reading

Sunday, 31 July 2016 - 5:49pm

Published by Matthew Davidson on Sun, 31/07/2016 - 5:49pm in

This week, I have been mostly reading:

  • Was the Financial Crisis Anticipated? — Ozlem Akin, José M Marín, and José-Luis Peydró at INET, on their CEPR (UK) working paper: The paper finds that the top executives’ ex-ante sale of their own bank shares predicts worse bank returns during the crisis; interestingly, effects are insignificant for independent directors’ and other officers’ sales of shares. That is, effects are substantially stronger for the insiders with the highest and best level of information, the top five executives. Moreover, the top five executives’ impact is stronger for banks with higher ex-ante exposure to the real estate bubble, where an increase of one standard deviation of insider sales is associated with a 13.33 percentage point drop in stock returns during the crisis period. Our results suggest that insiders understood the heavy risk-taking in their banks; they were not simply over-optimistic, and hence they sold more of their own shares before the crisis.
  • I’m With The Banned — Laurie Penny goes gonzo for Medium: My new Spectator friend is as bewildered as I am by the way Americans take Milo and his ilk seriously, by their willingness to take pride in performative bigotry and call it strength. It works. It sells. It’s the unholy marriage of that soulless debate culture that works so well in Britain, transplanted to a nation with no social safety net and half a billion guns. It works, in part, because of the essentially cult-like nature of U.S. culture and the structured ignorance that accompanies it. America is a nation eaten by its own myth. The entire idea of America is about believing impossible things. Nobody said those things had to be benign.
  • City Talk Pages — xkcd:
    City Talk Pages
  • Dana Milbank Tells Readers He Has an Incredibly Weak Imagination — Dean Baker, CEPR (US): What is perhaps most incredible is Milbank's notion of irresponsible. His sole measure of responsibility is the size of the government budget deficit and debt, which are for all practical purposes meaningless numbers. (If the government puts in place patent protection that requires us to pay an extra $400 billion a year for prescription drugs, this adds zero to the budget deficit or debt and therefore doesn't concern Milbank. However, if it borrowed an extra $400 billion a year to pay for developing new drugs, he would be furious.)
  • Now we’ve voted for Brexit, great British businesses like Southern rail, Byron burger, Lloyds bank and Sports Direct are finally set free — Mark Steel, whose voice you hear in your head as you're reading, in the Independent: [T]he marvellous thing about privatisation is it introduces choice, so if customers trying to get from East Grinstead to London aren’t happy with their rail service, they can choose to use a different rail network, such as the one from Glasgow to Fort William, or the Trans-Siberian Express.
  • Record Lows — Saturday Morning Breakfast Cereal:
  • Embarrassment for Christine Lagarde and IMF as Fund's own watchdog slams its eurozone record — Ben Chu at the Independent: The IEO concluded the IMF had “lost its characteristic agility as a crisis manager” in the way it responded to the economic turmoil in the eurozone, which required unprecedented bailouts for several states shut out of the capital markets and looked like it was going to tear the single currency zone apart. [I don't know. They turned a disaster into an apocalypse in record time. If that's not "characteristic agility" I don't know what is.]
  • Our attitude towards wealth played a crucial role in Brexit. We need a rethink — Stephen hawking in the Guardian: One of the reasons I believed it would be wrong to leave the EU was related to grants. British science needs all the money it can get, and one important source of such funding has for many years been the European commission. Without these grants, much important work would not and could not have happened. […] Money is also important because it is liberating for individuals. I have spoken in the past about my concern that government spending cuts in the UK will diminish support for disabled students, support that helped me during my career. In my case, of course, money has helped not only make my career possible but has also literally kept me alive.
  • How to be a writer — The Oatmeal:
  • “Liberal” Economists Cheered the New Democrats’ Deregulation of Finance — Bill Black at NEP: Bill Clinton and Al Gore were two of the most powerful leaders of the “New Democrats” – a group of Democrats determined to move the party strongly to the right on economics, budget, national security, regulation, and crime. The New Democrats’ policy apparatus was funded overwhelmingly by Wall Street but its ideological support came from economists who were “liberal” on some social issues. The Clintons and Gore delivered for Wall Street by embracing the three “de’s” – deregulation, desupervision, and de facto decriminalization that encouraged and allowed twin bubble to rapidly expand. The “dot com” bubble was the first bubble to burst. The housing bubble burst in late 2006, leading to the financial crises of 2008 and the Great Recession that began in 2007.

Sunday, 24 July 2016 - 1:57pm

Published by Matthew Davidson on Sun, 24/07/2016 - 1:57pm in

This week, I have been mostly… I don't know what I've been doing. Meanwhile, this happened in my sharply curtailed idle reading:

  • Economic Rationality Explains Everything and Nothing — Geoffrey Hodgson, Evonomics: Utility maximization can be useful as a heuristic modelling device. But strictly it does not explain any behavior. It does not identify specific causes. It cannot explain any particular behavior because it is consistent with any observable behavior. Its apparent universal power signals weakness, not strength.
  • Everyone But the Media Saw Trumpism Coming — Ted Rall: “We were largely oblivious to the pain among working-class Americans and thus didn’t appreciate how much his message resonated,” [New York Times journalist Nicholas] Kristof wrote. Most Americans are working-class. In other words, Kristof and his colleagues admit they don’t cover the problems that affect most Americans. Again: why does he still have a job?
  • Is an Aussie debt crisis around the corner? — Leith van Onselen, Macro Business: Admittedly, the real concern is that 40% of all mortgages are interest-only mortgages, which are more vulnerable […] Whether or not Australia is likely to experience some kind of financial crisis within the next three years is a moot point. But having one of the world’s most overvalued housing markets, combined with overly indebted households and an extreme reliance on offshore funding, is hardly a good situation to be in and the opposite of prudence. And…
  • The seven countries most vulnerable to a debt crisis — Steve Keen, Real World Economics Review Blog: They are, in order of likely severity: China, Australia, Sweden, Hong Kong (though it might deserve first billing), Korea, Canada, and Norway. […] Timing precisely when these countries will have their recessions is not possible, because it depends on when the private sector’s willingness to borrow from the banks—and the banking sector’s willingness to lend—stops. This can be delayed by government policy—as it was in Australia in 2008, via a strong government stimulus, the restarting of the housing bubble by a government grant to first home buyers, and the boom in investment and exports set off by China’s own stimulus program. But the day when credit growth stops can’t be put off indefinitely. When it arrives, these countries—many of which appeared to avoid the worst of the crisis in 2008—will join the world’s long list of walking wounded economies.
  • Are We Facing a Global “Lost Decade?" — Steve Keen, for the Private Debt Project [tl;dr: Yes.]: The tragedy is that although there are methods by which we could escape the global private debt trap into which we have fallen we are nonetheless prisoners of an economic orthodoxy that will prevent us from employing them... The main barrier here is simply the ignorance of the supposed experts on economics about the nature of money. While mainstream economists continue to spout naïve arguments about money and banking, the politicians who rely upon them for guidance are unlikely to attempt anything other than the poorly targeted and largely ineffective policies that Japan has persisted with for the last quarter century. A global “Lost Decade” is entirely probable.

