Thursday, May 31, 2018

Patrick Armstrong — Russian Federation Sitrep 31 May 2018

Links and commentary.

Russian Observer
Russian Federation Sitrep 31 May 2018

Andrew Batson — A Weberian analysis of Xi Jinping’s power

What the article says about Xi is also true of Putin. They both have traditional, legal, and charismatic authority. 

When this is true of leaders of great powers, they become world-historical figures. Xi and Putin are already emerging as key figures in the history of the 21st century. 
Mark Boden

Assad Abu Khalil — The West & Gulf Couldn’t Sway These Lebanese Elections

Excellent backgrounder. It's mostly about the intricacies of the Lebanese voting system and Lebanese politics, but this is an interesting aside on the US showing that "democratic elections" are not so democratic in the developed world as well as the emerging world.
In the U.S., there is still a clear agenda to suppress wide political participation. The U.S. is one of the few countries in the world which holds the vote on a working day—and in the winter where much of the East coast is buried under rain and snow. Furthermore, the U.S. requires voter registration, when most democracies don’t. The low voter turnout in the U.S. is by design, and not by default. If the U.S. were to adopt a proportional representation system—which both parties won’t allow because they enjoy holding the exclusive monopoly over political representation—voter turnout would increase. Most world democracies have—at least partially or at some level—adopted proportional representation.
Incidentally, the West "lost" the recent election in Iraq, too.

Of course, the West lost the recent election in Russia, too, but that was a foregone conclusion with the level of support for Putin going in. The only thing is question was the margin of victory and what percentage of the vote other parties would get. Not that the US didn't try to influence the Russian election, it did, as documented in a recent official report in Russia recently linked to here.

Meanwhile we are still being bombarded with faux outrage over the supposed influence of Russia on the 2016 election from "the Resistance."

Consortium News
The West & Gulf Couldn’t Sway These Lebanese Elections
Assad Abu Khalil | Professor of Political Science, California State University, Stanislaus

Quarter of Irish growth due to Apple iPhone

You can't really look at GDP to figure out what is really going on...

The Trump tax reforms of this past January 1 at least removes financial incentives for the multinational firms to cause this type of financial result.

So even the recent weakness in both the UK and EZ prints of GDP could easily be the result of a change in tax reduction strategy by the US multinationals in response to the Trump corporate tax policies.

And not some nebulous "austerity neoliberal conspiracy lies!" theories...

Trudeau Says U.S. Borrowing Is Unsustainable

Ha!  President or wtf of Canada:

U.S. government borrowing is not sustainable and divisive social policies will ultimately exacerbate tensions that will disrupt American business profitability, Canadian Prime Minister Justin Trudeau said. 
Asked in an interview how his government will respond to competitiveness concerns spurred by U.S. tax cuts, Trudeau said Canada is focused on generating long-term economic growth and wouldn’t engage in a “race to the bottom.” “I certainly know that I remain focused on the long term,” Trudeau said Tuesday in an interview with Bloomberg’s Stephanie Flanders, before appearing to conflate the U.S. debt and deficit. 
“I mean what’s the U.S. debt approaching now, is it a trillion dollars? I mean, we’re talking about something that is not sustainable.”

Yeah this looks like great progress here.... I know, I know... "neoliberal conspiracy lies!!!!"..... And PS looks like he is with EVERYBODY (and I mean EV-ER-EE-BOD-EEE...) else on US deficit going to $1T this year...

Wednesday, May 30, 2018

RT — Funding NGOs & stirring dissent: Russian special commission exposes election meddling by US

A special commission report on foreign meddling in the 2018 presidential election has been unveiled in Russia’s Upper House. The document highlighted the main methods of the elaborate campaign, spearheaded by the US.

The report, presented on Wednesday in Russia’s Upper House (the Senate), was prepared by the Commission for State Sovereignty Protection in cooperation with leading experts and analysts. The publicly available document was presented by the head of the commission, Senator Andrey Klimov.
The document pinned the blame for the meddling in Russia’s election directly on Washington, linking the ongoing surge in hostile activities with the domestic political struggle in the US. Attempts to interfere in internal Russian affairs, however, are not new, as they have been going on since the collapse of the Soviet Union.
The US has been the “main violator of international law” since the founding of the United Nations, and has “interfered more than 120 times in the affairs of 60 countries on all continents.” Washington’s closest allies – the UK, Germany, France, NATO, and European countries – are also to blame, since they either participate directly or support US activities, according to the document.
“We tried to show… the areas in which the subversive work took place. We’ve named 10 such areas. We have concrete examples for all of them based on absolutely reliable facts. It’s not someone’s guess, it’s not ‘highly likely,’ it’s something we can prove anywhere, it is backed up by testimonies, documents and it is, by great margin, not disputed by the other side [the US],” Klimov said at a press conference, which followed the hearings in the Upper House.
The main purpose of the commission’s report, according to Klimov, is to show the public – both Russian, and international – the scale and systematic nature of the efforts to undermine Russia’s “electoral sovereignty.” The ultimate goal of these activities is to force changes of Russia’s political course, destroy its territorial and economic integrity, he said....
The election meddling also included wide-scale cyberattacks on government electronic resources, primarily the Central Election Commission. All in all, roughly one-third of such attacks are conducted from US territory, according to the report.
More discreet methods include stirring dissent by intensifying the activities of foreign-based Russian-language media outlets and “independent” bloggers. The use of modern technology and communication methods apparently yielded some results, since the latest protests, while much smaller than those of 2011-13, increasingly attracted younger and even underage activists into the streets.…
NGOs operating in Russia have enjoyed a steady flow of funding from abroad, which spiked following the failure to discredit the 2012 presidential election. In 2015, for instance, politically active NGOs received 80 billion rubles (around $1.3 billion) from the US alone, the report says.
Although Russia limited the activities of foreign NGOs within the country, requiring them to openly register as ‘foreign agents,’ the flow of funds did not stop. Various ‘grey’ schemes came into use, such as providing large sums in cash or transferring funds to private individuals. In the meantime, Russia-based subsidiaries of foreign NGOs flourished – their funding in 2017 almost doubled compared to 2016.
The total amount of NGO funding greatly surpasses the upper limit for a presidential candidate’s campaign in Russia. The scale is comparable to the entire budget for holding elections in the entire country, according to the report.
Apart from directly financing “civil activists” in Russia, the US and its allies spent money on more covert activities. Ahead of the election, several unsanctioned socio-political surveys were conducted in Russia, which were sponsored by foreign government structures – including the Pentagon – the report stated.…
The recommended measures are not limited to restrictions. The report called for other countries and international organizations to become united in jointly opposing US meddling practices…. The classified version of the report, according to Klimov, contains additional recommendations for countering foreign meddling....
Funding NGOs & stirring dissent: Russian special commission exposes election meddling by US

Diane Coyle — Finance, the state and innovation

Yesterday brought the launch of a new and revised edition of Doing Capitalism in the Innovation Economy by William Janeway. Anybody who read the first (2012) edition will recall the theme of the ‘three player game’ – market innovators, speculators and the state – informed by Keynes and Minsky as well as Janeway’s own experience combining an economics PhD with his experience shaping the world of venture capital investment.
The term refers to how the complicated interactions between government, providers of finance and capitalists drive technological innovation and economic growth. The overlapping institutions create an inherently fragile system, the book argues – and also a contingent one. Things can easily turn out differently.... 

