Archive for October, 2011

Supercommittee of the One Percent Won’t Even Think of Taxing Wall Street

October 31, 2011 8 comments

from Dean Baker

If anyone still questioned who owns Washington, the congressional supercommittee charged with reducing projected deficits by $1.2 trillion seems determined to end any doubts. According to press accounts, both the Republicans and Democrats on the committee support a plan to reduce average Social Security benefits by 3 percent.

While whacking our parents and grandparents with a big cut in Social Security benefits apparently draws bipartisan support, the supercommittee will not even score a plan to tax Wall Street financial speculation.  Read more…

Four questions about David Ricardo (and his times)

October 31, 2011 6 comments

from Merijn Knibbe

One of the economists who keeps popping up on this blog as well as in the Real World Economics Review is David Ricardo. And he, or at least his ideas, get a bad press. Is that right? Maybe not entirely… but look for yourself. I’ve made a little examination Ricardo-ology with four questions (each 25 points, you will have to do the grading yourself).

Question 1. Read the two parliamentary speeches (June 1822) of Ricardo, below, carefully and answer the next question: do you think that this man might have been sympathetic towards the ‘Occupy Wall Street’ people? Read more…

“Politburo of correct economic thinking”

October 30, 2011 6 comments

In the new issue of Twill, which is devoted to economics, James Galbriath has an article on the intellectually and morally appalling state of the economics profession.  His article’s conclusion begins with a passage (in italtics) from an article that he wrote eleven years ago.

Leading active members of today’s economics profession… have formed themselves into a kind of Politburo for correct economic thinking. Read more…

Greg Mankiw gets it wrong on the US budget

October 30, 2011 1 comment

from Dean Baker

Mankiw told readers that:

“to maintain current levels of taxation, we will need to substantially reduce spending on the social safety net, including Social Security, Medicare, Medicaid and the new health care program sometimes called Obamacare.”

Actually, all we in the US have to do is to fix our private health care system.  Read more…

Beyond self-interest

October 29, 2011 8 comments

from David Ruccio

What’s the alternative to an economy based on self-interest?

As it turns out, two different proposals to move beyond self-interest, both related to the Occupy Wall Street movement, crossed my desk at the same time.

The first, by Stephen Healy and Boone Shear [ht: gh], is based on the idea that economic relations based on self-interest are only one possibility among many. The problem is, Read more…

Weekend Round Up

October 29, 2011 Leave a comment

from Peter Radford

It’s been a busy week. Particularly for sundry European leaders. Here’s a few suggestions for your consideration over the weekend.

Are stock markets really that stupid?

The extraordinary jump in the world’s various bourses at first sight of the Euro “solution” was out of proportion to the likely success of said solution. Actually it isn’t really a solution at all. Read more…

The global wealth pyramid

October 28, 2011 10 comments

from David Ruccio

The unequal distribution of global wealth by individuals (not countries) should give us pause. Even the Wall Street Journal is impressed:

Here’s another stat that the Occupy Wall Streeters can hoist on their placards: The world’s millionaires and billionaires now control 38.5% of the world’s wealth.

How do we know? Because Credit Suisse has just published the second edition of its Global Wealth Report, in which they calculate the distribution of the world’s total wealth. Read more…

Why Steve Keen is even more right than he thinks

October 28, 2011 7 comments

From Merijn Knibbe

According to Steve Keen quite a few academic economists do not agree with him that (changes in) debt matter, for changes in demand:

“even after showing empirical evidence on the impact that rising and then falling private debt had on the economy both now and during the Great Depression, I couldn’t convince several of the academics in the audience of the importance of private debt: they kept coming back to “one person’s debt is another person’s asset, therefore the level of debt doesn’t matter”.  Read more…

The upward redistribution of income in the United States 1979 to 2007

October 27, 2011 4 comments

from David Ruccio

If it wasn’t clear before it should be now: the distribution of income in the United States has become increasingly unequal over the course of the past three decades.

It is increasingly unequal based on “market incomes,” and it is only slightly less increasingly unequal after taking consideration transfers and taxes. The result in both cases is that the distribution of income in the United States has become grotesquely unequal.  Read more…

George Monbiot Seminar

October 27, 2011 27 comments

from Steve Keen

This is the link to video of the seminar I gave in Oxford earlier this month that The Guardian‘s George Monbiot attended. George then wrote the feature “It’s in all our interests to understand how to stop another Great Depression“, which briefly propelled the new edition of Debunking Economics to No. 89 on Amazon UK‘s Bestseller list.  Read more…

Thoughts on The Ethics Of Economics

October 27, 2011 10 comments

from Peter Radford

Allow me to offer an ill tempered tirade:

Medicine has its famous injunction: first do no harm. Economics ought to abide by that rule too. It is a massive evasion of responsibility for the profession to continue to plod along as if a few hundred more earnest papers will do the trick. They won’t. The error is profound. It is deep. It is decisive. Economists everywhere: stop what you are doing. Stop researching. Stop teaching. Stop advising. Stop writing. And above all stop pontificating. There are no clothes on this particular emperor, and it is high time we admitted as much. So, instead of all those activities, consider this: what are you doing to rehabilitate economics? Now. Not tomorrow.

