethink the fiscal-monetary nexus of the euro zone.
How to undermine an entire geopolitical and economic region from within in just one treaty. Great work, folks.

econoblog 101
Open letter in the FT: inject newly created money directly into the real economy
Dirk Ehnts | Berlin School for Economics and Law

Bankster Looters Leveraging "Stoned Fiat" [currency] Confidence Trick

(Commentary posted by Roger Erickson)

Have you heard the story of "Stone Soup" ? Banksters are misusing that theme today, as "Stoned Fiat" [currency].

"In varying traditions, the stone has been replaced with other common inedible objects, and therefore the fable is also known as button soup, wood soup, nail soup, and axe soup."

And now known as NeoLiberal MacroEconomics (though alternately called Control Fraud, or Wreckonomics).

They waltz into town, contribute nothing, and encourage everyone to contribute real assets.
Unfortunately, instead of provisioning the participants with optimal distribution of all the aggregate return-on-coordination they admittedly helped trigger ... they turn Control Fraud and skip town with the "claimed" ownership of real assets - now conveniently called "income" ... and then hide behind their claim of "doing god's work."

A parasitic schtick, if you're sociopathic enough to pull it off without remorse. At least until the looted host dies.

Iceland's PM Allows Brits To Recommend Degradation of Iceland’s Monetary System

   (Commentary posted by Roger Erickson)


(That didn't need solving, only properly using.)


This report imagines going from "fractional fiat" to100% reserve fiat?

    Doh!

That's what you get when you hire a British Bankster to report on YOUR fiat currency system.

Repeat after me.

There is no "fractional reserve" in a fiat currency system.

Only on an archaic gold-std currency system. For Pete's sake! What does "fractional fiat" even mean? Arbitrarily keeping some Public Initiative in reserve? Why? For what?

A "fiat" currency system is SUPPOSED to automatically denominate any & every transaction that's desired-AND-allowed (by public feedback). Adding cash hoards in various places doesn't solve the need for increasingly distributed feedback in growing, national economies.

The solution is to REGULATE and oversee all credit underwriters, public & private ... and NOT to restrict the access to denomination numbers. That way the "currency supply" is always what it's supposed to be, neither too large nor too small ... and both inflation & appreciation become trivial, archaic metrics coincidental to sustainable systemic development. Like like Cubits. Or released demonic airs once said to possess the ill.

Currency supply or liquidity logic is similar to the logic of a blood circulatory system. We don't regulate personal + group behavior by squeezing the oxygen supply in the air (good luck with that). Similarly, banks can't Centrally Plan currency supply, and admitted so back ~1933, on account of abject failure. Quit beating our aggregate heads on that discredited idea. Instead, we practice distributed regulation of our net & local goals, activities, methods, tactics & tools ... plus a host of local/aggregate tricks ... to utilize, on demand, as much of an inexhaustible metric as is PRACTICALLY needed.

If this is hard to follow, please read this little bedtime story.


Then please read about Marriner Eccles, Abba Lerner, William Vickrey, Warren Mosler, Abe Lincoln, Benjamin Franklin and John Law.

ps: Will someone who's already a narcissist please post this commentary at Icelandic Review? Thanks.





A currency system involves drop dead simple operations. It takes ideology (and lots of self-deceiving fraud) to make it seem complicated.


There are other issues with "Lord" Turner's claims, but there's no use beating a dead horse. It just distracts people from the fact that it was dead on arrival.


ps: You can't even comment at the Icelandic Review without capitulating to use of the Narcissist's Network. How's that for democracy.







Japanese still lowering tire prices...


Back in February they had a $50 rebate on 4...


Now they have increased that to $70 (or double that if the credit card people can get their claws in) ...



These types of pricing actions (in USD terms) taken by Japanese manufacturers are not without further consequences for the financiers of the trade.

The effect is bearish Yen imo.