The fundamental assumption of a free enterprise system ("capitalism") is that entrepreneurship drives innovation, which accelerates growth and overall prosperity.

Looking at the historical record, this is obviously true. But it is more complicated than that, and a lot things can go wrong if all the gears in the machine are not always in sync. History also shows that they are not as evidence by cycles, where all cycles are a combination of business (economic) and financial factors that are influenced by a number of contingencies in a dynamic environment, including policy and its application.

The Enlightened Economist
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


The problem I have with this type of reasoning is that assumes away contingency. Technological innovation land the creation of a consumer society through marketing and advertising lead to the creation of mass markets, which changed the dynamic in a way that models did not anticipate and likely could not have because the new technology that made this possible was emergent and foreseeable in advance.

I don't think that this vitiates Marx and Engels' approach, but rather strengthens the argument for the need for conceptual models that are based on "fuzzy logic" to complement formal modeling based on technically defined analytical concepts and precise measurement to delimit the boundaries of sets.

Contingency implies uncertainty. Uncertainty implies the need to use fuzzy logic rather than the strict formalization that conventional economics as "science" demands. Both are necessary tools, especially as scale increases — which is what the fallacy of composition is about. Macro is not and cannot be scaled up micro analysis.

Of course, what can be formalized usefully should be used. But not everything is capable of being modeled formally in a dynamic way when contingency is involved, and static models are mostly gadgets when cet. par. is assumed.

Michael Roberts Blog
The fallacy of composition and the law of profitability
Michael Roberts

Brian Romanchuk — Book Review: Prosperity For All

Professor Roger E. A. Farmer has written Prosperity For All: How to Prevent Financial Crises, in which he lays out the case for creating a sovereign wealth fund whose objective is to stabilise financial markets. If we can eliminate financial crises, we can avoid the rise in unemployment that results. Although that is an interesting concept, I was highly skeptical about the idea before I read the book -- and my skepticism remains after reading it. Instead, the discussion of macro theory within the book is why it is of interest.
Bond Economics
Book Review: Prosperity For All
Brian Romanchuk

Bill Mitchell — The assault on democracy in Italy

I decided to write an extended blog post today (Wednesday) because events in Italy are so interesting. My usual short post on a Wednesday will resume next week. George Soros is now saying that “everything that could go wrong has gone wrong” in Europe and a financial collapse is in the wind (Source). I doubt the latter but agree with the former assessment. All the flaws in the original neoliberal design of the Eurozone have been revealed and all the reasons why those flaws were created in the first place remain in place. Nothing has changed since 1977 when the MacDougall Report concluded that the cultural and national differences between the (then) Member States of the European Communities were too great to allow an effective monetary union to be created. That assessment and the earlier work of Pierre Werner in his 1970 Report were ignored as the neoliberals in France and Germany rushed headlong to Maastricht. France thought it would have a chance to dominate and Germany was distracted by unification but still firmly in charge of what would be allowed in the new monetary system and what would not. Now, one of the biggest nations – Italy – is is turmoil as the damage of being part of the Eurozone slowly but surely erodes its capacity to deliver anything remotely like prosperity and its social and political system starts to collapse. Italy must leave the Eurozone – the sooner the better. And, that will bring a reality check for the whole disaster and encourage other nations to push for an orderly dissolution.
Stein's Law — "If something cannot go on forever, it will stop." — Herbert Stein

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

See also

Lars P. Syll’s Blog
Italy — shows why the euro has to be abandoned if Europe is to be saved
Lars P. Syll | Professor, Malmo University

See also

Politics and Renewal within the Euro: A Thought on the Unfolding Italian Crisis (and remarks on Greece)
Eric Schliesser | Professor of Political Science, University of Amsterdam’s (UvA) Faculty of Social and Behavioural Sciences

German unemployment record low

Despite the harmful effects of the ECB asset purchases to their biggest bank.... still down to 5.2%.

Tuesday, May 29, 2018

Samantha Eyler-Driscoll — Gabriel Zucman: “Some People in Economics Feel That Talking About Inequality Is Not What Economists Should Be Doing

The rising scholar of taxation and inequality talks to ProMarket about the problems excessive economic power poses for open political systems, how states can tackle profit-shifting, and critics who have dismissed his work on distributional issues as “a French economics.”
ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business
Gabriel Zucman: “Some People in Economics Feel That Talking About Inequality Is Not What Economists Should Be Doing”
Samantha Eyler-Driscoll

Reuters — Chinese state media slam U.S. trade announcement, say Beijing ready to fight

"Them's fighting' words."

China responds to President Trump's gonzo policy making.

Trade war in the cards? Or is this just part of the negotiating process?

Whatever, it's further evidence that America cannot be trusted to keep its word.

Chinese state media slam U.S. trade announcement, say Beijing ready to fight

See also
China will double down to make breakthroughs in core technologies, Chinese President Xi Jinping said on Monday as he urged the country’s top scientists and engineers to build China into a global hi-tech leader.
Read "public investment."

South China Morning Post
Xi Jinping urges China to go all in on scientific self-reliance after ZTE case exposes hi-tech gaps
Kinling Lo

And I stupidly used to think Putin was smart. I pity the poor Russian people.

At his economic conference with other world leaders there, Putin said this...
"We are hostages to this internal strife in the United States..." 
And I stupidly used to think Putin was smart. 

When one puts limits in one's own mind, even if they are imaginary, those limits can be debilitating. 

Putin, as the ruler of the largest country on earth, doesn't understand that Russia has no limits, especially none imposed by U.S. "internal strife," whatever that is. 


I pity the poor Russian people. 

Buy some more gold, Vlad.

