Tuesday, May 31, 2016

Bill Mitchell – Iceland proves the nation state is alive and well

Important. The intersection of the political and the economic, and the predominance of the political under national sovereignty. The internationalist left ignore this at its peril, especially in a world of transnational corporatism. Bill also discusses the situation in Iceland in relation to the recent IMF paper, Neo-liberalism: Oversold?

Bill Mitchell – billy blog
Iceland proves the nation state is alive and well
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Aditya Chakrabortty — You’re witnessing the death of neoliberalism – from within

Based on the IMF paper.
From the 1980s [Thatcher-Reagan era] the policymaking elite has waved away the notion that they were acting ideologically – merely doing “what works”. But you can only get away with that claim if what you’re doing is actually working…
Neoliberalism has stalled other than for the extremely wealthy.

The Guardian
You’re witnessing the death of neoliberalism – from within
Aditya Chakrabortty

Bloomberg Special Report — The Untold Story Behind Saudi Arabia’s 41-Year U.S. Debt Secret

The facts confirm the rumors.

The Untold Story Behind Saudi Arabia’s 41-Year U.S. Debt Secret
Andrea Wong, With assistance from Sangwon Yoon

Brian Tashman — Trump is a full-blown nutter: Here are 58 unhinged conspiracy theories the Republican leader has promoted

Presumptive Republican presidential nominee Donald Trump not only surrounds himself with conspiracy theorists, he has spent years pushing conspiracy theories himself, much to the delight of his supporters.
At times, Trump tries to remain evasive about whether he actually believes these conspiracy theories, insisting that he simply “heard” or “read” them somewhere or is just asking a question.…
Politically incorrect, or nutter? You decide.

Raw Story
Trump is a full-blown nutter: Here are 58 unhinged conspiracy theories the Republican leader has promoted
Brian Tashman, Right Wing Watch

Also, in case you missed it.
INFOWARSDONALD TRUMP TELLS ALL ON THE ALEX JONES SHOWTrump joins the Alex Jones Show for an exclusive interviewThe Alex Jones Show - DECEMBER 2, 2015

Xinhua — China's 4G users exceeds 500 min

There are now more than 500 million 4G users in China thanks to government measures, a minister told a conference Tuesday.
China owns the world's largest 4G network with more than 2 million 4G base stations, Industry and Information Technology Minister Miao Wei told the First Global 5G Event in Beijing.…
China has formed a 5G R&D team to research and test the technology with a view to commercialize it by 2020.
500 million is way more people than the entire population of the US.

China's 4G users exceeds 500 min

Victor Davis Hanson — Class, Trump, and the Election

Trump as the anti-establishment protest candidate, running against a presumptive Hillary Clinton who is the Establishment personified.

National Review
Class, Trump, and the Election
Victor Davis Hanson
ht Malmo's Ghost in the comments

TASS — Central Bank: Russian banking system capable to finance economic growth

MOSCOW, May 30. /TASS/. The Russian banking system is capable of financing economic growth, Chairperson of the Central Bank Elvira Nabiullina said on Monday.
"We managed to preserve population and companies’ confidence in the banking system. The banking system restored population’s deposits by increasing capital. Lending for the real sector of the economy does increase, though not highly, and it shows the banking system is capable to continue discharging its main function - financing the economic growth," Nabiullina said.
According to the official, the Bank of Russia intends to continue financial recovery policy for the banking sector.
"We will proceed with this banking sector financial recovery policy. Our main task is to switch to a proactive position and early prevention of problems," Nabiullina said.
4% inflation target no super-challenging task.

"The task for 2016 is to pursue the interest-rate policy aimed at reaching 4% inflation by the end of 2017. We’re trying to reach it at any cost… We consider the policy of reaching 4% inflation as part of the general economic policy aimed at creating background for economic growth. Nevertheless, 4% inflation is not a super-challenging task," Nabiullina said.
The Russian Accounts Chamber shares the position of the Central Bank regarding the deadline for reaching the inflation target.
"We share the Central Bank’s position. We can meet the [inflation] target [of 4% by the end of 2017] under certain conditions and respective measures," sais Tatyana Golikova, the head of the Account Chamber.
Last year’s economic recession could have been greater
The Central bank chief has pointed out that last year’s economic recession in Russia could have been greater without allowing the ruble to float.
"Among the key trends we’re facing now are declining inflation with risks remaining in mid-term budgetary policy, and the floating exchange rate (of the ruble) for the whole 2015, which caused volatility but stabilized the economy as without it the recession could have been greater," she said.
According to Russia’s state statistics service Rosstat, the country’s GDP contracted by 3.7% in 2015.
Growing debts of bridge banks
The Bank of Russia is concerned of growing debts of bridge banks in the course of financial recovery procedures and measures to increase their equity are needed.
"We started applying more sanctions but there is a challenging point of concern for us. The debt load on banks is growing and equity should be increased, so we need to think how to do that efficiently," Nabiullina said.
No shortage of currency liquidity
The Central Bank official has also noted that Russian banks are facing no shortage of currency liquidity.
"We see that as of now there is no shortage of currency liquidity in the system and the banks’ need for currency to be provided by the Central Bank has dropped through the floor during the year, which demonstrates stabilization in the sector," Nabiullina said.
Central Bank: Russian banking system capable to finance economic growth

Peregrin Wood on the Libertarian Party ticket

Looking at the Libertarian Party's Gary Johnson-William Weld ticket.

Irregular Times
William Weld’s Past Involvement With Unity08 Brings Ethical Shadow To Libertarian Ticket

Gary Johnson Has Policies Just Like Trump’s On The Economy And Environment
Peregrin Wood

Matias Vernengo — Is there a new "new economics"?

Don’t get me wrong. I’m all for external critiques of mainstream economics. And I think there are important lessons from some of these fields. But they are all about imperfections. In my view, economics has to be rebuilt on old economics. The old economics of the classical authors and Marx, that understood that distribution reflects social conflict, in particular, class conflict, and the old “new economics” of Keynes, that understood that causality implied that demand determines supply (and not vice versa as in Say’s Law). Sure you might add complexity, and heterogeneous agents, and institutions (perhaps more than property rights?), and that helps too. But complexity, heterogeneous agents and other 'imperfections' are there, as I noted in my debate with Colander et al. as a way of making the mainstream more reasonable, and not to bring down a theory with insurmountable logical problems. My two cents.
Naked Keynesianism
Is there a new "new economics"?
Matias Vernengo | Associate Professor of Economics, Bucknell University

James Petras — Anglo-America: Regression and Reversion in the Modern World

The capital (property owner) and labor (wage-taker) struggle is coming to a head as capital share increases and labor share decrease, and market-based policy replaces welfare policy.

James Petras Website
Anglo-America: Regression and Reversion in the Modern World
James Petras | Professor (Emeritus) of Sociology at Binghamton University in Binghamton, New York and adjunct professor at Saint Mary's University, Halifax, Nova ScotiaAnglo-America: Regression and Reversion in the Modern World

John Helmer — The Red Line Crossed, In The Cross-Hairs, At Trigger Point — Waiting For An October Surprise

Approaching the level of the Cuban missile crisis?

When Putin starts talking publicly about red lines being crossed and crosshairs, it gives pause, unfortunately not to the American and NATO leadership, it seems.

The Russian leadership doesn't threaten, it warns. If the warning is not heeded, then it acts.
First there was the red-line announcement. On Friday in Athens there was the cross-hairs statement. By the month of October, the month before the US presidential election, there will be the trigger point.

The US and the North Atlantic Treaty Organization (NATO) allies are going to war with Russia, accelerating the inevitability that Russia will strike in self-defence. This is what the first and second statements by President Vladimir Putin warn. There will be no statement of warning when the trigger point arrives.
Dances with Bears

Alexei Lossan — Why is Russia borrowing money on the foreign markets?