Telesur — Ecuador Opposition Leaders to Ask for US Sanctions on Country

An opposition supporter who recently emerged after a year in hiding as a fugitive from justice told a private media station Friday that he intended to go to Washington in order to have the U.S. government apply unilateral sanctions against Ecuador as they have done with Venezuela. “We are going to ask the U.S. senate commission (sic) to analyze the case of Ecuador the violation of human rights and specific cases of corruption so that the same measures and sanctions that the Obama government recently imposed on Venezuela be imposed (on Ecuador),” Fernando Villavicencio told Ecuavisa....
Villavicencio was a political adviser to Jimenez, who sat in congress as a member of the opposition-aligned Pachakutik party. The party bills itself as left-wing but has taken controversial positions, including support for the 2010 coup attempt against the democratically-elected president.
Telesur
Ecuador Opposition Leaders to Ask for US Sanctions on Country

Sputnik Merkel Fears Split in EU Regarding Anti-Russian Sanctions – German Media


Some Europeans, especially business people, are starting to freak that they are losing Russian markets to the emerging countries that Russia has turned to owing to sanctions and is not likely to turn back toward Europe when sanctions end.

The emerging world has also pretty much nixed sanctions against Iran and Europe is losing out there, too.

This is not affecting either the US or UK much economically, and many Europeans resent that they are being asked to foot the bill for Anglo-American policy.

Angela Merkel has taken it on herself to both hold the coalition together and also blunt the US rush to war, which is unpopular in Europe and Merkel herself fears more than the coalition falling apart.

The loner this situation lasts the more issues will bubble up, and no one expects the crisis to be resolved anytime soon, putting pressure on the Atlantic alliance itself.

Sputnik

Rakesh Krishnan Simha — US to kill F-35 fighter

The US Defence Department announced Tuesday it would "most certainly" kill the troubled F-35 'stealth' fighter after getting final clearance from Secretary of Defence Ash Carter. With $1 trillion already sunk into development and initial production, the F-35 Joint Strike Fighter programme is known as the aircraft that's "more expensive than Australia".

Initial reports suggest the decision to terminate the largest defence contract in history was a result of the threat from advanced versions of the Russian Su-27 Flanker series aircraft. "We just can't overlook the fact that in every wargamed scenario the Flankers have whipped the F-35," Pentagon spokesman Siphon Cash told USA Today. "Even without being stealthy, the Flankers are getting better with each new model."
The impending arrival of the T-50 Sukhoi stealth fighter could be another reason. In a worrying trend, several American fighter pilots have taken early retirement even as the Russians have started inducting early models of their fifth generation fighter. "My father, a former USAF fighter pilot in the early 1970s, was spooked by the MiG-25 Foxbat and spent years in rehab," said John Kwitter, who was an F-35 pilot at Elgin Air Force Base, Florida. "The Foxbat was a big scare word in the USAF those days and rattled many pilots of my father's generation. With the F-35 likely to be a sitting duck for the Russian fighter jocks flying the T-50, I have decided not to end up in a mental asylum."....
Russia & India
US to kill F-35 fighter
Rakesh Krishnan Simha


(snark but pretty funny and with a grain of truth to it)

Robert H. Wade — The Ukraine crisis is not what it seems


Le Monde Diplomatique follows Der Spiegel in questioning the Anglo-American version of the Ukrainian crisis.

Le Monde Diplomatique — English edition
The Ukraine crisis is not what it seems
Robert H. Wade | Professor of Political Economy and Development at the London School of Economics, author of Governing the Market,Princeton University Press, 2003, and winner of the Leontief Prize in Economics in 2008


Tuesday, March 31, 2015

Yanis Varoufakis — "The Nature Of The Greek Crisis"


Video interview

Social Europe
"The Nature Of The Greek Crisis"
Yanis Varoufakis

So Nice Of These "Evo-Economists" To "Allow" Evolution To Proceed

   (Commentary posted by Roger Erickson)


Everything You Need To Know About Laissez-Faire Economics. A Conversation with Alan Kirman

Huh? This SOUNDS right, but there's something subtly wrong. They're treating biology as though it's novel, and something to be fused into existing economics.

