Politicians Who Want Us to Live Beyond Our Means — Peter Cooper

Politicians often tell us that we should live within our means. Quite right. Unfortunately, many of them do not appear to understand what this actually entails when it comes to fiscal policy. So far as most economists are concerned, the events of the last decade have thoroughly discredited advocates of austerity. Yet, it remains quite common to hear politicians from across the political spectrum calling for reductions in fiscal deficits or even fiscal surpluses. There appears to be little awareness that, in most countries, a call for a fiscal surplus is, literally, a call for the society to live beyond its means.... 

Excellent  summary. Save it and pass it on.

heteconomist
Politicians Who Want Us to Live Beyond Our Means
Peter Cooper

Lars P. Syll — a primary reason for the rise of inequality

Economic liberalism expressed as "free market capitalism" aka neoliberalism is incompatible with political liberalism as liberal democracy owing to the social effects of the inequality that favoring economic liberalism in the above sense leads.

Lars P. Syll’s Blog
Economics — a primary reason for the rise of inequality
Lars P. Syll | Professor, Malmo University

Revealed: Americans care more about social needs than deficits — John Duda

A recent poll from the Democracy Collaborative and YouGov reveals that most Americans are ready to spend more for social needs, even if it raises the deficit. 

The debate around modern monetary theory (“MMT”) is picking up steam – with its partisans pushing the model further into the public sphere than one might expect, and the old guard of establishment economics, together with some more interesting critical voices, pushing back.

The questions at stake can make the average person’s head spin: can a government with sovereign control over its currency create money at will to meet social needs, or would this create out of control inflationary spirals? Does tax income precede government spending, or does spending create the money that’s then taxed back to tweak the distribution of incomes and rein in inflation?

To most Americans, this is all probably a bit opaque and abstract – the inner workings of our money supply and its deep connections to the banking sector are, after all, as Bill Greider memorably put it, “the secrets of the temple.” But when we look at the core issue, we find that more Americans than not agree with the basic political judgement that MMT tries to justify theoretically – namely, that deficits shouldn’t matter if social needs are not being met....

Open Democracy
Revealed: Americans care more about social needs than deficits

John Duda

Robert Heilbroner — The Embarrassment of Economics: Weekend Reading

Robert Heilbroner hits it out of the park in this short article, originally a speech. It's a fun read, too.

Grasping Reality
Robert Heilbroner (1996): The Embarrassment of Economics: Weekend Reading
Brad DeLong | Professor of Economics, UCAL Berkeley

Rebecca L. Spang — MMT and Why Historians Need to Reclaim Studying Money

Good read! 

Controversy over money is nothing new in US history, since it has been a lively political issue. The arguments are not chiefly about money, although couched in terms of money, economics, and finance, but rather, politics, which involves winners and losers in the policy game. Historically, sound money advocated have been the wealthy, and functional finance people have been ordinary citizens aka "the little people" (h/t Alan Simpson).

History News Network
MMT and Why Historians Need to Reclaim Studying Money

Rebecca L. Spang | Professor of History at Indiana University where she directs the Liberal Arts and Management Program, and author of Stuff and Money in the Time of the French Revolution (Harvard University Press, 2015)

Laura Belin - New bill is “clear attempt by MidAmerican to monopolize the sun in Iowa”

A new bill backed by MidAmerican Energy would devastate the ability of Iowans to install solar panels for their homes or businesses. House Study Bill 185 would undo a longstanding policy of net metering, which “allows residential and commercial customers who generate their own electricity from solar power to feed electricity they do not use back into the grid.”

Iowans served by monopoly providers MidAmerican or Alliant Energy have been able to use net metering since the 1980s, under rules adopted by the Iowa Utilities Board.

In recent years, MidAmerican has periodically sought to subvert net metering in various ways. Environmental advocates have been concerned the policy would become the next target for Republican lawmakers who destroyed Iowa’s decades-old, successful energy-efficiency programs last year at the behest of utility companies.…

Disclosure: I am a resident of Iowa (Iowa City).