Sunday, 17 July 2016 - 5:18pm

Published by Matthew Davidson on Sun, 17/07/2016 - 5:18pm in

This week, I have been mostly reading:

  • Something Crazy Is Happening to Swiss Bonds, and It’s a Sad Sign for the World Economy — Jordan Weissmann at Slate: Yields on government bonds from all around the world have been plunging thanks to anxious investors buying them for their safety. (Bond yields fall as prices rise.) And in many instances, the returns have cratered below zero. As Quartz reports Thursday, “around a third of all developed-country government debt—or more than $7 trillion, in terms of market value—is now trading at negative yields,” meaning that buyers are willing to pay more for these bonds than they will eventually get back if they hold them to maturity. […] The most mind-blowing example of this trend is Switzerland. Last week, yields on all of its government bonds, out to 50 years, turned negative. [A major qualification: Government bonds aren't loans. Governments with their own currency never need to borrow money in order to spend. Bonds are a mechanism to drain reserves held at central banks, in order to hit interest rate targets. The pessimism is real, though.]
  • Corbyn: the summer of hierarchical things — Paul Mason in Medium: By September, if Corbyn wins he’ll be in a position to go into the Labour conference exerting control: over the NEC, where a left slate looks likely to win; and over policy via conference, where the delegates will for the first time reflect the changed membership. After that, in any election called by the incoming Tory prime minister Theresa May, Corbyn’s supporters would be able to stage “trigger ballots” to de-select the MPs most hostile to Corbyn, leaving the leadership, the HQ, the policy and the parliamentary group aligned to the left.
  • Donald Trump Understands the Nexus Between Trade and Immigration — a corker by Marshall Auerback in Naked Capitalism: Historically, immigration law has concerned itself with many considerations, the most of which is the displacement of US workers. By contrast, advocates of free trade ignore this consideration, or blithely suggest that the resultant unemployment in a displaced sector (e.g., the automobile industry), is a “negative externality”, which is generally offset by the resultant gains in competitive efficiency, and lower cost goods. Cheap imports, then, outweigh the displacement of workers. But we do not extend this logic to immigration, or we would move straight to a policy of open borders.
  • The murky world of industrial relations in the higher ed sector — Joanne Finkelstein in On Line Opinion: The quality of universities' delivery to students is adversely influenced by the casual, less engaged and experienced academic. It is particularly evident in newer institutions which have been aggressive in developing new programs of study supposedly in response to market demands. […] in the higher education sector, such a culture has ensured a declining quality in teaching especially in the newer and regional universities – those institutions designed specifically to widen participation and increase social equity.
  • Modern Money: The Basics — Geoff Coventry provides a really nice, concise summary I wish I'd written: Money is a wonderful human invention – perhaps one of our greatest. Most nations have a monetary system designed to provide for private commercial needs, but also, simultaneously, to enable governments to access sufficient resources to create safe, just and ever-improving societies.
  • Bernie Sanders’ connections with two UMKC economists run deep — Mark Davis at the Kansas City Star does a charming local news profile of Stephanie Kelton and Bill Black: Kelton and Black are part of a team of economic advisers, including former labor secretary Robert Reich and James Galbraith at the University of Texas in Austin, who help the Sanders campaign develop policies. Randall Wray, a fellow UMKC economics professor, credits Sanders for embracing thinkers from outside the economic mainstream. “The mainstream is a complete disaster and a complete disaster for our country,” Wray said. [We can assume they won't be advising Clinton.]
  • Note To Economists: Saving Doesn’t Create Savings — Steve Roth in Evonomics;another wonderfully concise explanation I wish I'd written: When you spend money — transferring it to someone else in return for newly-produced goods and services — does it affect our collective monetary savings? In strict accounting terms, obviously not. Your money just moves from your account to someone else’s account; it doesn’t disappear. Your bank has less deposits; the recipient’s bank has more deposits. Aggregate monetary savings is unchanged by that accounting event. […] In three simple words: spending causes saving. Real, collective accumulation of real, long-lived stuff. Monetary saving — not-spending part of your income this year — doesn’t, collectively, create either real or monetary savings.
  • How Democrats Created Liberalism of the Rich — Thomas Frank, Naked Capitalism via TomDispatch: Boston is the headquarters for two industries that are steadily bankrupting middle America: big learning and big medicine, both of them imposing costs that everyone else is basically required to pay and which increase at a far more rapid pace than wages or inflation. A thousand dollars a pill, 30 grand a semester: the debts that are gradually choking the life out of people where you live are what has made this city so very rich. […] Professional-class liberals aren’t really alarmed by oversized rewards for society’s winners. On the contrary, this seems natural to them — because they are society’s winners. The liberalism of professionals just does not extend to matters of inequality; this is the area where soft hearts abruptly turn hard.
  • Letter from US Senator Al Franken to Niantic, Inc., owners of Pokemon GO: Recent reports, as well as Pokemon GO s own privacy policy, suggest that Niantic can collect a broad swath of personal information from its players. From a user's general profile information to their precise location data and device identifiers, Niantic has access to a significant amount of information, unless users - many of whom are children - opt-out of this collection. Pokemon GO'S privacy policy states that all of this information can then be shared with The Pokemon Company and "third party service providers", details for which are not provided, and farther indicates that Pokemon GO may share de-identified or aggregated data with other third parties for a non-exhaustive list of purposes. Finally, Pokemon GO s privacy policy specifically states that any information collected - including a child's - "is considered to be a business asset" and will thus be disclosed or transferred to a third party in the event that Niantic is party to a merger, acquisition, or other business transaction.
  • Privatisation! Free trade! Shares for all! The great con that ruined Britain — Peter Hitchens in the Daily Mail! (via Richard Murphy): I am so sorry now that I fell for the great Thatcher-Reagan promise. […] I thought – this now seems especially funny – that private British Telecom would be automatically better than crabby old Post Office Telephones. I think anyone who has ever tried to contact BT when things go wrong would now happily go back to the days of nationalisation. Soviet-style slowness was bad, but surely better than total indifference.
  • Is Competition the Cause of the Productivity Slowdown? — Dean Baker, CEPR: My alternative explanation is that a weak labor market and low wages explain much of the slowdown in productivity. The argument is straightforward. When Walmart can hire people at very low wages, they are happy to pay people to stand around and do almost nothing. That is why many retailers now have greeters or sales people standing in aisles who contribute little to productivity.

