Wednesday, July 26, 2017

Michael Lewis — Why the Scariest Nuclear Threat May Be Coming From Inside the White House

Donald Trump’s secretary of energy, Rick Perry, once campaigned to abolish the $30 billion agency that he now runs, which oversees everything from our nuclear arsenal to the electrical grid. The department’s budget is now on the chopping block. But does anyone in the White House really understand what the Department of Energy actually does? And what a horrible risk it would be to ignore its extraordinary, life-or-death responsibilities?
Vanity Fair
Why the Scariest Nuclear Threat May Be Coming From Inside the White House
Michael Lewis

Brian Romanchuk — Book Review: GDP

GDP: A Brief but Affectionate History by Professor Diane Coyle offers an interesting popular history of the concept of gross domestic product (GDP). GDP is a mental construct, and is the result of somewhat arbitrary decisions. The book discusses the history of the idea, tied in with economic history as well as the history of economics.… 
GDP is one of three aggregates that are theoretically equal to each other (in practice, there is a statistical discrepancy, since they are based on three different input data sets).
  1. The sum of all production in the domestic economy.
  2. The sum of all expenditures in the domestic economy.
  3. The sum of all incomes in the domestic economy (Gross Domestic Income, or GDI)....
I believe that a lot of the kvetching about GDP would disappear if we got rid of it, and replaced it with Gross Domestic Income. Since the two values are theoretically the same, we would be theoretically in the same boat. However, economists would be less hung up on their theoretical preconceptions....
Bond Economics
Book Review: GDP
Brian Romanchuk

Egg Glut


"We're out of eggs!"




Tuesday, July 25, 2017

Dustin Volz — Russia’s Kaspersky Lab launches free antivirus software globally


Free is good.

Reuters
Russia’s Kaspersky Lab launches free antivirus software globally
Dustin Volz

Fund Managers and Strategists Think the Bull Market Is Ending Next Year


Bearish sentiment fomented by projected CB actions.


Central bank policy cited as main risk over coming year or two. 
Bloomberg poll captures views of 30 investors across globe. 
The would-be end of a great cycle for financial markets would come just about when central bank balance sheet contraction is expected to kick into high gear. 
By mid-2018, the Federal Reserve’s wind-down may be well under way, and the European Central Bank might have joined the Bank of Japan in tapering asset purchases.




Jason Smith — Causality in money and inflation ... plus some big questions


That pesky causality again.

Information Transfer Economics
Causality in money and inflation ... plus some big questions
Jason Smith

Stephen S. Roach — Deciphering China’s Economic Resilience

International economic forecasters find it difficult to resist superimposing the experience of crisis-prone developed economies onto China. But, once again, the Chinese economy has defied the pessimists: after decelerating for six consecutive years, real GDP growth appears to be inching up in 2017.
Project Syndicate
Deciphering China’s Economic Resilience
Stephen S. Roach | senior fellow at Yale University's Jackson Institute of Global Affairs and a senior lecturer at Yale's School of Management, and former Chairman of Morgan Stanley Asia and the firm's chief economist.

Bill Mitchell — There is nothing much that Milton Friedman got right!

“If we want to ensure more people are well-employed, central banks alone will certainly not suffice” is a quote I am happy to republish because I consider it to be 100 per cent accurate. The only problem is that the way I think about that statement and construct its implications is totally at odds with the intent of its author, who claimed it was “an important lesson of Friedman’s speech”, which “remains valid”. The quote appeared in a recent Bloomberg article (July 17, 2017) – What Milton Friedman Got Right, and Wrong, 50 Years Ago – written by journalist Ferdinando Giugliano. It celebrates the Presidential Speech that Friedman gave to the American Economic Association on December 29, 1967 at their annual conference in Washington D.C. In terms of the contest of paradigms, the speech is considered to be the starting point proper of the Monetarist era, even though it took at least another 5 or 6 years (with the onset of the OPEC oil crises) for the gospel espoused by Friedman to really gain ground. The problem is that Friedman was selling snake oil that became the popular litany of the faithful because it suited those who wanted to degrade the role of government in maintaining full employment. It was in step with the push by capital to derail the Post War social democratic consensus that had seen real wages growing in proportion with productivity, reduced income inequality, jobs for all who wanted to work and a strong sense of collective solidarity emerge in most advanced nations. This consensus was the anathema of the elites who saw it as squeezing their share of national income and giving too much power to workers to negotiate better terms and conditions in their work places. Friedman provided the smokescreen for hacking into that consensus and so began the neo-liberal era. We are still enduring its destructive consequences.

Friedman’s speech was subsequently published in the American Economic Review as ‘The Role of Monetary Policy’ in the 1968 volume 58(1) (pages 1-17). 
The Bloomberg article goes along with the view that Friedman’s speech represented a “paradigm shift” in economics....
Bill Mitchell – billy blog
There is nothing much that Milton Friedman got right!
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Capital and Leverage Ratios


A couple of good articles on these two regulatory ratios from Clarus Financial:

Capital Ratio here:

CAPITAL RATIOS AND RISK WEIGHTED ASSETS FOR TIER 1 US BANKS

Leverage Ratio here:

SUPPLEMENTARY LEVERAGE RATIO: COMPARING US BANKS

If you look at it systemically, via the Fed's H.8 report of the system level asset composition, you can see that currently it is the Leverage Ratio that is the control ratio; due to current Fed monetary and Treasury fiscal policies forcing about $5T of non-risk assets into the system's asset accounts.

We have about $12.5T total assets so with a LR of 7% that requires about $900B capital, risk assets of about $7.5T so with a CR of  8% that requires only about $600B.

Capital requirements are being driven by the amount of non-risk assets govt policy is creating in the system.

Banks are over-capitalized via the Capital Ratio by 100s of $B and accordingly we see them increasing dividend and share buybacks with their earnings rather than adding to their regulatory capital accounts; they dont need any more or at least much more capital to operate the risk side of their business.

