Social Choice and Social Welfare
Barry Z. Cynamon, currently Visiting Scholar at the Federal Reserve Bank of St. Louis, and Steven M. Fazzari, Professor of Economics at Washington University in St. Louis, are researchers on consumer behavior and how it affects the economy. They wrote an op-ed for the St. Louis Post Dispatch in October 2007 in which they predicted that an end to the relentless trend of rising household debt and a subsequent crash in household spending could lead to a killer U.S. recession. Soon after, their prediction came true. Their current work, which examines how high and rising inequality is holding back the American economy, is part of the Institute for New Economic Thinking’s project on the Political Economy of Distribution. They explore how the massive debt which led to the Great Recession, the spending collapse that followed, and the stagnation that persists are all linked to income inequality. In the following interview, they discuss what their findings mean for America.Salon
An effect of being trained in mainstream economics but then encountering alternative approaches is to experience a growing realization — or at least a creeping suspicion — that most of what has been taught is the opposite of the truth. Even when the story told contains some truth, it is likely to have been turned on its head. Thanks to Kalecki and Keynes, for example, it becomes clear that demand (spending) determines supply (income), including in the long run. Spending, in a monetary production economy, must come before production can commence. Thanks to Post Keynesians, it becomes evident that loans create deposits, not the reverse. There could be no deposit prior to the decision to extend the first private or public loan (unless through government spending). Thanks especially to Sraffians, it has been established that profit cannot be a remuneration for productive contribution. We can conceptualize profit as unpaid labor (Marx) or due to ownership (Sraffians, Post Keynesians).
An observation due to Modern Monetary Theory (MMT) that sometimes meets with resistance, though in my view is convincing, is that government spending or lending is logically prior to the receipt of tax revenue or government borrowing. This is a recognition that, from inception, government must issue its currency (spend or lend) before reserve accounts can be debited.
I often ponder this and other aspects of MMT in relation to Marx. In this regard, a statement made by Yanis Varoufakis in a fascinating presentation recorded in May 2013 caught my attention. Here, I will use it as a springboard for a brief consideration of Marx in relation to MMT on the question of fiscal policy, without intending to imply that Varoufakis would necessarily agree with the interpretation (or with MMT, for that matter).heteconomist
‘The U.S. and China are locked in a great power competition, and their primary goals are incompatible.’…
National visions are powerful motivators. For the U.S., a national vision of liberal democracy and free markets has translated into permanent forward deployment of the U.S. military and the world’s largest alliance system. Underlying this forward strategy is the belief that liberal democracy is the best form of government, and that it must be protected at home and given to others when possible. This American vision is less than three centuries old; China’s view of itself as the center of the universe goes back thousands of years. As scholar Yan Xuetong notes, Chinese people believe China’s fall from preeminence to be “a historical mistake which they should correct.” If it is true that old habits die hard, the main tenets of China’s national vision are unlikely to change.
By pivoting to Asia, Washington is placing a bet that Beijing desperately wants to avoid a disastrous conflict as much as it does, and that the status quo in the region will endure. By tightening the noose, Beijing is trying to call its bluff. As Sun Tzu might observe, both sides are trying to win without fighting.
For now, that may be a viable strategy. But even if China continues its steady growth, avoids threatening its neighbors, and generally demonstrates that it is a responsible stakeholder in the international system, it is inconceivable that it would allow another superpower to have the best real estate in its own neighborhood. At some point, the U.S. and China’s national visions will collide. When that happens, Washington and Beijing will both have to make a monumental decision about the future of East Asia, and the rest of the world.The Diplomat
Actually it’s McCloskey dissing what she calls leftish economists generally, although poor Piketty and his notorious book provides the moment she seizes to attack us misguided folk. Riven through with fundamental error and hopelessly soft we have all, apparently, misunderstood the great sweep of history.
The lesson from which is that all is swell if we just leave it alone. We need to set aside our petty and foolish concerns about the environment, and a whole host of other nonsense about market imperfections – and, yes, government imperfections too – we need to acknowledge the great wealth that surrounds us, and gorge on the pile of goodies that capitalism has brought us.…
If the great spirit in the sky was working tirelessly throughout those two hundred years or so, then surely the benefits ought to have accrued more evenly. Why is the material leap more focused towards the end? At least for the ungrateful poor who don’t realize they are actually wealthy.