Oil and Gas links

Oil Price
Russia Just Won Big In The European Gas War
Tim Daiss


U.S. Oil Exports Eat Into OPEC Market Share In Asia
Tsvetana Paraskova


‘’Biggest Ever Change’’ In Oil Markets Could Send Prices Higher
Irina Slav

See also

Sputnik International
Russia, China Moving Forward to Form Strategic Energy Alliance

Elizabeth Vos — Guccifer 2.0’s American Fingerprints Reveal An Operation Made In The USA

In his final report in a three-part series, Guccifer 2’s West Coast Fingerprint, the Forensicator discovers evidence that at least one operator behind the Guccifer 2.0 persona worked from the West Coast of the United States.
The Forensicator’s earlier findings stated that Guccifer 2.0’s NGP-VAN files were accessed locally on the East Coast, and in another analysis they suggested that a file published by Guccifer 2.0 was created in the Central time zone of the United States.
False flag operation?

Disobedient Media
Guccifer 2.0’s American Fingerprints Reveal An Operation Made In The USA
Elizabeth Vos

Each day brings more evidence of a plot involving intelligence and law enforcement officials to destroy Donald Trump using the pretext of Russia. This is not a theory. It is a fact. While many of the specific details about who actually made key decisions remains to be revealed, there is abundant evidence in the public record that exposes the skeletal framework of this plot. To put it bluntly, Trump has been a target of a coup d'etat that has relied of information warfare rather than actual arms. But the objective of the plotter was no different from a traditional coup, such as the one that removed Chilean President Salvador Allende in 1973. In fact, it appears that the CIA has been involved in both efforts.
Let's go through the evidence.….
Sic Semper Tyrannis
The Plot to Slaughter Donald Trump
Publius Tacitus


Zero Hedge
London-to-Langley Spy Ring; The Roots Of Obamagate Become Clearer
Tyler durden

Alastair Crooke — Sanctioning the World, the US Inadvertently ‘Locks & Launches’ Multipolarism

If these US policies are not sustainable, what then? The primal flaw to the neo-con maximum leverage doctrine is its lack of any easy ladder down which to climb that does not appear to be a national US humiliation. Usually, if pressure doesn’t work, it is assumed that it was because there was not enough of it – for example, Trump attributes the weaknesses to the JCPOA to Obama failing to let the Iranians stew in sanctions for long enough. Obama cut the pressures too early in Trump’s view – and hence got a ‘flawed agreement.’
A deeper point – and one made by the Chinese in respect to North Korea – is that others do not think in the way of President Trump. The radical utilitarianism evident when Trump says that Jong Un will be “safer, happier and richer” if he accepts Trump’s ultimatum reflects precisely the shallow materialism, on which the global political tide has turned. The so-called ‘populist’ call for a return to traditional national values precisely is a rejection of JS Mills type of utilitarian politics. It is, as it were, the wish to return to being human, in a rounder way....
Strategic Culture Foundation
Sanctioning the World, the US Inadvertently ‘Locks & Launches’ Multipolarism
Alastair Crooke

Zero Hedge — China Accelerates Next-Gen Nuclear Weapons Development To Compete With US, Russia

Keeping abreast of the arms race.
As we have been documenting over the last year and beyond, China is rapidly modernizing its military; unveiling a new stealth bomber, an array of guided-weapons, and deploying further from home. Their most recent focus has been on next generation nuclear weapons - as Beijing ramps up blast experiments for nukes comprised of smaller, smarter warheads designed to limit damage by targeting specific targets, according to the South China Morning Post….
China's development of next gen nukes will put them in direct competition with the United States and Russia, sparking concerns by experts over the prospect of a new cold war arms race that has the potential of boiling over into thermonuclear war.…
“The use of small warheads will lead to the use of bigger ones,” Beijing-based naval expert Li Jie told the Post. “If other countries use nuclear weapons on us, we have to retaliate. This is probably why there is research to develop new weapons.”
Just a matter of when and who uses nukes first. But that is not necessarily the US, China or Russia. Could be Pakistan, India or Israel, for instance.
Zero Hedge
China Accelerates Next-Gen Nuclear Weapons Development To Compete With US, Russia
Tyler Durden

Pepe Escobar — The Syria connection to Iran, Afghanistan and China


It's complicated. The US doesn't do nuance.

Asia Times
The Syria connection to Iran, Afghanistan and China
Pepe Escobar

Yanis Varoufakis — Merkel’s Comeuppance is Europe’s – and the World’s – Misfortune

Not so veiled warning that if the technocrats persist while the US acts like an imperial hegemon, the populist backlash is coming that will burn down the EU house.

While he doesn't say it, we've been here before, in the 1930s.

Project Syndicate
Merkel’s Comeuppance is Europe’s – and the World’s – Misfortune
Yanis Varoufakis

See also

The Case for Concerted Action
My Favourite Chart, Updated: Euro Area Imbalances
V. Ramanan

Attilio Moro — This is the New Italy

Years of neoliberal economic policies imposed by Brussels and by Italian politicians alike have devastated numerous industrial towns and the very fabric of Italian society, reports Attilio Moro....
Short backgrounder.

Consortium News
This is the New Italy
Attilio Moro

See also
SPIEGEL ONLINE: Have the countries in the southern part of the euro area done enough on their side to fix monetary union?
Constâncio: Yes. The countries hardest hit by the crisis had high budget deficits and high current account deficits at the start of the crisis. So they were importing a lot more than they were exporting. But a great deal has been done since then. In the meantime, all the countries concerned have a primary fiscal surplus, which means that they are reducing their debt bit by bit. And all these countries now have a current account surplus; they are exporting more than they import. That is quite a turnaround.
Death of the working class by strangulation to benefit the portfolios of the ownership class.

Spiegel Online
ECB Vice President Constâncio: 'Italy Knows the Rules'
Henning Jauernig and Stefan Kaiser interview outgoing European Central Bank Vice President Vítor Constâncio

See also
And the reason why Italians are seething with growing rage aimed squarely at Europe's unelected institutions, is because European Budget Commissioner, German Guenther Oettinger, said the one thing that he should not have: that "the negative development of the markets will lead Italians not to vote much longer for the populists" according to an interview set to be published in Deutsche Welle later in the day.
Market "discipline."

The elite is confident that it can jam any policy it wishes on "the little people," you know, the people that voted for Mussolini and Hitler.

