Streaming post at the Guardian here for "May Day" in Europe.
Excerpt from the Pope:
I call on politicians to make every effort to relaunch the labour market...Work is fundamental for dignity I think of labour market difficulties in various countries.
I think of people, not just young people, who are unemployed often because of an economic conception of society based on selfish profit outside the bounds of social justice.So I don't get this here where he says that unemployment is due to "selfish profit" I guess he thinks on the part of non-government sector firms whom I guess the Pope thinks should just operate themselves as a "charity" and employ humans whose labor they don't need doing nothing of value.
Looks like the Pope thinks the "job creators" aren't "doing their job", as far as employing people.
What if firms do not need any more employees to produce their desired products and services Pontificus Maximus?
What is the plan then?
Don't you have any macro-economists on staff at the Vatican to help you figure that one out?
What's the problem? No "pump priming"? Government sector "crowding out"? .....What's the problem?
Clueless.
I take it his view is that a concern for social justice should be a concern of all human beings, including those who operate businesses.
ReplyDeleteDan he is blind to the concept of your "Public Enterprise".... full employment is not the non-govt sector's responsibility nor can they accomplish it mathematically under FFNC...
ReplyDeletersp,
I don't think that's what he meant Matt. You didn't highlight all of the key words in the quote:
ReplyDeleteunemployed often because of an economic conception of society based on selfish profit outside the bounds of social justice.
He's saying that the root of the problem is an "economic conception of society" that sees all actions as profit-driven and reserves no room for boundaries determined by a conception of social justice. He's criticizing the view of man as "homo oeconomicos" - a purely self-interested maximizer.
Some of the people in my office were talking about a retired gent in town who ran a business for years and was "one of the good guys". What they meant is that during lean times he alwasy made it is first priority to take care of his workforce, and was willing to absorb company losses to do it.
Of course, he owned his own company. Now publicly owned companies are run to maximize shareholder value, which requires their managers to prioritize "efficiency" and profitability over the people who work there.
People have been reduced to "human resources".
Dan,
ReplyDeletec'mon this is Randall Wray 101... once we go to FFNC, everybody is unemployed... the non-govt can't solve this on their own... perhaps to your point they can "soften the blow" thru modern "charity" but that can only go so far if the balances are not there....
And then next thing you know you get the morons like Ken Langone (who allegedly made his money in Home Depot where if you asked him to "pass me a Phillips head" he would respond "Is that the pointy one???) who every time he gets on CNBC (which is too often) he ratttles on about his big "charity" up in Harlem where all the black kids benefit or something and this is why we need wealthy people or some shit...
The Pope is naive here; probably being fed nonsense by his mainstream economic staff at the Vatican...
rsp,
Profit share is increasing, while labor share is decreasing. According to plan. That's what "austerity" is all about.
ReplyDeleteTom even if we ran everything as a "non-profit" that would not provide a guaranty of full employment...
ReplyDeletersp,
"unemployed often because of an economic conception of society based on selfish profit outside the bounds of social justice."
ReplyDeleteOK he says:
UNEMPLOYED... BECAUSE.... PROFIT (with conditions).
"profit" is associated with firms that have earnings which are a form of savings... call them 'corporate savings'.
Not only firms save but also households save too... is the Pope saying that households should not save also? Or that households can save but they have to save "with justice" and then people wont get thrown out of their jobs?
The whole statement here is mathematically absurd.
Any 'savings' at all is a demand leakage and hence causal in unemployment, it doessnt matter if there are other "conditions" such as the savings being "outside the the bounds of social justice" or not...
I dont think Benedict would have put this word "profit" in this statement here... Benedict used to scold on economic results too but IIRC he would just focus on the unacceptable results and leave it at that...
Francis is getting into the details here and he is flat out spewing UNTRUTH...
It would have been better stated as "unemployed because of a policy that does not guaranty social and economic justice..." or something like that... or "unemployed because of a society that does not demand social-economic justice..." like that....
Strike one for Francis.
rsp,
Hey Francis, tell your blind-moron economic staff to read the words of the Lord here:
ReplyDelete"6 "Now, about the eleventh, coming out, he found others standing. And he is saying to them, 'Why stand you here the whole day idle?'
7 They are saying to him that 'No one hires us.' Mat 20:6-7
People are unemployed because no one hires them... whadya' know.
Matt a bit of middle ground, no? I mean, with more than 20 TRILLION USD hidden in tax heavens, plus the top 1 percentile of the population is western countries accumulating >35% net wealth I think the pope has a point there.
ReplyDeleteI mean, what the fuck are they going to do with all that hoarded money? They could use it to invest or employ people who is unemployed or underemployed even if it's at a minor cost to the firm.
