Lars P. Syll — Blog Balanced budget religion

Paul Samuelson quote you may wish to keep on file if you don't already have it.

Lars P. Syll’s Blog
Balanced budget religion
Lars P. Syll | Professor, Malmo University

Bill Mitchell — An MMT response to Jared Bernstein – Part 1

This will be a keeper series!

There was an article posted by American political analyst Jared Berstein yesterday (January 7, 2018) – Questions for the MMTers – which I thought was a very civilised exercise in engagement from someone who is clearly representative of the more standard Democratic Party view, that the US government has to move towards balancing its fiscal position and reducing government debt in order to meet the social security challenges posed by an ageing population and the accompanying increase in dependency ratios.

He is sympathetic to Modern Monetary Theory (MMT), given that he wrote “there’s no distance between my views and a core principal of MMT: the need for deficit spending when the economy is below full employment”. In other words, he notes that “MMT or whomever else argues on behalf of expansionary fiscal policy is correct”. 

But that is a fairly standard ‘progressive’ position when the economic cycle is below full capacity. This position typically alters quite dramatically when so-called longer terms considerations are brought into the picture. Jared Bernstein worries about the inflationary consequences of fiscal policy (so do MMT economists by the way) and thinks central banks should be the primary macroeconomic policy makers (MMT economists reject this).

He also thinks that if the government doesn’t sell bonds to match its deficits then there will be “currency debasing”. MMT economists have pointed out the fallacies of that proposition but he is still in the dark about it.

And he also thin[k]s that fiscal position should be balanced at full employment. MMT economists do not agree with that proposition pointing out that it all depends on the state of saving and spending decisions in the non-government sector. It is likely that continuous deficits will be required even at full employment given the leakages from the income-spending cycle in the non-government sector.

So while his queries are conciliatory and written in an inquiring fashion, the gulf between this typical ‘progressive’ view of macroeconomics and MMT is rather wide. This is Part 1 of a two-part series that responds to the questions that Jared Bernstein raises and hopefully puts the record a bit straighter....

[Paragraphing introduced for online readability. This is one paragraph in the original. tjh]

Bill Mitchell – billy blog
An MMT response to Jared Bernstein – Part 1
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

John Solomon - FBI launches new Clinton Foundation investigation

The next Sunday with Charles and Jason Goodman might be quite good. It's normally like watching paint dry but I bet Charles Ortel will be flying with this.

The Justice Department has launched a new inquiry into whether the Clinton Foundation engaged in any pay-to-play politics or other illegal activities while Hillary Clinton served as Secretary of State, law enforcement officials and a witness tells The Hill.

FBI agents from Little Rock, Ark., where the Foundation was started, have taken the lead in the investigation and have interviewed at least one witness in the last month, and law enforcement officials said additional activities are expected in coming weeks.

The officials, who spoke only on condition of anonymity, said the probe is examining whether the Clintons promised or performed any policy favors in return for largesse to their charitable efforts or whether donors made commitments of donations in hopes of securing government outcomes.

The probe may also examine whether any tax-exempt assets were converted for personal or political use and whether the Foundation complied with applicable tax laws, the officials said.

John Solomon - FBI launches new Clinton Foundation investigation

Danial Goleman - Are rich people smarter?

Its worth a country investing in a good education for its people because it can create a more productive country and everyone benefits. More entrepreneurs, more skilled workers, more higher pay meaning more taxes collected reducing the burden on everyone else, more people in work and paying taxes, less crime, and so on. 

The influence of the environment

In this domain, rigorous experiments have been performed, not on people but on animals. This is how the development of the brains of respectively “rich” and “poor” mice has been studied. The “rich” mice lived in small groups in cages with plenty of toys, and “poor” mice lived in bigger numbers in empty cages. The neural networks in rich mice developed much faster and their brains became notably heavier than those from their poor counterparts. The rich mice became much smarter in finding their way out of a maze. In monkeys as well, it was found that the environment has a strong influence on brain development and intelligence (1).

In humans the impact of environmental factors is even stronger, this is what is shown in a recent study involving sugar cane planters in India. These small scale peasants receive more than half of their income in one go, shortly after harvest. For part of the year they are relatively rich and they are rather poor during the other part. It appears that these peasants have more mediocre results in cognitive tests during their “poor” periods. They lose up to 13 I.Q. points, the equivalent of a sleepless night or alcoholism. Yet these are the same people, with the same brains.