But according to Deputy Finance Minister Sergei Storchak, the issuance of Eurobonds is not aimed directly at financing the budget deficit. In his words, the main objective for Russia is to "show its flag," to show that it is present on the international capital market.
That was my initial impression. Russia didn't really need to go to the bond market to get euro. Rather, it was prove that Russia can create and operate it's own financial markets independently of the West. It was a signal to the US that that not only are sanctions not working, but that Russia is self-sufficient,  not isolated, and not just a "gas station" either.

According to MMT, borrowing in a foreign currency is a constraint, but for Russia this was a geopolitical and geostrategic move as much as an economic one.

Russia Beyond the Headlines
Why is Russia borrowing money on the foreign markets?
Alexei Lossan, Rbth

Ryan Mallett-Outtrim — Does Venezuela’s Crisis Prove Socialism Doesn’t Work?

Yet in reality, Venezuela’s current economic crisis can mostly be chalked up to one of life’s most dreary technicalities: bad currency management.…
Venezuela has a fixed rate currency, meaning the government sets exchange rates pegged to the US dollar. It’s worth noting there’s nothing socialist about a fixed exchange rate. Countries as diverse as Saudi Arabia and Aruba have fixed rate currencies. However, Venezuela’s currency, the Bolivar Fuerte (BsF) also has one other interesting feature: its distribution is controlled by the government. In Venezuela, you can’t just go to an exchange house and buy currency. You either purchase currency from the government, or you resort to the black market. A decade ago, this arrangement worked well, but today things are different.…
For years, the government has only had two options: either move towards a well regulated, well oiled, simple and loophole free controlled exchange regime, or a free float. Instead, the government has chosen a third option: make currency exchange as convoluted, inefficient and messy as possible, with loopholes and blind spots left, right and center. Nothing makes sense, and everything is open to exploitation. This may sound harsh, but the facts don’t lie.…
If you read through the entire thing, you may have noted some of the most pro market voices oversaw some of the biggest policy blunders.…
No matter how we cut it, it’s hard to avoid the conclusion that poor currency management was a pivotal factor in the current crisis.…
The right wing can blame it on the vague specter of socialism, but only if they ignore the successes of the Chavez years. They also need to ignore the fact that throughout the Maduro administration, many of the government’s top economics decision makers have been from the pro business wing of the PSUV. They also need to ignore the fact that no opposition party has offered anything resembling a viable policy solution to the economic crisis. Likewise, the left wing can continue simply blaming the imperialist conspiracy, but they have to ignore the fact the government has made some very obvious missteps. Assuming there is a conspiracy involving the US to crush the Bolivarian movement (which frankly, is already an open secret), the Maduro administration has made life pretty easy for the conspirators. It’s also important to point out there has only been so much the government could have done to prevent sabotage over the past few years, making relatively easily controllable factors like monetary policy all the more critical.
Unfortunately, through procrastination and inaction, poor monetary policy has been permitted to rot the foundations of the economy for years on end, and now a political crisis rages on with no end in sight. The only question left is, can this go on much longer?
Float that sucker!!!

Much more in-depth reporting that I have seen elsewhere. Must-read to understand what's up in Venezuela. It's longish for a post, but worth reading all of. The excerpts above are the most interesting from the MMT POV. Venezuela should have taken the signal from Russia and floated.

Does Venezuela’s Crisis Prove Socialism Doesn’t Work?
Ryan Mallett-Outtrim

Paul Robinson — Two primaries

May was primary season in Russia. For the first time, some Russian political parties have adopted the American practice of holding primary votes to select their candidates for the forthcoming general election. The idea, supposedly, is to involve citizens more deeply in the democratic process, and to ensure that candidates have popular support and are not just the appointees of party leaders. So, how has it worked out?…
Two primaries
Paul Robinson | Professor, Graduate School of Public and International Affairs at the University of Ottawa

Jörn Bibow — Of Voices in the Air and Never-Ending Dreams of Helicopter Drops

The debate over helicopter money rages on.

Zero Hedge — Brazil's New Anti-Corruption Minister Quits After Leak Exposes His Involvement In Corruption Scandal

Our prediction that the cabinet of Brazil's new president Michel Temer would not last long received its first validation just 10 days after the impeachment of Dilma Rousseff, when a recording was leaked in which Brazil's new Planning Minister under Temer, Romero Juca, was overheard explaining how the removal of Rousseff would "prevent the wide corruption probe dubbed Carwash from proceeding." This prompted many to wonder if Rousseff was indeed correct all along claiming a silent, US-sponsored coup had taken place in Brazil, one in which the cost of sweeping the Carwash scandal under the rug was her own scalp.

Incidentally, Juca quit shortly thereafter to preserve the new president's reputation as corruption-free as possible.
Then earlier today, things for the new, just as corrupt as his predecessor president, Michel Temer got particularly awkward, not to mention painfully ironic, when none other than Brazil's Transparency and Anti-Corruption Minister, Fabiano Silveira resigned on Monday after leaked recordings suggested he tried to derail a sprawling corruption probe, the latest cabinet casualty impacting interim President Michel Temer's administration.

No amount of commentary can do justice to the gruesome farce that Brazilian economics is quickly devolving into.…
Zero Hedge
Brazil's New Anti-Corruption Minister Quits After Leak Exposes His Involvement In Corruption Scandal
Tyler Durden
ht Don Quijones at Raging Bull-Shit

Philip Pilkington — Achtung! My Book is Coming Out Soon: Here Is a Brief Overview and Some Media Links

Hi everyone – or, at least, whoever is left out there. As you probably know, this blog has been shut down since October 2014 and I have pretty much fallen off the face of the planet. Actually I’ve been working in investment where I’ve found a job that allows me to pursue non-mainstream economic research.
Some of you may recall that I was writing a book during the last days of this blog. I’m happy to say that this book is now fully completed and has been accepted for publication by Palgrave Macmillan. The provisional publication date for the book will be October 2016and the price will be around £19.50. The book’s title will be: ‘The Reformation in Economics: A Deconstruction and Reconstruction of Economic Theory’.
The book will not be a rehash of material that is available on this blog. I consciously avoided this as I thought that it would be rather boring. So the book is all brand new material. Some of the ideas were thrown around on this blog in more primitive form but I have tried to develop them properly in the book.…
Fixing the Economists
Achtung! My Book is Coming Out Soon: Here Is a Brief Overview and Some Media Links
Philip Pilkington

Deficit is too small? Consumer spending rose most in six years.

Consumer spending rose 1 percent last month after a flat reading in March, the Commerce Department reported Tuesday. Incomes were up a solid 0.4 percent, matching the March gain. Wages and salaries, the most important component of incomes, gained 0.5 percent.

Where are the "deficit is too small" people? When will they admit that they are wrong? Do you keep on saying, for years, that there's going to be a recession? How is that useful?

We have had it correct the entire time with our analysis of flows. I use flows almost exclusively in my MMT Trader report.

It's all about flows. You don't even know what the deficit is going to be until the government spends first. You don't even know how much total taxes will be paid.

It's flows.

Monday, May 30, 2016

Prediction Markets Update

TTIP, TISA Explained | Wikileaks | Jeremy Corbyn | Bernie Sanders | Julian assange

I thought this short intro to TTIP and TISA was very good. I thought the US loved capitalism and a bit of healthy competition, but not nearly so much when they don't win all the time, it seems.


The new issue of MMT Trader is out. Get your 30-day free trial today!

MMT Trader

The new issue of MMT Trader is out.

Early in May when everyone was panicking and selling stocks the MMT and fiscal flow analysis in my report kept us buying. And see how it worked out? Market has rallied sharply.

You will not find another report like this anywhere. I break down all the spending and fiscal "flow" numbers. This is the most leading analysis you can get.

Try it for 30 days absolutely free and decide for yourself.

 MMT Trader

Hillary Accused of Racketeering by the FBI, Will She be Indicted? Will She be Dumped from the Presidential Race?

