Sunday, April 30, 2017

Daniel Little — Strategies for resisting right-wing populism

Neoliberalism versus populist nationalism or social democracy. Neoliberalism is generating a reaction, as dialectics would predict. The dominant reaction presently is populist nationalism tending toward authoritarianism on the right of the political spectrum. The left is still stuck with the globalist (corporatist) neoliberalism adopted by Third Way politicians like Bill Clinton and Tony Blair in reaction to Ronald Reagan and Margaret Thatcher's conservatism.
What would it take for the parties of the left to embrace the pro-working class [social democratic] policies described here? And is the underlying suspicion voiced by Rothstein above actually correct: that the Democratic Party is so beholden to large corporate interests that it is incapable of adopting these kinds of platforms?
Understanding Society
Strategies for resisting right-wing populism
Daniel Little | Chancellor of the University of Michigan-Dearborn, Professor of Philosophy at UM-Dearborn and Professor of Sociology at UM-Ann Arbor

See also


The siren song of homogeneity
Noah Smith

Peter Radford — Complex Simplicity

The simple so-called laws of economics may or may not hold, but they are inevitably swamped within a context so riddled through with idiosyncrasy that they become very weak and only partial explanations of events. To strengthen those laws in the face of this turmoil past economists have dedicated themselves to extracting bits and pieces from the economy for isolated analysis, as if by such reduction they could learn some truth that would still hold once the isolated part was re-introduced into the complex whole. This method has produced a brilliant array of components disassociated from their context none of which have much value when the components are all re-assembled. So modern economics is not a solid body of thought so much as an amalgam of “neat tricks” that are handy for illuminating this or that, but which are insufficient for explaining the whole. Even then they fall short....
Real-World Economics Review Blog
Complex Simplicity
Peter Radford

Brian Beutler — Trump’s Desperation Is Exposing His Deep Ignorance [Tax Plan]

His plan for a corporate tax cut probably won't work, even with full Republican support, because he doesn't know the rules in Congress.
The New Republic
Trump’s Desperation Is Exposing His Deep Ignorance
Brian Beutler


Pence — Trump's Tax Plan To Increase Deficit "In The Short Term"

Hours after Trump provided the broad framework, if few details, to his tax plan, conceived almost certainly by Goldman Sachs economists Alec Phillips and Jan Hatzius (and presented to the public by former Goldman employees Steven Mnuchin and Gary Cohn), the CRFB [Committee for a Responsible Federal Budget] calculated its impact on both the US budget deficit and future US debt. This is how the CRFB phrased it:
"Based on what we know so far, the plan could cost $3 to $7 trillion over a decade– our base-case estimate is $5.5 trillion in revenue loss over a decade. Without adequate offsets, tax reform could drive up the federal debt, harming economic growth instead of boosting it."
The administration doesn't think so.
Specifically, Pence acknowledged that the Trump administration's tax proposal could increase the deficit, at least at first. "Maybe in the short term," he said during an exclusive interview on NBC's "Meet The Press."

To be sure, Pence was confident that eventually the deficit would decline as it would be overcome by economic "growth" thanks to the tax cuts it will fund. However, even he hedged: “the truth is, if we don’t get this economy growing at 3 percent or more, as the president believes we can, we’re never going to meet the obligations that we’ve made today."…
Tax cuts are not spending. So it depends on how the increase in the "savings" of the private sector owing to reduced taxes is used. To the degree it is saved and not spent, the net effect on real growth will be nil. However, if that saving occurs in financial assets, those asset classes will greatly appreciate, creating an appearance of growth.

Moon of Alabama — Dumb And Vile - Independent Falls For Prank, Smears Other Journalists

Moar gaslighting.

Moon of Alabama
Dumb And Vile - Independent Falls For Prank, Smears Other Journalists

Saturday, April 29, 2017

Bank of America has the most capital of any bank in the US

Regulatory ratios.

By this measure, there's no question that Bank of America is massive. At the end of the third quarter, it reported just under $2.2 trillion worth of total assets on its balance sheet, split between loans, interest-earnings securities, and a variety of other asset types. Yet, even though that's enormous, it's nevertheless smaller than one of Bank of America's principal competitors: JPMorgan Chase. Going into the financial crisis, JPMorgan was ranked third in terms of assets -- Citigroup was first, followed by Bank of America. Fast forward to today, however, and JPMorgan Chase is now the biggest bank in the United States, with $2.5 trillion worth of assets on its balance sheet -- click here for the full list of America's 10 biggest banks by assets.

if you measure size a slightly different way. Namely, by looking at the quantity of shareholders' equity, or capital, on their respective balance sheets.

When you measure size in this way, it turns out that Bank of America is actually the biggest bank in the United States. It has $270 billion worth of capital compared to JPMorgan's $254 billion. Citigroup and Wells Fargo round out the four biggest banks by capital, at $232 billion and $203 billion, respectively.

1:10 on Leverage.

So the recent swing in Reserve Assets of $400B would have to be covered by $40B of capital at this 1:10 ratio.  About 4% of the four money center bank total capital.

Business Insider
Bank of America has the most capital of any bank in the US

Deutsche Bank: A Greek Tragedy at a German Institution?

More success by the clever "bankster!" geniuses operating the "neoliberal conspiracy!" shifting all of the wealth up to the top.

Whatever the reasons, in 2014 and 2015, Deutsche reported cumulative losses of close to $16 billion, leading to a management change, with a promise that things would turn around under new management. The other dimension where this crisis unfolded was in Deutsche’s regulatory capital, and as that number dropped in 2015, Deutsche Bank's troubles moved front and center.

Musing on Markets
Aswath Damodaran

Friday, April 28, 2017

Edward Harrison — Why the euro crisis will happen again and Italy will be involved

This morning, as the data were coming in from Europe for Q1 GDP, I got a reminder from Twitter about the inherent deflationary nature of the euro area’s design.| And this goes directly to how to think about credit risk in Europe.

I followed a twitter post to a Charles Goodhart article from 1997, written before European Monetary Union. And he was saying things that the late British economist Wynne Godley was banging on about five years earlier when the Maastricht Treaty set out the terms for euro. Here’s the crux as it relates to credit risk in Europe:
Credit Writedowns
Why the euro crisis will happen again and Italy will be involved
Edward Harrison

Thursday, April 27, 2017

Stephen Holmes — The future of DDoS attacks looks scary. Blockchain will protect us

The ease of launching massive DDoS attacks will grow and no existing system can address this problem unless it is truly distributed. The blockchain may serve as the best remedy.
American Banker
The future of DDoS attacks looks scary. Blockchain will protect us
Stephen Holmes | vice president of the fintech lab at VirtusaPolaris

See also

Denial-of-service, web app attacks plague banks
Penny Crosman

Neil Wilson — The Bond Economy

Alex Douglas raised the mainstream view of government budget constraintsagain this week, where he was ably assisted in his argument by Brian Romanachuk.
The bone of contention is whether governments can continue borrowing indefinitely. Alex and Brian demonstrate that the mathematics of the mainstream is based upon assumptions that cannot and do not hold in reality.
The popular defence at the moment is that everything fails if r > g. Bad things happen if the growth in the rate of debt/interest is greater than the growth in GDP. But what does that actually mean in practice?
To show what it means, I’ve built a little three agent model in a spreadsheet. This model is the mainstream economist and basic income fan’s dream scenario. Everybody gets a payment straight from government and all anybody cares about is earning interest....
Modern Money Matters
The Bond Economy
Neil Wilson

Bill Mitchell — The destruction of Greece – “only a down payment” according to the IMF

On April 22, 2017, the Italian Minister of Economy and Finance, Pier Carlo Padoan presented a briefing to the 25th Meeting of the International Monetary and Financial Committee of the IMF in Washington. He spoke on behalf of Albania, Greece, Italy, Malta, Portugal and the Republic of San Marino. This annual event examines the “macroeconomic outlook” of the nations in question and conditions the IMF policy approach for the year ahead. Padoan, an ardent pro-Eurozone supporter, told the gathering that in the last year, the Greek economy was recovering and that “GDP remained stable in 2016, while for the first time since 2010 two consecutive quarters of growth were reported”. I wonder what data he was looking at. The official national accounts data for Greece doesn’t tell that story. With Greece still wallowing in the depths of recession, it is clear that the IMF hasn’t finished with the destruction of that formerly independent nation. The destruction to date (27 per cent contraction and increased poverty) are considered by the IMF to be “only a down payment” on what Greece has to do so satisfy the Troika. At what point do people start to realise that the on-going costs of this austerity dwarf the significant costs that would accompany exit? And the Troika is not done with Greece yet. They intend to screw it down even further. And the costs of remaining in the dysfunctional monetary union escalate by the day. At some point, the Greeks will realise they have been dudded. What is left is anyone’s guess – but it won’t be pretty. The destruction of Greece is “only a down payment” according to the IMF – keep that mentality in mind when you are working out whether Greece should remain obedient or tell them all to f*ck off and regain their currency independence and restore prosperity.
What happens when a country becomes a colony.

