All this raises a thought. Could it be that the main obstacle to full employment policies is not so much one of technical economics so much as ideology and politics?Ya think?
Past posts have focused on the mechanics of a specific balance sheet, specifically that of the central bank and of private banks. This post looks at the balance-sheet interrelations between the three main macroeconomic sectors of the economy: the domestic private sector, the government sector and the foreign sector. This macro view provides some important insights about issues such as the public debt and deficit, policy goals that are more likely to be achieved, the business cycle, among others.…New Economic Perspectives
“Look again at that dot. That's here. That's home. That's us." #EarthDay https://t.co/fXXsIOr443 @yulsman pic.twitter.com/d7tsEnx8mc
— Discover Magazine (@DiscoverMag) April 23, 2016
It’s not easy for outsiders to sort through all the competing claims about Brazil’s political crisis and the ongoing effort to oust its president, Dilma Rousseff, who won re-election a mere 18 months ago with 54 million votes. But the most important means for understanding the truly anti-democratic nature of what’s taking place is to look at the person whom Brazilian oligarchs and their media organs are trying to install as president: the corruption-tainted, deeply unpopular, oligarch-serving Vice President Michel Temer (above). Doing so shines a bright light on what’s really going on, and why the world should be deeply disturbed.…*****
In an earning calls last Friday with JP Morgan, the celebratory CEO of Banco Latinoamericano de Comercio Exterior SA, Rubens Amaral, explicitly described Dilma’s impeachment as “one of the first steps to normalization in Brazil,” and said that if Temer’s new government implements the “structural reforms” that the financial community desires, then “definitely there will be opportunities.” News of Temer’s preferred appointees strongly suggests Mr. Amaral — and his fellow plutocrats — will be pleased.
Meanwhile, the dominant Brazilian media organs of Globo, Abril (Veja), Estadão — which Miranda’s op-ed discusses at length — are virtually unified in support of impeachment, as in No Dissent Allowed, and have been inciting the street protests from the start. Why is that revealing? Reporters Without Borders just yesterday released its 2016 Press Freedom Rankings, and ranked Brazil 103 in the world because of violence against journalists but also because of this key fact: “Media ownership continues to be very concentrated, especially in the hands of big industrial families that are often close to the political class.” Is it not crystal clear what’s going on here?
So to summarize: Brazilian financial and media elites are pretending that corruption is the reason for removing the twice-elected president of the country as they conspire to install and empower the country’s most corrupted political figures. Brazilian oligarchs will have succeeded in removing from power a moderately left-wing government that won four straight elections in the name of representing the country’s poor, and are literally handing control over the Brazilian economy (the world’s seventh largest) to Goldman Sachs and bank industry lobbyists.
This fraud being perpetrated here is as blatant as it is devastating. But it’s the same pattern that has been repeatedly seen around the world, particularly in Latin America, when a tiny elite wages a self-protective, self-serving war on the fundamentals of democracy. Brazil, the world’s fifth most populous country, has been an inspiring example of how a young democracy can mature and thrive. But now, those democratic institutions and principles are being fully assaulted by the very same financial and media factions that suppressed democracy and imposed tyranny in that country for decades.Regime change.
Russia is a painful lesson of a major power that tried to follow the West, but only woke up after gaining nothing.
Big countries will certainly face geopolitical competition. And the US will spontaneously try to weaken the contestants.
China has become the world' second largest economy. We cannot expect our future path to become smoother. On the contrary, the country is likely to become the focus of the Western power's exclusive reactions.
We have to be well prepared.Global Times (China)
Speaking at the recent session of the economic forum in Davos, the head of the US Department of Defense, Ashton Carter, urged countries to slow “the pace of militarization,” saying: “We are telling everyone, not only China but all involved: stop, stop building up military strength”.