In a recent release, the FBI has indicated that it will be presenting a recommendation to Loretta Lynch, Attorney General of the Department of Justice:



“James Comey and The FBI will present a recommendation to Loretta Lynch, Attorney General of the Department of Justice, that includes a cogent argument that the Clinton Foundation is an ongoing criminal enterprise engaged in money laundering and soliciting bribes in exchange for political, policy and legislative favors to individuals, corporations and even governments both foreign and domestic.”  (quoted by Frank Huguenand, Global Research, May 30, 2016)

There are several possible scenarios which affect the outcome of the presidential campaign.
The fundamental question is whether this recommendation –which documents the criminal undertakings of the Clinton Foundation– will be carried out by the Attorney General.
Loretta Lynch was appointed Attorney General by president Obama in 2010 during his first term. Of significance, Lynch also held the position of U.S. attorney for the Eastern District of New York under the Bill Clinton administration (1999-2001).
Moreover, as pointed out in a recent article by Jerome Corsi, Loretta Lynch is political crony of the Clintons:
But little known is the fact that Lynch was a litigation partner for eight years at a major Washington law firm that served the Clintons. 
Lynch was with the Washington-headquartered international law firm Hogan & Hartson LLP from March 2002 through April 2010. 
 According to documents Hillary Clinton’s first presidential campaign made public in 2008, Hogan & Hartson’s New York-based partner Howard Topaz was the tax lawyer who filed income tax returns for Bill and Hillary Clinton beginning in 2004.
In addition, Hogan & Hartson in Virginia filed a patent trademark request on May 19, 2004, for Denver-based MX Logic Inc., the computer software firm that developed the email encryption system used to manage Clinton’s private email server beginning in July 2013. A tech expert has observed that employees of MX Logic could have had access to all the emails that went through her account.
It is, therefore, highly unlikely that Lynch will follow the recommendation of James Comey and the FBI.
Nonetheless, even if the indictment is NOT carried out, inevitably Hillary Clinton’s “credibility” as a presidential candidate is in jeopardy.
The corporate media may attempt to cover up or distort the findings of the FBI and manipulate public opinion with a view to supporting Hillary’s candidacy. This won’t work. Hillary’s reputation has been tainted. A suspected criminal cannot become president of the USA, whether the legal procedure against her is carried or not.

And the Donald Trump campaign will go into high gear to discredit Hillary Clinton.
Under these circumstances, the Democratic Party hierarchy (not to mention Hillary’s corporate sponsors) may decide to dump Hillary Clinton.

Assuming Clinton falls out of the presidential race, what happens? This scenario has already been contemplated and carefully rehearsed ahead of Hillary’s demise. 

Will the nomination go to Bernie Sanders or will Joe Biden formally enter the race as a “slip in” candidate:

While Hillary, according to the FBI, is allegedly involved in criminal wrongdoings including money laundering and political bribes, Donald Trump’s candidacy is also fragile, given his alleged links to organized crime as documented by David Cay Johnston:
But Trump was not clean as a whistle. Beginning three years earlier, he’d hired mobbed-up firms to erect Trump Tower and his Trump Plaza apartment building in Manhattan, including buying ostensibly overpriced concrete from a company controlled by mafia chieftains Anthony “Fat Tony” Salerno and Paul Castellano. That story eventually came out in a federal investigation, which also concluded that in a construction industry saturated with mob influence, the Trump Plaza apartment building most likely benefited from connections to racketeering. Trump also failed to disclose that he was under investigation by a grand jury directed by the U.S. attorney in Brooklyn, who wanted to learn how Trump obtained an option to buy the Penn Central railroad yards on the West Side of Manhattan. 
Why did Trump get his casino license anyway? Why didn’t investigators look any harder? And how deep did his connections to criminals really go? (Politico, May 22, 2016)
Dirty politics. So much for Democracy and “We the People”. What choice is left?

The Criminalization of politics in America: The leading presidential candidates, Hillary and Donald, have shaky records, with alleged links to criminal wrongdoings.

Sunday, May 29, 2016

Xinhua — China's supply-side reform right on target as its economy enters new normal: expert

A U.S. expert lauded China's efforts to advance the supply-side structural reform and said it is right on target as the country's economy is now settling into a "new normal" of lower growth rates.
"China is producing a lot, but its people are not buying it. The mismatch of supply and demand is a pain for the economy. However, the supply-side reform is here to solve this problem," said Zhao Yao, professor and co-director of the Supply Chain Analytics Laboratory at the Business School of Rutgers University.
Structural reform on the supply front requires industries to change focus from blind expansion to the actual demands of customers through offering innovative products, analysts say.
Supply-side reform is mainly two things, one is to improve the Chinese companies' productivity and the other is to win the competition in a global market," said Zhao at a Chinese executive training program held at Rutgers Business School on Tuesday.
China's economy has maintained high growth since its reform and opening-up. However, the country only garnered a 6.9 percent growth rate in 2015.
Zhao pointed out that as the country's economy enters a new normal, it needs to shift its focus from scale and speed toward quality and efficiency, which is just what the supply-side reform is calling for.
At a key economic meeting held at the end of 2015, China's policy makers pledged to take steps to push forward the supply-side structural reform in 2016 and beyond, supporting growth through new demand and productivity.
It is seen as an innovative move to guide the world's second largest economy and a proactive decision to make it more competitive internationally.
To push forward the reform, China needs to build a unified market to reduce marketing expense for companies, said Zhao.
The country has to invest in a fast and efficient transportation network to reduce logistic cost for companies and to encourage fine competition and innovation, especially for the small and medium-sized companies, he added.
Meanwhile, a continued effort to fight corruption is also important as this can help companies reduce the hidden cost.
"With all this done, I am sure China's companies will take more than half the space in the Fortune 500," said Zhao.
China's supply-side reform right on target as its economy enters new normal: expert

New Deal Democrat — Refinancing is dead: a generation of Hard Times will continue until secularly real wages improve

So the bottom line is, we are already in a period – a period that I expect to last an entire generation – where real gains by average Americans won’t be available from financing gimmicks, but must come from real, actual wage growth. At the moment I see little economic or political impetus to make that happen, even though average Americans understand via their wallets the issue all too well. Eventually it will happen, but I believe between now and then is another recession, one that I fear is likely to be worse than the 2008-09 recession because it is likely to include a spasm of wage-price deflation.

Angry Bear
Refinancing is dead: a generation of Hard Times will continue until secularly real wages improve
New Deal Democrat

See also

Nordic Enterprise Trust
Towards an Economics of Common Sense
Chris Cook

Mark Weisbrot — The Brazilian Coup and Washington's "Rollback" in Latin America

Although corporations are obviously a big player in U.S. foreign policy, and they literally do much of the writing of commercial agreements like NAFTA and the TPP, the number one guiding principle in Washington's foreign policy apparatus is not short-term profit but power. The biggest decision-makers, all the way up to the White House, care first and foremost about getting other countries to line up with U.S. foreign policy.
Power leads to wealth. Capture the fort on the hill and control the diamond mines in the valley.