Furthermore there is the Flynn effect. After the 2nd World War US citizens got an average of 100 in I.Q. tests. In 2002 the same tests, which normally involve finding solutions to abstract problems, yielded and average of 118. This is a substantial increase. This effect has been seen in all industrialised countries, including Belgium. The increase was of 3 to 5% per decade. Nowadays this effect is closer to stagnation, and in some cases in regression.

Intelligence is not a static quantity, it can (strongly) fluctuate within the same person. Furthermore the environments are susceptible to change through time. A part of the intellectual ability is determined by genetic factors, but the surrounding environment also exerts a very big influence on the intelligence.

Danial Goleman - Are rich people smarter?

Press TV - Cyprus police arrest Israeli involved in organ trade in Kosovo

The Israeli ringleader of a global gang involved in an organ trafficking in Kosovo has been arrested in Cyprus, Kosovan police say.

Moshe Harel is accused of organizing dozens of illegal kidney transplants at the Medicus clinic in Kosovo’s capital, Pristina, a decade ago.

"The suspect whose initials are MH was arrested a few days ago in Cyprus following an international arrest warrant," Kosovan police spokesman Baki Kelani said Saturday.

Poor people from areas in Eastern Europe and Central Asia were allegedly brought to the Medicus clinic after being assured that they would receive up to 15,000 euros ($18,000) for their kidneys.

Recipients, mainly Israelis, would pay up to 100,000 euros for the organs. Some donors never received any money.

The organ scandal came to light in 2008 after a Turkish man whose kidney had been removed was found seriously ill at Pristina airport.

Police raided the clinic, which was shut down following the scandal.

In 2013, an EU-led court in Kosovo sentenced five Kosovan doctors to up to eight years in prison for organ trafficking in the country. They have all denied any wrongdoing.

Prosecutors said at the time of the trial that donors, whose organs were illegally removed, were left without proper medical care and treated "like waste."

In 2016, Kosovo’s Supreme Court annulled the verdict and ordered a new trial, which is ongoing.

Press TV - Cyprus police arrest Israeli involved in organ trade in Kosovo

Tapper cuts off Trump adviser interview: I've wasted enough of my viewers' time

This interview put me in a strange position as I'm not a conservative and I don't like much of Trump's policies, but at the same time I know the MSM hates Trump and has been portraying him as incompetent and unintelligent because their prefered candidate did not win. I'm English but I wanted Trump to get in because he said a lot of good things about draining the swamp and I felt that Hilary might start WW3. Yes, Trump was bad, but Hilary was far worse.

I have been following the independent news and getting the truth about Trump and how he really does want better relations with Russia which the MSM hates him for. If you read Tom's article today, the Moon of Alabama — Trump Offloads Foreign Policy Problems - Lets EU Grow A Spine, it might be possible that Trump is outsmarting his whole administration and trying to do what he said he would do. 

As I have the opposite opinion to the MSM but although I'm not a conservative I was moved by Stephen Miller's defence of Trump which I felt was sincere. In fact, he gets very upset in the interview and criticises CNN for spreading fake news. I didn't think he was just trying to defend Trump because that is what he is paid to do, he seemed to be genuine in trying to get what he thinks is the truth out to the audience although Jack Tapper wouldn't let him. See what you think? 

After reading the Moon of Alabama article today it's kind of got my hopes up again that Trump could be trying to put things right, but Patrick Armstrong and Andrew Korybko might be as wishful thinking as me. 

  

Jared Bernstein — Questions for the MMTers

MMT (functional finance actually) challenged. Why is fiscal policy based on FF superior to monetary policy as presently conducted?

Let the debate begin.

On the Economy
Questions for the MMTersJared Bernstein | Senior Fellow at the Center on Budget and Policy Priorities and former Chief Economist and Economic Adviser to Vice President Joe Biden in the Obama Administration

Aabid Firdausi — International Trade and Globalization: Are Benefits Truly Mutual?