Like all of Washington’s policy in recent years, these words of the American politician who develops and implements US military doctrine, are the best proof of the hypocritical and two-faced character of White House policy, which sets out to strengthen its leading role in the world, particularly in terms of military affairs, at the expense of other States. In particular, the latest report of the Stockholm International Peace Research Institute (SIPRI), serves as confirmation of that. The report states that the USA remains number one in terms of total spending for military purposes. Its share in total world arms spending accounts for 36% (596 billion dollars).
However, SIPRI reports that, in fact, increase military expenditure can be observed in most countries and their total, compared to the previous year, increased in 2015 by 1% to $1,676 trillion dollars.…NEO
Russia’s composite quarterly [PMI] reading is at 49.9 for 1Q 2016 an improvement on 4Q 2015 reading of 49.1, but still not above 50.0.
In simple terms, the problem remains even though its acuteness might have abated somewhat.true economics
Here’s Fernando Cardim de Carvalho’s summary of the situation from his latest policy note….
You can read the policy note here. See also Cardim de Carvalho’s working paper for more detailed data on how the Brazilian economy got to this point.Multiplier Effect
The country’s elite class and their media organs have failed, over and over, in their efforts to defeat the party at the ballot box. But plutocrats are not known for gently accepting defeat, nor for playing by the rules. What they have been unable to achieve democratically, they are now attempting to achieve anti-democratically: by having a bizarre mix of politicians – evangelical extremists, far-right supporters of a return to military rule, non-ideological backroom operatives – simply remove her from office.
.@marklevinshow is human excrement on the take. Short too.
— Roger Stone (@RogerJStoneJr) April 22, 2016
An extraordinary process of change is about to explode this month on campuses and in communities across the United States. Thousands of Americans are coming together in dozens of locations to take on the question of what kind of system should replace capitalism. The process is called the Next System Teach-Ins.
Teach-ins to address the fundamental question of how to move beyond capitalism will be taking place on campuses as well as in community centers and correctional facilities -- most between Earth Day (April 22) and May Day (May 1), following kickoff events this month at the New School and the City University of New York (CUNY) system in New York City; and the University of Wisconsin at Madison. The largest teach-in is planned for the University of California, Santa Barbara, between April 26 and 28. Major sessions from that campus will be live-streamed into classrooms, house parties and workplaces across the world.
The idea that capitalism as a system may be coming to an end, that something new must ultimately be created, is no longer restricted to groups on the political left. Survey after survey has found millions of Americans embracing ideas far different from business as usual. A January 2016 poll of likely Democratic caucusgoers, even in a state like Iowa, found that 43 percent described themselves as "socialist" -- a higher percentage than those who self-identified as "capitalist." Eighty-four percent of Democratic voters under the age of 30 voted for the self-described "democratic socialist" candidate Bernie Sanders, and one-third of all Sanders supporters have told pollsters they will vote for the Green Party's Jill Stein in the general election if Sanders is not the Democratic Party nominee.The problem the Left has with agreeing on anything. But this is the incubation stage. Divergent thinking before convergent.
Nor is the understanding that the current system is not the be-all and end-all of history restricted to progressives in general. Long before anti-capitalism found mass expression in the Sanders campaign, four years ago, in 2012, Klaus Schwab, chairman of the World Economic Forum -- the annual gathering of corporate and financial leaders in Davos, Switzerland -- declared: "Capitalism in its current form no longer fits the world around us."….
But what kind of system might one day transcend the traditional 20th-century models of corporate capitalism on the one hand, and state socialism on the other? And what can those who insist that the next system produce democracy, justice, equality, ecological sustainability and a culture of community do to build understanding of the kind of political and economic system and society that we want and need?
What can we do to move forward in a positive way? How do we engage the question, both practically and theoretically? How do we move beyond abstract rhetoric? These questions at the heart of the teach-ins matter to all of us, but they are particularly urgent to those born after the 1960s.…
We've seen state socialism and know it's not a workable alternative. We've experienced corporate capitalism; it has proven itself inequitable, unstable and ultimately unsustainable. Over the coming decades, and especially when the next crash comes, will we be ready to offer a clear, workable and compelling vision of how to reorganize society?Truthout | OpEd
The Fed faces a skeptical market view of gradual rate hike pace https://t.co/47D6pX4cHx pic.twitter.com/TzmhtOFEwO— Bloomberg (@business) April 22, 2016
More than half of Russians would like to see the restoration of the Soviet Union, according to a poll released Tuesday.
