Close Encounters of a Green New Deal Kind — Douglas Holtz-Eakin

In the end, MMT looks like an extreme version of conventional economics in which there is no independent monetary policy and there are a lot of unused resources. But when resources get tight, the reflex is command and control central planning.

This cuts to the quick of it. The question is how much market state (where free markets determine outcomes, in theory at least) and how much welfare state (where the economy is managed based on desired outcomes). This is an ongoing dialectic among Libertarians, conservatives, liberals and progressives in the US.

However, the GND is different in that it is a special case. The name indicates that it is being compared to the New Deal that addressed the effects of the Great Depression. Proponents also point to the American economic response in WWII, in which John Kenneth Galbraith played a major role. In the minds of the proponents of the GND, this is about government mobilizing resources and "taking charge" in order to meet an existential threat. Opponents view this as overreaction to a supposed threat that does not appear to exist, in their minds.

This is reminiscent of the lead up to WWII, where Americans in general preferred isolationism to preparation until events were forced on them at Pearl Harbor. Then the race to catch up.

American Action Forum

Close Encounters of a Green New Deal Kind

Douglas Holtz-Eakin | President

Tazra Mitchell — Some House Leaders Ignore Evidence, Cite Flawed Reports to Justify Taking Basic Assistance Away From Needy Individuals

Some Republican policymakers continue to propose basing eligibility for assistance programs on participants’ ability to meet strict work requirements — most recently with House Agriculture Committee Chairman Michael Conaway’s proposal to reauthorize SNAP (formerly food stamps)[1] — despite a lack of credible evidence that the requirements would work as intended.[2]

To build support for work requirements that take away assistance from adults who cannot work a set number of hours per month, conservative policymakers are pointing to three methodologically flawed studies touting the policy’s alleged success in Kansas’s and Maine’s cash and food assistance programs. The three studies misrepresent or omit key findings, and in many instances, make inappropriate claims about the impact of work requirements on work and earnings that the facts do not support.

Our analysis of the same data sharply contradicts the studies’ findings. We found that many adults in these programs already worked or would likely work soon anyway, but many of them found it difficult to find steady work and had earnings far below the poverty line or would have otherwise still qualified for assistance after their exits from the program....

The studies have at least four key flaws....

Center on Budget And Plicy Priorities
Some House Leaders Ignore Evidence, Cite Flawed Reports to Justify Taking Basic Assistance Away From Needy Individuals
Tazra Mitchell

Ramanan — Thomas Palley – Re-theorizing The Welfare State And The Political Economy Of Neoliberalism’s War Against It

Thomas Palley has a new paper:

The Case for Concerted Action

Thomas Palley – Re-theorizing The Welfare State And The Political Economy Of Neoliberalism’s War Against It

V. Ramanan

Neil Wilson — The basic income means that you are requiring somebody else to use up their finite lifespan to…

The basic income means that you are requiring somebody else to use up their finite lifespan to produce output, take it from them by force and give it to somebody who *refuses* to contribute to the production process. There is no value exchange, only theft. That is no different to the process the idle rich use today — and are rightly resented for it.

So you have to justify, politically, why society should support people *for their entire life* who simply refuse to contribute when they clearly can. Good luck with that one....

Anything else is working tax credits, disability pensions, old age pensions, or child benefit. The Job Guarantee replaces them all with a simple demand: you are required to work for the wage unless exempted by age or infirmity. If you are exempted then you still get the supporting income — which neatly covers sickness, disability, old-age, child benefits....

In my view, the next step is recognizing that the attempted market state is not working and cannot be made to work by trying to impose the conditions necessary for it. That is the basis of a political ideology, rather than application of scientific method — as is often advertised either through ignorance or disingenuously.

The need is for a reinvigoration of a well-functioning welfare state that considers good comprehensively, defining good in terms of positive values versus negative values. Norms are cultural, and such decisions should be taken politically in democratic environments such as democratic republics and participatory democracies. At present there are as yet no large scale participatory democracies but technological innovation is making that possible.

Past attempts at creating sustainable welfare states have not been entirely satisfactory for various reasons. A basic income is unlikely to be successful in doing so for the many reasons that critics have set forth. In summary the issues are not chiefly monetary, but real.

My recommendation is to institute a non-monetary social dividend based on provision of social goods in terms of distribution of and access to the available real resources of a society, along with a job guarantee that guarantees paid work including benefits for all willing and able to work. Obviously, the pay is a monetary benefit. But this is tied to work as a productive social contribution unless a person is unable to make a productive social contribution in the context of a job. However, monetary contributions such as stipends for students and pensions for retirees would also be part of the "fair deal," positioned between work as non-monetary aspects of the social dividend like universal access to quality health care.

