So Are We All MMTists Now? — Brian Romanchuk

Larry Summers attracted a great deal of attention with arguments that post-Keynesian theories ought to be taken into account, and the ability of central banks to stimulate the economy are limited. One could argue that the zeitgeist is shifting in the direction of Modern Monetary Theory (MMT): the role of fiscal policy may be increasingly important. However, I am unsure how far actual economics debates will shift.

One may note that Summers dodged discussing MMT in his initial tweets; in fact, he referred to Thomas Palley, whose main contributions in recent years has been his sectarian attacks on MMT. My guess is that this will be a fairly standard approach...,

I have said previous, this is about control of the Democratic Party going forward — the Democratic Establishment (the Clinton-Obama camp) versus the progressives (the Bernie-Squad camp). Stephanie Kelton has put MMT at the center of it owning to her association with Bernie and AOC's endorsement of MMT.

The former is backing way from New Keynesian but is not willing to throw in the towel and support MMT. Now the battle is engaged. So far the victories are going in the right direction if one is an MMT supporter. Monetarism is effectively dead and New Keynesian is becoming untenable as a policy position.

There has been an ongoing battle between one faction of Post Keynesians and others that support MMT. Larry Summers just cast his hat with the former.

Bond Economics
So Are We All MMTists Now?
Brian Romanchuk

Michael Hudson — Global Warming and U.S. National Security Diplomacy

Control of oil has long been a key aim of U.S. foreign policy. The Paris climate agreements and any other Green programs to reduce the pace of global warming are viewed as threatening the aim of dominating world energy markets by keeping economies dependent on oil under U.S. control. Also blocking U.S. willingness to help stem global warming is the oil industry’s economic and hence political power. Its product is not only energy but also global warming, along with plastic pollution....

Naked Capitalism
Michael Hudson: Global Warming and U.S. National Security Diplomacy
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

John Ross — Why China maintained its strong economic growth

The reason this is crucial is set out in the article below. It shows in a detailed way that it is investment, and not any other major factor in the economy, which controls China’s rate of economic growth – as it does in other major economies. In addition to its medium-term effect it was the fall in fixed investment which led to the economic slowdown in the second half of 2018, and the upturn which led to the good results in the first quarter of 2019 and in March in particular. Quantitative analysis of the data therefore confirms that it is fixed investment which is the most powerful factor in China’s medium-term economic development and its short-term macroeconomic regulation....

The article also contains an explanation of how the US approach to trade involves hybrid warfare. Hybrid warfare leads with economic warfare and information warfare, followed by cyberwarfare (although cyberwarfare is ongoing under the guise of intelligence gathering), and only then moves on to kinetic warfare if hybrid warfare does not accomplish the objectives, or if the adversary responds.

Should-read.

Socialist Economic Bulletin
Why China maintained its strong economic growth

John Ross

Stephanie Kelton — The Democrats’ Options for Repealing the Trump Tax Cut

No, this won’t be on the table until 2021 at the earliest. But the party’s candidates need to offer some solutions.

Bloomberg Opinion
The Democrats’ Options for Repealing the Trump Tax Cut

Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

William Hartung — The Pentagon's Plan to Dominate the Economy

Given his erratic behavior, from daily Twitter eruptions to upping his tally of lies by the hour, it’s hard to think of Donald Trump as a man with a plan. But in at least one area — reshaping the economy to serve the needs of the military-industrial complex — he’s (gasp!) a socialist in the making.…

William Hartung apparently misses that the first step in the plan is reality distortion, also known as "gaslighting." With such field distortion, establishing truth becomes impossible on evidence-based argument, opening the possibility of normalizing anything. It's the basis of the plan of a "master persuader." The president did not invent it. It has historical precedent.

His plan is now visibly taking shape — one we can see and assess thanks to a Pentagon-led study with a distinctly tongue-twisting title: “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States.” The analysis is the brainchild of Trump’s adviser for trade and manufacturing policy, Peter Navarro, who happens to also be the key architect of the president’s trade wars.