Although 58 percent of respondents said they would like to see a new socialist system, only 14 percent believed that it was likely to happen, the report by the independent Levada center pollster revealed.
Thirty-one percent of respondents were opposed to restoring the Soviet Union, while 10 percent did not give an opinion.
The numbers show little change from a similar poll conducted a decade ago, the pollster reported.
The number of Russians who regret the collapse of the Soviet Union — currently 56 percent — remains below the all-time high in 2000 when President Vladimir Putin came to power. At the time, some 75 percent of Russians regretted the fall of the Soviet Union, according to Levada Center polls.
Just over half of Russians, or 51 percent, think the Soviet collapse could have been avoided, while another 33 percent believe it was inevitable, the latest poll indicated. In March 2000, the numbers stood at 62 percent and 26 percent, respectively.So much for the pipe dream of a popular uprising leading to regime change and a Western-oriented liberal government.
The first examination I ever failed was an Economics paper I took as part of an accountancy qualification. I could not understand the subject at all, as it seemed to bear no relationship to Reality as I experienced it. But since I needed a Pass, I learnt it all parrot-fashion, regurgitated it, duly passed, and mentally filed the subject in the bin.
However, in recent years, my work in that space where markets and the internet converge has led me to take a good look at the financial system, and to the subject of the Economics which provides a conceptual framework – and justification – for it.
I have come to realise that the problem lies in the metaphysical and epistemological basis of Economics – in other words, its relationship with the Reality which we experience. The assumptions, and definitions used are not only couched in language which might almost be designed to confuse, but are also crafted to suit the purposes of those who actually fund the academic development of the subject.…
The result of the development of Economics in the last 100 years or so has been to develop a bastard strain of Economics one of the principal purposes of which has been to justify the taxation of earned income – Labour, rather than the unearned income arising out of economic rents derived purely from the unearned privilege of private property in Commons such as Land.
The other principal purpose of Economics has been to rationalise the current system of Finance Capital, consisting of the Twin Peaks of Debt and Equity. Firstly, a monetary system based upon the creation of credit by credit institutions aka banks which has virtually no basis on the productive economy, and secondly, a system of absolute property rights – in particular the form of financial capital consisting of shares in a Joint Stock Limited Liability Corporation.…
The cleansing of our Economic Augean Stables might begin with a new set of Factors of Production.
- Location – three dimensional spatial location.
- Energy – in the form of electricity, the energy value of fuels, and from other sources.
- Knowledge – the accumulated knowledge, experience and talent of a human during his lifetime, or the imperishable and timeless patterns of recorded knowledge and cultural artifacts he leaves behind.
Each of these Factors of Production has a value in use, and each of them is independent of the other two, although all three must necessarily be deployed together when humans act individually, or collectively via a protocol as an enterprise.
Many would agree that each of these Factors (with the exception of an individual’s lifetime knowledge) is in fact a Commons – owned by and available to all – and I agree with Henry George that those who have exclusive rights of use of a Commons should compensate those they exclude.…I would not completely exclude an individual's lifetime knowledge since knowledge acquisition and deployment is a shared enterprise. Individuals don't come to knowledge and develop skill exclusively or even chiefly individually but socially as a shared enterprise, ascending a ladder made by others, and in a supportive environment. The "self-made man" is a myth.
The Systemic Fiscal Reform I advocate is neither a revolutionary appropriation by the State nor a redistribution of income. Instead I advocate a transition from the taxation of earned income (since there is no longer enough earned income left to tax) to the taxation of the privilege of exclusive use of Factors of Production.
