Saturday, October 1, 2016

RT — Direct aggression by US against Damascus to cause 'tectonic shift' in Middle East - Moscow

“If the US launches a direct aggression against Damascus and the Syrian Army, it would cause a terrible, tectonic shift not only in the country, but in the entire region,” Maria Zakharova said during a talk show, which is to be aired fully later on Saturday and has been cited by RIA.
With no government in Damascus, there will be a power vacuum in Syria, which “so-called moderates, who are, in reality, not moderate at all but just terrorists of all flavors, would fill; and there will be no dealing with them,” the diplomat predicted. 
“And later it would be aggravated the way it happened in Iraq. We know that [Saddam Hussein’s] Iraqi Army became the basis of the Islamic State. Everything that both the [US-led] coalition and Russia are fighting now stems from it,” Zakharova said.

Martin Jacques — The death of neoliberalism and the crisis in western politics

In the early 1980s the author was one of the first to herald the emerging dominance of neoliberalism in the west. Here he argues that this doctrine is now faltering. But what happens next?
After almost nine years, we are finally beginning to reap the political whirlwind of the financial crisis. But how did neoliberalism manage to survive virtually unscathed for so long? Although it failed the test of the real world, bequeathing the worst economic disaster for seven decades, politically and intellectually it remained the only show in town. Parties of the right, centre and left had all bought into its philosophy, New Labour a classic in point. They knew no other way of thinking or doing: it had become the common sense. It was, as Antonio Gramsci put it, hegemonic. But that hegemony cannot and will not survive the test of the real world.
The first inkling of the wider political consequences was evident in the turn in public opinion against the banks, bankers and business leaders. For decades, they could do no wrong: they were feted as the role models of our age, the default troubleshooters of choice in education, health and seemingly everything else. Now, though, their star was in steep descent, along with that of the political class. The effect of the financial crisis was to undermine faith and trust in the competence of the governing elites. It marked the beginnings of a wider political crisis.
But the causes of this political crisis, glaringly evident on both sides of the Atlantic, are much deeper than simply the financial crisis and the virtually stillborn recovery of the last decade. They go to the heart of the neoliberal project that dates from the late 70s and the political rise of Reagan and Thatcher, and embraced at its core the idea of a global free market in goods, services and capital. The depression-era system of bank regulation was dismantled, in the US in the 1990s and in Britain in 1986, thereby creating the conditions for the 2008 crisis. Equality was scorned, the idea of trickle-down economics lauded, government condemned as a fetter on the market and duly downsized, immigration encouraged, regulation cut to a minimum, taxes reduced and a blind eye turned to corporate evasion.
The public is noticing a contrast and getting nostalgic. Let the good times roll again.
It should be noted that, by historical standards, the neoliberal era has not had a particularly good track record. The most dynamic period of postwar western growth was that between the end of the war and the early 70s, the era of welfare capitalism and Keynesianism, when the growth rate was double that of the neoliberal period from 1980 to the present.…
Large sections of the population in both the US and the UK are now in revolt against their lot, as graphically illustrated by the support for Trump and Sanders in the US and the Brexit vote in the UK. This popular revolt is often described, in a somewhat denigratory and dismissive fashion, as populism. Or, as Francis Fukuyama writes in a recent excellent essay in Foreign Affairs: “‘Populism’ is the label that political elites attach to policies supported by ordinary citizens that they don’t like.” Populism is a movement against the status quo. It represents the beginnings of something new, though it is generally much clearer about what it is against than what it is for. It can be progressive or reactionary, but more usually both.…
The resurgence of class consciousness.
The wave of populism marks the return of class as a central agency in politics, both in the UK and the US. This is particularly remarkable in the US. For many decades, the idea of the “working class” was marginal to American political discourse. Most Americans described themselves as middle class, a reflection of the aspirational pulse at the heart of American society. According to a Gallup poll, in 2000 only 33% of Americans called themselves working class; by 2015 the figure was 48%, almost half the population.…
The poverty of the Left.
One of the reasons why the left has failed to emerge as the leader of the new mood of working-class disillusionment is that most social democratic parties became, in varying degrees, disciples of neoliberalism and uber-globalisation. The most extreme forms of this phenomenon were New Labour and the Democrats, who in the late 90s and 00s became its advance guard, personified by Tony Blair and Bill Clinton, triangulation and the third way…
Populism is not going away.
Trump may well lose the presidential election just as Sanders failed in his bid for the Democrat nomination. But this does not mean that the forces opposed to hyper-globalisation – unrestricted immigration, TPP and TTIP, the free movement of capital and much else – will have lost the argument and are set to decline. In little more than 12 months, Trump and Sanders have transformed the nature and terms of the argument. Far from being on the wane, the arguments of the critics of hyper-globalisation are steadily gaining ground. Roughly two-thirds of Americans agree that “we should not think so much in international terms but concentrate more on our own national problems”. And, above all else, what will continue to drive opposition to the hyper-globalisers is inequality.
The Guardian (21 August 2016)
The death of neoliberalism and the crisis in western politics
Martin Jacques