Sunday, 10 July 2016 - 4:07pm

Published by Matthew Davidson on Sun, 10/07/2016 - 4:07pm in

This week, I have been mostly reading:

  • Psychologists Throw Open The “File Drawer” — Neuroskeptic: Now, a group of Belgian psychology researchers have decided to make a stand. In a bold move against publication bias, they’ve thrown open their own file drawer. In the new paper, Anthony Lane and colleagues from the Université catholique de Louvain say that they’ve realized that over the years, “our publication portfolio has become less and less representative of our actual findings”. Therefore, they “decided to get these [unpublished] studies out of our drawer and encourage other laboratories to do the same.”
  • Insanity — xkcd:
    Insanity
  • Reform School — Malcolm Harris at The New Inquiry reviews Schools on Trial, by Nikhil Goyal: In 1837, Horace Mann, the founder of American compulsory education, established the Massachusetts Board of Education, the first such agency and one which would become the model for the nation. But Mann didn’t want a more intellectually engaged population—literacy in the state already stood at 99 percent. Social control was a serious concern for Western elites after a series of failed revolutions, and Mann was very impressed by the system he saw on a visit to Prussia. He returned with a plan for public education. “Compulsory schooling evangelists,” Goyal writes, “which included many industrialists and financiers, in fact, wanted to ‘dumb down’ the American population to create docile followers, not potentially troublesome freethinkers who questioned authority.”
  • Trade Treaty Propaganda Goes Into High Gear — Dean Baker, CEPR: As far as the protectionism in the TPP, the deal is quite explicitly about increasing the length and strength of patent and copyright protection. Yes, that is "protection" as in "protectionism." Patent and copyright protection do serve a purpose in providing an incentive for innovation and creative work, but all forms of protection serve a purpose. The question that serious people ask is whether there is a better way to serve the purpose.
  • 'I Love My Label': Resisting the Pre-Packaged Sound in Ed-Tech — Audrey Watters: As someone who works outside of academia, without an institutional affiliation, I can’t begin to tell you how frustrating it is to be unable to access journal articles. I always get so irked when I hear technology evangelists proclaim “You can learn anything you want on the Internet.” No, you can’t. Huge swaths of knowledge, art, science remain inaccessible; and it’s a loss for scholarship, which need not and does not only happen among those with access to a university research library or with log-in credentials to its online portal. That inaccessibility is a reflection of institutional culture, industry culture, corporate culture, copyright (that is, intellectual property laws), capitalism, and code. That is, when we talk about the future of something like “education technology” or even when we talk about the future of research and scholarship or teaching and learning, we must grapple with issues that are technological, sociological, and above all, ideological.
  • The elites hate Momentum and the Corbynites - and I’ll tell you why — David Graeber, providing "opinion" for The Guardian, as opposed to whatever the hell you'd call the utter tripe they normally publish about Corbyn: I’ve spent much of the past two decades working in movements aimed at creating new forms of bottom-up democracy, from the Global Justice Movement to Occupy Wall Street. It was our strong conviction that real, direct democracy, could never be created inside the structures of government. One had to open up a space outside. The Corbynistas are trying to prove us wrong. Will they be successful? I have absolutely no idea. But I cannot help find it a fascinating historical experiment. […] insofar as politics is a game of personalities, of scandals, foibles and acts of “leadership”, political journalists are not just the referees – in a real sense they are the field on which the game is played. Democratisation would turn them into reporters once again, in much the same way as it would turn politicians into representatives. In either case, it would mark a dramatic decline in personal power and influence. It would mark an equally dramatic rise in power for unions, constituent councils, and local activists – the very people who have rallied to Corbyn’s support.
  • The Duncan Smith resignation: fundamentally shifting the economic debate — Neil Schofield: 'I am unable to watch passively whilst certain policies are enacted in order to meet the fiscal self imposed restraints that I believe are more and more perceived as distinctly political rather than in the national economic interest.' In other words, for the first time a key player in the post-2010 Conservative project has said, almost explicitly, that austerity is a political, not an economic choice. […] In other words, Duncan Smith’s resignation letter – and the events surrounding it – powerfully endorse the fundamental tenet of Jeremy Corbyn’s and John McDonnell’s economic programme: that austerity is a choice, not an economic necessity. It wholly destroys the intellectual underpinning of McDonnell’s opponents in the Parliamentary Labour Party.
  • Peak Indifference — Cory Doctorow in Locus Online: At a certain point, indifference to tobacco’s dangers peaked – long before actual tobacco use peaked. Peak indifference marks a turning point. […] That’s why it’s time for privacy activists to start thinking of new tac­tics. We are past peak indifference to online surveillance: that means that there will never be a moment after today in which fewer people are alarmed by the costs of sur­veillance.
  • A world war has begun. Break the silence. — John Pilger: In 2009, President Obama stood before an adoring crowd in the centre of Prague, in the heart of Europe. He pledged himself to make "the world free from nuclear weapons". People cheered and some cried. A torrent of platitudes flowed from the media. Obama was subsequently awarded the Nobel Peace Prize. It was all fake. He was lying. The Obama administration has built more nuclear weapons, more nuclear warheads, more nuclear delivery systems, more nuclear factories. Nuclear warhead spending alone rose higher under Obama than under any American president.
  • Budget accounting tricks — Simon Wren-Lewis: One of the problems with fixed date deficit (or in this case surplus) targets is that they encourage playing around with the public finances to hit the target. Generally, but not always, this involves making a saving today by shifting costs into the future. Privatisation is an obvious example. It may be justified if the net present value of the sale is positive, or if privatisation really improves efficiency, but all to [sic] often it is a device to meet a short term target. Although a New Keynesian (Wren-Lewis will when pressed admit he subscribes to the superstition of "sound finance"), he makes a good point here. i.e. that, just as in the popular bugaboo where public deficits can be run up by unscrupulous pollies who "buy votes", those same unscrupulous pollies are more likely in the current neoliberal environment to buy a reputation as good economic managers by using fire sales of public assets (usually a bad thing) to hide deficits (rarely a bad thing).
  • Get ready for a recession by 2017 — Steve Keen in the Australian: Whichever party is in opposition at the time will blame the incumbent, but in reality this recession has been set up by the sidestep both parties have used to avoid downturns for the past quarter century: whenever a crisis has loomed, they’ve avoided recession by encouraging the private sector to borrow and spend. […] Australia’s most famous recession sidestep was during the GFC, when it was one of only two countries in the OECD to avoid experiencing two consecutive quarters of negative GDP growth (the other country was South Korea). Since then, the private sectors of the advanced countries have collectively de-levered, reducing their debt levels from about 170 to 160 per cent of GDP. Australia, in stark contrast, has levered up.
  • Tony Blair's spin unspun: how his claims compare with the Chilcot report — Andy McSmith, The Independent: Mr Blair has claimed that he was promising the Americans his support as a way of influencing Washington’s decision making and getting them to seek United Nations approval before acting. Taking questions from journalists, he asserted that his support was not “unconditional”. But the opening words of that July note [to Bush] – “I will be with you, whatever” – do sound unconditional.
  • I read the Chilcot report as I travelled across Syria this week and saw for myself what Blair's actions caused — Robert Fisk, The Independent: When Blair can say, as he did the moment the Chilcot report was published, that it should “lay to rest allegations [sic] of bad faith, lies and deceit” – without a revolution in the streets against his bad faith, lies and deceit – then you can be sure that his successors will have no hesitation in swindling the public again and again. After all, what’s the difference between Iraqi WMDs that don’t exist, 45-minute warnings that are falsities, 70,000 non-existent Syrian “moderates” and a fictitious NHS windfall of millions if Britain left the European Union?
  • To Save The Economy, We Have To Break Its One Sacred Rule — Jason Hickel, Co.Exist: As soon as we start focusing on GDP growth, we’re not only promoting the things that GDP measures, we’re promoting the indefinite increase of those things. And that’s exactly what we started to do in the 1960s. GDP was adopted during the Cold War for the sake of adjudicating the grand pissing match between the West and the USSR. Suddenly, politicians on both sides became feverish about promoting GDP growth. GDP growth became a sacred rule. And we remain in thrall to it today.
  • Mocked and forgotten: who will speak for the American white working class? — Chris Arnade in The Guardian: America, and particularly the white working class, is dealing with a drug epidemic that is killing more people each year at a startling rate. Just in the past decade deaths from drugs has doubled. The National Review sees it as another sign of the flawed character of the poor. This is a common and moralistic trope those battling an addiction have long dealt with – that it is all the fault of their weakness. The reality is often far more complex. Addiction thrives in societies undergoing stress.
  • Stopping Deflation? Dead Easy. So Why Isn’t It Being Done? — Ian Welsh: If you let fixed costs have inflation above income increases, then everything else is going to have to suffer deflation, because it is discretionary. Gotta eat and have a warm place to sleep, first.
  • The Tory leadership election is a sort of X Factor for choosing the antichrist — Frankie Boyle in the otherwise disgraceful, paper of choice for the discerning New Labour war criminal, The Guardian: [The Parliamentary Labour Party] say they need a leader who knows how to oppose, albeit primarily their own party membership. The idea is that Corbyn is unelectable, and it’s just one of life’s sad ironies that none of the people who believe this will be able to beat him in an election. […] One of the PLP’s main worries will be that Labour’s vote will crumble to Ukip under Corbyn, who won’t produce enough racist mugs and mouse mats to reassure everybody. And, to be fair, it must be galling to a party that invaded Iraq, rendered Libyans to be tortured by Gaddafi and detained asylum seekers with Dickensian cruelty to lose voters on the race issue.

