This 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.
Archive for the ‘U.S. Policy’ Category
Proto-fascism unleashed: how the Republican Party sold its soul and now threatens democracy
Friday, June 4th, 2021Sliding Doors: The Day US Democracy Almost Died
Sunday, January 10th, 2021Sunday January 10, 2021. It is now four days since the January 6 mob attack on the US Congress which President Donald Trump incited. In a manner akin to a combat situation, the numbness induced by the overwhelming nature of the event is giving way to shock and anger. What is also becoming clear is just how close US democracy came to dying.
Sliding Doors
The film Sliding Doors begins with two different scenarios in which the course of the main protagonist’s life depends on whether or not she catches the subway by seconds. The events of January 6 have a Sliding Doors quality to them.
It now seems the attack has backfired for Trump and turned into a political fiasco. That fiasco resonates with Adolf Hitler’s failed 1923 Munich Beer Hall putsch (German for coup) – though lest we get carried away, let us not forget Hitler returned and took power ten years later, and we all know what followed.
Hitler’s failed Munich putsch is one scenario. The other scenario is the Bolshevik Party’s sudden seizure of power in St. Petersburg, Russia in October 1917. That coup succeeded and launched a totalitarian dictatorship that was to last almost seventy-five years.
It is easy to imagine a scenario in which Trump’s mob had been better organized and more ruthless, and in which they had seized Congress and summarily executed Democratic Senators and House members – along with Senator Mitt Romney, who has been heroic in his opposition to Trump. That would have left a rump majority of willing accomplice Republicans, plus a smaller group of Vichyssoise Republicans who meekly towed the line.
(more…)Obamacare With a Public Option: Fool Me Twice Shame on Me
Tuesday, March 3rd, 2020There is an old saying “Fool me once shame on you, fool me twice shame on me.” That saying is relevant for the current healthcare debate in which former Vice-President Biden and elite Democrats are touting a reheated version of Obamacare with a public option. It is a case of trying to fool the American public twice.
Adding an Obamacare public option will not solve the healthcare problem. Worse yet, it misses an historic opportunity to heal the festering wound of healthcare via a single-payer system as proposed by Senator Bernie Sanders.
(more…)Bernie Sanders: Nothing to Fear Except Fear Itself
Tuesday, February 18th, 2020“The only thing we have to fear is fear itself.” Eighty-seven years ago those were the words of Franklin Delano Roosevelt in his 1933 inaugural speech. Today, they resonate with Senator Bernie Sanders’ presidential campaign, which confronts a barrage of attack aimed at frightening away voters.
Fear is the enemy of change and the friend of hate. That is why both sides of the political establishment are now running a full-blown campaign of fear-mongering against Sanders.
The Democratic Party establishment likes the economy the way it is and wants to prevent change. Donald Trump and the Republicans have made themselves the party of hate. Both therefore have an interest in promoting fear, which explains the strange overlap in their attacks on Sanders.
(more…)A Stock Market Boom is Not the Basis of Shared Prosperity
Wednesday, January 22nd, 2020The US is currently enjoying another stock market boom which, if history is any guide, also stands to end in a bust. In the meantime, the boom is having a politically toxic effect by lending support to Donald Trump and obscuring the case for reversing the neoliberal economic paradigm.
For four decades the US economy has been trapped in a “Groundhog Day” cycle in which policy engineered new stock market booms cover the tracks of previous busts. But though each new boom ameliorates, it does not recuperate the prior damage done to income distribution and shared prosperity. Now, that cycle is in full swing again, clouding understanding of the economic problem and giving voters reason not to rock the boat for fear of losing what little they have. READ MORE
The economics of negative interest rates: editors’ introduction
Thursday, December 19th, 2019Thomas Palley, Louis-Philippe Rochon, Guillaume Vallet , Review of Keynesian Economics, April 2019.