The reality is the inverse, and that Warren Mosler is right. The entire finance industry is more trouble than it's worth ... to humanity. In fact, it really is predatory, by it's very nature. So is our macro-economic policy - which should revert to simple logistics accounting, as real civic goals are set and pursued.

Otherwise, there's the danger that economists will someday also discover thermodynamics ... and even ecology? They'd try to fit those fields into "economics" too. If that happens, we're toast! Ideology would rule, and would ruin, all thinking whatsoever.

Meanwhile, don't hold your breath waiting for them to understand engineering, or culture.

Actually, this state of affairs is astounding ... since so many real science PhDs have gone into finance the last 30 years. Apparently, even most scientists aren't willing to really think, if their job depends on them thinking out of aggregate paradigm.


Pavlina R. Tcherneva — When A Rising Tide Sinks Most Boats: Trends In Us Income Inequality

In the postwar period, with every subsequent expansion, a smaller and smaller share of the gains in income growth have gone to the bottom 90 percent of families. Worse, in the latest expansion, while the economy has grown and average real income has recovered from its 2008 lows, all of the growth has gone to the wealthiest 10 percent of families, and the income of the bottom 90 percent has fallen. Most Americans have not felt that they have been part of the expansion. We have reached a situation where a rising tide sinks most boats. 
This policy note provides a broader overview of the increasingly unequal distribution of income growth during expansions, examines some of the changes that occurred from 2012 to 2013, and identifies a disturbing business cycle trend. It also suggests that policy must go beyond the tax system if we are serious about reversing the drastic worsening of income inequality.
Tricked down isn't happening. Time for some new narrative to dupe the rubes.

Levy Institute
Pavlina R. Tcherneva | Assistant Professor of Economics, Bard College Research Scholar, Levy Economics Institute

Paul Tudor Jones on inequality: He has nothing new to offer

Paul Tudor Jones' view that the private sector is what we need to rely on to solve massive income and wealth inequality is ignorant.

Efraim Zuroff — One man's journey to the heartland of fascism

Hostility to minorities and attempts to rewrite Holocaust history in Baltics - but no one cares, except Russia
i24 News (Tel Aviv) — Opinion
One man's journey to the heartland of fascism
Efraim Zuroff | chief Nazi-hunter of the Simon Wiesenthal Center and director of its Israel Office

Stratfor — The West Hems in Russia Little by Little


Not the whole story according to George Friedman, head of Stratfor. According to a talk that Friedman gave which was taped and excerpts put on YouTube, what is actually happening is that the US is creating a cordon sanitaire from the Baltics to the Black Sea, which accounts for the US led coup in Ukraine and the US running Ukraine through a puppet government. (Friedman regards this as transparent.)

Note this is the US acting alone in creating the cordon, not NATO, which would likely not approve the strategy since NATO policy requires unanimous consent of the member states and this is not in everyone's interest.

The US strategy is ostensibly to isolate and contain Russia. But the hidden agenda is to create a US military controlled corridor separating Europe from Russia in order to prevent the development of Russian-European cooperation and perhaps an eventual alliance based on economic and trade benefits — and especially to prevent a German-Russian alliance should Germany listen to Putin's overtures about the advantages of this.

According to Friedman, the worst nightmare of the Anglo-Americans beginning with German unification under Prussian leadership has been development of a German-Russian alliance, which would unite Germany's economic and technological expertise with Russian natural resources, giving this alliance effective control of strategist Halford Mackinder's heartland of Eurasia and as a consequence control of the world island. This is fundamental to the Brzezinski doctrine, too. 

A German-Russian alliance is essentially the only really viable threat to continuing US world hegemony through military control of the sea, air and space, at least for the foreseeable future.

According to Friedman, everything hangs on Germany, and Germany hasn't yet made up it mind. The US is not waiting to find out, since there is a lot of pressure by German business to dump the US in favor of a closer relationship with Russia, which would be much more in Germany's economic interest (meaning their economic interest).

Friedman admits its cynical but hey, this is hard ball.

