Links. ´Huh?´!, the loneliness of mainstream economics, the draft, madmen in Brussels and job growth and transfers to Euro banks
- Dingemanse, M., Torreira, F., & Enfield, N. J. say they will hold the shortest speech ever when they receive their Ignoble price for the article ´Is “Huh?” a universal word? Conversational infrastructure and the convergent evolution of linguistic items. PLOS ONE, 2013, 8(11): e78273. (pdf)
- According to ´thank you´s´ in books titled ´Heterodox macroeconomics´ and this website Arjun Jayadev and Josh Mason can be called ´heterodox economists´. But are they? Or, to rephrase this question in an awkward way, are ´heterodox´ economists really the heterodox ones? Their article `Fisher Dynamics” in US Household Debt, 1929-2011.” American Economic Journal: Macroeconomics, 6(3): 214-34.is about the influence of debt service on net macro indebtedness of households. Interestingly, the Bank of International Settlements publishes comparable research, look here and here., using comparable data and methods to answer somewhat comparable questions. It increasingly looks as if ´mainstream´ economics with its blind eye for debt )which is opening a little, but only a little) is becoming more and more isolated and ´heterodox´.
- There is a backlash against neoliberal policies. One of the signs of this is the reintroduction of the draft in LIthuania. Yes, the abolishment of the draft in many countries in the eighties was a victory for neoliberal policies. Extend the labour market to the army! Look here for an article of J.D. Singleton about the pivotal role of (of course) MIlton Friedman in the debate about abolishing the draft
– Friedman´s arguments were clearly neoliberal. Interestingly, Hayek and Mises were against abolishing it while John K. Galbraith and Kenneth Boulding were in favor.
- Frances Coppola about the madmen in authority in Brussels. It´s worse than you think.
- In the second quarter, before madmen closed the banks, Greece had the second highest job growth rate of the EU. The number of jobs diminished fastest in Finland.
- The ECB calculated the amount of money transferred by governments to European banks. Quite a lot, though there are large differences between countries. An annoying thought – such transfers do not add to the total flow of spending and income but they do increase the budget deficit and government debt. Which means that they directly lower the multiplier not of extra government spending but of additional spending as measured by the change of the government deficit. As far as I know, not all studies estimating the impact of austerity on GDP take account of this. An excerpt
ECB Economic Bulletin, Issue 6 / 2015 – Articles
General government debt in the euro area increased by 4.8% of GDP over the period from 2008 to 2014 owing to financial sector assistance…The debt increase as a result of financial sector support corresponds to less than one-fifth of the increase in government debt over the same period … The debt impact of financial sector support varied considerably across countries. Financial sector support led to a substantial increase in government debt of around 20% of GDP in Ireland, Greece, Cyprus and Slovenia. It also had a high impact in Germany, especially owing to measures taken at the onset of the crisis, and in Austria and Portugal, mainly as a result of more recent interventions. By contrast, government debt in Italy and France was hardly affected by financial sector support. Compared with past financial crises in advanced economies, the deterioration in euro area government finances was worse, despite a similar amount of financial sector assistance. According to a recent study from the International Monetary Fund (IMF), which measured the fiscal costs of 60 systemic banking crises between 1970 and 2011, the median increase in overall government debt was around 12% of GDP, of which 7 percentage points were accounted for by the direct fiscal costs of financial sector support.
Regarding the recent crisis (2007-11), the IMF analysis looks at a sample of 25 systemic banking crises, mainly involving advanced economies. The median increase in government debt was 18% of GDP, of which 4.2 percentage points were due to direct fiscal costs, compared with an increase in government debt for the euro area of almost 22% of GDP, of which only 4.6 percentage points were explained by direct financial sector support. These differences suggest that the indirect macroeconomic costs of the financial crisis in the euro area have been even more pronounced compared with previous systemic banking crises.