reading

Sunday, 12 February 2017 - 6:00pm

Published by Matthew Davidson on Sun, 12/02/2017 - 4:00am in

This week, my academic performance has delivered a crushing blow to my self-confidence, so to reassure myself that I'm still capable of abstract thought, I have been mostly reading:

  • Nature is priceless, which is why turning it into ‘natural capital’ is wrong — Bram Büscher and Robert Fletcher: The move from nature to natural capital is problematic because it assumes that different forms of capital - human, financial, natural - can be made equivalent and exchanged. In practice - and despite proponents’s insistence to the contrary - this means that everything must potentially be expressed through a common, quantitative unit: money. But complex, qualitative, heterogeneous natures, as these same proponents acknowledge, can never adequately be represented in quantitative, homogenous money-units. […] Natural capital is therefore inherently anti-ecological and has little to do with giving value to nature, or rendering this value visible. It is the exploitation of nature to inject more value, and seeming legitimacy, into a faltering capitalist growth economy.
  • The true cost of our insanely low Newstart allowance — Peter Martin: This week, at the National Press Club, Social Services Minister Christian Porter dismissed suggestions that it needed to lift the Newstart unemployment benefit of just $264.35 per week. "The fact that people who find it challenging to subsist on Newstart do so for short periods of time might actually speak to the fact that that's one of the design points of the system," he said. The low rate was "working okay because the encouragement is there to move off those payments quickly".
  • Reducing income inequality — Bill Mitchell: […] financial market deregulation provided capital with ‘all its Christmases at once! – it could have a higher profit share and suppress real wages growth and keep profits high by realising the increased sales and productivity improvements. How? The trick was found in the rise of so-called ‘financial engineering’, which pushed ever increasing debt onto the household and corporate sectors. The capitalists found that they could sustain purchasing power and receive a bonus along the way in the form of interest payments. This seemed to be a much better strategy than paying higher real wages.
  • Why credit card interest rates are high — Peter Martin: The best guess as to why most of us don't much care about rates comes from studies that find that alongside the sizeable proportion of the population that pays off its cards on time (and so doesn't care about rates) is a larger group of "deluded optimists" who believe they will pay their cards off on time. They're not concerned about rates either because they falsely believe they won't have to pay them. Psychological tests show the more likely people are to select cards with high rates, the more optimistic they are about all things.
  • The current system of knowledge dissemination isn’t working and Sci-Hub is merely a symptom of the problem — Iván Farías Pelcastre and Flor González Correa in the LSE Impact Blog: Some scholars consider that, by removing barriers to access to knowledge, Sci-Hub is actually promoting the widest possible dissemination and use of academic research for the benefit of the entire scientific community. For instance, Masoud Shahnazar, Iran-based independent literary researcher, states that “we Iranians really owe [Sci-Hub] a lot” for providing access to the materials Iranian scholars require for their research. How researchers are able to access paywalled papers in a country faced with economic sanctions which prevent international payments is one of many questions that the current model cannot effectively answer.
  • Time To Treat Bank CEOs Like Adults — Dean Baker in HuffPo: Regardless of the exact motives, the real question is what will be the consequences for [Wells Fargo CEO John] Stumpf and other top executives. Thus far, he has been forced to stand before a Senate committee and look contrite for four hours. Stumpf stands to make $19 million this year in compensation. That’s almost $5 million for each hour of contrition. Millions of trouble-making high school students must be very jealous.
  • Stupefied: How organisations enshrine collective stupidity and employees are rewarded for checking their brains at the office door — André Spicer in Aeon: One well-known firm that Mats Alvesson and I studied for our book The Stupidity Paradox (2016) said it employed only the best and the brightest. When these smart new recruits arrived in the office, they expected great intellectual challenges. However, they quickly found themselves working long hours on ‘boring’ and ‘pointless’ routine work. After a few years of dull tasks, they hoped that they’d move on to more interesting things. But this did not happen. As they rose through the ranks, these ambitious young consultants realised that what was most important was not coming up with a well-thought-through solution. It was keeping clients happy with impressive PowerPoint shows. Those who did insist on carefully thinking through their client’s problems often found their ideas unwelcome. If they persisted in using their brains, they were often politely told that the office might not be the place for them.

