Paul Krugman has a new post that explains why the debate over money- vs. bond-financing of government deficits is really much ado about nothing. In it, he essentially echoes longstanding MMT-core principles, as we will show below.
It used to be comforting to think that the saying “one rule for the rich, another for the poor” was just that: a saying. We could all pretend that America was a land of equal laws, even though we all knew deep down that rich folk can always get away with stuff we can’t.
Now, in these years of crisis, we are exposed to the ugly truth far too frequently. Big business and rich people have one set of laws. The rest of us another. In their laws a contract is inviolate. To break it you have to have extreme extenuating circumstances and/or a well paid lawyer. In our laws a contract is a suggestion. To break it you have to be a creditor who has friends amongst the elite and/or a well paid lawyer.Real-World Economics Review Blog
The disastrous flaws in mainstream economics, and how economies can serve our total wellbeing
The Levy Institute’s Jan Kregel and L. Randall Wray took part in a workshop at the UK House of Commons, November 25th, on “Financial Governance for Innovation and Social Inclusion,” organized by Mariana Mazzucato (SPRU) and Leonardo Burlamaqui (Ford Foundation) and hosted by Shadow Minister for the Cabinet Office, MP Chi Onwurah. Kregel and Wray’s presentations follow:
Here is a list of 3 recent activities, two of which have videos for your viewing pleasure.Economonitor — Great Leap Forward
Whoever reads modern neoclassical models will notice that “It is one of the commonplaces of the received economic theory that work is irksome.” As Thorstein Veblen wrote 115 years ago. This idea is even one of the cornerstones of DSGE-models. But is work really always irksome? Below, the rest of the Veblen article which boils down to the idea that disliking all work is in fact, in modern terminology, characteristic of a state of clinical psychological depression: “Man’s life is activity.”And as man is a social animal, at least part of that activity had to be oriented at longer term goals in the interest of the group and man has evolved to like such activities: work. But if that’s part of our true nature, why does our society give so many people the idea that work is irksome?Real-World Economics Review Blog
Thinking about my academic qualifications the last few days made me revisit some of my old subject areas.
The Gracchi era of the Roman Republic I’ve consequently realized offers something of a precedent for today’s disruption.
The Gracchi brothers were tribunes (representatives of the plebs) who were disturbed by the displacement of peasants from the land by slaves (effective roman equivalent of robot) and demanded reforms to compensate the peasants. Part of the problem was also that most of the land had been acquired by rome’s wealthiest citizens and speculators. There was consequently little opportunity for wealth to be distributed, even by military honors, which usually entitled soldiers to a patch of land and thus a livelihood.
The Gracchi wanted land redistribution, but also what I guess could be called a form of basic income payable in grain to tide the peasants over....Occupy Rome didn’t end well.
Can you imagine participating in a protest outside the White House and forcing the entire U.S. government to resign? Can you imagine a group of randomly chosen private citizens rewriting the U.S. constitution to include measures banning corporate fraud? It seems incomprehensible in the U.S., but Icelanders did just that. Icelanders forced their entire government to resign after a banking fraud scandal, overthrowing the ruling party and creating a citizen’s group tasked with writing a new constitution that offered a solution to prevent corporate greed from destroying the country. The constitution of Iceland was scrapped and is being rewritten by private citizens; using a crowd-sourcing technique via social media channels such as Facebook and Twitter. These events have been going on since 2008, yet there’s been no word from the U.S. mainstream media about any of them. In fact, all of the events that unfolded were recorded by international journalists, overseas news bureaus, citizen journalists and bloggers. This has created current accusations of an intentional cover up of the story by mainstream U.S. news sources.
An “iReport” on CNN, written by a private citizen in May 2012, has questioned the reasons why this revolution has not been widely covered in the U.S., suggesting that perhaps the mainstream media is controlled by large corporate interests and thus has been unwilling to report on Iceland’s activities. That report is currently making its way around social media. CNN today placed a statement on its website saying: “We’ve noticed this iReport is being shared widely on Facebook and Twitter. Please note that this article was posted in May 2012. CNN has not yet verified the claims and we’re working to track down the original writer.” It is interesting to note that CNN’s European version, CNN Europe, already covered the story of the protests and the government’s resignation, leading many to question why CNN would now need to “look into” the claims.
Besides CNN Europe’s own coverage of the scandal, the events in Iceland were widely covered by international media and are easily verified by a simple search on Google which leads to a variety of reputable international news sources that ran numerous stories on the Icelandic revolution. A whole documentary has been made on the governmental overthrow called Pots, Pans and Other Solutions, and now, the conversation is focused on whether or not the citizens’ actions actually worked to make Iceland a more equitable nation....Las Vegas Guardian Express
“I am not an expert in health care, or Obamacare, or the Affordable Care Act, or however you choose to describe it, but I do know this: I have benefited from that kind of universal health care in my 55 years of public life,” Powell said. “And I don’t see why we can’t do what Europe is doing, what Canada is doing, what Korea is doing, what all these other places are doing.”
More than five years after the fall of Lehman Brothers we are still dealing with the problem of high unemployment, the worst kind of “waste” in economic theory.
Is there a better approach? A number of scholars, notably Professor Randy Wray of the University of Missouri-Kansas City, have long proposed a Job Guarantee program or the government as an “employer of last resort,” or ELR.
