Every week my e-mail box receives a steady stream of articles aimed at cultivating public animus to Russia. The articles are always wrapped in a narrative in which Russia is a threat to democracy in Ukraine, Eastern Europe, and elsewhere. The effect is to create public support for hardline action (economic and/or military) against Russia.
(more…)Archive for the ‘Uncategorized’ Category
The US and Russia: beware of Neocons and liberals preaching democracy promotion
Wednesday, December 8th, 2021Anti-China Fever in the US: a lethal contagious disease
Monday, September 20th, 2021Much of the United States (especially Washington, DC) is in the grip of a contagious lethal anti-China fever which is spreading fast.
Even people I usually admire and respect have become infected. Reason and facts have lost all capacity to inoculate.
Fortunately, I was sent a vaccine (that takes one minute to administer) which I would like to share with you:
Three points in response to China (& Russia) hawks:
(1) A mirror is a very good thing to have in these situations (probably the most valuable & cost-effective piece of equipment the Pentagon could purchase right now). When wondering about China’s naval posture in the South China Sea or Russia’s response to eastward NATO expansion, use the mirror to reflect on the Monroe doctrine & how we would react if a Chinese flagged 7th fleet were cruising the Caribbean.
(2) Ukraine & Taiwan are both special unresolved historical situations. They should each be treated as such, carved out as best possible, and not allowed to poison the entire relationship. The mortal danger is the US war lobby exploits those situations to provoke Russia and China, hoping the resulting optic will favor their ugly ambitions.
(3) In his later years, George Kennan, architect of the containment doctrine, believed the best way to deal with the Russians is to leave them to themselves (i.e. they will sabotage themselves on their own). That continues to be good advice & also has relevance for China.
Financialization revisited: the economics and political economy of the vampire squid economy
Wednesday, September 1st, 2021This paper explores the economics and political economy of financialization using Matt Taibbi’s vampire squid metaphor to characterize it. The paper makes five innovations. First, it focuses on the mechanics of the “vampire squid” process whereby financialization rotates through the economy loading sector balance sheets with debt. Second, it identifies the critical role of government budget deficits for the financialization process. Third, it identifies the critical role of central banks, which are the lynchpin of the system and now serve as de facto guarantors of the value and liquidity of private sector liabilities. Fourth, the paper argues financialization imposes a form of policy lock-in. Fifth, it argues financialization transforms popular attitudes and understandings, thereby generating political support despite poor economic outcomes. In effect, there is a politics of financialization that goes hand-in-hand with the economics. The paper concludes with some observations on why mainstream macroeconomics has no equivalent construct to financialization and discusses the disquieting unexplored terrain that the economy is now in.
Preparations for the “Next Afghanistan” have already begun
Thursday, August 19th, 2021Now that the twenty year-long US military expedition to Afghanistan has ended in catastrophe, the US Neocon establishment has already begun preparations for the “Next Afghanistan”. That process begins with blaming Joe Biden and rewriting history.
Thus, Richard Haas (President of the Council on Foreign Relations) writes in Project Syndicate: “Biden was recently asked if he harbored any regrets about his decision to withdraw all US troops from Afghanistan. He replied he did not. He should.” As part of his argument, Mr. Haas scare mongers the prospect of a “Taliban domino effect” whereby the Taliban takeover Pakistan.
The New York Times has also been busy playing the blame game and rewriting history. Two days after Kabul fell, its page one story blamed President Biden and suggested something very different was possible: “But in his speech, Mr. Biden spent more time defending his decision to depart Afghanistan than the chaotic way it was carried out.”
In similar vein, another Times story claimed: “In several cities, Afghan security forces put up a strong fight to stop the Taliban advance, with videos showing exchanges of gunfire. But much more prevalent during the Taliban’s offensive were scenes of apparent retreat by government forces left ill-equipped to secure the country after the American withdrawal.”
The reality is President Biden has nothing to apologize for and deserves our collective thanks for a decision that always stood to benefit the United States but never politically benefit him.