Sunday, 3 July 2016 - 4:49pm

Published by Matthew Davidson on Sun, 03/07/2016 - 4:49pm in

This week, I have been mostly not reading, with some exceptions:

  • Ignored for Years, a Radical Economic Theory Is Gaining Converts — Michelle Jamrisko in Bloomberg, no less: “There’s an acknowledgment, even in the investor community, that monetary policy is kind of running out of ammo,” said Thomas Costerg, economist at Standard Chartered Bank in New York. “The focus is now shifting to fiscal policy.” That’s where it should have been all along, according to Modern Money Theory. The 20-something-year-old doctrine, on the fringes of economic thought, is getting a hearing with an unconventional take on government spending in nations with their own currency.
  • How I Stopped Worrying and Learned to Love the Drone — Ted Rall: The Penagon said it would never deploy Predator or Reaper drones in the United States. Now USA Today reveals that they do, and have for years. But noit to worry: now the Pentagon says they won't be used to kill Americans the way they're used in Somalia, Yemen and Pakistan.
  • E.J Dionne Is Far Too Generous, “Moderate Progressives” Were Promoting Inequality — Dean Baker, CEPR: It's also worth noting that Clinton's cult of deficit reduction and balanced budgets contributed to the victory of austerity politics following the downturn. Many Clintonites absurdly argued that the prosperity of the late 1990s was due to the fact that Clinton balanced the budget and subsequently ran surpluses. Of course the reality was the exact opposite. (The unexpected boom, due to a stock bubble, lead to the surpluses.) Nonetheless, the power of this Clinton myth made it more difficult for progressives to push the case for stimulus following the collapse of the housing bubble.
  • The Era of Free Trade Might Be Over. That’s a Good Thing — Jared Bernstein: So we should welcome the end of the era of F.T.A.s, which had long devolved into handshakes between corporate and investor interests on both sides of the border, allowing little voice for working people. With such noise behind us, we might be ready to foster the next generation of advanced production and help our exporters fight back against currency manipulators. That would be more productive than fighting tooth and nail over the next big trade deal. Plus additional remarks on his blog, "where real estate is dirt cheap".
  • The New Truth About Free Trade — Robert Reich notices the US has spent decades negotiating the export of monopolies and the import of monopoly rents: Big American corporations no longer make many products in the United States for export abroad. Most of what they sell abroad they make abroad. The biggest things they “export” are ideas, designs, franchises, brands, engineering solutions, instructions, and software, coming from a relatively small group of managers, designers, and researchers in the U.S. The Apple iPhone is assembled in China from components made in Japan, Singapore, and a half-dozen other locales. The only things coming from the U.S. are designs and instructions from a handful of engineers and managers in California.
  • Both sides now. — Jonathan Rees: Yes, MOOCs can’t do what professors do, but what happens if what you do gets redefined so that they can? You know that education is not the same as content transmission, but unless you stay engaged with all the two-bit hucksters who think it is they will win the battle of public opinion and your tenured sinecure will dry up when your students all enroll at some barely acceptable online clown college.
  • Global Inequality: Branko Milanovic Takes on the World — Dean Baker in HuffPo: It is more than a bit absurd that many intellectual types are running around worried that the robots will take all the jobs (when they aren’t worried about the demographic crisis creating a shortage of workers) when the “problem” can be easily solved by reducing work hours. But this issue actually segues nicely into my more fundamental criticism of [Milanovic's] book. While it does not outright say this anywhere, many readers will likely believe that the harm to the middle class and working class in rich countries was a necessary price for the gains in the developing world. This is a huge leap which certainly does not follow from standard economic theory. […] There is also the question of intellectual property rights, which Milanovic frustratingly treats as a fact of nature. Again, one of the great absurdities of debates on inequality is that we have people wringing their hands over how we can reverse the upward redistribution of income, while we constantly write new laws and trade agreements that make patent and copyright protection longer and stronger. Instead of deliberately designing policies that promote upward redistribution, we could instead look to alternative mechanisms to finance innovation and creative work.

Sunday, 26 June 2016 - 5:20pm

Published by Matthew Davidson on Sun, 26/06/2016 - 5:20pm in

This week, I have been mostly reading:

  • How Bernie Gives Hope for the Future — Ian Welsh provides a nuanced and pursuasive variant on the "nothing left to lose" argument for social change, to which I've never subscribed, but hey, you take your hope where you can get it: This is not the 2000s or 90s. This is not the age of compromise. The fruits of neoliberalism, neoconservatism, and oligarchy are being reaped; the youngsters have now grown up and never known a good economy. Many barely remember a time when the US wasn’t at war. […] The Democrats are the conservative party right now. They are about the status quo: Keep neo-liberaling, keep bombing and invading brown people’s countries, keep shoveling money to the rich. […] But Bernie lost in a genuinely hopeful way, showing that a socialist is now viable in the US and that young people are massively against the status quo.
  • On decriminalizing the sex trade — Chris Dillow: Here, though, is the thing. I – and I, strongly suspect, Mr Corbyn too – favour legalization of the sex industry in the context of other policies that empower women to reject exploitation. For me, these include full employment policies to give them other career possibilities; a mass housebuilding programme to reduce rents; and – of course - a basic income to improve their outside options.
  • What Will Many Bernie Sanders Voters Do After July? — Ralph Nader in Common Dreams: Here we go again. Every four years, the Democratic leaders define the Democratic candidate by how bad the Republicans are. This is designed to panic and mute their followers. Every four years, both parties become more corporatist. Sanders’ voters want to define the Democratic Party by how good it can be for the people. […] Where does this leave the Sanders people who see Hillary as experienced in waging wars, qualified as an entrenched pol, and realistic to suit the plutocracy’s tastes, and not really getting much of anything progressive done (alluding to the ways she has described herself)?
  • The trouble with getting the BBC to be less popular — David Mitchell, who—damn him—is still occasionally funny, in the Guardian: A report, commissioned by the Department for Culture, Media and Sport and published last week, argues that “greater distinctiveness” in the BBC’s output will allow its commercial rivals to make an extra £115m a year. […] Unfortunately the distinctiveness of a Hitchcock movie, a Lowry painting or a Cole Porter lyric doesn’t seem to be the sort the report is getting at, because that’s a kind people really like. That would be entirely counterproductive to its stated aims. By “distinctiveness”, the report means that the BBC should deliberately target smaller and more niche audiences, in order to allow the commercial sector to take the bigger ones. Its distinctive flavour would be less like chicken liver and more like calves’ brains. Because that would be fairer on the market place.
  • Paul Samuelson on Deficit Myths — L. Randall Wray at New Economic Perspectives: […] the need to balance the budget over some time period determined by the movements of celestial objects, or over the course of a business cycle is a myth, an old-fashioned religion. But that superstition is seen as necessary because if everyone realizes that government is not actually constrained by the necessity of balanced budgets, then it might spend “out of control”, taking too large a percent of the nation’s resources. Samuelson sees merit in that view. It is difficult not to agree with him. But what if the religious belief in budget balance makes it impossible to spend on the necessary scale to achieve the public purpose? […] We don’t need myths. We need more democracy, more understanding, and more transparency. We do need to constrain our leaders—but not through dysfunctional superstitions.
  • The Fed shouldn’t accept the “new normal” without a fight — Josh Bivens at the Economic Policy Institute: [A] key contributor to productivity growth is technological advance. This technological advance does not fall from the sky, rather it is the product of directed investment (R&D) and trial and error (workers learning by doing). When the pace of R&D investment is slow and output growth is slow enough to provide fewer opportunities for learning by doing, it is not shocking that technological advancement may slow. Further, there is ample evidence that firms boost labor-saving investments (which boost productivity) when labor costs are rising rapidly. Rapid labor cost growth has not been a feature of the recovery from the Great Recession. Between 2007 and 2014, real hourly pay for the median worker, for example, has slightly declined (see Table 1 here), and the share of corporate sector income accruing to capital owners rather than to employees reached historic highs. This labor market slack and weak wage growth has provided very little spur to boost productivity in the search for higher profits.
  • How negative-gearing changes can bring life back to eerily quiet suburbs — Kim Dovey in The Conversation: It is impossible to say how much this production of empty architecture is a function of negative gearing since it also goes hand-in-hand with neoliberal markets and high disparities of wealth. However, the curbing of negative gearing will have a significant impact in getting empty housing onto the market. This in turn could go some way to reversing this cycle of emptiness – bringing life to the shops, offices, streets, parks and public transport.
  • It's Time to Rid the DNC of DINOs, Starting With the Chair — by a gestalt creature called The Daily Take Team, from The Thom Hartmann Program: Jim Fouts, a three-term Independent mayor of Warren, Michigan, attended Sunday's Democratic debate, just like he had attended the Republican debate on Thursday. […] He told BuzzFeed News that he was seated behind Wasserman Schultz, and that he was praising Bernie's performance and talking about how this debate proved that more debates were a good idea for the Democrats. Then, during an early commercial break, Fouts and his assistant were taken out of their seats and the sergeant at arms told him, "The people that run this want you ejected, they don't want you here." Fouts was allowed to watch the rest of the debate from his seat, but he had to be careful about even clapping too loud or at the wrong time, for fear of getting ejected. […] Debbie Wasserman Schultz isn't the only Democrat-In-Name-Only (DINO) in the Democratic leadership. But as the DNC Chair, she is the highest-ranking DINO in the party. Tim Canova will take her seat in Congress, but Clinton is sure to give her a plum job elsewhere, for services rendered during the primaries.
  • On the results of the UK referendum — DiEM25: OUT won because the EU establishment have made it impossible, through their anti-democratic reign (not to mention the asphyxiation of weaker countries like Greece), for the people of Britain to imagine a democratic EU.
  • The American Fascist — Robert Reich: As did the early twentieth-century fascists, Trump is focusing his campaign on the angers of white working people who have been losing economic ground for years, and who are easy prey for demagogues seeking to build their own power by scapegoating others. […] As the Washington Post’s Jeff Guo has pointed out, Trump performs best in places where middle-aged whites are dying the fastest.
  • Whither Europe? The Modest Camp vs the Federalist Austerians — Yanis Varoufakis and James Galbraith: Soon after the Great Crisis of the Eurozone struck, Europe decided to treat it piecemeal – as though each affected country had committed separate and unrelated policy errors. The governing institutions of Europe denied that the difficulties of Greece, Ireland, Spain, Portugal and Italy could be part of a single disaster, spanning at once the realms of banking, public debt and investment.
  • Negative Gearing. It's turning us into a nation of landlords and serfs — Peter Martin: The great Australian dream meant owning your own home. "Getting ahead" means getting ahead of someone else. It's how Treasurer Scott Morrison sees the Australian dream. […] It's certainly what negative gearing is about. "The vast bulk of Australians who use negative gearing are just trying to get ahead and trying to get their family in a better position," Morrison says. But negative gearing only gets them ahead if prices climb. The more that people negatively gear in order to get ahead, the more prices climb. The further they climb, the harder houses become to buy. And the harder they become to buy, the more the Australian dream recedes.
  • Whittingdale is wrong: it is advertisers who are destroying the digital economy — Alexander Hanff in openDemocracy: Publishers feel like they have no control over the type of ads being forced on them by adtech companies and advertising agencies. This is a situation that needs to change – publishers should control all of the content they publish – including ads; and traditionally that was always the case. […] Advertisers and brands need to understand that their route to the audience is via the publishers whose content they are poisoning through invasive technologies and an ever increasing greed for more and more data. They need to purify the water before they can persuade us to start drinking it again – they need to stop tracking and profiling us, they need to better police their networks and platforms to eliminate malvertising and they need to yield control of the experience back to the publishers who own the audience. [Needless to say, we should object to being considered "owned" by publishers as well.]

Sunday, 19 June 2016 - 9:29pm

Published by Matthew Davidson on Sun, 19/06/2016 - 9:29pm in

This week, I have been mostly reading:

