Wikileaks Leaker Bradley Manning Finally Charged Marcy Wheeler, FireDogLake (hat tip Glenn Greenwald)
Australia’s Most Wanted: People Smuggling Edition Larvatus Prodeo
Wall Street’s pity party snit fit Andrew Leonard, Salon (hat tip reader John D)
Law & Order: Mortgage Victims Unit (Starring Fred Thompson) Mother Jones (hat tip reader John D)
Russian Media Skimps on Spy Story Wall Street Journal. This is funny in a sick way. The Russian media is underreporting a foreign story that reflects badly on the nation! As if that never happens in the US….Oh, and this article is top of the front page on the Web edition right now.
Truth moves slowly, while bullshit travels at the speed of sound FireDogLake
Why Corporations Matter, Part I Gonzalo Lira
A New Generation, an Elusive American Dream Louis Uchitelle, New York Times
Finance spread its own risks but left ours alone Financial Times
Some BIStoric gold swaps FT Alphaville. Be sure to read the comments.
Shopping Centers Struggle, But Hope Seen Wall Street Journal
Modern monetary theory and inflation – Part 1 billy blog. Note Bill claims MMT says what government “should” do. He really is not in a position to dictate MMT “positions” on policy (many if not most of the serious MMT writers in the US would say that MMT tells you about policy tradeoffs, it doesn’t dictate policy choices), so you need to discount his pronouncements.
Executive Compensation and other Parasitic Loads Edwin Lee (hat tip reader Francois T). From last year, but worth reading.
Antidote du jour:
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“Some BIStoric gold swaps” FT Alphaville
Why all the uproar about gold? Could it be because of it’s run up in price for the last ~10 years vs the fiat currencies? Maybe gold’s outperformance of most other asset classes over the same time span?
Didn’t Keynes end the debate about gold’s function when he declared it a ‘barbarous relic’?
Gold is an insurance policy against inflation/hyperinflation and the only means of protecting wealth against governments that will not be checked in their will to print, print, print, debt of every description and duration.
Even if gold is viewed as simply another commodity, I doubt it’s value will ever go to zero purchasing power…no fiat currency, bond, stock, or government issued debt of any type or duration can make that assumption. Every fiat currency created has eventually gone to dust… become worthless paper.
If gold is truly a ‘barbarous relic’, why are central banks still holding onto it and why would the BIS bother with it?
If you actually read details of the history of Gold in the 19th and 20th centuries, you find that Gold increases in value in both periods of inflationary and deflationary distress, but Gold is a superior tangible asset in periods of deflationary asset while a an often inferior tangible asset in periods of general inflatoin when other tangible assets (land, art, etc.) may be a better store of value than Gold. This was certainly the case during the 1970s and 1980s when a far higher general inflation trend exists then exists today, and where after peaking in 1980, the price of Gold (and oil) collapsed relative to the val value of other assets as the inflation rate fell from 12% to 6% in the U.S.
In deflationary periods all other asset prices decline as they are converted to cash to either pay off debts or to increase cash a hoard to meet possible demands to pay off debt. Gold, because it functions in our mind as the final store of value, is consider the only thing better than cash, and like 1928-1934, it increases in value even against fiat currencies in which debts are denominated. When a moderate reflation in the value of other assets occurs, as occurred after 1934, then the upward pressure on Gold will decline as investors start shifting into other tangible assets, no longer fearful that the price they pay today will be significantly less tomorrow.
So the basic rule is with accelerating inflation or deflationn, Gold rises. With reflation (price recovery after deflation) and disinflation (a period of declining inflation rates), Gold declines. Of course catching the breaks in these patterns is is more luck or fortune telling then skill as we all “see through a glass darkly.”
Thanks for the breakdown.
Re. gold, it’s just a commodity, a relatively useless one at that. See: GOLD
In answer to the question “. . . why are central banks still holding onto it?”, for the same reason they think debt/GDP indicates a nation’s ability to pay its debts. The central banks are run by people whose education ended August 15, 1971.
Rodger Malcolm Mitchell
“Re. gold, it’s just a commodity, a relatively useless one at that.”
As far as I know, the interest on gold leases is paid in gold, not cash. So if a central Bank accepts a negative rate of interest that means they will receive less gold back than they loaned out. I presume Central Bankers, even those educated before 1971, know arithmetic and realize this is a losing proposition. What is the motivation?
If fiat currencies lose ~2% of their purchasing power every year due to inflation targeting by central banks are the fiat currencies really a store of value, or only a medium of exchange?