(a) Location – a Land Value Tax, levied on the use value of location
(b) Energy – Taxation of the use of the Resource Commons, particularly a Carbon Tax; and
(c) Knowledge – a Limited Liability Tax levied on the gross revenues of the Corporation used to “enclose” Knowledge, through employment contracts and Intellectual Property.No spoiler. You'll have to read the post. It's short and a good read.
There is no way that such systemic fiscal reform would ever be implemented by the institutions which currently exist. Turkeys do not vote for Christmas, and the privileged in control of the Institutions will not give up their privileges.…
The angry reaction to my report [about Bernie Sander's economic program] revealed that by some combination of rationalization and the dominance of neoclassical microeconomics since the 1970s, liberal economists have virtually abandoned Keynesian economics, which supported the notion that governments can and must intervene in the economy to ensure the best results for society. These economists went back to pre-Keynesian thinking, where price fluctuations are supposed to equilibrate supply and demand at full employment with an optimal distribution of good and services. The very suggestion that government action can result in increases in growth rates or wages is now taken to be obviously wrong. Adopting the language of neoclassical micro welfare economics, everything is already as good as can be — all that government can do is to make it worse. Criticisms of the orthodox model and its policies are deemed worthy of scorn, to be dismissed tout court because they are obviously at variance not only with textbook economics, but with what we need to believe to rationalize failure.
The reaction to my paper — the casual and precipitous conclusion that it must be wrong because it projects a sharply higher rate of GDP growth — comes from the assumption that the economy is already at full employment and capacity output. It is assumed that were output significantly below full employment, then prices would fall to equilibrate the two. This is the political counsel of despair. It is based on classical economic theory and the underlying acceptance of Say’s Law of Markets (named for the great Classical economist Jean-Baptiste Say), which says that total supply of goods and services and the total demand for goods and services will always be equal. The shoe market creates the right amount of demand for shoes — it works out so neatly that the true measure of the supply of shoes, of potential output, can be taken by measuring actual output. This concept is used as a justification for laissez-faire economics, and the view that the market mechanism finds a harmonious equilibrium. It explains why even in the depths of the economic crisis, Christina Romer, former Chair of the Council of Economic Advisers in the Obama administration, who was always skeptical of fiscal policy and Keynesian economics, and why Jared Bernstein, former Chief Economist and Economic Adviser to Vice President Joseph Biden under Obama, who should have known better, wrote that the economy would return on its own to full employment. They predicted, quite wrongly, that the proposed Obama stimulus would accelerate this recovery by 6 months.
The return of Say’s Law has distorted the way liberal policy elites view the economy.… This reevaluation says to policy elites, “Hey, we are doing as well as can be expected.” To the general public it says, “Sorry, nothing more can be done for you.” TINA.…
Controversy reflects the disagreements and uncertainty that alone can lead to intellectual progress. It is time to inject some of these into orthodox macroeconomics. We have been ill-served by a smugly sure macroeconomics both in imagination and policy. Amazingly, the crisis of 2007-9 has left intact the dominant pseudo-Keynesian orthodoxy; maybe the kerfuffle around my report will help to open some space for constructive dialog in a profession that has clearly grown too complacent.
A significant number of student’s exposure to economics is through Econ 101. only. They never intend to become economists, they simply want to learn something about the economy. Yet, as Krugman admits, 101 is full of hypothetical purity about markets. It isn’t a representation of actual economies. It is a distorted and ideologically driven account of what markets might be under conditions so remote from reality that we can dismiss the whole thing as absurd. No one can learn about the actual economy from sitting through Econ 101.Why do economists insist on creating this stalking horse called a ‘perfect market’ only to bash it as ridiculous later on? Why not begin with something more attached to the real markets students are likely to encounter? And why do they bash it in classes that only future economists attend? Is this some secret plot to ensure intellectual superiority over the naive souls who fell for the misleading nonsense in 101?Economics could take a hint from philosophy. Philosophy profs are aware that only a very small percentage of their students are likely to go on to major in philosophy and an even fewer to go on to grad school for an advanced degree in it. So they design Phil 101 accordingly.
