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Archive for February, 2011

10 reasons why not a single financial executive has gone to jail.

February 28, 2011 7 comments

from Edward Fullbrook

Last night in Hollywood, Charles Ferguson’s acceptance speech for winning the Oscar for best documentry began:

“Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong.”

In a recent Aljazeera  article, Danny Schechter, author of The Crime of Our Time, offers 10 reasons why not a single financial executive has gone to jail.  One of them pertains directly to the economics profession. Read more…

Economic Errors

February 28, 2011 5 comments

from Peter Radford

That the discipline called economics is in a bit of a mess is beyond dispute. That is has taken this long for many of its leading lights to come down from their respective mountain tops and admit so is, frankly, a scandal, but not surprising given the enormous prestige and ego reinforcing power attaching to being an nationally renowned economist. The top players represent the apex of a deep and loyal band determined to defend their position stoutly in the face of periodic insurrection in the ranks. That way they can ensure the perks flow to the loyal troops. This much we all know, and our knowledge simply tells us that economics is much like any other trade. Insular, defensive, conservative, and self-regarding. Read more…

A model makers’ Hippocratic Oath

February 26, 2011 5 comments

from Edward Fullbrook

Recently an article by Emanuel Derman and Paul Wlmott appeared in Bloomberg Businessweek which begins:

Whirring away at the center of the mortgage meltdown that prompted the current crisis were those theoretical constructs known as financial models. Read more…

Why do “free traders” never talk about free trade when the losers are likely to be people like them?

February 26, 2011 3 comments

from Dean Baker 

David Leonhardt is one of his country’s more thoughtful economic columnists who often has insightful pieces in his columns at the NYT. This makes his interview with two economists who recently wrote a book on college costs even more disturbing. He doesn’t ask the tough questions.  Read more…

Categories: Political Economy

“My name is Brad DeLong.”

February 25, 2011 12 comments

A post went up yesterday on The Berkely Blog consisting of the transcript of a presentation, “What have we unlearned from our Great Recession?”, that Brad DeLong gave Jan 07, 2011 at the American Economic Association Meetings.  It begins:

My role here is the role of the person who starts the Alcoholics Anonymous meetings.

My name is Brad DeLong.

I am a Rubinite, a Greenspanist, a neoliberal, a neoclassical economist.

I stand here repentant. Read more…

25 graphics showing upward redistribution of income and wealth in USA since 1979

February 25, 2011 13 comments

from David Ruccio

I assemble a presentation on inequality on a regular basis for my Principles of Microeconomics course. Here are links to the latest one, from Fall 2010, as a pdf document, a Powerpoint presentation, and a Quicktime movie.

The following are some other representations of inequality (please feel free to send me additional ones):

Read more…

Categories: Political Economy

Reflections on the “Inside Job”

February 24, 2011 12 comments

from Peter Radford

It’s depressing to watch the movie “Inside Job” simply because it is true. Shockingly true. It is also interesting to watch the comments come in from Europe where the movie is just now playing. I wonder whether it will alter public opinion of America. It should.

The American economic policy elite, by which I mean the academics, politicians, and business leaders that comprise it, is shamefully inadequate. In my more extreme moments I would call them irretrievably corrupt.  Read more…

Common ground with Republicans: Nix NSF funding for economics

February 24, 2011 Leave a comment

from Dean Baker

One of the items on cut list for House Republicans is the National Science Foundation (NSF). They want to cut $150 million, or 2.2 percent, from its 2010 budget for the current fiscal year.

This should be a place where progressives can find common ground with Republicans. Virtually no economists could see the $8 trillion housing bubble whose collapse wrecked the economy. Recognizing the bubble required nothing more than knowledge of the basic arithmetic that most of us learned in the third grade. There was no excuse for someone who does economics for a living to have failed to see the bubble and recognize its danger. Read more…

Graph of the week: US Employment to Population Ratio 1948-2011

February 23, 2011 15 comments

from Edward Fullbrook

The dramatic long-term increase of the US EPOP beginning in 1976 resulted mainly from the success of the Women’s Liberation Movement.  But what accounts for its even more dramatic 10-year and still ongoing decline from 2001?  How far down will it go?  When will it stop?  What could stop it?  Read more…

Meanwhile in Europe…(9). Increasing differences, increasing strains (or increasing labor flows?)

February 23, 2011 4 comments

from Merijn Knibbe

A chronicle

I. Regime change: May 1, a whole number of still existing labor mobility restrictions for inhabitants of new EU member states will be lifted 

II. Eurostat has published new data on GDP, industrial production, construction and unemployment. What’s happening?  Read more…

Categories: The Economy

Four important truths

February 22, 2011 2 comments

from Edward Fullbrook

There is a worth-reading review by Jonathan Kirshner of four books on financialization in the just-released current issue of the Boston Review.  Kirshner writes:

But the collective sigh of relief and overconfident pronouncements emanating from Wall Street and Washington obscure the fact that we have done little to avert an even worse crisis in the future. We may have stanched the bleeding, but the underlying disease—a culture, ideology, and political economy of uninhibited finance—remains. Indeed, by tiptoeing around the real issues we may ultimately make things worse.

The reviewed books are: Read more…

Wisconsin is, and is not, about the money

February 21, 2011 1 comment

from David Ruccio

Is the ongoing battle over Governor Walker’s proposal to eliminate public sector collective bargaining in Wisconsin about the money? It is and is not.

On one hand, it’s not. Paul Krugman sees it as all about power. Read more…

Categories: Political Economy

“The worst types, however, are academic economists who . . . “

February 21, 2011 7 comments

from Edward Fullbrook

Have you seen Inside Job yet?  I haven’t, but I probably will after reading its rave reviews yesterday in the UK Sundays. It has been nominated for best full-length documentary Oscar.  It is about the origins of the financial collapse and of the current economic crisis, and apparently identifies economists as being the primary villains. 

The film includes a telling of the moment when Larry Summers, Read more…

Graph of the week: World’s Liquid Fuels Supply

February 19, 2011 1 comment

This alarming graph comes from a report titled:  Read more…

Process

February 18, 2011 2 comments

from Peter Radford

I want to pick up on something David Ruccio argued a couple of days ago [Misleading “trade partners”]. If I understand him correctly he suggests that the concept of comparative advantage, a staple of orthodox economics since Ricardo, doesn’t work as advertised because it is based on the notion that exchange takes place between individuals and not between individuals and corporations. He argues that since corporations intercede, and therefore act as agents apart from the end users, they distort the outcome.

I think he has a case, at least in part. Read more…

What has Krugman been smoking?

February 17, 2011 6 comments

from Steve Keen

I have almost finished writing the second edition of Debunking Economics (to be published by Zed Books in September 2011), which (a) makes me particularly sensitive to the drivel neoclassical economists write and (b) in need of the occasional diversion when reading nonsense dressed up as science gets all too much.

So I have to thank Paul Krugman for feeding both needs at once, with a paper that has been just brought to my attention Read more…

Keynesian Coffee

February 16, 2011 10 comments

from Peter Radford

What is the difference between a neoclassical cup of coffee and a Keynesian cup of coffee? Answer: you can drink the latter and the former exists only in your mind.

This thought came to me this morning when I decided to test the vaunted market mechanism that my neoclassical friends so adore. They always distinguish between it and the version of a market I have in mind: it being pristine and akin to a Platonic pure form; mine being intensely mucky and debased due to its earthly uncertainty polluted existence. So my test was this: I expressed my preference very clearly for a cup of coffee. Then I waited for it to turn up. At my desk, which was something I also clearly included in my preference. And I waited.  Read more…

Brookings’ “Heckuva Job, Brownie” moment: Greenspan’s keynote address

February 16, 2011 8 comments

from Dean Baker

The Brookings Institution stands alongside Harvard, Yale and Princeton, among the nation’s elite intellectual institutions. This is why it so striking that it chose to invite former Federal Reserve Board Chairman Alan Greenspan to give the keynote address at a forum on reforming the home mortgage finance system last week.

It would be difficult to imagine a more disastrous failure than Alan Greenspan. Read more…

Misleading “trade partners”

February 15, 2011 2 comments

from David Ruccio

I am not enamored by the economics of Obama’s campaign of “Winning the Future” but the economic theory of Gregory Mankiw’s critique is, at best, misleading.

Obama wants us to see China and other economies as rivals to our own economic success. Therefore, we all need to become more competitive. Mankiw, for his part, disputes the idea of rivalry and wants us to see all trade as taking place between partners and therefore as mutually beneficial.

He begins with the misleading example of Read more…

The budget and other fiction

February 15, 2011 3 comments

from Peter Radford

Rule one of US budget watching: the President’s budget is never, never, worth the paper it is printed on. It is more of a suggestion. It is a helpful guideline to lay down the boundaries within which the President tries to negotiate with Congress. If that Congress is intransigent, as it is an a big way right now, then even that limited goal becomes futile.

So, with that grim preamble, what do we make of the Obama budget released this morning?  Read more…

Categories: Political Economy
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