Wednesday, June 14, 2017

NeoLiberal Democrats on the Economy

NeoLiberal Democrats on the Economy


Kevin Drum hates the term neoliberal.  Yet I find that it matches his brand of thinking very well, and is emblematic of the status quo (e.g. Hillary) wing of the Democratic Party.  This is where I come from, although I moved to the Bernie camp last year (progressive), and the two groups are having major arguments these days.
Drum has a large following at Mother Jones, and I am a regular reader of his blog, although I frequently disagree with the folks there and am something of an outsider now.  Anyway, in the last couple of days, he has made a couple of comments regarding the economy which are representative of my disagreement with Drum and his wing of the Democrats.

Financial Sector is Healthy

On a variety of measures, financial sector performance is cranking along this year at the very-healthy-but-non-bubble values of 2003.  
Sources: Employment via Bureau of Labor Statistics; stock performance via Financial Select Sector SPDR Fund via Google Finance; earnings via Yardini Research.
My instinctive reaction, based upon long standing disagreements with Drum and the consensus, is that something is wrong in an economy where stock prices grow much faster than the economy.  Drum uses "employees" as a proxy for the economy, which is probably not the best choice.  To show that stock prices are reasonable, he shows that they are in line with earnings.  I also disagree with this logic.
I hope to revisit this later, but for now I still disagree vehemently with Drum’s assertion that the financial sector is healthy.

Death of Malls

For some reason, the death of malls is suddenly an obsession of newspapers everywhere. I’m not sure why
He goes on to point out that electronic commerce growth is accelerating.  I find it odd that he questions the newsworthiness of the death of malls.  Surely this is a big deal in terms of employment, use and value of real estate, and has many societal implications.

Tuesday, June 13, 2017

My Worst Nightmare

I'm not a big fan of the NY Times -- take a look at this and let me know what you think:  Lee Camp: How to Write Propaganda for the NY Times – As Demonstrated in an Article About Me

With regard to the specifics regarding Trump and the Republicans, my opinion is that they are both headed for electoral disaster.  As Leonhardt (Weak Trump, Strong Paul Ryan) and Chait (why Republicans won’t impeach Trump) make clear, Trump has abandoned many of his campaign promises to the relatively numerous working class.  Tomasky (the backlash in Kansaspoints out that the Republican Kansas legislature has just overridden Governor Brownback's veto and passed a sizeable progressive tax increase.  And today we read that Austerity is over, May tells Tories:
Theresa May is poised to bring to a close seven years of austerity after Tory MPs warned that they would refuse to vote for further cuts.
Republicans and Tories like power, and generally this is attained by cozying up to the wealthy.  But, occasionally, maintaining power requires more populist measures.  We may find ourselves confronting big-spending Republican budget busters -- my worst nightmare.  While Dems are consumed (unproductively) with Russia, Republicans may take the political high ground.

So Leonhardt's missive is encouraging in the sense that Republican legislators seem to think that passing tax cuts for the wealthy is a winning electoral strategy, and they are probably wrong in that regard.

All opinions expressed above may well be wrong (c:

Saturday, June 03, 2017

Progressive Tide About to Come In

Progressives are knocking on the door to governance in the U.K. (Corbyn), U.S. (Sanders), Spain, Italy, and France.  Trump is a last gasp for the conservatives, and the centrist social-democrats are weak everywhere (Clinton, UK Labour, French Socialists, etc.).  In my opinion, it's only matter of time before the dam breaks and change sweeps across the western world.

Monday, May 08, 2017

MMT in "The Nation"

While the mainstream media of the political center (New York Times, Washington Post) provides a platform to purveyors of false information leading to needless wars (see Iraq 2003) and climate change skeptics (see my previous post), The Nation offers more thoughtful alternatives to the conventional wisdom.  I'm not a regular reader, but am thinking of signing up.  Here's what most recently caught my eye.