Paul Rosenberg — Breaking point: America approaching a period of disintegration, argues anthropologist Peter Turchin

Anthropologist Peter Turchin's "Ages of Discord" provides a crucial decoder ring for Trump-era social strife.
The American polity today has a lot in common with the Antebellum America of the 1850s; with Ancien Régime France on the eve of the French Revolution; with Stuart England during the 1630s; and innumerable other historical societies,” Turchin writes. “However, unlike historical societies, we are in a unique position to take steps that could allow us to escape the worst. Societal breakdown and ensuing waves of violence can be avoided by collective, cooperative action.”….
“Structural‐demographic theory represents complex (state‐level) human societies as systems with three main compartments (the general population, the elites, and the state) interacting with each other and with sociopolitical instability via a web of nonlinear feedbacks,” Turchin writes. Their relationship, as described and measured in the theory, is summarized in this figure:
“Ages of Discord” also tests this theory against the example of American history, with special attention to turning points in different trends, which show a remarkable degree of coherence.
One table lists 29 proxies representing 15 variables, all but one of which — life expectancy — reversed direction within about a decade of 1970. These include three proxies of labor oversupply; two of economic and health well-being; three of social well-being and economic inequality; two of elite overproduction, intra-elite competition and intra-elite cooperation; three of cooperation and equity; and one of intra-elite fragmentation, patriotism, state legitimacy, state capacity and sociopolitical instability.

In short, Turchin finds that it wasn’t just similar social trends that changed together; trends from every aspect of the model changed direction around the same time.

Patrick G. Eddington — The “Pardon Snowden” Case Just Got Stronger


Cato gets one right, but it's not about economics.

Cato Institute — Cato At Liberty
The “Pardon Snowden” Case Just Got Stronger
Patrick G. Eddington

Brian Romanchuk — Whither Mainstream Economics?

The inertia in academic institutions provides a very good reason to expect very little progress within mainstream business cycle macroeconomics. Nevertheless, that segment of the profession could be dragged kicking and screaming back to reality by central banks, and so there is no reason for total pessimism on that score. This article is written from the perspective of an outsider analysing the field from the perspective of the history of ideas, and not arguing about the validity of any school of thought.
This article bookends my earlier article "Whither Post-Keynesian Economics?" It is no secret that I believe that post-Keynesian economics is the best way to approach economics. I discuss how post-Keynesian economics fits into my discussion here in an appendix.…
My interpretation of post-Keynesian economics leads to a somewhat pessimistic conclusion: we cannot hope to assign a single probability distribution to the future value of macroeconomic variables using a single model. (The existence of such a model would allow for a "scientific" determination of the validity of the model using statistical tests.)….
If we assume that my assertion is correct, the implication is that we cannot blindly hope to apply the lessons of science (particularly Physics) to economics. Any theory that offers quantitative predictions can be shot down for one reason or another -- either problematic observed data, or theoretical incoherence. This means that there can be no "final answer" for macro theory, which is why we are stuck with battling tribes with different interpretations.