Zero Hedge
Italians Furious After EU's Oettinger Says "Markets Will Teach Them" Not To Vote For Populists
Tyler Durden

While it is nothing but a waste of time, today Italy's premier-designate, Carlo Cottarelli, a former IMF official also known as "Mr. Scissors" for his drastic public debt cutting, was supposed to present the country's scandalous president, Sergio Mattarella with a list of people who make up his technocratic government; instead he left the meeting with the president without an agreement on a cabinet team and Italy staring new elections in just two months.
While it is unclear what led to the failure by Cottarelli, who will again meet Mattarella on Wednesday, the inability to lay out his government would force the president to dissolve parliament, leading to elections within 60 to 70 days. He may have little choice: as Bloomberg notes, pressure among barious Italian lawmakers mounted on Tuesday to hold elections as soon as possible, with Ansa reporting that Cottarelli’s efforts were stalled by the parties demanding a vote on July 29, or a week later, on August 5....
Tyler Durden

Michael Kumhof and Clare Noone — Central bank digital currencies - design principles and balance sheet implications

This paper sets out three models of central bank digital currency (CBDC) that differ in the sectors that have access to CBDC. It studies sectoral balance sheet dynamics at the point of an initial CBDC introduction, and of an attempted large-scale run out of bank deposits into CBDC. We find that if the introduction of CBDC follows a set of core principles, bank funding is not necessarily reduced, credit and liquidity provision to the private sector need not contract, and the risk of a system-wide run from bank deposits to CBDC is addressed. The core principles are: (i) CBDC pays an adjustable interest rate. (ii) CBDC and reserves are distinct, and not convertible into each other. (iii) No guaranteed, on-demand convertibility of bank deposits into CBDC at commercial banks (and therefore by implication at the central bank). (iv) The central bank issues CBDC only against eligible securities (principally government securities). The final two principles imply that households and firms can freely trade bank deposits against CBDC in a private market, and that the private market can freely obtain additional CBDC from the central bank, at the posted CBDC interest rate and against eligible securities.
Bank of England
Central bank digital currencies - design principles and balance sheet implications
Michael Kumhof and Clare Noone

See also
Understanding the changing role of central banks and the novel policies they have pursued recently is absolutely essential for analysing many economic, financial and political issues, ranging from financial regulation and crisis, to exchange rate dynamics and regime changes, and QE and prolonged low interest rates. This book features contributions by many of the world’s leading experts on central banking, providing in accessible essays a fascinating review of today’s key policy and research issues for central banks. Luminaries including Stephen Cecchetti, Takatoshi Ito, Anil Kashyap, Mervyn King, Donald Kohn, Otmar Issing, Hyun Shin and William White are joined by Charles Goodhart of the London School of Economics, whose many achievements in the field of central banking are honoured as the inspiration for this book.
The Changing Fortunes of Central Banking discusses the developing role of central banks and the policies they pursue in seeking monetary and financial stabilisation, while also giving suggestions for model strategies. This comprehensive review will appeal to central bankers, financial supervisors, academics and economists working in think tanks.
The changing fortunes of central banking
Philipp Hartmann, European Central Bank & CEPR; Haizhou Huang, China International Capital Corporation and Dirk Schoenmaker, Erasmus University, Bruegel & CEPR

Joumanna Bercetche -Traders are worried this could be the 'big unwinding' of Italian bond markets

  • On Friday, two-year Italian bond yields rose 35 basis points in one day — almost equivalent to the entire range of the year for U.S. 10-year Treasurys.
  • This was the weakest session in five years and continued a month that's seen these yields rise 70 basis points in total.
  • Ratings agencies are also beginning to raise alarm bells.
Italian bonds have witnessed one of their worst trading weeks since the euro zone sovereign debt crisis, with many traders getting a stark reminder of the volatility that once characterized markets in the region.

On Friday, two-year Italian bond yields rose 35 basis points in one day — almost equivalent to the entire range of the year for U.S. 10-year Treasurys. This was the weakest session in five years and continued a month that's seen these yields rise 70 basis points in total.
Yields move inversely to a bond's price and a spike higher is seen as investors feeling more concerned about lending to Italy's government. More specifically, traders usually sell short-maturity paper when there are growing credit risk concerns at a sovereign level.
The original catalyst for the selling came from the populist parties hoping to take control of Italy after inconclusive elections in March. Lega and the Five Star Movement (M5S) plan to issue short-term bills to finance state activity in their economic policy proposals. Market participants were taken aback and many have interpreted that initiative as laying the foundation for a potential parallel currency in the future, further amplifying the potential new government's collision course with the rest of Europe.

David F. Ruccio — Marx ratio

First there was the Great Gatsby curve. Then there was the Proust index. Now, thanks to Neil Irwin, we have the Marx ratio.
Each, in their different way, attempts to capture the ravages of contemporary capitalism. But the Marx ratio is a bit different. It was published in the New York Times. Its aim is to capture one of the underlying determinants of the obscene levels of inequality in the United States today—not class mobility or the number of years of national income growth lost to the global financial crash. And, of course, it takes its name from that ruthless nineteenth-century critic of mainstream economics and capitalism itself....
Occasional Links & Commentary
Marx ratio
David F. Ruccio | Professor of Economics, University of Notre Dame

See also
Putting aside this rich line-up of events, what has caught our attention is the equal proliferation of pieces celebrating Marx’s birthday, for the better or for the worse. From misleading and derogatory articles such as the Rulers of the world: read Karl Marx! published by The Economist to educational short pieces such as Cooper’s It’s time to normalize Karl Marx, it is difficult to not wonder about the reasons behind such opposing views. Similarly, it is difficult to resist the temptation to add a little contribution to the debate. So here we are.…
Developing Economics
Marx’s Birthday and the Dismal Science: A Few Observations
Carolina Alves and Ingrid H. Kvangraven

Felipe Rezende — Banks, Capital Markets, and Institutional Investors as Providers of Long-Term Finance

This is the second in a series of blog posts on financing infrastructure assets.
Multiplier Effect
Banks, Capital Markets, and Institutional Investors as Providers of Long-Term Finance
Felipe Rezende | Director, Economics and Finance Program, Bard College and Research Fellow, The Levy Economics Institute

Bill Mitchell – ECB research provides a withering critique of mainstream macroeconomics

Although this blog post considers some very technical material its message is simple. Mainstream macroeconomic models that are used to determine policy choices by governments are deeply flawed and the evidence strongly supports a central thrust of Modern Monetary Theory (MMT) – that fiscal policy is powerful and that austerity will kill growth. In that sense, it helps us understand why various nations and blocs (such as the Eurozone) struggled after the onset of the GFC. It also explains why the deliberate attack on Greek prosperity by the Troika was so successful in demolishing any prospect of growth – an outcome that the official dogma resolutely denied as they constructed one vicious bailout after another. It also explains why New Keynesian approaches to macroeconomics are flawed and should be ignored. I was reminded this week by a research paper I had read last  year (thanks Adam for the reminder) which presents a devastating critique (though muted in central bank speak) of the mainstream approach to macroeconomic modelling. A research paper from the ECB (May 2017, No 2058) – On the sources of business cycles: implications for DSGE models – provides a categorical critique of DSGE models and a range of other stunts that mainstream economists have tried to introduce to get away from the obvious – economic cycles are demand driven.…
Q. Why do Austerians want to restrict domestic demand by limiting domestic worker incomes?

