Ultra sexism on online economics forum

from The Daily Californian (Berkeley)

A recent study on gender stereotypes in the anonymous online forum Economics Job Market Rumors, or EJMR, revealed what appears to be a hostile environment toward women in some circles of the economics field.

Recent campus graduate Alice Wu conducted the study as part of her senior thesis, using EJMR posts from 2014 to 2016. The focus of the study, according to Wu, was to “examine whether people in academia portray and judge women and men differently in everyday ‘conversations’ that take place online.”

Wu, an economics and applied mathematics double major, said in an email that she first learned about EJMR though friends interested in reading about prominent economists on the forum.

“I was very shocked when I saw the gender stereotyping remarks, given that its users are highly-educated graduate students in economics,” Wu said in her email.

Wu used her experience with text analysis from a campus machine learning course to identify and allocate gender classifiers in EJMR posts such as “he” and “she” as strongly predictive of male versus female subjects. Wu’s analysis found that the 30 words most indicative of a discussion about women, in order, were: “hotter,” “lesbian,” “bb,” “sexism,” “tits,” “anal,” “marrying,” “feminazi,” “slut,” “hot,” “vagina,” “boobs,” “pregnant,” “pregnancy,” “cute,” “marry,” “levy,” “gorgeous,” “horny,” “crush,” “beautiful,” “secretary,” “dump,” “shopping,” “date,” “nonprofit,” “intentions,” “sexy,” “dated” and “prostitute.”

The list of words with the strongest predictive power for males contained words more directly associated with economics and academics, including “adviser,” “Wharton,” “Austrian” — a school of economic thought — and “mathematician.” Nine out of the 30 words with the highest predictive power for men were directly related to economics, while almost none of the 30 words in the list for women were directly related to economics.
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The fall of the US middle class

from Steve Pressman

As the rich received a bigger piece of the pie, everyone else got relatively less. We can see this in the falling share of income going to the middle-three income quintiles (Figure 1).

An international financial architecture system to deal with persistent trade imbalances and any international financial crisis

from Paul Davidson

An international financial architecture system to deal with persistent trade imbalances and any international financial crisis can be developed to operate under the same economic principles laid down by Keynes at Bretton Woods. But this system does not require the establishment of a supranational central bank of the world as Keynes suggested in his “Keynes Plan” at Bretton Woods. Instead, this new international payment system is aimed at obtaining a more acceptable international agreement (given today’s political climate in most nations) that does not require any nation to surrender the nation’s control of either its domestic banking system or the operation of its domestic monetary and fiscal policies to a supranational authority. Each nation will still be able to use monetary and fiscal policies to determine the domestic economic destiny that is best for its citizens as long as it does not detrimentally affect employment and income earning opportunities in other trading partner nations.

What is required is a closed, double-entry bookkeeping clearing institution to keep the international payments “score” among the various trading nations plus some mutually agreed upon rules to solve the problems of persistent trade and international payment imbalances. It will also require an international agreement and a method to prevent international financial market transactions that can cause a financial market crisis that would be disruptive to the stability of any nation’s economy as well as a threat to the global economy.  

Disappearance of borrowers finally recognized after 2008

from Richard Koo

Until 2008, the economics profession considered this kind of contractionary equilibrium (the world of $500) brought about by a lack of borrowers to be an exceptionally rare occurrence—the only recent example was the Great Depression, which was triggered by the stock market crash in October 1929 and during which the US lost 46 percent of nominal GNP in the process described above. Although Japan fell into a similar predicament when its real estate bubble burst in 1990, its lessons were almost completely ignored by the economics profession until the Lehman shock of 2008.^[1]

Economists failed to consider the case of insufficient borrowers because when macroeconomics was developing as a separate academic discipline starting in the 1940s, investment opportunities for businesses were plentiful as new “must-have” household appliances ranging from washing machines to televisions were invented one after another. With businesses trying to start or expand production of these new products, there were plenty of borrowers in the private sector and interest rates were quite high, at least in comparison with the post-2008 world.  