Bleeding Heartland
New bill is “clear attempt by MidAmerican to monopolize the sun in Iowa”
Laura Belin

Robert Paul Wolff — SOCIALISM?

One of the Anonymati [Anonymouses? Anonymice?] asks that I write a critique of the oh so sober, serious analysis of socialism, complete with charts and graphs, produced by the President’s Council of Economic Advisors....

I have read the Executive Summary of the report and scanned through the report itself, but I do not intend to take issue with it, and my reason for not doing so is the real subject of this post. Let me begin by reminding you that Karl Marx, who wrote 5000 pages, more or less, on the history, anatomy, laws of motion, and mystified ideology of capitalism, wrote maybe 50 or 60 pages, if that, about socialism. It was not a lapse in memory on his part. He had a reason for not writing about how socialism would work, and that reason is the very heart of his economic and historiographical theory.

Marx believed that just as capitalism had developed slowly, organically, within the existing socio-economic system of feudalism, so too the social relationships of production appropriate to socialism would develop within the structure of capitalism until the contradiction, as he called it, between the two would produce a revolutionary transition. Socialism would not come about as a result of manifestos, or theoretical analyses, or counter-cultural utopian experimental communities. Rather, the inner development of capitalism itself would create the new social relations of production out of which socialism would emerge. In effect, capitalists themselves would be the gravediggers of capitalism....

The Philosopher's Stone
SOCIALISM?
Robert Paul Wolff | Professor Emeritus, University of Massachusetts Amherst

See also

In what follows, I propose to take as my text a famous statement from Marx’s A Contribution to the Critique of Political Economy1—a sort of preliminary sketch of Das Kapital2—and see what it can tell us about the capitalism of our day. I shall try to show you that Marx was fundamentally right about the direction in which capitalism would devel- op, but that because of his failure to anticipate three important features of the mature capitalist world, his optimism concerning the outcome of that development was misplaced. Along the way, I shall take a fruitful detour through the arid desert of financial accounting theory.

Here is the famous passage, from the preface of the Contribution, published in 1859:

No social order ever disappears before all the productive forces for which there is room in it have been developed, and new, higher re- lations of production never appear before the material conditions of their existence have matured in the womb of the old society.3

Robert Paul Wolff, "The Future of Socialism"35 SEATTLE U. L. REV. 1403 (2012)

See also

In a slender volume edited by Heinrich Geisenberger “The Great Regression”, fifteen, among the most important left-wing social thinkers of today, ask the following question: what is the future of social-democracy now when global neoliberalism is crumbling and the forces of nationalism and xenophobia are on the rise? I would not be letting you in on a big secret, nor do I think I would undermine the book’s appeal, if I say that they do not have an answer; neither individually, not collectively. The reason is simple: the answer, as of now, is elusive, and it might even seem that it does not exist....

Global Inequality

What is to be done? Fifteen authors in search of a solution.

Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

See also

When we launched the Niskanen Center in January 2015, we happily identified ourselves as libertarians. Sure, we were heterodox libertarians, but there are many schools of libertarianism beyond those promoted by Charles Koch’s political operations. The school we identified with was a left-libertarianism concerned with social justice (a libertarian perspective that I’ve defended in debates with more orthodox libertarians here and here). That worldview lacked an institutional voice in 2015. Our ambition was to create a space for it and, in so doing, redefine what it meant to be libertarian in the 21st century.

 I have abandoned that libertarian project, however, because I have come to abandon ideology. This essay is an invitation for you to do likewise — to walk out of the “clean and well-lit prison of one idea.” Ideology encourages dodgy reasoning due to what psychologists call “motivated cognition,” which is the act of deciding what you want to believe and using your reasoning power, with all its might, to get you there. Worse, it encourages fanaticism, disregard for social outcomes, and invites irresolvable philosophical disputes. It also threatens social pluralism — which is to say, it threatens freedom.

The better alternative is not moral relativism. The better alternative is moderation, a commodity that is rapidly disappearing in political life, with dangerous consequences for the American republic.