Peter Dorman — Fascism: The View from Within

What’s necessary is to see fascism from the inside. Why might people support an authoritarian, chauvinist ruler who attacks minorities and foreigners?…
The proper way to determine the fascist threat from a right wing nationalist movement in the US or elsewhere is to ask (1) do they seek to impose the unity and rule of “the people” (their national or ethnic group) through suppression of minorities, dissent and foreigners? and if so (2) what repressive or violent actions will they need to take to carry out such a program?
Fascism: The View from Within
Peter Dorman | Professor of Political Economy, The Evergreen State College

Carol Anderson — Trump Exposes the GOP's Dirty Secret: They Build Everything by Nurturing White Rage

America's soft fascism disguised by code words is now out in the open.
Shortly before he died, Reagan’s strategist Lee Atwater explained the game plan of the Southern Strategy in a matter-of-fact clinical policy. “By 1968 you can’t say ‘n***r’ — that hurts you, backfires,” Atwater emphasized. “So you say stuff like, uh, forced busing, states’ rights, and all that stuff. And you’re getting so abstract now, you’re talking about cutting taxes, and all these things you’re talking about are totally economic things and a byproduct of them is, blacks get hurt worse than whites.” But Donald Trump doesn’t do abstract and that is what has sent the GOP into a tizzy.
Nixon and Reagan mastered this by adapting to the new racial terrain carved out by the Civil Rights Movement. As Nixon aide John Ehrlichman explained to Harper’sDan Baum in 1994, “We knew we couldn’t make it illegal to be against black[s], but by getting the public to associate . . . blacks with heroin, and then criminalizing” the drug “we could disrupt those communities,” Ehrlichman said. “We could arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news. Did we know we were lying about the drugs? Of course we did.”
But that lie was infinitely effective in driving policy. In 2008, the NAACP reported that “five times as many whites are using drugs as African Americans, yet African Americans are sent to prison for drug offenses at 10 times the rate of Whites.” Consequently, blacks comprising just 13 percent of the U.S. population made up “59% of those in state prison for a drug offense.” Packaged and sold as keeping neighborhoods and families safe, the Nixon administration’s well-targeted lie, which was expanded upon by Ronald Reagan, and taken up by Democrats such as Bill Clinton to prove that they could be “tough on crime, too,” has worked masterfully. Because many states disfranchise those with felony convictions, the Sentencing Project reports that 2.2 million African Americans or 7.7 percent of black adults have been legally stripped of their voting rights; as compared with 1.8 percent of the non-African American population.…
And that’s the problem. What the GOP is really mad about is that Donald Trump has made visible what many have tried so hard to hide.AlterNet
Trump Exposes the GOP's Dirty Secret: They Build Everything by Nurturing White Rage
Carol Anderson

See also
Back when Dick Cheney was being hailed for calling out Donald Trump’s racism, I notedone aspect of that radio interview that largely escaped notice: his embrace of the myth that the American continent was empty when his Puritan ancestors got here.

Cheney didn’t stop there. He then emphasized that one of his ancestors arrived as a religious refugee, a Puritan. “A lot of people, my ancestors got here, because they were Puritans.” Cheney suggested, then, that the place was empty when William Cheney arrived in the 17th century. “There wasn’t anybody here, then, when they came.”
Should be "the myth of (white) American exceptionalism."

Jason Smith — Falsifiable statements are not philosophical disagreements

I would address this by saying that science as that which can be substantiated objectively, in contrast to philosophy as that which can't, meet as the margin. This margin is determined logically by available criteria, and also by the practicality of applying criteria.

This margin is blurring the distinction between philosophy and science and philosophers become more empirical and scientists become more speculative and what they deal with becomes less measurable.

This margin is a frontier of knowledge. It's a grey area not amenable to black and white thinking.

Basically, this debate begins with the distinction the ancient Greeks made between chaos (randomness) and cosmos (order). That which is ordered is "rational," that is, subject to logical reasoning (Greek: <i>logos</i>). Aristotle was the first to establish a theory of causality based on four causes (<i>aitia</i>) — formal, material, efficient, and final or teleological — that are both necessary and sufficient to answer the question "why" completely.

This framed the debate in metaphysics, epistemology, and natural philosophy for centuries, until the modern era when Galileo (among others) emphasized the necessity of observation.

Aristotle had also emphasized the observation against Plato's introspection, but Galileo launched the scientific age by emphasizing it and creating instruments for extending observation (telescope) and measurement (thermometer). Galileo also used the mathematics of his day to formalize knowledge.

This is key, because Aristotle based  his method primarily on first causes (aitia), which can also be rendered first principles or reasons. Observation as a rationale in justification is not essential. First principles are typically justified as self-evident or intuitional rather than observational. Now we would say "initial assumptions" rather than "first principles."

Science really took off and became differentiated from science with the advent of advanced mathematics, initially developed by "philosophers." Descartes introduced analytic geometry and Leibniz the calculus, for example.

Descartes had already posited a hard and fast distinction between mind and world. However, it was David Hume took this to its logical conclusion by further positing that reasoning is purely mental and observation deals only with sense data. There is no basis in either logic or sense data capable of justifying a metaphysical principle of causality.

For Hume, the assumption that sense data are caused by something unknown and unknowable external to them is a matter of belief. Causality is based in observation of constant correlation of sense date. Cause and effect is condition and result.

The history of philosophy since then has been largely either an acceptance of Hume or a reaction to him.

In the philosophy of science, the result was abandoning the question "why" and replacing it with "how." In science this is represented theoretically and formally in terms of mathematical functions, that is invariant relationships of inputs and outputs.

If the function is known, then it is a matter of observing and measuring independent variables and resultant dependent variables. If there is no method of arriving at a function relating measured inputs to measured outputs, then stochastic methods must be used to approximate outcomes from populations or random samples.

This is purely operational, dealing how things work rather than explanatory of why they work. We can know something of the laws of nature expressed mathematically, but not why these law actually apply other than their place in a system of invariance that is the basis of ergodicity. As result science is tentative in its conclusions owing to future uncertainty in the absence of metaphysical causality grounded in knowledge of reality instead of knowledge limited to sense data.

In the transition from philosophy to science it was assumed that there are hidden "laws" as observational regularities that can be discovered by applying a rigorous method that involves both theory based on mathematical models and observation of quantities based on measurement.

There are essentially three division of scientific inquiry based on subject matter and methodology — natural sciences, life sciences and social sciences. Psychology is a bridge science between life science and social science. Different fields lend themselves to different methods of investigation and levels of precision.

One aspect of philosophy involves attempting to elucidate how all this works in terms of a whole. This is called "consilience," that is, complementarity of knowledge in a unified and integrated system of information. While there is as yet no comprehensive unified "theory of everything," most agree that different aspects of scientific inquiry need to be compatible and that integration is self-reinforcing, acting as an attractor.

Those working in one area that are unmindful of work in other areas that contradicts their work or calls it into question, or do not addressing this issue, are working at the margin and may be marginalized or dismissed.

While this alone doesn't prove mavericks wrong, if they don't account for discrepancies, they are likely to be ignored for "magical thinking," or being "ivory-tower philosophers" in the pejorative sense of idle speculation based on unsubstantiated assumptions that do not accord with established observation and explanation.

Positivism was a simplistic solution for establishing criteria in terms of Hume's fork, the distinction between logic and observation. The criteria are tautology and contradiction formally, and empirical truth and falsity based on observation and measurement.

But this proved too rigid to account for how scientists actually proceed. There is a spectrum of thought on this from positivism to Paul Feyerabend's Against Method: Outline of an Anarchistic Theory of Knowledge, in which he claims that "science" is what scientists do rather than what they or others think they do. There is no "scientific method," and trying to impose one as a rule would limit creativity and innovation.

The upshot is that applying general principles is often less than satisfactory because most cover only special cases. So each instance must be approached in context to determine what procedure and which criteria apply, and then some degree of rigor has to be exercised in applying this. There is art or craftsmanship involved.

Anyway, Jason's post is interesting in this regard. It's short and not wonkish.