It should be noted that this theoretical ambivalence is not novel; it is effectively how market economists operate.
The side effect is that this puts academic post-Keynesians in a bind. Since they cannot produce a model that is "scientifically true," there is no reason that their theories must be adopted on "scientific" grounds. All that can be done is package their theories in a way that makes them more attractive than their competitors. As time passes, they will be absorbed into the "mainstream." Although this process seems inevitable, the question remains whether mainstream authors will properly cite the post-Keynesian authors, or else pretend that they came from within the New Consensus tradition.…
Bond Economics
Whither Mainstream Economics?
Brian Romanchuk

Michael Hudson — Review of James Galbraith, Welcome to the Poisoned Chalice (2016)

Galbraith expressed his “epiphany” already in 2010 that a “market-based” solution was a euphemism for anti-labor austerity and a reversal of political democracy. “In a successful financial system, there must be a state larger than any market. That state must have monetary control – as the Federal Reserve does, without question, in the Untied States.” 
That was what many Europeans a generation ago expected – for the EU to sponsor a mixed public/private economy in the progressive 20th-century tradition. But instead of an emerging “European superstate” run by elected representatives empowered to promote economic recovery and growth by writing down debts in order to revive employment, the Eurozone is being run by the troika on behalf of bondholders and banks. ECB and EU technocrats are serving these creditor interests, not those of the increasingly indebted population, business and governments. The only real integration has been financial, empowering the ECB to override national sovereignty to dictate public spending and tax policy. And what they dictate is austerity and economic shrinkage.…
“Europe has devoted enormous effort to create a ‘single market’ without enlarging any state, and while pretending that the Central Bank cannot provide new money to the system.” Without monetizing deficits, budgets must be cut and the public domain sold off, with banks and bondholders in charge of resource allocation.

As long as “the market” means keeping the high debt overhead in place, the economy will be sacrificed to creditors. Their debt claims will dominate the market and, under EU and ECB rules, will also dominate the state instead of the state controlling the financial system or even tax policy.

Galbraith calls this financial warfare totalitarian, and writes that while its philosophical father is Frederick Hayek, the political forbear of this market Bolshevism is Stalin. The result is a crisis that “will continue, until Europe changes its mind. It will continue until the forces that built the welfare state in the first place rise up to defend it.”
To prevent such a progressive policy revival, the troika promotes regime change in recalcitrant economies, such as it deemed Syriza to be for trying to resist creditor commitments to austerity. Crushing Greece’s Syriza coalition was openly discussed throughout Europe as a dress rehearsal for blocking the Left from supporting its arguments. “Governments from the Left, no matter how free from corruption, no matter how pro-European,” Galbraith concludes, “are not acceptable to the community of creditors and institutions that make up the European system.” …
Galbraith’s month-by-month narrative describes how the IMF and ECB overrode Greek democracy on behalf of creditors and privatizers. They sought to undermine the Syriza government from the outset, making Greece an object lesson to deter thoughts by Podemos in Spain and similar parties in Portugal and Italy that they could resist the creditor grab to extract payment by a privatization grab and at the cost of pension funds and social spending. By contrast, conciliatory favoritism has been shown to right-wing European parties in order to keep them in power against the left.…
The arena of conflict and rivalry has shifted from the military to the financial battlefield. Along with the IMF and ECB, central banks across the world are notorious for opposing democratic authority to tax and regulate economies. The financial sector’s policy of leaving money and credit allocation to banks and bondholders calls for blocking public money creation. This leaves the financial sector as the economy’s central planner. 
The euro’s creation can best be viewed as a legalistic coup d’état to replace national parliaments with a coterie of financial managers acting on behalf of creditors, drawn largely from the ranks of investment bankers. Tax policy, regulatory and pension policies are assigned to these unelected central planners. Empowered to override sovereign self-determination and national referendums on economic and social policy, their policy prescription is to impose austerity and force privatization selloffs that are basically foreclosures on indebted economies. Galbraith rightly calls this financial colonialism.…
At first glance the repeated “failure” of austerity prescriptions to “help economies recover” seems to be insanity – defined as doing the same thing again and again, hoping that the result may be different. But what if the financial planners are not insane? What if they simply seek professional success by rationalizing politics favored by the vested interests that employ them, headed by the IMF, central bankers and the policy think tanks and business schools they sponsor? The effects of pro-creditor policies have become so constant over so many decades that it now must be seen as deliberate, not a mistake that can be fixed by pointing out a more realistic body of economics (which already was available in the 1920s).…
The EU cannot be “fixed” by marginal reforms. Greece’s treatment shows that it must be recast – or else, countries will start leaving in order to restore parliamentary democracy and retain what remains of their sovereignty. The financial sector’s ideal is for economies centrally planned by bankers, leaving no public infrastructure unappropriated. Privatized economies are to be financialized into opportunities to extract monopoly rent.