Navarro, however, can hardly take sole credit for the administration’s latest economic plan, since the lead agency for developing it was also the most interested of all in the project, the Pentagon itself, in particular its Office of Defense Industrial Policy. In addition, those producing the report did so in coordination with an alphabet soup of other agencies from the Department of Commerce to the Director of National Intelligence. And even that’s not all. It’s also the product of an “interagency task force” made up of 16 working groups and 300 “subject matter” experts, supplemented by over a dozen industry “listening sessions” with outfits like the National Defense Industrial Association, an advocacy organization that represents 1,600 companies in the defense sector.

Before jumping into its substance and implications for the American economy and national defense, let me pause a moment to mention two other small matters.
First, were you aware that the Pentagon even had an Office of Defense Industrial Policy? It sounds suspiciously like the kind of government organization that engages in economic planning, a practice anathema not just to Republicans but to many Democrats as well. The only reason it’s not a national scandal — complete with Fox News banner headlines about the end of the American way of life as we know it and the coming of creeping socialism — is because it’s part of the one institution that has always been exempt from the dictates of the “free market”: the Department of Defense.

Second, how about those 300 subject matter experts? Since when does Donald Trump consult subject matter experts? Certainly not on climate change, the most urgent issue facing humanity and one where expert opinion is remarkably unified. The Pentagon and its contractors should, however, be thought of as the ultimate special interest group and with that status comes special treatment. And if that means consulting 300 such experts to make sure their “needs” are met, so be it.

Now for the big stuff....

Tom Dispatch
Tomgram: William Hartung, The Pentagon's Plan to Dominate the Economy

This article is crossposted at The Nation

The Nation
The Military Is the Ultimate Special-Interest Group: More money than ever is going towards the least-efficient sector of the economy.
William D. Hartung

Charlotte Cowles — Stephanie Kelton Wants You to Ask: ‘What Does a Good Economy Look Like?’

It’s rare for a fiscal policy wonk to attain political celebrity status, but economist Stephanie Kelton, a professor at Stony Brook University in New York, is one of the hottest names in Washington right now. Though her ideas were considered radical just a few years ago (Paul Krugman flatly rejected the premise of her research in a 2011 New York Times column), several of the policies she helped popularize, such as nationwide student debt cancellation and a federal jobs guarantee, have become hallmarks of emerging progressive ideology, championed by politicians like Democratic House nominee Alexandria Ocasio-Cortez, Senator Kirsten Gillibrand, and Senator Bernie Sanders. (Kelton served as Sanders’ chief economic adviser during his 2016 presidential run.) 

At 48, Kelton is a fast, earnest speaker eager to explain her ideas to anyone who asks. She packs conference halls (even a sports arena, in one case), appears regularly on MSNBC, cultivates a robust Twitter presence, and even lists her cellphone number on her website for journalists on a deadline—although lately, she’s been fielding just as many calls from political candidates seeking her counsel. “I’ve spent the whole summer on Skype with an awful lot of people running for office,” she says brightly. “They’re reaching out because they want to get the economics right, which is so heartening.”…

Closing the last mile. The strategy is paying off.

This is a really good "elevator speech" for MMT advocates and also politicians and others that need to explain economic policy and answer questions about policy proposals.

Make Change
Stephanie Kelton Wants You to Ask: ‘What Does a Good Economy Look Like?’
Charlotte Cowles

Jared Bernstein — Trump 2020 game plan: Fake Laffer, Go Keynes.

Summary and implications of Goldman Sachs economic research team forecast.
On the Economy
Trump 2020 game plan: Fake Laffer, Go Keynes.Jared Bernstein | Senior Fellow at the Center on Budget and Policy Priorities and former Chief Economist and Economic Adviser to Vice President Joe Biden in the Obama Administration

Zach Carter — Stephanie Kelton Has The Biggest Idea In Washington

Must-read. 