My hope is that I might best convince you to leave ideology behind by holding up a mirror to an ideological culture that is likely not your own — the world of libertarianism — and discussing the reasons why I left it behind. I suspect that, for those who hold to an “–ism,” the ideological culture of my old world doesn’t look too terribly different from your own.

I do not aim here to settle old scores or to criticize friends and former colleagues. After all, the beliefs that I find wanting today are the very beliefs that I myself held for most of my adult life. I simply mean to put in stark relief the pitfalls of ideological thinking, to illustrate those pitfalls in the world I know best, and to make the case for something better...

Niskanen Center

THE ALTERNATIVE TO IDEOLOGY

Jerry Taylor

See also

What happens when the rising tide doesn't lift all boats.

Conversable Economist
Remembering Albert Hirschman's Tunnel Effect
Timothy Taylor | Managing editor of the Journal of Economic Perspectives, based at Macalester College in St. Paul, Minnesota

Eric Lonergan — MMT and fiscal rules (part I) – a prologue

Finally, a useful MMT critique.

Philosophy of Money
MMT and fiscal rules (part I) – a prologue
Eric Lonergan

Michael Roberts — Socialism and the White House

The Trump White House research team have issued a very strange report. It’s called “The Opportunity Costs of Socialism,”. It purports to prove that ‘socialism’ and ‘socialist’ policies would be damaging to Americans because the ‘opportunity costs’ of socialism compared to capitalism are so much higher.

What is strange and rather amusing is that the White House advisers to Trump deem it necessary to explain to Americans the failures of ‘socialism’ in 2018. But when you delve into the report, it becomes clear that what is worrying the Trumpists is not ‘socialism’, but the policies of left Democrat Bernie Sanders for higher taxes on the rich 1% and the increased popularity of a ‘single-payer’ national health service for all. The popularity of these policies threatens the Republican majority in Congress and also the wealth and income of big pharma corporations and Trump’s billionaire supporters....

Michael Roberts Blog
Socialism and the White House
Michael Roberts

See also

People's World
Socialism under attack from scared White House

Ian Goodrum

Michael Calderbank — Costas Lapavitsas: Socialism starts at home

Michael Calderbank speaks to Marxist economist Costas Lapavitsas ahead of the publication of his provocative new book The Left Case Against the EU

Costas Lapavitsas  The book is obviously a critique of the EU as it stands. It’s an assessment of where the union is, what it has become, and its likely direction. It is an attempt to say that the left should have nothing to do with defending this set of institutions. It should assume a critical, rejectionist position. I am asserting that this is the only way you can develop radical politics in Europe, a radical and internationalist economic and social programme....

Red Pepper
Costas Lapavitsas: Socialism starts at home
Michael Calderbank | Red Pepper co-editor and parliamentary researcher for trade unions

Bill Mitchell — Progressive political leadership is absent but required

One of the themes that has emerged in the discussions of the British Labour Party Fiscal Credibility Rule (which should be renamed the Fiscal Incredulous Rule) is when is the right time for a political party to show leadership and start educating the public on new ideas. The Modern Monetary Theory (MMT) project has been, in part, about educating people even if our ideas have been strongly resisted by the mainstream. The mainstream (New Keynesian) paradigm in economics is degenerative (meaning it has little empirical validation) and eventually it will fade into historical obscurity. For many of us that cannot come quickly enough.

The defenders of the Rule argue that progressive politicians have to tread carefully or else the amorphous financial markets will turn on them and destroy their initiatives. The problem is that by kowtowing to the City or Wall Street, the progressive political forces become captured and redundant. Witness the electoral demise of social democratic parties over the last several decades.

The conditions are ripe (see below) for a courageous head-on attack on these financial market elites and educate the public so that they allow elected governments to legislate for all rather than serving the interests of the elites, which has become the norm over the last several decades. The problem is that progressive political forces are also taking advice from mainstream economists who use the tools of neoliberalism. The upshot is that progressive political leadership is absent but desperately required....

Bill Mitchell – billy blog
Progressive political leadership is absent but requiredBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Sandwichman — "Opportunity Cost of Socialism"

Why is the Council of Economic Advisers producing party political propaganda for the GOP?…

Are Trump's "economic advisers" really so ignorant of basic economic concepts beyond the most elementary textbook simplification?...

