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.
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Friday, April 8, 2011
The US Needs A Fifth Budget Proposal
In The People's Budget, Jeffrey Sachs, Director of The Earth Institute, Quetelet Professor of Sustainable Development, and Professor of Health Policy and Management at Columbia University, as well as Special Advisor to United Nations Secretary-General Ban Ki-moon, outlines the four budget approaches that are now on the table. From the the MMT perspective they all fail because they do not understand sectoral balances and think that balancing the budget is a good idea. It's not only a wrong idea, it is a crazy idea in this economic environment. If any of these ideas are enacted, depression here we come. With all those credentials, I'm surprised that Prof. Sachs would miss this. His heart is in the right place, but his analysis isn't.
don't think it's just mmt where there's been something missing in sachs' analysis.
ReplyDelete* chapters 11 & 12 of naomi klein’s The Shock Doctrine
* Mass privatisation and the post-communist mortality crisis: a cross-national analysis. in The Lancet, Volume 373, Issue 9661, Pages 399 – 407, 31 January 2009
and here's a quote attributed to him:
“The need to accelerate privatization is the paramount economic policy issue facing Eastern Europe. If there is no breakthrough in the privatization of large enterprises in the near future, the entire process could be stalled for years to come. Privatisation is urgent and politically vulnerable."
agree though that his heart is mostly in the right place (except for the apparent elitist thing). v sad.
"The People's Budget" may be a historical reference to the 1911 British budget of David Lloyd George which incorporated a remarkable number of progressive ideas including an early form of their national healthcare system. It came about as a result of Lloyd George's political courage and decades of activism in the wake the gold-bug deflation that had seized the world since the 1870's.
ReplyDeleteIt sounds like the democrats have produced a fundamentally neo-liberal "alternative" that has no new ideas and no real challenges to the dominant paradigm. If, in titling their plan "The People's Budget" the democrats intended a historical comparison between Lloyd George's 1911 budget and their own 2011 budget they have no business doing so since there is really no comparison.
selise, I think Jeffrey learned his lesson from that. He presupposed institutions and culture that were not there.
ReplyDeletetom, what do you think he learned and why? his interview with klein, as she describes it, did not give me the impression of lesson's learned... and i'd be interested in reading other accounts of his reflections his actions from that time.
ReplyDeleteHe admitted some time ago that he overestimated the degree of economic understanding in the former Soviet bloc.
ReplyDeleteIt was pretty shocking. When the Western advisors asked to see the books, they got back, "What is accounting?"
Tom,
ReplyDeleteThat is interesting. You know in the west we are very concerned with accounting.
Look at all the fiscal deficit "kerfufle" (sp?;), that is seemingly an obsession with an accounting number, an absolute obsession with these people.
These people seem to care less about the real human toll of depraved policy, but rather care more about 'balanced' accounting numbers.
Maybe outside the west folks are more focused on the outcomes, and less on what the accounting says.
Resp,
tom,
ReplyDeletefirstly, i don't think the massive problems that result as a consequence of imposing shock therapy -- against the wishes of the general public -- are a function of their "economic understanding." (btw, iirc that's not the story he told klein).
second, has sachs ever apologized or taken responsibility for damage caused by his actions? as far as i can tell it's always someone else's fault. that coupled with his widely reported arrogance and unwillingess to respect the wishes of the people most affected by his actions (as opposed to his rhetoric) do not make me think he has demonstrated much open mindedness, willingness to learn from others or even recognition that he might not have all the answers.
.... probably a minor issue in the current context of issues.
selise, I give Sachs the benefit of the doubt that he was trying to do the best thing. Of course, his analysis of the problem and method for solving it were wrong, and like most Ivy League professors, he is arrogant about his "knowledge." But unlike some others, I don't think that Sachs was or is on the dark side of the force.
ReplyDelete" I give Sachs the benefit of the doubt that he was trying to do the best thing."
ReplyDeletetom, ok. i was just wondering why because everything i've read/seen leads me to conclude that his idea of "the best thing" is not mine (when it comes to his actions, public rhetoric is a different matter). hope i'm open to persuasion, but would have to have some evidence to consider.
selise, i generally simplify situations into black and white for easier understanding. I divide the this into the rip-off artists and the people that unwittingly serve them through ignorance, flattery, co-optation, etc. I put Sachs in the latter category.
ReplyDeleteA big problem with economists, especially academics, is that they are chiefly theoretical instead of practical. This is dangerous since whenever there is a big pile of money around, there are thieves and cheaters.
This is essentially what's wrong with economics in the US now, too. There's a global rip-off going on, and economists are unaware of it, or at least pretending to be.
tom,
ReplyDeletenot a big fan of black and white here... but if i'm going to go with the black and white thing, it's not going to be based on motivation.
first, because i'm not smart enough to judge motivation (although unwillingness to admit personal responsibility, even to the point of hostility and intellectual dishonesty, is imo a big clue).
second, because actions and outcomes are what matter most to me. when it comes to the economic and political elite, i'd rather have helpful actions from someone with hostile motivation than actions which cause massive deprivation and death from someone with the best of intentions. the road to hell and all that....
..... and maybe as a personal fault, i've completely OD'ed on reading/hearing from krugman, delong, etc how tim geithner, larry summers, ben bernanke, etc are good people, very smart and are doing their best yada yada. gives me hives nowadays. which may have something to do with my reaction to your defense of sachs.
I agree with that, selise. Everything is nuanced. At the same time, there are some really evil people out there. They are the people that are pulling the strings in the background.
ReplyDeleteThe distinction here is people who are sincerely trying to do good but screwing it up, and people who are out for themselves and their cohorts at the expense of the entire planet. The difference in order of magnitude and threat is enormous.
The really evil people are happy to see others blamed for the mess, while they remain behind the scenes.
Escape from the Zombie Food Court by Joe Bageant
ReplyDeleteJoe Bageant will be missed. Rainbow Pie was a great read.
ReplyDelete