Gold has risen vs all fiat currencies over the last ~10 years, while the dollar has lost over 25% of it’s purchasing power. Obviously, this does not make the fiat currencies appear to be a store of value when compared to gold.
It is well known that central bankers make concerted efforts to suppress the price of gold denominated in fiat currencies…Therefore, it is a practical matter for central banks and their proxies to sell gold into the market to suppress gold prices. The US claims to hold X amount of gold but the US has allowed no independent audit of gold reserves since the mid 1950s.
If you wish to seek out specific quotes from various central bankers regarding their comments about gold suppression schemes you will find them at FOFA. Link… http://fofoa.blogspot.com/2010/07/timing-is-everything.html
PSYCHOPATHIC SCAMERICA
The stripes of injustice,
The red, white, and blue,
They wave for the comfort,
Of the psychopathic few,
Charmingly superficial and overly glib,
With a grandiose sense of self worth,
Parasitic pathological liars,
Claiming godlike stature by birth,
Impulsive and Irresponsible,
They manipulate and con,
Versatile gangsters,
That deceptively fawn,
The home of the brave,
And the land of the free,
Is a land where few,
Accept responsibility,
An alliance of psychopaths,
Demonizing all in their way,
Their god is their greed,
Its the scamerican way,
Once normal good people,
Have been brainwashed away,
From fairness and reason,
To hate and disarray,
And now they bicker,
As they lose each crumb,
They are the latest victims,
Of their top gangster scum …
Hundreds of years,
Of societal gain,
In a few generations.
Gets washed down the drain …
Deception is the strongest political force on the planet.
Another interesting link on pharma and outsourcing. Be careful what you ask for…
http://www.nytimes.com/2010/07/07/business/global/07indiadrug.html?_r=1&ref=business
People still shop at malls?
Gonzalo posits; “What is the soul of a company?”
What holds it all together — the tangible assets, non tangible assets, structural assets, etc.?
The ‘glue’ that holds it all together Gonzalo is that they are all ‘externalizations’ of human organisms. As such they are deceptions, tools of dominance, made to get the needs met of the particular corporate alliance. Corporate alliances are leading edge alliances in that that they race ahead of the now pretty much defunct nation state alliances. You err in thinking there is a triumvirate, there is a greater alliance of wealthy controlling elite that own and control the corporations, the media, the nation states, the military establishments, etc., and now the externalizations themselves, which gain aggregate perceptive powers as each day passes and they morph into the newer form of humanity the onotron which must be factored in also. That is why it is important to be careful what you externalize as it may be used against you. Specific brilliant technologies, like the clockwork externalization, are always lost over time because they are created within a failed alliance that lacked the perception in leadership to remain dominant by creating successful deceptions.
There is always an ever shifting duality that reflects the base forces of evolution, perception pitted against the externalized deceptions. Events align to the most powerful deceptions.
Deception is the strongest political force on the planet.
Dear Yves
Bill,
Please reread my comment. My remark was about “serious MMT writers in the US“. It merely says you are not a MMT writer in the US, not that you are not serious.
In addition. the post has comments that frankly will alienate US readers who might otherwise be receptive to MMT. For instance:
“The sovereign government, which is not revenue-constrained because it issues the currency, has a responsibility for seeing that the workforce is fully employed.
The part is bold is not widely accepted in the US, in fact, I would hazard most reject the idea that government should play a role in assuring full employment, much “has a responsibility” (which I read as a stronger claim). Even though that is the goal of most policy prescriptions made by economists, many people, perhaps even most, in the US reject the idea of the government having responsibility for employment.
There is an assumption re the proper role of government in your formulation which is not inherent to the MMT analysis of consequences. You can contend that this OUGHT to be the goal per your analysis earlier in the post of the costs of less than full employment, but that is still very much subject to debate here, as much as it may seem obvious to you.
Unfortunately, many people here would rather suffer in the name of small government and their belief that government encroaches on personal liberties. And they vote. Look at the reactions to the Martin Wolf post today, or my anodyne NYT op ed with Rob Parenteau, or any of Marshall Auerback’s posts. And my blog skews liberal.
The Pollingreport website summarises poll outcomes in the US, and seems to indicate that US voters want Govt. action on jobs. See this, for example:
http://www.pollingreport.com/prioriti.htm
Poll interpretation is chancy, but I don’t see a totally negative view of the US Govt’s. role.