Sunday, 5 February 2017 - 7:20pm

Published by Matthew Davidson on Sun, 05/02/2017 - 7:20pm in

This week, I have been feeling guilty about skipping a month, and mostly reading:

  • Why Do Anything? A Meditation on Procrastination — Costica Bradatan in the New York Times: The drama of procrastination comes from its split nature. Just like the architect from Shiraz, the procrastinator is smitten by the perfect picture of that which is yet to be born; he falls under the spell of all that purity and splendor. What he is beholding is something whole, uncorrupted by time, untainted by the workings of a messed-up world. At the same time, though, the procrastinator is fully aware that all that has to go. No sooner does he get a glimpse of the perfection that precedes actualization than he is doomed to become part of the actualization process himself, to be the one who defaces the ideal and brings into the world a precarious copy, unlike the architect who saves it by burning the plans.
  • China’s Army of Global Homebuyers Is Suddenly Short on Cash — Bloomberg News: Less than a month after China announced fresh curbs on overseas payments, anecdotal reports from realtors, homeowners and developers suggest the restrictions are already weighing on the world’s biggest real estate buying spree. […] “If it’s too difficult, I’m out,’’ said Mr. Zheng, 66, a retired civil servant in Shanghai who declined to give his first name to avoid attracting regulatory scrutiny. He may abandon a 2.4 million yuan ($348,903) home purchase in western Melbourne, even after shelling out a 300,000 yuan deposit last August. He’s due to make another big payment next month. [Tick… tick… tick…]
  • Why Trump's Staff Is Lying — Tyler Cowen, Bloomberg View: By requiring subordinates to speak untruths, a leader can undercut their independent standing, including their standing with the public, with the media and with other members of the administration. That makes those individuals grow more dependent on the leader and less likely to mount independent rebellions against the structure of command. Promoting such chains of lies is a classic tactic when a leader distrusts his subordinates and expects to continue to distrust them in the future. Another reason for promoting lying is what economists sometimes call loyalty filters. If you want to ascertain if someone is truly loyal to you, ask them to do something outrageous or stupid. If they balk, then you know right away they aren’t fully with you.
  • The Private Debt Crisis — Richard Vague: When too high, private debt becomes a drag on economic growth. It chips away at the margin of growth trends. Though different researchers cite different levels, a growing body of research suggests that when private debt enters the range of 100 to 150 percent of GDP, it impedes economic growth. When private debt is high, consumers and businesses have to divert an increased portion of their income to paying interest and principal on that debt—and they spend and invest less as a result. That’s a very real part of what’s weighing on economic growth. After private debt reaches these high levels, it suppresses demand.

Sunday, 8 January 2017 - 3:03pm

Published by Matthew Davidson on Sun, 08/01/2017 - 3:03pm in

This week, I have been plagued by self-doubt and mostly reading:

  • Overt Monetary Financing – again — Bill Mitchell: From the perspective of Modern Monetary Theory (MMT), a helicopter drop is equivalent to an increase in the fiscal deficit in the sense that new financial assets are created and the net worth of the non-government sector increases. It occurs when the government uses its currency-issuing capacity (linking treasury spending to central bank operations) without matching its deficit spending with debt-issues to the non-government sector. So the central bank adds some numbers to the treasury’s bank account to match its spending plans and in return may be given treasury bonds to an equivalent value. Instead of selling debt to the private sector, the treasury simply sells it to the central bank, which then creates new funds in return. This accounting smokescreen is, of course, unnecessary. The central bank doesn’t need the offsetting asset (government debt) given that it creates the currency ‘out of thin air’. So the swapping of public debt for account credits is just an accounting convention.
  • We are not and never will be dependent on bond markets — Richard Murphy: […] no government need issue gilts at all. It has only been EU law that has required the UK to do so in recent years. It is that law which has prevented the government simply issuing new money instead at any time. […] far from investors doing the government a favour by investing in gilts the government does savers an enormous favour by letting them place funds on effective deposit at guaranteed fixed rates with the only deposit taker who will never default because they can always print more money to make sure that they will not do so. The government could, in effect, entirely avoid paying this interest but for the essential role that the government wants its bonds to play in certain key financial markets, such as the repo and pension sectors.