Perhaps it had something to do with democracy. Or, alternatively put, the push back by folk like my grandmother against the system that seemed to be permanently stacked against them. They voted repeatedly to distribute wealth more evenly, to limit the risks of living in the spirit’s system, and to otherwise guard against to excesses of the capitalists. They had a sense of balance. A sense that allowed the economic system to flourish but within more decently proscribed limits. Distribution was important because it allowed everyone to feel an equal participant. Excess undermines that feeling.
Yes, Deirdre, distribution does matter. It matter s a lot. In fact it matters so much that rightists – I resist the obvious impulse to use the word “wrongists” – wanting to defend the great spirit in the sky ought to pay very great attention.
Because maldistribution can, and I will stay polite here, mess things up. Big time. Really big time. It creates political problems in a democracy. And that then creates problems for the economy.The key point:
The tradition in which McCloskey sits, denies forcibly and very loudly that the government can play any role whatever in the economy. It has constructed an entire intellectual edifice – Smith-Say-Mises-Hayek-Friedman et al – to enforce that denial. It has sought to interfere in the democratic process in order to neuter any influence that process might have.Like I've been saying capitalism and democracy are antithetical.
I am a Dutch citizen who lives here in Malaysia. This morning I read some news regarding MH17 in Elsevier, a worthy Dutch news magazine.
As you should know the Dutch government signed an agreement with 3 other countries (Belgium, Australia and Ukraine) about the manner in which the JIT would investigate the MH17 disaster.
According to Elsevier sources, this (secret) agreement has one condition that ensures all parties within the JIT group (including Ukraine) have the right to secrecy. In other words: if any of the parties finds that certain evidence might be damaging, it is entitled to demand complete secrecy by all JIT members.
Of course an incredible situation: how can Ukraine, one of the two suspected parties, ever be offered such an agreement?…
Besides the fact that the MH17 plane was Malaysian territory and Malaysia was not even allowed to join the JIT this is an absolute scandal of epic proportions. It shows the JIT investigation for what it is: a corrupt and useless exercise.Malaysia Today
Imagine the scenario. It’s 2025 and the volume of home-produced oil is so great that the US is near energy independent as far as crude imports are concerned.
With that energy independence, the amount of dollars flowing out of the US and over to net energy producers (and traditional dollar reserve hoarders) such as Saudi Arabia, Russia and Mexico has come crashing down.
So how would such a dollar-flow contraction affect the global economical and political balance?
According to Citi’s credit team, it would likely affect things a lot.…The Financial Times — FT Alphaville
As biotech masterminds and venture capitalists scramble to hatch a new generation of environmentally friendly fuels that can help power the average gasoline-burning car, they are confronting an unexpected obstacle: the White House.
Yielding to pressure from oil companies, car manufacturers and even driving enthusiasts, the Obama administration is threatening to put the brakes on one of the federal government's most ambitious efforts to ease the nation's addiction to fossil fuels.
The proposed rollback of the 7-year-old green energy mandate known as the renewable fuel standard is alarming investors in the innovation economy and putting the administration at odds with longtime allies on the left.Even the Third Way is against the White House on this.
"It is disheartening to see how much potential to slow climate change we are missing out on by not doing this," said Ryan Fitzpatrick, a clean energy adviser at Third Way, a Washington group that seeks bipartisan policy solutions.McClatchy
Six years into his presidency, Obama still doesn’t seem to understand that just because some people have impressive credentials doesn’t mean they know what they’re doing. Indeed, in a profoundly corrupted system – like the one that now controls Official Washington – rewards are handed out to people who serve the corrupt interests or at least don’t get in the way.
In a time of corruption, the countervailing forces of wisdom and courage will never be found among the credentialed, but rather among the outcasts of the establishment, those who were forced to the margins because they objected to the venality, because they stood up against misguided “group think.”