The Great Recession (2008/9) triggered by the financial crisis of 2008 has had considerable impact on the conduct of monetary policy. Before the recession, monetary policy was largely based on a New Consensus-type macroeconomic model and it targeted inflation via a Taylor interest rate rule. The belief was that policy engineered changes in real interest rates had strong and predictable effects on output and inflation.
Based on that understanding, in the immediate wake of the financial crisis, central banks were quick to lower their policy interest rate to zero or near-zero. The expectation was for a speedy and robust V-shaped recovery, an expectation which was reflected in Federal Reserve Chairman Ben Bernanke’s comments in March 2009 about seeing “green shoots” of economic recovery.
When that V-shaped recovery failed to materialize, expectations shifted to a U-shaped recovery, and then in turn morphed into L-shaped recovery and talk of secular stagnation. READ MORE
Central Bank Independence: A Rigged Debate Based on False Politics and Economics
Saturday, September 7th, 2019The case for central bank independence is built on an intellectual two-step. Step one argues there is a problem of inflation prone government. Step two argues independence is the solution to that problem. This paper challenges that case and shows it is based on false politics and economics. The paper argues central bank independence is a product of neoliberal economics and aims to institutionalize neoliberal interests. As regards economics, independence rests on a controversial construction of macroeconomics and also fails according to its own microeconomic logic. That failure applies to both goal independence and operational independence. It is a myth to think a government can set goals for the central bank and then leave it to the bank to impartially and neutrally operationalize those goals. Democratic countries may still decide to implement central bank independence, but that decision is a political one with non-neutral economic and political consequences. It is a grave misrepresentation to claim independence solves a fundamental public interest economic problem, and economists make themselves accomplices by claiming it does. [READ MORE]
Macroeconomics vs. Modern Money Theory: Some Unpleasant Keynesian Arithmetic and Monetary Dynamics
Thursday, April 4th, 2019The last decade has witnessed a significant revival of belief in the efficacy of fiscal policy and mainstream economics is now reverting to the standard positions of mid-1970s Keynesianism. On the coattails of that revival, increased attention is being given to the doctrine of Modern Money Theory (MMT) which makes exaggerated claims about the economic costs and capability of money-financed fiscal policy. MMT proponents are now asserting society can enjoy a range of large government spending programs for free via money financed deficits, which has made it very popular with progressive policy activists. This paper examines MMT’s assertion and rejects the claim that the US can enjoy a massive permanent free program spree that does not cause inflation. It also shows the proposed MMT fiscal program entails economically implausible debt and money supply dynamics that will likely trigger financial instability. READ MORE
The Fracturing of Globalization: Implications of Economic Resentments and Geopolitical Contradictions
Tuesday, January 15th, 2019The last forty years have witnessed a third wave of globalization which can be termed “neoliberal globalization”. Now, there are indications that the era of neoliberal globalization might be drawing to a close, as evidenced by the trade war between the US and China. This paper argues the fracturing of neoliberal globalization reflects the growing impact of economic resentments and geopolitical contradictions. The paper presents a simple analytical framework that constructs the global economy in terms of a core consisting of the US, China, and the EU. It then examines how globalization creates economic resentments and geopolitical tensions within and between members of the core, thereby fracturing globalization. The rise of US – China geopolitical competition promises to twist the character of the global economic order, which stands to be shaped by strategically motivated economic integrations and recalibrations rather than generalized global economic integration. The paper then extends the analysis to non-core country blocs and examines how they are impacted by globalization and the rise of US – China geopolitical competition. READ MORE
Job Guarantee Programs: Careful What You Wish For
Friday, September 14th, 2018Some progressive economists are now arguing for the idea of a Job Guarantee Program (JGP), and their advocacy has begun to gain political traction. For instance, in the US, Bernie Sanders and some other leading Democrats have recently signaled a willingness to embrace the idea.
In a recent research paper I have examined the macroeconomics of such a program. Whereas a JGP would deliver real macroeconomic benefits, it also raises some significant troubling economic and political economy concerns. Those concerns should be fully digested before a JGP is politically embraced.