As Wray notes in the interview below, the U.S. government can proceed directly to zero unemployment by hiring all of the labor that cannot find private sector employment. Furthermore, by fixing the wage paid under this ELR program at a level that does not disrupt existing labor markets, i.e., a wage level close to the existing minimum wage, substantive price stability can be expected. A sizable benefits package should be provided, including vacation and sick leave, contributions to Social Security, and, most importantly, health care benefits, providing scope for a bottom-up reform of the current patchwork health care system.
Using the government as an ELR would not be introducing another element of intrusive bureaucracy into our economy. It would simply offer a better utilization of the existing stock of unemployed who are now dependent on the public purse — especially the chronically long-term unemployed.
The current system we have relies on unemployed labor and excess capacity to try to dampen wage and price increases. However, it pays unemployed labor for not working and allows that labor to depreciate and develop behaviors that act as barriers to future private-sector employment.INET
In the monthly e-newsletter for the Justice Department's Community Oriented Police Services (COPS) program, Senior Policy Analyst Karl Bickel sounds the alarm about the militarization of America's domestic police forces. Here's his conclusion:
Police chiefs and sheriffs may want to ask themselves—if after hiring officers in the spirit of adventure, who have been exposed to action oriented police dramas since their youth, and sending them to an academy patterned after a military boot camp, then dressing them in black battle dress uniforms and turning them loose in a subculture steeped in an “us versus them” outlook toward those they serve and protect, while prosecuting the war on crime, war on drugs, and now a war on terrorism—is there any realistic hope of institutionalizing community policing as an operational philosophy?
In my last post, I argued that the fair price of a bitcoin as a monetary instrument is zero BTC; a bitcoin contains no promise in terms of income, in terms of convertibility, in terms of maturity, or any other. As a commodity, I have no idea what its fair price is. BOA says it is $1300. I will let those who find utility in the bitcoin payment system and speculators decide how much they are willing to pay in USD for a number credited on their screen in BTC. All I can tell you is: “money does not grow on trees.” Money is not a natural occurrence, it is a man-made financial devise. It looks like the bitcoin creator’s views on money were shaped by the old and erroneous idea that “gold is money.” Gold was at best a collateral embedded in a monetary instrument (gold coin), the metal itself was never money. In today’s blog, I will focus on three other issues with the bitcoin system that prevent it to work well as a monetary system. While I explain what ought to happen to make the bitcoins work properly as a monetary instrument, I am not sure it can be done.New Economic Perspectives
The notion of tax-driven money is easiest to understand in relation to an exogenous tax such as a property tax or simple head tax. Demand for a state money is most effectively driven by exogenous taxes, not endogenous ones such as income taxes. Even so, in a hypothetical system with a tax imposed solely on income, the tax would still drive demand for a state money. It is worth considering why this is the case, because it also indicates why some level (but not any level) of a basic income would also be consistent with currency viability.heteconomist
The typical economist’s take on this, however, is that by filling the lower-skilled jobs with robots, we will be able to move human workers into the higher-skilled work. Of course, as robots get smarter (or as we continually reduce complex processes to a series of simple steps—which has been the basis of automation since the days of Adam Smith), humans will be funneled into ever-higher-order tasks. Not to worry, say the economists, because we’ll need more and more robots, too. Hence, the final refuge for human workers will be to make the robots that do everything else.
Economist Joan Robinson (who should have been the first woman to win the Nobel for Economics—but was disqualified for taking the winning side of the “Capital Controversy” debate; note all the losers of that debate did get a Nobel, presumably as a consolation prize for losing to Robinson!) saw all this coming long ago when she wondered “But what do we do when robots make the robots?”
Back in 1991 I wrote about all this in a journal article: “Saving, Profits, and Speculation in Capitalist Economies”, Journal of Economic Issues, vol. 25, no. 4, December 1991, pp. 951-975. I just took a look at it and still consider it to be the best article I have published.....Economonitor — Great Leap Forward
ABSTRACT
Heterodoxy serves as an umbrella term to cover the coming together of separate projects or traditions. In answering the question, 'what distinguishes heterodoxy from the orthodoxy?', the author argues that matters of ontology are central. In answering the question, 'how are the various traditions that make up the modern heterodoxy to be distinguished from each other?', the author defends criteria other than varying commitments to specific substantive theories, policy measures or techniques (or basic units) of analysis.Lawson, T. (2005). "The nature of heterodox economics". Cambridge Journal of Economics 30 (4): 483–505.
If all you’ve got is a hammer, then everything starts to look like a nail. And if police and prosecutors are your only tool, sooner or later everything and everyone will be treated as criminal. This is increasingly the American way of life, a path that involves “solving” social problems (and even some non-problems) by throwing cops at them, with generally disastrous results. Wall-to-wall criminal law encroaches ever more on everyday life as police power is applied in ways that would have been unthinkable just a generation ago.
By now, the militarization of the police has advanced to the point where "the War on Crime” and “the War on Drugs” are no longer metaphors but bland understatements. There is the proliferation of heavily armed SWAT teams, even in small towns; the use of shock-and-awe tactics to bust small-time bookies; the no-knock raids to recover trace amounts of drugs that often result in the killing of family dogs, if not family members; and in communities where drug treatment programs once were key, the waging of a drug version of counterinsurgency war. (All of this is ably reported on journalist Radley Balko’s blog and in his book, The Rise of the Warrior Cop.) But American over-policing involves far more than the widely reported up-armoring of your local precinct. It’s also the way police power has entered the DNA of social policy, turning just about every sphere of American life into a police matter.
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