Progressive mobilization in Europe

from Jayati Ghosh

Meetings of global leaders – such as recently occurred in the G20 meeting at Hamburg – increasingly have a ring of farce about them. The inability to come to agreement on pretty much anything of significance is leavened only by sideshows and media obsession with which global leader met with whom for how long, who sat in for which President at the “high table”, and similar trivia. Meanwhile, there is abject failure on the part of these leaders to recognize the pressing need for urgent and co-ordinated global action to solve so many current problems, ranging from the terrible state of the world economy to wars and conflicts, as well as the instabilities and inequalities created not just by the forces of globalization fostered by these same governments, but their own direct actions.

But such meetings sometimes have at least one positive outcome: they become the occasion for public mobilization and calls for action around the issues that really matter for most people, and thereby help in spreading ideas for a more positive policy agenda. In Hamburg, the second largest city in Germany with a long history of left groups and progressive movements, this was very much in evidence. For several days before the G20 Summit as well as during the official Summit, there were alternative gatherings, processions and protests that were dominantly peaceful and also thoughtful, imaginative and ultimately quite inspiring.  

“Less than 2 °C warming by 2100 unlikely”

from  Nature Climate Change 

Less than 2 °C warming by 2100 unlikely

Adrian E. Raftery, Alec Zimmer, Dargan M. W. Frierson, Richard Startz & Peiran Liu

The recently published Intergovernmental Panel on Climate Change (IPCC) projections to 2100 give likely ranges of global temperature increase in four scenarios for population, economic growth and carbon use¹. However, these projections are not based on a fully statistical approach. Here we use a country-specific version of Kaya’s identity to develop a statistically based probabilistic forecast of CO₂ emissions and temperature change to 2100. Using data for 1960–2010, including the UN’s probabilistic population projections for all countries^{2, 3, 4}, we develop a joint Bayesian hierarchical model for Gross Domestic Product (GDP) per capita and carbon intensity. We find that the 90% interval for cumulative CO₂ emissions includes the IPCC’s two middle scenarios but not the extreme ones. The likely range of global temperature increase is 2.0–4.9 °C, with median 3.2 °C and a 5% (1%) chance that it will be less than 2 °C (1.5 °C). Population growth is not a major contributing factor. Our model is not a ‘business as usual’ scenario, but rather is based on data which already show the effect of emission mitigation policies. Achieving the goal of less than 1.5 °C warming will require carbon intensity to decline much faster than in the recent past.

Problems with Pareto optimality

from Gary Flomenhoft, “The triumph of Pareto”, real-world economics review, issue no. 80, 26 June 2017, pp. 14-31.

There are several serious problems with the use of Pareto Optimality as the central goal of economics. One of the primary implications of “Pareto Optimality” is that it accepts the current distribution of wealth as a given. If any income distribution can lead to an “optimal” outcome, there is no need to be concerned about just distribution. Mainstream economists generally make no distinction between earned or unearned income, and when they do, it is typically to recommend lower taxes on the latter, a policy that has been adopted in the USA. Mainstream economists rarely question the legitimacy of the source of wealth. Fairness or origin of the current distribution is a problem left to politicians and society. It is not considered a legitimate question for economics. As Steven Hackett points out, “Slavery was widely seen in the North as being unethical from a deontological perspective, but a policy alternative of ending slavery would make slave owners worse off than under the status quo, and thus would have failed the Pareto efficiency criterion” (Hackett, 2001: 26).  

Redefining economics in terms of multidimensional analysis and democracy

from Peter Söderbaum, “Do we need a new economics for sustainable development?”, real-world economics review, issue no. 80, 26 June 2017, pp. 32-44.

A proposed new theoretical perspective starts with a partly different definition of economics:
“Economics is multidimensional management of (limited) resources in a democratic society”

Why “multidimensional” management? Multidimensional goes against the one-dimensional analysis of neoclassical theory and method. “Monetary reductionism” is no longer accepted. The idea that we should put a monetary price on all impacts, ecosystem services included, to make them commensurable and tradeable, is abandoned. Instead impacts of different kinds are kept separate throughout analysis. And non-monetary impacts are viewed as being as “economic” as monetary ones. This may make analysis more complex but also more relevant. In relation to environmental issues, Sweden has proposed 16 environmental objectives to monitor the quality and state of the environment as well as possible (Swedish Environmental Agency, 2016). At the UN level, world leaders agreed about 8 Millennium Development Goals in the year 2000. This process of broadening the agenda has continued with 17 Sustainable Development Goals (SDGs) sanctioned at the UN-level in November 2015. They are:  