Sunday, 1 January 2017 - 4:56pm

Published by Matthew Davidson on Sun, 01/01/2017 - 4:56pm in

This week, I have been mostly reading:

  • Stand, Fight, Resist — Jason Griffey: Neutrality favors the powerful, and further marginalizes the marginalized. In the face of the current political climate, with the use of opinions as bludgeons and disinformation as the weapon of choice for manipulation and intellectual coercion, it is up to those who value fact and believe in the care of those in need to stand up and positively affirm that to do otherwise is evil.
  • Going down the drain, putting this wondrous stock market at risk? — Wolf Richter: Companies in the S&P 500 spent about $3 trillion since 2011 to buy back their own shares, often with borrowed money. It’s part of a noble magic called financial engineering, the simplest way to goose the all-important metric of earnings per share (by lowering the number of shares outstanding). And it creates buying pressure in the stock market that drives up share prices. […] “Only” 362 of the S&P 500 companies bought back shares in Q3, the second lowest number in three years, with Q2 having been the lowest number (blue line in the chart below). [And, not unrelated:]
  • Apple CEO Tim Cook Met With Trump to “Engage” on Gigantic Corporate Tax Cut — Jon Schwarz, the Intercept: Cook first described how it was critical for Apple to “engage” with governments on what he called “our key areas of focus.” According to Cook, these include “privacy and security, education,” “advocating for human rights for everyone,” “the environment and really combating climate change” and “creating jobs” — i.e., nothing as mundane as money. But in the third paragraph, Cook acknowledged, “We have other things that are more business-centric — like tax reform.” [And, tying it all together a few months ago:]
  • Standing up to Apple — Robert Reich: Congress’s last tax amnesty occurred in 2004, when global U.S. corporations brought back about $300 billion from overseas, and paid just a tax rate of 5.25 percent rather than the regular 35 percent U.S. corporate rate. Corporate executives argued then – as they argue now – that the amnesty would allow them to reinvest those earnings in America. The argument was baloney then and it’s baloney now. A study by the National Bureau of Economic Research found that 92 percent of the repatriated cash was used to pay for dividends, share buybacks or executive bonuses.
  • James Galbraith Tells Us What Everyone Needs to Know About Inequality — Polly Cleveland reviews - well, quotes from - Jamie's new book at the D&S Blog: Galbraith adds a new insight: not only did the postwar high-tax regime induce corporations to keep executive pay in check, it also induced them to retain profits and reinvest them in the corporation. With the 1980’s “greed is good” transformation, rates of reinvestment slowed as executives started taking more for themselves—surely helping slow the overall rate of growth. [i.e. for currency-issuing governments, the purpose of taxation isn't revenue-raising; it's about steering the economy toward desirable public policy ends.]
  • A Chat (Avec Chat) — Wondermark, by David Malki !: PANEL 5: CLOSE UP: The teacup lies on the ground, shattered, the tea long since cold.

Sunday, 25 December 2016 - 4:55pm

Published by Matthew Davidson on Sun, 25/12/2016 - 4:55pm in

This week, I have been mostly reading:

  • How Laissez-Faire Economics Led to Inequality and Recession — Jeff Madrick in the Huffington Post: The Federal Reserve just named a new committee headed by vice chairman Stanly Fischer to research how unstable financial markets may affect the real economy of jobs, production, business investment and profits. If you read the 2008 minutes of the Federal Open Market Committee (released earlier this year), which meets roughly every six weeks to set interest rate and other policies, you’ll see that the policymakers and their staffs had little idea how to account for financial risk. Finance simply wasn’t in their economic models.
  • “I don’t need your civil war.” — Jonathan Rees: All us historians let out a loud sigh when we read that story about Republican Senator Ron Johnson wanting to replace us all with Ken Burns videos. It’s an incredibly stupid argument, of course, but it’s also sadly typical of everyone who has no idea what history professors actually do all day. […] Better to be the ones inserting the video cassette and administering the multiple choice test after the tape ends than not to have any job at all.
  • Facebook recommended that this psychiatrist’s patients friend each other — Kashmir Hill, Fusion: She hadn’t friended any of her patients on Facebook, nor looked up their profiles. She didn’t have a guest wifi network at the office that they were all using. After seeing my report that Facebook was using location from people’s smartphones to make friend recommendations, she was convinced this happened because she had logged into Facebook at the office on her personal computer. She thought that Facebook had figured out that she and her patients were all in the same place repeatedly. However, Facebook says it only briefly used location for friend recommendations in a test and that it was just “at the city-level.”
  • Where’s your data? It’s not actually in the cloud, it’s sitting in a data centre — Brett Neilson, Ned Rossiter, and Tanya Notley of Western Sydney University in the Conversation: Governments spend a great deal of resources safeguarding critical infrastructure. The protection of data and information systems is now included in this work. However, the focus for data security is on the development of software, as though we have forgotten that data storage happens in real places on the ground – and not in “virtual” clouds. Not knowing where data centres are located, or indeed what they actually do, prevents us from having conversations about how this infrastructure is governed, supported and protected.

Sunday, 18 December 2016 - 6:32pm

Published by Matthew Davidson on Sun, 18/12/2016 - 6:32pm in

This last few weeks, I have been mostly going mad, and reading:

  • Ageing out of drugs — Stacey McKenna in Aeon: So, what have we learned so far from those who age out of drug use? When people talk about the life cycle leading to natural recovery, numerous factors are at play. For many, it’s a simple case of ‘being sick and tired of being sick and tired’. […] Though this is the path that’s most common among people who have tried or even become addicted to drugs, it’s the one least discussed. But careful scrutiny of ageing out – both why people do and why they don’t – tells us a lot about drug dependence and what to do about it. […] The so-called unbreakable cycle of addiction appears to result from inequity – from poverty, from discrimination, from social and economic oppression.
  • Did Money Eat Our Brains? — Steve Roth at Evonomics: After growing rapidly for a couple of million years, doubling from roughly 750 to 1,500 cubic centimeters, human brains have shrunk by about ten percent over just ten or twenty millennia. (So they’ve been getting smaller maybe twenty times faster than they got bigger.) Imagine taking an ice cream scoop out of your brain. That’s about the size of it.
  • Why America’s MOOC pioneers have abandoned ship — Jonathan Rees: The most obvious reason why everyone from the founders of MOOC companies to students who sign up for such course are abandoning MOOCs is because these kinds of courses have not lived up to their initial hype. MOOCs were supposed to transform education as we know it, but traditional education with its inefficiency derived from the close proximity between professors and their students has proved more resilient than its wannabe disruptors ever imagined.
  • S&P warns on NZ house prices. What about Oz? — Leith van Onselen at MacroBusiness provides your terminally ill economy chart porn of the week:
  • Podcast Out — David A. Banks in the New Inquiry is onto something: The invisible forces that control human behavior, as it turns out, are not sociological or even cultural; the answers to life’s most important questions are invariably cognitive, biological, or evolutionarily determined. Topics that might have once been subject to political debate or rhetorical argument–work demands, exposure to toxins, surveillance, the limits of love, even Marxian alienation–become apolitical subjects for scientific testing. But the results only lead to greater and greater complexity, prompting introspective thought rather than action. Thus, liberal infotainment is full of statements that sound like facts–what social media theorist Nathan Jurgenson calls “factiness”–that do nothing more than reinforce and rationalize the listeners’ already formed common sense, rather than transforming it: what you believed to be true before the show started was not wrong, it just lacked the veneer of factiness.