This should start to reverse somewhat when Fed starts to reduce the reserves in September...



Monday, July 24, 2017

Chase Madar — The Conservative Case for Universal Healthcare


Democrats may be about to lose a core issue if they don't wake up.

The American Conservative

Zero Hedge — Former CIA Director Calls For A Coup If Trump Fires Mueller

In the most vocal opposition to president Donald Trump yet, former CIA Director John Brennan said that if the White House tries to fire special counsel Robert Mueller, government officials should refuse to follow the president orders, as they would be - in his view - “inconsistent” with the duties of the executive branch.
"I think it's the obligation of some executive branch officials to refuse to carry that out. I would just hope that this is not going to be a partisan issue. That Republicans, Democrats are going to see that the future of this government is at stake and something needs to be done for the good of the future," Brennan told CNN's Wolf Blitzer at the Aspen Security Forum, effectively calling for a coup against the president should Trump give the order to fire Mueller.... 
Zero Hedge
Former CIA Director Calls For A Coup If Trump Fires Mueller
Tyler Durden

See also
Just six months after his inauguration, Americans already are split down the middle, 42%-42%, over whether President Trump should be removed from office, a new USA TODAY/iMediaEthics Poll finds.…
Those findings, designed to measure the intensity of opinion, also show a perfect divide, 34%-34%.
USA Today
Poll: Americans split 42%-42% on impeaching Trump

Yasser Abdih and Stephan Danninger — What Explains the Decline of the U.S. Labor Share of Income? An Analysis of State and Industry Level Data

“The U.S. labor share of income has been on a secular downward trajectory since the beginning of the new millennium. Using data that are disaggregated across both state and industry, we show the decline in the labor share is broad-based but the extent of the fall varies greatly. Exploiting a new data set on the task characteristics of occupations, the U.S. input-output tables, and the Current Population Survey, we find that in addition to changes in labor institutions, technological change and different forms of trade integration lowered the labor share. In particular, the fall was largest, on average, in industries that saw: a high initial intensity of “routinizable” occupations; steep declines in unionization; a high level of competition from imports; and a high intensity of foreign input usage. Quantitatively, we find that the bulk of the effect comes from changes in technology that are linked to the automation of routine tasks, followed by trade globalization.”

Lord Keynes — The 10,000 Year Explosion, Chapter 6: A Summary

Chapter 6 of Gregory Cochran and Henry Harpending’s The 10,000 Year Explosion: How Civilization Accelerated Human Evolution(2009) is called “Expansions,” and examines the genetic effects of large-scale migrations of human beings.
History is filled with examples of certain population groups that conquer, migrate into, or spread over large areas and replace other groups, or replace other groups with some mixing.
Cochran and Harpending (2009: 156) accept that cultural and technological advantages have played a large role in the success of such movements, but also contend that sometimes, in important cases, evolutionary genetic traits have also been a factor. In this respect, as in normal evolutionary theory, we must look at group fitness, and not just individual fitness, as factors in human history (Cochran and Harpending 2009: 158).
Social Democracy For The 21St Century: A Post Keynesian Perspective

Pepe Escobar — A coup in the House of Saud?


Gives "MBS" new meaning. It's no longer mortgage backed security but Mohammad bin Salman.

But just as MBS were involved in the global financial crisis that began with the housing bubble in the US; so too, Mohammad in Salman is poised to initiate a global political crisis. Pepe Escobar explains.

Asia Times
A coup in the House of Saud?
Pepe Escobar

James Petras — Imperial Power Centers: Divisions, Indecisions and Civil War

One of the most important outcomes of the Trump Presidency are the revelations describing the complex competing forces and relations engaged in retaining and expanding US global power (‘the empire’). The commonplace reference to ‘the empire’ fails to specify the interface and conflict among institutions engaged in projecting different aspects of US political power.
In this essay, we will outline the current divisions of power, interests and direction of the competing configurations of influence.
James Petras Website
Imperial Power Centers: Divisions, Indecisions and Civil War
James Petras | Professor (Emeritus) of Sociology at Binghamton University in Binghamton, New York and adjunct professor at Saint Mary's University, Halifax, Nova Scotia

David Dayen — Single Payer, Meet All Payer: The Surprising State That Is Quietly Revolutionizing Health Care


Maryland.

Lord Keynes — The 10,000 Year Explosion, Chapter 5: A Summary

Chapter 5 of Gregory Cochran and Henry Harpending’s The 10,000 Year Explosion: How Civilization Accelerated Human Evolution (2009) is called “Gene flow,” and looks briefly at the evolutionary changes induced by mixing of genetically distinct populations.
Social Democracy For The 21St Century: A Post Keynesian Perspective
The 10,000 Year Explosion, Chapter 5: A Summary
Lord Keynes

VIPS — Intel Vets Challenge ‘Russia Hack’ Evidence


Letter to the President.

Consortium News
Intel Vets Challenge ‘Russia Hack’ Evidence
Veteran Intelligence Professionals for Sanity (VIPS)

Awara — Doing Business in Russia: Russian Financial System


Short summary. Essentially, Russia is internationalizing (in effect Westernizing) its banking and financial system, as is China also.

Awara
Doing Business in Russia: Russian Financial System
Eugene Isaev

David Glasner — Hayek, Deflation and Nihilism


At least Hayek later admitted he was wrong about deflation being useful in breaking rigidities.

