Peter Cooper — Truth and Lies About Government Deficits

There is a lot of misinformation spread by politicians and much of the media on the topic of fiscal policy, particularly when it comes to the role and impact of government deficits....

There is a basic distinction that needs to be kept in mind to avoid falling for the lies. It is that although changes in government policy have an effect on the economy, the final fiscal outcome depends on what happens, partly as a result of those policies, to income and employment. This is why a larger fiscal deficit can occur alongside either weak income and employment (a “bad deficit”) or strong income and employment (a “good deficit”).

In reality, a currency-issuing government’s fiscal position is not important in itself. What matters is that the government’s fiscal policy is appropriate to the economic circumstances. During a period of economic weakness, the important point is to facilitate a sustained recovery. Once recovery is under way, incomes and tax revenues revive. The fiscal deficit narrows automatically as a result, although this is really neither here nor there. What matters is the strength and sustainability of the economic recovery.

heteconomist

Truth and Lies About Government Deficits
Peter Cooper

Mark Buchanan — The Chilling Math of Inequality

Conventional economics misses it. Physics pick it up. But common sense nails it.

Bloomberg View
The Chilling Math of Inequality
Mark Buchanan

Corey Hoffman — Reaping the seeds that Austerity hath sown

Overlapping Consensus

Reaping the seeds that Austerity hath sown

Corey Hoffman

Brad Delong — Must-Read: Invictus: Red State, Blue State: Kansas and Washington

Kansas going down the tubes due to imposition of voodoo economics (ht Poppy Bush), while Seattle is prospering after raising the minimum wage. Explain that away, Greg Mankiw.

WCEG — The Equitablog
Must-Read: Invictus: Red State, Blue State: Kansas and Washington
Brad Delong

James Petras — Pillage and Class Polarization: The Rise of “Criminal Capitalism”

Is criminal capitalism a step up or a step down from crony capitalism. Obviously, for these people it's been a step up.

With the longest work day, US workers score lower on the ‘living well’ scale than most western European workers. Moreover, despite those long workdays US employees receive the shortest paid holidays or vacation time (one to two weeks compared to the average of five weeks in Western Europe). US employees pay for the costliest health plans and their children face the highest university fees among the 34 countries in the Organization for Economic Cooperation and Development (OECD).

In class terms, US employees face the greatest jump in income inequalities over the past decade, the longest period of wage and salary decline or stagnation (1970 to 2014) and the greatest collapse of private sector union membership, from 30% in 1950 down to 8% in 2014.

On the other hand, profits, as a percentage of national income, have increased significantly. The share of income and profits going to the financial sector, especially the banks and investment houses, has increased at a faster rate than any other sector of the US economy.

There are two polar opposite trends: Employees working longer hours, with costlier services and declining living standards while finance capitalists enjoy rapidly rising profits and incomes.

Paradoxically, these trends are not directly based on greater ‘workplace exploitation’ in the US.

The historic employee-finance capitalist polarization is the direct result of the grand success of the trillion dollar financial swindles, the tax payer-funded trillion dollar Federal bailouts of the crooked bankers, and the illegal bank manipulation of interest rates. These uncorrected and unpunished crimes have driven up the costs of living and producing for employees and their employers.

Financial ‘rents’ (the bankers and brokers are ‘rentiers’ in this economy) drive up the costs of production for non-financial capital (manufacturing). Non-financial capitalists resort to reducing wages, cutting benefits and extending working hours for their employees, in order to maintain their own profits.

In other words, pervasive, enduring and systematic large-scale financial criminality is a major reason why US employees are working longer and receiving less– the ‘trickle down’ effect of mega-swindles committed by finance capital....

Sounds like Michael Hudson.

James Petras Website
Pillage and Class Polarization: The Rise of “Criminal Capitalism”
James Petras | Professor (Emeritus) of Sociology at Binghamton University in Binghamton, New York and adjunct professor at Saint Mary's University, Halifax, Nova Scotia

Brad DeLong — Oligarchy and Monetary Policy: I Confess That I Do Not Understand

The top 0.01% would not be poorer absolutely (although they would be poorer relatively) in a high-pressure higher-inflation economy.

But they think they would be… 

WCEG — The Equitablog
Oligarchy and Monetary Policy: I Confess That I Do Not Understand
Brad DeLong

The irony is that most problems are pseudo-problems resulting from ignorance, misconception, or misperception. As a result, actual problems are either overlooked, denied, or otherwise not addressed, e.g., due to "lack of affordability" even when real resources are available.