Information Transfer Economics
Falsifiable statements are not philosophical disagreements
Jason Smith

Joe Mellor — Most corrupt country on planet is Britain, says Mafia expert

Fearless journalist Roberto Saviano, who has dedicated his career to exposing the Italian mafia, has claimed that it is Britain that is the most corrupt country on Earth.
The London Economic
Most corrupt country on planet is Britain, says Mafia expert
Joe Mellor, Deputy Editor

Lars P. Syll — The tiny little problem with Chicago economics

John Cochrane and Robert Lucas going off again. Government spending "crowds out" private spending. Bill Vickrey points out the mistake.
Chicago economics is a dangerous pseudo-scientific zombie ideology that ultimately relies on the poor having to pay for the mistakes of the rich. Trying to explain business cycles in terms of rational expectations has failed blatantly. Maybe it would be asking to much of freshwater economists like Lucas and Cochrane to concede that, but it’s still a fact that ought to be embarrassing. My rational expectation is that 30 years from now, no one will know who Robert Lucas or John Cochrane was. John Maynard Keynes, on the other hand, will still be known as one of the masters of economics.
Lars P. Syll’s Blog
The tiny little problem with Chicago economics
Lars P. Syll | Professor, Malmo University

Saturday, May 28, 2016

Patrick Smith — The Defense Department Is Ruining America: Big Budgets, Militarization and the Real Story Behind Our Asia Pivot

As ever, follow the money through the revolving door. And the new arms race and cold war is just beginning.

The Defense Department Is Ruining America: Big Budgets, Militarization and the Real Story Behind Our Asia Pivot
Patrick Smith

Xinhua — Cargo trains link China, Germany

A cargo train linking Germany and northwest China's Xinjiang Uygur Autonomous Region began operation on Saturday, local authorities said.
It takes ten days for the train to reach Germany's industrial city of Duisburg from Xinjiang's regional capital Urumqi over a distance of 8,000 km, during which it goes through Kazakhstan, Russia and Poland, said Xu Yongxin, general manager of the company that undertook the project.
The outbound trains transport Xinjiang specialties such as chemical products, tomato sauce and textiles, while the inbound trains bring back food, furniture, mechanical and electrical products, and health products.
It is a cargo train route with the shortest distance between China and Europe, which is at least 2,000 km shorter than other similar China-Europe cargo train routes and saves two to three days in time.
Xinjiang now operates several cargo train services to central Asia, Russia and Georgia.
Cargo trains link China, Germany

telesur — Brazil: Leak Shows Pro-Impeachment Group Funded By Opposition

Leaked audio revealed that the Free Brazil Movement — one of the loudest voices calling for the impeachment of President Dilma Rousseff in the lead up to her ouster — received financial and political support from opposition political parties.

The Free Brazil Movement, known as MBL, billed itself as a non-partisan organization, however the online web portal UOL leaked a conversation with one of the founders of the movement boasting about having secured a deal with Rousseff's political opponents.

In the recording, Renan Antonio Ferreira dos Santos, national coordinator for the MBL, says opposition political parties agreed to print material free-of-cost and help mobilize their members to attend rallies calling for the impeachment of Rousseff.

The parties mentioned in the recording, including the PMDB, PSDB, and Democrats, are now all part of the coup-imposed government of Michel Temer.

Many of the lawmakers who voted in favor of ousting Rousseff cited the impeachment demonstrations as proof that Brazilians wanted to see the president removed from her post.

Renan dos Santos confirmed to UOL that the recording was authentic. MBL later claimed that it was “natural” that political parties would help turn people out to the demonstrations. The group also denied that political parties influenced their political outlook of the group.

The MBL is a far-right collective that believe the solutions to the country's economic problems are based on free-market policies. Fabio Ostermann and Juliano Torres, two of MBL leaders, were educated in the Atlas Leadership Academy, linked to the Atlas Economic Research Foundation, financed by the notorious U.S. businessmen the Koch Brothers.…
Two other leaked recordings showed key members of the coup government were scheming with members of the Supreme Court and military command to ensure Rousseff’s ouster and did so to derail an ongoing corruption investigation.…
More indications of "soft coup" by the right-wing rather than the democratic process that the new government and the US are claiming.

Brazil: Leak Shows Pro-Impeachment Group Funded By Opposition

Dani Rodrik — The Politics of Anger

First, the good: Dani Rodrik acknowledges that national governments exert powerful social, political  and economic force.  Obviously, choosing to tip the scales in the direction of special interests is also a choice that is directional.  

Choosing to do nothing is also a choice that is directional, and owing to the social, economic and political framework leads to promoting special interest, too. 

Governments need to abandon the view that there is no alternative to powerful market forces and the assumption that markets are the solution to all social, political and economic problems. 

Not only is not true, but also the public has come to disbelieve it. 

We are experiencing the result as the rise of populism on the left and right, Sanders and Trump in the US. But a similar phenomenon is taking place elsewhere.

Now, the bad: Rodrick cites "the malleability of capitalism" as a tested solution. Adopting social democracy has worked in the past, for instance, the New Deal and the Scandinavian model. 

The reason is this bad is because history also shows that as soon as such a model adopted, powerful forces of hard core capitalism, whose key fundamental is that those who own the country should govern it, begin working in concert to undermine the success of the new model even as it is being put in place. They are not phased by the length of time it may take or what may be involved. 

Thus, the history of capitalism is a swings toward and away from market fundamentalism, with market fundamentalism being the attractor.

The reason seems to be that social, political and economic liberalism as conceived in the West are not compatible.

Populism is the assertion of political liberalism is a country that is at least nominally democratic and holds free and fair elections.

The reaction of those advocating economic liberalism as the basis of a political theory (neoliberalism) is an attempt to bridle democracy using the levers of power that social class, political power and economic inequality bestow.

Project Syndicate
The Politics of Anger
Dani Rodrik | Professor of International Political Economy at Harvard University’s John F. Kennedy School of Government

Chuck Spinney — New Nukes for a New Cold War

President Obama’s administration is planting the seed money for an across-the-board-modernization of nuclear weapons, delivery systems, and support systems that will cost at least a trillion dollars (more likely $2 trillion to $3 trillion, IMO) over the next 15-30 years.…

Given the highly evolved nature of the domestic politics driving defense spending (i.e., the domestic operations of the Military-Industrial-Congressional Complex (I described this in “The Domestic Roots of Perpetual War”), history shows the golden cornucopia of this nuc “bow wave” or programs will quickly evolve into an unstoppable tsunami of front-loaded and politically engineered contracts and subcontracts that will grow over time to overwhelm and paralyze future Presidents and Congresses for the next 20-30 years.
This kind of budget time bomb has happened at least twice before in the non-nuclear part of the defense budget: The first began when the Nixon-Ford Administration planted the seeds of defense budget hysteria by starting a bow wave of new modernization programs, financed in the short term by readiness and force structure reductions in early-to-mid 1970s. These reductions led to budget pressures that exploded in the late 1970s and 1980s when President Jimmy Carter began growing the defense budget and President Ronald Reagan accelerated that growth.Get ready for huge budget deficits or cuts in domestic spending as the arms race accelerates, since the chances of raising taxes is low.
Spinney doesn’t mention it, but there is also the thinking that while the US can afford this, Russia and China, who will be forced to respond, will not. This is as much as piece of economic warfare as it is about military preparedness.

Ironic or disingenuous coming from a president that has called for nuclear disarmament.

Consortium News
New Nukes for a New Cold War
Chuck Spinney

Getting to know the alternatives. The Libertarian Party platform and candidates.

Getting to know the alternatives. The Libertarian Party platform and candidates.

The Hill
5 things the Libertarian Party stands for
Ben Kamisar
Lisa Hagen

Lord Keynes — On the Value of Work in a Social Democracy

Briefly mentions MMT JG.