A. To decrease spending on imports while increasing exports in order to "strengthen" the trade balance and ideally achieve a permanent trade surplus, using Germany as a model for the EZ.

This is the prescription of the TroikaEuropean Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF).

This is what is happening with respect to the political kerfuffle in Italy.

Bill Mitchell – billy blog
ECB research provides a withering critique of mainstream macroeconomics
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

See also
Italy’s establishment has just revealed its truest beliefs and priorities. The context was the two parties that received the most votes in the last election forming a coalition government. The two parties seeking to form a coalition government won a majority of the seats in both houses of Italy’s parliament in the most recent election. The New York Times reported many of the key facts, but missed the key analytics.
"All's fair in love, war" — and politics, which is war conducted by other means.

New Economic Perspectives
The New York Times Praises the Italian Establishment’s Economic Illiteracy and Assault on Democracy
William K. Black | Associate Professor of Economics and Law, UMKC

Andre Vltchek - Saudi Wahabbism Serves Western Imperialism

If only the original communists hadn't banned religion, then the West would not have been able to portray them as agents of the Devil. I guess they saw how the ruling elite had used religion to control the masses. Wahabbism is extreme right wing, religious fascism and I wonder how the Wahhabi clerics believe such hate and violence serves God? Perhaps they are making a ton of money out of it like the extreme right-wing, Christian evangelical  preachers do? Again we read about pure evil driven by the elite. Until a few years back I was naive and never knew that things were this bad.  KV

When the Saudi Crown Prince gave an interview to the Washington Post, declaring that it was actually the West that encouraged his country to spread Wahhabi to all corners of the world, there was a long silence in almost all the mass media outlets in the West, but also in countries such as Egypt and Indonesia.
Those who read the statement expected a determined rebuke from Riyadh. It did not come. The sky did not fall. Lightning did not strike the Prince or the Post.
Clearly, not all that the Crown Prince declared appeared on the pages of the Washington Post, but what actually did, would be enough to bring down entire regimes in such places like Indonesia, Malaysia or Brunei. Or at least it would be enough under ‘normal circumstances’. That is, if the population there was not already hopelessly and thoroughly indoctrinated and programmed, and if the rulers in those countries did not subscribe to, or tolerate, the most aggressive, chauvinistic and ritualistic (as opposed to the intellectual or spiritual) form of the religion.

Reading between the lines, the Saudi Prince suggested that it was actually the West which, while fighting an ‘ideological war’ against the Soviet Union and other socialist countries, handpicked Islam and its ultra-orthodox and radical wing – Wahhabism – as an ally in destroying almost all the progressive, anti-imperialist and egalitarian aspirations in the countries with a Muslim majority.
Dissident Voice

Monday, May 28, 2018

Steve Keen — Brussels-Rome war: EU holds back Italy’s anti-euro tide for now

The first battle in the war between Brussels and Rome has thus been won by Brussels: I have little doubt that Mattarella was lobbied very strongly by EU figures to block Savona, because he is capable of developing the real weapon that Five Star/Northern League could bring to bear against the euro – the “mini-BOT.” Named in reference to Italy’s “buoni ordinario del tesoro,” which are short-term government bonds, these would be government-issued notes valued at between €1 and €500, which would be issued to people and companies owed tax refunds by the government. These, in turn, would be valid for paying taxes, buying train tickets, getting petrol at government-owned fuel stations, and so on.
These sidestep the euro’s monopoly as legal tender in the eurozone because a vendor does not have to accept these if they are tendered in an exchange. But they can be accepted, perhaps at a discount to face value, and thereby become an alternative means of payment to the euro.
This is a weapon that Greece prepared, but never used, because Yanis Varoufakis, in what he describes in Adults in the Room as “Mea Maxima Culpa” (“my most grievous fault”) decided to leave the decision to Alexis Tsipras. Tsipras demurred, and the result was a Greek tragedy.
An alternative-means-of-payment is a much more cogent weapon in Italy’s hands than it would have been in Greece’s. Italy’s economy is six times larger than Greece’s and average salaries are almost double (though per-capita income has fallen substantially since the global financial crisis); its economy, particularly in the north, is an industrial powerhouse; and its climate supports a huge range of agricultural products. Much more of what Italians need to buy can be purchased from other Italians than was ever feasible for Greece (the only categorical exception is oil). The mini-BOT could really free Italy from the stranglehold of the euro.…
Much more. Worth a read.
Brussels will seek to blame the anti-euro rebels, but the real villains of this crisis are the euro itself and the Maastricht Treaty. As the rebel British economist Wynne Godley stated back in 1992 when the Treaty was signed:
“If a country or region has no power to devalue, and if it is not the beneficiary of a system of fiscal equalization, then there is nothing to stop it suffering a process of cumulative and terminal decline leading, in the end, to emigration as the only alternative to poverty or starvation.” (Wynne Godley, ‘Maastricht and All That’ London Review of Books, October 1992)
Of course, another option is "populist" revolt. If a genuine left can't rise to the occasion, Mussolini anyone?

Brussels-Rome war: EU holds back Italy’s anti-euro tide for now
Steve Keen | Professor and Head Of School Of Economics, History & Politics, Kingston University, London

Links - 28 May 2018

Thomas Fazi is Bill Mitchell's collaborator.
The Italian Marxist Antonio Gramsci coined the term “organic crisis” to describe a crisis that differs from ”ordinary” financial, economic, or political crises. An organic crisis is a “comprehensive crisis,” encompassing the totality of a system or order that, for whatever reason, is no longer able to generate societal consensus (in material or ideological terms).
Such a crisis lays bare fundamental contradictions in the system that the ruling classes are unable to resolve. Organic crises are at once economic, political, social, and ideological—in Gramscian terms, they are crises of hegemony—and they usually lead to a rejection of established political parties, economic policies, and value systems. However, they don’t necessarily lead to the swift collapse of the dominant order. Gramsci described these situations as interregna in which “the old is dying and the new cannot yet be born” and during which time “a great variety of morbid symptoms” can appear.