Uneasy Money

Martin Armstrong — China – A Different Central Bank Altogether

When I returned to the States, people I knew in the Fed and in Treasury called to ask me my opinion after these meetings with the Chinese government. I responded: It was great. They only hired people with experience!
Armstrong Economics
China – A Different Central Bank Altogether
Martin Armstrong

Steve Cecchetti and Kim Schoenholtz — The Other Trilemma: Governing Global Finance

Courses in international economics usually introduce students to the impossible trinity, also known as the trilemma of open-economy macroeconomics: namely, that a fixed exchange rate, free cross-border capital flows, and discretionary monetary policy are incompatible (see left panel of diagram). Why? Because, in the presence of free capital flows under a fixed exchange rate, private currency preferences (rather than policymakers) determine the size of the central bank balance sheet and hence the domestic interest rate. We’ve highlighted this problem several times in analyzing China’s evolving exchange rate regime (see here and here).
While many students learn that a country can only have two of the three elements of the open-economy trilemma, few learn that there also exists a financial trilemma. That is, financial stability, cross-border financial integration, and national financial policies are incompatible as well (see right panel of diagram). The logic behind this second trilemma is that increases in financial integration reduce the incentives for national policymakers to act in ways that preserve financial stability globally. Put differently, as the benefits from financial stability policies spread beyond borders, the willingness to bear the costs of stabilizing the system at the national level decline. This has the important implication that, if we are to sustain increasing financial integration, then we will need greater international coordination among national financial regulators (see here, or for a much broader case for international economic governance, see Rodrik). While this conclusion applies widely, nowhere is it more true than inside the euro area, where policymakers would like a fully integrated financial market, but still protect national champions (including financial intermediaries as well as exchanges)....
Money & Banking
The Other Trilemma: Governing Global Finance
Steve Cecchetti and Kim Schoenholtz

Deborah Bach — Babies can learn a second language in 1 hour per day

“Science indicates that babies’ brains are the best learning machines ever created, ...” says coauthor Patricia Kuhl, codirector of I-LABS and a professor of speech and hearing sciences.
A primary ask of educational research is how to harness this most effectively and efficiently. Presently, a lot of potential is going to waste. Waste is uneconomical.

World Economic Forum | Agenda
Babies can learn a second language in 1 hour per day
Deborah Bach

House passes budget-busting Defense bill


This same type of thing is going on with the Authorizations in the other departments as well.  FY 2018 shaping up nicely.

Seems like the authorization people and appropriation people are finally getting fed up with the moron budget people.

Always better to watch what people do vs. what they say.


The bill would exceed the president's $603 billion defense budget request. But it also would blow past the $549 billion cap on defense spending set under the 2011 Budget Control Act by about $72 billion.




Sunday, July 23, 2017

Paul Richard Huard — FACT: Viet Cong Commandos Sank an American Aircraft Carrier


Bet you didn't know this.

Here's why.
Not surprisingly, North Vietnam celebrated the sinking of Card, considering it a propaganda victory of the first rank. The U.S. government refused to even acknowledge the vessel’s sinking, telling the public the carrier had only been damaged.
Paul Richard Huard | military historian, free-lance journalist, and contributor to War Is Boring

Bill Mitchell – Germany fails to honour its part of the Greek bailout deal

In this blog – The fiscal role of the KfW – Part 1 – I recounted how the government-owned German development bank, KfW (Kreditanstalt für Wiederaufbau) – interacts with the German Finance Ministry to allow its fiscal balance to move into surplus without the commensurate level of fiscal drag that would normally be associated with that degree of fiscal withdrawal. The intent of the blog was to show how the Germans cleverly use their state-owned development bank to advance ideological positions not available to other states that have either privatised these type of institutions or never created them in the first place. It is ironic given the Germans insistence that countries like Greece privatise everything in sight. Today’s blog returns to the KfW, in part, because new information has emerged where we learn that the Greek crisis has allowed the German Ministry of Finance to run surpluses without melting their economy down. The KfW’s role in that regard is undoubted. It has been a source of bailout funds for Greece, on behalf of the German government, and has been pocketing handy profits ever since. This information shows that the popular claims that German taxpayers are bailing out Greece are clearly false and just political verbiage. Further, despite the understanding that the Member States (bailout partners) would remit any profits made on asset holdings associated with the Greek bailout, the Germans have reneged on that deal, in part, because it has channeled those profits through the KfW, which it claims is at hands length to the government, despite being 100 per cent government-owned.
Double-dealing.

Bill Mitchell – billy blog
Germany fails to honour its part of the Greek bailout deal
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Peter Cooper — Short & Simple 10 – Spending Independently of Income

It was mentioned (in part 2) that a currency-issuing government issues its currency in the act of spending. An implication of this is that a currency-issuing government does not need income in order to spend. We have also noted (in parts 5 and 9) that a household or business can spend independently of current income. They can do this either by drawing down past savings or through borrowing.
heteconomist
Short & Simple 10 – Spending Independently of Income
Peter Cooper

Steve Roth — Two Big Questions About the Job Guarantee: God, Devil, and the Details


More blather about the JG.

Answer to question 1: It's a job guarantee. It's advertised as a job offer for those willing and able to work that don't have a job offer from private sector employers in their area. To get the wage you have to show up and do the job you signed you for. What is so hard to understand about that?

Answer to question 2: These issues need to be articulated clearly and formulated into a legislative bill. The initial bill will likely be debated in the House and Senate and modified based on hearings, debate and lobbying. Just like every other policy proposal that becomes law.

Saudi Arabia turning off US oil tap










Wayne Madsen — The End of the ‘New American Century’ Pronounced by the Pentagon


Is the US military quietly signaling a historical turn of events comparable to Britain's decision to abandon empire? One item doesn't tell the whole story but it is indicative that it is being discussed at high levels.

