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.
In the last 50 years the interesting macro story that left its mark on everything was globalisation. And economists bungled it, massively. It would have required more knowledge than economists normally have to understand the financial imbalances due to monetary system design, the labor markets problems, inequality, trade cheating, evironmental sciences and materials engineering and other issues we know about in hindsight. But all were given the hand-wave with dismissive excuses about education and bitter people losing jobs and imports being a real benefit making way for progress. Reading old articles from the time, nearly everyone in every part of Macro repeated what they learned in econ-101 about trade. Even MMT folks got it horribly wrong. Nobel prize winners we now know were some of the worst.
So here we are, humanity is in the first steps of making the transition away from oil as the primary source of energy for everything. It is one of the most monumental changes and technological advances that civilization will undergo this century. It is certain to reshape investment, trade and politics in profound ways that are only beginning to emerge. And what are we getting from macro? Franko gives up mocking of the venezuelans because he disapproves of their political system. Tom gives us conflict in Russia and the Middle East framed as East vs West rather than any context in terms of energy and technology. The elephant in the room is being ignored and waved off but is central to what is happening.
MNE is supposed to be a brightspot in the macro world but here, perhaps a bit dim. The orthodoxy is even worse, stuck in their climate ideology debates, everything framed from that angle, they've not been able to give any leadership or guidance to political leaders and no realistic vision of how policy can help drive and smooth transition to give financial markets investment and workers in affected countries ideas and models that would result in less uncertainty. I don't fully understand why metaphorical economic helping hands aren't extended to places like Venezuela, Russia and Saudi Arabia rather than scorn but ?? who knows. They are basically ready for a wave of economic development, this is the marshall plan moment. It is only the first stage of massive transition that will unfold over decades. There is no better time to be helpful rather than adversarial to the populations. The engineers designing the new systems can define what is possible but within that range of possibilities policy will drive what actually happens and ensure fair systems of production and delivery. Those decisions will drive international trade, labor demand, financial flows for a very long time to come. Left to their own devices, corporations will design systems that capture the most profit by designing regulatory monopolies. We see it already, countries will do what companies pay the politicians to do. The consequences to politics, workers, consumers, investors and other classes of people are still wide open but I don't think US and European economists begin to understand how much influence they have to sway the development. It's much bigger than climate, even after light vehicles don't use oil, there isn't enough oil for the remaining uses, so the transition is a necessity when you look at the numbers of people in Africa, MENA and Asia climbing the economic ladder. Maybe that is a good thing western economists are clueless, because they generally have done more damage than good. But I remain hopeful that one day, on some issues, economists will prove more useful. And this is one where the full range of technological options is pretty well defined and financial variables are well known but apparently, economists aren't interested.
The problem is, as Marx, noted is that social and political superstructure, as well as economic infrastructure, is determined by the the forces of production that are dominant at the time and will persist until those the potential of those forces is exhausted.
This is now beginning to take place within the capitalist system that depends on carbon-based energy. Precisely what the energy drivers of the emerging system will be is now in the process of being determined through competition iaw the capitalist system that predominates globally.
Ideally, the coming energy system will be decentralized and distributed rather than centralized and concentrated. That would result in a very different economic infrastructure and social and political superstructure that would support both individualism and socialism rather than the kind of hierarchical system upon which capitalism is constructed on the military model.
One political superstructure just crumbled today. Won't read consequential headlines like that every day. The rebalancing Saudis almost certainly have to lose the peg to the USD. That instantly changes USD dollar dominance in trade as they will won't want to be paid primarily in dollars but in their trade basket. Storms are brewing on the horizon.
Ryan, humanity is just returning to a more natural form of government since first civilizations: feudalism. Rationalism never won, it was just an illusion and an impasse. Most humanity loves slavery and owning others, directly or indirectly, bullying and pushing them over, dominating other people and if not, destroying them. Private ownership rights trumping everything, is a very old idea, defended by a lot of people, under an umbrella of ideologies.
All the tenet ideas about how to manage our societies can be understood when you understand this. Fairness, balanced development and progress is not really something a lot of people with power to change things want.
