Europe Needs a DARPA — Dalia Marin

An economy needs government-financed investment, but DARPA is the way to do it?

Project Syndicate
Europe Needs a DARPA
Dalia Marin | Chair of International Economics at the University of Munich and a research fellow at the Centre for Economic Policy Research.

Michael Roberts — The world’s scariest economist?

Mariana Mazzucato is one of the world’s most influential economists, according to Quartz magazine. She has won many awards for her work. She is an adviser to the UK Labour Party on economic policy; she “has the ear” of radical Congress representative Alexandria Ocasio-Cortez, she advises Democratic presidential hopeful, Senator Elizabeth Warren and also Scottish Nationalist leader Nicola Sturgeon. And she has written two key books: The Entrepreneurial State (2013) and the The Value of Everything (2018).

Mazzucato is considered radical, even ‘scary,’ by many mainstream economists and conservative politicians. This is because she has highlighted the important role that the state and governments have played in delivering innovation in technology and in advancing productive investment. The idea that the state can be a leading force in innovation and investment in useful activity is anathema to the right-wing neo-liberal ‘free market’ views of the majority of mainstream economists and politicians.…

Mariana Mazzucato is a fellow traveler with the MMT economists and has collaborated with Randy Wray.

Michael Roberts Blog — blogging from a marxist economist
The world’s scariest economist?

Michael Roberts

Mariana Mazzucato — Yes, Government Creates Wealth

Economics has never accepted the idea that the public sector creates wealth. But it does—and acknowledging that can lead to sweeping change....

Democracy — A Journal of Ideas
Yes, Government Creates Wealth

Mariana Mazzucato | RM Phillips chair in the Economics of Innovation at SPRU in the University of Sussex

See also

Ten years after the global economic crisis, profits have recovered, but investment remains weak. Ultimately, the reason is that economic policy continues to be informed by neoliberal ideology and its academic cousin, “public choice” theory, rather than by historical experience.

Project Syndicate
Who Really Creates Value in an Economy?
Mariana Mazzucato | RM Phillips chair in the Economics of Innovation at SPRU in the University of Sussex

Bill Mitchell – Public infrastructure investment must privilege public well-being over profit

One of the principle ways in which so-called progressive political parties (particularly those in the social democratic tradition) seek to differentiate themselves from conservatives is to advocate large-scale public infrastructure investment as a way of advancing public good. You can see evidence of that in most nations. Nation-building initiatives tend to be popular and also are less sensitive to the usual attacks that are made on public spending when income support and other welfare-type programs are debated. Capital worked out long ago that public spending on infrastructure provided untold benefits by way of profits and influence. In the neoliberal era, the bias towards ‘competitive tendering’ and public-private partnerships has meant that private profit tends to dictate where and what public infrastructure is built. The problem is that large-scale projects tend to become objects of capture for the top-end-of-town. Research shows that these ‘megaprojects’ typically deliver massive cost overruns and significantly lower benefits than are first estimated when decisions are being made about what large projects to fund. Further, evidence suggests that this is due to corrupt and incompetent behaviour by private project managers (representing their companies) and empire-building public officials. They lie about the costs and benefits so as to distort the decision-making processes in their favour. Any progressive government thus must be mindful of these tendencies and behaviours. A progressive policy agenda needs to be more than just outlining a whole lot of nice sounding public infrastructure projects that the government will pursue. The whole machinery of public procurement that has emerged in this neoliberal era needs to be abandoned and replaced with decision-making processes and rules that privilege the advancement of public well-being over profit.

Bill Mitchell – billy blog
Public infrastructure investment must privilege public well-being over profit
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Anthony Patt — How Changing My Economic Model Made Me a Climate Change Optimist

Neo-classical economics doesn’t offer useful insights for disruption.

Evonomics
How Changing My Economic Model Made Me a Climate Change Optimist
Anthony Patt | Professor of Climate Policy at ETH Zurich, the author of Transforming Energy: Solving Climate Change with Technology Policy (Cambridge Univ. Press 2015), and a Coordinating Lead Author for Working Group III of the Intergovernmental Panel on Climate Change.

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

Dirk Ehnts — John Maynard Keynes: “I could create, I could afford” (Public Service Employment)

Here is a quote from John Maynard Keynes, writing in 1933:

If I had the power today I should surely set out to endow our capital cities with all the appurtenances of art and civilisation on the highest standards of which the citizens of each were individually capable, convinced that what I could create, I could afford – and believing that money thus spent would not only be better than any dole, but would make unnecessary any dole. For with what we have spent on the dole in England since the War we could have made our cities the greatest works of man in the world.

econoblog 101
John Maynard Keynes: “I could create, I could afford” (Public Service Employment)
Dirk Ehnts | Lecturer at Bard College Berlin

The quote is from National self-sufficiency (Yale Review, 1933).  See the whole of Section IV. It's brilliant.