The gauntlet has been thrown down, posing a question today much like that of the 1930s: Will the alternative to austerity, debt deflation and the resulting economic breakdown be resolved by a pro-labor socialist alternative, or will it lead to a victory by anti-European right-wing parties?….
Not difficult to see where this is headed. The Left and it's chance and blew. Now it the Right's turn.

Michael Hudson
Review of James Galbraith, Welcome to the Poisoned Chalice (2016)

Friday, September 30, 2016

Xinhua — Absurd presidential debate underlines deep-rooted problems facing US


A view from China. "Absurd." The wonders of democracy.

Xinhua
Absurd presidential debate underlines deep-rooted problems facing US
Chu Lei and Qi Zijian

Felicity Arbuthnot — The Betrayal of Syria - The US, France and Britain’s UN Ambassadors at the United Nations


The US is the current imperial power in the region while France and Britain are the former imperial powers there.

Katehon
Felicity Arbuthnot: The Betrayal of Syria - The US, France and Britain’s UN Ambassadors at the United Nations

Ray McGovern — Russia-Baiting and Risks of Nuclear War


Not like the US has not done this before with almost disastrous consequence, MeGovern explains, providing a historical reminder. Now US leaders are tempting fate again.

Consortium News
Russia-Baiting and Risks of Nuclear War
Ray McGovern, 27-year career as a CIA analyst included leading CIA’s Soviet Foreign Policy Branch and later conducted morning briefings of President Reagan’s most senior national security advisers with the President’s Daily Brief

Mike Whitney — The Biggest Heist in Human History


Consequences of monetary versus fiscal policy — asset appreciation versus economic stimulus, enriching asset owners but leaving workers out in the cold. Monetarism versus Keynesianism.

Counterpunch
The Biggest Heist in Human History
Mike Whitney

Ryan Gallagher — Europe’s Top Human Rights Court Will Consider Legality of Surveillance Exposed by Edward Snowden


The shoe drops. The US deep state will be apoplectic over this. For one thing,  guilty verdict would exonerate Snowden.
HUMAN RIGHTS GROUPS have launched a major new legal challenge over mass surveillance programs revealed by the National Security Agency whistleblower Edward Snowden.
Ten organizations – including Privacy International, the American Civil Liberties Union, and Amnesty International – are taking up the landmark case against the U.K. government in the European Court of Human Rights (pictured above). In a 115-page complaint released on Thursday, the groups allege that “blanket and indiscriminate” surveillance operations carried out by British spy agencies in collaboration with their U.S. counterparts violate privacy and freedom of expression rights.
The case represents the first time Europe’s top human rights court has been asked to consider the legality of surveillance exposed in the Snowden documents. Its judgments are legally binding and could potentially have ramifications for how surveillance is conducted within the U.K.
“Through bulk surveillance programs, the U.S. and U.K. governments intercept the private communications and data of millions of people around the world,” said Ashley Gorski, staff attorney at the ACLU National Security Project. “Not only is bulk surveillance unlawful, but it has a deeply chilling and corrosive effect on political discourse and our personal communications. We are hopeful that the European Court of Human Rights will recognize that this mass surveillance violates fundamental rights to privacy and freedom of speech, and that the court’s ruling will help put an end to these practices on a global scale.”
Totalitarianism.

The Intercept
Europe’s Top Human Rights Court Will Consider Legality of Surveillance Exposed by Edward Snowden
Ryan Gallagher

TASS — Expert: Russia will have to increase volume of borrowings threefold in 2017


Luckily, Kudrin has no operational role.
Russia will have to triple the volume of loans in 2017, head of the Center for Strategic Research (CSR) and ex-Finance Minister Alexei Kudrin said in an interview with the Rossiya 24 TV channel as part of the Sochi-2016 International Investment Forum.
"It will be necessary to increase borrowings anyway, even next year we will have to take three times more than this year, but when the reserve fund becomes empty, we will have to borrow even more," Kudrin said.
At the same time he noted that "this policy can be only temporary."
"That is why it will be necessary to cut deficit and cut borrowings. But in these conditions it is necessary to take funds to solve these current issues," Kudrin said. He did not say exactly what borrowings he was talking about.
"It will be necessary to increase borrowings anyway, even next year we will have to take three times more than this year, but when the reserve fund becomes empty, we will have to borrow even more," Kudrin said.
Kudrin has suggested that certain social budget expenditures on the so-called Presidential ‘May decrees’, including the one implying a raise in wages to public sector employees, should be postponed in order to bring the budget into balance.
Neoliberal moronism.