  • Saturday Morning Breakfast Cereal (via Timothy Taylor):
  • The rise of Donald Trump — Dean Baker, Real World Economics Review Blog: Whatever the final outcome of the presidential race, Trump has exposed a sense of extreme anger among large segments of the population. These people are unhappy about economic policies that have undermined their financial security. Their anger may be misdirected towards immigrants or other countries, but it is not about to go away unless the policies change.
  • Larry Fink and His BlackRock Team Poised to Take Over Hillary Clinton’s Treasury Department — David Dayen at The Intercept: BlackRock is far from a household name, but it is the largest asset management firm in the world, controlling $4.6 trillion in investor funds — about a trillion dollars more than the annual federal budget, and five times the assets of Goldman Sachs. And Larry Fink, BlackRock’s CEO, has assembled a veritable shadow government full of former Treasury Department officials at his company. […] And his priorities appear to be so in sync with Clinton’s that it’s not entirely clear who shares whose agenda. Clinton, for her part, has refused to rule out a treasury secretary drawn from Wall Street.
  • Joe Wilson to Hillary Clinton in 2010: Baghdad “Has Been Bled to Death” — Zaid Jilani in The Intercept: My trip to Baghdad (September 6-11) has left me slack jawed. I have struggled to find the correct historical analogy to describe a vibrant, historically important Middle Eastern city being slowly bled to death. Berlin and Dresden in World War II were devastated but they and their populations were not subjected to seven years of occupation that included ethnic cleansing, segregation of people by religious identity, and untold violence perpetrated upon them by both military and private security services. […] The service people don’t see themselves there to bring peace, light, joy or even democracy to Iraq. They are there to kill the “camel jockeys.”
  • Why Trump? — George Lakoff: Language that fits [a conservative or progressive] worldview activates that worldview, strengthening it, while turning off the other worldview and weakening it. The more Trump’s views are discussed in the media, the more they are activated and the stronger they get, both in the minds of hardcore conservatives and in the minds of moderate progressives. This is true even if you are attacking Trump’s views. The reason is that negating a frame activates that frame, as I pointed out in the book Don’t Think of an Elephant! It doesn’t matter if you are promoting Trump or attacking Trump, you are helping Trump.
  • The Federal Reserve and the Global Fracture — Antti J. Ronkainen interviews Michael Hudson: The aim of lowering interest rates was to provide banks with cheap credit. The pretense was that banks might lend to help the economy get going again. But the Fed’s idea was simply to re-inflate the Bubble Economy. It aimed at restoring the value of the mortgages that banks had in their loan portfolios. The hope was that easy credit would spur new mortgage lending to bid housing prices back up – as if this would help the economy rather than simply raising the price of home ownership. […] Banks did make money, but not by lending into the “real” production and consumption economy. They mainly engaged in arbitrage and speculation, and lending to hedge funds and companies to buy their own stocks yielding higher dividend returns than the low interest rates that were available.
  • RICHARD KOO: The 'struggle between markets and central banks has only just begun' — David Scutt of Business Insider Australia points us towards this illustration of how trying to increase the amount of broad money by issuing base money is "pushing on a string":
    Nomura Koo
  • The Unemployment Rate Isn’t Used to Keep Unemployment Low (With Graph) — Ian Welsh: So, the unemployment rate from late 70s and on, has been used to determine if wages should cause inflation, and to then raise interest rates to make sure they don’t. Not incidentally, the result is also to crush wages, because, essentially, wages that improve are nothing more than wages that increase faster than non-wage inflation. The unemployment rate not only doesn’t measure how good the economy feels for ordinary people, it was actually used, with purposeful action, to crush wages.
  • There's more than one way to kill negative gearing — Peter Martin: Before John Howard halved the headline rate of capital gains tax at the turn of the century, negative gearing was relatively unattractive. Landlords as a group made money. In 1999-2000 they made a combined $219 million. Ever since then they've lost money. In 2012-13 they lost a net $5.4 billion... Capital gains matter because they are the mechanism negative gearers use to make money. The profits they make from eventually selling their properties are meant to exceed their annual losses from rent. A cut-rate capital gains tax makes those profits more likely. Investors can write off their annual losses at the full tax rate and pay tax on their eventual profits at only half the rate.
  • Exit Planning — Thomas Geoghegan in The Baffler: Toe-to-toe, it’s the elderly and not the robots who are taking jobs from the young. […] The more we shrink the welfare state—I mean cut back on private pensions, Social Security, and Medicare so that older Americans must stay in the workforce—the harder it is for a young person to land a job. D.C. think tanks love to tell the elderly that we’re really in fine shape and that it is our duty to keep on working. To an audience of older college grads, like me, they say, “Hang on to those college-type jobs.” At the same time, they push more young people into college. Isn’t this a contradiction? It seems that the one hand does not know what the other hand is doing. That’s the problem with neoliberalism.

Sunday, 12 June 2016 - 7:54pm

Published by Matthew Davidson on Sun, 12/06/2016 - 7:54pm in

This week, I have been mostly reading:

  • So Sue Them: What We’ve Learned About the Debt Collection Lawsuit Machine — Paul Kiel, ProPublica: In 1996, there were around 500 court judgments in New Jersey from suits filed by debt buyers. By 2008, that number had reached 140,000. […] For the most part, debt buyers purchase defaulted credit card accounts, typically for a few pennies on the dollar. Starting in the late 90’s, the industry began a period of rapid growth and then exploded in the middle of the last decade. That led to a sharp spike in suits, many of them by smaller debt buying companies that have since gone out of business. The industry is now dominated by several large companies.
  • Hey Joe, banks can’t lend out reserves — Steve Keen: For me, watching academic economists and Central Bankers (the vast majority of whom trained as economists) tell the banks to “lend your excess reserves to the public, dammit!”, is akin to watching some delusional person in a playground watching two kids playing on a see-saw, and criticising them because they weren’t both up in the air at the same time.
  • The Barbarism of Donald Trump — Ian Welsh: I don’t know if Clinton will torture. I know Bernie Sanders won’t. I know there are options available in the American election that don’t sell the tattered remains of America’s soul.
  • Corbyn's Progress — Tariq Ali: Blair, angered by this outburst of democracy in a party that he had moulded in his own image, declared that the Labour Party would be unelectable unless Corbyn was removed. Brown kept relatively quiet, perhaps because he was busy negotiating his very own private finance initiative with the investment firm Pimco (Ben Bernanke and the former ECB president Jean-Claude Trichet are also joining its ‘global advisory board’). Simultaneously, his ennobled former chancellor, Lord Darling, was on his way to work for Morgan Stanley in Wall Street. Blair, an adviser to J.P. Morgan since 2008, must have chuckled. At last, a New Labour reunion in the land of the free. All that ‘light-touch’ regulation was bearing rich fruit. Virtually every senior member of the Blair and Brown cabinets went to work for a corporation that had benefited from their policies.
  • Folks Worried About Robots Taking Our Jobs Need to Learn Arithmetic — Dean Baker: It is important to recognize that “owning robots” is a political issue, not an economic one. Specifically, people own robots because we give them patent monopolies. In most cases robots would be very cheap to produce if the government didn’t threaten to arrest people for not respecting patents. […] So we end up with money going from the rest of us to people who own robots because the government has given these people a monopoly over the use of the technology. Suppose the government didn’t give a monopoly over the use of the technology. Suppose that we funded the research through a different mechanism or at least made the monopolies shorter and weaker. Then the folks who developed the robots would not have so much money, the robots would be cheaper, and the rest of us would be richer.
  • MMT, trade balance and balance of payments — Mike Norman: A net importer is gaining "stuff" in an exchange with a net exporter, and the net exporter is accumulating the currency of the net importer. Thus the net importer is benefiting in real terms while the next exporter is benefiting in financial terms. The net exporter is diminishing domestic product (real) for domestic use, and the net importer is increasing indebtedness (financial) to the net exporter. On the other hand, net imports are beneficial to the economy and nation at full employment. The nation has more stuff than it would otherwise have at the current level of productivity. Because foreign workers are contributing to domestic productivity. And the country is not exporting jobs.
  • Saturday Morning Breakfast Cereal:
  • Listening to past Treasurers is a dangerous past-time — Bill Mitchell: On January 23, 2016, a former Australian Treasurer Peter Costello (1996-2007) gave a speech to the Young Liberals (the youth movement of the conservative party in Australia) – Balanced Budgets as a Youth Policy – which was sad in the sense that some people never get over being dumped as out of touch and unpopular and was ridiculous in the sense that it is a denial of reality and macroeconomic understanding. He mounted the same old arguments that have been used to justify the pursuit of fiscal surpluses (grandchildren etc) but failed to recognise that his period as Treasurer was abnormal in terms of our history and left the nation exposed to the GFC as a result of the massive buildup in private sector debt over his period of tenure. The only reason he achieved the surpluses was because growth was driven by the household credit binge which ultimately proved to be unsustainable. Fiscal deficits are historically normal and should not be resisted. They are the mirror image in a national accounting sense of non-government surpluses, which historically, have proven to be the best basis for sustained growth and low unemployment.
  • Tilting at windmills: The Faustian folly of quantitative easing — Steve Keen, Real World Economics Review Blog: QE gets into the money supply—not via lending, which is impossible, but via asset purchases, which far and away benefit rich households more than poor ones. Rich households also benefit from the income the share transactions generate. And finally, some of that money gets to poor households when the rich ones—made richer still by QE—buy some services off them. The real economy has thus received some impetus from QE, but only a relatively trivial amount of the money created has got into circulation in Main Street. As Michael Hudson puts it, Bernanke’s helicopter dumped money on Wall Street, not Main Street. The bubble before the financial crisis had already exaggerated income inequality past what is sustainable in a capitalist society. Central Bank meddling via QE has made this problem worse, and without the illusion of a boom (like the Internet and Subprime Bubbles) to make it seem somehow palatable. And Neil Wilson adds some more context, though I must admit that I couldn't follow his logic for one crucial step.
  • Bernie Sanders proved politicians can make it this far without selling their souls — Robert Reich in the Guardian: Sanders’ courage in taking on the political establishment has emboldened millions to stand up and demand our voices be heard. Regardless of what Sanders decides to do now, he has ignited a movement that will fight onward. We will fight to put more progressives into the House and Senate. We will fight at the state level. We will organize for the 2020 presidential election. We will not succumb to cynicism. We are in it for the long haul. We will never give up.
  • We are being led by imbeciles — Bill Mitchell: I was reading John Maynard Keynes recently – circa 1928 – that is, 8 years before the publication of the General Theory with his Treatise on Money intervening. He was railing against the principles and practice of ‘sound finance’, which he noted had deliberately caused billions of pounds in lost income for the British economy. He urged the Treasury and the Bank of England to abandon their conservative (austerity) approach to the economy and, instead, embark on wide-scale fiscal stimulus to create jobs and prosperity. He concluded that with thousands of workers idling away in mass unemployment that it was “utterly imbecile to say that we cannot afford” to stimulate employment via large-scale public works – building infrastructure etc. He considered the policy makers who opposed such options were caught up in “the delirium of mental confusion”. The stark reality is that 88 years later, he could have written exactly the same article and would have been ‘right on the money’.
  • Why I don't use heroin — Chris Arnade, The Guardian: Addiction is a symptom of something very wrong with our society. That in any city or town, across all of America, people live on the streets, shooting up, selling themselves for another bag, should make us all stop and ask ourselves “why does our society create and allow such pain?”.