Bill Mitchell – billy blog
The destruction of Greece – “only a down payment” according to the IMF
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Wednesday, April 26, 2017

Robert Wade — The market paradigm versus the production paradigm

As Ricardo is the source of the market paradigm, Charles Babbage is the source of the production paradigm, in the form of his 1832 book, On the Economy of Machinery and Manufacturers.[8] His successors included Alfred Marshall, Allyn Young, Edith Penrose and George Richardson. It is a fair bet that most economics PhD students in Anglo universities have never heard of these people, let alone read them.
The production paradigm says that the core mechanism of how economies transform (or not) lies in the combination of production capabilities, business organization, and economic governance; or what Michael Best calls the “capability triad”. Economies with high capability pivot on a sufficient density of “entrepreneurial” firms which pull basic and applied R&D or production and marketing ideas from MNCs [Multi-National Corporations] with branches in the economy in question, into innovation in products, processes, organizations, and marketing. These entrepreneurial firms do not emerge by themselves as a natural result of a well-working market. Their own internal capacity development requires a larger ecosystem of finance, skills and S&T partnerships; which depends on trust in social interactions, and therefore physical and/or cultural proximity. The government (national or regional) is the organizer, the steward of the infrastructure needed to support this ecosystem....
Real-World Economics Review Blog
The market paradigm versus the production paradigm
Robert Wade | Professor of Political Economy and Development at the London School of Economics

Jefferson Morley — It's Official: How the Koch Brothers Killed Trump’s Job Plan

That was quick.

This is the big problem with electing outsiders to clean up government and put the people first, as Jesse Ventura found out, for example. Outsiders have no political base once they begin governing unless there is a wave election that results in a a wholesale replacement of insiders with outsiders. And even with a wave election, there is still the administrative bureaucracy and the deep state, which both provide continuity across administrations.

It's Official: How the Koch Brothers Killed Trump’s Job Plan
Jefferson Morley, AlterNet

Brian Romanchuk — Does The Governmental Budget Constraint Exist?

Illustrates the point that the so-called intertemporal governmentalI budget constraint (IGBC) is "fuzzy" if not illogical, and its "proof" involves a lot of handwaving.

Bond Economics
Does The Governmental Budget Constraint Exis
Brian Romanchuk

Bill Mitchell — Deutsche Bundesbank exposes the lies of mainstream monetary theory

On one side of the Atlantic, it seems that central bankers understand the way the monetary system operates, while on the other side, central bankers are either not cognisant of how the system really works or choose to publish fake knowledge as a means to leverage political and/or ideological advantage.|

Yesterday, the Deutsche Bundesbank released their Monthly Report April 2017, which carried an article – Die Rolle von Banken, Nichtbanken und Zentralbank im Geldschöpfungsprozess(The Role of Banks, Non-banks and the central bank in the money-creation process). The article is only in German and provides an excellent overview of the way the system operates. We can compare that to coverage of the same topic by American central bankers, which choose to perpetuate the myths that students are taught in mainstream macroeconomic and monetary textbooks. Today’s blog will also help people who are struggling with the Modern Monetary Theory (MMT) claim that a sovereign government is never revenue constrained because it is the monopoly issuer of the currency and the fact that private bank’s create money through loans. There is no contradiction. Remember that MMT prefers to concentrate on net financial assets in the currency of issue rather than ‘money’ because that focus allows the intrinsic nature of the currency monopoly to be understood.
Bill Mitchell – billy blog
Deutsche Bundesbank exposes the lies of mainstream monetary theory
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Tuesday, April 25, 2017

Priebus — Syria, China moves part of 'Trump Doctrine'

Trump Doctrine:  Shoot first and ask questions later?

Just kidding — sort of.

The HiIl
Priebus: Syria, China moves part of 'Trump Doctrine'
Jordan Fabian

Jason Smith — Should the left engage with neoclassical economics?

Getting the left up to speed by understanding information. There's a lot of good stuff in this post.

Information Transfer Economics
Should the left engage with neoclassical economics?
Jason Smith

Pedro Nicolaci da Costa — There’s a reason poor countries feel they've lost control of their economies

The increasing integration of global markets and economies, in addition to new technologies that help accelerate the transmission of financial shocks from one region to another, is making it trickier for so-called emerging countries to manage their banking systems.
A surge in dollar-denominated bonds in developing economies, and their dependence of the vagaries of the richest nations, leave policymakers in areas like Latin America, Africa and Asia in difficult, if not entirely untenable positions, according to the International Monetary Fund’s latest report on global financial stability. Currency markets are particularly vulnerable and volatile....

Paul Craig Roberts — The Looting Machine Called Capitalism

PRC finally wakes up and smells the coffee and becomes a Marxian, even though he probably doesn't realize it yet in those terms. Maybe Michael Hudson will clue him in, since he got a lot of his new-to-him economic ideas from Hudson. Recall that PCR was one of the original Reagan supply-siders. How things change. And if someone with PCR's background can be turned around, there's hope.
I have come to the conclusion that capitalism is successful primarily because it can impose the majority of the costs associated with its economic activities on outside parties and on the environment. In other words, capitalists make profits because their costs are externalized and born by others. In the US, society and the environment have to pick up the tab produced by capitalist activity....
"Privatize profits; socialize costs."

Paul Craig
The Looting Machine Called Capitalism
Paul Craig Roberts

Sputnik International — Putin: Russia to Keep Ruble's Floating Rate, Seeking Market Tools

Currency stability is a high priority for both Russia and China.

Sputnik International
Putin: Russia to Keep Ruble's Floating Rate, Seeking Market Tools

Inessa Sinchougova — Japan's forces accumulate on Russia's Eastern borders

Just when you thought things couldn't get much worse.

Fort Russ
Japan's forces accumulate on Russia's Eastern borders
Politnavigator- by Inessa Sinchougova

RIA Novosti. The Ministry of Defense of the self-proclaimed Donetsk People's Republic announced the arrival of US military instructors in the conflict zone in the Donbass.
Donetsk Defense Ministry report: US advisors at the front., translated by Tom Winter

You know, the folks DJT accused of trying to start WWIII.

Guess who’s coming to dinner? Trump hosts McCains, Graham

Trump and the Yemeni Quagmire
Giorgio Cafiero
A few hour ago the Turkish airforce hit Kurdish and Yezidi positons on both sides of the Singal mountains in east-Syria and west-Iraq. Near Derik in east-Syria more than 20 bombs destroyed a YPG headquarter, a radio station and a media center. At least nine YPK fighters were killed. The YPG is the Syrian sister organization of the Kurdish PKK in Turkey. The PKK is a designated terrorist organization. Within Syria U.S. special forces are embedded with the YPG and are coordinating YPG moves against the Islamic State in Raqqa. YPK and PKK follow the anarcho-marxist theories of their leader Abdullah Öcalan who is in isolation detention in Turkey.
Moon of Alabama
Turkish Airstrikes On Kurds Complicate U.S. Operations In Iraq And Syria

The crazy.