Sunday, 4 December 2016 - 4:19pm

Published by Matthew Davidson on Sun, 04/12/2016 - 4:19pm in

This week, I have been mostly reading:

  • Sword of Democracy — Saturday Morning Breakfast Cereal by Zach Weinersmith:
  • Piers Morgan, neoliberal — Chris Dillow: The goods of excellence consist in mastery of particular practices, which tend to be positive-sum: one man’s excellence can be celebrated by all. The goods of effectiveness, however, are things like wealth, fame, power and winning, and these are often zero-sum: for a winner there must be a loser.
  • Australia’s Unemployment Rate Isn’t What It Seems — Jim Stanford in New Matilda: By considering all three categories of underutilised worker (officially unemployed, working but need more hours, and non-participants), we generate a much higher measure of labour market slackness: close to 17 percent, almost three times higher than the official unemployment rate.
  • RealtyCorp is born — Leith van Onselen, MacroBusiness: Australia’s media duopoly is on its way to becoming one giant real estate fix. Hot on the heels of Fairfax becoming a glorified real estate agent […] Real estate is now tipped to drive NewsCorp’s earnings growth into the future as well.
  • Corbyn’s Plan — Ian Welsh, declining to mince words: I have little patience for all the Brits who are wringing their hands about Labour and parking their votes in the Conservative party. This is a good, non-radical plan that will work. It is a plan of a government that wants to be good to the poor and the young. Corbyn is entirely credible regarding the lot of it, as he’s stuck by these principles all through the Thatcher and Blairite years. If you’re planning to vote Conservative in the UK, when this is on offer, you’re just an asshole, an “I”ve got mine, fuck you Jack,” or someone who has bought so far into neoliberal ideology that your political actions make you indistinguishable from an asshole, whether or not you think neoliberal policies “work.”
  • Electricity retail prices too high — Public Interest Advocacy Centre: Research by energy economist Bruce Mountain, released this week, confirms that the big three electricity retailers (AGL Energy, Energy Australia and Origin Energy) are charging two to three times more to sell electricity in NSW, VIC, SA and QLD, where the market has been deregulated, than the regulated retailer is charging in the ACT.
  • Incorporating energy into production functions — Steve Keen: In my last post on my Debtwatch blog, I finished by saying that the Physiocrats were the only School of economics to properly consider the role of energy in production. They ascribed it solely to agriculture exploiting the free energy of the Sun, and specifically to land, which absorbed this free energy and stored it in agricultural products. […] But rather than following the Physiocrats’ lead on energy, Smith instead saw labour—not energy—as the font of wealth (which he described in the same terms as Cantillon: the “conveniencies of life”), and ascribed the increase in productivity over time to “the division of labour" […] Economics thus lost the Physiocrats’ focus on energy, and instead descended first into the “Labour theory of value” and then into the Neoclassical (and Post Keynesian) notions of “production functions” in which energy played no role at all.
  • #1246; In which is glimpsed an Opportunity — Wondermark, by David Malki!: It's a gunfight-themed podcast called 'Colt 45 Minutes Long'

Sunday, 27 November 2016 - 5:02pm

Published by Matthew Davidson on Sun, 27/11/2016 - 5:02pm in

It's been a weird week of extremes of relief and despair (in that order), so I have been mostly bookmarking rather than reading:

  • Who Will Command The Robot Armies? — Maciej Cegłowski (via Tregeagle): Letting robots do more of the fighting makes it possible to engage in low-level wars for decades at a time, without creating political pressure for peace. As it becomes harder to inflict casualties on Western armies, their opponents turn to local civilian targets. These are the real victims of terrorism; people who rarely make the news but suffer immensely from the state of permanent warfare.

Sunday, 20 November 2016 - 6:03pm

Published by Matthew Davidson on Sun, 20/11/2016 - 6:03pm in

This week, I have been mostly reading:

  • The Higher Education White Paper: Euphemisms for Destruction — Will Davies in the Political Economy Research Centre blog: It is easy to moan about ‘privatization’ of higher education, but this is arguably something worse. With privatization go some of the benefits of privacy. Instead, we have a technocratic dream of perfectly calibrated ‘satisfaction’ and fees, where every ‘incentive’ is ‘aligned’. It all stems from a Benthamite fantasy that (as I explore in The Happiness Industry) money and subjective experience have a simple, stable relationship to each other. Sustaining the fantasy in an area like higher education involves regulatory complexity on a scale and cost that even Blairites might have blanched at. Technical complexity of this nature benefits one ‘stakeholder’ above all others: consultants.
  • Polls Showed Sanders Had a Better Shot of Beating Trump–but Pundits Told You to Ignore Them — Adam Johnson, at Fairness and Accuracy In Reporting (FAIR): There was a debate last spring, when the Sanders/Clinton race was at its most heated, as to whether Bernie Sanders’ consistently out-polling Hillary Clinton was to be taken as a serious consideration in favor of his nomination. […] Never mind, the pundits said—Clinton had been “vetted” and Sanders had not.
  • Obama said Hillary will Continue his Legacy – Indeed! — Michael Hudson. Okay, academic now, but this is a very important point I've not heard expressed from anybody else. Forget superdelegates; the Democratic primary process included essentially irrelevant states in the sample that was supposed to prove Clinton's electability: Appointed as DNC head by President Obama in 2008, [Tim Kaine] dismantled Howard Dean’s 50-state strategy, not bothering to fight Republicans in the South and other solid Republican states. His move let them elect governors who gerrymandered their voting districts after the 2010 census. The DNC designated these “neglected” states to come first in the presidential primaries. They were the ones that Hillary won. Sanders won most of the swing states and those likely to vote Democratic. That made him the party’s strongest nominee – obliging the DNC to maneuver to sideline him.
  • Time to ditch Rawls? — Branko Milanovic: Liberal democracies do not affirm the principles of liberalism, as Rawls expected, neither domestically nor internationally. It is inconceivable for Rawls, if these societies would be working well, that they would, as in the US now, generate a third or more of “malcontent” population that clearly does not believe in liberal principles nor is willing to affirm them in their daily lives. Far from it. This, plus the pervasive role of money in electoral politics, lower tax rates for capital than labor, neglect of public education etc. imply that domestically so called liberal societies are very far from Rawls’ idea of liberalism. The difference is so great that we cannot, I think, speak of the discrepancy any longer as the expected difference between an abstract idea and what exist in reality. These societies belong to an entirely different category. Moreover, in foreign policy, as became clear with the Iraq war, they act like outlaw states since they break the fundamental rules on which the international community is founded, namely absence of wars of aggression.
  • The Gig Economy — Ted Rall:
    Proponents of the so-called "Gig Economy" say that while traditional jobs are disappearing, we should be happy about the new spate of "entrepreneurial" jobs that will replace them. True, we won't have paid vacations, retirement plans or sick leave, or much pay for that matter, but we'll be independent, free as a bird to fail or succeed.
  • Building a Progressive International — Yanis Varoufakis continues his crusade of optimism in the pages of Project Syndicate: Bernie Sanders’s “political revolution” in the US, Jeremy Corbyn’s leadership of the UK’s Labour Party, DiEM25 (the Democracy in Europe Movement) on the continent: these are the harbingers of an international progressive movement that can define the intellectual terrain upon which democratic politics must build. But we are at an early stage and face a remarkable backlash from the global troika: witness Sanders’ treatment by the Democratic National Committee, the run against Corbyn by a former pharmaceutical lobbyist, and the attempt to have me indicted for daring to oppose the EU’s plan for Greece.
  • Why Jeremy Corbyn Matters — Richard King in 3 Quarks Daily: It's this prospect of genuine grass-roots democracy that scares the bejesus out of the establishment. The Blairites like to talk about "credibility" and to lament or decry Corbyn's lack of it. But they know as well as anyone that the public's notions of what is credible are changing faster than Donald Trump's policy positions. Boris Johnson, a man who can't comb his own hair and describes African people as "piccaninnies", has just been made British Foreign Secretary: how's that for "credibility"? No, the Blairites aren't anti-Corbyn because they think he can't beat May in a general election. They are anti-Corbyn because they're worried he will.
  • Class in America and Donald Trump — Karin Kamp interviews historian Nancy Isenberg for BillMoyers.com: Donald Trump’s success is rooted in a raw, unscripted speech, outright rudeness and his ability to project anger without being constrained by the well-measured idiom of the politician. His campaign manager admits he is “projecting an image.” Who’s surprised? Our electoral politics has always countenanced con artists and has abided identity politics. An Australian observer described the phenomenon succinctly back in 1949, and it’s true today: Americans have a taste for a “democracy of manners,” he insisted, which was in fact different from real democracy. Voters accept huge disparities in wealth, he observed, while expecting their leaders to “cultivate the appearance of being no different from the rest of us.”
  • My Fellow Americans: We Are Fools — Margot Kidder vents on CounterPunch on the occasion of Hillary "We came, we saw, he died" Clinton's coronation as Democratic nominee: I am half Canadian, I was brought up there, with very different values than you Americans hold, and tonight — after the endless spit ups and boasts and rants about the greatness of American militarism, and praise for American military strength, and boasts about wiping out ISIS, and America being the strongest country on earth, and an utterly inane story from a woman whose son died in Obama’s war, about how she got to cry in gratitude on Obama’s shoulder — tonight I feel deeply Canadian. Every subtle lesson I was ever subliminally given about the bullies across the border and their rudeness and their lack of education and their self-given right to bomb whoever they wanted in the world for no reason other than that they wanted something the people in the other country had, and their greed, came oozing to the surface of my psyche.