The euphoria around international trade and the general consensus regarding capitalism’s inevitable sustenance among countries of the Global South is at least partly due to the absence of an alternative after the collapse of the Soviet Union. The politics of capitalism, with its expansionary dynamics, has assumed a truly “global” avatar by aggressively pursuing a neoliberal globalization agenda. Thus, we see much hype around the numerous trade treaties that governments around the world sign, claiming they would boost economic growth and create jobs. However, a critical examination of mainstream trade theories reveals several insights as to why there has been a hegemony of thought when it comes to attitudes around globalization.

The idea that “free” trade and globalization imply mutual benefits and prosperity for all the parties involved is simply accepted as common sense. Mainstream trade theories argue that if nations engage in international exchange, then all parties will be better off. Although this seemingly innocuous assumption is based on an unrealistic worldview, it has deep implications when translated into practice. This article provides a basic understanding of some of the areas that theories in mainstream international economics conveniently ignore....

The Minskys
International Trade and Globalization: Are Benefits Truly Mutual?

Aabid Firdausi | Master’s student at the Department of Economics, University of Kerala, India

Tom Phillips — China to move millions of people from homes in anti-poverty drive

Another propaganda piece from the Guardian supposedly countering Chinese propaganda about the current program to eradicate poverty in China and get everyone above the poverty line. It is not only propaganda.

It is cynical, especially in comparison with the neoliberal agenda that is resulting in increased poverty and precarity in the neoliberal world. And in many places around the world, neoliberal policy is displacing disadvantaged people summarily in the quest to exploit resources in their region.

The headline should read, "China to move millions of people from hovels to homes in anti-poverty drive."

Perhaps the author is not consciously writing propaganda but just displaying Western ideological bias and the isolation of Western elites in their bubbles. The result is the same, however.

At least he is writing from on scene and the facts of the report belie the bias.

The Guardian
China to move millions of people from homes in anti-poverty drive

Tom Phillips, from Padangshang village, Yunnan province, PRC

Tom Phillips in Padangshang village, Yunnan province

Patrick Cockburn — When it comes to the Iran protests, be careful who you put your trust in

A vacuum of information is created which, at a moment of intense international interest, is going to be filled with dubious stories from partisan sources.

Never let a good crisis go to waste.

The Independent (UK)
When it comes to the Iran protests, be careful who you put your trust in

Patrick Cockburn

Also

A truism about U.S. politics and media is that once a foreign leader or a country has been demonized everything written or said about the subject will be skewed to the negative, a rule reflecting Washington’s groupthink and careerism, as ex-CIA analyst Paul R. Pillar notes about Iran.

Consortium News
Gazing at Iran Through a Distorted Glass

Paul R. Pillar, retired CIA officer | nonresident senior fellow of the Center for Security Studies in the Edmund A. Walsh School of Foreign Service at Georgetown University, a contributing editor at The National Interest, formerly federal executive fellow at the Brookings Institution, a visiting professor in the Security Studies Program at Georgetown University.

Ilana Strauss — Does punishing people actually work?

The conundrum arises from assuming methodological individualism based ontological individualism when humans are social animals embedded in a complex adaptive system in which increasing rate of coordination yield increasing return on coordination. Basic evolutionary biology, and team work in organizational behavior.

Methodological individualism based on the "ontology of common sense" is similar to naive realism based on the "epistemology of common sense." Naive realism holds that individual minds mirror "reality" similarly enough to conclude that minds mirror the same reality, providing the same information and stimulating the same or highly similar behavior as a rule. This assumption leads to such unresolvable difficulties that most epistemologists and cognitive scientists have concluded naive realism cannot be correct and something else has to be going on.

In both cases the issues arise from failure to understand correctly how individuals are embedded in the system they inhabit. It is basically a conflation of the micro scale with the macro, when the macro scale is influential if not determinative.

This shows up, for instance, in classical liberalism assuming utilitarianism, namely, that freely pursuing individual utility sums additively to the greatest good for the greatest number as a consequence of spontaneously natural order.

This is assumed as a general theory. However, evidence shows that this is not how social systems necessarily operate. That assumption turns out to be a special case that is rarely if ever actually achieved.

The same with punishment over rehabilitation in corrections.

From the Grapevine

Does punishing people actually work?

Ilana Strauss

Brian Romanchuk — MMT Is Not Just "Theory X"

Explaining MMT.