Theresa May would fire UK’s nuclear weapons as a ‘first strike’, says Defence Secretary Michael Fallon
Rob Merrick | Deputy Political Editor
In case the UK strikes a nuclear power, then “the UK, which doesn’t have vast territory, will be literally wiped off from the face of the earth with a counterstrike,” Klintsevich said.
UK risks being ‘wiped off the map with nuclear counterstrike’ – Russian senator

10-minute warning: Japan instructs citizens on potential North Korea strike
Wilkerson: Trump Admin's Iran Talk Sounds Like Bush's Pre-Iraq War

Calling bullshit.

Lavrov Dismantles UK-Led Sarin 'Investigation' in 30 Seconds

Electrical separation
Paul Robinson | Professor, Graduate School of Public and International Affairs at the University of Ottawa
Iraq War architect Paul Wolfowitz now has Donald Trump's ear. This can only end badly.
Are Neoconservatives Marching the United States into a Fresh New Hell?
Heather Digby Parton

Reuters — U.S. Announces New Tariffs on Canadian Lumber After Trade Spat Over Dairy Farmers


U.S. Announces New Tariffs on Canadian Lumber After Trade Spat Over Dairy Farmers

JP Koning — Leaving a monetary union is difficult, but Hawaii pulled it off

I'll bet you didn't know about this. I didn't either.

Leaving a monetary union is difficult, but Hawaii pulled it off
JP Koning

Alexander Dugin — Fourth Political Theory: Shortest Presentation

This is a bit wonkish, since Dugin covers a lot of ground in a few words and graphs. But take my word for it as someone who has studied this stuff, Alexander Dugin is a brilliant thinker that is is capable of thinking outside the box. Whether one agrees with his conclusions, his range and depth of analysis is impressive.

He argues in this "shortest presentation" that the Modern period that began philosophically with Descartes putting subjectivity at the center. Modernity spawned three social and political philosophies to replace both medieval Scholastic philosophy and also the revival of the classics in the Renaissance, as well as feudalism as the dominant social, political and economic institution. These three were 18th century liberalism, 19th century communism, and 20th century fascism. As Modernity winds down in the 21st century, liberalism has emerged victorious over communism and fascism and there is no returning to either of those vanquished contenders. 

The result is that either liberalism will remain dominant or an alternative will emerge. Dugin argues that liberalism, being a product of Modernity, is condemned by time. It must either change into a new form of liberalism or be replaced by an alternative yet to emerge as the Modern period transitions into the Post Modern (which should not be confused with Post Modernism). 

As focus shifts away from subjectivity as central, which is the basis of individualism as the core of liberalism, a new historical moment is emerging. Individualism is running up against its limits in the liberal West, which has been the center of Modernity. Paradoxes of liberalism are rising, for example, as modern liberalism seeks to impose itself illiberally through forced conversion.

Dugin speculates that the alternative that is emerging is a Post Modernity that harkens to Pre-Modernity and the Great Chain of Being that was replaced by the rise of modern science and the enormous success of technology. But this does not meaning returning to the past either, which is not possible anyway.

He appeals to Heidegger's analysis of Dasein, literally being there, that is, being present, without going into the specifics of Heidegger's thought in this "shortest presentation." But those familiar with Heidegger will understand that Dugin is implying his Heidegger's critique of the ontological (existence) versus the ontic (essence), the challenge of "technicity," and the distinction between the authentic person and the conformist personality. The challenge is being chained to matter (determinism with illusion of freedom) or rising above in spirit (realizing genuine freedom). Modernity has confused an illusion of freedom with actual freedom.

I admit some confirmation bias here, but I had come some similar conclusions before encountering Dugin. While his view differs from mine, since our vantage points are quite different, it seems to me that he is on the right track. Modernity was something of a historical aberration and the course of history is likely to revert to its historical trajectory instead of Modernity being the end of history as many in the West either believe or would like to believe. 

Liberalism will be incorporated into Post Modernity, but its extremes will be tempered and its extravagances will be modulated as absorption in the subjective characteristic of Modernity is transcended, and a more holistic view emerges to temper radical individualism.
Fourth Political Theory: Shortest Presentation
Alexander Dugin

Monday, April 24, 2017

Daria Dugina — France: Globalism Vs Patriotism

Professional analysis of French politics from the POV of geopolitics and geostrategy.
France: Globalism Vs Patriotism
Daria Dugina (daughter of Alexander Dugin)

Suzanne Venker — Campus Free Speech Is The Least Of It: What I Learned From My Visit To Bard

This short post says a lot about reality construction. The author is a controversial speaker who was invited to speak at Bard College. She was received politely and delivered her presentation. Her complaint is that the students were so brainwashed that they did not agree with her.

Parallel realities.

Both the speaker and the student think that the other has been blue-pilled, and they have popped the red pill.

This is normal wherever ideology is prevalent, and this includes economics.

The Daily Caller
Campus Free Speech Is The Least Of It: What I Learned From My Visit To Bard
Suzanne Venker | Fox News Contributor

Mitch Horowitz — Believe It or Not: The New Age and Occult Underpinnings of Trump and Bannon's Ideology

This is not about Trump and Bannon as the title suggests but about the American psyche and "pop mysticism." Many Americans probably know at least something this already, since it has been reported in the media. But most people abroad may not, and it is important to realize as a key factor in American behavior, as well as a contributor to the formulation of US policy. It is a short post and there is much more to the story.

Regardless of one's prior knowledge of this, the beliefs that Horowitz identifies make an important contribution toward explaining the prevalence and power of "American exceptionalism" as a cornerstone of the American mindset. 

This is also explains the longstanding policies of liberal internationalism and liberal interventionism as Americans seek to bring "the blessings of liberty" to the entire world, regardless of whether others want to be "liberated."

Believe It or Not: The New Age and Occult Underpinnings of Trump and Bannon's Ideology
Mitch Horowitz, Salon

Pepe Escobar — Emmanuel Clinton vs Marine LeTrump

I have argued on Asia Times that Macron is nothing but an artificial product, a meticulously packaged hologram designed to sell an illusion.
Only the terminally naïve may believe Macron incarnates change when he’s the candidate of the EU, NATO, the financial markets, the Clinton-Obama machine, the French establishment, assorted business oligarchs and the top six French media groups....
Everyone in Brussels “voted” Macron as he proposes a budget for the eurozone, a dedicated Parliament, and a dedicated Minister of Finance. In short; Brussels on steroids....
Then illusion and the reality:
If the coming, epic clash could be defined by just one issue that would be the unlimited power of the Wall of Cash.
Macron subscribes to the view that public debt and expenses on public service are the only factors responsible for French debt, so one must have “political courage” to promote reforms.
Sociologist [not economist] Benjamin Lemoine is one of the few who’s publicly debating what’s really behind it — the interest of financiers to preserve the value of the debt they hold and their aversion to any negotiation.
Because they control the narrative, they are able to equate “political risk” — be it Marine or Mélenchon — with the risk to their own privileged positions.
The real issue at stake in France — and across most of the West — revolves around the conflicting interests of financial masters and citizens attached to public service and social justice....
Asia Times
Emmanuel Clinton vs Marine LeTrump
Pepe Escobar

Bloomberg — Jack Ma Sees Decades of Pain as Internet Upends Old Economy

Change is not the issue, since change is inevitable. Rather, the accelerating pace of change is overwhelming many and leaving a lot of people behind. Unless this is modulated, social disruption will result from disruptive technology.