Justice in the Age of Finance

from C. P. Chandrasekhar

The big news late in June 2017 was that the Serious Fraud Office (SFO) in the UK had charged four former senior executives of Barclays bank, including its former chief executive, John Varley, with fraud committed almost a decade earlier, during the global financial crisis of 2008. This is the first chief of an institution embroiled in the 2008 financial crisis who faces criminal (as opposed to civil) proceedings. How long the investigation will take and what the punishment will be is yet to be seen. But being the first criminal prosecution of a small number of the large group of financial chieftains who through their acts of commission and omission precipitated the crisis, the event has received substantial media attention.

Ten years have passed since the global financial crisis of 2007-08. While long-term, structural factors played a role in precipitating that crisis, early evidence showed that conscious actions by banks and leading investment banking firms which exploited the loopholes that financial deregulation offered were equally responsible. Moreover, compensation practices that linked salaries and bonuses to profits made, encouraged the pursuit of profit at the expense of all else. As a result, fraud was at the centre of the crisis that devastated ill-informed or wrongly tutored investors and borrowers, many of whom earned a minuscule fraction of what the functionaries of finance did, and had been persuaded into living beyond their means by accessing easily available debt. This could continue for long because the securitization that deregulation encouraged, allowed those who created credit assets by lending to transfer the risk to dispersed investors for a fee. The opaque instruments created to conceal the accumulating risk in the system were merely emblematic of the ubiquitous fraud. 

new issue of Real-World Economics Review

real-world economics review
Issue no. 80 
download whole issue

Inequality, democracy and the ecosystem Politics, preferences, and prices: the political consequences of inequality          2 Luke Petach          download pdf The triumph of Pareto          14 Gary Flomenhoft          download pdf Do we need a new economics for sustainable development?          32 Peter Söderbaum         download pdf From green growth towards a sustainable real economy          45 Jørgen Nørgård and Jin Xue          download pdf Money Split-circuit reserve banking – functioning, dysfunctions and future perspectives          63 Joseph Huber          download pdf The coming revolution in political economy          85 Tim Di Muzio and Leonie Noble          download pdf Keynesian issues Derivation of involuntary unemployment from Keynesian microfoundations          109 Philip George          download pdf Asymmetric price adjustment: the missing link in Keynesian macroeconomics          121 Victor Beker          download pdf Nations Chinese economics as a form of ethics          148 Kazimierz Poznanski           download pdf A brief history of Pakistan’s economic development          171 Muhammad Iqbal Anjum and Pasquale Michael Sgro          download pdf         Review essays Negating 1984: Michael Hudson’s antidote to doublespeak in economics          179 Jamie Morgan          download pdf Deserving economics          186 Peter Radford          download pdf A note Trade imbalances are undesirable          193 Leon Podkaminer          download pdf Board of Editors, past contributors, submissions and etc.          197 Leave comments here

Brexit, don’t forget how we got here

from Jamie Morgan

Understanding Brexit requires us to consider the political economy of tax justice and the abuse of wealth protection.

At a time when a general election has dominated the press for the last two months and Brexit has been a shadow of anxiety – a most remarkable event that the political parties have been steadfastly refusing to remark upon in any meaningful way – it is important to recall just how we got to the current state of affairs; a state that Craig Berry refers to as ‘undemocracy’.  A narrow majority decision based on (at best) limited information has become a fait accompli empowering government to pursue a position regarding which the populous are still in ignorance.  It is difficult to see what kind of mandate follows from this, but it is not difficult to see that the longstanding problem is one of increasing separation between citizenry and those who they elect to represent them.

Disintegration, distrust and any number of additional alliteratively phrasable and parsable terms and concepts have general and specific causes.  If we are to understand how we got here there is a political economy to be considered.  Financialisation has also meant the accumulation of financial assets creating wealth stocks and income flows for the few far more than for the many. Inequality is a process based on asymmetrical ownership of such assets.  This has been both a product of and a contribution to the difference between a 1% and the 99%.  