Bond Economics
MMT Is Not Just "Theory X"
Brian Romanchuk

Moon of Alabama — Trump Offloads Foreign Policy Problems - Lets EU Grow A Spine

The question is becoming, "Who lost Europe?"

Moon of Alabama
Trump Offloads Foreign Policy Problems - Lets EU Grow A Spine

b

related

Une parole franche
Rex Tillerson in "The New York Times": Pride and PrejudiceGilbert Doctorow | European Coordinator of The American Committee for East West Accord Ltd.

Jonathan Birch — Organisms as societies

Here, "society" is being used as a metaphor rather than a description. I would prefer to use "system" rather than "society," and to compare biological systems with social systems, since this is more descriptive and less evocative. At the same time, I agree that the use of "society" is legitimate and useful in biology and evolutionary theory.  

There are three major types of systems, corresponding to the three major branches of science — physical, biological, and social. There are resemblances and important differences in these types of system.

That said, the article is short and worth knowing about, since it indicates a rising trend in the field and evolutionary biology is exerting increasing influence on social, political, and economic thinking. 

So is the systems approach. General Systems Theory was founded by biologist Ludwig von Bertalanffy. Economist Kenneth Boulding switched from conventional economics to general systems theory. 

OUPblog

Organisms as societies

Jonathan Birch is an Assistant Professor in the Department of Philosophy, Logic and Scientific Method at the London School of Economics and Political Science, specializing in the philosophy of evolutionary biology

Malcolm Jaggers —Marijuana Makes You a Leftist

Getting ready for the next iteration in the culture war, which is heating up again.

Sessions has the right idea.

Promoting weed (cannabis legalization) is a "left-wing plot," you see. Plus, it is "anti-masculine."

Alt-Right
Marijuana Makes You a Leftist 

Malcolm Jaggers

See also

The war on drugs did not stop the cultural adoption of weed anymore than Prohibition stopped the cultural proclivity for alcohol. And it didn't stop the money interests then, and and it won't now.

Business Insider
Jeff Sessions has fired the first shot in his long-awaited crackdown on marijuana — and some investors see it as an opportunity
Jeremy Berke

Simon Wren-Lewis — Why the microfoundations hegemony holds back macroeconomic progress

When David Vines asked me to contribute to a OXREP (Oxford Review of Economic Policy) issueon “Rebuilding Macroeconomic Theory”, I think what he hoped I would write on how the core macro model needed to change to reflect macro developments since the crisis with a particular eye to modelling the impact of fiscal policy. That would be an interesting paper to write, but I decided fairly quickly that I wanted to say something that I thought was much more important.

In my view the biggest obstacle to the advance of macroeconomics is the hegemony of microfoundations. I wanted at least one of the papers in the collection to question this hegemony. It turned out that I was not alone, and a few papers did the same. I was particularly encouraged when Olivier Blanchard, in blog posts reflecting his thoughts before writing his contribution, was thinking along the same lines.… 

Mainly Macro

Why the microfoundations hegemony holds back macroeconomic progress
Simon Wren-Lewis | Professor of Economics, Oxford University

Hassan Hakimian — What’s Driving Iran’s Protests?

Not a bad article considering that Project Syndicate is an organ of the corporate elite.

The author does recognize that the economic protest is the result of President Rouhani's neoliberal program to deliver the promised increase in prosperity that neoliberals assume to be widely distribute by trickle down.

So, even though the article is written from the neoliberal point of view, it does admit the failure of neoliberal reformers to deliver on their promises to the country as a whole, even though growth has improved under Rouhani.

What the author does not mention is that the economic aspect of the protest is exacerbated by the cutting back of welfare, with the result that the have-nots protesting have been severely disadvantaged even with the economy "improving."

Project Syndicate
What’s Driving Iran’s Protests?
Hassan Hakimian, Director of the London Middle East Institute and Reader in Economics at SOAS, University of London

Anatoly Karlin — Chinese Science

China coming on strong. It still has a way to go though.