Stratfor — Geopolitical Diary
The West Hems in Russia Little by Little

Diane Coyle — Economists? Hubris? Surely not? [Book Review]


Brief overview of Meghnad Desai’s new book, Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One.

The Enlightened Economist
Economists? Hubris? Surely not?
Diane Coyle | freelance economist and a former advisor to the UK Treasury. She is a member of the UK Competition Commission and is acting Chairman of the BBC Trust, the governing body of the British Broadcasting Corporation

The privatization of the Port of Piraeus, which Syriza opposed, is now going forward


Hat tip to my good friend and MNE contributor, Roger Erickson, for this.

(Reuters) - The Greek government will sell its majority stake in the port of Piraeus within weeks, the country's deputy prime minister told China's official Xinhua news agency, a flip-flop from the leftist government as it seeks funds from its creditors.
The Syriza government of Alexis Tsipras took power in January on promises to end painful austerity, saying it would halt a string of privatisations including the sale of a 67 percent stake in the Piraeus Port Authority (OLP). Read article.

#NoBALLS

Well, okay, first of all I called this from the very beginning. I called the eventual capitulation by Syriza, by Tsipras, by Varoufakis. Go back and read my blog entries starting from January 26.

But enough of patting myself on the back. If you care anything about breaking the global grip of the oligopoly, the neoliberal rape, the plutcratic plunder, then this has to make you want to puke. Another sellout by the phoney, cowardly, BallLESS, (add your own adjective), liberal, progressive, left wing.

They go down so easy, don't they? No stomach for fighting. No stomach for just about anything except getting down on their knees and giving hand jobs to the elites. So quick to cede power and control to the plutocracy...willingly...on a silver fucking platter. Each and every time.

I'm just wondering what Syriza will do next? Re-fire those rehired workers?

And by the way, we'll be getting another taste of it here in the U.S. Guess who's being anointed Senate Minority Leader? Chuck Schumer (D-NY), friend of Wall Street and war, those two great, liberal Democratic values.

Schumer had in the past “succeeded in limiting efforts to regulate credit-rating agencies, for example, sponsored legislation that cut fees paid by Wall Street firms to finance government oversight, pushed to allow banks to have lower capital reserves and called for the revision of regulations to make corporations’ balance sheets more transparent.”
His behavior has changed very little since the crisis.
When Senators Sherrod Brown (D-OH) and Ted Kaufman (D-DE) introduced an amendment to break up the largest banks, they were able to recruit the support of a handful of GOP senators, but Schumer worked alongside the Obama administration to kill it. He insists that capital gains tax rates stay lower than those of other income, a direct gift to fund managers. Read the rest of the article here.

Who needs the GOP when you have guys like Schumer?


Odd How Long It Takes For This To Sink In

   (Commentary posted by Roger Erickson)


"Among the numerous advantages promised by a well constructed Union, none deserves to be more accurately developed than its tendency to break and control the violence of faction." James Madison

And Madison took his examples from Greek & Roman writings 2000 years old!

The problem can't be one of education alone. Rather, our sea of people is simply expanding faster than are our old methods for encouraging cultural diffusion of ideas.

If HOW we run student education & workforce training doesn't change, fast enough .... we inevitably end up with "dead zones" at the bottom of our expanding sea of (changing) citizens.

It's not just factions, it's all aspects of all Union or team or workforce interactions.

If you don't like change ... you can't love your own kids, or our changing world.

Recombination. Ya gotta love it. There's no alternative.

Ed Dolan — Deconstructing ShadowStats. Why is it so Loved by its Followers but Scorned by Economists?