Modern Monetary Theory -- The Sanders generation and a new economic idea

As James Galbraith says in the article: 
“The contribution of MMT is not the discovery of new facts,” Galbraith says. “It’s a teaching core of things which are factually uncontroversial.” But its implications can be radically humane.
 I highly recommend the entire article.

Sunday, May 07, 2017

Bret Stephens in NY Times

As suggested, I read Bret Stephen's first column for the NY Times: Climate of Complete Certainty.  I have 3 serious problems with this column and with the NY Times for hiring Stephens as one of their columnists.  Some of my opinions are from this critical article: The problem with NY Times and climate change isn't what you think.  Anyway, here are my thoughts:
  1. Stephen's column is largely a straw man argument.  Almost everybody would agree with his basic premise that we shouldn't always uncritically accept the conventional wisdom of the scientific community or other authority figures.  Obviously, there are a whole range of possibilities with regard to scientific consensus, from the odds that the sun will rise tomorrow, to the prospect that solar power will largely eliminate our need for fossil fuels by the year 2040.  But Stephens doesn't pick out any particular problem or opinion with regard to the climate change consensus.  So he's fighting against a position that no one is identified as taking.
  2. The one concrete example he does give of the scientific consensus being wrong is wildly incomparable to the subject of climate change.  He suggests that because the pollsters were wrong about the 2016 presidential election, they could well be wrong about climate change.  But the polls have generally been correct in predicting election results.  The Trump victory over Clinton was an anomaly. Moreover, there are obvious technical reasons why polling is more difficult these days -- i.e. cell phones.  Study of climate change, on the other hand, has been going on for decades and the results, as far as I know, have been confirming the scientific consensus.  At any rate, political polling is quite a bit different from climate science.
  3. The NY Times seems to think it is promoting a free and responsible search for truth and meaning by publishing this opinion / commentator who dares to speak against the conventional wisdom.  But the criteria for providing such a soapbox should be based upon something other than the popularity of the opinion amongst those who distrust the elite.  There should be some reasonable grounds for dissension, and so far none have been provided.  Rather, the oil companies and others with vested interests in denying climate change have already spent enormous sums trying to poke holes in the scientific consensus, just as the tobacco companies did back in the day.  Far from providing a forum to hear the views of the underdog, the Times is giving the vested interests a forum to muddy the waters.
I'm copying some friends on this email because, as we discussed at church, it is related to a discussion we've been having on the subject of scientific consensus and The Structure of Scientific Revolutions

Saturday, April 22, 2017

Paradigm Shifts

Since my post referencing Jung was thoroughly trashed and then ignored, here is one that Jerry (and Stuart?) won't be able to resist.  (Jim's in Bali so he's off the hook this time.)  I ran across this in a discussion of the sorry state of conventional economic wisdom.

Three before their time: neuroscientists whose ideas were ignored by their contemporaries

I discuss three examples of neuroscientists whose ideas were ignored by their contemporaries but were accepted as major insights decades or even centuries later. 
  1. The first is Emanuel Swedenborg (1688–1772) whose ideas on the functions of the cerebral cortex were amazingly prescient. 
  2. The second is Claude Bernard (1813–1878) whose maxim that the constancy of the internal environment is the condition for the free life was not understood for about 50 years when it came to dominate the development of modern physiology. 
  3. The third is Joseph Altman (1925–) who overturned the traditional dogma that no new neurons are made in the adult mammalian brain and was vindicated several decades later.
Here's a good article if anyone wants to see how a similar situation is playing out in economics:  
MMT is what is, not what might be (warning, it's rather long).  Here's a relatively brief excerpt describing the general phenomenon of scientific revolutions:

Academic disciplines (such as, neurobiologists, archaeology, economists etc.) work within organised ‘paradigms’, which philosopher Thomas Kuhn identified in his 1962 book – The Structure of Scientific Revolutions – as “universally recognized scientific achievements that, for a time, provide model problems and solutions for a community of practitioners”...
Rather, Kuhn said that dominant viewpoints persist until they are confronted with insurmountable anomalies, whereupon a revolution (paradigm shift) occurs. The new paradigm exposes the old theories as inapplicable, introduces new concepts, asks new questions and provides students with a new way of thinking with a new language and explanatory metaphors...
The work of Joseph Altman, Jacques Cinq-Mars, Barry Marshall and countless others across all discplines represented the potential for a paradigm shift and was resisted by the mob until change became ineluctable.
Not all novel ideas face this sort of brick wall. But when the professional bodies become trapped by Groupthink and, typically, there is status and money at stake (particularly, commercial edge) then resistance can be fierce and prolonged...
The following discusses the above with respect to economics, so you can ignore it if you've had enough (c:

The point to understand is that MMT is a system of thought that allows us to understand how a fiat currency monetary system operates and the central role that government can play in a modern monetary economy...
What is mostly ignored in mainstream economic commentary is that in August 1971, the monetary system agreed at the famous Bretton Woods conference in July 1944, which required the central banks of participating nations to maintain their currencies at agreed fixed rates against the US dollar, collapsed.
The system proved unworkable and when President Nixon abandoned the convertibility of the US dollar into gold, most nations moved to a fiat currency system...
Different nations (or blocs of nations) structure and use the capacity possessed by a fiat currency in different ways. The Eurozone Member States voluntarily ceded the capacity to Frankfurt and then imposed harsh rules on themselves with respect to net spending.
Other nations have evolved differently.
But the point is that every day, across every nation, monetary systems are in place that operate along the lines described and explained by MMT...
MMT, as a new powerful lens, makes things that are obscured by neo-liberal narratives more transparent.
It means that the series of interlinked myths that are advanced by conservative forces to distract us from understanding causality and consequence in policy-making and non-government sector decision-making are exposed.
There is much similarity with traditional religion, as I see it.

Friday, April 14, 2017

Regional Inequality and the Election of Trump

The election of Trump is part of an international reaction to neo-liberal economics.  Looking at the phenomenon more closely, we can see that increasing regional disparities caused by the decline of U.S. government anti-trust enforcement are a major component of the overall reaction.

Eliminating anti-trust has been good for profits of major American corporations.  The co-option  (co-opting) of the middle class through the ownership society and increasing participation in the profits of large corporations has no doubt been a major factor.  No doubt there have also been some beneficial effects for consumers.

The effects of neo-liberalism on regional economic equality are less well appreciated.  Thus, many of the owners of regional corporations are unhappy and have called for ever less federal government intrusion into the economy.  Ironically, however, these regional corporations are under attack from larger national and multi-national corporations, and lack the protection formerly provided by anti-trust laws.

Thus, Trump rode regional dissatisfaction to the presidency, boosted by anti-government business leaders in flyover country.  Their businesses, however, are not under attack from the government, but from global behemoths such as Amazon.com, Bank of America, or United Airlines.  Their irrational belief that too much government is responsible for the increasing regional disparities is manifest in the profoundly confused Republican economic platform.  Voters in flyover country know something is amiss with their local economies, but their leaders (Republican and Democrat) aren't giving them a reasonable explanation.  They've turned in the exact opposite direction of where they need to go.

These thoughts of mine are still half-baked.  For a more coherent discussion, please see Regional inequality is out of control. Here’s how to reverse it, by Phillip Longman (from 2015 -- i.e. written before Trump rose to prominence).  Here's the concluding paragraph of Longman's article:
Inequality, an issue politicians talked about hesitantly, if at all, a decade ago, is now a central focus of candidates in both parties. The terms of the debate, however, are about individuals and classes: the elite versus the middle, the 1 percent versus the 99 percent. That’s fair enough. But the language we currently use to describe inequality doesn’t capture the way it is manifest geographically. Growing inequality between and among regions and metro areas is obvious to all of us. But it is almost completely absent from the current political conversation. This absence would have been unfathomable to earlier generations of Americans; for most of this country’s history, equalizing opportunity among different parts of the country was at the center of politics. The resulting policies led to the greatest mass prosperity in human history. Yet somehow, about thirty years ago, we forgot our history.