Dean Baker’s post of 20 Jun. indicates that Americans see jobs as more important than deficits:
“The Post is always anxious to tell readers about the need to reduce the deficit, it’s endlessly repeated editorial line. Of course this is the opposite of what the polling data show.
“For example, a poll conducted by Pew on June 3-6 asked respondents which economic issue concerned them most. Forty one percent said jobs, only 23 percent said the deficit. A NBC/Wall Street Journal poll from early May found that by 35 percent to 20 percent people thought economic growth and job creation should be the first economic priority. Only 20 percent ranked the deficit first.
“A Fox News poll, also done in early May, found that by a margin of 47 percent to 15 percent people thought the economy and jobs was a more important priority than the deficit and government spending. An early April NYT/CBS poll found that 23 percent of respondents listed the economy as the top priority, while 22 percent listed jobs. Only 11 percent listed the deficit.
“So, the polls don’t seem to support the Post’s claim that the public is more worried about the deficit than jobs”.
http://www.cepr.net/index.php/blogs/beat-the-press/the-post-tells-readers-that-the-public-is-more-concerned-about-deficits-than-jobs/
But I’m no expert on US polls. Maybe other readers would like to comment.
I have read that many citizens have equated deficits to jobs through the following logic:
The US government is borrowing money from China who is stealing our jobs. Thus if we stopped borrowing money, China would stop stealing our jobs.
The funny thing is, that despite the absurdity of the above argument it might actually be true. Rogoff/Reinhart show fiscal overindebtedness has lead to permanent GDP/job loss. It is also plausible that oversavings in Asia shifted jobs from debtor to creditor nations.
Krugman argues that debt ain’t so bad, and that stimulus will fill the whole from debt deflation. To the common man this feels like drinking yourself sober. The nuanced arguments are not penetrating because there is so much distrust for government spending post bailout. There is a lot of festering anger from that period.
“Unfortunately, many people here would rather suffer in the name of small government and their belief that government encroaches on personal liberties.”
A small point Yves, those of us who feel/vote this way do not believe we are suffering in the name of small government. We believe that government in the name of full employment may be successful at being more redistributive, but in the long run there is much less to distribute. Personal liberties are valuable largely because (we believe, liberals dissent) that they create a better economy for most.
How can there be “less than” a negative number, since what’s being distributed now is not only nothing, but is our being looted?
I find it hard to believe you really think anything is happening or will continue to happen other than the complete economic liquidation of the people. Yet you talk as if you know absolutely nothing about the processes of the last 40 years, or their radical acceleration over the last ten years.
What Yves means is, you and your ideological ilk are being herded into the slaughterhouse along with everyone else, and you’re too brainwashed and blind to realize it.
You’re really insane enough to think you’re going to be spared.
All the stolen wealth must be restituted back to the people at the ground level. That’s what should have been done in fall of 08, and that’s what still should be done.
Yves,
“Note Bill claims MMT says what government “should” do. He really is not in a position to dictate MMT “positions” on policy (many if not most of the serious MMT writers in the US would say that MMT tells you about policy tradeoffs, it doesn’t dictate policy choices), so you need to discount his pronouncements.”
First, while Bill Mitchell, as you say, “. . . is not in a position to dictate MMT “positions” on policy. . . ” as one of the three most widely known MMT economists, he is extremely influential among those who practice the MMT approach. So, when he says that MMT is about both full employment and price stability, that “pronouncement” isn’t one to be discounted. Also, other MMT economists such as Randy Wray, Warren Mosler, Stephanie Kelton, Pavlina Tcherneva, Marshall Auerback, Scott Fullwiler, Mat Forstater, Greg Norman, and others all address both problems of getting to full employment and achieving price stability in their writings. In your recent thread on AmericaSpeaks, the charge frequently surfaced that MMT had no regard for inflation. Well, Bill’s series on inflation is in part directed at that view and is a refutation of it.
Second, even though you’re right that most serious US MMT writers “would say that MMT tells you about policy tradeoffs, it doesn’t dictate policy choices,” it is also true that every MMT writer I’ve ever corresponded with, at least 10 now, do think that the Government ought, at least, to accept that full employment is an important aspect of public purpose and ought to be a goal of Government activity.
You’ve said above in your reply to him that Bill ought to have said something like that rather than said:
“The sovereign government, which is not revenue-constrained because it issues the currency, has a responsibility for seeing that the workforce is fully employed.”