The social dividend would cover social goods like education, health care, R&D, and infrastructure, including continuously state of the art universal broadband access, for one thing. The proportion of available real resources committed to public use instead of private use is a political decision to be arrived at democratically in different jurisdictions. 

I would not include a universal monetary disbursement in a social dividend, but rather restrict the social dividend to distribution of available real resources for social benefit. This is the basis for a welfare state committed to the common good and general welfare that is not achieved in a market state, since markets behavior based on accumulation of private property is not concerned with provision of social goods.

I would begin with the enduring question, what does it mean to live a good life as an individual in a good society, recognizing that the micro, meso and macro levels are aspects of a system in which each affects all. Interdependence in a networked environment implies that causation is cross-level in all directions with varying degrees of effect. Therefore, a systems approach encompassing an institutional approach is required.

Neil Wilson
The basic income means that you are requiring somebody else to use up their finite lifespan to…
Neil Wilson

Lars P. Syll — Marketization undermining the welfare system

1. Privatization is supposed to reduce cost by increasing efficiency. However, "efficiency" can be increased by trading off effectiveness and reducing quality.

2. The argument about privatization and deregulation generally assumes that there is no distinction between public and private goods, and it often also ignores externalities.

Lars P. Syll’s Blog
Marketization undermining the welfare system
Lars P. Syll | Professor, Malmo University

Why Deficits Hurt Banking Profits — Sharmini Peries interviews Michael Hudson

The post is actually about the establishment push to establish a market state through privatization and deregulation in order to extract rents by replacing what is left of the FDR New Deal welfare state that publicly provides social benefits through the government's policy space as a currency sovereign.

While Hudson doesn't go into the history prior to Bill Clinton, this push was initiated by Jimmy Carter's fiscal conservatism, accelerated under Reaganomics, was amplified by Bill Clinton under the aegis of Robert Rubin, cemented in place by Alan Greenspan, and continued by Bush and Obama. Now Trump is setting about advancing the job dismantling the remnants of New Deal.

The aim of neoliberals is to prevent governments from spending money to revive growth by running deficits. Their argument is: “If a government can’t run a deficit, then it can’t spend money on roads, schools and other infrastructure. They’ll have to privatize these assets – and banks can create their own credit to let investors buy these assets and run them as rent-extracting monopolies.”

The bank strategy continues: “If we can privatize the economy, we can turn the whole public sector into a monopoly. We can treat what used to be the government sector as a financial monopoly. Instead of providing free or subsidized schooling, we can make people pay $50,000 to get a college education, or $50,000 just to get a grade school education if families choose to if you go to New York private schools. We can turn the roads into toll roads. We can charge people for water, and we can charge for what used to be given for free under the old style of Roosevelt capitalism and social democracy.”

This idea that governments should not create money implies that they shouldn’t act like governments. Instead, the de facto government should be Wall Street. Instead of governments allocating resources to help the economy grow, Wall Street should be the allocator of resources – and should starve the government to “save taxpayers” (or at least the wealthy). Tea Party promoters want to starve the government to a point where it can be “drowned in the bathtub.”

But if you don’t have a government that can fund itself, then who is going to govern, and on whose terms? The obvious answer is, the class with the money: Wall Street and the corporate sector. They clamor for a balanced budget, saying, “We don’t want the government to fund public infrastructure. We want it to be privatized in a way that will generate profits for the new owners, along with interest for the bondholders and the banks that fund it; and also, management fees. Most of all, the privatized enterprises should generate capital gains for the stockholders as they jack up prices for hitherto public services.”...

Michael Hudson
Why Deficits Hurt Banking Profits

Sharmini Peries interviews Michael Hudson

David F. Ruccio — Make GDP great again

Here’s what folks need to understand: mainstream economists like Feldstein, who celebrate an economic system based on private property and free markets, build and use models in which market prices capture all the relevant costs and benefits to society. And, since GDP is an accounting system based on adding up transactions of goods and services based on market prices, for mainstream economists it should represent an accurate measure of the “public’s well-being.”

Mainstream economists can’t have it both ways—either market prices do accurately reflect social costs and benefits or they don’t. If they do, then Feldstein & Co need to stick with the level and rate of growth of GDP as the appropriate measure of the wealth of the nation. And, if they don’t, all their claims about the wonders of free markets simply dissolve.…

This quote summarizes the point — market information doesn't capture social welfare. More good stuff at the link. GPP measures transactions rather than product. Many transactions are non-productive.