Yes, in theory this could not go forever, but there is a wide space for action there. With all that money being recirculated into the economy the majority of the population could reduce their liabilities and start consuming again. An increase in aggregate demand that would help with unemployment etc.
Sure the government could keep feeding corporations, shareholders and CEO's pockets to keep high profit margins to avoid a collapse in the rate of profit and create employment that way. But are we placing the right incentives by doing that? I see that as a free card for ponzi-economics and go back again to creating bubbles.
Is not like the profit-share of corporations is decreasing (there is always enough deficit spending for them), as Tom says. The problem is that this would require redistribution of net worth from top to bottom and not the other way around. I guess this is what the Pope is pointing.
Redistribution would require higher taxes (more progressive)...appealing to corporations to lower their profits is a waste of time...not going to happen...it's like asking runners to not win a race...this is why progressive taxation was implemented and was the main contribution to the rise of the middle class.
ReplyDeleteNASCAR puts restrictions on how fast the cars can go so they don't end up killing all the participants.
This is a problem only tax policy can solve (or the system will self-destruct).
I don't see any other plausible solution to the inequality problem, but I'm open to other suggestions.
To solve the inequality issue, tax away economic rent.
ReplyDeleteGovernments will still have deal with residual UE, retirement, and disability as social issues.
Ignacio Sure the government could keep feeding corporations, shareholders and CEO's pockets to keep high profit margins to avoid a collapse in the rate of profit and create employment that way. But are we placing the right incentives by doing that? I see that as a free card for ponzi-economics and go back again to creating bubbles.
ReplyDeleteThis is a frequently heard complaint against the sectoral balance approach and functional finance without taxing away economic rent. It just funnels "taxpayer money" to the top. Of course, it is not really "taxpayer money" in the sense of funding but it is included in the budget and it if produces what MMT calls a "bad deficit," i.e., a reaction to policy stupidity, then it is a waste of govt funding that could be put to gainful use instead of to fix a problem that need not have occurred in the first place. So, yes, "bad deficits" do cost "taxpayers" whereas good deficit reduce taxes, provide infrastructure, increase services and promote the general welfare instead of going right into the pockets of the wealthy to sit there.
Without taxing away economic rent and funding bad deficits, the MMT solution is pretty much a farce, since it is just another way of enriching the the already wealthy without actually addressing the underlying problem, which is rent extraction.
Also Tom, that creates (a lot of) bad inflation. So is indirectly funded by taxpayers, it's a heavy cost for majority of society.
ReplyDeleteIgnacio,
ReplyDeleteI see your point about the 20T, etc,,
But lets take a look at total USD $NFA that exists globally, Im not going to look it up but with Treasury Securities and bank deposits, lets say it is about 20T total which I think is near correct...
So even if we were to confiscate that and re-distribute that to all 300M US citizens, they all would only get like $67k each... that would hardly be enough to retire on at age 65 for the rest of ones lifetime... and even then it would just end up back in the corporate coffers in the end anyway...
So the important thing for system operation is the regular recurring $NFA flow that is injected by the govt sector to the non-govt... that is what sustains in financial terms...
So the Pope here asserting that somehow "selfish unjust profits" or really "selfish unjust savings" is the cause of mass unemployment is just plain wrong... the govt is not injecting enough $NFA is the problem.
The Pope is blind to this... he is still in some sort of "gold standard mentality" as Warren terms it where to the Pope "money is scarce"...
Even if we "tax away rent" without making the proper adjustment to these leading $NFA flows from the govt to non-govt, we still get mass unemployment.... but we wouldnt have to put up with these wealthy morons in our face all the time which might make it worthwhile anyway...
ie it is not "the deficit" that is important, it is the basic, leading $NFA flow that the govt injects every month that is the key flow... no economists track this flow to my knowledge, including the MMT folks....
rsp,
"...leading $NFA flow..."
ReplyDeleteMatt, this is a great descriptor...we need to promote this framing...
This is the fundamental "fuel" of the system.
Paul,
ReplyDeleteIt's not "G" in the "G-T" part from the GDP equations...
So it is something else...
What may be happening lately is as the baby boomers are retiring, these "retirement oriented" flows from Social Security and Medicare are becoming very paramount in facilitating these key flows....
1946 + 65 = 2011 so we are about 18 months into this... its a shame that older folks have to sign up for medicare and get sick in order for the govt to create this key flow but I guess we have to take what we can get...
Social Security (and I believe Medicare but I'm still looking into this...) is not in "G" so "G" cannot be completely informative...