However, Bill asserted this in the context of a section in his post on “Responsible fiscal practice in MMT.” This section is explicitly normative since it is stating Bill’s view about such practice. I think every MMT writer has the right to say what they think “responsible fiscal practice in MMT” is, including Bill. I don’t think their statements about this ought to be discounted either, but, instead should be evaluated against other ideas about what responsible fiscal practice in MMT is. I thank Bill for his view on this, and I also think that as one of the developers of MMT for more than 30 years and as one of the three most acknowledged leaders in MMT, that his view is important because it is bound to be an influential one in the MMT school. Apart from that, however, I think there is merit in his view of fiscally responsible MMT practice, and that he may be right about what that is. So, again, I certainly don’t think his view should be discounted.
You also said that Bill’s statement about a sovereign government’s responsibility
“. . . is not widely accepted in the US, in fact, I would hazard most reject the idea that government should play a role in assuring full employment, much “has a responsibility” (which I read as a stronger claim). Even though that is the goal of most policy prescriptions made by economists, many people, perhaps even most, in the US reject the idea of the government having responsibility for employment.”
I’m not sure that most of us here reject the idea that the Government should play a role is assuring full employment. As far as I know there is no direct polling on this question, but perhaps I’m wrong about this. If I had to guess about this I’d say that a majority of us do think that the Government should play a role in helping to achieve “full employment” and that people are divided about the size of that role. and the degree of that obligation of Government.
I also think that our views on this subject have varied greatly over the years. During the period from the end of WWII through the 1970s the view that Government ought to pursue full employment was much more popular than it’s become in the neo-liberal period since Reagan’s election. With unemployment so high in the US it’s a fair conjecture to make that more of us may again think that the Government should provide full employment.
Here’s a link to a Federal Reserve Bank of SF newsletter on the goals of monetary policy policy written in 1999:
http://www.frbsf.org/econrsrch/wklyltr/wklyltr99/el99-04.html
The newsletter outlines the evolution of the Fed’s legislative mandate and discusses its employment goals in that context. Among other things it says:
“The Fed then has two main legislated goals for monetary policy: promoting full employment and promoting stable prices. With this mandate, the Fed has helped foster the exceptional performance of the U.S. economy during the past decade. Still, some have argued that the Fed’s mandate could be improved, especially in looking ahead to future attempts to maintain or institutionalize recent low inflation. Much discussion has centered on two topics: the transparency of the goals and their dual nature.
The transparency of goals refers to the extent to which the objectives of monetary policy are clearly defined and can be easily and obviously understood by the public. The goal of full employment will never be very transparent because it is not directly observed but only estimated by economists with limited precision. For example, the 1997 Economic Report of the President (which has authority in this matter from the Humphrey-Hawkins Act) gives a range of 5 to 6% for the unemployment rate consistent with full employment, with a midpoint of 5.5%. Research suggests that there is a very wide range of uncertainty around any estimate of the natural rate, with one prominent study finding a 95% probability that it falls in the wide range of 4 to 7-1/2 % (see Walsh 1998).”
The meaning of “full employment” here is associated with the idea of a “Non-Accelerating Inflation Rate of Unemployment” or NAIRU. It’s because of ideas prevalent about the NAIRU that the level of “full employment” discussed above is so high. But Bill Mitchell, along with other MMT economists, believes that the NAIRU hypothesis is invalid. See his: http://bilbo.economicoutlook.net/blog/?p=1502 for his reasoning and some evidence.
So, his target of full employment at only 2% unemployment has to be viewed in that context. Let’s say that Bill’s view about the NAIRU were adopted by the Fed, then the newsletter above implies that the Fed’s “full employment” goal as part of implementing the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978 would correspond with Bill’s assertion that it is the responsibility of the Federal Government to do all it can consistent with price stability and the other goals of the act.
In short, a case can be made that Bill’s assertion that the Government “has a responsibility for seeing that the workforce is fully employed,” is already the law of the land in the United States.
Sorry for the length of this comment. But I thought yours deserved a careful reply.
Best,
Joe Firestone
Mr Mithchell; I Wouldn’t be considered a serious economist at all. Yet, I dare to call you on a couple of points:
I realise that as an amateur I have more leaway than yourself, but the artificial constraints and the theoretical abstraction of economics has always frightened me.
You state that ‘full employment and price stability’ is at the heart of this MMT you claim to represent. Well…it ain’t gonna happen outside of Greenspan’s “Goldilocks economy”!
Full employment is impossible to achieve except perhaps in a totalitarian state. And in my opinion price stability is equally rare in a market driven economy. Windfall profits are the ultimate motivator of those same speculators and entrepreneurs who might possibly energize the economy to achieve something near to your “full employment”.