Occasional Links & Commentary
Make GDP great again
David F. Ruccio | Professor of Economics, University of Notre Dame

Oleg Egorov — Over 50 percent of Russians miss the Soviet Union

When the Soviet republics of Russia, Ukraine and Belarus signed the Belavezha Accords on December 8, 1991, dissolving the Soviet Union, Marat was just a few months old. He did not know life in the Soviet Union. Nevertheless, he says he misses that country.
Marat, whose real name is being withheld at his request, is now 25 years old. He works in one of the Russian ministries, is satisfied with his salary and life, but still believes that things must have been better in the USSR.

"Free education, free medicine," Marat said, listing the advantages of the Soviet state. “People lived modestly but the state took care of them. Now money controls everything. The inequality is immense. Whoever is stronger is right. It wasn't like this in the USSR."

Marat is not alone in his nostalgia. Sociological surveys indicate that more than 50 percent of Russians today regret the collapse of the Soviet Union. In an April 2016 poll by the Levada Centre, 56 percent of the respondents said they wished the Soviet Union still existed. A recent survey by the All-Russian Centre for Public Opinion (VTsIOM) showed that 64 percent of Russians would vote for the preservation of the USSR if a referendum was held today, similar to the one held on March 17, 1991, which asked Soviet citizens if it was necessary to preserve the country in that form.

Nostalgia for the Soviet Union is highest among Russians over the age of 55, and those who live in rural areas, according to Karina Pipiya, a Levada Centre sociologist. But there are a number of those like Marat — young people who are successful, integrated in modern society and who do not remember the Soviet Union — who long for it. A huge 50 percent of young people surveyed on the topic by VTsIOM share Marat's opinion, said Mikhail Mamonov, director of the VTsIOM research projects.….

Mamonov said those who are positive about the Soviet Union always point out the same three things: "A small but guaranteed salary, employment, things that are guaranteed for you." In an era of harsh market competition, people want to retreat to a time when they think all these things existed, Mamonov explained.

People don't miss the USSR as much as the socialistic welfare state. Polling shows that there is little support for recreating the Soviet Union and the Communist Party is stuck at least that 15% of the vote. Neoliberals advocating close ties with the West, Western liberalism, and a market sate are under 5%. It appears that Russians prefer something along the lines of the Scandinavian social democratic model or democratic socialism.

Russia & India Report
Over 50 percent of Russians miss the Soviet Union
Oleg Egorov, RIR

Brad DeLong — The Melting Away of North Atlantic Social Democracy

Assessment 

When I try to evaluate the state of the debate over Thomas Piketty's Capital in the Twenty-First Century two years after its first (French) publication, I find myself driven to three conclusions. The factors that Piketty identifies as leading to the melting-away of the social-democratic North Atlantic economy are operating, but so far their effects on income and wealth inequality have been smaller than other largely-unrelated factors that have been operating in the past generation and generating the rise of housing as a source of wealth and the rise of the super-incomes. Piketty's factors have been supercharged by other forces over the past generation, but that does not mean that they are not at work—and, in fact, reinforces the chances that Piketty's inequality-driving factors will be of decisive importance over the next seventy years. The question of whether our road leads to Piketty (2014)—a new Belle Époque plutocracy—or Keynes (1936)—a euthanization of the rentier in which the wealth of the rich is outlandish but their incomes are not due to low rates of profit—hinges on our politics. And our politics is something we can control.

We as a civilization could decide that we are not willing to let money talk so loudly in politics. We could keep our politics from being one of establishing monopoly after monopoly and rent-extraction chokepoint after rent-extraction chokepoint. If we manage that, then the forecasts of Keynes (1936) and Rognlie (2015) will come true, and a rise in wealth accumulation will carry with it a fall in the rate of profit, and a highly-productive not-too-unequal society.

But right now money talks very loudly indeed. And I leave the Piketty debate more depressed about our ability to keep it from talking so loudly. What makes me more depressed? The Piketty debate itself does: The eagerness of so-many economists to aggressively make so many shoddy arguments that Piketty does not know what he is talking about.

Talking Points Memo
The Melting Away of North Atlantic Social Democracy

J. Bradford DeLong

Ann Jones — American Capitalism Has Failed Us: We're Overworked, Underemployed and More Powerless than Ever Before

Comparing America to the Nordic model. Guess which wins big?

AlterNet
American Capitalism Has Failed Us: We're Overworked, Underemployed and More Powerless than Ever Before
Ann Jones, Tom Dispatch

Chris Dillow — Lies we've told our children

In this context the fact that many of these youngsters are supporting Jeremy Corbyn is not at all surprising. What is surprising is that the political establishment are so narcissistically self-absorbed that they cannot see that his rise represents their own abject failure.

Stumbling and Mumbling
Lies we've told our children
Chris Dillow | Investors Chronicle

Eric Michael Johnson — What Philanthropic Organizations Need to Know about Giving – Is philanthropy driven by morality or markets?

The notion that philanthropy resulted from the invention of money is a pillar of classical economics. It is also a myth. After more than two centuries of searching for an indigenous society that approximates Adam Smith’s parable of the original barter system, anthropologists have concluded that it can only be imaginary. “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing,” wrote Cambridge anthropologist Caroline Humphrey in a 1985 paper titled “Barter and Economic Disintegration” in the journal Man. Instead, researchers have discovered that philanthropy is far more central to human social organization than economists had ever imagined.

The notion that philanthropy resulted from the invention of money is a pillar of classical economics. It is also a myth.…

This suggests that Adam Smith wasn’t so much chronicling the evolution of modern market economies as he was observing what existed during his time and then projecting it onto the human past.…

Evonomics

What Philanthropic Organizations Need to Know about Giving

Eric Michael Johnson

Don Quijones — Uruguay Does Unthinkable, Rejects Global Corporatocracy [TiSA]

Often referred to as the Switzerland of South America, Uruguay is long accustomed to doing things its own way. It was the first nation in Latin America to establish a welfare state. It also has an unusually large middle class for the region and unlike its giant neighbors to the north and west, Brazil and Argentina, is largely free of serious income inequality.

Two years ago, during José Mujica’s presidency, Uruguay became the first nation to legalize marijuana in Latin America, a continent that is being ripped apart by drug trafficking and its associated violence and corruption of state institutions.
Now Uruguay has done something that no other semi-aligned nation on this planet has dared to do: it has rejected the advances of the global corporatocracy.…

Despite – or more likely because of – its symbolic importance, Uruguay’s historic decision has been met by a wall of silence. Beyond the country’s borders, mainstream media has refused to cover the story.…

This post is more about the spread of Global Corporatocracy through trade agreements being spearheaded by the US. It is about TiSA in particular, which includes more countries that TTP and TTIP combined.

Important.

Good summary of what we know about TiSA as the installation of neoliberal global corporatocracy and why not only Uruguay but also China and Russia are right in opposing it. It is the end of liberal democracy and the institution of plutocracy. Since the US has written the rules, it would give the US power elite and their cronies permanent global hegemony to extract rent without limitation.

The contents of TiSA would not be revealed publicly until five years after ratification.

There agreements are being designed as the final step enclosure and the suppression of democratic governance by neoliberal global corporatocracy.

This is a power play on a grand scale and little Uruguay has courageously said "nothing doing" to the gringos.

Pass this on.

Wolf Street
Uruguay Does Unthinkable, Rejects Global Corporatocracy
Don Quijones, Spain & Mexico, editor at WOLF STREET

Benjamin Radcliff — Which political system does happiness economics support?

Does happiness economics favor the market state of neoliberalism or the welfare state of social democracy and regulated capitalism.

Most of us are Stoics. We think that happiness is something that individuals find for themselves: the key is to work hard for a good life, and to face adversity with defiance. This ‘rugged individualism’ might fit the American ethos, but it is at odds with a growing body of empirical research that shows that some kinds of societies produce a great deal more satisfaction with life than others. Happiness, in other words, is more social than psychological.

If so, then the obvious step, as Albert Einstein put it, is to ‘ask ourselves how the structure of society and the cultural attitude of man should be changed in order to make human life as satisfying as possible’. Economists, political scientists and other social scientists in the growing field of the political economy of wellbeing, or ‘happiness economics’, are using empirical rather than speculative methods to better understand what makes for satisfying lives. Happiness economics is not to be confused with ‘positive psychology’, which approaches happiness as a matter of individual attitudes. In contrast, scholars of ‘happiness economics’ maintain that, in the aggregate, a satisfying life is rooted in objective conditions, such that the economic, political and social aspects of societies are strong predictors of individual happiness.

The policies most conducive to human wellbeing turn out to be essentially the same ones that Einstein himself originally suggested: those associated with social democracy. In reviewing the research in 2014, Adam Okulicz-Kozaryn, a political scientist at Rutgers University-Camden in New Jersey, found that ‘societies led by leftist or liberal governments (also referred to as welfare states)’ have the highest levels of life satisfaction, controlling for other factors. Looking across countries, the more generous and universalistic the welfare state, the greater the level of human happiness, net of other factors.

The phrase ‘welfare state’ is pejorative to many Americans, but it would be less so if they had a better understanding of what it implies to the rest of the world.…

The obvious question is why "welfare state" is a pejorative to many Americans. The answer is clear historically — huge investment in redefining "welfare" from its original meaning "hand out paid for by your taxes." Who would do such a thing? Those with an interest in redistribution of wealth upward as growing inequality under neoliberalism strongly suggests. Neoliberal deregulation and policy aimed at reducing labor bargaining power allowed the upper class to capture the bulk of the benefits from rising productivity of the past several decades.

Aeon Magazine
Which political system does happiness economics support?

Benjamin Radcliff | professor of political science at the University of Notre Dame in Indiana and author of The Political Economy of Human Happiness (2013).

ProGrowthLiberal — Heritage Economist on Greece and the US

The Heritage foundation doesn't employ economists. It employs propagandists with an agenda — replacing what's left the welfare state with a market state under the control of an oligarchy. 

That's the heritage that these people want to reestablish is American heritage founded on a plantation economy.

That's the heritage of American capitalism.

Econospeak
Heritage Economist on Greece and the US
ProGrowthLiberal

Paul Craig Roberts — Greece Is Just The Beginning: The 21st Century 'Enclosures' Have Begun

The post is pretty excoriating, even for PCR.

All of Europe, and insouciant Americans and Canadians as well, are put on notice by Syriza’s surrender to the agents of the One Percent. The message from the collapse of Syriza is that the social welfare system throughout the West will be dismantled.

This former Reagan Administration official is sounding more radical that Michael Hudson.

What we see here is the impossibility of peaceful change, as Karl Marx and Lenin explained.

How the worm turns.

This is really an amazing post. Some people are going to be upset.

Zero Hedge
Greece Is Just The Beginning: The 21st Century 'Enclosures' Have Begun
Paul Craig Roberts

Michael Nevradakis and Greg Palast — GREECE’D: We Voted ‘No’ to slavery, but ‘Yes’ to our chains

What’s simply whack-o is that, while voting “No” to austerity, many Greeks wish to remain shackled to the euro, the very cause of our miseries....

Sorry, Alexis, if you want to use the Reich’s coin you have to accept the Reichsdiktat....

The imposition of the euro had one true goal: To end the European welfare state....

It would be refreshing to hear political leaders say the honest economic truth: “Workers of Europe unite! You have nothing to lose but the euro—and your chains.”

Greg Palast

GREECE’D: We Voted ‘No’ to slavery,  but ‘Yes’ to our chains

Greek journalist Michael Nevradakis and US investigative journalist Greg Palast

ht James in the comments

Bill Mitchell — The concept of ‘one Europe’ under threat from austerity

Fouling the nest.

Bill Mitchell – billy blog
The concept of ‘one Europe’ under threat from austerityBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Analyze Greece — Ögmundur Jónasson: Social Justice Is The Key For A Left Government

Tackling a serious economic crisis is difficult for all governments, whether they are left wing or right wing. It is important for everybody to be aware of this, politicians and voters alike. 

There is, however, a fundamental difference between the right and the left in this respect: Their objective is not the same. Of course politicians in general want to succeed in their endeavour to get their country out of serious trouble but they tend to evaluate the situation differently. This depends on their political conviction. Left wing, socially responsible forces, above all want to preserve, if not strengthen the social fabric of society – the welfare system - while the right wing under such circumstances is likely to use the crisis for system change, i.e. to marketise and privatise the system.

Disaster capitalism versus progressive reform.

Analyze Greece
Ögmundur Jónasson: Social Justice Is The Key For A Left Government (January 28, 2015)
ht Jan Milch

Icelandic politician Ögmundur Jónasson (born 17 July 1948), was the former Health and Interior Minister for the Icelandic left government between 2009-2013. He has been active in various grass-root activities, a prolific commentator and public speaker. As minister, he gained international attention in connection with three issues. First, he proposed measures designed to protect children from the harms of violent pornography as part of his broader support for human rights and women’s rights. Secondly, he rejected a plan by Chinese business tycoon, Mr. Huang Nubo, to purchase a huge tract of land in the North East of Iceland attracting much geopolitical and media attention. Thirdly, he refused all cooperation with FBI agents who arrived in Iceland in 2011 —on the pretext of investigating an impending hacking attack on Icelandic government computers— and directed them to leave the country because he believed that they were, in fact, engaged in a broader swoop to gather intelligence on WikiLeaks in trying to frame its founder Julian Assange.

Robert Hunker — Eco Economics Takes on Neoliberalism

Ever since Milton Friedman, American economist (1912-2006), who considered himself the heir to Adam Smith, used the term neoliberalism in an essay “Neoliberalism and its Prospects” in 1951, the world has tilted in that direction, starting with Chile as the “Chicago Boys” lab experiment under the watchful eye of the infamous dictator General Augusto José Ramón Pinochet Ugarte, president from 1974-90. The world has never been the same.

Today, neoliberalism reigns supreme across the oceans, whereby control of economic principles shifts from the public sector to the private sector with limited governmental interference, the less the better, open markets, free trade for all and deregulation piled upon deregulation as well as austerity for the masses (look at Greece and Spain for major pushback movements, happening today).

With neoliberalism, the market pretty much determines everything. When looked at from another angle, the world becomes a gigantic commoditized sphere spinning around the solar system, as markets set prices for everything, except for the biosphere, a very big “except for,” indeed.

Does it make sense to set prices for everything, except for the biosphere? Since everything, from wheat to space travel, is market-driven, why not the atmosphere, why not oceans, why not soil? Why leave the biosphere out of the realm of the market?

After all, since survival of the fittest is as old as nature, and since neoliberalism, in practice, dictates ‘survival of the fittest economics’ it mirrors nature’s behavior, although, as it happens in real life, neoliberalism is bottom-feeder economics whereby the rich accumulate more and more and more at the expense of lower and lower and lower wages, less benefits, and crushed self-esteem. What could be worse?

There is a better way, a sharper focus found within eco economics, which ties the whole picture together, the externalities outside of markets as well as everything inside markets, thus, integrating important externalities into the market system, e.g., biophysical limits….

On natural capitalism.

Natural capital is defined by Sir John Richard Hicks, British economist, 1904-1989, Hicksian natural capital, bringing forth Hicksian natural income, which is the level of consumption that can be sustained from one period to another period without reducing natural wealth, which is key to successful eco economics. [Yes, that John Hicks]

Humanity's "natural capital" is the environment as a commons. Neoliberalism draws on natural capital inefficiently through externalities that distort true cost and, therefore, the vaunted price mechanism of the market, to make life poorer for all not only by privatizing gains and socializing losses but also through ecological degradation the actual cost of which is diminished quality of life. while this cost can be estimated monetarily though factors like health costs, life is priceless and cannot be valued monetarily.

The solution lies in converting from an ownership society and economy to a stewardship society and economy.

Far from preventing "the tragedy of the commons" as Garrett Harkin theorized, privatization is leading to not only a tragedy of the commons as the ecological system but also a catastrophe for humanity as its life-support system collapses.

Counterpunch
Eco Economics Takes on Neoliberalism

Robert Hunziker

Also

“Libertarians” For Ethnic Cleansing

Kevin Carson

[Walter Block] starts out by defending gentrification as a simple manifestation of autonomous market preferences, of course. The gentrifier does, he admits, drive existing residents — sometimes third or fourth-generation residents — out of their homes. They are forced to retreat to “less preferred real estate. We know this since if they liked their new domiciles more than their previous ones, they would have already moved there, without any pressure being placed on the market by the new gentry.” And the homes they’re driven from “are part of neighborhoods, communities, associations. They have a history there. Their children are wrenched away from their friends.” 

But, says Block, so what? Gentrifiers do all these awful things entirely by trying to rent or purchase real estate in a neighborhood, “thus bidding up rents and sales prices higher than would otherwise exist.” 

Is this unfair? he asks. “Certainly not. Assume that the rich came by their wealth in an honest way, not through government grants of special privileges, subsidies, bail-outs, a la crony capitalism, but via laissez faire capitalism.” Having thus assumed away the entire real world of privilege enjoyed by actually existing rich people, and the fact that local governments are nothing but showcase properties of the local real estate interests, Block goes on to argue that anything short of inequality and merciless gentrification would be grossly unfair to the rich, because they “have contributed more to everyone else than the poor.”

"Just deserts."