Strategic Culture Foundation
The End of the ‘New American Century’ Pronounced by the Pentagon
Wayne Madsen

Lord Keynes — The 10,000 Year Explosion, Chapter 4: A Summary

Chapter 4 of Gregory Cochran and Henry Harpending’s The 10,000 Year Explosion: How Civilization Accelerated Human Evolution (2009) is called the “Consequences of Agriculture.”
The effects of agriculture accelerated human evolution and selective pressures in the following ways:
Interesting tidbit:
Yet another cognitive trait that may have been selected for in farmers is the ability to defer gratification (Cochran and Harpending 2009: 114). This was an extremely important type of behaviour on which farming is based, and needed for sowing of crops or breeding of animals, when those plants or animals can be eaten in the present. Farmers with personality traits such as delayed gratification, patience, a work ethic, self-control, and long-term planning would have survived to produce more offspring (Cochran and Harpending 2009: 114). Curiously, this would also have bred more selfish people in contrast to hunter gatherers (Cochran and Harpending 2009: 115).
The would bear out Rousseau's assumption over Hobbes.

Conversely, this would speak in favor of Hobbes.
Farming allowed the creation of more advanced state-based societies that developed systems of law and order and punishments. Many such societies have imposed the death penalty for socially-harmful behaviour, as in crimes like murder, violence, and so on. In a stable society over time, this would likely kill off more aggressive individuals (usually men) and leave that society with a gene pool favouring less aggressive and less violent individuals (Cochran and Harpending 2009: 111–112). Some have argued that the high levels of social conformity in East Asian societies are not just a cultural phenomenal, but the result of long-run genetic changes influencing personality arising from the thousands of years of how these state-based societies in East Asia have operated. This raises the interesting possibility that highly developed state societies have “tamed” human beings in certain ways, not just culturally but also genetically (Cochran and Harpending 2009: 112–113), and that in modern agricultural societies (which have had agricultural and state systems for thousands of years), the average man today might be less aggressive and less violent than the average man 2,000 years ago, or 10,000 or 20,000 years ago. People from state-based, agricultural societies – with thousands of years of history – probably have different cognitive traits, on average, as compared with people in hunter-gatherer societies not subject to the same kind of long-term evolutionary change.
Social Democracy For The 21St Century: A Post Keynesian Perspective
The 10,000 Year Explosion, Chapter 4: A Summary
Lord Keynes

Saturday, July 22, 2017

Nathan Tankus — No, UBI Criticisms Are Not Implicitly Premised On The Idea the Racial Wealth Gap is Good (Sigh)


Nathan Tankus rips up UBI advocate Matt Bruenig and takes a shot or two at Matt Yglesias.

Go JG!

Tankus Notes
Nathan Tankus

Jason Ditz — CIA Chief Warns of WikiLeaks Plotting to “Take Down America Any Way They Can”


The CIA Director conflates the US Deep State and ruling elite with America.

Message for Mike Pompeo: Americans are fed up with endless war. This is all about "taking our country back."

The US Deep State, including the military and military-industrial complex, realize that the US can only present a credible threat in bullying its "adversaries" (read all that refusal to be the American elites' bitch) if the American people are behind more war. This requires the construction and control of a consensus reality by controlling the narrative. Wikileaks is a threat to that.

AntiMedia
CIA Chief Warns of WikiLeaks Plotting to “Take Down America Any Way They Can”
Jason Ditz

See also

The witch-hunt and smear campaign continue.
"Smears against the Green Party for participating in elections are nothing new, but raising the smears to the level of McCarthyism is a recent wrinkle," said Scott McLarty, media director for the Green Party, in an interview with The Hill.
Sputnik International
Jill Stein Comes Under Trump Jr.-Russia Probe Scrutiny

Fort Russ — Fake news alert!


The Hill this time.

Fort Russ
Fake news alert!
Izvestia - translated by Inessa Sinchougova

Izvestiya means "news" in Russian.
[Izvestia is] a Russian daily newspaper founded in 1917 as the official organ of the Soviet government. It continued to be published independently after the collapse of communist rule and the break-up of the Soviet Union. — Oxford Living Dictionaries — English

Aric Jenkins — You Should Update Your Apple Devices Immediately to Fix a Major Security Flaw


Public service message

Fortune — Cybersecurity
You Should Update Your Apple Devices Immediately to Fix a Major Security Flaw
Aric Jenkins

Lord Keynes — The 10,000 Year Explosion, Chapter 3: A Summary

Chapter 3 of Gregory Cochran and Henry Harpending’s The 10,000 Year Explosion: How Civilization Accelerated Human Evolution (2009) is called the “Agriculture: The Big Change,” and examines the evolutionary impact of the agricultural revolution and urban life.
Social Democracy For The 21St Century: A Post Keynesian Perspective
The 10,000 Year Explosion, Chapter 3: A Summary
Lord Keynes

Ivan Eland — Trump’s Slide into Endless-War Syndrome


I am not sure that "slide" is the correct word. I would call it more a push than a slide.

"Ivan." Isn't that a Russian name? (Just kidding.)

Consortium News
Trump’s Slide into Endless-War Syndrome
Ivan Eland | Senior Fellow and Director of the Center on Peace & Liberty at the Independent Institute

Kerry McDonald — How Schooling Crushes Creativity

In 2006, educator and author Ken Robinson gave a TED Talk called, “Do Schools Kill Creativity?” At over 45 million views, it remains the most viewed talk in TED’s history.
Robinson’s premise is simple: our current education system strips young people of their natural creativity and curiosity by shaping them into a one-dimensional academic mold.
This mold may work for some of us, particularly, as he states, if we want to become university professors; but for many of us, our innate abilities and sprouting passions are at best ignored and at worst destroyed by modern schooling.…
Robinson echoes the concerns of many educators who believe that our current forced schooling model erodes children’s vibrant creativity and forces them to suppress their self-educative instincts....
Compelling research shows that when children are allowed to learn naturally, without top-down instruction and coercion, the learning is deeper and much more creative than when children are passively taught.
Like American philosopher and educator John Dewey said many decades ago. It was called "progressive education" by then as an alternative to education by rote, which is now called "teaching the test."

Progressive education involves emphasizing learning over teaching, discovery over schooling, and group (team) learning over individual instruction.

Then objective is learning for life rather than credentialing.