Here is Ramanan on this lately (I know youve had your run-ins with Ram) but this looks like the kind of thing we are talking about from Ram: "Lilico’s argument seems to think of the budget deficit as exogenous – i.e., under the control of the government but a careful study reveals that this ain’t so. His argument is another example where accounting identities are misinterpreted as behaviour."
Like ex post accounting is not "behavior" ... I think this "leading $NFA flow" is closer to describing true "behavior" on the part of the govt sector in it's dealings with the non-govt...
rsp,
To paraphrase Keynes, take care of employment and everything else follows.
ReplyDeleteThat's not happening for two reasons. First is the false belief that running actual full employment is inflationary and reduces the value of savings.
Secondly, there is the neoclassical-neoliberal view that increasing labor share reduces profit share and therefore reduces retained earnings available for investment, hence inhibits growth. This view is used to justify committing as much gain from productivity increases to capital as possible as "efficient use of capital." In this view a reserve army of unemployed and destitute is desirable, and some would necessary, for efficiency of capital.
But Tom, mathematically, that still doesnt work if the govt is not injecting enough $NFA monthly to "cover the rent" that the net liability cohort has to pay (or default)
ReplyDeleteso it is in so-called "capitalists" best interest to make sure govt is meeting it's responsibilities in this regard... for instance in lending, when the credit is originated in the system, there is no provision in the system for the interest that has to be paid on the credit originated in the system...
This form of Marxs's "capitalism" fails systemically when the leading $NFA flows do not keep up with the flow required to service the newly added systemic credit...
And tax cuts dont help because they dont add any leading $NFA flow directly where needed which is at the point of the net liability cohort...
This is why Bush/Cheney doing the mail out of the $650 checks in the summer of 2008 put off the crash so well until September... this was a positive add of leading $NFA flow right to the net liability cohort...
right now it seems to be happening thru the transfer payment programs which have been supportive here and the equity indexes keep going up...
This is why the Peterson morons are trying to wound the medicare flow by pushing the date back from 65 to 67 and wound the SS flow by pushing back the SS date past 65... they are trying to kill the golden goose... ie morons.
rsp,
Matt, it seems it depends on which series we look at...
ReplyDeleteThis one appears to include the transfer payments...
http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&903=87
...and if I recall it matches up with this record of deficits...
https://www.dropbox.com/s/c43m9m1eo7hl5e6/debthist01z1.xls
Either way it seems your argument holds...
Ok Ill take a look at those...
ReplyDeleteBefore entering into social security and medicare, those payments are intra-non-govt sector flows... (people work and use FIRE sector health insurance schemes...)
Then when these folks sign up for SS and Medicare, this creates an inter govt to non-govt sector flow that was not there before... which is becoming apparently very supportive to the provision of the total system requirements...
(And the Peterson people want to shut this off! The whole thing will shut down again...)
rsp,
Matt, govt either has to stop paying the rent (Randy) or tax it away (Michael Hudson). It's a vicious circle that never has a good ending because, as Rodger Mitchell points out, psychologically, wealth is relative. The rich measure how rich they are not only by how much they have but also and more importantly how much more they have than others.
ReplyDelete"(And the Peterson people want to shut this off! The whole thing will shut down again…)"
ReplyDeleteI wonder how they plan to sell this failure to the public as something that is good for us in the long run?
Because as far as I (we) can tell the strategy has no mathematical chance of success. They have to know that don't they?
imo they are not systems people Paul... none of them... they can't understand these systems to the degree necessary to operate/manage them...
ReplyDeleteThey are all "bean counters" so to speak...
rsp,
Tom,
ReplyDeleteimo it is perhaps jumping the gun as far as making those distributional adjustments before we get a handle on how these systems operate to begin with...
I think if people could be taught how this system operates, those types of distributional issues would come to resolution quickly thru the political process...
the public/people do not understand what their complete set of operational options are yet...
rsp,
Matt, I am not sure that the voting public is smart enough ever to get monetary economics, which is why it is so easy for the elite to dupe the rubes.
ReplyDeleteBecause as far as I (we) can tell the strategy has no mathematical chance of success. They have to know that don't they?
ReplyDeleteTheir point is to break the system and blame it on high wages and social programs. The neoliberal solution is to get rid of social programs and reduce wages to be more competitive. As Margaret Thatcher said, TINA. It's the same old leoliberal strategy.
Tom,
ReplyDeletePoint taken, but I will still take the position that the elite are truly made morons without a clue....
rsp,
Matt, read the Mark Blyth article from Foreign Affairs that I posted today. He lays it out in terms of the history. It's really a brilliant historical presentation that cuts to the core. They may be morons, but there is method in their madness.
ReplyDelete