It is hard to think of a website so loved by its followers and so scorned by economists as John Williams’ ShadowStats, a widely cited source of alternative economic data on inflation and other economic indicators. Any econ blogger who has ever written a line about inflation is familiar with ShadowStats. Time and again, readers cite it in comments, not infrequently paranoid in their tone and rude in their language. Brief replies that cast doubt on some of more extreme claims made by ShadowStats fans don’t seem to have much effect. After a recent round of comments, I promised the editor of one website to undertake a thorough deconstruction of ShadownStats. Here is the result....
Economonitor — Ed Dolan's Econ Blog
Deconstructing ShadowStats. Why is it so Loved by its Followers but Scorned by Economists?
Ed Dolan

Joseph Joyce — The U.S.: Inept Diplomacy, Indispensable Currency

All this demonstrates the discrepancy between the diplomatic and financial power of the U.S. On the one hand, the U.S. must deal with countries that are eager to claim their places in global governance. The dominance of the U.S. and other G7 nations in international institutions is a relic of a world that came to an end with the global financial crisis. On the other hand, the dollar is still the predominant international currency, and will hold that place for many years to come. The use of the renminbi is slowly growing but it will be a long time before it can serve as an alternative to the dollar. Consequently, the actions of the Federal Reserve may have more international repercussions than those of U.S. policymakers unable to cope with the shifting landscape of financial diplomacy.
Angry Bear
The U.S.: Inept Diplomacy, Indispensable Currency
Joseph Joyce

Daily Treasury Statement predicting HUGE jobs number on Friday

If you took my course, Understanding the Daily Treasury Statement, you would know why I am making this call, now, three days before the release of that number. I am telling you this: it will be far better than expectations.

I am not going to tell you how I know this, but I know. You will have to sign up for the next course to learn how to get this information plus lots of other, very powerful, money making tips and insights from this amazing resource. I am the only one who teaches this.

Consider this a gift--my gift to you, so don't waste it; go make yourself some (a lot) of money.

The number will blow away the 240k expected gain in nonfarm  payrolls. BLOW. IT. AWAY.

So, what  do you do?  You buy the dollar (short euro, yen, British pound, Aussie dollar, etc), sell bonds, sell gold and sell stocks. On the latter, I know it seem counterintuitive because, obviously, a strong jobs number is bullish news for the economy and therefore bullish for stocks, however, the way the market has been trading, i.e. with intense fear of an imminent rate hike, they'll probably hit the stock market in reaction to a strong number. On the other hand, longer term investors should use this as an opportunity to add to long stock positions.

Enjoy.

-Mike Norman
#itsnotaboutthedeficit

Wage rises are required – real wages must grow in line with productivity

There was an interesting article in the UK Guardian last weekend (March 29, 2015) – Why falling inflation is a false pretext for keeping wages low – which examined wage trends in the UK and the validity of the argument that “Falling inflation now provides employers with a pretext for keeping wage settlements low". Employer groups never support wage increases and are continually trying to suppress real wages growth below productivity growth so that they can enjoy a greater share of national income. As part of my research to discover the nature of the ideological shift accompanying the emergence of Monetarism as the dominant policy paradigm I have been examining wage distributions. This is part of a book I will complete next year (fingers crossed) on the demise of the political left. In this blog we examine the shifting relationship between labour productivity growth and real wages growth since 1960. The results are illuminating and open up a broad research front about which I will write more as time passes.
As usual, Bill puts his finger on the fundamental issue. The chief issue in a surplus economy is distribution of the surplus. The major parties vying for a share are "capital" (owners and those who control the firm) and "labor" (workers aka "the help"). So the tussle is between capital share and labor share with respect to distributing the surplus resulting from productivity.

Owners argue that productivity increase no longer comes chiefly from laborin a highly technological economy , e.g., through growing experience and improved skill, but from technology and organizational and management capability. So capital and top management that controls and directs the firm naturally deserve the greater share based on both proportionate contribution to the resultant profit and incentive to increase profit through capital formation, which benefits the whole society by creating jobs and trickle down.

As Henry Ford realize, the problem with this approach is effective demand for consuming production potential if workers are not paid enough to afford to purchase the entire potential (and they cannot borrow to do so indefinitely). So the result is an output gap and involuntary unemployment.