Jack Ma Sees Decades of Pain as Internet Upends Old Economy
ht Automatic Earth

Bill Mitchell — German trade surpluses demonstrate the failure of the Euro

The election of Donald Trump has stirred up the IMF and Germany, in particular.|Trump’s trade advisor has claimed that Germany is manipulating the currency to maintain its competitiveness. A more general view is that the massive German external surplus is a reflection of a dysfunctional Eurozone, particularly the failed monetary policy stance of the ECB and the lack of a European-level (federal) fiscal policy capacity and willingness to expand domestic demand in the Member States. In fact, both views have credibility as I will explain. Last week (April 19, 2017), Eurostat released the latest trade data for the Eurozone – Euro area international trade in goods surplus €17.8 bn. It showed that Germany’s trade surplus continues to grow (it was 35.4 billion euros in January-February 2017, up 1.4 billion over the 12 months) in total. In 2016, Germany’s current account surplus was 8.6 per cent of GDP, which is obviously an outlier. What is required to redress this on-going dysfunction within the Eurozone would appear to be beyond the political mentality of the establishment polity in the Eurozone. And with Macron’s elevation to an almost certain Presidential victory in France, it is hard to see any dynamic for now emerging that will create change for the better. So as usual, the Eurozone muddles on – with a dysfunctional design architecture and an even more dysfunctional attitude to policy flexibility held by the powers to be. Germany is seriously responsible for a lot of this dysfunction.
Germany is operating with the euro as a discounted DM. All the other nations using the euro are operating with a currency premium. 

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

Sunday, April 23, 2017

Andrew Batson — What is the real driver of the Russian revanche?

Important. Another paradox of liberalism. Liberalism creates its own enemies.

Andrew Batson's Blog
What is the real driver of the Russian revanche?

Ingrid Harvold Kvangraven — 200 Years of Ricardian Trade Theory: How Is This Still A Thing?

On Saturday, April 19th 1817, David Ricardo published The Principles of Political Economy and Taxation, where he laid out the theory of comparative advantage, which since has become the foundation of neoclassical, ‘mainstream’ international trade theory. 200 years – and lots of theoretical and empirical criticism later – it’s appropriate to ask, how is this still a thing?

This week we saw lots of praise of Ricardo, by the likes of The Economist, CNN, Forbes and Vox. Mainstream economists today tend to see the rejections of free trade implicit in Trump and Brexit as populist nonsense by people who don’t understand the complicated theory of comparative advantage (“Ricardo’s Difficult Idea”, as Paul Krugman once called it in his explanation of why non-economists seem to not understand comparative advantage). However, there are fundamental problems with the assumptions embedded in Ricardo’s theory and there’s little evidence, if any, to back up the Ricardian claim that free trade leads to benefits for all. On this bicentenary, I therefore think it’s timely to revisit some of the fundamental assumptions behind Ricardo’s theory of comparative advantage, that should have led us to consider alternative trade theories a long time ago....
Good summary backgrounder. "It's more complicated than that," the "that" being what is assumed.

The following quote contains an important lesson about logic and epistemology.
Rather than accept that there is something wrong with the exchange rate theory itself, empirical discrepancies are explained by measurement problems and/or imperfections in the market because of currency ‘manipulation’ (see for example Eichengreen 2013 or Gagnon 2012). In fact, neoclassical trade theory is so highly regarded that economists, almost across the board, cannot imagine any reason for China’s trade surplus with the US other than the Chinese manipulating their exchange rate in order to stimulate their exports.
What has happened here is that the theoretical model become the criterion for assessing truth rather than a model to be compared with observation in measurement.

Take probability theory. Probability theory shows the outcome of a long run roll of a coin toss, regardless of whether it is an ensemble of 1000 coins tossed at once or a single coin tossed a 1000 times. If the outcome does not converge on 0.50, then the fairness of the coin becomes suspect and not the theory.

This is not necessarily the case with a scientific theory. In the case of an anomaly scientists check the experiment but after checking and finding no errors, the theory becomes suspect. Repeated failures result in re-thinking the theory.

Because it is difficult to impossible to run controlled experiments in economics in many cases, trade being one of them, the dominant theory is never questioned. It serves as a criterion of truth whose truth is privileged from question.

Developing Economics
200 Years of Ricardian Trade Theory: How Is This Still A Thing?
Ingrid Harvold Kvangraven | PhD student in Economics at the New School for Social Research

Brian Romanchuk — SFC Models And Introductory MMT-Style Fiscal Analysis

The usefulness of Stock-Flow Consistent (SFC) models is that they allow us to illustrate concepts in economics without relying solely on verbal descriptions.
In this article, I will discuss my interpretation of some of the ideas floating around in Modern Monetary Theory (MMT). I will note that these are my interpretations of statements made by others, illustrated by an extremely simple model. The key is that even simple models can be used to clarify our thinking.
This article is only a partial response to an article by Gerard MacDonell. He is unhappy about some of the writings of Professor Bill Mitchell, one of the leading MMT economists.
I am not going to argue on Mitchell's behalf, rather I just want to offer some analysis that touches on some of the technical issues Gerard made. He noted that Federal taxation and spending are roughly similar, so how does that square with MMT pronouncements about the independence of taxation and spending? This outcome is not surprising, as it is exactly the sort of thing that is predicted by SFC models -- and MMT mathematical analysis of the economy uses SFC models.
For those if you who are not fully up-to-date on post-Keynesian factionalism, please note that SFC models were meant to be a mathematical lingua franca for post-Keynesian economics. In other words, MMT economists use SFC models, but they are not exclusive to MMT.
Since I want to work with my Python modelling framework here, and it currently cannot support full business cycle analysis (extensions will be added later), I cannot do complete justice to Functional Finance. Therefore, I have to just focus on a couple of more basic ideas about fiscal polict
  1. there is little relationship between taxes and spending; and
  2. governments cannot control the budget deficit.
I will address these here in turn....
Bond Economics
SFC Models And Introductory MMT-Style Fiscal Analysis
Brian Romanchuk

Saturday, April 22, 2017

Jason Smith — Economics to physics phrasebook


Information Transfer Economics
Economics to physics phrasebook
Jason Smith

See also

Good ideas do not need lots of invalid arguments in order to gain public acceptance

Branko Milanovic — A theory of the rise and fall of economic leadership: review of Bas van Bavel’s “The Invisible Hand?”

The recently published “The invisible hand?: How market economies have emerged and declined since AD 500” (Oxford University Press, 2016, 330 pages) by Bas van Bavel has, like all important books, a relatively simple core theory which Van Bavel, a well-known economic historian teaching at the University of Utrecht, illustrates on five historical examples: Iraq between 500 and 1100, Central and Northern Italy 1000-1500, the Low Countries 1100-1800, England 1800-1900, and the United States 1800-today. (The first three cases are discussed in detailed separate chapters, each running to 50-60 pages, while the last two, to which Western Europe may be appended, are discussed in a single chapter called “Epilogue”)....
Global Inequality
A theory of the rise and fall of economic leadership: review of Bas van Bavel’s “The Invisible Hand?”
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

JW Mason — At Dissent: A Cautious Case for Economic Nationalism

I have an article in the new issue of Dissent, arguing that “As long as democratic politics operates through nation-states, any left program will require some degree of delinking from the global economy.”…
One thing that’s probably not as clear as it should be in the Dissent piece, is that the case for delinking is much stronger for most other countries than for the United States. For most countries, free trade and, even more, free capital mobility, drastically reduce the choices available to national governments. (This “disciplining” of the state by foreign investment is sometimes acknowledged as its real function.) For the US, I don’t think this is true – I don’t think the threat of capital flight meaningfully constrains policy here. And in particular I don’t think it makes sense to see a more positive trade balance as necessary or even particularly desirable to boost demand, for reasons laid out here and here.
The US is a special case in many respects and American leaders, media and much of the public project the American case on the world either as the general case or the general case to be achieved, and often this is not even the actual case but the dominant narrative.

J. W. Mason's Blog
At Dissent: A Cautious Case for Economic Nationalism
JW Mason | Assistant Professor of Economics, John Jay College, City University of New York

The Mélenchon Economy

Jean-Luc Mélenchon’s senior economic advisor explains his proposals to grow the economy and carry out an ecological transition.
Regardless of whether Mélenchon wins, he is having a similar effect in France to that of Bernie Sanders in the US and Jeremy Corbyn in the UK:  People are realizing that there is an alternative.

Vive le populisme de gauche!