Secondly, your treatment of inflation as being neutral is dependant upon a huge artifice. Even if you managed to create “full employment”, the growth of incomes would never be close to even. Even if you had some super watchdog to oversee a proportional increase for each type of work and employment, the income disparities would increase in the upward movement. This is not so different than our experience of the past decade.
And all of that is reckoning without the ‘Big ugly pig in the room’….Government! The stimulus has government increasing the money supply and increasing spending. What is actually happening is that increased demand is coming from the government to the economy and creating employment of labour and resources. Therefore, everything is toploaded to the government. Government is outbidding the economy for these resources causing increased costs and decreased profitability for anyone not supplying the government.
This is hardly a recipe for an non harmful inflation.
Note Bill claims MMT says what government “should” do. He really is not in a position to dictate MMT “positions” on policy (many if not most of the serious MMT writers in the US would say that MMT tells you about policy tradeoffs, it doesn’t dictate policy choices), so you need to discount his pronouncements.
IOW Bill is starting to be less timid than his peers. That sounds good to me. Why should timidity somehow be entitled to set the pace of what’s allowable or what “needs to be discounted”.
Of course no one’s by right more or less in a position to dictate positions by birth or something. As always throughout history, that job’s up for grabs, for whomever grabs it.
From NYT New Generation Piece: “Over the last five months, only one job materialized. After several interviews, the Hanover Insurance Group in nearby Worcester offered to hire him as an associate claims adjuster, at $40,000 a year. But even before the formal offer, Mr. Nicholson had decided not to take the job.
Rather than waste early years in dead-end work, he reasoned, he would hold out for a corporate position that would draw on his college training and put him, as he sees it, on the bottom rungs of a career ladder.”
Sorry, buddy, but you graduated in 2008 (from Colgate! expensive) and live with your parents. You got a $40K offer, and you’re turning it down. “Son, there’s the door…leave!” Give me a break. Take Dad’s advice, get off Facebook, and take the job.
“Rather than waste early years in dead-end work, he reasoned, he would hold out for a corporate position that would draw on his college training and put him, as he sees it, on the bottom rungs of a career ladder.”
With that type of reasoning skill I’m surprised he even graduated from a place like Colgate. How is any first job out of college that’s not at a fast food joint (or similar service job) “dead-end work”? Claims adjuster for an insurance company… sounds like corporate entry level job to me and if he was successful at it could lead to more connections and better job offers which would indeed move him up the corporate ladder if he works hard anough and is astute enough to do so. Or if he really doesn’t think the insurance industry is corporate enough for him, why not take the 40K job and then keep looking for something better?
And at some point I need to pay higher taxes to make sure this kid, and kids like him, can stay on his parent’s insurance? This kid (and all those who would defend his choice here) is a perfect example of why America is in decline business-wise. Another example is kids who get totally useful liberal arts degrees by taking out loans they can’t get a good enough job to repay. What has happened to the work ethic? It is slowly being replaces by the entitlement ethic.
This is one of the many reasons I am an ex-liberal (also ex-believer in any political ideology). For many years I have had the belief that I am willing to pay extra taxes to benefit the whole… however that tax money is mostly going to wars and looting by the elites (bailouts, earmarks, thousand plus page bills that benefit who exactly?) and not really benefitting the whole… so I am no longer willing to support that system.
ooops.. meant to say “totally useless” NOT “totally usefull”
What really aggravates me about this article is that it makes my entire generation (Millennials/Gen Y) look bad. Most of the people I know my age are far from like this. Take my wife, for example. She is licensed as a middle school language arts teacher. She can’t find a teaching job, so she works for about $8.50/hr at a leading big box retail joint. She’s also doing a temp teaching gig for three weeks, in a classroom so ill-equipped there isn’t even a chalkboard in the room.
Engineering is not a guarantee of a good job either, as my wife works with someone with a mechanical engineering degree.
Only someone with poor reasoning skills would think an example or two reflects an entire generation, and I think most people are also aware that the job market is tougher for everyone right now, and especially the youth.
However, I have observed over the past 10-15 years a trend of young people acting entitled to the lifestyles their parents provide them and without having to work very hard to have that. The examples in my world have been more of the late high school, early college age. I have been especially frustrated when I see single women (ususally divorced), who are working hard yet barely staying in the middle class, who have high school aged sons that are unwilling to work on their grades or unwilling to make the effort to get into college or unwilling to try and find a part-time job… often dropping out of school to play computer games and hang out with friends (often at the mall) on divorced parent’s or grandparent’s dime.