Trumponomics: Causes and Consequences

paperback now available from the Amazon pages listed below

508 pages

Here are links to the book’s pages on the various Amazons
United States $28, Brazil, Canada, France, Germany, India, Italy, Japan, Mexico, Spain, United Kingdom

Where will global demand come from? (4 charts)

from C.P. Chandrasekhar and Jayati Ghosh

For several decades, the US economy functioned as the principal agent of global demand, sucking in vast amounts of imports from the rest of the world as it built up vast current account deficits. Of course, it was easily able to finance these deficits with capital inflows, benefiting from its status as the holder of the only viable global reserve currency. But just as the US was able to make the rest of the world in effect pay for its own domestic economic expansion, this expansion had positive effects on growth in the rest of the global economy.

The US functioned as the primary source of demand for major exporting nations, thereby pulling much of the rest of the world economy along with it in the intermittent periods of boom. In the 1990s and again in the 2000s, there were prolonged periods during which the current account deficits of the US grew and then remained at very high levels, generating demand for others in the world economy. While major exporting nations like Germany, China and to a lesser extent Japan, were obviously the chief beneficiaries of this, the expansion trickled down to other countries and regions.

This was clearly not the ideal mode of global expansion, since it created imbalances that were bound at some point to become unsustainable, and possibly erupt in crises, as they indeed did in 2001 and again more severely in 2008-09. The problem was that countriestried to export their way to growth and therefore relied on an external stimulus for demand expansion, which had to be at the expense of others. A better and morepreferable route to global growth would be to enable and allow domestic expansion within countries – but that requiresinternational co-ordination.

Such co-ordination has been lacking in the recent past. This is unfortunate, because since  the Global Financial Crises, in which the US economy was the epicentre, the US economy’s net stimulus to the rest of the world has been on a declining trajectory. And the absence of other demand stimuli condemns the global economy to its low “new normal”.  

Europe’s third alternative: leapfrogging Putin

from Robert Locke

One big problem  in orthodox economics is the inability of its market orientation to cope with strategic implications of economic and political geography. I pointed that out in an article published in the rwer (“Reassessing the basis of economics:  from Adam Smith to Carl von Clausewitz,” #61, 26.09.2012, 100-114), to which nobody responded.  But the issue won’t go away and is especially pertinent today, because of the uproar caused by Trump’s failure to support the invocation of article 5.  This issue is being discussed within the framework of US post WWII geographical hegemony.  As Thomas Paley’s post “Trump and the Neocons: doing the unilateralist walz,” May 20 2017, states under the rubric The future of international relations, the implication is that

“Trump’s unilateralism may…reflect enduring neocon leanings within the current U.S. polity. Though the intensity of those leanings will ebb and flow, they are now a permanent feature…that has ramifications for the international relations order that foreign governments around the world will need to digest. One concern is excessive export dependence on the U.S. market which renders countries economically vulnerable to U.S. punitive market access restrictions. A second is U.S. corporate takeovers of foreign country champion firms. Europe also needs to recognize it may suffer negative backwash effects from unilateral U.S. interventions in the Middle East and elsewhere. In contrast, the U.S. is protected by the Atlantic and Pacific oceans, and that protection may even foster U.S. military recklessness.”

Discussing the subject within this context gives Europeans two policy-making options, to make some sort of accommodation with Putin or to let Trump call the tune.  But, if we explore the geographical options differently, there is a third possibility, leapfrogging Putin to China.  

Trump and the Neocons: doing the unilateralist waltz

from Thomas Palley

The neocon factor dramatically changes the interpretation of the Trump administration’s unilateralist international economic policy chatter.

Donald Trump’s first one hundred days have revealed his inclination for unilateralism in international relations. That inclination reflects his opportunistic and bullying disposition, and it also fits well with his anti-globalization pose.

Trump’s unilateralism has also spawned a dangerous waltz with Washington’s neocon establishment. The opportunistic Trump looks to gain establishment support, while the neocon establishment looks to the opportunist-in-chief to implement its own unilateralist view of the world.

The waltz is clearly visible in recent military actions but it also extends to international economic policy which is an area of budding neocon concern.

A further twist is that neocon unilateralism can be exercised against both rivals and allies. Power is at the core of the neocon project. And power can be used to block rivals or bend allies.

No rivals tolerated

The neocon project derives its appeal inside the United States from the belief that never again should there be a power, like the former Soviet Union, capable of rivalling the United States.

Originally, the neocon project represented ultra-conservative Republican thinking, but it has substantially become mainstream thinking. 