Social Democracy For The 21St Century: A Post Keynesian Perspective
On the Value of Work in a Social Democracy
Lord Keynes

Greg Grandin — Still Selling Neoliberal Unicorns: The US Applauds the Coup in Brazil, Calls It Democracy

Washington now has compliant compradores in power in Argentina and Brazil—and perhaps soon in Venezuela.…Brazil’s is the third Latin American coup on Obama’s watch. All three were “constitutional coups,” using the fig leaf of legality to oust presidents who ran policies slightly ajar to the interests of local and international elites. Honduras in 2009 and Paraguay in 2012 were low-hanging fruit, small countries with outsized oligarchies, where mild reformers were easily dispatched. But Washington’s reaction to those two coups set the pattern for its response now to Brazil: Watch, wait, and quietly encourage the coup plotters, giving them time to consolidate a new order until recognition seems a reasonable course. In Honduras, in particular, Hillary Clinton as Obama’s secretary of state was instrumental in legitimizing the coup’s subsequent death-squad regime.…
The Nation
Still Selling Neoliberal Unicorns: The US Applauds the Coup in Brazil, Calls It Democracy
Greg Grandin

See also

Defend Democracy Press
Brazil: Coup or Fiasco?
Immanuel Wallerstein
ht Yves Smith at Naked Capitalism

Edward Lambert — Attractor State of Productive Capacity is Shifting

What is an attractor state?
It is a state around which a dynamic system organizes itself.
Effective Demand 

Eric Tymoigne — Money and Banking Part 16: FAQs about Monetary Systems

The following answers a few question in order to illustrate the previous post and to develop certain points.
New Economic Perspectives
Money and Banking Part 16: FAQs about Monetary Systems
Eric Tymoigne | Associate Professor of Economics at Lewis and Clark College, Portland, Oregon; and Research Associate at the Levy Economics Institute of Bard College

Don Quijones — Emails Show TPP ‘Collusion’ Between Mega-Banks & Obama Administration

The stench is getting worse.

Egmont Kakarot-Handtke — Petitio principii — economists’ biggest methodological mistake

Petitio principii (appeal to principle) is also called circular reasoning, begging the question, and assuming the conclusion.
You summarize how ergodicity came to economics: “Samuelson said that we should accept the ergodic hypothesis because if a system is not ergodic you cannot treat it scientifically.” (See intro)
This is pretty much the same way how most other core concepts and foundational propositions came to economics as Mirowski has shown (1995).…
The rationale of conventional economics is taken from classical physics, where atoms act predictably in accordance with the laws of force fields in which they interact. The program of conventional economics is to construct an analog to atoms and law of force fields. Methodological individualism and rational optimization are assumed and used to construct the concept of homo economicus as an analog to the atom. Markets are "fields," where the forces are the "market forces" of supply and demand that maintain an economic system in a state of equilibrium through mutual adjustment of atoms to shifting economic conditions analogous to the ergodic operation of a physical system in classic physics that is predictable based on laws. Neat, but baseless. Mirowski lays this out in detail in his works.

AXEC: New Foundations of Economics
Petitio principii — economists’ biggest methodological mistake
Egmont Kakarot-Handtke

100 Years of US Troops as Lab Rats

  1. Video, Abby Martin


    On Memorial Day, politicians will speak at ceremonies all over the country and repeat their favorite mantra: "Support the troops."

    This pledge is hammered into the American psyche at every turn. But there is a hidden, dark history that shows that the politicians are in fact no friend to service members--but their greatest enemy.

    Abby Martin documents experimentation on US troops, from race-based chemical agent tests to nuclear weapons.

Friday, May 27, 2016

Zack Beauchamp — The Donald Trump dove myth: why he’s actually a bigger hawk than Hillary Clinton

Donald Trump as colonialist.
In fact, Trump is an ardent militarist, who has been proposing actual colonial wars of conquest for years.…
In the past five years, Trump has consistently pushed one big foreign policy idea: America should steal other countries' oil.…
To be clear: Trump's plan is to use American ground troops to forcibly seize the most valuable resource in two different sovereign countries [Iraq and Libya]. The word for that is colonialism.
Yeah, he actually said this — repeatedly. Although I would not say that this makes him a bigger hawk than HRC. The Donald is not a neocon — as far as we can tell now anyway. He has suggested he would back off confronting Russia.

But he has also said things involving torture that go way beyond HRC, so while Trump is not a neocon bent on US global hegemony, at least from what he has said publicly, he is no dove either.

This post provides a lot of background. Beauchamp sees Trump as a Jacksonian* rather than a neocon (Wilsonian).

The Donald Trump dove myth: why he’s actually a bigger hawk than Hillary Clinton
Zack Beauchamp

The four traditional schools of US foreign policy by Walter Russell Mead
Longtime readers will know that I divide American foreign policy into four schools of thought. Hamiltonians (well represented among the old Republican foreign policy establishment) want the United States to follow the trail blazed by Great Britain in its day: to build a global commercial and security system based on sea power and technological leadership, maintaining a balance of power in key geopolitical theaters and seeking to attract rivals or potential rivals like China into our system as, in Robert Zoellick’s phrase, “responsible stakeholders.” Wilsonians also want the United States to build a world order, but to anchor it in liberal human rights practices and international law rather than in the economic and security frameworks that Hamiltonians prefer. Those two globalist schools dominate the foreign policy establishment’s thought about the world we live in, and have done so since the 1940s.
There are two other schools that are home-focused rather than globalist. They are less interested in changing the world around the United States than in keeping the United States safe from the world. Jeffersonians have historically sought to avoid war and foreign entanglements at all costs; Jacksonians have been suspicious of foreign adventures, but strongly believe in national defense and support a strong military and want decisive action against any threat to the United States, its honor, or its treaty allies.Jeffersonians are generally opposed to almost any war other than a war of self defense following a direct enemy attack; Jacksonians aren’t interested in global transformation but will generally back robust American responses to anything they see as a security threat or a threat to America’s honor and reputation abroad.

Arturo Garcia — Trump backs out of debate against Sanders after tech company offers to pay for it

“Based on the fact that the Democratic nominating process is totally rigged and Crooked Hillary Clinton and Deborah Wasserman Schultz will not allow Bernie Sanders to win, and now that I am the presumptive Republican nominee, it seems inappropriate that I would debate the second place finisher,” the statement read.
The statement came to light shortly after Traction and Scale CEO Richie Hecker volunteered to offer the $10 million the GOP nominee had wanted to be donated to charity as a condition of debating Sanders.…
Lame. What about the money to charity?

Bernie wins big without having to do anything. Trump looks like an a$$hole.

Raw Story
Trump backs out of debate against Sanders after tech company offers to pay for it
Arturo Garcia

Asia Unhedged — Xi visit to China rust belt hints squeakier view of economy than Li

Speculation about China's top leadership is just that. That said, this presents a view that many analysts agree with.

Asia Times
Xi visit to China rust belt hints squeakier view of economy than Li
Asia Unhedged

Overall risks associated with public debt are "controllable", and there is room on the government's balance sheet to borrow more, the Ministry of Finance said.
However, it warned the local governments' ability to repay debt has weakened.

Michael Kinship — All Donald Trump’s Men

Donald Trump claims to fight for the little guy against a rigged system, but the presumptive Republican presidential nominee has turned to political operatives who have scammed money for the rich and powerful, says Michael Winship. 
With friends like these…
Consortium News
All Donald Trump’s Men
Michael Kinship

See also
But then the job of Vice President is going to be very, very important in a Trump administration according to Manafort, so they aren't going to take any chances:
He needs an experienced person to do the part of the job he doesn’t want to do. He seems himself more as the chairman of the board, than even the CEO, let alone the COO.”
Trump's campaign is a mess

Michael Brenner — America’s Worst Laid Plans

The U.S. government seeks to impose neo-liberal economics on the world even though those “free-market” policies funnel global wealth to a tiny fraction at the top, cause widespread despair and spark political turmoil, Michael Brenner explains.
Neoliberalism: Unregulated markets and privatization of public assets are the solution to all social, political and economic problems now and forever.

What is left unsaid is that markets are naturally asymmetric because societies are hierarchical socially, politically and economically. What is also left unsaid is that this result in institutional capture that tilts the playing field so that wealth flows to the top.