Sunday, 13 November 2016 - 6:22pm

Published by Matthew Davidson on Sun, 13/11/2016 - 6:22pm in

This week, I have been mostly reading:

  • Surpluses & deficits are hotly debated – but what about the currency? — Emile Woolf, Renegade Inc: When a British importer buys German goods he must pay for them in euros. For that purpose he (or his agent) will acquire euros from a German bank, and after settling the bill the German exporter (or his bank) is now a holder of British pounds. What will he do them? He can use them to buy British goods, or even UK treasury bonds, or he can exchange them for a different currency – but if, instead, he just sits on them indefinitely he will, just like the retailer who never cashes your cheque, be handing the importer a free gift!
  • John McDonnell is right: we do disagree on macroeconomic policy — Richard Murphy: I said he should not agree to a fiscal charter promising a balanced budget which is wholly economically unnecessary and even destructive. But he did. I also argued against the fundamentally neoliberal concept of an independent central bank that takes control of key aspects of economic management out of democratic control and which was Ed Balls idea. But John bought into it. And as a result he backed off from People’s QE : he was advised that a central bank cannot create money to help ordinary people, job creation or the building of social housing. Instead John accepted that central banks can only use that power for the sake of saving bankers.
  • The macroeconomic challenge of the twenty first century — Richard Murphy: Petrodollars created the architecture of the economies of the world that are now creaking at potential massive cost to us all. Now wise management of the fiscally created dollars, euros, pounds, yen and more can provide the alternative, costless but ultimately liberating source of the lubricant for our future economies. As a result we no longer need to burn the planet to liberate the potential in all people. The fiscal dollar can instead build the foundations for prosperity and social harmony that we all crave.
  • New Paper: Demand-Side Business Dynamism — Mike Konczal and Marshall Steinbaum in Roosevelt Forward: This paper argues that the decline in mobility, dynamism, and entrepreneurship is a result of declining labor demand since 2000. When it is hard to find another job, employed workers stay at the jobs they have, impairing their ascent up the job ladder and the accompanying wage growth over careers that historically led to the middle class. Declining entrepreneurship can also be explained by workers’ reluctance to leave large, stable incumbents to start their own firm or to work at a start-up when they cannot be assured that they will have a more stable job to return to. Thus, we find that the concentration of employment in old firms and in large firms mirrors the timing of declining labor mobility due to declining demand.
  • Understanding Trump — George Lakoff: Private enterprise and private life utterly depend on public resources. Have you ever said this? Elizabeth Warren has. Almost no other public figures. And stop defending “the government.” Talk about the public, the people, Americans, the American people, public servants, and good government. And take back freedom. Public resources provide for freedom in private enterprise and private life. The conservatives are committed to privatizing just about everything and to eliminating funding for most public resources. The contribution of public resources to our freedoms cannot be overstated. Start saying it.
  • How Did We Get Such a Terrible Nominee? — Ted Rall:
    The party candidate isn't true to its basic principles, lies, is ruthless, breaks the law and has record-high disapproval ratings in the polls. How the hell did America's oldest political party wind up with such a terrible candidate? Easy: they plotted and schemed.
  • The Bank of Japan needs to introduce Overt Monetary Financing next — Bill Mitchell: When economists talk of ‘printing money’ they are referring to the process whereby the central bank adds some numbers to the treasury’s bank account to match its spending plans and in return is given treasury bonds to an equivalent value. That is where the term ‘debt monetisation’ comes from. Instead of selling debt to the private sector, the treasury simply sells it to the central bank, which then creates new funds in return. This accounting smokescreen is, of course, unnecessary. The central bank doesn’t need the offsetting asset (government debt) given that it creates the currency ‘out of thin air’. So the swapping of public debt for account credits is just an accounting convention.