Marshall Auerback — Trump’s Bogus Infrastructure Plan Takes the U.S. Further Down the Road of Rentier Capitalism

President Trump presented his infrastructure plan last week. If you’re keen on the idea of out-of-control privatized utilities gouging customers and manipulating energy markets, or consortia building overpriced, expensive toll roads (until they go bust), then you’ll love the president’s proposals. His mooted public-private partnerships are another variant of socialism for the rich and free market discipline for the rest of us. PPPs are like a religion that offers its adherents the promise of capitalist heaven via tax breaks, subsidized funding, and guaranteed returns, minus the discipline of private bank credit arrangements or potential bankruptcy, the costs of which are invariably borne by a public already experiencing the hell of significantly more restricted access (think toll roads and bridges), higher user fees or “slower lane” traffic (think the end of net neutrality), and the costs of bailouts if and when the venture goes bust....

No private market discipline is enforced on management because in most cases they are given control of what was once a public monopoly, which is simply converted into a private one. It’s rentier capitalism, plain and simple.... 

In essence, these public-private partnerships are one of the sick jokes that the neoliberal era visited on all of us in the name of economic efficiency and responsible government—a ‘joke’ because the beneficiaries of all this public largesse have been laughing all the way to the bank as stupid public officials continue to fall prey to their lobbying as they joyfully hand over the keys to the public purse. Trump is simply perpetuating the trend of allowing governments to continue to abrogate their true responsibilities to pursue and safeguard public purpose. Governments should never have become agents of private profit.…

Neoliberalism can be viewed as government as agent of private profit based on "free market" ideology that prioritizes private ownership over public because "efficiency," along with public policy that favors capital formation as the basis for growth, under the assumption that "a rising tide lifts all boats" (trickle down).

Naked Capitalism
Trump’s Bogus Infrastructure Plan Takes the U.S. Further Down the Road of Rentier Capitalism

Marshall Auerback

Cross-posted from Alternet

Michel Hudson — Tollbooth Trump

Shamini Peries interviews Michael Hudson. Video and transcript.

Michel Hudson
Tollbooth Trump
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

Hunter Blair — The Trump administration’s infrastructure plan remains empty talk and will be paid for by cuts to programs that help working people

"Smoke and mirrors."

Economic Policy Institute
The Trump administration’s infrastructure plan remains empty talk and will be paid for by cuts to programs that help working people
Hunter Blair

Asia Unhedged — Xi stresses integrated military, civilian development

During a meeting of the Central Commission for Integrated Military and Civilian Development (CCIMCD) on Friday, Chinese President Xi Jinping stressed the importance “defense, science and industry” will play in the integration of the private sector and China’s military, according to an official release from Xinhua.…

“Defense science, technology and industry are key areas for integrated military and civilian development, and play a vital role in boosting the country’s innovation-driven development and supply-side structural reform,” read a Xinhua translation from a statement released after the meeting.

The commission adopted a plan for the development of “defense science, technology and industry” (as translated by Xinhua) during the period under the 13th five-year plan (2016-2020), as well as guidelines on advancing integrated military and civilian development in the areas.

Asia Times

Xi stresses integrated military, civilian development
Asia Unhedged

Lars P. Syll — Modern society

A picture is worth a thousand words.

Lars P. Syll’s Blog
Modern society
Lars P. Syll | Professor, Malmo University

Rutger Bregman — Look at the phone in your hand – you can thank the state for that

Take the driving force behind the digital revolution, also known as Moore’s law. Back in 1965, the chip designer Gordon Moore was already predicting that processor speeds would accelerate exponentially. He foresaw “such wonders as home computers”, as well as “portable communications equipment” and perhaps even “automatic controls for automobiles”.

And just look at us now! Moore’s law clearly is the golden rule of private innovation, unbridled capitalism, and the invisible hand driving us to ever lofty heights. There’s no other explanation – right? Not quite.

For years, Moore’s law has been almost single-handedly upheld by a Dutch company – one that made it big thanks to massive subsidisation by the Dutch government. No, this is not a joke: the fundamental force behind the internet, the modern computer and the driverless car is a government beneficiary from “socialist” Holland....

The Guardian
Look at the phone in your hand – you can thank the state for that

Rutger Bregman

Tim Harford — The iPhone at 10: How the smartphone became so smart

All of these technologies are important components of what makes an iPhone, or any smartphone, actually work. Some of them are not just important, but indispensable. But when Mariana Mazzucato assembled this list of technologies, and reviewed their history, she found something striking.

The foundational figure in the development of the iPhone wasn't Steve Jobs. It was Uncle Sam. Every single one of these 12 key technologies was supported in significant ways by governments - often the American government.

"Who invented the iPhone?" The government. Apple picked up the technology and adapted it to the iPhone. A lot of that technology was likely developed either for military use or military/intelligence-related use.