But, but... economics is a science! (snark)

Econospeak
"Opportunity Cost of Socialism"
Sandwichman

Nicolai Starikov — Who Really Put up the Berlin Wall?

Again, follow the money, here the conversion of the Reichsmark to the DM. Very interesting from the monetary point of view — who controls the money, and all that.

I think some of you may have heard on more than one occasion about how that bloodthirsty tyrant Stalin set up a blockade of West Berlin in 1948 and how the freedom-loving nations organized the Berlin airlift to circumvent it. But today we’ll let you in on what really happened....

Russia Insider
Who Really Put up the Berlin Wall?

Nicolai Starikov

Simon Johnson — Saving Capitalism from Economics 101

All across the United States, students are settling into college – and coming to grips with “Econ 101.” This introductory course is typically taught with a broadly reassuring message: if markets are allowed to work, good outcomes – such as productivity growth, increasing wages, and generally shared prosperity – will surely follow.

Unfortunately, as my co-author James Kwak points out in his recent book, Economism: Bad Economics and the Rise of Inequality, Econ 101 is so far from being the whole story that it could actually be considered misleading – at least as a guide to sensible policymaking. Markets can be good, but they are also profoundly susceptible to abusive practices, including by prominent private-sector people. This is not a theoretical concern; it is central to our current policy debates, including important new US legislation that has just been put forward....

Fitting post on Labor Day (US holiday celebrating working people). Worth reading in full. Unfortunately it is about saving capitalism from its excesses rather than overhauling it.

Why is capitalism in need of an overhaul. The term, "capitalism," explains it.

"Capitalism" is a socio-economic system that favors capital (property ownership) over the other factors of production, land (environment) and labor (those that work for a living). This "market-based" system is institutionally based, and as such politically based.

Classical liberalism was about reducing government intervention in the economy. Neoliberalism is about government capture through politics in order to favor the interests of capital.

Politics is influenced by a simplistic understanding of conventional economics, which has been called "economism" to distinguish it from economics. Econ 101 is more about promoting economism more than teaching economics in terms of models that are substantiated by events.

Project Syndicate
Saving Capitalism from Economics 101

Simon Johnson |  professor at MIT Sloan, former chief economist of the IMF, senior fellow at the Peterson Institute for International Economics, and co-founder of the blog, The Baseline Scenario

Bill Mitchell — The conservative polity is fracturing – an opportunity for the Left

Regular readers will know that I have spent a lot of time writing about the demise of the Left political parties as they became subsumed with neoliberal economic ideology, which blurred the political landscape as the ‘centre’ moved to the Right. That topic was the focus of our current book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017). The neoliberal infestation has left these parties with declining electoral support, fractured internal organisations and cultures, and a seeming inability to abandon their flawed economic narratives. But there is a mirror image to this demise and that is playing out on the conservative side of politics. In Australia in the last week (but building for years) the far right conservative elements from within the government have brought down their own leader and our Prime Minister in a spiteful clash of ideologies between the more moderate elements in their party and the extremes out on the right. The internal tensions that drove this suicidal mission is being played out around the world. Think about the way that Trump is compromising the Republican party. Think about how Brexit is splitting Tory ranks in Britain. And so on. The problem for the conservatives is that citizens are realising that the neoliberal economic approach has failed to deliver on its promises. And that economic model is ‘owned’ by the conservatives. The adoption of neoliberal economics by social democratic parties is not part of their DNA. It is largely because their ranks have been infested by careerists who have come from the ‘elites’ and have little resonance with workers. The gaps in the policy space that these fractures have created is being occupied by extremist groups. It will be much easier for progressive parties to reclaim that space than it will be for the conservatives who are in the process of a death spiral. But to do that, the social democratic movements has to abandon every vestige of neoliberal economics – the concepts, policies and language and framing. That is the challenge.