TASS
Expert: Russia will have to increase volume of borrowings threefold in 2017

SouthFront — US Defense Secretary: US to ‘Sharpen Military Edge in Asia’

The US is going to sharpen its military edge in the Asia-Pacific region in connection with growing concern about China’s military building up there, US Defense Secretary Ashton Carter said on Thursday.

“The United States will continue to sharpen our military edge so we remain the most powerful military in the region and the security partner of choice,” Carter said.
So let's add this up. The US is preparing for war with Russia and China while also engaged in the GWOT. This implies that the "defense" budget has to expand considerably.

SouthFront
US Defense Secretary: US to ‘Sharpen Military Edge in Asia’


Sputnik International
‘Pivot’ Prompts US to Send Newest, Best Weapons to Asia-Pacific - Carter

Riley Waggaman —This Is Not a Drill: NYT Editorial Board Lays Groundwork For War With Russia. Can't Wait!

Since the invention of assholes in 50,000 B.C.E., bleached-teethed television pundits and other social parasites have beckoned the young to die or lose limbs in pointless, illegal wars.… 
We've already established, in our lede, that assholes have been roaming the world for thousands of years. But it was Mark Twain who warned us about the New York Timesmany, many years ago:
Riley Waggaman specializes in dark humor. Today, the NYT gets the richly deserved brunt of it.

Russia Insider
This Is Not a Drill: NYT Editorial Board Lays Groundwork For War With Russia. Can't Wait!
Riley Waggaman

The Saker — The war against Syria: both sides go to “plan B”


The saker games "plan B" for the US and the Russian response. What's at stake? Only WWIII.
Please consider that before you go to vote.
Patrick Lawrence

Julia Ruiz Pozuelo, Amy Slipowitz, Guillermo Valeting — Democracy does not cause growth


Growth is the result of economic liberalism. Democracy is about social and political liberalism rather than economic liberalism.

There is a tradeoff between growth and fairness. 

Economic liberalism promotes growth, while social and political liberalism promote fairness and reciprocity.

Capitalism as an expression of economic liberalism is antithetical to democracy as the basis for social and political liberalism.

Achieving grown and fairness requires optimization of goals based on opposing values. Maximizing growth leads to a decline of fairness and reciprocity social and politically, which now goes by the term "inequality."

Vox.eu
Democracy does not cause growth
Julia Ruiz Pozuelo, Amy Slipowitz, Guillermo Valeting
ht Mark Thoma at Economist's View

John Helmer — FOUR MH

If you are following MH17 at all, you will want to read this in full. Lots of details. Here is the lede:
You don’t need to be an expert in ground-to-air warfare, radar, missile ordnance, or forensic criminology to understand the three fundamental requirements for prosecuting people for crimes. The first is proof of intention to do what happened. The second is proof of what could not have happened amounts to proof that it didn’t happen. The third is proof beyond reasonable doubt.
These are not, repeat not, the principles of the Joint Investigation Team (JIT), a team of police, prosecutors, and spies from The Netherlands, Ukraine, Malaysia, Belgium, and Australia. They have committed themselves to proving that a chain of Russian military command intended to shoot down and was criminally responsible for the destruction of Malaysia Airlines Flight MH17 on July 17, 2014, and for the deaths of all 298 people on board. The JIT case for Russian culpability hinges on five elements occurring in sequence – that a BUK missile was launched to the east of the aircraft, and approached it head-on, before exploding on the port (left) side of the cockpit.

Pause, rewind, then reread slowly in order to identify the elements of intention, causation, and culpability: (1) the BUK missile was aimed with a target acquisition radar by operators inside a BUK vehicle at a target flying in the sky and ordered to fire; (2) they fired from their vehicle parked on the ground facing east towards the aircraft’s approach; (3) the missile flew west and upwards to a height of 10,060 metres; (4) the warhead detonated; (5) the blast and the shrapnel tore the cockpit from the main fuselage; destroyed one of the aircraft engines; and caused the aircraft to catch fire, fall to the ground in pieces, and kill everyone.

On Wednesday afternoon, in the small Dutch town of Nieuwegein, two Dutchmen, one a prosecutor, one a policeman, claimed they have proof that this is what happened. For details of the proof they provided the world’s press, read this. Later the same day, in Moscow, a presentation by two Russians from the Almaz-Antei missile group, one a missile ordnance expert, the other a radar expert, presented their proof of what could not have happened. Click to watch.

The enemies of Russia accept the Dutch proof and ignore the Russian proof. As Wilbert Paulissen, the Dutch policeman, claimed during the JIT briefing, “the absence of evidence does not prove [the BUK missile] was not there.”
Paulissen may be right. To prove he’s right all he has to do is to fill in the gap between the JIT version of what happened and the Russian version of what could not have happened by answering these questions. To convince a court and jury, Paulissen’s answers to these questions must be beyond reasonable doubt.…
Dances with Bears
FOUR MH
John Helmer

See also

Consortium News
The Official and Implausible MH-17 Scenario
Robert Parry

Christopher Colford — Toward a more durable form of globalization, beyond 'neoliberal' negligence


The World Bank approvingly notices "disruptive theory" in macroeconomics.

The World Bank
Toward a more durable form of globalization, beyond 'neoliberal' negligence
Christopher Colford | Communications Officer at The World Bank, in its Financial and Private Sector Development Network

Thursday, September 29, 2016

Radical Remaking of Economics, and What it Means — David Sloan Wilson interviews Eric Beinhocker

This year marks the 10th anniversary of Eric Beinhocker’s influential book The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics. Like an earthquake tremor, Beinhocker’s book rattled the windows of the economic establishment by proposing a new foundation for the discipline that was paradigmatically different than its current foundation inspired by Newtonian physics.
Evonomics
Radical Remaking of Economics, and What it Means
David Sloan Wilson interviews Eric Beinhocker

Enrico Grazzini — Why Issuing Fiscal Money Could Help Exit The Italian (And Eurozone) Crisis


Along the lines that Warren Mosler proposed some time ago.

Social Europe Journal
Why Issuing Fiscal Money Could Help Exit The Italian (And Eurozone) Crisis
Enrico Grazzini

Alexander Mercouris — Joint Investigation Team on MH-17: Why the case is still open


Alexander Mercouris smells bullshit.

The Duran
Joint Investigation Team on MH-17: Why the case is still open

Sputnik — Nuclear Poker: Why the US Can't Trick Russia Into Changing Its Nuclear Doctrine


Interesting look at US and Russian military policy.

Accordingly, Alexandrov suggested that US lawmakers' proposal is based on the understanding that a nuclear war is unwinnable, and to try to trick Russia into abandoning its established doctrine.
"In essence, the US is repeating the technique of Leonid Brezhnev's Soviet Union, which unilaterally renounced the first use of nuclear weapons. This was done because at the time, the USSR had a significant superiority in conventional forces over NATO. As a result, the use of nuclear weapons was judged to be disadvantageous, since all of Western Europe could be captured without their use. In that situation, it's worth noting, NATO banked on the use of tactical nuclear weapons, which became a deterrent against possible Soviet attack."
Today, Alexandrov noted, the situation has been flipped on its head. Russia can no longer resist the combined might of NATO in a long war using only conventional weaponry. 
"Therefore, since the 1990s, our doctrine provides for the possibility of using nuclear weapons first in case of a serious threat to Russia's national security." "Thus, the Democrats' initiative is aimed at achieving strategic superiority over Russia, and possibly China," the analyst suggested. "Of course, Moscow should not give in to this kind of demagogy. Russia must continue to retain the right to use tactical nuclear weapons first," he emphasized.
Ultimately, Alexandrov noted, Russia has already taken the necessary measures to move to a new generation of nuclear weaponry, from the Iskander tactical missile complex and the Kh-101 strategic cruise missile, which has a range of 5,000 km, to new ballistic missiles capable of overcoming US missile defenses. "All of this has forced the US to maneuver in this way, and to try to outplay Russia in the nuclear field," the analyst concluded.

Graham E. Fuller — Democracy, the “Great Debates,” and China


Graham Fuller talks some sense.

Now let’s look at the other end of the spectrum. It’s interesting that China today is actually quietly touting to the rest of the world its own evolving system. Of course we recoil from the terrible catastrophes of Chinese regimes over most of the past century. But we shouldn’t lose sight of the fact that China has been concerned with principles of good governance going back some three thousand years, including Confucian principles of the responsibility of “cultivated” or educated people to govern wisely; that was probably as good as it got in that era. More important, the state bureaucracy was selected through massive nation-wide examination systems to choose the most qualified. The system had its good periods and bad, almost on a 300 year cyclical basis—breakdown and restoration.
Today China is creeping back again, this time from the disasters of Chairman Mao towards a semblance of order and rationality in governance. It has implemented a series of often unusually effective policies that are slowly bringing an ever rising percent of the rural and urban poor into the middle class and a slightly freer life.

Now, I don’t want to live in China particularly. But consider the daunting challenges of running this country: one that was left behind in the last century or so, invaded by English and Japanese imperialists, massively misruled under fanatic communists (not all were fanatic) for fifty years, and now presides over a population approaching 1.4 billion people. China’s leaders operate on the razor’s edge: meeting pent-up demand after decades of deprivation, managing the transition of millions of peasants who want to come to the cities, feeding and housing everyone, maintaining industrial production while trying to reverse the terrible environmental damage wrought in earlier decades, to maintain stability, law and order while managing discontent that could turn violent, and to maintain the present ruling party in power to which there is no reasonable alternative as yet. That’s quite a high-wire act.
So if you were running China today, what would you advocate as the best policies and system to adopt? Chances are few of us would simply urge huge new infusions of democracy and rampant capitalism. The delicate balance of this frail recovering system needs to be guided with care. But it is basically working—as opposed to looming alternatives of chaos and poverty.

China today suggests to developing countries that China’s own model of controlled cautious light authoritarian leadership—where leaders are groomed over decades up through the ranks of the party— may be a more reliable system than, say, the bread and circuses of the US. That’s their view.
No one system has all the answers. But it’s worth observing that by now the US probably lies at one extreme of a political spectrum of bread-and-circus “democracy.” Can the system be reformed? Ever more serious questions arise about the present system’s ability to meet the challenge of this century—along multiple lines of measurements.
And, as world gets more complex, there is less room for radical individualism, whistle blowing, and dissent. Vital and complex infrastructural networks grow ever more vulnerable that can bring a state down. The state moves to protect itself. The strengthening of the state against the individual has already shifted heavily since the Global War on Terror and even more so under Obama.
I’m not suggesting that China is the model to be emulated. But we better note how it represents one rational vision of functioning governance of the future—under difficult circumstances—at one end of the spectrum. The US lies at the other. Is there anything that might lie somewhere between these two highly diverse systems of governance?

Just sayin’.
In the spirit of disclosure, this is a view that I have espoused previously so I am biased in its favor. I am happy to see someone "on the other side of the fence" putting it forward for consideration in the policy establishment.

Democracy, the “Great Debates,” and China
Graham E. Fuller, former senior CIA official

Eduard Popov — Shooting itself in the foot: US legalizes lethal weapon deliveries to Ukraine


Things you should know.
Last week, the US Congress approved the Stability and Democracy for Ukraine Act, or “STAND for Ukraine.” As the Ukrainian Embassy in the US has reported, American congressmen unanimously supported the bill.

The bill’s list of means for supporting democracy in Ukraine includes the supply of lethal defensive weapons systems. The legislation will come into force following a vote in the Senate and its signing by the US President. From that point on, Washington will be able to officially supply lethal weapons to Ukraine.
Fort Russ
Shooting itself in the foot: US legalizes lethal weapon deliveries to Ukraine
Eduard Popov for Fort Russ - translated by J. Arnoldski

Also

Ukrainian shelling disrupts ceasefire, "disappoints" OSCE

Simon Wren-Lewis — Why was austerity once so popular?


A pretty good one. It argues indirectly for the need to educate voters that the currency issuer is the mirror image of the currency users, so their accounting statements are complementary rather than similar. Government deficits are non-government income and government debt is non-government net financial wealth in aggregate.