BBC
The iPhone at 10: How the smartphone became so smart
Tim Harford

Bill Mitchell — It is just ridiculous to starve public investment funding

On Monday (December 19, 2016), my blog – US central bank decision to raise interest rates doesn’t make much sense – examined the recent interest rate hike in the US and made a case that it didn’t appear, on the basis of the evidence at hand, to be a well-reasoned policy decision. In researching the case I was struck by how far public gross capital formation has fallen in the US, particularly at the State/Local level as mindless austerity takes its toll. Governments find it easier to cut capital spending than recurrent spending because the ‘costs’ of the those spending cuts are not immediately obvious to the population and, typically, do not manifest until after the political cycle exhausts. Cutting pensions, school outlays, and other recurrent targets usually brings an immediate political outcry because the impacts are immediate. But it takes time for public infrastructure to degrade from lack of maintenance and replacement. Eventually it does degrade and in some cases becomes unusable. Then the costs of repair/replacement are usually higher than if the resource had have been maintained and replaced according to reasonable engineering schedules. The US Bureau of Economic Analysis (BEA) publishes a very interesting data series that allows us to examine the ageing of the capital assets (public and private) on an annual basis back to 1925. I thought I would explore that dataset to inform the proposition that neo-liberalism has been associated with degraded public infrastructure and the loss of service (to the non-government sector) that accompanies such degradation. The results of my enquiry are fairly stark.

I wrote about that sort of policy mypopia last week in this blog – Austerity is the enemy of our grandchildren as public infrastructure degrades....

Bill Mitchell – billy blog
It is just ridiculous to starve public investment funding
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Peter Cooper — Not Investing in Infrastructure, Culture and Knowledge IS the Burden We Place on Future Generations

If we were to believe most politicians, we’d be under the mistaken impression that government not investing today does future generations a favor. Leaving communications systems underdeveloped, road and transport networks crumbling, education and public health systems deteriorating, our cultural institutions eroding, developments in science and technology stagnating, and so on, will supposedly free future generations of any burden that might otherwise be imposed upon them.
If we set aside the politicians’ Orwellian Newspeak, it is obvious that investing in infrastructure today helps future generations, and not investing in it leaves future generations in a worse state. It is also clear that this investment for the benefit of future generations requires no reduction in our own current levels of consumption when, as now, many unemployed and part-time workers want full-time jobs and there are plant, machines and other equipment being left unused....

heteconomist
Not Investing in Infrastructure, Culture and Knowledge IS the Burden We Place on Future Generations
Peter Cooper

Capitalism in the Time of Trump? — Lynn Parramore interviews Mariana Mazzucato

Mariana Mazzucato, Professor of the Economics of Innovation at the Science Policy Research Unit of the University of Sussex and author of The Entrepreneurial State: debunking public vs. private sector myths, has made a passionate case for the government’s active role in the economy —sending the old laissez faire notion that markets can run themselves into the dustbin where it belongs. In a new book co-edited with Michael Jacobs, Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth, she offers a bold new vision for contemporary capitalism that works for the people and the planet. What chance does this vision have in the age of Trump and Brexit? Mazzucato shares her view.

INET
Capitalism in the Time of Trump?
Lynn Parramore interviews Mariana Mazzucato, Professor of Economics, University of Sussex

Mariana Mazzucato — Why Economic Recovery Requires Rethinking Capitalism

If future growth is to take a different path, it will require more than the usual mantra about taking advantage of low interest rates to fund infrastructure. Instead, we need to rethink the fundamental precepts that govern our understanding of how and why capitalist economies grow—both in terms of the ‘rate’ and the ‘direction’ of change. Key to this is a better understanding of what drives business investment, and the effect that public investment can have—not just ‘crowding-in’ investments that businesses may already have been considering, but actively stimulating the desire to make new investments they hadn’t yet considered. It is this ability of bold, strategic public investments to rouse what Keynes called the ‘animal spirits’ of business investors that is key.…

The good society is based on a public-private partnership.

INET
Why Economic Recovery Requires Rethinking Capitalism

Mariana Mazzucato | RM Phillips chair in the Economics of Innovation at SPRU in the University of Sussex

Bill Mitchell — The case for re-nationalisation – Part 2

In the first part of this blog (July 13, 2016) – Brexit signals that a new policy paradigm is required including re-nationalisation – I suggested that re-nationalisation of certain sectors has to return as a key industry policy plank for any aspiring progressive political party.

Bill Mitchell – billy blog
The case for re-nationalisation – Part 2
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Francis Fukuyama — Exporting the Chinese Model

As 2016 begins, an historic contest is underway, largely hidden from public view, over competing Chinese and Western strategies to promote economic growth. The outcome of this struggle will determine the fate of much of Eurasia in the decades to come.…

Project Syndicate
Exporting the Chinese Model
Francis Fukuyama | senior fellow at Stanford University and Director of the Center on Democracy, Development and the Rule of Law.