The Mélenchon Economy
Liêm Hoang-Ngoc is an economic advisor to Jean-Luc Mélenchon and a lecturer in economics at the Panthéon-Sorbonne University. He is also the President of the New Socialist Left Party and a regional councillor in Occitan

Also at Jacobin:
Two hundred French educators explain why they’re supporting Jean-Luc Mélenchon in tomorrow’s presidential election.
Another World Is Possible With Jean-Luc Mélenchon

David F. Ruccio — Science and socialism

"It's doesn't take an Einstein," although Einstein did put his finger on it.

Occasional Links & Commentary
Science and socialism
David F. Ruccio | Professor of Economics, University of Notre Dame

Friday, April 21, 2017

James Kwak — How Ideologues Use Grade-School Economics to Distort Minimum Wage Debates

Economism may not accurately describe reality, but its reduction of complex phenomena to simple concepts was a major asset in the battle of ideas. The political landscape of the United States after World War II was dominated by the shadow of the New Deal and the idea that the government could and should pay a major role in managing the economy. Businesses that opposed intrusive regulations and wealthy individuals who feared higher taxes needed an intellectual counterweight to the New Deal, a conceptual framework that explained why an activist government was bad not just for their profits and their pocketbooks, but for society as a whole. Economism filled that need.…
In short, conventional economics is propaganda for an ideology rather than being a science as advertised. "Simplify and conquer" was added to "divide and conquer."

How Ideologues Use Grade-School Economics to Distort Minimum Wage Debates
James Kwak | Associate Professor of Law at the University of Connecticut School of Law

Lynn Parramore — America is Regressing into a Developing Nation for Most People

A new book by economist Peter Temin finds that the U.S. is no longer one country, but dividing into two separate economic and political worlds.
You’ve probably heard the news that the celebrated post-WW II beating heart of America known as the middle class has gone from “burdened,” to “squeezed” to “dying.” But you might have heard less about what exactly is emerging in its place.

In a new book, The Vanishing Middle Class: Prejudice and Power in a Dual Economy, Peter Temin, Professor Emeritus of Economics at MIT, draws a portrait of the new reality in a way that is frighteningly, indelibly clear: America is not one country anymore. It is becoming two, each with vastly different resources, expectations, and fates....
The US begins to resemble Latin America as the American Dream fades into memory for many Americans.
Along with Thomas Piketty, whose Capital in the Twenty-First Century examines historical and modern inequality, Temin’s book has provided a giant red flag, illustrating a trajectory that will continue to accelerate as long as the 20 percent in the FTE sector are permitted to operate a country within America’s borders solely for themselves at the expense of the majority. Without a robust middle class, America is not only reverting to developing-country status, it is increasingly ripe for serious social turmoil that has not been seen in generations....
Expect increased sales of The Communist Manifesto and Mein Kampf.

America is Regressing into a Developing Nation for Most People
Lynn Parramore 

Warren Mosler — Credit check

See any reason not to panic?

The Center of the Universe
Credit check
Warren Mosler

Darius Shahtahmasebi — Journalist Who Blew Lid off War Crimes: CIA Fighting ‘Parallel’ War in Afghanistan

The first thing to note is that the dropping of a large bomb in Afghanistan and publicizing it to the world with its malignant title “the mother of all bombs” – that bomb was not aimed at ISIS fighters. It was aimed at the new administration in Washington. It was bringing them into line. It was conditioning them – to turn them from being anti-interventionists into being routine overseers of a huge military which goes its own way to a large extent. We shouldn’t misunderstand what went on there; that was a political gesture in my strong opinion....
The Anti-Media
Journalist Who Blew Lid off War Crimes: CIA Fighting ‘Parallel’ War in Afghanistan — Exclusive
Darius Shahtahmasebi

Fred Nagel — It’s “Deep State” Time Again

Whenever there are obvious conflicts within the ruling class, the concept of a Deep State is brought out to explain why our government seems to be coming apart at the seams. When the tired rhetoric of our two party system can’t bring us to a satisfying catharsis, there is always the deus ex machina of grand conspiracies and hidden rulers.
The actual nature of our oppression, however, has been in plain sight for decades, although assiduously avoided by much of our media. The criminality of the CIA and the FBI is a case in point. Both agencies have long been well beyond Congressional oversight. The dirty tricks, political harassment, and illegal spying carried out by the FBI, as well as the foreign assassinations, political coups, and massive surveillance of the CIA have only been thoroughly investigated once, and that was during the Church Committee hearings of 1975. The hearings exposed the lawlessness of FBI and CIA, but made little difference in either agencies’ long term accountability, despite the creation of the U.S. Senate Select Committee on Intelligence.
Thirty-two years later, Senator Jay Rockefeller, then Chair of the Senate Intelligence Committee, was asked what progress his organization had made in finding out about the secret operations of the nation’s intelligence agencies. In exasperation, he told a young freelance reporter, “Don’t you understand the way intelligence works? Do you think that because I’m chairman of the Intelligence Committee that I just say ‘I want it, give it to me’? They control it. All of it. All of it. All the time.”…
Who's in charge around here anyway?

Fred Nagel

Diana Johnstone — The Main Issue in the French Presidential Election: National Sovereignty

The confusion is due to the fact that most of what calls itself “the left” in the West has been totally won over to the current form of imperialism – aka “globalization”. It is an imperialism of a new type, centered on the use of military force and “soft” power to enable transnational finance to penetrate every corner of the earth and thus to reshape all societies in the endless quest for profitable return on capital investment. The left has been won over to this new imperialism because it advances under the banner of “human rights” and “antiracism” – abstractions which a whole generation has been indoctrinated to consider the central, if not the only, political issues of our times.
The fact that “sovereignism” is growing in Europe is interpreted by mainstream globalist media as proof that “Europe is moving to the right”– no doubt because Europeans are “racist”. This interpretation is biased and dangerous. People in more and more European nations are calling for national sovereignty precisely because they have lost it. They lost it to the European Union, and they want it back.
That is why the British voted to leave the European Union. Not because they are “racist”, but primarily because they cherish their historic tradition of self-rule.…
The Trotskyites so-called "leftists" aka have blown themselves up by self-identifying with the neo-imperialists globalists. Charles De Gaulle is laughing in his grave.

Another illustration of the paradox of liberalism involving social, political and economic liberalism in which social liberalism is being used as tool to target economic liberalism at the expense of political liberalism. This is another instance illustrating how difficult it is to integrate social, political and economic liberalism. As result, many are losing confidence in liberalism as a viable social, political and economic theory and are looking for alternatives. This is freaking out the liberal establishment, which views the only alternatives to liberalism as being either fascism or communism. As a result debate has become irrational.

Good backgrounder on French politics going to the presidential election, too.

Peter Radford — Nailed to Its Perch

Economics, in its majority form, is simply dumb and wrongheaded. It is a dangerous technology based on a severely anti-social premiss. It seeks to contort the world to match itself rather than to describe the world as it is....
The project of the economic liberalism that dominates the economics profession is to model an idealized world based on highly restrictive assumptions based on ideology, chiefly methodological individualism that assumes ontological individualism, and then recommend policy that attempts to conform the real world to the model.

The Radford Free Press
Nailed to Its Perch
Peter Radford

Asia Unhedged — China just established seven new FTZs—here’s what they’re all about

The new batch of free trade zones includes five inland provinces, and gives clues regarding China’s long-term strategy.
Asia Times
China just established seven new FTZs—here’s what they’re all about
Asia Unhedged

Thursday, April 20, 2017

Jeff Spross — You’re Hired!

The Democrats are looking for a big idea? Here’s one: a guaranteed job for anyone who wants one. It’s not as crazy as it sounds.
Democracy — A Journal of Ideas
You’re Hired!
Jeff Spross

Robert Parry — Why Not a Probe of ‘Israel-gate’?

The question that must not be asked.
As Official Washington fumes about Russia-gate, Israel’s far more significant political-influence-and-propaganda campaigns are ignored. No one dares suggest a probe of Israel-gate, says Robert Parry.
An exploration of the heart of the snake pit.