Gramsci was talking about Italy in the 1910s. A century later, the country is facing another organic crisis. More specifically, it is a crisis of the post-Maastricht model of Italian capitalism, inaugurated in the early 1990s. This model, I argue, can be described as a peculiar kind of comprador capitalism—a term generally used in the context of the old colonial system to describe a regime in which a country’s ruling classes ally with foreign interests in exchange for a subordinated role within the dominant hierarchy of power.…
American Affairs
Italy’s Organic Crisis
Thomas Fazi

The fight for a full employment bill forty years ago offers lessons for supporters of a job guarantee today.…
If history is a guide, then these efforts may need to be more powerful than the Civil Rights Movement, which at its height made full employment such a key component of its agenda. If that is daunting, well, it should be. But an appropriate power analysis is vital for the years ahead....
Full Employment and Freedom
David Stein

See also
But diverse as the activities of the Forum may have been, none of the Forum venues, none of the Forum participants were as important to the success of the event as the four leaders who joined President Vladimir Putin on stage to address the Plenary Session Friday afternoon: President Emmanuel Macron of France, Prime Minister Shinzo Abe of Japan, Chinese Vice President Wang Quishan and IMF General Director Christine Lagarde.….
Putin's Russia is not exactly isolated.
As we shall see, Macron uses history as a cloak of personal grandeur; he envisions himself as an historic personage, an agent of History, following in the footsteps of none other than Charles De Gaulle....
It is more than curious that Macron chose to highlight the fact that when his predecessor Charles Charles De Gaulle decided to visit Russia in June 1966 he chose St Petersburg (Leningrad at the time) because of the city’s heroic resistance in the great siege of World War II. Macron announced that he would be visiting the Piskarevo cemetery where more than a million unidentified victims of the siege are buried to lay a wreath of remembrance.
Mention of his following in the footsteps of De Gaulle during this speech in Petersburg aligns perfectly with his mentioning one month ago in Washington De Gaulle’s address to the joint session of Congress in 1967, an honor that had been granted to no other French head of state in the intervening 51 years. It is remarkable that Macron, who started his government career as a Socialist and served under Hollande, has chosen De Gaulle, the iconic figure of the French Center Right, to be his avatar. The common denominator is surely national sovereignty, which De Gaulle went very far to promote....
Une parole franche 
St Petersburg International Economic Forum, 24 - 26 May 2018
Gilbert Doctorow | European Coordinator of The American Committee for East West Accord Ltd.

See also
Merkel on Saturday also reiterated a February coalition proposal to allow municipalities to apply a dissuasive tax on owners of vacant land who leave their plots unused, hoping to speculate on future windfall sales.
Decisions, Decisions, Decisions
Merkel to Revive Land Tax on Plots held Speculatively Vacent
Andrew Lainton

See also
External Affairs Minister Sushma Swaraj said India abides only by the sanctions imposed by the United Nations and not that of any individual nation indicating that the country may not be in a hurry to re-consider its economic ties with Iran on account of the fresh sanctions imposed by the US on the Islamic nation.
“India follows only UN sanctions, and not unilateral sanctions by any country,” Swaraj said at a press conference on Monday when asked about India’s response to the US decision of withdrawing from the Iran nuclear deal.
Iranian Foreign Minister Javad Zarif is in New Delhi to discuss the situation following the US rejection of the nuclear accord and to find out about India’s position on the matter. Iran is the third largest supplier of oil to India, after Iraq and Saudi Arabia.
Global South and East not going along with Global North and West. The parting of the ways?

The Hindu — Business Line (India)
India abides by UN sanctions, not unilateral ones: Swaraj


Pepe reports from Iran. A very different view than the picture presented in Western media.

Asia Times
Iran diary: bracing for all-out economic war
Pepe Escobar

See also
Now I learn that they also recruit "confidential sources" to speak to you about the subject of FBI interest WITHOUT bothering to inform you that they are going to tell the FBI what you said about things. Some of these "confidential sources" are employed by the FBI for long periods of time. The American professor now teaching at a UK university who was sent by the FBI to talk to several Trump campaign people was one such. Other "confidential sources" are recruited for a particular case.  Sometimes they are recruited from among the existing acquaintances or "friends" of the person targeted by the FBI. In other words if DoJ, the WH, or the Bureau (FBI) want to know what I, or anyone else, really says about a given topic, they can recruit someone I know using pressure, persuasion or money to "rat" me out.
Felix Dzerzhinsky would have been proud of their skills if they had been his men.
Just how is this different from the KGB?

Sic Semper Tyrannis 
The FBI uses "confidential informants?" So did the Cheka.
Col. W. Patrick Lang, US Army (ret.) 
At the Defense Intelligence Agency, Lang was the Defense Intelligence Officer (DIO) for the Middle East, South Asia and counter-terrorism, and later, the first Director of the Defense Humint Service. At the DIA, he was a member of the Defense Senior Executive Service. He participated in the drafting of National Intelligence Estimates. From 1992 to 1994, all the U.S. military attachés worldwide reported to him. During that period, he also briefed President George H. W. Bush at the White House, as he had during Operation Desert Storm.

He was also the head of intelligence analysis for the Middle East for seven or eight years at that institution. He was the head of all the Middle East and South Asia analysis in DIA for counter-terrorism for seven years. For his service in the DIA, Lang received the Presidential Rank Award of Distinguished Executive. — Wikipedia

By Peter S. Goodman - Britain’s Big Squeeze: In Britain, Austerity Is Changing Everything

                        This beautiful park is up for sale to developers - once it's gone, it's gone!

“Everybody uses this park,” says Jackie Lewis, who raised two children in a red brick house a block away. “This is probably our last piece of community space. It’s been one after the other. You just end up despondent.”

So much for the Thatcher miracle, Britain is more broke than ever. But where did the money go, maybe the banks took it all in their bail out?  But aren't these the technocrats who say they know how to run an economy?

After eight years of budget cutting, Britain is looking less like the rest of Europe and more like the United States, with a shrinking welfare state and spreading poverty.r eight years of budget cutting, Britain is looking less like the rest of Europe and more like the United States, with a shrinking welfare state and spreading poverty.

PRESCOT, England — A walk through this modest town in the northwest of England amounts to a tour of the casualties of Britain’s age of austerity.
The old library building has been sold and refashioned into a glass-fronted luxury home. The leisure center has been razed, eliminating the public swimming pool. The local museum has receded into town history. The police station has been shuttered.
Now, as the local government desperately seeks to turn assets into cash, Browns Field, a lush park in the center of town, may be doomed, too. At a meeting in November, the council included it on a list of 17 parks to sell to developers.