Mainly Macro
Why was austerity once so popular?
Simon Wren-Lewis | Professor of Economics, Oxford University

Greg Mankiew — Trumponomics


Greg Mankiw betrays his astonishing ignorance of monetary economics and the institutional structure of international finance. He thinks that the capital markets set US interest rates and determine the yield curve, so a shrinking trade deficit would reduce buyers of US Treasuries, driving up interest rates across the yield curve.
Their analysis of trade deficits, starting on page 18, boils down to the following: We know that GDP=C+I+G+NX. NX is negative (the trade deficit). Therefore, if we somehow renegotiate trade deals and make NX rise to zero, GDP goes up! They calculate this will bring in $1.74 trillion in tax revenue over a decade.
But of course you can't model an economy just using the national income accounts identity. Even a freshman at the end of ec 10 knows that trade deficits go hand in hand with capital inflows. So an end to the trade deficit means an end to the capital inflow, which would affect interest rates, which in turn influence consumption and investment.
As Professor Mankiw observes, this is a freshman error, and is he the one making it! Apparently he cannot distinguish between a model with simplifying assumptions and the real world. The good professor is describing a the world as he would like it to be, not the way it actually is at present.

The Fed sets the interest rate and the yield curve is a projection of the interest and expectations about future Fed rate policy. There is never a lack of USD existing as settlement balances to purchase Treasury securities because the amount of Treasury securities offered is equal to the reserves injected into the settlement system by government spending. Treasury security issuance simply serves to drain the excess reserves created by government spending from the settlement system as reserve accounts at the Fed into Treasuries, which are transferable time deposits held at the Fed.*

Furthermore, the Fed has the capacity to manage the amount of settlement balances in the settlement system so that all transactions clear. When the Fed is not paying IOR and doesn't choose to set the rate to zero, then it sets its target and lets quantity float, by using open market operations, for example.

There is nothing wrong with Professor Mankiw's model as an economic model. However, it is not representational model of way the real world works. While it might have relevance as a teaching gadget, students would be given the wrong idea if they were lead to conclude that the world works like that.

Greg Mankiw's Blog
Trumponomics
Greg Mankiw | Robert M. Beren Professor of Economics at Harvard University

* L. Randall Wray, Modern Money Theory: The Basics, at New Economic Perspectives


Robert Parry — The Official and Implausible MH-17 Scenario


As far as I can see, there is no entirely plausible scenario on the table this far. There is also no scenario that has a plausible account of both motive and execution of a plan. However, the situation is complicated by several factors. All the evidence available has not been revealed publicly for examination and likely will not "for security reasons." Secondly, the investigation was compromised by a party to events with a stake in the outcome of the investigation being included as a member of the investigative body.

Robert Parry suggests why the recent report is more disinformation in the ongoing information war. There are more reasons that Parry lists.

Consortium News
The Official and Implausible MH-17 Scenario
Robert Parry

Michael Brenner — US Foreign Policy Elite vs. the Evil One

There are four guiding principles:
—It is legitimate, even imperative, for the threatened democratic world, led by Washington, to use its power to forestall assaults on them.
–Traditional concepts of state sovereignty do not constitute an acceptable legal or political barrier to efforts at imposing that solution.
–The United States, therefore, is not a “global Leviathan” that advances its selfish interests at the expense of others. It is, rather, the benign producer of public goods.
–The privilege of partial exception from the international norms, including the right to act unilaterally, is earned by an historical record of selfless performance.
Consortium News
US Foreign Policy Elite vs. the Evil One
Michael Brenner | Professor of International Affairs at the University of Pittsburgh and a Senior Fellow at the Center for Transatlantic Relations, SAIS-Johns Hopkins, Washington, D.C.

See also

Consortium News
How the US Armed-up Syrian Jihadists
Alastair Crooke

Compare and contrast US police with China's police.

Andrew Batson's Blog
Daring to sympathize with China’s unhappy police
Andrew

Lars P. Syll — My philosophy of economics

A critique yours truly sometimes encounters is that as long as I cannot come up with some own alternative to the failing mainstream theory, I shouldn’t expect people to pay attention.
This is however to totally and utterly misunderstand the role of philosophy and methodology of economics!
As John Locke wrote in An Essay Concerning Human Understanding….
Science is a competition of ideas in an arena where evidence is the final arbiter.

Lars P. Syll’s Blog
My philosophy of economics
Lars P. Syll | Professor, Malmo University

"Inflation!" Sighting


Yeah but oil..... was.... at... $140... oh never mind.