Author Archives: Ed Walker

The Rise and Fall of the Phillips Curve

The Phillips Curve is broken and is used by policy-makers to hurt workers. Can it be fixed?

Tax Breaks for Big Pharma on Top of Unreasonable Price Hikes

Big Pharma’s claim that it is hard pressed to find cash for R&D spending needs to be taken with a fistful of salt.

Capitalism Versus The Social Commons

How the struggle over who controls the commons, the monied classes or a broader group of citizens, reveals the fundamental contradictions of capitalism.

One Reason Economists Don’t Get Any Love: They Refuse to Take Any Blame for the Great Crash

Economists still act as if their role in devising the policies that led to the crisis has no bearing on their credibility.

Why the Claims Neoliberals Make About Markets Are Wrong

Economists generally, and especially neoliberal economists, take Jevons’s “proof” that markets maximize utility for all participants at face value, and have exalted it into a principle for the organization of society. The proof doesn’t stand up to close examination.

How Wall Street Used Swaps to Get Rich at the Expense of Cities

This post by Ed Walker provides a detailed description of how badly municipalities have been fleeced when they bought interest rate swaps from Wall Street as part of financings. It isn’t simply that these borrowers were exploited, but that the degree of pilfering was so extreme that the financiers clearly knew they were dealing with rubes and took full advantage of the opportunity.

But what is even more troubling than the fact set here is the failure of the overwhelming majority of abused borrowers to seek to recover their losses. Walker describes that multiple legal approaches lead you to the same general conclusion: the swaps provider, as opposed to the hapless city, should bear the brunt of the losses. So why haven’t cities like Chicago, that have been hit hard by swaps losses, fought back? Walker does not speculate, but in the case of Rahm Emanuel, it’s not hard to imagine that his deep ties to Big Finance are the reason.

You Are Worth More Than The “Market” Says

Yves here. Ed Walker’s post below, on how mainstream economics tries to explain how wages are set, reveals that making them look market-determined is ideology that bears no relationship to facts. But that’s precisely why economics is so attached to theory and so leery of data.

In a bit of synchonicity, Ed’s post dovetails with our piece on Polanyi’s The Great Transformation last week. By e-mail, he quoted Polanyi…

Masaccio: Piketty Shreds Marginal Productivity as Neoclassical Justification for Supersized Pay

Yves here. One of the main agendas of neoclassical economics is to give Panglossian defenses of the current order a veneer of intellectual legitimacy. If our system is the result of individuals and businesses behaving in logical ways, at least in the minds of economists, surely the outcome is inevitable, and therefore virtuous, or else those operators would do things differently. The Big Lie in all of this is that neoclassical economics takes power completely out of the equation. While it does assume selfishness, in that everyone is out or himself to maximize his utility, it also assumes atomized actors who lack the power to influence markets.

One instructive way to see how these arguments break down is by looking at neoclassical economists justify large disparities in pay. Piketty shows that the idea that people are paid what they are worth, or in neoliberal-speak, according to their marginal productivity, to be a sham