For a nation with a storied history of public largess, the protracted campaign of budget cutting, started in 2010 by a government led by the Conservative Party, has delivered a monumental shift in British life. A wave of austerity has yielded a country that has grown accustomed to living with less, even as many measures of social well-being — crime rates, opioid addiction, infant mortality, childhood poverty and homelessness — point to a deteriorating quality of life.

Steve Keen - My review on Yanis Varoufakis' "Adults in the Room"

Steve keen on Twitter

Yanis has just penned a superb review of reviews of Adults in the Room, and it's prompted me to make my review (which I only published on Amazon) more widely known. Here it is below, and here's the link to the review on Amazon.
Buy Yanis's book. It's the only way you'll understand what's about to unfold in Italy

 A cracking tale of the first act in the destruction of Europe by Europe's unelected elite 

First an admission: Yanis and I have been friends since we met in 1991, when I was doing my PhD at the University of New South Wales and he was a Senior Lecturer at the University of Sydney. This hasn't influence my review however: if I hadn't enjoyed the book, I would simply not have written one.
Having read it, I am confident that it will go down as one of the great political biographies of the 21st century. It is a work that people will turn to when they try to understand what on earth happened during our time: a riveting, compelling history of a critical act in the self-inflicted decay of European civilisation.
Most political biographies are an attempt to rescue a reputation that deserved to be sullied. This one confronts the many barbs that were thrown Yanis's way, but he doesn't refrain from throwing some barbs at himself either when, on reflection, he wished he had taken a different course. That takes a courage and an honesty that I came to expect from knowing Yanis, and he did not disappoint.
As the tragedy of Syriza unfolded in 2015, I had wished that Yanis would deploy the one Big Stick he had: the threat to default from Greece's unpayable loans from the IMF. On its own this was not significant, but as he explains in the book, it would in turn have triggered a cascade of defaults that would have undone Mario Dragi's program of Quantitative Easing.
He did, once, have his finger on that trigger, and decided not to pull it--to wait and leave the act to Tsipras. Looking back in this book, he now wishes he had done so. If he had, he could have forced the Troika to work with Greece on a sensible program, rather than watch them impose one which will lead to Greece becoming Europe's Somalia.
I like to think that I would have pulled that trigger. But I wasn't there in the hot seat: Yanis was, and he tells the tale impeccably well. This is a cracking yarn as well as a priceless political history, with major actors--Dragi, Tsipras, Merkel and above all Schauble--exposed by their own words.
They will not like to have their words and deeds documented this well, which is all the more reason you should read it. 

Danial Larison - The Madness of Lindsey Graham

I didn't know who Lindsey Graham was when I first saw him but I realised straight away he was a very dangerous person. KV

Danial Larison - The Madness of Lindsey Graham

For some mysterious reason, Lindsey Graham is taken seriously when he talks about foreign policy, and yet everything he has to say about these issues is either nonsense or maniacal. Here he is rambling about why the U.S. should be willing to attack North Korea despite the massive loss of life that would follow:
Well, you know, so let’s understand what we’re saying here. We’re saying that as a last resort, we’ll use military force to destroy the regime’s nuclear program, which basically means destroying the regime. Now yes, that will be, that will be difficult. It will be devastating to the region. But 20 years from now, if they keep building nuclear weapons and missiles, they’re going to sell it to somebody who will use it. Iran is different. They have a religious mission. They’re religious zealots. They’re religious Nazis. If they get a nuclear weapon, they’ll use it for religious purposes, to purify the Sunni faith, destroy Israel and come after us. So where does a terrorist get a weapon, a nuclear weapon, that they would actually use? From a regime like North Korea or Iran. So the President has calculated for the good of the world, for the good of the United States, I’m going to take off the table North Korea having nuclear capability to threaten the homeland and the world at large. And if it takes a war to end that nuclear threat, so be it. And the war will be over there. The people dying will be over there, and he doesn’t want to do that. But he’s going to pick regional conflict to secure the homeland [bold mine-DL]. I hope people understand that.
Graham has shrugged off the likely deaths of millions several times before by asserting that they will be “over there.” Never mind that hundreds of thousands of Americans live in South Korea and would suffer along with the rest of the population there, and never mind that North Korea likely already has the ability to strike U.S. targets with nuclear-tipped ICBMs. Graham is enough of a warmonger that these things wouldn’t make him think twice anyway. Just consider the monstrous inhumanity required to talk up the virtues of starting a war that would devastate multiple countries and claim millions of lives and then shrug it off because it supposedly won’t affect us. Add to this the nonsensical raving about Iran’s supposed zealotry that would lead its government to commit national suicide, and you have a very clear window into the warped and disturbed thinking of one of our country’s leading pro-war fanatics.
It is tempting to dismiss Graham’s rhetoric as nonsense and leave it at that, but there is a strong and worrying likelihood that the president shares Graham’s demented views and may be willing to act on them. Now that Bolton is advising Trump, the president will have another equally fanatical voice in his ear telling him to do just that.

The American Conservative - 1,475 Disappeared Children

A shocking video, but look at the others here too? Immigrant women workers being raped on night shifts and in the fields at American farms. 

Trafficked in America, 1,475 Disappeared Children. Documentary

The American Conservative 

The Arizona Republic writer E.J. Montini has a story that is so horrible that it can’t be true … can it? Yes, it’s true. Excerpts:

The Trump administration recently announced a new, get-tough policy that will separate parents from their children if the family is caught crossing the border illegally.

It was a big news story. So big it overshadowed the fact that the federal government has lost – yes, lost – 1,475 migrant children in its custody.

Homeland Security Secretary Kirstjen Nielsen told Congress that within 48 hours of being taken into custody the children are transferred to the Department of Health and Human Services, which finds places for them to stay.


The Office of Refugee Resettlement reported at the end of 2017 that of the 7,000-plus children placed with sponsored individuals, the agency did not know where 1,475 of them were.

Read the whole thing.

Last month, PBS’s Frontline reported that some of these children were released by the feds into the hands of human traffickers:

In 2014, at least 10 trafficking victims, including eight minors, were discovered during a raid by federal and local law enforcement in Portman’s home state of Ohio. As FRONTLINE examined in the recent documentary Trafficked in America, HHS had released several minors to the traffickers. The committee said the case was due to policies and procedures that were “inadequate to protect the children in the agency’s care.”