Do you know how hard it is for many parents to find teenaged babysitters (typically female)? When I was young we did such things to earn money and any parent that wanted a date night had no shortage of girls willling to sit for them. It used to be very common for high school aged boys to do mow lawns or do yard work for extra cash. When was the last time a teenager left a flyer for babysitting services or lawn mowing services or snow shovelling services on your door?
One new trend is unemployed people doing things like starting an errand running business or pet-sitting service or something like that. To quote an old phrase “necessity is the mother of invention” and it will be interesting to see how different people handle the current job market and what new “innovations” come out of that.
Valissa,
Tragically, there’s still a lot of people in America who think that the NYT represents quality journalism.
I think for my generation, the college/post college time is a period of “growing up” where our expectations get slowly deflated. The experience won’t make us “damaged goods” though, and we’ll be just fine in the long run.
The babysitter anecdote is interesting, but it doesn’t totally jive with some of my experiences as a kid (I’m not saying that I don’t believe you, but here’s another anecdote of mine). When I was a teenager about 10-15 years ago, people had their yardwork done by lawn services (I grew up in an upper-middle class neighborhood). That might jive more with the “teenagers don’t work anymore because low skill immigrants took their jobs” story.
I’ll be honest, I didn’t work much in high school, but that was because my parents pushed me into spending the time on schoolwork instead. Same deal with my wife. Even without paying work, I was quite busy with homework, studying, and sports/extracurriculars.
But don’t you want the kids to get the heck off your lawn? Isn’t mowing it incompatible with that? I kid.
Only someone with poor reasoning skills? Do you not even read your own posts? Geez, you three poor things, having your hubris dinged by a fluffy propaganda piece.
“And at some point I need to pay higher taxes to make sure this kid, and kids like him, can stay on his parent’s insurance?”
Ridiculous, especially when you consider how the bill reams everyone else with that mandate. There is only one popular constituency in this country: the upper middle class.
Obviously the bill reams everybody… do you not understand a rhetorical comment? And my background is not upper middle class by any means. It’s only been in recent years that I’ve taken any interest in money and economics, as I never had any to worry about. One reason I don’t comment on blogs much these days is how people jump on one or two sentences and then make assumptions (about the poster) which justify them to go on the attack. Nice work!
I like the racoons..I come here for the pictures..:)
Claims adjuster for an insurance company IS a job on the corporate ladder, however some of the commentators here are making the same mistake as the NY Times reporter, from the opposite perspective.
The story of a single doofus really doesn’t tell you anything about the employment prospects of the generation entering the workforce, which much more substantial analysis has indicated is really quite poor.
I think we DO realize that, which is why we can’t believe the audacity of this completely inexperienced doofus turning it down, thinking something better is going to just plop in his lap any time soon.
I don’t think he’s representative of young people, though. He’s representative of a particular demographic sliver(although they tend to think they’re the world).
What’s also funny about this guy is that he isn’t playing the classic job-hopping technique that we Millennials are often accused of doing. If he was smarter, he’d take the job, get a few years of experience, then parlay that experience into a better job at another company. That assumes of course that he can’t a promotion at the company he’s currently working at.
You missed the point on that NYT article. The American Dream, as propounded by the protagonists grandfather. “Scott has got to find somebody who knows someone,” the grandfather said, “someone who can get him to the head of the line.” This is how dad and grandad made their great success, and why shouldn’t junior? Oh yeah, something about all that leaching off the host body finally killing it dead…
Dear Yves
Your caveat seems strange to me. It carries the implication that I am not a “serious MMT writer” although I am one of the early developers of the contemporary literature in this area and the buffer stock analysis goes back to 1978 (very early).
Further, none of my “serious” US colleagues would disagree with any of the points I make in the post you mention. The statements and policy options I outlined as core MMT are all part of the shared understanding I have with my US colleagues (and friends).
And as a senior developer of the MMT tradition I have every right to articulate the policy implications that come from the theoretical understanding we have developed.
Someone has to translate it into a preferred set of policy options to provide traction within the public debate.
best wishes
bill
Loved this story…
“Proton radius smaller than believed”
http://www.latimes.com/news/science/la-sci-proton-20100708,0,2957085.story
“If the theory turns out to be wrong, ‘it would be quite revolutionary. It would mean that we know a lot less than we thought we knew,’ said physicist Peter J. Mohr of the National Institute of Standards and Technology in Gaithersburg, Md.”