6 comments:
In the last 50 years the interesting macro story that left its mark on everything was globalisation. And economists bungled it, massively. It would have required more knowledge than economists normally have to understand the financial imbalances due to monetary system design, the labor markets problems, inequality, trade cheating, evironmental sciences and materials engineering and other issues we know about in hindsight. But all were given the hand-wave with dismissive excuses about education and bitter people losing jobs and imports being a real benefit making way for progress. Reading old articles from the time, nearly everyone in every part of Macro repeated what they learned in econ-101 about trade. Even MMT folks got it horribly wrong. Nobel prize winners we now know were some of the worst.
So here we are, humanity is in the first steps of making the transition away from oil as the primary source of energy for everything. It is one of the most monumental changes and technological advances that civilization will undergo this century. It is certain to reshape investment, trade and politics in profound ways that are only beginning to emerge. And what are we getting from macro? Franko gives up mocking of the venezuelans because he disapproves of their political system. Tom gives us conflict in Russia and the Middle East framed as East vs West rather than any context in terms of energy and technology. The elephant in the room is being ignored and waved off but is central to what is happening.
MNE is supposed to be a brightspot in the macro world but here, perhaps a bit dim. The orthodoxy is even worse, stuck in their climate ideology debates, everything framed from that angle, they've not been able to give any leadership or guidance to political leaders and no realistic vision of how policy can help drive and smooth transition to give financial markets investment and workers in affected countries ideas and models that would result in less uncertainty. I don't fully understand why metaphorical economic helping hands aren't extended to places like Venezuela, Russia and Saudi Arabia rather than scorn but ?? who knows. They are basically ready for a wave of economic development, this is the marshall plan moment. It is only the first stage of massive transition that will unfold over decades. There is no better time to be helpful rather than adversarial to the populations. The engineers designing the new systems can define what is possible but within that range of possibilities policy will drive what actually happens and ensure fair systems of production and delivery. Those decisions will drive international trade, labor demand, financial flows for a very long time to come. Left to their own devices, corporations will design systems that capture the most profit by designing regulatory monopolies. We see it already, countries will do what companies pay the politicians to do.
The consequences to politics, workers, consumers, investors and other classes of people are still wide open but I don't think US and European economists begin to understand how much influence they have to sway the development. It's much bigger than climate, even after light vehicles don't use oil, there isn't enough oil for the remaining uses, so the transition is a necessity when you look at the numbers of people in Africa, MENA and Asia climbing the economic ladder. Maybe that is a good thing western economists are clueless, because they generally have done more damage than good. But I remain hopeful that one day, on some issues, economists will prove more useful. And this is one where the full range of technological options is pretty well defined and financial variables are well known but apparently, economists aren't interested.
The problem is, as Marx, noted is that social and political superstructure, as well as economic infrastructure, is determined by the the forces of production that are dominant at the time and will persist until those the potential of those forces is exhausted.
This is now beginning to take place within the capitalist system that depends on carbon-based energy. Precisely what the energy drivers of the emerging system will be is now in the process of being determined through competition iaw the capitalist system that predominates globally.
Ideally, the coming energy system will be decentralized and distributed rather than centralized and concentrated. That would result in a very different economic infrastructure and social and political superstructure that would support both individualism and socialism rather than the kind of hierarchical system upon which capitalism is constructed on the military model.
One political superstructure just crumbled today. Won't read consequential headlines like that every day. The rebalancing Saudis almost certainly have to lose the peg to the USD. That instantly changes USD dollar dominance in trade as they will won't want to be paid primarily in dollars but in their trade basket. Storms are brewing on the horizon.
Thanks for the link. Promoted to a post.
Ryan, humanity is just returning to a more natural form of government since first civilizations: feudalism. Rationalism never won, it was just an illusion and an impasse. Most humanity loves slavery and owning others, directly or indirectly, bullying and pushing them over, dominating other people and if not, destroying them. Private ownership rights trumping everything, is a very old idea, defended by a lot of people, under an umbrella of ideologies.
All the tenet ideas about how to manage our societies can be understood when you understand this. Fairness, balanced development and progress is not really something a lot of people with power to change things want.
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