FEE — Foundation for Economic Education
How Schooling Crushes Creativity
Asif Aziz

Seema Sengupta — Radical thinking needed if India is to avoid water collapse

In India, polluted and dried-up rivers, poor storage infrastructure, contaminated groundwater and shrinking aquifers – to name but a handful of problems – have turned the country’s water woes into a hydra-headed monster. With 76 million people – approximately 5% of the country’s total population – living without access to safe drinking water, many experts believe India faces a looming internal water war that will jeopardize all of its ambitious developmental projects, from “Make in India” to building smart cities....
Asia Times
Radical thinking needed if India is to avoid water collapse
Seema Sengupta

Also

New Delhi is running out of water

Branko Milanovic — Multi-party kleptocracies rather than illiberal democracies


As long a we're calling a spade a spade, tt seems to me that Western liberal democracies are also "multi-party kleptocracies" in that a single, homogeneous elite always wins. 

It's only question of which faction of the elite gains the greatest spoils. 

Like the "illiberal democracies." this is the illusion of democracy and free choice, but in the end the result is the same. The ruling elite walks away the spoils because they control the levers of power and own the wealth.

And it will be so as long as bourgeois liberalism in the form of neo-feudalism and predatory capitalism persist.

Global Inequality
Multi-party kleptocracies rather than illiberal democracies
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

Brian Davey — Mismodelling human beings – “rational economic men” in love, politics and everyday life

This chapter explores the assumptions about human nature on which mainstream economics is based. The description of “rational economic man” ignores most psychological and psychotherapy understandings of people. — Brian Davey, Credo: Economic beliefs in a world in crisis, Chapter 9
Key to the conceptual confidence trick are assumptions about what people in general are like. It is all based on an implicit modelling of human beings. Certain types of behaviour (the type that allows economists to model people and markets) are called “rational”. Now, you might think that this description of people is meant by economists to be applicable only to economic and market activities. Certainly this was the point of view of one of the founders of the famous Chicago school of economics, Frank Knight. Although committed to the alleged virtues of the market, Knight was not naive about how far you could take economic analysis. In his book Risk, Uncertainty and Profit he concluded that economics only applied to the satisfaction of wants, and that this business of satisfying wants by no means accounted for all of human activity. Indeed Knight questioned how far one could go with a “scienti c treatment” of human activity and wrote of his own views:
In his views on this subject the writer is very much an irrationalist. In his view the whole interpretation of life as activity directed towards securing anything considered as really wanted, is highly artificial and unreal. (Backhouse, 2002, p. 204)
Some contemporary economists of the Chicago school don’t see it this way. If people are calculating their individual self interest in their economic dealings why should one assume that they do not do the same thing in their political, their social and their interpersonal dealings? Should we not also assume that government ocials are calculating their interests too? At the very least, why should contact between business and government not lead to a cosy relationship, particularly if people can leave government posts and get lucrative jobs with industry? What about bribes and kickbacks from business for special favours? 
As I argued earlier, we can take the idea from Anaïs Nin that we do not see things as they are – we see things as we are. There is likely to be a loop in which a theory which describes how people are assumed to be, when powerfully propagated in textbooks as “social science”, will have an influence on how people behave. With economics we have a theory which argues that if people just look after their own interest that’s OK because “an invisible hand” described by wizard intellectuals delivers an approximation to an optimal allocation of resources. Under the influence of a view like this, concern about what is in a wider interest is not likely to blossom. It is unlikely to figure as a motivation or concern. As individualists people will look no further than themselves. They do not need to look further than themselves because the “invisible hand” will do the rest.
It is quite logical to believe that if people are actually like this then their attitude to the community and to the state will be framed in the same terms. Such people, customers of the state, rather than citizens and members of communities, will then have an interest in getting the best deal from the state to pursue their own individual agendas.…
This is an interesting post and the book is a free download.

Frank Knight assumed that utility maximization applied only to economic behavior, while Gary Becker extended that assumption to human behavior in general. This assumption that humans act in their self-interest to gain maximum satisfaction "naturally" or "by nature" rests on the assumption of methodological individualism, which in turn presumes an assumption of ontological individualism.

Extreme individualism contradicts the longstanding assumption that humans are social animals dating at least to Aristotle's Politics.* The assumption of sociality that has greater biological and psychological evidence than the assumption that humans are chiefly individualistic in interests, motivation, decision making and behavior, and act independently of other factors and influences.

The Western intellectual tradition has viewed "rationality" as the distinguishing characteristic of humanity and since its inception in ancient Greece, the Western intellectual tradition has also viewed rationality as moral and pro-social.

Radical (Jacobin) and reactionary (liberal) individualism are innovations that developed in reaction to overbearing government as a residual of the feudalism system that was an obstacle to rising capitalism. This was also a reaction of the Protestant Reformation to the Church's dogmatism and monopoly on knowledge asa means of social control. While these forms of individualism are "rational" in terms of the historical dialectic, given conditions prevailing at the beginning of the modern period, they are neither intrinsic to humanity as indicative of "human nature," nor naturalistic in terms of the course of human development and history.

Emphasis on individualism ignores the broad and deep social and economic influence of culture and institutions, for instance. Conventional economics excludes institutionalism as heterodox, for example, and ignores economic sociology.

Radical and reactionary individualism are pernicious assumptions both socially and also personally, for they are separative. Rather than resulting in spontaneous natural order, pursuit of self-interest primarily leads to egotism and social dysfunction. Extreme liberalism is opposed by both traditionalism and socialism for this reason. Freedom without responsibility confuses liberty with license.