The 10 most viewed RWER Blog posts in 2016

1. Poll Results: Top 10 economics books of the last 100 years
2. Summary of the Great Transformation by Polanyi      Asad Zaman
3. Reflections on the “Inside Job”      Peter Radford
4. The tiny little problem with Chicago economics      Lars Syll
5. Money and the myth of barter     David Ruccio
6. What is Post Keynesian Economics?     Lars Syll
7. The seven countries most vulnerable to a debt crisis     Steve Keen
8. The 15 largest arms exporters per capita     Joseph Buzaglo
9. Re-thinking the definition of “Public Goods”     June Sekera
10. 25 graphics showing upward redistribution of income and wealth in USA since 1979     David Ruccio

Comparing income inequality in the United States and France

The bottom 50 percent of income earners makes more in France than in the United States even though average income per adult is still 35 percent lower in France than in the United States (partly due to differences in standard working hours in the two countries).⁹ Since the welfare state is more generous in France, the gap between the bottom 50 percent of income earners in France and the United States would be even greater after taxes and transfers.

Positional analysis: what it is and why economists need it

from Peter Söderbaum, Judy Brown and Małgorzata Dereniowska and WEA Commentaries

What would an alternative economics and economy look like for a sustainable future? As with any normative vision, such as that of a sustainable economy and society, a variety of responses and perspectives can be legitimately sought. Out of those, for many economists, only the perspectives that result in outcomes that are (potentially) Pareto improvements are economically meaningful. But sustainability and democratic legitimization of sustainability values in some respects displays some inefficiency in terms of utility (e.g., loss of time needed to implement democratic procedures or to collectively develop a shared normative vision of sustainability), or can be judged differently depending on the process employed in arriving at a sustainable outcome. Indeed, the inherent ethical dilemma of sustainable development between economic efficiency, social equity, and environmental conservation are not practically separable. What if we turned around the question to think about an alternative vision of economics, economic analysis, and decision making approaches that makes room for plural normative criteria without predefining their ranking within decision processes, and illuminates social conflicts, instead of obscuring them with value-neutral ‘representational’ claims? This alternative idea underlies positional analysis (PA) that addresses both the outcome and the process, with explicit attention paid to their ethical and political content, at the level of analysis, planning, and decision making.  

America’s hidden pains

from William Neil

We begin with some gross numbers from Das’ Age of Stagnation: the loss of wealth from the Great Recession of 2008-2009. Citing the work of three economists at the Federal Reserve Bank of Dallas (Tyler Atkinson, David Luttrell and Harvey Rosenblum), the figures they put on the loss to the U.S. economy come to 6-14 trillion dollars, “equivalent to U.S. $50,000 to U.S. $120,000 for every American household, or 40-90% of one year’s economic output”. We’ve seen figures of family distress ranging from $20,000-$60,000, largely representing losses in the stock market, which seem on target from direct personal experience. The other factor driving towards a more lasting economic pain are those who lost enough in straight financial terms to forestall market re-entry, matched with a psychological aversion to ever trusting it again. Additionally, pension fund retirement viability was affected by the same dynamics. These factors must be considered, as difficult as they are to quantify, to qualify the otherwise impressive performance after 2010 in the financial markets, they being supported by all the permutations known as Quantitative Easing, American and European versions.  

The market paradigm versus the production paradigm

from Robert Wade

Why have the large majority of professional economists, especially in the academy and in western-dominated international organizations like the World Bank and IMF, been committed to free trade policy, downplaying theoretical and empirical weaknesses in order to remain so?

The teaching of economics in just about all universities of the western world, and in large parts of the developing world, socializes students into belief in the rightness of the “market” paradigm, and the more “rigorous” the training the more thoroughly socialized they become.[1]  The paradigm focuses on price competitiveness – free labor markets, flexible prices, free international trade – as the key to national competitiveness. It treats the market system as “self-organizing”, firms being essentially passive except for competing in price. It treats technology as external to production, as something which firms can buy on the market. It has no built-in process of innovation, no conception of an “industrial ecosystem” of firms competing and cooperating with each other.[2] With all these things stripped out, the culture of the profession elevates belief in comparative advantage and free trade as the litmus test of competence to be an economist, as the earlier quote from Krugman suggests.