Consortiums News
Why Not a Probe of ‘Israel-gate’?
Robert Parry

Todd Royal — Geopolitics is becoming the main driver of global oil prices

The first summit earlier this month between US President Donald Trump and his Chinese counterpart, Xi Jinping, focused on the North Korean nuclear threat and trade accords between the two global superpowers. The impact of the two-day meeting will also affect fossil-fuel and related energy policy for Asia and the world more than any action by Opec or the prices set by major oil producers.
China is now the largest buyer of US oil exports, accordingto Bloomberg. And since Beijing has blocked North Korean coal imports to sanction Pyongyang for its nuclear and ballistic missile programs, China is buying US coal instead. The coal blockade indirectly helps Trump fulfill a continued pledge of “putting US coal miners back to work.” China’s economy is still dependent on the country’s coal-fired power plants, and the move to buy more US coal in support of UN sanctions against North Korea illustrates how geopolitics will drive energy policy....

Martin S. Feldstein — Why the U.S. Is Still Richer Than Every Other Large Country

Will America maintain these advantages? In his 1942 book, Socialism, Capitalism, and Democracy, Joseph Schumpeter warned that capitalism would decline and fail because the political and intellectual environment needed for capitalism to flourish would be undermined by the success of capitalism and by the critique of intellectuals. He argued that popularly elected social democratic parties would create a welfare state that would restrict entrepreneurship.
Although Schumpeter’s book was published more than 20 years after he had moved from Europe to the United States, his warning seems more appropriate to Europe today than to the United States. The welfare state has grown in the United States, but much less than it has grown in Europe. And the intellectual climate in the United States is much more supportive of capitalism.
If Schumpeter were with us today, he might point to the growth of the social democratic parties in Europe and the resulting expansion of the welfare state as reasons why the industrial countries of Europe have not enjoyed the same robust economic growth that has prevailed in the United States.
What's wrong with Martin Feldstein's argument?

First, he defines national wealth based on real GDP per capita regardless of distributional effects. Biased and skewed away from distributed prosperity.

Secondly, he proposes no rigorous method for identifying causal factors, determining their relationships and priority of importance, and isolating confounding factors. Methodologically unsound.

Thirdly,  it is blatantly political. A view of economics is used to promote a political viewpoint. Ideology rather than science.

He knows better. Fail. A grade for persuasion based on ideology though. It even appeals to authority (Schumpeter). And Feldstein is also using his own authority to persuade.

Harvard Business Review
Why the U.S. Is Still Richer Than Every Other Large Country
Martin S. Feldstein | George F. Baker Professor of Economics at Harvard University, and the president emeritus of the National Bureau of Economic Research

CNBC — Republicans have a new plan to repeal Obamacare — and here it is

Republican lawmakers have a new plan to repeal and replace Obamacare in a bid to bridge the gap between the House Freedom Caucus and moderates, according to a document obtained by CNBC....
A Freedom Caucus source told CNBC the changes to the health bill would secure 25 to 30 "yes" votes from the Freedom Caucus, and the new bill would get "very close" to 216 votes. The source said that 18 to 20 of those "yes" votes would be new.

Two senior GOP aides told CNBC no vote is scheduled for next week, but a discussion is expected via conference call on Saturday....
Republicans have a new plan to repeal Obamacare — and here it is
Berkeley Lovelace Jr. and Kayla Tausche

Thomas Palley — Trumponomics:NeoconNeoliberalism Camouflaged with Anti-Globalization Circus

A Post Keynesian's view of Trumponomics.
A key element of Trump’s political success has been his masquerade of being pro-worker, which includes posturing as anti-globalization. However, his true economic interest is the exact opposite. That creates conflict between Trump’s political and economic interests. Understanding the calculus of that conflict is critical for understanding and predicting Trump’s economic policy, especially his international economic policy.
As part of maintaining his pro-worker masquerade, Trump will engage in an anti-globalization circus, but the bark will be worse than the bite because neoliberal globalization has increased corporate profits, in line with his economic interests. He will also feed his political base’s racist immigration policy as long as that does not adversely impact corporate profitability.
Lastly, Trump expresses neocon unilateralist tendencies that play well with much of the US electorate. His neocon unilateralism is not a one-off temporary political aberration. Instead, it reflects intrinsic and enduring features of the current US polity. That has profound implications for the international relations order, and is something many Western European governments may not yet have digested.
Social Europe
Trumponomics:NeoconNeoliberalism Camouflaged with Anti-Globalization Circus
Thomas Palley | Schwartz Economic Growth Fellow at the New America Foundation

Bill Mitchell — MMT is what is, not what might be

Must-read. 'Nuff said.

Bill Mitchell – billy blog
MMT is what is, not what might be
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Wednesday, April 19, 2017

Pictures of Two Morons

Moron #1:

Moron #2:

Both exhibiting the falsehood: "We're out of munnie!"

Moon of Alabama — The Nerve Agent Attack that Did Not Occur - Khan Sheikhun Summary Report by Prof. Postol

MIT Professor Theodore Postol, a well known missile expert and former scientific advisor to the U.S. Chief of Naval Operations, analyzed the available evidence of the alleged April 4 Sarin attack on Khan Sheikhun in Syria. He comes to the conclusion that the White House allegations and its report are false. The White House report was not created or vetted by knowledgeable intelligence analysts. This confirms our own analysis published earlier on Moon of Alabama.
Here is Prof. Postol's summary report: The Nerve Agent Attack that Did Not Occur, April 19(pdf, 18 pages).
Previously three preliminary versions of Prof. Postol's analysis were released by him:
Moon of Alabama
The Nerve Agent Attack that Did Not Occur - Khan Sheikhun Summary Report by Prof. Postol


Washington's Blog
The Nerve Agent Attack that Did Not Occur: Analysis of the Times and Locations of Critical Events in the Alleged Nerve Agent Attack at 7 AM on April 4, 2017 in Khan Sheikhoun, Syria

Jim Lobe — Bannon Down, Pentagon Up, Neocons In?

Balanced article on US politics relative to international relations and foreign and military policy.

Bannon Down, Pentagon Up, Neocons In?
Jim Lobe

Masha Gessen — The Real Madman

Where Putin’s unpredictable persona is a carefully cultivated one, Trump has given no evidence that his madman act is an act.
I disagree with notorious Putin-basher critic Masha Gessen, who is Russian-born and is fluent in Russian, and should know better. Putin may appear to be a "madman" from the Western POV, but his actions are perfectly rational based on Russian interests, for which he is willing to take risks, which Gessen seems not to understand or does not want to understand.

Putin actually met with her at the Kremlin on several occasions. Has any US president every met with a prominent critic like Noam Chomsky, let along invited one to the White House? I didn't think so.

On the other hand, Trump? Gessen is also a foe of Donald Trump, and she is on firmer ground on this score.

The New York Review of Books
The Real Madman
Masha Gessen

Fabius Maximus — Our Right & Left have lost their way. Saul Alinsky points to a better politics.

Summary: As US politics becomes a cacophony of lies and nonsense (now descending into street violence), we need to know that it can be better. This post reminds us of Saul Alinsky’s famous “Rules for Radicals”, which will work for any political movement.
Some Alinsky excerpts. It's short and worth a read.

Fabius Maximus
Our Right & Left have lost their way. Saul Alinsky points to a better politics.

Brink Lindsey and Steven M. Teles — Worried About Concentration? Then Worry About Rent-Seeking

While concentration can lead to rent seeking, rent-seeking can also lead to concentration.

ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business
Worried About Concentration? Then Worry About Rent-Seeking
Brink Lindsey, vice president for research at the Cato Institute, and Steven M. Teles | associate professor of political science at Johns Hopkins University and a senior fellow at the Niskanen Center
ht Mark Thoma at Economist's View

Bill Mitchell — Subsidiarity – a European Union smokescreen to justify failure

One of the various smokescreens that were erected by the European Commission and the bevy of economists that it either paid or were ideologically aligned to justify the design of the monetary union around the time of the Maastricht process was the concept of subsidiarity.
In 1993, the Centre for Economic Policy Research (a European-based research confederation) published its Annual Report – Making Sense of Subsidiarity: How Much Centralization for Europe? – which attempted to justify (ex post) the decisions imported from the 1989 Delors Report into the Maastricht Treaty that eschewed the creation of a federal fiscal capacity. It was one of many reports at the time by pro-Maastricht economists that influenced the political process and pushed the European nations on their inevitable journey to the edge of the ‘plank’ – teetering on the edge of destruction and being saved only because the European Central Bank has violated the spirit of the restrictions that a misapplication of the subsidiarity principle had created. It is interesting to reflect on these earlier reports. We find that the important issues they ignored remain the central issues today and predicate against the monetary union ever being a success....
Bill Mitchell – billy blog
Subsidiarity – a European Union smokescreen to justify failure
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Tuesday, April 18, 2017

Peter Cooper — Government Money and Democracy

How the currency issuer creates money democratically and how the democratic process can be sidelined with respect to money creation.

Government Money and Democracy
Peter Cooper

USAFacts beta courtesy of Steve Ballmer

USAFacts was inspired by a conversation Steve Ballmer had with his wife. She wanted him to get more involved in philanthropic work. He thought it made sense to first find out what government does with the money it raises. Where does the money come from and where is it spent? Whom does it serve? And most importantly, what are the outcomes?
With his business background, Steve searched for solid, reliable, impartial numbers to tell the story… but eventually realized he wasn’t going to find them.
USAFacts beta

Wendy McElroy — Your Bitcoins Open to CIA and Criminals, Heed Wikileaks’ Warning

More on Vault 7.
This Wikileaks dump reiterated something we already knew; Our devices are fundamentally unsafe. No matter what kind of encryption we use, no matter which secure messaging apps we take care to run, no matter how careful we are to sign up for two-factor authentication, the CIA—and, we have to assume, other hackers—can infiltrate our operating systems, take control of our cameras and microphones, and bend our phones to their will. The same can be said of smart TVs, which could be made to surreptitiously record our living-room conversations.
Back to carrier pigeons?

Monday, April 17, 2017

Bill Black — Dodd-Frank Was Designed to Fail – and Trump Will Make it Worse

Here is what [out-going chairman of the Federal Financial Institutions Examination Council Daniel] Tarullo actually admitted about Dodd-Frank’s fatal flaw. President Obama and Congress did not frame it as a coherent response to the perverse incentives that cause our recurrent, intensifying financial crises. Wall Street CEOs rigged our structures to institutionalize perverse incentives. Refusing to change those structures after a catastrophe was, of course, significantly insane. President Obama and Congress failed to engage in a rigorous, honest investigation of those structural causes and then refused to fix the structural defects.
The structures that institutionalize perverse incentives have in common the creation of conflicts of interest. CEOs do this primarily by creating perverse compensation systems, but they also do it through combining investment and commercial banking. Systemically dangerous institutions (SDIs) (“too big to fail”) create another conflict of interest. Politicians dependent on their contributions and pathetic regulators treat them as untouchable. Astonishingly, Obama and Congress refused to fix any of these three primary conflicts of interest that drive our recurrent crises.
New Economic Perspectives
Dodd-Frank Was Designed to Fail – and Trump Will Make it Worse
William K. Black | Associate Professor of Economics and Law, UMKC

Pam and Russ Martens — Has Former Goldman Sachs President, Gary Cohn, Gone Rogue on Glass-Steagall?

Backgrounder on former Goldman President Gary Cohn, who is becoming increasingly influential in the Trump administration domestically, just as Generals James Mattis and H. R. McMaster with respect to international affairs.

Wall Street On Parade
Has Former Goldman Sachs President, Gary Cohn, Gone Rogue on Glass-Steagall?
Pam Martens and Russ Martens

Yen Nee Lee — China's start-ups are changing, and that has major global implications

China's non-financial outbound investments rose from $5.5 billion in 2004 to a new high of $170.11 billion in 2016, according to data compiled by the country's National Bureau of Statistics.….

"Chinese enterprises have begun to rapidly increase their global investment to achieve mid- to long-term growth. With the 'One Belt, One Road' initiative and other strategies serving as a powerful engine, more Chinese enterprises are expected to invest overseas and, therefore, a double-digit growth rate in China's outward [foreign direct investment] is expected in the next few years," Loletta Chow, global leader of EY's China Overseas Investment Network, said in a report....
China's start-ups are changing, and that has major global implications
Yen Nee Lee

Sunday, April 16, 2017

Scotty — Trump has lost control over the Pentagon

Cutting through this heavy bureaucratic American doublespeak, the White House will be informed, but would have no commanding authority over the US military.…
It’s important to realize that this Trump’s decision to give more freedom to the US general to decide where to start a war, or as it’s been dubbed “the New Approach” had come after the fact that was “on display this week in Afghanistan, where Gen. John Nicholson, head of the U.S.-led coalition there, decided to use one of the military’s biggest nonnuclear bombs—a Massive Ordnance Air Blast bomb, or MOAB.”
After the MOAB was dropped, repeating without the presidential approval, the Media came out heralding this bombing of Afghanistan as “America’s top military commanders are implementing the vision articulated by Defense Secretary Jim Mattis: U.S. military commanders to make more battlefield decisions on their own.”
“A senior administration official said Mr. Trump didn’t know about the weapon’s use until it had been dropped.”
The Vineyard of the Saker
Trump has lost control over the Pentagon

Ira Chernus — Love Trumps Domination (Without the Combover)

Another influential thinker of that era was a German-American philosopher, Herbert Marcuse. (Some radicals even marched in rallies carrying signs reading “Marx, Mao, Marcuse.”) For him, the dehumanization of modernity was rooted in the way science and technology led us to view nature as a mere collection of “things” having no inherent relation to us -- things to be analyzed, controlled, and if necessary destroyed for our own benefit.
Capitalists use technology, he explained, to build machines that take charge both of the workers who run them and of aspects of the natural world. The capitalists then treat those workers as so many things, not people. And the same hierarchy -- boss up here, bossed down there -- shows up at every level of society from the nuclear family to the international family of nations (with its nuclear arsenals). In a society riddled with structures of domination, it was no accident that the U.S. was pouring so much lethal effort into devastating Vietnam.
As Marcuse saw it, however, the worst trick those bosses play on us is to manipulate our consciousness, to seduce us into thinking that the whole system makes sense and is for our own good. When those machines are cranking out products that make workers’ lives more comfortable, most of them are willing to embrace and perpetuate a system that treats them as dominated objects....
In every arena, as Marcuse explained back in the 1960s, the system of hierarchy and domination remains self-perpetuating and self-escalating.
What’s the remedy for this malady, now as lethally obvious at home as it once was in Vietnam?
The end of domination [is] the only truly revolutionary exigency,” Marcuse wrote. True freedom, he thought, means freeing humanity from the hierarchical system that locks us into the daily struggle to earn a living by selling our labor. Freedom means liberating our consciousness to search for our own goals and being able to pursue them freely. In Martin Luther King’s words, freedom is “the opportunity to fulfill my total capacity untrammeled by any artificial barrier.”

How to put an end not only to America’s war in Vietnam, but to a whole culture built on domination? King’s answer on that April 4th was deceptively simple: “Love is somehow the key that unlocks the door... The first hope in our inventory must be the hope that love is going to have the last word.”
 A call to non-violent revolution.

Tomgram: Ira Chernus, Love Trumps Domination (Without the Combover)
Ira Chernus | professor emeritus of Religious Studies at the University of Colorado Boulder and author of the online MythicAmerica: Essays

Another view

Um. Grow Up. We Want The Warlords To Rule. The Entire Militia of Them. ;)
Curt Doolittle

Reuters — Wall Street banker Cohn moving Trump toward moderate policies

Heritage Foundation's Stephen Moore out; ex-Goldman CEO Gary Cohn in. 

Cohn is a Democrat. Conservatives are not happy.

James Oliphant and Svea Herbst-Bayliss

David Fields — New Book: Reading “Capital” Today – Marx after 150 Years

Recent years have seen a surge of interest in Marxian political economy, particularly evident by the resurgence of readers picking up Marx’s most famous work, Capital. Now 150 years after its original publication, there are still fresh interpretations of Capital that can help readers find new pathways to progressive or revolutionary change. Marking the 150th anniversary of its publication, Reading “Capital” Today offers a wide range of leading thinkers’ reflections on this influential text—its political legacy, its limitations, and its continuing relevance in our world....
Radical Political Economy
New Book: Reading “Capital” Today – Marx after 150 Years
David Fields

Ramanan — The Paradox Of Costs And Other Macro Paradoxes

I love paradoxes. In economics the fallacy of composition accounts for a lot of them. This is a problem with assuming microfoundations uncritically.

The Case for Concerted Action
The Paradox Of Costs And Other Macro Paradoxes
V. Ramanan

Diane Coyle — Economics and its soul

Diane Coyle argues that economics has actually regained its soul by reincorporating institutionalism. So a lot of the current criticism about neoclassical economics dominating the profession is no longer valid.

Noah Smith has also been arguing that economics is also becoming a lot more data-oriented, that is, empirically based, than formal now.

The Enlightened Economist
Economics and its soul
Diane Coyle | freelance economist and a former advisor to the UK Treasury. She is a member of the UK Competition Commission and is acting Chairman of the BBC Trust, the governing body of the British Broadcasting Corporation

Saturday, April 15, 2017

Reeves Wiedeman — The Duke Lacrosse Scandal and the Birth of the Alt-Right

It not only launched [Richard] Spencer’s career, but that of White House adviser Stephen Miller, too.
Richard Spencer has become somewhat of a fringe Alt-Right character if not caricature. Conversely, Steve Miller is a presidential adviser in the Trump administration with a West Wing office adjacent to the Oval Office along with Jared Kushner, Steve Bannon, Reince Priebus, Sean Spicer, and Kellyanne Conway, in addition to VP Mike Pence. Miller is the youngest of the group and an up-and-comer in US politics. He is a person to watch.

New York Magazine
The Duke Lacrosse Scandal and the Birth of the Alt-Right
Reeves Wiedeman

See also
Miller parlayed his experiences as a conservative activist at Duke into a job on Capitol Hill, where he worked for former Minnesota Representative Michele Bachmann, then for Alabama Senator Jeff Sessions, Trump’s choice for attorney general. It’s in Sessions’s office where he came into his own in Washington.
Miller was someone on whom Sessions “relied very heavily,” said Andrew Logan, who worked as Sessions’s press secretary while Miller served as communications director. “He sort of necessarily became involved in all of the policy areas as well.” According to Logan, Miller was involved in writing nearly all of Sessions’s speeches.
Miller quickly became associated with the hardline anti-immigration, anti-globalist views that characterize Sessions and which became a main theme of the Trump campaign....
Miller is also closely connected with Bannon.
Though Miller preceded Bannon on the Trump campaign, they got to know each other while Bannon was still running Breitbart.

“I know Bannon feels the same way that I do about him,” said one Breitbart News staffer who spoke on condition of anonymity. “Always expressed a lot of admiration for him.”
The staffer referred back to a speech Jeff Sessions gave at a Breitbart-sponsored CPAC event two years ago in which Sessions spoke about being a populist, and tied it to Miller.
“That Sessions speech at CPAC was basically Breitbart laying down the ‘This is what we believe on immigration’ and that’s pretty much inseparable from Miller,” the staffer said.

Asked to describe Bannon and Miller’s relationship, a former Breitbart Newsstaffer said “Sponsor-client relationship from what I can tell, or mentor-mentee, which is the policy Bannon regularly adopts with younger people.”
“You could not get where we are today with this movement if it didn’t have a center of gravity that was intellectually coherent,” Bannon told Politico Magazine last year. “And I think a ton of that was done by Senator Sessions’s staff, and Stephen Miller was at the cutting edge of that.”
The Atlantic
How Stephen Miller's Rise Explains the Trump White House
Rosie Gray

Sarah Ellison — The Inside Story Of The Kushner-Bannon Civil War

It's more about the reality show than the title. Weekend read.
Hate-watching is a key element of reality television: viewers get a surge of superiority and catharsis when watching characters they do not respect but in some strange way are drawn to. “It’s incredibly satisfying to hate-watch [Trump],” Shapiro said—and the same goes for watching members of his staff. Senior West Wing aides, like the president himself, exhibit a trait that is essential for a successful reality-TV show: they are largely unself-aware, not fully realizing “how they are perceived, because they will keep stumbling into the same mess over and over again, and they are really easy to place in a cast of characters,” said UnReal’s Shapiro. They are, in part, reliable caricatures of themselves.
Vanity Fair
The Inside Story Of The Kushner-Bannon Civil War
Sarah Ellison

Xinhua — China's self-driving truck passes test

A Chinese-made self-driving truck has passed a navigation test, heralding the era of intelligent, automated heavy vehicles.
FAW Jiefang, the leading truck manufacturer, debuted the self-driving truck at FAW Tech Center in Changchun City, Jilin Province. The truck was able to recognize obstacles, slow down, make a detour, and speed up.
The truck reacted correctly to traffic lights, adaptive cruise control, remote commands and successfully overtook, company sources said.
FAW Jiefang now plans to commercialize the intelligent driving vehicle as early as 2018.
Hu Hanjie, FAW Jiefang general manager, said the company has built a whole industry chain partnership to develop, manufacture, sell, and service self-driving trucks. The participation of more firms across the sector will accelerate the technology's use on heavy-duty vehicles, Hu said.
Leading Chinese tech firms, including Baidu and Tencent, have invested in self-driving entities. Baidu, for example, has tested driverless mini cars at the annual World Internet Conference for the last two years.
Industry insiders, however, said the technology may prove more practical when it is used on trucks than private cars as truck drivers are more likely to drive tired. The new systems could cut operational costs by replacing drivers.
Xinhua | Editor: Yao Lan

Constantin Gurdgiev — Swift & Digital Money: Cybersecurity Questions

Shadow Brokers.

true economics
15/4/17: Swift & Digital Money: Cybersecurity Questions
Constantin Gurdgiev | chairman of the Ireland-Russia Business Association, contributor and former editor of Business & Finance Magazine, and lecturer in Finance with Trinity College, Dublin

Counter Current News — Massive Blow To Federal Reserve: Texas Introduces Bill To Recognize Gold & Silver as Legal Tender

The crazy is spreading.

It's not mentioned here but they want a balanced budget amendment, too, to bring prosperity to all that work hard to earn their money.


I have not been posting much on politics and global affairs of late. The crazy is even more rampant there, and the level of moronism astonishing. "What a revoltin' development" as Chester A Riley (played by William Bendix) used to say on "The Life of Riley." But this is not funny.

Counter Current News
Massive Blow To Federal Reserve: Texas Introduces Bill To Recognize Gold & Silver as Legal Tender

Rutger Bregman — No, wealth isn’t created at the top. It is merely devoured there

Must read article on work versus rent and free-riding. 

Attacking false consciousness by consciousness-raising.

The Guardian
No, wealth isn’t created at the top. It is merely devoured there
Rutger Bregman
Crossposted at Evonomics

China's exchange rate

James Hamilton explains a complication of Rodik's trilemma for China.

China’s tetralemma
James Hamilton


Short answer: maybe, but probably not.

Is China’s Currency Undervalued? A Reality Check
Menzie Chinn

Ramanan — Effective Demand And The Labour Market

Noah Smith asks, “Why the 101 model doesn’t work for labor markets”.|

He realizes the answer but attributes it to Nick Hanauer.…
So Smith indeed concedes that the profession missed it out. But the attribution is incorrect. All this was figured out by Michal Kalecki in the 1930s....
The Case for Concerted Action
Effective Demand And The Labour Market
V. Ramanan

See also

Information Transfer Economics
It's a production input. No, it's a market good. Relax, it's both.
Jason Smith

Noah Smith: "Why the 101 model doesn't work for labor markets"