Credo
Mismodelling human beings – “rational economic men” in love, politics and everyday life
Brian Davey
* From these things therefore it is clear that the city-state is a natural growth, and that man is by nature a political animal, and a man that is by nature and not merely by fortune citiless is either low in the scale of humanity or above it (like the “ clanless, lawless, hearthless” man reviled by Homer,1 for one by nature unsocial is also ‘a lover of war’) inasmuch as he is solitary, like an isolated piece at draughts. And why man is a political animal in a greater measure than any bee or any gregarious animal is clear. For nature, as we declare, does nothing without purpose; and man alone of the animals possesses speech. The mere voice, it is true, can indicate pain and pleasure, and therefore is possessed by the other animals as well (for their nature has been developed so far as to have sensations of what is painful and pleasant and to indicate those sensations to one another), but speech is designed to indicate the advantageous and the harmful, and therefore also the right and the wrong; for it is the special property of man in distinction from the other animals that he alone has perception of good and bad and right and wrong and the other moral qualities, and it is partnership in these things that makes a household and a city-state.

Friday, July 21, 2017

Lord Keynes — The 10,000 Year Explosion, Chapter 2: A Summary

Chapter 2 of Gregory Cochran and Henry Harpending’s The 10,000 Year Explosion: How Civilization Accelerated Human Evolution(2009) is called “The Neanderthal Within,” and examines the possibility that early humans outside of Africa interbred with Neanderthals, and how this affected human evolution....
Social Democracy For The 21St Century: A Post Keynesian Perspective
The 10,000 Year Explosion, Chapter 2: A Summary
Lord Keynes

Shashi Reddy — A computer was asked to predict which start-ups would be successful. The results were astonishing.

Clickbait title, but an interesting article anyway.
In 2009, Ira Sager of Businessweek magazine set a challenge for Quid AI's CEO Bob Goodson: programme a computer to pick 50 unheard of companies that are set to rock the world.
The domain of picking “start-up winners” was - and largely still is - dominated by a belief held by the venture capital (VC) industry that machines do not play a role in the identification of winners. Ironically, the VC world, having fuelled the creation of computing, is one of the last areas of business to introduce computing to decision-making. 
Nearly eight years later, the magazine revisited the list to see how “Goodson plus the machine” had performed. The results surprised even Goodson: Evernote, Spotify, Etsy, Zynga, Palantir, Cloudera, OPOWER – the list goes on. The list featured not only names widely known to the public and leaders of industries, but also high performers such as Ibibo, which had eight employees in 2009 when selected and now has $2 billion annual sales as the top hotel booking site in India. Twenty percent of the companies chosen had reached billion-dollar valuations.
To contextualize these results, Bloomberg Businessweek turned to one of the leading “fund of funds” in the US, which has been investing in VC funds since the 1980s and has one of the richest data sets available on actual company performance and for benchmarking VC portfolio performance.
The fund of funds was not named for compliance reasons, but its research showed that, had the 50 companies been a VC portfolio, it would have been the second-best-performing fund of all time. Only one fund has ever chosen better, which did most of its investments in the late 1990s and rode the dotcom bubble successfully. Of course, in this hypothetical portfolio, one could choose any company, whereas VCs often need to compete to invest.
Recently, Bloomberg asked Goodson to repeat the feat. Here, we’ll take an in-depth look at the methodology behind the new list, and also broader trends set to flourish in the market....
World Economic Forum
A computer was asked to predict which start-ups would be successful. The results were astonishing.
Shashi Reddy | Chief of Staff, Quid

Scaramucci: "No, the national debt does not make the United States insolvent"


Hmmmm:


TIME ran a piece this week by economist Jim Grant titled “Make America Solvent Again.” The cover exclaimed that in order to pay off our $13.9 trillion national debt, every American needs to chip in $42,998.12. The alarmist headline likely accomplished its goal of selling magazines in grocery store checkout lines, but the underlying premise of the article is inane. 
Let’s start with the definition of insolvency. An entity is insolvent when debts exceed assets. First off, the U.S. government owns hundreds of trillions worth of assets. The Institute for Energy Research (IER) estimated in 2013 that fossil fuel-related assets owned by the federal government are worth more than $150 trillion, more than ten times the national debt. Add in things like land, real estate and military equipment, and the government’s assets are likely well in excess of $200 trillion. In addition, current U.S. gross domestic product (GDP) is around $18 trillion, on which the government has taxation authority.

A bit weak (I detect a slight foul odor of libertarianism present...) but not too shabby.  Scaramucci seems unaware of the US federal government's use of Modified Accrual accounting which does not allow Accrual Accounting methods to be used on the left hand side of the accounting, so under present accounting methods, they can't accrue the value of future taxation or hypothetical asset sales...

So unless the Trump people attack the Federal government's inane accounting methodology, the inane assertions about Federal government "debt!" will continue...



David F. Ruccio — Globalization—how did they get it so wrong?

There is perhaps no more cherished an idea within mainstream economics than that everyone benefits from free trade and, more generally, globalization. They represent the solution to the problem of scarcity for the world as a whole, much as free markets are celebrated as the best way of allocating scarce resources within nations. And any exceptions to free markets, whether national or international, need to be criticized and opposed at every turn.
That celebration of capitalist globalization, as Nikil Saval explains, has been the common sense that mainstream economists, both liberal and conservative, have adhered to and disseminated, in their research, teaching, and policy advice, for many decades.
Today, of course, that common sense has been challenged—during the Second Great Depression, in the Brexit vote, during the course of the electoral campaigns of Bernie Sanders and Donald Trump—and economic elites, establishment politicians, and mainstream economists have been quick to issue dire warnings about the perils of disrupting the forces of globalization.
I have my own criticisms of Saval’s discussion of the rise and fall of the idea of globalization, especially his complete overlooking of the long tradition of globalization critics, especially on the Left, who have emphasized the dirty, violent, unequalizing underside of colonialism, neocolonialism, and imperialism.
However, as a survey of the role of globalization within mainstream economics, Saval’s essay is well worth a careful read....
Occasional Links & Commentary
Globalization—how did they get it so wrong?
David F. Ruccio | Professor of Economics, University of Notre Dame

Why Brilliant Girls Tend to Favor Non-STEM Careers


And it is not just a male/female thing...