Sunday, 5 June 2016 - 8:25am

Published by Matthew Davidson on Sun, 05/06/2016 - 8:25am in

This week, I have been mostly reading:

  • Wall Street’s Message to Young Adults: “You are Clueless” — Bill Black at NEP elicits a LOL: Wall Street CEOs are very upset with young adults. They believe you are “clueless” and “voting against [your] own interests” when you support Bernie Sanders. A Wall Street CEO took to the pages of the Wall Street Journal to decry the fact that “Millennials are flocking to Sanders.” It would be cruel to note that one has to be clueless to believe that writing an op ed in the WSJ was a good way to reach millennials supporting Bernie.
  • Dear Paul — Gerald Friedman (Context here): While you don’t know me, you seem to feel free to speculate about my values and interests. You assume that an outsider economist like myself must be considered not particularly “insightful or even technically competent.” And, elaborating this theory, you conclude that envy would lead me to jump on an opportunity for self-advancement by shilling for an outsider politician. Now this theory might be tested empirically. You could easily have tested your theory by investigating my motives empirically. You could have called me and asked. Or you could have read any of the news stories where I explained how I stumbled on this research project, and where I explained my (lack of) connection to the Sanders campaign. Krugman's continuing public self-immolation is baffling.
  • Saturday Morning Breakfast Cereal:
  • Who are the capitalists? — David F. Ruccio: It’s one of the questions I ask my students. And they always get the answer wrong. So, in my experience, do most other people. But it’s a key issue. If we’re going to figure out how capitalism works—and, perhaps even more important, how to change it—we need to know who the capitalists are.
  • Surprised by the rise of Bernie Sanders and Jeremy Corbyn? Then you need to get out more — Simon Wren-Lewis: Political commentators talk to politicians who talk to political commentators. It tells us how embedded the influence of the City and Wall Street is. The media relies on economists from the financial sector, and so tends to see the economy from their perspective. The blind spot is mostly to the left, because we have the Daily Mail and Fox News. As a result, it came as a complete surprise that a crisis caused by the financial sector that left that sector unscathed but instead led to a diminished role for the state, might make many people rather angry.
  • Robert Samuelson Is Unhappy that We Have Evidence Based Economics — Dean Baker at CEPR: There are still millions of unemployed or underemployed workers who would like full-time jobs. This means that the concern about balanced budgets is needlessly keeping these people unemployed. And the weakness of the labor market is keeping tens of millions of workers from having the bargaining power necessary to get their share of the benefits from economic growth in higher wages. Perhaps even worse, the obsession with deficits prevents us from doing things we really need to do. The neglected items form a long list, from early childhood education and affordable college to keeping the kids in Flint from being poisoned.
  • Australia’s Housing Bubble: In the Grip of Insanity — Pater Tenebrarum, who appears to be some kind of gold bug, but as the link comes via Naked Capitalism, and I agree with the conclusion, I'm prepared to overlook the tinfoil hat: In this particular case, the boom has already progressed to a rare extreme: with home prices at 10 to 12 times disposable income (far higher than the peaks attained in the housing bubbles in the US, Ireland and Spain), the end is clearly getting close. Australian home-owners, property investors and banks will be in for quite a rude awakening.
  • How to Explain the Sanders Campaign to an Idiot, Paul Krugman or a Clintonite in 8 Sentences — Seth Abramson in the Huffington Post: Bernie Sanders […] is staying in the race because all the extant hard data suggests he is a stronger general election candidate than Mrs. Clinton, because he passionately believes the Democrats must defeat Donald Trump in the fall, and because Mrs. Clinton’s stunning failure to secure 59 percent of pledged delegates didn’t merely invite but indeed encouraged him to take his case to superdelegates in July […] The Democratic Party has never, in modern history, run a candidate with an unfavorable rating as high as Mrs. Clinton’s […] Sanders plans to continue his campaign in the hope of saving Democratic elders from their slavish devotion to a political dynasty that’s turned the Party from its New Deal roots toward a neoliberal corporatism now destroying the middle class.
  • Waist deep in the Big Muddy — John Quiggin: The sudden collapse of four for-profit vocational education enterprises including Aspire college is the latest in a string of scandals, failures and license revocations in the sector. […] The provision of public funds to for-profit operators has been a predictable, and predicted disaster. Of all the disasters perpetrated under the banner of microeconomic reform, education reform has probably been the worst.
  • Morrison's tax swap would have taken from the poor and given to the rich — Peter Martin: The most shocking thing in the Treasury analysis delivered to Scott Morrison on January 25 isn't the finding that a cut in income tax funded by a lift in the goods and services tax wouldn't boost the economy at all. It's what Morrison asked the Treasury to model. He asked it to model a lift in GST from 10 to 15 per cent and then the handing back of every possible cent in income tax cuts. Because boosting the GST automatically results in extra spending on benefits such as Newstart, family allowances and pensions as prices climb it isn't possible to give all of it back. But it is possible to hand back $30 billion of the $35 billion as tax cuts, and that's what Morrison asked the Treasury to model in the first instance, not legislated increases in benefits of the kind delivered by his predecessor Peter Costello when introducing the GST. The impact is horrific.
  • To Fix Inequality and Steady the Economy, Think Radically — Lynn Parramore at INET interviews Adair Turner: […] for the decade leading up to 2007, a whole lot of people who weren’t getting raises felt that they were doing ok because they managed to buy a house that was going up in price. But it all came to and end, a catastrophic end. Rising inequality can create a more highly leveraged economy, and it can then make the economy vulnerable to a crash like 2008. And in that crash, the really malign thing is that the crash itself tends to further increase inequality because it tends to be the people at the lower end of the wealth distribution who were highly leveraged and had to borrow lots of money to buy their house. In the downswing, they lose all the wealth they’ve got.