We will see whether we will accept this piece of ‘scientific evidence’ or reason a need for further investigation.
I notice that Jamie Galbraith has a good word to say about the creation of a Govt. bank – which he suggests might be called the Infrastructure and Environment Bank:
http://roomfordebate.blogs.nytimes.com/2010/06/24/can-obama-create-more-jobs-soon/
And people might be interested in this website which specialises in news about Govt. banks:
http://publicbanking.wordpress.com/
Just a good read over at Rortybomb from Mike I wanted to point out:
http://rortybomb.wordpress.com/2010/07/07/unemployment-insurance-1-raj-chettys-research-presented-at-epi/
I always enjoy reading Salon.com’s Andrew Leonard – worth linking on a regular basis.
Glenn Greenwald…Hmmm…?
Greenwald: I agree with virtually all of his politics but, in my no doubt retarded opinion, engages in prolix pretzel polemics for it’s own sake. (heh,heh,heh)… I think he “suffers” some form of legal Asperger’s syndrome. Glenn Greenwald does his navel gazing right there on his keyboard.
I have theory about navel gazing: do it long enough and it ends up looking like a belly button.
Re: the FT piece on Finance and Risk
So, I was reading this article and waiting for the punch line, but it never came. Seems he is saying, all the way through, that the clever financial industry has found all sorts of tricky mathematical ways to manage risk but the regular people are on their own because they only have old simple ways.
WTF? Weren’t all those clever ways of managing risk just shown to be ineffective. Didn’t they take way too much risk because they thought they had it managed, to cover their respective asses. Didn’t the whole thing just crash in a big pile of not-so-clever ideas on the ground? Wasn’t it the rest of the people, who weren’t even playing the stupid game, who wound up backstopping their deluded risk management that did not work when it was needed? Aren’t we still looking at the same scheme continuing without any real acknowledgment or modification of the lame “risk management”?
Is there some redeeming thought or perspective in this article that I missed?
Or maybe he was trying to say something similar to my rant, but the tone was too subtle and I missed it?
Yup, that is a rant, in British.
G. Liro on corporations: “Cynics view corporations as money-making machines. But that’s just stupid. Corporations—of whatever size—should be viewed as two things: One, productivity engines, designed to produce a specific good or service, while disregarding anything and everything else, so as to satisfy a demand in the society.” The problem with this perspective (well _a_ problem, there are others) is that there is no basis for it in historical fact. The argument presented in this is that corporations play a role, presumed to be decisive, in the retention of [something desirable, read the piece] without which civilizations would lose their gains or at the very least fall behind. Early corporations though, such as the instance discussed here, had nothing to do with ‘productivity’ or knowledge retention or anything of the like: they were chartered to secure monopoly commercial privileges. Most specifially the VOC discussed, launched to secure exclusive control of spice commerce from a portion of the Indonesian archipelago by blowing indigenous middlemen out of the water and driving the Portugese and the English out of the areas desired. Nothing to to with ‘productivity’ in goods or services, everything to do with _exclusivity_. Most joint stock enterprises or ‘patents’ [read the history] were about exclusive grants of rights to certain activities, not even exclusive rights to manufacturing processes as one might think. The South Sea Company of Bubble ill-fame: an exclusive trading right (uselss) with an attached monopoly to ship slaves to Spanish South America (profitable) as cover for ill-designed speculation in state debt of the UK (Ponzi-ed, badly). If anything, the function of the corporation prior to the Industrial Revolution, think c. 1750, was anti-productive in that the goal was exclusive profit by curtailing any competition or _actual_ innovation in goods or services through grant of legal fiat (or government-sactioned private force).
If one where to look at the process of innovation and productivity enhancement in early modern Europe in fact, one great example would be in metal foundry, beginning with church bell manufactury and critically driven by cannon foundery, something what has been studied. This was profoundly driven by individual artisans and their sometimes multi-generational workshops, often with an international clientele. Secondarily, there were great state-supported enterprises which brought together expertise and built skills by continuous production (at colossal expense). Of that kind, one thinks there of the Arsenal in Venice, and the state foundaries of the Ottomans (very competitive until 1700) and Spain. Nowhere does one see the ‘productive corporation’ building technology and out-competing supposedly dead-end mechanics or clueless governments. Networked individuals in a synergey with state-supported funding was what grew technical skills in early modern Europe. And in Enlightenment Europe. And in Imperial Europe. Not nascent corporations.