Or do girls with the skill sets that would give them entrance to STEM fields prefer fields that involve working with people over fields that involve working with things?

and "skill sets" are one thing (maybe "aptitude" better here) but then you still have to rigorously TRAIN to get good at something... you need to go hard and get reps...






Thursday, July 20, 2017

Peter Cooper — Short & Simple 9 – Spending Determines Income

We understand that, as a rule, total spending must equal total income (this was explained in part 4 of the series). But this raises a question. Is it spending that determines income or, instead, income that determines spending?
heteconomist
Short & Simple 9 – Spending Determines Income
Peter Cooper

Nauman Sadiq — The US takes Rebranded Al-Nusra Front off Terror Watch-lists


Shell games in the snake pit.
According to a recent report by CBC Canada, al-Qaeda’s affiliate in Syria, which was formerly known as al-Nusra Front and then Jabhat Fateh al-Sham (JFS) since July 2016, has been removed from the terror watch-lists of the US and Canada after it merged with fighters from Zenki Brigade and hardline jihadists from Ahrar al-Sham and rebranded itself as Hayat Tahrir al-Sham (HTS) in January this year.… 
Thus, this rebranding exercise has been going on for quite some time. Al-Julani announced the split from al-Qaeda in a video statement last year. But the persistent efforts of al-Julani’s Gulf-based patrons have borne fruit only in January this year, when al-Nusra Front once again rebranded itself from Jabhat Fateh al-Sham (JFS) to Hayat Tahrir al-Sham (HTS), which also includes “moderate” jihadists from Zenki Brigade, Ahrar al-Sham and several other militant groups, and thus, the US State Department has finally given a clean chit to the jihadist conglomerate that goes by the name of Tahrir al-Sham to pursue its ambitions of toppling the Assad regime in Syria.

Darius Shahtahmasebi — We Finally Know Who Is Really Behind the Qatar Crisis

Anti-Media has covered some of the geopolitical undertones of this crisis (see here and here), but the UAE’s specific role in this crisis is worth highlighting on its own here. While the UAE is aligned with these other GCC nations in its distaste for Iran and its desire to bring Qatar to its knees, it transpires that the UAE has a hidden agenda of its own.
Qatar hosts the American military’s largest base in the region, al-Udeid, which currently houses over 10,000 American personnel. This is important because the UAE wants this base removed from Qatar and wants to host the American military themselves.
As usual, "follow the money."

Lord Keynes — The 10,000 Year Explosion, Chapter 1: A Summary

Gregory Cochran and Henry Harpending’s The 10,000 Year Explosion: How Civilization Accelerated Human Evolution (2009) is a truly extraordinary book that every person on the Left should read. In essence, Cochran and Harpending challenge the notion that human evolution stopped around 50,000 years ago....
Social Democracy For The 21St Century: A Post Keynesian Perspective
The 10,000 Year Explosion, Chapter 1: A Summary
Lord Keynes

Alastair Crooke — A Syrian Cordon Sanitaire: Is Israel huffing & puffing, or is it serious ?


Alastair Crooke also writing at SST now.

Sic Semper Tyrannis
A Syrian Cordon Sanitaire: Is Israel huffing & puffing, or is it serious?
Alastair CrookeSee also

Did Trump Get it Right by Accident?
Publius Tacitus

Caleb Maupin — Oil, Qatar, China & The Global Conflict


Backgrounder on conditions in geopolitics and geostrategy. It's much broader than oil, Qatar and China as the title suggests.

It's difficult to see how this unfolding dynamic doesn’t lead to war as competing political systems and economic interests continue on a collision course.

There is no way to disentangle social structures, political systems and economic interests of societies. They are different facets of the same structure.

NEO
Oil, Qatar, China & The Global Conflict
Caleb Maupin

Grete Mauthner — America’s Propaganda Central is Going to Cash in Big

A bipartisan initiative led by senators Rob Portman and Chris Murphy has authorized 160 million dollars over two years to fight state actors through a little-known agency office housed at the State Department called the Global Engagement Center....
America’s state propaganda agency Broadcasting Board of Governors (BBG) released a report about the range of its last year’s activities.…
The report states that in 2016 the agency would cooperate with all sorts of investigators, directors and journalists for them to promote US foreign policy and national security interests “through independent journalism”.
The target audience of such instances of “independent journalism” can be found in Russia, across the entire post-Soviet space, China, Iran, Cuba, along with a number of other regions. The BBG would broadcast its propaganda manifests in national languages of the countries it has been operating in, while adding programs in the languages of national minorities living in the above mentioned regions. By the end of 2016, the total number of employees of BBG reached 2,940.
In mid-June, the [US State Department's] Bureau of Democracy, Human Rights and Labor would release a tender that would demand the contenders to present the bureau with considerable capabilities for “independent and objective media coverage” across the Baltic States, in order to promote the “values of democracy and human rights” and wage information wars. Under the conditions of the tender, it is emphasized that the media should create competitive modern content on actively developing digital platforms, while targeting the Russian-speaking audience in those states. The tender will provide the agency that would get an upper hand with a sum ranging from 1.5 million to 3 million dollars, however it would be forced to closely coordinate its activities with US embassies in the Baltic countries. In addition, the agency that is to win the grant should get registered with the NSPA – NATO Support and Procurement Agency.
Last month it has also become known that the Broadcasting Board of Governors remains in control of such propaganda stations as Radio Liberty and Voice of America demanded the US Congress to allocate a total of 22 million dollars on its operations in spite of the fact that public interest towards above mentioned stations has been declining due to all sorts of unfounded public statements that they have been making. In total the Board has demanded US president to allocate over 685 million dollars on its operations for the year 2018. It’s curious that Washington is spending almost as much money on spreading propaganda in Russia as it spends on similar activities in China....
Simultaneously, US propagandist rail against Chinese government sponsored Confucian Institutes in US universities and Russian government sponsored RT operating in the English-speaking world.