Its' a very positive article, but unfortunately, the job guarantee is not presented in terms of the basic issue — the choice between a buffer stock of employed or buffer stock of unemployed, and how the former is superior using efficiency and effectiveness as criteria.

The other key issue is how the JG is an integral aspect of policy formulation that promises to reconcile the trifecta of growth, employment and price stability, previous thought to be impossible without using one as a tool to target the others.

Adoption of policy based on MMT analysis should keep the economy operating a close to optimal output and employment along with moderate inflation, with the JG playing the dual role of providing a price anchor, on one hand, and on the other, mopping up residual unemployment after the application of function finance to fiscal policy based on stock-flow consistent macro modeling.

Huffington Post
Stephanie Kelton Has The Biggest Idea In Washington
Zach Carter

Michael Stephens — Watch Live: A New New Deal and the Job Guarantee

Today at the New School, L. Randall Wray and Stephanie Kelton take part in a public workshop organized by the National Jobs for All Coalition that is focused on developing a “A New ‘New Deal’ for NYC and the USA....

Multiplier Effect
Watch Live: A New New Deal and the Job Guarantee
Michael Stephens

Tom Palley — Trump and the Neocons: Doing the Unilateralist Waltz

The neocon goal is unchallenged U.S. supremacy. If that goal frames U.S. foreign policy, international economic policy must conform with it.

In the Cold War era, the currency of power was provision of weapons and ideology. In the new era of globalization, commerce has become a major new currency of power, making international economic policy a key concern.

Consequently, under Trump, neocon unilateralism is now spreading into international economic relations....

Tom Palley hits one out of the park, connecting neoliberalism (economic) and neoconservatism (political) with globalization and US global hegemony.

The Globalist
Trump and the Neocons: Doing the Unilateralist WaltzTom Palley

Edward Harrison — If Donald Trump remains a cultural warrior, he will fail

Early on in President Trump’s new administration, too much of his energy is being placed on divisive ‘cultural’ issues and not enough attention is being paid to economic policies. To the degree Trump has turned to the economy, much of his policy has been focused on issues that will not yield long-term economic benefits but contain considerable risk, like trade with Mexico and China. And so, while Donald Trump is only a few weeks into his presidency, I think we can begin to take stock of what his presidency will mean for the US economy....

*************
So from where I sit I see a Cultural warrior President, who is getting bogged down over divisive and non-economic issues. I also see a President, who when he does turn to economic policy, is at risk of favoring existing businesses rather than promoting markets. And finally I don’t see a President who is focused on the things that will engender more domestic consumption and investment — improving the after-tax incomes of ordinary Americans by lowering middle income tax burdens and increasing wages.

When Donald Trump focuses on middle class incomes, that’s when you should expect consumption and investment — and hence economic growth — to increase. Until then, don’t expect much.

Credit Writedowns
If Donald Trump remains a cultural warrior, he will fail
Edward Harrison

Tony Wikrent — Rex Tugwell of FDR's Brain Trust: The New Deal in Retrospect

Rexford Guy Tugwell (1891-1979) was an economist and one of the most important and innovative members of President Franklin D. Roosevelt's first Brain-Trust. Tugwell studied economics at the Wharton School of the University of Pennsylvania under Simon Patten, at the time one of the leading economists in the USA and one of the last great economists to emphasize the difference between productive economic activity, and economic rent seeking. Patten was a founder of the American Economics Association. 

This was decades before Wharton was infested by neoliberalism and became an MBA mill.