The Unz Review
Chinese Science

Anatoly Karlin

Adam Johnson — Think Tank-Addicted Media Turn to Regime Change Enthusiasts for Iran Protest Commentary

Since the outbreak of mass demonstrations and unrest in Iran last week, US media have mostly busied themselves with the question of not if we should “do something,” but what, exactly, that something should be. As usual, it’s simply taken for granted the United States has a divine right to intervene in the affairs of Iran, under the vague blanket of “human rights” and “democracy promotion.” (The rare exception, such as an op-ed by ex-Obama official Philip Gordon—New York Times, 12/30/17—still accepted the premise of regime change: “I, too, want to see the government in Tehran weakened, moderated or even removed.”) With this axiom firmly established in Very Serious foreign policy circles, the next question becomes the nature, degree and scope of the “something” being done.

Propaganda pumps and the echo chamber.

FAIR

Think Tank-Addicted Media Turn to Regime Change Enthusiasts for Iran Protest Commentary
Adam Johnson

TIM BISSELL - 10 Secret CIA Prisons You Do Not Want To Visit

The US Central Intelligence Agency has, according to multiple investigative reports from both mainstream media outlets and human rights organizations, operated numerous “black sites” across the world. These locations, according to the reports, are secret prisons used to house “ghost prisoners.” Those sent to these places are held captive without being charged with any crime and are not allowed any form of legal defense.

Ghost prisoners are subject to what the CIA calls “enhanced interrogation tactics”; most others call it torture. The CIA and their operatives’ methods allegedly include waterboarding, sleep deprivation, humiliation, physical beatings, electric shocks, and worse.

These secret prisons, dotted all over the world, might just be the most terrifying places on Earth.

Listverse

TIM BISSELL - 10 Secret CIA Prisons You Do Not Want To Visit

Carib Flame - Venezuela’s Cryptocurrency Set to Avoid Financial Attacks

Rodriguez said the Petro is backed by the resources that the country already has, including energy and mineral reserves.

Venezuela’s Vice President of Communication and Culture, Jorge Rodriguez, said that its new cryptocurrency will avoid financial attacks.

At a meeting in Miraflores Thursday recapping presidential management in 2017, Rodriguez said the Petro is backed by the resources that the country already has, including energy and mineral reserves.

Addressing the difference between Petro and Bitcoin, he stressed that the former will have a backing in natural resources, while Bitcoin has it only in a physical good.

Rodriguez also announced that the president of Venezuela, Nicolas Maduro, signed Wednesday the certification of the Ayacucho Block of the Orinoco Paleo Belt, which has five billion barrels of oil certified internationally, to support the Petro cryptocurrency.

Rodriguez stressed that with the creation of a cryptocurrency, the Venezuelan government is sure that it has an instrument to prevent attacks from the global financial system.

Carib Flame - Venezuela’s Cryptocurrency Set to Avoid Financial Attacks

James George Jatras — Iran and Myths of Revolution

Backgrounder.

Jatras is one of the few mentioning that some of the economic frustration is the result President Rouhani's neoliberal "reform" that shrank the the welfare state and expanded the market state to improve the economy and integrate Iran into the global economy after the nuclear deal and lifting of some sanctions. This policy further disadvantaged the have-nots that make up the bulk of the protestors. The neoliberal answer is to wait patiently; it takes time for the gains to trickle down.

Strategic Culture Foundation
Iran and Myths of Revolution
James George Jatras | Deputy Director of the American Institute in Ukraine, a privately funded American NGO, and former U.S. diplomat and foreign policy adviser to the Senate GOP leadershipAs

Also

Here is a revealing fact from a World Bank study for 2016:

“The Iranian government has implemented a major reform of its subsidy program on key staples such as petroleum products, water, electricity and bread, which has resulted in a moderate improvement in the efficiency of expenditures and economic activities.” In plain English, “efficiency of expenditures” means the Iranian government is cutting down on how much its social welfare programs actually provide social welfare....

In other words, Iran follows an extreme neoliberal, shock-and-awe kind of capitalism [under President Rouhani].

Good economic analysis.

But it appears to me that the author is crediting "the people of Iran" with more homogeneity than exists there based on what I am reading. The protests are not "people" the rising up against an incompetent and repressive government. Iranian demography and politics are more complicated then that.

Counterpunch
Iran and the Left: a Dissenting View

Reza Fiyouzat

Jay Tharappel — Iran: internal grievances, external agendas

US and Israel back another terrorist group (in addition to Al Qaeda and ISIS) when it is useful.

