An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
So please explain the logic of the left's support of the rent seeking Venezuela regime again????Explain the logic of all the current lefty doomsayers in light of probably $700B annual oil rent removed from the US and probably $3T equiv. globally???So according to the left, we cant have a good global economy unless the oil people get to extract $3T annual rent????I dont think so....
The logic of the left in Latin America is about fair distribution.The problem with the left in Latin America is 1) being attached to leftist economic ideology, and 2) failing to understand how to use policy space effectively..However, it isn't just a matter of poor policy decisions. The left has also had to face 1) the active opposition of the right, which owns the bulk of the nation's wealth, with most of the largest fortunes being hereditary, with all this implies about education, experience, and networks, etc. The left has also had to face 2) the active opposition of the neoliberal world led by the US, which has sought to weaken and overthrow leftists governments. Inequality is actually lessening in Latin America as the middle class expands, but this still leaves a huge underclass and and a very wealthy upper class that feels it is entitled to rule on the conservative principle that those who own the country should govern the country.
Denies the reserve army.http://axecorg.blogspot.co.uk/2016/03/wage-profit-and-counter-intuitive-labor.html
A guy called JB Clark and his accomplices have eliminated from (neoclassical) Economics the concept of "land" as a particular type of capital, with a "fertility" and thus a "rent". This was done to counter arguments that "land" generates "rent" thanks to its natural, intrinsic "fertility" and this windfall should therefore be specially taxed.Also JB Clark and his accomplices have this reduced all "capital" to a single "jelly", that is to dollars in practice, by using delusional handwaving called the "Cobb-Douglas production function", in order to "prove" the central truthiness of neoclassical Economics, that absent government regulation income is uniquely determined to productivity, which cannot be proven if there are even just 2 different types of "capital".This makes contemporary Economists pretty much blind to the economics of mined energy, and of the unique advantages of extracting it in nearly ready-made form from mineral sources (as I have went on about before) and land rents.The story of Economics is not a story of theoretically orientated individuals it is a story of politically oriented individuals. The central truthiness of Economics is that the distribution of income is determined uniquely by personal productivity, or equivalently that high income and wealth are deserved.Every one of the intentional “mistakes” (both mathematical and economical) in the theory of Economics as listed in Steve Keen's “Debunking Economics” is necessary to support that truthiness.It is not that the practitioners of Economics and their sponsors are good-faith or deluded theorists that develop a theory and ignore reality that does not match the theory.They are politicians who have vested interests and ignore any theory that does not advance their vested interests.Some people argue that it goes further up, that the supporters of Economics are actually theologians, in the religious sense, with a theology of salvation that is in effect crass elitism (major example: Mankiw), and their politics are a consequence of that and their Economics are an indirect consequence of that.There are two important differences between the USA and the Nordic Model (Denmark in this example) :* Danes largely think they belong to the same "tribe"/"group", most of the USA middle class think that the poor don't belong to their "tribe"/"group". The most obvious example for the USA are not the poor of african origin, but the native "indians".* The USA (and UK) middle classes have fully bought into the "plantation economy" model, in which each of them believes that they will win big and enjoy an "upstairs" lifestyle, and everybody else will lose and toil through a "downstairs" one, while the Danish middle classes believe in risk pooling, perhaps because they are not that confident that each of them will be a winner (in the UK the "blow you Jack, I'm allright" mindset of Telegraph/Mail readers)As to the latter point in the USA:www.eschatonblog.com/2015/04/why-didnt-i-get-rich.html"journalists/columnists of a certain age (meaning ones not much older than me and younger) are coming around to the realization that the economy is screwing them, too. There was a moment when a lot of them (we're talking ones at elite outlets, not your random small town paper) thought they'd done everything right, would become celebrities, and get Tom Friedman's speaking fees. The economy sure was working for them, and screw everybody else."
Also in the neoclassical model it is assumed that there are infinite markets across all of eternity with infinite suppliers in each of them in order to give perfect competition without which the central truthiness of Economics cannot be asserted.But how can there be infinite suppliers in infinite markets if they all must have the same production function? That means that in effect there is only supplier which get arbitrarily sliced into infinite subsets. But then how can there be perfect competition?It just does not make sense.But “aligned” Economists never point out the above “technical assumptions” because all that matters is the central truthiness of Economics, upholding which is also central to a well-rewarded and richly sponsored career in academic Economics.
@matt Franko: Chavez nationalised the oil wealth of his nation so that the people could benfit, and their living standards approve.what would you prefer: exonnmobil/BP owned all the oil revenue?2)don't know what you are talking about.who "on the left" supports high oil prices?
jake they are a member of opec....And your mischaracterizing the Chavez policy... the oil firms had a royalty of a % of the production in real terms... once oil went over $100 Chavez thought the firms were "making too much money!" and reneged.... same thing with Russia and Ukraine about at the same time...So second rate Chavez' indignation and that of his second rate nation is measured in USD terms... not bbls of oil... and this is all fine with the left...Now they cant even get food or toilet paper.... hence they remain literally a turd world nation.... and a threat to the security of the southern US if the wheels come completely off down there... Once he thought oil was going to be above $100 forever he reneged and thought they could survive on rent as a nation from then on doing nothing ... use the rent to buy food, toilet paper, etc... from the US with the oil rents... Well as with all rent extraction schemes like this it eventually collapses and now they are a basket case.... The left blames this on some fantasy, non-empirical, figure of speech, rationalist, "neo-liberal conspiracy!" meanwhile they view corporate profits as the same kind of rent when at least the firms are producing something and the Venezuela policy doesnt produce anything... except a nation left an economic basket case...So (as usual) there is YUGE amounts of hypocrisy coming from the left on this issue...Venezuela rent for doing nothing >>> GOOD!Profits for firms for doing everything >>> BAD!The left is unqualified and incompetent for leadership/administration...
Here we have Matt using the Marxist definition of "rent". Too funny.
'Danish middle classes believe in risk pooling, perhaps because they are not that confident that each of them will be a winner'I saw this documentary on the Scandinavian model recently and they said that they had very cold winters and the only way they could survive was by pooling resources together.
The wealth of the West was built up by 500 years of the slave trade, you couldn't get more rent extraction than that. Now the Western mega rich are born rich and make money in their sleep.
Bob I dont think this "rent" stuff is BS... (maybe I did at one time... didnt really understand what Tom was talking about and chalked it up to some sort of Marxist BS... )But now it is playing out in the oil industry for sure (I have to see things in order to understand them ie empiricist...) and were going to see the effects this year which I think are going to be positive for the US and China for sure... maybe even Russia if they respond by creating new non-oil domestic production...
Matt,Do you believe oil producers should give away their product for free? Should they try to sell it at the highest price they can get?
No not the PRODUCERS... the PRODUCERS should be paid...Also no cartels... OPEC is a cartel...A while back oil was 130 now it is 30... no shortages, market fully supplied...$100 rent therefore previously... Bush admin full of oil people so they have no incentive to rock the boat... Obama admin full of incompetent but well meaning people so nothing happens there either....Non cartel production increaesed to the point where cartel lost power so the monopoly rent has been removed... US economy productive contribution is increasing in response... airlines, etc...
"I saw this documentary on the Scandinavian model recently and they said that they had very cold winters and the only way they could survive was by pooling resources together."I'm not sure how much one should ascribe to those explanations regarding the Scandinavian countries development.One of the working class parties most important early ideas was that policy should be based on knowledge. And for people to understand the policy and hopefully support it and perhaps even contribute with their own ideas, knowledge has to be brought broadly to the masses.They also understood that knowledge not only could be acquired within the regular education system but also in other forms.One very successful form (which became a the major tool for working class parties in Scandinavia) was the study circle provided by adult educational association which was built up to be embracing. It had the advantage of being a flatly organised (the learning process) which wiped out one of the working classes problems with formal education.But as more people got formal educations together with a constant bashing from right wing owner elites through their lobby organisations and media, working class representatives more and more distanced themselves from these important ideas about broad knowledge and effective ways to spread it among the population.It was for a short period a complement to formal education but as more people have been fed with the myth that if you get a formal education (higher the better) it also equals being generally knowledgeable about society, which of course is not necessary the case.I believe this is one very important factor for the Scandinavian development, both up and now down.
No not the PRODUCERS... the PRODUCERS should be paid...The producers are paid. Whether they are a worker co-operative, a private business, or state-run. They are not charities...Also no cartels... OPEC is a cartel...A while back oil was 130 now it is 30... no shortages, market fully supplied...If it were functioning as a cartel, price would not have dropped to 30.Non cartel production increased to the point where cartel lost power so the monopoly rent has been removed... US economy productive contribution is increasing in response... airlines, etc...That is the outcome of various factors, not just price. Superprofits have been removed temporarily. OPEC still accounts for 40% of world oil production and 75% of proven reserves. If they can get their act together, 30$ bbl will not stand.
Bob: "If it were functioning as a cartel, price would not have dropped to 30."Yes! Facts are dangerous things! How can this possibly be called a cartel, especially when there is near violence between the oil ministers of this cartel, many of the decisions reached are almost immediately undermined by another member, usually a US client state? The Saudis and their offshoots despise Venezuela, Libya, Iraq, post-revolution Iran and the others. OPEC is essentially Saudi Arabia and the other Gulf Kingdoms, all US client states. Forget the output from Venezuela and the other semi-independent members. Washington decides the oil price and its client states, who are close to being monopolist price setters, do as they're told. And the spare capacity in Saudi Arabia, as is evident since the huge fall in the oil price, is almost enough to set the price. When the other Gulf Kingdoms join with Saudi Arabia, which they always do, then the price has been set.
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