This account by Tugwell provides an excellent short history of the pre-war Roosevelt administration. I greatly wish I had been aware of it nine years ago, in time to have posted it during Obama's first campaign. It would have served as a signpost to an alternative to neoliberalism, which Obama unfortunately followed steadily as he moved from one accommodation with Wall Street to the next. In addition to my reading of countless articles these past 8 years, I have read Obama’s two autobiographies, Plouffe’s book, and the biographies by Halperin and Heilemann, Remnick, and Alter, and the excellent book detailing the influence of Wall Street by Suskind, Confidence Men: Wall Street, Washington, and the Education of a President. One thing that strikes me is that neither Obama, nor Plouffe, nor anyone else close to Obama, ever spoke of Franklin Roosevelt and the New Deal as if they were actually familiar with them or wished to emulate FDR. I suspect they have never studied Roosevelt and the New Deal, at least not with the goal of learning how to govern as well and as dynamically as FDR did. Obama and his team certainly never discussed the heroic measures Roosevelt and Harry Hopkins took to get millions of people a paying job so they wouldn’t starve in the winter of 1933-34....

Obama, like Bill Clinton, modeled himself on Ronald Reagan rather than FDR. Actually, it was Jimmie Carter that began the turn of the Democratic establishment to the right.

The post contains a copy of R. G. Tugwell's "The New Deal in Retrospect," The Western Political Quarterly, December, 1948, Vol. 1, No. 4.

It also contains a link to Michael Hudson's article on Simon Patten on productive investment versus economic rent.

real economics

Rex Tugwell of FDR's Brain Trust: The New Deal in Retrospect
Tony Wikrent

Bill Black — Jobs, Jobs, Jobs – Not Austerity

Democrats under the spell of Rubinomics consign themselves to the political wilderness.

New Economic Perspectives
Jobs, Jobs, Jobs – Not Austerity
William K. Black | Associate Professor of Economics and Law, UMKC

Bloomberg — Treasury Pick Mnuchin Says Tax Cuts to Double U.S. Growth

Trumponomics = Reaganomics?

Bloomberg
Treasury Pick Mnuchin Says Tax Cuts to Double U.S. Growth
Saleha Mohsin and Michelle Jamrisko

See also

Steven Mnuchin, President-elect Trump’s nominee for Treasury Secretary, said today of Trump’s coming tax cut proposal, “Any reductions we have in upper-income taxes will be offset by less deductions so that there will be no absolute tax cut for the upper class.” But his assertion, on CNBC this morning, is completely at odds with the tax plan that Trump announced during the campaign, which would provide a massive tax cut for upper-income taxpayers.

To be sure, the plan that Trump announced would limit itemized deductions for high-income taxpayers (to $100,000 for individuals, $200,000 for joint filers). The value of the tax cuts that would disproportionately benefit the richest people, however, far outweighs the deduction limit. Among other benefits for wealthy filers, the Trump plan would cut the top income tax rate, the top tax rate for wealthy partnerships, and the capital gains and dividends tax rate, and it would eliminate the estate tax on massive inheritances.

As a result, under the current Trump tax plan, the top 1 percent of taxpayers would receive by far the largest tax cut as a share of income — a 14 percent increase in after-tax income, the Tax Policy Center finds. Meanwhile, the plan provides far less for those at the bottom or in the middle. As the chart shows, after-tax income would rise just 0.7 percent for those in the bottom fifth and 0.9 percent for those in the next fifth....

The Center on Budget and Policy Priorities
Treasury Nominee’s Claims at Odds With Trump Tax Plan
Chuck Marr | Director of Federal Tax Policy

Trump’s pick for the nation’s top financial regulator sparked rave responses from Wall Street lobbyists but a firestorm from public interest groups.

Inequality.org
‘Foreclosure King’ for Treasury
Sarah Anderson

Edward Harrison — Donald Trump and the return of Rockefeller Republicanism

Smart post by MMT-friendy Edward Harrison.

Just as Bill Clinton tacked right to become Republican lite, Trump needs to tack left to become Republican lite. Otherwise, the center will not hold.

There needs to be more realism in US domestic and foreign policy and less ideology.

Trump seems to get this.

Credit Writedowns Pro
Donald Trump and the return of Rockefeller Republicanism
Edward Harrison

Pepe Escobar — How Donald Trump will follow the money

The headline is a bit misleading. The post is much broader and includes US foreign and military policy as well as the economy.

