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What comes next?

July 31, 2015 5 comments

from David Ruccio

The other day, I expressed my doubts about Paul Mason’s arguments about postcapitalism. But others see his argument in a much more positive light, including some friends of mine, Jenny Cameron, Katherine Gibson, and Stephen Healy [ht: sk].

They, too, however, assert that “technology does not in and of itself guarantee a better future.” What are needed, and which they see emerging in the midst of capitalism today, are “explicit ethical commitments that are developed independent of online apps and cyber networks.”

Technology is augmenting relations of care for others. Technology does not bring these relations into being.

In our research on the diverse economic practices that exist outside the purview of mainstream economics, we find people are forging new types of economies around six ethical concerns:

  • What do we need to survive well?
  • What happens to surplus, or what is left over after our survival needs have been met?
  • How do we act responsibly to those whose inputs help us to survive well (whether other people or the environment)?
  • How much and what do we consume in order to survive well?
  • How do we care for the commons – the gifts of nature and intellect that we rely on?
  • How do we invest so that future generations can also live well?

Read more…

Categories: Uncategorized

The guessing game

July 27, 2015 4 comments

from David Ruccio

12wage

Read more…

Categories: The Economy

Children don’t count

from David Ruccio

children

Certainly not in the United States.

According to the most recent study by the Annie E. Casey FoundationRead more…

Categories: The Economy

Devil’s dung

July 15, 2015 2 comments

from David Ruccio

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Pope Francis’s recent references to money as the “dung of the devil” (or, alternatively, the “devil’s dung“) brought to mind lots of different references (from the etymology of dung in terms of different classes of workers to Freud’s tale of the devil whose gifts of money turn to excrement upon his leaving). Read more…

Categories: ethics

USA 1933 vs. Greece 2013 (3 graphs)

from David Ruccio

GDP Read more…

Categories: Greece

Child poverty and severe material deprivation in Greece 2008 and 2012 (2 tables, UNICEF report)

July 10, 2015 4 comments

from David Ruccio

child poverty

Is there any statistic more illustrative of the nature of contemporary capitalism—especially the effects of the global financial crash and of the so-called recovery—than the rate of child poverty?

According to the most recent UNICEF report (pdf), Read more…

Categories: Greece

An inconvenient historical truth

from David Ruccio

Thomas Piketty, in an interview with the German newspaper Die Zeit, is the latest to recognize an inconvenient historical truth: in 1953, Germany was able to negotiate a large (50-60-percent) reduction in its outstanding foreign debt (owed to many countries, including Greece).

ZEIT: So you’re telling us that the German Wirtschaftswunder [“economic miracle”] was based on the same kind of debt relief that we deny Greece today?

Piketty: Exactly. After the war ended in 1945, Germany’s debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece. Instead, both of our states employed the second method with the three components that I mentioned, including debt relief. Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.

Read more…

Categories: Greece

What exactly is all this productivity for?

June 16, 2015 4 comments

from David Ruccio

image01

It’s a story that could have appeared in the pages of George Packer’s magnificent book, The Unwinding: An Inner History of the New America. Or from the pen of Molly Ivins—which is good, since Esther Kaplan was recently awarded the 2015 MOLLY National Journalism Prize for her article, “Losing Sparta: The Bitter Truth Behind the Gospel of Productivity” [ht: bn].  Read more…

Beyond “antibiotic and rat poison”

June 11, 2015 3 comments

from David Ruccio

There is something fundamentally unstable—and ultimately dangerous—about the liberal critique of austerity.

Consider the recent essay on “The Economic Consequences of Austerity” by Amartya Sen. On one hand, he correctly criticizes the austerity effects associated with the deficit-cutting measures that have been imposed in Western Europe in the years following the crash of 2007-08 (and reminds readers of Keynes’s critique of the austerity measures the Allied Powers were threatening to impose on Germany in the Treaty of Versailles).

But then Sen accepts, without any further argument, the need for “real institutional reform” in Europe: “from the avoidance of tax evasion and the fixing of more reasonable retiring ages to sensible working hours and the elimination of institutional rigidities, including those in the labour markets.”

In other words, Sen is attempting to distinguish between the “antibiotic” of institutional reform and the “rat poison” of austerity. Read more…

A beautiful idea?

from David Ruccio

What most of my students know about  and game theory (at least before sitting through my two or three lectures on the topic or taking an entire course in game theory) they derived from the film, A Beautiful Mind, and the stupid example used to illustrate game theory in the film (of a blond woman walking into a bar).