Bill's analysis shows that the problem is not at root economic but political, that is, ideological. It is the result of imposing a neoliberal political theory on society based on a false economic rationale in that the basis of neoliberalism as a political theory is that a market state is superior to a welfare state in delivering a high standard of living. Politics is essentially about the distribution and use of power in a society, and the ruling elite who hold power get to impose their ideology on society. The recourse therefore is to change the ruling elite and shirt the power. That is an economic issue to the degree that wealth confers power.

Basically, the thinking behind a market state being superior is Say's law and the belief that the purpose of capitalism is increased capital formation because trickle down. The thinking behind a welfare state is that production is for consumption and shared prosperity and a high standard of living are based on broadly based distribution that encourages circular flow.

However, as Bill points out, the hidden agenda behind a "market" state is rent extraction rather than simply allocation of the surplus to the top tier through market forces. This is neoliberalism's dirty secret. Power provides the ability to design institutions for rent extraction.

Bill Mitchell – billy blog
Wage rises are required – real wages must grow in line with productivityBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

J.D. Alt — Opportunities of a Millennium (Part 1)

Viewed through the ideology of money-scarcity, the major challenges facing society appear to represent “costs” that people must be penalized to pay by taking dollars out of their personal pockets. At one level, politics is the endless and bitter argument of one party proposing to do X, Y, or Z in order to accomplish some collective benefit, and the other party saying: Yes, but how are you going to pay for it?—which is the “gotcha” question because everyone certainly “knows” that in order to actually do X, Y, or Z, the federal government will have to increase taxes or borrow dollars from the Private Sector pot. Understanding modern fiat money (and how to manage it as a collective tool) creates, as we now understand, a remarkably different and more useful perspective. With this new perspective, as we’re about to see, many of the biggest challenges we face as a collective society can be viewed not as a “cost”—a penalty to be paid—but instead as an enormous opportunity to make our lives, both collectively and individually, more effective and prosperous. Confronting these challenges, in other words, will not take dollars out of our personal pockets, it will—in addition to hopefully overcoming the challenge addressed—put dollars into our pockets. This, in essence, is the uniquely empowering perspective that modern fiat money makes possible.
To see the power of this perspective in concrete terms, let’s explore four of the major dilemmas the Millennials will surely be facing as they come into power....
New Economic Perspectives
Opportunities of a Millennium (Part 1)
J.D. Alt

Cultural Development at 31st Week of Democracy






Are we past the 2nd Trisequester yet?

Or still in the fetal position?