Or take another example of a crucial change in European skills, the arithmetization of mathematics. A truly profound change, it took place in the 16th century, and the process is in part opaque. Small bankers and accountants had a signal role in spreading ‘Arabic’ numerization (which they did not innovate), but it was also learned mathematicians adopting the practice which greatly changed the _teaching_ of mathematical reasoning by 1600. The impact of superior mathematical reasoning on innovative science in Europe has everything to do with the transformation of knowledge we associate with the modern age. Find me the corporation in that, anywhere. Not involved. Why? Too busy making money from commercial monopolies, that’s why.
There are many reasons why China, a powerhouse of innovation, did not retain early advantages relative to Europe. One, of course, was that pesky foreign occupation after 1644 which imposed a non-Chinese, conservative, and parasitic ruling class on the region with no interest in commerce or science to speak of during the entire time of Europe’s great [something] forward. Then, too, China _had not_ lost its acquired cultural knowledge. The great bulk of scholarship and learning from 500 BCE on was retained, and much from the millennia before, the reason why China is sometimes (if with less than accuracy) mentioned as ‘a four thousand year old civilization.’ But that historical knowledge was a great weight to carry around too: it was difficult for the innovation in China after 1000 to penetrate upward in society against the knowledge of tradition, and the newer skills acquired less patronage from the state even before foreign occupation stalled the process. The point in mentioning this is that the supposed productivity of European corporate enterprise is not a meaningful explanation for why China and Europe showed differential expansions of their knowledge base in the 1600-1900 period.
Discussing the joint-stock enterprise in Europe prior to the 20th century as a ‘designed productivity engine’ is an unambiguous anachronism from turn-of-the-21st century thought. [Note: Define ‘productivity.’ No one has done this yet, so that’ll be a notable coup.] Corporatons were founded to make money; they had no other social purpose. The Directors and senior staff of the VOC did not spend years sailing to the Spice Isles and bringing back the ‘black gold’ of spice at gunpoint and no small personal risk to ‘satisfy a demand in society.’ They did it to get rich. They undertook this by the grant of exclusive right by the powers that be in the Netherlands, nothing about expanding the common store of [something useful].
Corporations exist to make money. Highly innovative corporations which lose money go out of business. Unproductive corporations which make money are massively rewarded in the equity markets. Many of the greatest corporate successes had everything to do with using better access to capital TO BUY OR STEAL AN _ACTUAL_ INNOVATORS WORK, and scale it up. (See AC power, GE; dos, Microsoft.) One could call that ‘productivity,’ a different discussion (with the same conclusion in my view).
Then there is the issue of educational institutions as a repository of innovation and cultural skill relative to chartered commercial enterprises, but since that comparison wasn’t raised in this piece I’m not going to pick up the ball and run with it myself.
Perhaps Part II will have more to offer, though.
“Then there is the issue of educational institutions as a repository of innovation and cultural skill relative to chartered commercial enterprises, but since that comparison wasn’t raised in this piece I’m not going to pick up the ball and run with it myself.”
Good point, but brings up the whole business of control of academia through grants, funding, etc., which gets back to the who really owns and controls governments; the people, corporations, wealthy ruling elite, etc.,?
Deception is the strongest political force on the planet.
I think he meant that in principle we could have truly public education as a truly democratic institution with no corporate involvement at all.
Obviously that’s the opposite of what we have today, and could only be the outcome of a complete social revolution which purged the corporate scourge completely.
So I, the historical record on this one is instructive. You see, the universities of Renaissance and Enlightenment Europe were anything but hotbeds of innovation. Many if not most were under Church control, and fellowships were lifetime appointments (typically) so long as you didn’t offend Someone Powerful. What these institutions did was to give some training and education to wider educated public: It was _that_ educated public who, debting and discussing things amongst themselves, often in personal networks and volutary associations, who really advanced learning, and especially science. Institutions passed on the basic skills and commonplaces of higher education, that was their role, not incubators of ‘great thought’ which they would still have you believe, inaccurately. So in a context where institutional control was, indeed, heavy and censorious, the abilities those minded to take away from contact with it were what mattered to society. One huge advantage of Europe relative to other societies was that, with its highly fragmented political context, there was a lot of social space and sustainable niches for these ‘independent thinkers of thoughts’ to sustain themselves, unlike in other more centralized societies which more actively regulated (i.e. suppressed) radical thinkers, seeing them rightly as disruptive of The Way Things Are.
I think the issue of ‘who controls the grants’ is vastly overstated in our contemporary thought. Most of those grants go to drones for make-work. Real innovation happens at the margins, made by those with a hankering for it.