I found this comment, by a non-economist, buried deep in a Krugman blog post about the effect of wage cuts: Read more…

USA going down

October 26, 2011 6 comments

from David Ruccio

In the United States the average worker’s pay was up last year but the situation of the average worker got worse.


As David Cay Johnston explains,

There were fewer jobs and they paid less last year, except at the very top where, the number of people making more than $1 million increased by 20 percent over 2009.

In other words, median pay fell (again) in 2010, by 1.2 percent, to $26,364. While the number of Americans with any work fell (again) last year, down by more than a half million from 2009 to less than 150.4 million.  See the chart. Read more…

The State of Everything

October 26, 2011 3 comments

from Peter Radford

I have been mightily diverted by technological and personal matters recently and so am struggling to catch up. As I do so one theme has stood out: exhaustion. We are exhausted. Morally, intellectually, politically, and every other way. We seem to have fought our way into a state of enforced lassitude within which we can no longer even imagine progress. We are suffering from a form of trench warfare. Our leaders are exposed as inept. Brilliantly educated, earnest, well informed, and well intentioned. They are inept. So much for all those advanced degrees and professional qualifications. In our hour of need they amount to not much more than paper. Those achievements are nice to hang on walls to remind us of the hours spent poring over books in the library, or yawning through interminable, and marginal, classes on subjects no one but the professors were interested in, but they don’t appear to guarantee solutions to actual economic problems.

The state of everything is a mess.  Read more…

Trichet’s Rein at the ECB: No Party for Europe

October 26, 2011 3 comments

from Dean Baker

Jean Claude Trichet will be retiring as head of the European Central Bank at the end of the month. He will step into retirement having wreaked the sort of destruction on the European economy that hostile powers can only dream about. Tens of millions of people across the eurozone countries are unemployed or underemployed because of his mismanagement of Europe’s economy. Meanwhile the world teeters on the brink of another financial crisis because of the ECB’s failure, along with the IMF, to effectively address the sovereign debt crisis. Most incredible of all, Trichet probably thinks he has done a good job. Read more…

Celebrity economists embrace Occupy Wall Street: Krugman, Sachs, Stiglitz and Co.

October 25, 2011 7 comments

from Edward Fullbrook

Paul Krugman, Jeffrey Sachs, Robert Reich, Joseph Stiglitz, and Jeff Madrick have all either gone to the Financial District in New York Cityand embraced OWS or written favourably about it.

Stiglitz and Madrick were there on Saturday and below is their dialogue using the people’s mic in front of the protesters.  Read more…

A Plutonomy and a Précarité

October 25, 2011 3 comments

from Edward Fullbrook

At 83, Noam Chomsky was in top form on Saturday when speaking to thousands of the 99% demonstrating at Dewey Square in Boston. His topics included economics and plutonomy.  Here are some highlights.

On economics:
What’s being played out for the past 30 years is actually kind of a nightmare that was anticipated by the classical economists. Read more…

Why Poland and Sweden escaped the crisis, to an extent, and some other Baltic states didn’t

October 25, 2011 Leave a comment

from Merijn Knibbe

Introduction: the real lesson of the graphs below is that ‘investment booms’, induced by large flows of (international) capital, have to be prevented.  And they can be prevented. Poland seems to have managed this by having an ‘outdated’ financial system, which disabled the free flow of foreign capital (and yes, according to graphs 2 and 3 a land tax might help, too).

Paul Krugman recently Read more…

Southern European workers versus Northern European workers: 5 charts

October 24, 2011 1 comment

from David Ruccio

Are Greeks and southern Europeans lazy free-loaders who deserve the austerity measures currently being imposed on them by their governments and European creditors?

That’s certainly the story that circulates, even among many otherwise right-minded individuals. But Kash Mansori has run the numbers and that’s now what he discovered. Read more…

Argentina’s economic success is key to presidential election

October 24, 2011 4 comments

from Mark Weisbrot

As expected, Cristina Fernández de Kirchner won re-election as President of Argentina in a landslide victory yesterday, despite having faced hostility from the media for most of her presidency, and from many of the most powerful economic interests in the country. So it might be a good time to ask why this might happen. Read more…

Break up the banks

October 24, 2011 4 comments

from Peter Radford

Before they break us up. Again.

I have stayed away from discussing the banks in recent months largely because I consider the solution to our banking problems to be self evident. They’re too big. Make them smaller. Arcane debates over capital ratios, naked CDS prohibitions and other bureaucratic responses are all small fry and akin to re-arranging deck chairs. The chairs are just fine. It’s the Titanic we need to worry about.  Read more…