The rationale of exceptionalism to justify imposing this globally as the world order:
The United States has been pursuing an audacious project to fashion a global system according to its specifications and under its tutelage since the Cold War’s end.
For a quarter of a century, the paramount goal of all its foreign relations has been the fostering of a system whose architectural design features the following:
  • a neo-liberal economic order wherein markets dictate economic outcomes and the influence of public authorities to regulate them is weakened;
  •  this entails a progressive financializing of the world economy which concentrates the levers of greatest power in a few Western institutions – private, national and supranational;
  • if inequality of wealth and power is the outcome, so be it;
  • security provided by an American-led concert that will have predominant influence in every region;
  • a readiness to use coercion to remove any regime that directly challenges this envisaged order;
  • the maintenance of a large, multi-functional American military force to ensure that the means to deal with any contingency as could arise;
  • all cemented by the unquestioned conviction that this enterprise conforms to a teleology whose truth and direction were confirmed by the West’s total victory in the Cold War.
Therefore, it is inherently a virtuous project whose realization will benefit all mankind. Virtue is understood in both tangible and ethical terms.…
The rest explains the insanity of it all and where it is leading.

America's leadership is puny and not up to the task. And there is no one of that caliber in the wings and no vision to replace the insanity.

Consortium News
America’s Worst Laid Plans
Michael Brenner | Professor of International Affairs at the University of Pittsburgh

Alexander Mercouris — The Strange Story of Russia’s Eurobond or How the West is Forcing Russia to Improve its Financial System

The story of the floating of Russia’s eurobond is a revealing tale of Western arrogance and Western blindness, not just about Russia but about the operation of the financial markets. In the process Western actions have achieved the opposite of what Western leaders intended.
The Duran
The Strange Story of Russia’s Eurobond or How the West is Forcing Russia to Improve its Financial System
Alexander Mercouris

Enrico Braun — OWNED: Victoria Nuland Totally Shut Down by Matt Lee with One Question (Video)

An oldie but a goodie
Two minute clip says everything about US information policy.

This is the woman who is likely to be US secretary of state under Killiary.

Russia Insider
OWNED: Victoria Nuland Totally Shut Down by Matt Lee with One Question (Video)
Enrico Braun

Alexei Lossan — The Plans on Putin's Desk - 3 Ways Out of the Economic Crisis

Nothing in paradigm, Sergei Glazier being closest and the Ministry of Economic Development furthest.

Russia Beyond the Headlines
The Plans on Putin's Desk - 3 Ways Out of the Economic Crisis
Alexei Lossan

Yves Smith — New IMF Paper Challenges Neoliberal Orthodoxy

While the IMF’s research team has for many years chipped away at mainstream economic thinking, a short, accessible paper makes an even more frontal challenge. It’s caused such a stir that the Financial Times featured it on its front page. We’ve embedded it at the end of this post and encourage you to read it and circulate it.
The article cheekily flags the infamous case of the Chicago Boys, Milton Friedman’s followers in Pinochet’s Chile, as having been falsely touted as a success. If anything, the authors are too polite in describing what a train wreck resulted. A plutocratic land grab and speculation-fueled bubble led quickly to a depression, forcing Pinochet to implement Keynesian policies, as well as rolling back labor “reforms,” to get the economy back on its feet.
The papers describes three ways in which neoliberal reforms do more harm than good.…
Now that the wheels are coming off, the knives are coming out.

Naked Capitalism
New IMF Paper Challenges Neoliberal Orthodoxy
Yves Smith

Eric Beinhocker — The Great Transformation: Economics, Policy, Politics

Economic ideas matter. The writings of Adam Smith over two centuries ago still influence how people in positions of power – in government, business, and the media – think about markets, regulation, the role of the state, and other economic issues today. The words written by Karl Marx in the middle of the 19th century inspired revolutions around the world and provided the ideological foundations for the cold war. The Chicago economists, led by Milton Friedman, set the stage for the Reagan/Thatcher era and now fill Tea Partiers with zeal. The debates of Keynes and Hayek in the 1930s are repeated daily in the op-ed pages and blogosphere today.
Economic thinking is changing. If that thesis is correct – and there are many reasons to believe it is – then historical experience suggests policy and politics will change as well. How significant that change will be remains to be seen. It is still early days and the impact thus far has been limited. Few politicians or policymakers are even dimly aware of the changes underway in economics; but these changes are deep and profound, and the implications for policy and politics are potentially transformative.
For almost 200 years the politics of the west, and more recently of much of the world, have been conducted in a framework of right versus left – of markets versus states, and of individual rights versus collective responsibilities. New economic thinking scrambles, breaks up and re-forms these old dividing lines and debates. It is not just a matter of pragmatic centrism, of compromise, or even a ‘third way’. Rather, new economic thinking provides something altogether different: a new way of seeing and understanding the economic world. When viewed through the eyeglasses of new economics, the old right–left debates don’t just look wrong, they look irrelevant. New economic thinking will not end economic or political debates; there will always be issues to argue over. But it has the promise to reframe those debates in new and hopefully more productive directions.…
So how might new economics move us beyond the mechanistic view of policy and regulation, and towards a view that takes into account the complexity, unpredictability, and reflexivity of the economy?
My view is that we must take a more deliberately evolutionary view of policy development. Rather than thinking of policy as a fixed set of rules or institutions engineered to address a particular set of issues, we should think of policy as an adapting portfolio of experiments that helps shape the evolution of the economy and society over time. There are three principles to this approach…
Theoretical physicist John Hagelin ran for president on a similar platform some time ago as the Natural Law Party candidate. (I voted for him because of the platform rather than because he happens to be a friend.) While he had no chance of winning, it got him in a lot of doors with both parties and also leaders in important fields. He said he found a surprising level of agreement with his position that through science we already know promising solutions to virtually all our major problems, but that we are not trying them. The reason he got from those who agreed was that no one wanted to buck the trend by proposing something new and unknown to the public. It was just too risky for a politician career-wise.

The Great Transformation: Economics, Policy, Politics
Eric Beinhocker | Executive Director of the Institute for New Economic Thinking at the Oxford Martin School, University of Oxford

Lane Kentworthy — Social-democratic vs market-friendly progressivism

Iber and Konczal aim to highlight a tension within the American left between a “social democratic” vision of how to address social problems and a “progressive but market-friendly” vision. They say Bernie Sanders, a social democrat, believes access to education and healthcare should be a right, available to all persons regardless of income or wealth, whereas Hillary Clinton, a market-friendly progressive, thinks education and healthcare should remain market commodities, with access hinging at least partly on a person’s ability to pay.
 Hillary Clinton is a progressive? What? Clintonism is Third Way New Democrat!

But the observation on Sanders is illuminating, too. There is a difference between social democracy and democratic socialism. Sanders is a social democrat that is offering some tweaks to neoliberalism.
Though Sanders favors free college for everyone, that isn’t what he would provide. He proposes zero tuition (for in-state students at four-year public universities). But that wouldn’t cover room and board, which costs $10,000 a year or more for a typical student. Offering “free” college that doesn’t include room and board is a bit like offering “free” healthcare that covers the cost of surgery but requires patients to pay out of pocket for the hospital room. In the Sanders plan, low-income students, but not middle-income ones, “would be able to use federal, state, and college financial aid to cover room and board, books, and living expenses.” So for Sanders, like for Clinton, college education wouldn’t be genuinely decommodified.
That’s the case in Sweden too, which is why a large portion of young Swedes leave college with fairly large student loan debt despite paying zero tuition.
Lane Kentworthy
Social-democratic vs market-friendly progressivism
When the College Cost Reduction and Access Act took effect in 2009, neither lawmakers nor school administrators had any idea how many college students would check the box on the Free Application for Federal Student Aid (FAFSA) -- the document that determines eligibility for Pell grants, subsidized loans and work-study awards that help students pay for college or vocational training -- to indicate that they were homeless.

At last tabulation, the number was 58,000, a small percentage of the 20.2 million students presently enrolled in both undergraduate and graduate study. Nonetheless, school counselors and advocates believe the number is starkly inaccurate and represents a mere fraction of university students who actually lack a permanent home.…
Students With Nowhere to Stay: Homelessness on College Campuses
Ellen J. Bader

Liu Haiyang — Whose “International Law” Are We Talking About?