But Obama has been unwilling – or possibly unable – to come to grips with this reality. Despite his personal intelligence and rhetorical skills, Obama never has been willing to challenge people cloaked in credentials – those who went to the best schools, worked at big-name firms, won prestigious awards or held fellowships at famous think tanks.
The tragedy of Obama is that I’m told that he understands the stupidity of the modern U.S. establishment and does sometimes consult with “realists” who offer practical advice for how he can resolve some of the most nettlesome problems facing the United States around the world. But he does so virtually in secret, with what politicians like to call “deniability.”Consortiums News
"I think that what we have seen since the 1980s is the recognition on the part of the right that the educative nature of politics is really crucial and important. They want to take control of those institutions that produce particular kinds of subjects, dispositions, attitudes, particular modes of desire that are compatible with market values and market social relationships. So the school becomes a reproductive tool that aligns itself with the belief that the market has the ability to govern all social life," Giroux tells Camilla Croso in this interview. "Schools are public spaces and by default, they are at odds with a market rationality. The people who control corporate power globally, today, have no interest in the public, public values or public goods."
HG: Actually, the public as a democratic public sphere that encourages critical dialogue and an engaged citizenry is the enemy of the market for them because it's a non-commoditized sphere that basically can produce all those things that are considered hazardous to corporate interests. That is, it produces people who can imagine otherwise and hence act otherwise; it can produce people who believe in thoughtfulness, critical exchange, civic courage [and] social responsibility, and are more than willing to hold power accountable. Public spheres are places in which thinking becomes dangerous and, in that sense, they have to be shut down.
Furthermore, there is an enormous effort on the part of the right, all over the globe, to privatize these public spheres and to turn them into risk-free investments for accumulating capital and profits for the relatively few, for the rich, for politicians, all of whom then can make enormous amounts of money off them. They can disempower faculty, they can treat students as consumers and they can basically use them as a way to accumulate capital.
Henry A. Giroux currently holds the McMaster University Chair for Scholarship in the Public Interest in the English and Cultural Studies Department and a Distinguished Visiting Professorship at Ryerson University. His most recent books include: Youth in Revolt: Reclaiming a Democratic Future (Paradigm 2013), America's Educational Deficit and the War on Youth (Monthly Review Press, 2013), Neoliberalism's War on Higher Education (Haymarket Press, 2014), and The Violence of Organized Forgetting: Thinking Beyond America's Disimagination Machine (City Lights, 2014). The Toronto Star named Henry Giroux one of the 12 Canadians changing the way we think! Giroux is also a member of Truthout's Board of Directors. His website is www.henryagiroux.com.Giroux is becoming one of the leading public intellectuals of the left.
While Western mainstream media concentrates attention on the emissions agreement signed by US President Barack Obama and Chinese President Xi at the recent APEC Beijing Summit, Russia’s Putin and China’s Xi quietly signed major new energy agreements that will have enormous geopolitical significance in bringing about the very nightmare that US strategists such as Zbigniew Brzezinski warned about way back in 1997 when America seemed indomitable as sole Superpower.…
They reportedly discussed “the current international and regional security situations, regional issues as well as the relationship between the two militaries”, said Xinhua. One can wonder just what those “situations” might be, perhaps the brazen US and EU intervention into Ukraine to give the excuse for financial warfare and a proxy war against Russia, and perhaps the US National Endowment for Democracy’s “Umbrella Revolution” in Hong Kong, designed to rattle Beijing as well as the Obama “Asia Pivot” military focus on China? The Washington neo-conservative hawks and their backers in the CIA, State Department and NSC are managing to accelerate the very Eurasian alliance that is they are trying to destroy.…First appeared:New Eastern Outlook
An economic system that rewards psychopathic personality traits has changed our ethics and our personalities…
We tend to perceive our identities as stable and largely separate from outside forces. But over decades of research and therapeutic practice, I have become convinced that economic change is having a profound effect not only on our values but also on our personalities. Thirty years of neoliberalism, free-market forces and privatisation have taken their toll, as relentless pressure to achieve has become normative. If you’re reading this sceptically, I put this simple statement to you: meritocratic neoliberalism favours certain personality traits and penalises others.…
There are constant laments about the so-called loss of norms and values in our culture. Yet our norms and values make up an integral and essential part of our identity. So they cannot be lost, only changed. And that is precisely what has happened: a changed economy reflects changed ethics and brings about changed identity. The current economic system is bringing out the worst in us.
