Communist revolutionary Che Guevara rapidly became an inspirational figure for revolutionary socialist change after his execution in Bolivia in 1967. Forty years later, Che lives on but his image now adorns t-shirts that have become popular fashion statements. This transformation reflects the extraordinary power of markets to capture and transform, turning an avowed enemy of the market system into a profit opportunity. (more…)
Archive for the ‘Economics’ Category
The Capture of Keynesianism
Monday, April 14th, 2008Demythologizing Central Bankers and the Great Moderation
Wednesday, April 2nd, 2008It is often said that the winners get to write history, which matters because the way we tell history frames our understandings. What is true for general history also holds for economic history, and the way we tell economic history affects our expectations and aspirations for the economy. (more…)
Preventing a Financial Crash
Monday, March 17th, 2008With the collapse of Bear Stearns, financial markets are moving closer to a crash that risks grave harm to the economy and the lives of working people. The Federal Reserve’s recently created Term Auction Facility (TAF) and Term Securities Lending Facility (TSLF) move policy in the right direction. However, more needs to be done if a crash is to be prevented. (more…)
Breaking the Neoclassical Monopoly in Economics
Thursday, February 7th, 2008For the past 25 years, the so-called “Washington Consensus†– comprising measures aimed at expanding the role of markets and constraining the role of the state – has dominated economic development policy. As John Williamson, who coined the term, put it in 2002, these measures “are motherhood and apple pie, which is why they commanded a consensus.†(more…)
Don’t Bet Against the Dollar
Wednesday, December 12th, 2007The global economy runs on the dollar, and that isn’t about to change. Today the world’s central banks hold about two thirds of their reserves in U.S. dollars. Most commodities are priced in American currency, and much of world’s trade is invoiced in dollars as well. The dollar is the lifeblood of the international system. (more…)
Through the Looking Glass: Saving Glut or Demand Shortage
Wednesday, November 7th, 2007The old saying is that “If you only have a hammer everything looks like a nailâ€. For economists, the hammer is “saving†and a host of problems are reduced to questions of saving. Nowhere is this clearer than discussions of the U.S. trade deficit and global financial imbalances, which are often explained as a saving problem. Unfortunately, this focus on saving distorts understanding and distracts from the real challenge of creating mass consumption markets in developing countries. (more…)
Exchange Rates: There is a Better Way
Wednesday, October 31st, 2007The world economy is poorly served by the current system of exchange rates. That system has contributed to today’s global financial imbalances, which are widely viewed as posing significant economic risk. These imbalances have also created political tensions between countries over how to adjust them, and within countries over job losses. Exchange rates matter more than ever under globalization, which means the world needs a better system. (more…)
Triangular Trouble: the Euro, the Dollar and the Renminbi
Monday, October 15th, 2007For the last several years the euro has been appreciating steadily against the U.S. dollar. Given the Chinese renminbi and other East Asian currencies are pegged to the dollar that means the euro has been appreciating steadily against all. This spells trouble for Euroland, and it suggests European policymakers should join with the U.S. to address the global problem of under-valued currencies. (more…)
The Flaws in Rubinomics
Tuesday, October 9th, 2007With Senator Hillary Clinton firmly cemented as the front-runner for the Democratic Party’s nomination, Rubinomics—named after former Treasury Secretary Robert Rubin, who shaped economic policy under President Clinton—has re-emerged as a critical issue. This is because Senator Clinton has firmly embraced it. Rubinomics rests on faulty economics and embodies bad politics. Progressive Democrats and the nation need to understand this. Here’s an explanation. (more…)
Jack Welch’s Barge: The New Economics of Trade
Monday, October 1st, 2007The classical theory of comparative advantage has driven US trade policy for the past fifty years. That policy, in combination with technical innovations that have lowered costs of transportation and communication, has opened the global economy. Yet paradoxically, this opening has rendered classical trade theory obsolete. That in turn has left the US economically vulnerable because its trade policy remains stuck in the past and based on ideas that no longer hold. (more…)