In modern liberal "democracies," policy battles are among elites, and this one is between industrial capital and finance capital. Industrial capitalists want their country back and think that Trump can deliver it to them.

Policy is prime determinate in macroeconomics, and this is a policy war among US elite and their disparate interests. Since the US is the global hegemon, its economic, foreign and military policy shapes the global economy as well as geopolitics. Industrial capital wants a course correction. Finance capital, backed by the Democrats, want to stay on course, which is a collision course with Russia and China in Eurasia.

RT
How Donald Trump will follow the money
Pepe Escobar

Michael Brenner — America’s Worst Laid Plans

The U.S. government seeks to impose neo-liberal economics on the world even though those “free-market” policies funnel global wealth to a tiny fraction at the top, cause widespread despair and spark political turmoil, Michael Brenner explains.

Neoliberalism: Unregulated markets and privatization of public assets are the solution to all social, political and economic problems now and forever.

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

The rationale of exceptionalism to justify imposing this globally as the world order:

The United States has been pursuing an audacious project to fashion a global system according to its specifications and under its tutelage since the Cold War’s end.
For a quarter of a century, the paramount goal of all its foreign relations has been the fostering of a system whose architectural design features the following:

• a neo-liberal economic order wherein markets dictate economic outcomes and the influence of public authorities to regulate them is weakened;
•  this entails a progressive financializing of the world economy which concentrates the levers of greatest power in a few Western institutions – private, national and supranational;
• if inequality of wealth and power is the outcome, so be it;
• security provided by an American-led concert that will have predominant influence in every region;
• a readiness to use coercion to remove any regime that directly challenges this envisaged order;
• the maintenance of a large, multi-functional American military force to ensure that the means to deal with any contingency as could arise;
• all cemented by the unquestioned conviction that this enterprise conforms to a teleology whose truth and direction were confirmed by the West’s total victory in the Cold War.

Therefore, it is inherently a virtuous project whose realization will benefit all mankind. Virtue is understood in both tangible and ethical terms.…

The rest explains the insanity of it all and where it is leading.

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

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

Liz Kreutz — Bill Clinton Would Be 'in Charge of Revitalizing the Economy,' Hillary Clinton Says

If her foreign policy record were not scary enough.…

During a campaign event in Fort Mitchell today, the Democratic presidential candidate was more blunt than ever about what her husband's role would be in a future Clinton administration — saying she plans to to put the former president "in charge of economic revitalization."

"My husband, who I'm going to put in charge of revitalizing the economy, 'cause you know he knows how to do it," Clinton told the crowd at an outdoor organizing rally. "And especially in places like coal country and inner cities and other parts of our country that have really been left out."

Clinton made similar remarks earlier this month during her first visit to Kentucky, a state where Bill Clinton remains popular among the largely white, working class voters.

"I've told my husband he's got to come out of retirement and be in charge of this because you know he’s got more ideas a minute than anybody I know," she said, while talking about manufacturing and jobs.

Over the course of the campaign, Clinton has repeatedly said she would seek her husband's advice if she takes office.

ABC News

Bill Clinton Would Be 'in Charge of Revitalizing the Economy,' Hillary Clinton Says
Liz Kreutz
ht Lambert Strether at Naked Capitalism

Brian Romanchuk — The United States of Stagnation

It should be noted that secular stagnation is not an accident; it is exactly what the policy elites in the United States want. Inflation is under control, taxes are low, and the environment is favourable for developing strong corporations. Although politicians pay lip service to faster growth and job creation, the revealed preference is that they do not actually want such an outcome.…

Short, not wonkish, and insightful about today's US economic situation and its politics.

Bond Economics
The United States of Stagnation
Brian Romanchuk

Xinhua — Spotlight: Trump gets them wrong, from trade balance to basic economics

The Chinese news service weighs in on Trump.

Xinhua
Spotlight: Trump gets them wrong, from trade balance to basic economics