Ukraine voted no on this resolution because this new Ukrainian Government is the only nazi regime in the world, and they are doing the standard nazi things, and so what they are doing is in violation of numerous international laws, which are not being enforced, but which are re-asserted and re-affirmed in this resolution, though Ukraine and the Ukrainian situation aren’t at all mentioned in the resolution. The United States voted no on it, because the U.S. Government had placed them into power. And Canada voted no on it because their far-right Prime Minister, Stephen Harper, has been a virtually unquestioning supporter of all U.S. foreign-policy positions, and wants U.S. President
Barack Obama to approve construction of the Keystone XL pipeline to assist the Koch brothers and other large oil giants to profitably transport and sell to Europe and around the world, tar-sands oil from Canada’s landlocked Athabasca region.
Germany abstained from voting on this resolution because their leader, Chancellor Angela Merkel, does not want to offend the U.S. President by voting for a resolution that the U.S. Government strongly opposes; and also because, as today’s leader of the land where nazism started — in the first nazi political party, the Nazi Party of Germany — she does not want Germany to vote against a resolution that condemns Nazism. If Germany were to have voted against this anti-nazi resolution, she would have faced a political firestorm at home. So, Germany abstained, in order not to offend Obama on the one side, and her public on the other.
Key to understanding the vote on this resolution is knowing the relevant historical background, which has largely to do with the world’s only nazi-led Government: today’s Ukraine. Consequently, the remainder of this article will explore that issue in depth, so that this otherwise-incomprehensible U.N. vote will become comprehensible.Washington's Blog
America today faces three great challenges. Inequality, driven in particular by a spike in incomes at the very highest end, is threatening the public’s belief in the justice of our economic system. Innovation in products and services that actually add to human flourishing and produce meaningful employment, driven by new firm formation, appears to be stagnating. Finally, Americans both on the right and left increasingly believe that our political system is rigged to benefit organized insiders, while critical public problems remain unaddressed.…
The standard image of how our economy works, and where the wealth of a good chunk of the 1 percent comes from, is wrong. The really important question, if we want to put our economy on a trajectory of greater productive innovation, less inequality, and more political legitimacy, is what explains this explosion of upward redistributing rent? How did this happen at a time that all of the political conversation was about the wonders of markets? How, if at all, might we actually restructure our politics to make it possible to claw back these rents, thereby liquidating unjust politically-protected fortunes, creating space for greater economic opportunity, and unleashing greater innovation?Cato Institute
It’s long overdue but better late than never that Europe might just be back-pedalling on America’s aggressive agenda towards Russia. The business-like visit to Moscow this week by Germany’s Foreign Minister Frank-Walter Steinmeier suggests that Europe can come to its senses to seek a diplomatic resolution of the escalating tensions over the Ukraine crisis – tensions that could spark a wider continental war, or worse.Germany blinks. Putin and Xi chuckle. Obama, McCain and the neocons fume.
Steinmeier met with his Russian counterpart Sergei Lavrov in which the pair stressed the need to find a political end to the violence in Ukraine. The German diplomat – the first high-level European envoy to Moscow in several months – also talked about normalising relations between his country and Russia and of finding a way to rescind the economic sanctions that Brussels has imposed on Moscow over recent months.
EU ministers in Brussels balked at imposing a fourth round of sanctions earlier this week, showing a growing division over the policy among European governments.
Interestingly, Steinmeier said his visit to the Russian capital was following up on positive discussions held last weekend with President Vladimir Putin at the G20 summit in Australia. The German foreign minister said the task now was to prevent a new spiral of violence in Ukraine.
Given that Germany is the European Union’s largest economy, we can fairly say that Berlin’s political attitude is going to hold sway for the rest of the bloc.
Meanwhile, the contrast with the European attitude, as seen this week through Steinmeier, could not be sharper in Washington.