Bill Mitchell – billy blog
The conservative polity is fracturing – an opportunity for the Left
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Simon Wren-Lewis — The biggest economic policy mistake of the last decade, and it had nothing to do with academic economists

The narrative rules. Whoever controls the narrative controls high ground regarding the opinion of politicians and the public.

The second point is that this academic debate had zero impact on politicians. In that sense Cooper’s article is of purely academic concern. Austerity was not begun because politicians chose the wrong academic macroeconomists to take advice from, and the fact that the Keynesians won the debate therefore had no impact on what they did. The academic debate was in this sense a complete sideshow. I think many Keynesian academics understood that: it was a fight we had to win but we were under no illusions it would change anything. I wrote in 2012 that if all academics were united we might have an impact on public opinion, but that illusion did not last very long and Brexit showed it was indeed an illusion.

I think this lack of influence that academic economics can have is not understood by many. It often suits some heterodox economists to pretend otherwise. Economists can be influential, but only when politicians want to listen, or the media is prepared to confront them with academic knowledge. For example politicians have not done nearly enough to ensure another financial crisis does not happen, but that isn’t because economists have told them not to or have not shown them how to do so. It is because politics prevents it happening....

Mainly Macro
The biggest economic policy mistake of the last decade, and it had nothing to do with academic economists
Simon Wren-Lewis | Emeritus Professor of Economics, Oxford University

Bill Mitchell — A twitter storm of lies …

This is my short Wednesday offering, which will be quite short considering the last two days have been (necessary) epics. My three-part series created somewhat of a social media storm, which means people are interested in the topic and I think that is healthy. Democracy is strengthened if people educate themselves and contest propositions that are abroad in the debate. But, as I noted yesterday, social media storms have a way of getting out of control and out of the realm of being complementary to a more considered educative process and interaction. What the recent Twitter storm has demonstrated is that key people are just willing to make spurious accusations (aka lies) without having taken the time to consider the depth of the literature that is available on any topic. That is not helpful to democracy. It undermines it. Anyway, in this short blog post, I consider some of the responses to my three-part series. As a footnote, I have now retitled the three-part series “MMT is just plain good economics” rather than using the quotation from the British Shadow Chancellor’s advisor who said that “MMT is just plain bad old economics”. Framing. I took the points of several commentators on this blog seriously in this regard. Thanks. 

Bill Mitchell – billy blog
A twitter storm of lies …
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — The plaintive, I just want to do my art!

Bill excoriates the UBI.

Bill Mitchell – billy blog
The plaintive, I just want to do my art!
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Jim O'Reilly — Some thoughts on liberal democracy as a deceptive term

Reflections with which I agree.

Comments on Global Political Economy
Some thoughts on liberal democracy as a deceptive term

Jim O'Reilly

See also

In my view, Dugin gets this right, too, as opposed to bourgeois liberalism's, "My way, or the highway."

The third totalitarianism is transnational corporate totalitarianism under the control of international capital, which happens to be mostly in Western "liberal" hands.

Geopolitika

The 'Third Totalitarianism' From The West

Alexander Dugin

Bill Mitchell — We can do something about neoliberalism

It is Wednesday, so just a (relatively) short blog post today. I am using the time today to further scope out the material and logic for my next book with Thomas Fazi, which we hope to publish sometime in 2019. I will provide more details on that project soon but it is intended to be the followup to our current book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017). So, today, a bit of that sort of flavour. In 1977, the Young European Federalists, which has long campaigned for European integration, released its Manifesto, which coined the term “democratic deficit”. While they intended it to be a concept to advance their pan-European intentions, the idea resonates strongly in the current climate and can be used to support a return to grass roots democracy aimed at reclaiming the nation state from the neoliberals and the progressive pretenders who have become infested with neoliberal ideas. In the last week, we have seen two notable events. First, the entrenchment of the colonial status of Greece under the watchful eye and collaboration of so-called ‘socialists’. Second, the magnificent success in today’s New York Democratic Primary election by a truly progressive candidate. These events are diametrically opposed. The former tells you what is wrong with traditional progressive political parties. The latter tells us that we can do something about it.

Bill Mitchell – billy blog
We can do something about neoliberalism
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia