Lars P. Syll — Why so-called​ deficits​ are economic necessities

Vintage Bill Vickrey quote.

Lars P. Syll’s Blog
Why so-called​ deficits​ are economic necessities
Lars P. Syll | Professor, Malmo University

Matias Vernengo — Classical Political Economy and the Evolution of Central Banks

The paper analyzes briefly the changing ideas on the role of money and banks from William Petty to Thomas Tooke, including the works of Adam Smith, David Ricardo, and Karl Marx. It analyzes the role of ideas in shaping the evolution of central bank regulation. Particular importance is given to the Bank of England’s inconvertibility period, from 1797 to 1821, and the ensuing debate in shaping Robert Peel’s Bank Act of 1844, which is often seen as the birth of modern central banking. The importance of the Say’s Law, and the inexistence of an alternative theory of the determination of output, is shown to play an essential role in the policy prescriptions of the so-called Bullionist authors, who won the debates that shaped central banking practices in the nineteenth century. The paper concludes with a brief analysis of what is a central bank according to the dominant (marginalist) mainstream of the profession, and what an alternative conception based on what may be termed classical-Keynesian political economy would be....

Naked Keynesianism
Classical Political Economy and the Evolution of Central Banks
Matias Vernengo | Associate Professor of Economics, Bucknell University

Felipe Rezende — The Massive Need for Infrastructure in the Emerging and Developed World

This is the first in a series of blog posts on financing infrastructure assets.

Multiplier Effect
The Massive Need for Infrastructure in the Emerging and Developed World

Felipe Rezende | Director, Finance program and Associate Professor of Economics & Finance, Bard College and Levy Economics Institute

June Sekera — The absence of a theory of public economy in today’s economics

More than a century ago, the effective operation of the public economy was a significant, active concern of economists. With the insurgence of market-centrism and rational choice economics, however, government was devalued, its role circumscribed and seen from a perspective of “market failure.” As Backhouse (2005) has shown, the transformation in economic thinking in the latter half of the 20th century led to a “radical shift” in worldview regarding the role of the state. The very idea of a valid, valuable public non-market has almost disappeared from sight....

Because mainstream economists in the U.S. and elsewhere have been so market-focused for so long, production outside the market has been erased from the equations of economics. So now, government action is regarded as an “intervention” that “distorts” smooth operation of an otherwise beneficent market. Government is considered to have an economic role only (or primarily) in cases of so called “market failure.” Consequently, there is no viable and explanatory concept of an actual, let alone a legitimate, public non-market economy. So pervasive is the creed that government only “intervenes” in what is thought to be the valid, market economy that even literature from the Congressional Research Service (Labonte, 2010) relegates government to an outsider role.... 

As I noted earlier, the “public choice” school has become the framework to which economists default for an explanation of the public economy. Backhouse (2005) outlines the development of the public choice school, which stems from a cluster of works published in the 1950s and 1960s by James Buchanan, Gordon Tullock, Mancur Olson, and Anthony Downs. It became a school, and a movement, when James Buchanan and Warren Nutter found a home for their efforts at George Mason University in Virginia. In the mid-1980s George Mason opened the Center for the Study of Market Processes, with its largest supporter being the Koch Family Foundations. Stretton and Orchard (1994) have demonstrated the anti-government, anti-democratic stance of public choice theorists in their extensive treatment of the school in Public Goods, Public Enterprise, Public Choice; Theoretical Foundations of the Contemporary Attack on Government. After critiquing the theory in economics terms, they suggest that public choice “reasoning seems to arise from the theorists’ reluctance to ‘come out’ and identify themselves as open enemies of democracy or at least of universal suffrage…Governments are viewed as exploiters of the citizenry, rather than the means through which the citizenry secures for itself goods and services that can best be provided jointly or collectively.”...

Real-World Economics Review Blog
The absence of a theory of public economy in today’s economics

June Sekera, researcher, UCL Institute for Innovation and Public Purpose; founder of the independent Public Goods Institute, and Research Fellow at the Global Development And Environment Institute (GDAE) at Tufts University, where she established and leads GDAE’s Public Economy Project

Brian Romanchuk — Note To Reporters: You Cannot Analyse A Sovereign Like A Corporation

Reporters and (apparently) readers have a hard time differentiating between the different fields within finance, and so they happily treat comments made by people like internet analysts (!) as representing "what the markets think" about government fiscal ratios. Since bad fiscal analysis is more exciting than good analysis, that is what appears in the media.

Very Quick Justification 

I am not going to give a long explanation of why you cannot analyse a "sovereign" (see comment below) like a corporation here. I will instead offer a simple example of how the logic in one area is diametrically opposed...

Bond Economics
Note To Reporters: You Cannot Analyse A Sovereign Like A Corporation
Brian Romanchuk

Andrew Lainton — Varoufakis’s Jane Austen Solution to Escaping Austerity and Achieving Growth

Explaining the Varoufakis strategy — consols. Chris Cook has been big on consols.

Decisions, Decisions, Decisions
Varoufakis’s Jane Austen Solution to Escaping Austerity and Achieving Growth
Andrew Lainton

Casino Counties — How making bets with public money can go wrong

My favorite line: "Hamilton County's financial situation may be difficult right now, [Hamilton County Commissioner Todd] Portune said. But next year, the government is taking a chance on a new source of expected revenue -- a casino." Good luck with that. What other assets do you have to sell after the current fire sale?

Read it at The Huffington Post
Ohio County Stadium Debts Force Government To Sell Hospital, Raid Savings

by Janell Ross