Fort Russ
Iran: internal grievances, external agendas

Jay Tharappel | Guest Contributor

See also

Wikipedia

People's Mujahedin of Iran (Mojahedin-e Khalq, acronyms MEK, MKO)

See also 

The Guardian (23 Sep 2012)
Five lessons from the de-listing of MEK as a terrorist group

Glenn Greenwald

What could go wrong with getting in bed a bit with the devil as long you don't worship him? Using AQ and ISIS has worked out so well.

Lars P. Syll — Dani Rodrik’s Ten Commandments

Longish and detained, but worth a read if you are following this debate.

Lars P. Syll’s Blog
Dani Rodrik’s Ten Commandments
Lars P. Syll | Professor, Malmo University

da Costa: "monetary policy ... may have little or no effect on the flow of aggregate demand."

This is false; monetary policy has a very significant effect on economic activity... more than is generally understood.

"The serious flaw in monetary policy is that it may have little or no effect on the flow of aggregate demand." https://t.co/lVtSqAtghR

— Pedro da Costa (@pdacosta) January 5, 2018

Pepe Escobar — Why there won’t be a revolution in Iran

Regime change is unlikely but what is in play is setting the scene for a further renewal of economic sanctions….

Asia Times
Why there won’t be a revolution in Iran
Pepe Escobar

David Orell — Economics is quantum

Money and brains are both quantum phenomena – so it's not surprising that economics is overdue for a quantum revolution...

Aeon
Economics is quantum

David Orell

Daniel José Camacho — The deficit doesn't matter: thinking morally about the economy with Stephanie Kelton

Social justice folks picking on  MMT.

Just before Christmas, Donald Trump signed the Republican tax bill which many predict will exacerbate wealth inequality in the country. Analyses project it will add over $1 trillion dollars to the deficit.

For all the talk about the national deficit and why it’s the reason our government can’t afford to improve healthcare or education, these developments reveal profound layers of hypocrisy. They show how deficit-talk has constrained political imagination and reduced the economy to a soulless, amoral balance sheet. Earlier this month, I sat down with one of our nation’s leading economists who’s been sounding the alarm on this precise problem.

Stephanie Kelton is a professor at Stony Brook University and a former chief economist for the Senate Budget Committee Democratic staff. If there is such a thing as a prophetic economist, she might just be it. Kelton is not afraid to rattle the status quo. A former adviser to Bernie Sanders (she recalled her trip to the Vatican with him), she is now also providing economic advising to Rev. Barber’s new Poor People’s Campaign.

Kelton’s public intellectual work has drawn attention to how a bipartisan fear of the deficit has distracted politicians from fixing problems in the real economy. Below is an edited transcript of our conversation....

The Christian Century — Practicing Liberation
The deficit doesn't matter: thinking morally about the economy with Stephanie Kelton
Daniel José Camacho

Report: Apple Likely to Repatriate $200 Billion in Foreign Cash

As I am led to understand it, this transaction would soon result in a $31B deposit (15.5%) into the Treasury account.

Hard to see the deficit going up under these conditions of "repatriation" unless the govt starts to increase withdrawals by the same type of amounts; which isn't going to happen as they think we are "out of money!".

"Deficit too small!" crowd and the "Trillion Dollar Deficit!" club (which btw is EVERYBODY...)  might see some exploding heads...

Dude. https://t.co/zY3gRC30UE

— Breitbart News (@BreitbartNews) January 4, 2018

Branko Milanovic — Schumpeter’s two theories of imperialism

Schumpeter’s theory is interesting for several reasons. It was formulated at the same time as Lenin’s and Luxemburg’s and clearly with the knowledge of the two. It reacts to the exactly the same events as theirs. It is different though and it was held by Schumpeter throughout his life. The key text for Schumpeter’s theory is “The sociology of imperialisms” (note the plural) published in 1918-19. It is a very long essay of some tightly printed 80 pages in its English translation. Schumpeter did not change anything (of substance at least) to the theory as can be seen from its brief reappearance in his “Capitalism, socialism and democracy” (CSD), published in 1942 (and republished many times since).

What Schumpeter says is the following....

Global Inequality
Schumpeter’s two theories of imperialism
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