Sunday, 29 May 2016 - 4:38pm

Published by Matthew Davidson on Sun, 29/05/2016 - 4:38pm in

This week, I have been mostly reading:

  • Thomas Piketty on the rise of Bernie Sanders: the US enters a new political era — Thomas Piketty in Le Monde via the Guardian: In many respects, we are witnessing the end of the politico-ideological cycle opened by the victory of Ronald Reagan at the 1980 elections.
  • Lobbyist Superdelegates Tip Nomination Toward Hillary Clinton — Lee Fang, The Intercept: There are 712 superdelegates in all, which is about 15 percent of the total delegates available and 30 percent of the total needed to win the nomination. If the nomination process is close, superdelegates may effectively pick the party’s presidential nominee, potentially overriding the will of voters. [This is why "Jeb!" couldn't make it in the big league. His vote-rigging skills are inadequate. Bernie has already won 2016 by a far wider margin than Gore won 2000, but Debbie Wasserman Shultz can halt a landslide with a single Medusa glare.]
  • Sydney Uni’s sweeping restructure: cutback and fightback ahead — Dylan Griffiths at Solidarity Online: On the last day of work for 2015, the University of Sydney’s Chancellor, Belinda Hutchinson, announced a drastic restructure of the University. The decisions were made in a secret Senate meeting days earlier. They include amalgamating ten faculties and six schools into six faculties and three schools and cutting down 122 degrees to 20 degrees.
  • The free market is an impossible utopia — Henry Farrell chats with Fred Block and Margaret Somers about Karl Polanyi, Washington Post: In the first instance the market is simply one of many different social institutions; the second represents the effort to subject not just real commodities (computers and widgets) to market principles but virtually all of what makes social life possible, including clean air and water, education, health care, personal, legal, and social security, and the right to earn a livelihood. When these public goods and social necessities (what Polanyi calls “fictitious commodities”) are treated as if they are commodities produced for sale on the market, rather than protected rights, our social world is endangered and major crises will ensue.
  • If you thought one Bernie Sanders was good, how about 100 of him? — Anoa Changa in the Guardian: I am a part of an initiative called Brand New Congress. Many of us are former Sanders campaign staffers, who are hoping to help elect Bernie Sanders-like candidates in at least 100 different districts in the next two years. […] The aim is to run one campaign for hundreds of candidates. Instead of running the races separately, we will be centralizing fundraising, awareness raising and organizing for campaigns across the country. Our unified process will level the playing field, and thus permit new leaders to rise up from the ranks of our working and middle class.
  • ‘You want a description of hell?’ OxyContin’s 12-hour problem — Harriet Ryan, Lisa Girion and Scott Glover, LA Times: Reps were ordered to visit doctors and “refocus the clinician back to q12h.” Doctors needed to be reminded “on every call,” they were told. “There is no Q8 dosing with OxyContin,” one sales manager told her reps, according to a memo cited in an FDA filing. She added that 8­-hour dosing “needs to be nipped in the bud. NOW!!” If a doctor complained that OxyContin didn’t last, Purdue reps were to recommend increasing the strength of the dose rather than the frequency. There is no ceiling on the amount of OxyContin a patient can be prescribed, sales reps were to remind doctors, according to the presentation and other training materials. […] An analysis of the medical records of more than 32,000 patients on OxyContin and other painkillers in Ontario, Canada, found that one in 32 patients on high doses fatally overdosed. […] OxyContin “does a great job of keeping me out of a wheelchair and moving...for 8 hours. Then I start going into withdrawal,” one patient wrote on an online message board in 2004.
  • Reclaiming Innovation — Jim Groom and Brian Lamb in Educause Review Online: The myriad costs associated with supporting LMSs crowd out budget and staff time that might be directed toward homegrown, open-source, and user-driven innovation. Indeed, institutional leaders may refuse to support alternative systems, such as blogs and wikis, lest they draw attention and users away from the "serious" enterprise learning tool, diverting resources and endangering investments. If a technology is sufficiently large and complex, it can dictate policy, resource allocation, and organizational behavior far beyond its immediate application.
  • The Faulty Foundation of Higher Education — Todd Rose, Ed.D., and Ogi Ogas, Ph.D., who have qualifications, in Psychology Today: Within our Taylorized system of college education, a Bachelor of Arts in Civil Engineering is designed to be equivalent to a Bachelor of Arts in English Literature, each diploma held to represent an equal unit of learning independent of who a graduate is or which college she graduated from. This uniformity was intended to ensure that the brain of every student who earned a diploma attained the same level of “critical thinking,” “civic awareness,” “cultural literacy,” or some other normative set of skills or knowledge.
  • Why Britain’s Housing Crisis Heralds the Next Financial Crash — Steve Rushton at Occupy.com: Housing prices in London have risen by 50% in the last five years. If the U.K. property bubble goes boom, it will be proportionally biggerthan the U.S. housing bust at the onset of the financial crisis in 2007. How did we get here? For starters, U.K. banks in 2015 lent over £1 trillion ($1.4 trillion) for housing, accounting for 70% of newly made loans. The result is that when this bubble pops, it could catalyze another global financial meltdown. While there are many other possible triggers, the next financial crash is more likely than not.
  • Guest Post: POSITIVE MONEY IN ACTION — Geoffrey Gardiner's Modest Proposal at New Economic Perspectives: The system of transaction accounts at the central bank will be used to keep track of the population. Every person will be allocated an account at birth and vital details will be recorded and updated. The records will include a record of the person’s genome. The bank will issue identity documents. The transaction account number will be the person’s identity and passport number, and also the number of his or her tax account. Transaction account statements will be sent automatically to the tax office, which will have the duty to debit it with all assessed taxes. Every immigrant or visitor to the country will get an account and give similar identity details.

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