(more…)The economics of New Developmentalism: a critical assessment
Thursday, July 1st, 2021This paper critically assesses the economics of New Developmentalism (ND). It begins by identifying and formalizing the principal components of ND which are identified as neutralizing Dutch disease, ending growth with foreign saving, development driven by a technologically advanced and internationally competitive manufacturing private sector, and getting macroeconomic prices right. It then examines four strands of critique consisting of internal economic logic critiques, Classical Developmentalism (CD) critiques, Keynesian and Neo-Kaleckian critiques, and the fighting the last war critique. To this author, ND is best understood as a Third Way styled analysis that blends CD heterodoxy and Neoliberalism. However, ND’s substantive policy recommendations lean in the Neoliberal direction, particularly as regards budget deficits and state intervention in the development process. From a Classical Development perspective, the problematic of development cannot be solved as easily as suggested by ND.
The Macroeconomics of Government Spending: Distinguishing Between Government Purchases, Government Production, and Job Guarantee Programs
Monday, June 14th, 2021This paper reconstructs the Keynesian income – expenditure (IE) model to include distinctions between government purchases of private sector output, government production, and government job guarantee program (JGP) employment. Analytically, including those distinctions transforms the model from a single sector model into a multi-sector model. It also surfaces the logic behind the automatic stabilizer property of JGP employment. The model is then extended to include Kaleckian income distribution effects which contribute to explaining why expenditure multipliers vary by type of fiscal expenditure. The Kaleckian version generates a new balanced budget multiplier driven by changed composition of government spending. It also illuminates some macroeconomic implications of privatization of government produced services.
Proto-fascism unleashed: how the Republican Party sold its soul and now threatens democracy
Friday, June 4th, 2021This essay argues that some forty years ago the Republican Party struck a Faustian bargain whereby it traded political integrity and decency for tax cuts and a corporate dominated economy. Now, the Republican party is reaping the consequences of that bargain in the form of its capture by Donald Trump and his followers. However, it also means we are all threatened as the party has unleashed and legitimized proto-fascist tendencies that risk destroying tolerance and democracy, and replacing them with intolerance and authoritarianism. The U.S. is now fighting a war for its soul. At issue are two core questions. One, will the U.S. remain committed to true democracy? Two, will the U.S. aspire to having a decent society with shared prosperity? The one upside of Trump and his purging of the old guard Republican Party is that he compels welcome clarification of those questions, which can no longer be evaded by the Democratic Party and the chattering class.
Life among the Econ: fifty years on
Tuesday, April 20th, 2021Almost fifty years ago, the Swedish econographer Axel Leijonhufvud (1973) wrote a seminal study on the Econ tribe titled “Life among the Econ”. This study revisits the Econ and reports on their current state. Life has gotten more complicated since those bygone days. The cult of math modl-ing has spread far and wide, so that even lay Econs practice it. Fifty years ago the Econ used to say “Modl-ing is everything”. Now they say “Modl-ing is the only thing”. The math priesthood has been joined by a priesthood of economagicians. The fundamental social divide between Micro and Macro sub-tribes persists, but it has been diluted by a new doctrine of micro foundations. The Econ remain a fractious and argumentative tribe.
Keywords: Micro, macro, economagicians, Keynesians, New Classicals, New Keynesians.
JEL ref.: A10, B00, B2, Z0, Z1.
Read the report
2021 Godley-Tobin Lecture: Marc Lavoie, “Godley versus Tobin on Monetary Matters”
Friday, February 12th, 2021
Rethinking capacity utilization choice: the role of surrogate inventory and entry deterrence
Saturday, January 30th, 2021This paper presents a macroeconomics-friendly Post Keynesian model of the firm describing both an inventory theoretic approach and an entry deterrence approach to choice of excess capacity. The model explains why firms may rationally choose to have excess capacity. It also shows the two approaches are complementary and reinforcing of each other. Analytically, the paper makes three principal contributions. First, it provides a simple framework for understanding the microeconomics of capacity utilization choice. Second, it reframes the Post Keynesian discussion of capacity utilization by making excess capacity choice the key to understanding normal capacity utilization. Third, it implicitly challenges Neo-Kaleckian wage-led growth theory as the model shows choice of the optimal excess capacity rate is independent of the level of demand.