  • Economic change will not happen until the left understands money — Ann Pettifor in openDemocracy: The fact is that as western economies try to recover, they are sunk again by a mountain of private debt whose repayment is made less likely by austerity policies. These are policies with the ideological aim of “shrinking the state” but which, in the process contract both public and private sector investment, employment and incomes. The consequence of weak demand built on a mountain of debt is deflation: a generalized fall in prices and wages. Most economists, especially those in thrall to the finance sector, have an obsession with, and an aversion to inflation. The reason is that inflation erodes the value of debt. Deflation does the very opposite: it inflates the value of debt. Creditors are not disturbed by deflation, as it effortlessly, and silently increases the value of their most valuable asset: debt.
  • Education, The Enlightenment, and the 21st-Century — Fred van Leeuwen for the RSA: There is an inherent conflict between blind faith and critical thinking. That is true whether it is religious fanaticism or the imposition of political ideologies or nationalistic or ethnic dogmas in schools. Although I am not confounding barbaric terrorism with the “values” of the market, it is a danger if one grants markets and management thinking unexamined reverence. Placing education in such a straightjacket is having a major impact on development because it is affecting the way in which communities are conceived, justice is understood, and democracy is practised.
  • The DNC Email Leaks: The Gift That Keeps On Feeding Distrust — John Kiriakou in Truthdig: As my friend the State Department whistleblower Peter Van Buren said recently, “People are claiming the Russian government risked something close to war to hack DNC emails to embarrass [Hillary] Clinton after her own email shenanigans and to help [Donald] Trump, who maybe would win in November and who maybe would make decisions favorable to Russia? You realize that’s what has to be true for this [Vladimir] Putin scenario to be true, right? We’re back to the 1950s, accusing politicians of being in league with the Russians.” […] The issue is that the DNC colluded and conspired to favor the Clinton campaign and deny Bernie Sanders the Democratic nomination for president. The DNC’s actions were Nixonian, and they read like an account of that shamed president’s actions from a chapter of “All the President’s Men.”
  • Overt Monetary Financing would flush out the ideological disdain for fiscal policy — Bill Mitchell: Monetary policy is really such a blunt and ineffective tool that it should be rendered redundant. The mainstream have never provided a convincing case that manipulating interest rates is somehow the preferable and effective option for stabilising the spending cycle. The GFC experience would suggest otherwise. All the monetary policy gymnastics have had very little impact. It would be much better to set the overnight rate at zero and leave it there and allow the longer term rates (which are impacted by inflation risk) settle as low as possible. Then, manage the spending cycle with fiscal initiatives that can be targetted, adjusted fairly quickly and which have direct impacts.
  • Democrats, Trump, and the Ongoing, Dangerous Refusal to Learn the Lesson of Brexit — Glenn Greenwald: Put simply, Democrats knowingly chose to nominate a deeply unpopular, extremely vulnerable, scandal-plagued candidate, who — for very good reason — was widely perceived to be a protector and beneficiary of all the worst components of status quo elite corruption. It’s astonishing that those of us who tried frantically to warn Democrats that nominating Hillary Clinton was a huge and scary gamble — that all empirical evidence showed that she could lose to anyone and Bernie Sanders would be a much stronger candidate, especially in this climate — are now the ones being blamed: by the very same people who insisted on ignoring all that data and nominating her anyway.

Pages