A Chinese view of what happens when the US makes the rules.
On its face, the US FON [freedom of navigation] program is an effort to assert US desires upon the world oceans for the sole purpose of affording its naval and air forces the maximum degree of mobility and flexibility. In essence, through enforcing American perspective of international law in defiance of shared international perspectives of international law, the apparent provocative nature of such assertions exposes the FON operations as exercises of hegemonic power projection so as to establish a US-dominated maritime legal order beyond a world ocean legal order guaranteed under the convention. As for the FON operations conducted in the South China Sea, they are no more than a tool to carry out the US “Pivot to Asia” strategy.
Whose “International Law” Are We Talking About?
Liu Haiyang is a research fellow at the Collaborative Innovation Center of South China Sea Studies, Nanjing University

Dara Lind — Trump campaign chair [Paul Manafort]: We’ll pick a white man for VP. Anything else would be “pandering.”

I guess Nikki Haley and Sarah Palin are out.

Trump campaign chair [Paul Manafort]: We’ll pick a white man for VP. Anything else would be “pandering.”
Dara Lind

Thursday, May 26, 2016

Sputnik — 'Risks of a US-China Conflagration in the Pacific Quite High'

Commenting on growing US-Chinese tensions in the South China Sea region, and Beijing's announcement that it would deploy nuclear-armed subs to the Pacific in response to US missile defenses in South Korea, University of Maryland professor John Short warned that the risks of a military confrontation between the two powers are 'quite high'.
'Risks of a US-China Conflagration in the Pacific Quite High'

Richard Sakwa — West could sleepwalk into a Doomsday war with Russia – it’s time to wake up

It is pointless to speculate what a war between Russia and the Atlantic community would look like, or even how it would start. This really would be a war to end all wars, since there would be no one left to fight another war. The emphasis now must be on averting such a doomsday scenario, and for that there must be honest recognition of earlier mistakes by all sides, and the beginning a new and more substantive process of engagement.
The endless prolongation of sanctions and a rhetoric of violence and scapegoating creates an atmosphere where a small incident could easily spiral out of control. It is the responsibility of our generation to ensure that it never happens.…
West could sleepwalk into a Doomsday war with Russia – it’s time to wake up
Richard Sakwa | Professor of Russian and European Politics, University of Kent

José L. Flores — Wall Street’s New Man in Brazil: The Forces Behind Dilma Rousseff’s Impeachment

This fight is not about Dilma Rousseff or corruption; the government would not impeach a corrupt president only to install a more corrupt president. This drama isn’t even about the political parties, all of them are corrupt. The problem is for the last thirteen years the Workers’ Party, with all its faults, has been implementing social welfare and safety net programs for the poor and was paying for it on the dime of Petrobras.
Brazil is the richest and most influential country in South America and for that reason is a primary target for U.S. economic control. If neoliberalism is not implemented in Latin America, what Washington considers its backyard, countries like Brazil will seek independent paths, regardless of U.S. capital and investments. This is always unacceptable to the United States’ imperialist policies and to the proxy leaders it uses for self-aggrandizement and profit.
A worse sin was BRICS, RC in particular.

Wall Street’s New Man in Brazil: The Forces Behind Dilma Rousseff’s Impeachment
José L. Flores

The Saker — How Russia Is Preparing for WWIII

I have recently posted a piece in which I tried to debunk a few popular myths about modern warfare. Judging by many comments which I received in response to this post, I have to say that the myths in question are still alive and well and that I clearly failed to convince many readers. What I propose to do today, is to look at what Russia is really doing in response to the growing threat from the West. But first, I have to set the context or, more accurately, re-set the context in which Russia is operating….
The Unz Review
How Russia Is Preparing for WWIII
The Saker

Katehon — Russian Orthodox Church against liberal globalization, usury, dollar hegemony, and neocolonialism

The Russian Orthodox Church of the Moscow Patriarchate has published a draft of the document "Economy in the context of globalization. Orthodox ethical view. " This document demonstrates the key positions of the Russian Church on a number of issues relating to the economy and international relations.… 
Not to be outdone by the pope.

Speaking of the pope:
Katehon (not the document): The unconditional support of state sovereignty against the transnational elite is a distinctive feature of the position of the Orthodox Church. This differs the Orthodox from Catholics, who are members of the globalist transnational centralized structure, in contrast to the Orthodox Churches, which are united in faith, but not administratively.…
This document is very important because it shows that the Russian Orthodox Church not only occupies a critical position in relation to the liberal globalization, but also offers a Christian alternative to globalization processes. While Catholics and most Protestant denominations have passionate humanist ideas, and in the best case, criticize globalization from the left or left-liberal positions, the Russian Orthodox Church advocate sovereignty and national identity. The most important aspect of the Orthodox critique of globalization is the idea of multipolarity and the destructiveness of modern Western civilization’s path.
Where the two Churches agree is on distributism.

Peter Hobson — Was Russia's First Bond Sale in 3 Years a Success?

The plan was to sell up to $3 billion in 10-year, dollar-denominated eurobonds. The yield, at around 4.75 percent, was generous compared to Western bond markets. Within a few hours, banking sources were saying that orders had been placed worth $5.5 billion…
The Moscow Times is a liberal paper  not friendly to the government, so this is unlikely to be a puff piece.

The Moscow Times
Was Russia's First Bond Sale in 3 Years a Success?
Peter Hobson

The Moscow Times is a liberal paper  not friendly to the government, so this is unlikely to be a puff piece.

Matias Vernengo — A brief note on Venezuela and the turn to the right in Latin America

Matias explains the situation in Venezuela in more detail. The problem is endemic and not directly the result of the Chavez-Maduro governments. A right-wing neoliberal government won't be able to fix it either, although they would likely get assistance from the IMF and US, at a price that will be borne by the people rather than the elite, who will be boosted by it, in particular as compradors.

Naked Keynesianism
A brief note on Venezuela and the turn to the right in Latin America
Matias Vernengo | Associate Professor of Economics, Bucknell University

Samuel Bowles — When economic incentives crowd in social preferences

Explicit economic incentives – for example, a subsidy to contribute to a public good – can sometimes ‘crowd out’ generous and ethical motives. But when properly designed, can incentives ‘crowd in’ these civic virtues? This column uses an example from ancient Athens to show how this might be done, providing a lesson for modern mechanism design and public policy.
Is there a close connection between morality and economics. Bowles suggests so, based Aristotle and ancient Athens.

When economic incentives crowd in social preferences
Samuel Bowles | Research Professor and Director of the Behavioral Sciences Program, Santa Fe Institute

Branko Milanovic — Economic reflections on the Fall of Constantinople

For the economic history buffs.

Global Inequality
Economic reflections on the Fall of Constantinople
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

Dylan Minor — CEOs with Lots of Stock Options Are More Likely to Break Laws

Perverse incentives.

Harvard Business Review
CEOs with Lots of Stock Options Are More Likely to Break Laws
Dylan Minor | visiting assistant professor at Harvard Business School and assistant professor at the Kellogg School of Management

Kimball Corson — A Note on Liquidity Preference

Short summary of the liquidity trap.

Wandering the Oceans: SailBlogs
A Note on Liquidity Preference
Kimball Corson

Michael Burke — US productivity declines

US productivity is set to decline for the first time in three decades, according to forecasts from the influential business research organisation the Conference Board. The level of productivity, which is the amount produced per hour of labour, is decisive for living standards. It is extremely difficult to increase the living standards of the mass of the population without increasing productivity, and impossible to do so on a sustained basis. The Conference Board is forecasting US productivity will decline in 2016.
The Financial Times quotes Bart van Ark, the Conference Board’s chief economist saying, “Last year it looked like we were entering into a productivity crisis: now we are right in it”.
Social and political implications of economic stagnation coming. American dream fading. This will be a challenge for the next administration and the next congress.

Socialist Economic Bulletin
US productivity declines
Michael Burke. economist, Social Economic Bulletin