As Kenneth Chang explains, the episode in the film is not an example of a Nash equilibrium. Read more…

The fetishism of mathematics

from David Ruccio

I am tempted, in response to Paul Romer, to paraphrase the Old Moor: “The use of mathematics in economics appears, at first sight, a very trivial thing, and easily understood. Its analysis shows that it is, in reality, a very queer thing, abounding in metaphysical subtleties and theological niceties.”

The last time I had the occasion to comment on Romer’s work was in reaction to the neoclassical colonialism of his proposal for “charter cities” in poor countries. Now, in a desperate bid to save the last vestiges of so-called endogenous growth theory, Romer has gone on the attack against what he calls “mathiness” in contemporary growth theory.

What is mathiness? Read more…

Economics and the value of art

from David Ruccio

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Neoclassical economists don’t have a lot to say about the value of art. Read more…

Equality and efficiency in retrospect (3 graphs)

from David Ruccio

I remember my dismay, when I first began teaching economics, how enthralled my colleagues (at least the liberal ones) were with Arthur Okun’s notion of the fundamental tradeoff between equality and efficiency (which they supplemented with John Rawls’s theory of justice). No critique of capitalism, no critique of political economy. They believed the democratic process would find the appropriate balance between market efficiencies and nonmarket interventions to create greater equality.

I was never happy with the idea of such a tradeoff (or, for that matter, with the veil of ignorance), because it was based on denying the fundamental injustice embedded in a capitalist economy—the appropriation and distribution of a surplus produced by the majority for the benefit of a tiny minority at the top. And no amount of celebrating the supposed efficiencies of capitalist markets (which, for the most part, were simply assumed) or tinkering with the distribution of income (with tax-based redistribution) was going to fix that. Read more…

Categories: Uncategorized

A one-chart summary of changes in United States income distribution from 1913 to 2012

April 21, 2015 1 comment

from David Ruccio

Bui

Here, in one chart (by Quoctrung Bui), is a summary of changes in the distribution of income from the early-twentieth century (1913) to the present (2012) in the United States.  Read more…

Categories: income redistribution

Ben Bernanke: The revolving door between Wall Street and U.S. government agencies continues to revolve.

April 19, 2015 5 comments

from David Ruccio

Apparently, the door between Wall Street and the U.S. government agencies in charge of regulating Wall Street continues to revolve. Former Federal Reserve chair Ben Bernanke is the latest to walk through the door.  Read more…

Categories: corruption, ethics

Chart – Every decile of the Greek population has lost since the crash

April 15, 2015 2 comments

from David Ruccio

Greece

According to the data in the chart by Max Roser, Brian Nolan, and Stefan Thewissen, every decile of the Greek population lost ground after the global financial crash and austerity measures were imposed in that country.

Read more…

Categories: Greece

It’s a wonderful life?

April 12, 2015 1 comment

from David Ruccio

Harvard economics professor Sendhil Mullainathan is worried that too many of his students are taking jobs in finance. He should be worried for other reasons, too.

Mullainathan’s concern stems from the idea that much of the activity in the financial sector involves “rent-seeking”:

Instead of creating wealth, rent seekers simply transfer it — from others to themselves. . .

The economists Eric Budish at the Booth School of Business and Peter Cramton at the University of Maryland, and John J. Shim, a Ph.D. candidate at Booth, have shown in a study how extreme this financial gold rush has become in at least one corner of the financial world. From 2005 to 2011, they found that the duration of arbitrage opportunities in the Chicago Mercantile Exchange and the New York Stock Exchange declined from a median of 97 milliseconds to seven milliseconds. No doubt that’s an achievement, but correcting mispricing at this speed is unlikely to have any real social benefit: What serious investment is being guided by prices at the millisecond level? Short-term arbitrage, while lucrative, seems to be mainly rent-seeking.

This kind of rent-seeking behavior is widespread in other parts of finance. Banks sometimes make money by using hidden fees rather than adding true value. Debt collection agencies may use unscrupulous practices. Lenders to poor people buying used cars can make profits with business models that encourage high rates of default — making money by taking advantage of people’s overconfidence about what cars they can afford and by repossessing vehicles. These kinds of practices may be both lucrative — and socially pernicious.

Read more…

Categories: exploitation

According to the Wall Street Journal takeovers are booming.

April 11, 2015 3 comments

from David Ruccio

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According to the Wall Street Journal, Read more…

Categories: The Economy

Conspicuous construction

March 27, 2015 1 comment

from David Ruccio

skyline

The high times aren’t going away in New York.

The city of just six years from now will be dramatically taller, with a series of luxury high-rises towering above Central Park, a new West Side development and downtown spires.

Read more…

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