Monday, March 30, 2015

Robert Parry — Deciphering the Mideast Chaos

Few Americans seem to comprehend what is unfolding in the Middle East – with the latest conflict involving Saudi airstrikes against the Houthi rebels who now control Yemen’s capital of Sanaa. In this swirl of regional wars, it’s often not clear where the U.S. government stands and how American interests are affected.
The reason for the confusion is simple: Many key pundits who get to explain what’s going on from the op-ed pages of the major U.S. newspapers and from the TV talk shows prefer that the American people don’t fully grasp what’s happening. Otherwise, the people might realize the dangers ahead and demand substantial changes in U.S. government policies....
... over the years, the U.S. government has exploited the general lack of knowledge among Americans about the intricacies of Middle East religions and politics by funneling the anger against one group to rationalize actions against another....
In seeking to smash this “Shiite crescent” [from Tehran through Baghdad and Damascus to Beirut], these Sunni-ruled states have been joined by Israel, which has taken the position that Iran and its Shiite allies are more dangerous than the Sunni extremists, thus transforming Al-Qaeda and the Islamic State into the “lesser evils.”
This was the subtext of Israeli Prime Minister Benjamin Netanyahu’s address to Congress on March 3 – that the U.S. government should shift its focus from fighting Al-Qaeda and the Islamic State to fighting Iran....
In one of the most explicit expressions of Israel’s views, its Ambassador to the United States Michael Oren, then a close adviser to Netanyahu, told the Jerusalem Post in September 2013 that Israel favored the Sunni extremists over Assad.
“The greatest danger to Israel is by the strategic arc that extends from Tehran, to Damascus to Beirut. And we saw the Assad regime as the keystone in that arc,” Oren told the Jerusalem Post in an interview. “We always wanted Bashar Assad to go, we always preferred the bad guys who weren’t backed by Iran to the bad guys who were backed by Iran.” He said this was the case even if the “bad guys” were affiliated with Al-Qaeda.
 And, if you might have thought that Oren had misspoken, he reiterated his position in June 2014 at an Aspen Institute conference. Then, speaking as a former ambassador, Oren said Israel would even prefer a victory by the Islamic State, which was massacring captured Iraqi soldiers and beheading Westerners, than the continuation of the Iranian-backed Assad in Syria.
“From Israel’s perspective, if there’s got to be an evil that’s got to prevail, let the Sunni evil prevail,” Oren said....
Over the past decade, the Israelis and the Saudis have built a powerful alliance, a relationship that has operated mostly behind the curtains. They combined their assets to create what amounted to a new superpower in the Middle East, one that could project its power mostly via the manipulation of U.S. policymakers and opinion leaders – and thus deployment of the U.S. military. 
Israel possesses extraordinary political and media influence inside the United States – and Saudi Arabia wields its oil and financial resources to keep American officialdom in line. Together, the Israeli-Saudi bloc now controls virtually the entire Republican Party, which holds majorities in both chambers of Congress, and dominates most mainstream Democrats as well.
Reflecting the interests of the Israeli-Saudi bloc, American neocons have advocated U.S. bombing against both the Syrian and Iranian governments in pursuit of “regime change” in those two countries. [emphasis added],,,,,
Parry views this as an existential crisis for the United States and neither the background nor the details are being revealed to the American public — as the New York Times calls for war with Iran (see below).

Consortium News
Deciphering the Mideast Chaos
Robert Parry

Also
Just as the New York Times promoted fake facts to rationalize invading Iraq, it has just published a deceptive op-ed to justify bombing Iran, the ranting of one of America’s most notorious warmongers, John Bolton, as Lawrence Davidson describes.
Letting A Warmonger Rant
Lawrence Davidson is a history professor at West Chester University in Pennsylvania.

circuit — Ben Bernanke and the natural rate of interest


Not so fast there. circuit comes to Ben's defense, kinda.

If my understanding is correct, a point that circuit makes is that a natural rate rate of interest, like potential output, is a theoretical term that is model-determined rather than being an observable. Consequently, it may be useful for a central bank to use a model in which a natural rate of interest at full employment figures in theorizing about monetary policy. 

After all, if a central bank is going to set monetary policy through the nominal interest rate, then it has to have some rationale for doing so, and for economists, that means having a model. Since exogenous money has been discredited that leaves the central with with the interest rate as its policy tool. So the question becomes how and when to use that tool.

However, Ben doesn't seem to imply that he thinks there is actually a Wicksellian rate that leads naturally to full employment equilibrium in the long run if market forces are left to operate. What would be the point of monetary policy in that case unless to influence the short term. But that is basically to dismiss the long run as realistically significant. 

Or maybe he does "believe in" an actual Wicksellian rate that naturally leads to full employment in the long run but concludes that doing nothing and waiting for "the long run" is just not practical politically and that monetary policy can fill in.

Fictional Reserve Barking
circuit

David F. Ruccio — Catholicism beyond capitalism


Pope Francis on trickle down and cooperatives. Francis seems to be a non-Marxist socialist. 

Occasional Links & Commentary
Catholicism beyond capitalism
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

For a Marxian view of worker cooperatives as a viable basis for socialism:

Monthly Review
Cooperatives On the Path to Socialism?
Peter Marcuse | Professor Emeritus of Urban Planning, Columbia University

Thomas Piketty, Paul Krugman And Joseph Stiglitz On The Economy And Inequality — Video

Thomas Piketty, Joseph Stiglitz and Paul Krugman were brought together in one event organised by 92nd Street Y in New York City
Social Europe
Thomas Piketty, Paul Krugman And Joseph Stiglitz On The Economy And Inequality
ht Jan Milch