After unaccompanied minors arrive in the United States, often to reunite with family members or to flee violence or poverty in their home countries, they are typically transferred from border patrol or customs officers to the custody of HHS, which often reunites the minors with a relative or another sponsor. The department is supposed to place check-in phone calls 30 days after a minor’s placement, but during the hearing, Wagner acknowledged gaps in that system.


In an interview with FRONTLINE for Trafficked in America, Portman said that HHS cannot ignore its responsibility for unaccompanied minors.

“We’ve got these kids,” he said. “They’re here. They’re living on our soil. And for us to just, you know, assume someone else is going to take care of them and throw them to the wolves, which is what HHS was doing, is flat-out wrong. I don’t care what you think about immigration policy, it’s wrong.”

Here’s a link to watch the entire Frontline “Trafficked in America” episode online.

Nearly 1,500 kids, disappeared. I agree with Sen. Portman: no matter what you think of US immigration policy, this is horrifying.

Why is this not a massive scandal? We’re talking children here. I suppose that’s one way to guarantee that people don’t try to cross the border illegally with their children: tell them that the US government will take their kids away, and oops, might even lose them, or even hand them off to human traffickers.

We can’t stand for this, America.

The American Conservative - 1,475 Disappeared Children

Graham Philips - Russia with Simon Reeve” – BBC Propaganda vs Reality

Independent filmmaker Graham Phillips takes a close look at the BBC program “Russia with Simon Reeve”, revealing the degree of bias – and worse – beneath its benignly smiling exterior. Off-Guardian

I remember watching a British documentary about Cuba a few years back which was presented nice looking middle class journalist. Well, surely he wouldn't lie, and so an unsuspecting public subliminally takes in the BBC propaganda without any thought? 

The first minute or so the filmmaker said what was good about Cuba, especially how every child gets a chance to learn ballet, because Fidel Castro loved ballet. But after that it just went into how authoritarian and run down Cuba was. The sanctions didn't help, said the filmmaker, but much of the blame can be put down to Fidel's communism, he added. No discussion of how Fidel Castro's first government had socialist, communist, and conservative party members in it and how the sanctions forced Cuba to go towards Russia for help. No mention of it colonial past as a slave state and how the Cubans had bravely fought to expel the evil imperialists who had terribly abused them and stole their resources; no mention of the constant threat to life of party members were under from US backed terrorist mercenaries; no mention of the ruthless ruling elite and US corporations who wanted to seize control of Cuba and turn it back into a slave state. It just said how bad communism was. 

Yes, communism is not great, but was rule by imperialists worse? And would communism always eventually go back to democratic socialism and capitalism if there was no further threat from imperialism and exploitation by a few wealthy and often criminal elite?   KV

Sunday, May 27, 2018

Philip Perry - There's a loneliness epidemic in the US and it’s getting worse

In the richest counties in the world there's a lot of loneliness as we become less group orientated and more individualistic.

In primitive societies the group was very social, for instance, I always wondered how very young women coped with being teenage mothers when there was no age of consent so most of them may have been still children. But young inexperienced mothers would never be left alone all day with nagging children as the grandmothers and great grandmothers - who would have considerable child rearing experience - would always be around to help. Also, a small group of women would look after the infants during the day while the other mothers worked in the fields. Of course, most of the men all went hunting together.

The stress was different too, there was no unemployment and if your house burnt down everyone in your village would help you build a new on.  But we know it was no paradise either. KV

Philip Perry

I’m going through a divorce. It’s amicable, mature, and adult. We just don’t work together as a couple anymore, but we’ll try and remain friends. As a writer, I work from home. I’m alone all day and now, no one is coming home at night. As a result, I’m taking great pains to be social, to go out, to see friends and family, to make phone calls, and to avoid social isolation. There’s no shame in admitting as much, although our rugged individualist society may look down on opening up about such things, especially as a straight male. Aren’t we supposed to be stoic mavericks, able to set out on our own, without anyone’s help at all? Turns out, not so much.

In fact, staying connected is the healthiest thing to do, and not just psychologically. According to a 2014 University of Chicago study, loneliness can have a significant negative impact on physical health. It can increase the rate of atherosclerosis—the hardening of the arteries, increase the risk of high blood pressure and stroke, and decrease retention, which can even hurt learning and memory. What’s more, the lonely often make worse life choices and are more prone to substance abuse.
Global health services company Cigna recently teamed up with market research firm Ipsos, to investigate loneliness in America. They conducted a nationwide survey, which found that 47% of Americans lacked meaningful interpersonal interactions with a friend or family member on a daily basis. 43% reported having weak relationships, experiencing feelings of isolation, and an overall lack of companionship. 46% said they felt lonely often, while 47% reported feeling left out.
Big Think

Steve Pinker - Why there are no libertarian countries (video)

Does everyone have the same values? Yes, but libertarianism isn’t one of them. 

Steve Pinker says that in modern societies people support some sort government social provision as they are aware the market can't meet the needs of everyone, for instance, the elderly, young children, and those that have no skills or talents that the market can use. But I think there is another very powerful reason: when the chips are down and you have run out of luck, no one wants to live in a society where, "you're on your own, mate!". Even most conservatives want some sort of social provision in place just in case things really do go badly wrong (what they don't like is people abusing the system, but none of us like that). Plus they know that relying on your family can be very hit and miss as well as it being very embarrassing to go begging. So, this is the reason why there will never be a libertarian state. Well, that's my opinion. KV

Steve Pinker 

Is conflict humanity's natural state? Could we ever agree on a set of values? The knee-jerk response for any student of history would be 'no', but the data tells a different story. Psychologist and author Steven Pinker offers proof in the form of Wagner's law: "One development that people both on the Left and the Right are unaware of is almost an inexorable force that leads affluent societies to devote increasing amounts of their wealth to social spending, to redistribution to children, to education, to healthcare, to supporting the poor, to supporting the aged." Until the 20th century, most societies devoted about 1.5% of their GDP to social spending, and generally much less than that. In the last 100 years, that's changed: today the current global median of social spending is 22% of GDP. One group will groan most audibly at that data: Libertarians. However, Pinker says it's no coincidence that there are zero libertarian countries on Earth; social spending is a shared value, even if the truest libertarians protest it, as the free market has no way to provide for poor children, the elderly, and other members of society who cannot contribute to the marketplace. As countries develop, they naturally initiate social spending programs. That's why libertarianism is a marginal idea, rather than a universal value—and it's likely to stay that way. Steven Pinker is the author of Enlightenment Now: The Case for Reason, Science, Humanism, and Progress.

Big Think