Let's get some perspective here. The US is way out front in funding and carrying on information war and stratcomm than it's putative "adversaries."

NEO
America’s Propaganda Central is Going to Cash in Big
Grete Mauthner

Alastair Crooke — How Trump Defines the Future

President Trump has defined the future as a battle between old-style nationalism and neoliberal globalism, a challenge that the West’s elites mock at their own peril, as ex-British diplomat Alastair Crooke describes.
As the world globalizes, there is a dialectic going on over which factors should predominate — international v. national, sovereign v. subject, unipolar v. multipolar, liberal v. traditional, capitalism v. democracy, etc.

Alstaire Crooke observes that this is no longer largely a difference between power blocs — East and West, or North and South — but rather involves fierce in-house political disputes among contending factions and vying political constituencies within countries.

The outcome is uncertain and it is already involving considerable conflict domestically and internationally. 

Presently, the world is realigning geopolitically and geostrategically as countries rethink their future and lay track for a path to it. As a result the world is becoming more precarious.

Consortium News
How Trump Defines the Future
Alastair Crooke | founder and director of the Conflicts Forum, and former British diplomat and senior figure in British intelligence and in European Union diplomacy

Vladimir Popov and Jomo Kwame Sundaram — Early Death in Russia


Sociological effects of economic change. Economic contraction results in social dysfunction that manifests negatively in individual lives.
The transition to market economy and democracy in the Russian Federation in the early 1990s dramatically increased mortality and shortened life expectancy. The steep upsurge in mortality and the decline in life expectancy in Russia are the largest ever recorded anywhere in peacetime in the absence of catastrophes such as war, plague or famine.
During 1987-1994, the Russian mortality rate increased by 60%, from 1.0% to 1.6%, while life expectancy went down from 70 to 64 years. Although life expectancy declined from 1987, when Mikhail Gorbachev was still in charge, its fall was sharpest during 1991-1994, i.e., during Boris Yeltsin’s early years.
In fact, mortality increased to levels never observed during the 1950s to the 1980s, i.e., for at least four decades. Even in the last years of Stalin’s rule (1950-1953), mortality rates were nearly half what they were in the first half of the 1990s.
Economic output fell by 45% during 1989-1998, while negative social indicators, such as the crime rate, murder rate, suicide rate and income inequalities, rose sharply as well, but even these alone cannot adequately explain the unprecedented mortality spike.
Yet, the Yeltsin period is represented as the "golden years" of Russia in the US, and the US elite is doing its best to return "the good old days" to Russia when "cowboy capitalism" ruled under the tutelage of the Harvard boyz, whose guiding principle was, "Let the market sort it out."

Vladimir Putin reversed the precipitous slide into system collapse and now the US elite thinks that his astronomical approval rating is the result of his control of Russian media, which he is running as a propaganda machine like Pravada was for the UUSR elite.
Meanwhile, the same syndrome begins to grip the US.
TripleCrisis
Early Death in Russia
Vladimir Popov and Jomo Kwame Sundaram

Tyler Cowen — The economics of the Protestant Reformation

Here is the abstract of a new paper by Davide Cantoni, Jeremiah Dittmar, and Noam Yuchtman:
Important economic history and history of economics for the development of the socio-economic system that subsequently emerged in the West as economic liberalism and "capitalism."

Good stuff in the comments, too.

Marginal Revolution
The economics of the Protestant Reformation
Tyler Cowen | Holbert C. Harris Chair of Economics at George Mason University and serves as chairman and general director of the Mercatus Center

Wednesday, July 19, 2017

Jason Smith — What mathematical theory is for


Cuts to the chase on the use of math in science, including economics.

Information Transfer Economics
What mathematical theory is for
Jason Smith

Nice Monday



Bullish DTS from Monday.  $15B net withdrawals including $4B of interest and then the TGA gained (reserve drain) $30B from deposits; removing some regulated dud assets from depository institutions.

TGA now back up over $200B again here still under the debt ceiling.






Zaid Jilani — Trumpcare Is Dead. “Single Payer Is the Only Real Answer,” Says Medicare Architect.

Many health care activists are now pushing to adopt what is called a “single payer” health care system, where one public health insurance program would cover everyone. The U.S. currently has one federal program like that: Medicare. Expanding it polls very well.
One of the activists pushing for such an expansion is Max Fine, someone who is intimately familiar with the program — because he helped create it. Fine is the last surviving member of President Kennedy’s Medicare Task Force, and he was also President Johnson’s designated debunker against the health insurance industry.
Fine, now 91, wrote to The Intercept recently to explain that Medicare was never intended to cover only the elderly population, and that expanding it to everyone was a goal that its architects long campaigned for....
Could the GOP pick up on this?
After the death of the Senate healthcare bill yesterday, The Intercept reached out to Fine for comment about where Congress should go next. “Single payer is the only real answer and some day I believe the Republicans will leap ahead of the Democrats and lead in its enactment,” he speculated, “just as did Bismarck in Germany and David Lloyd George and Churchill in the UK.”
No way the presently configured GOP could ever pass anything like this.

Trump Jr. Took a Meeting, Bill Clinton Took $500K — Aaron Mate interviews Michael Sainato

According to reports, Special Counsel Robert Mueller's probe now includes the recently disclosed meeting between Donald Trump Jr. and a Russian lawyer. The music publicist who arranged the meeting told Trump Jr. the lawyer had compromising information on Hillary Clinton on behalf of the Russian government, but the lawyer, Natalia Veselnitskaya, says she was only trying to lobby against the Magnitsky Act, which imposed sanctions on Russian officials. If that's true, then there's another interesting Clinton tie here. Hillary Clinton also opposed the sanctions when she was Secretary of State, and that only came after her husband, Bill Clinton, received $500,000 for a speech at a Russian investment conference in Moscow. According to leaked emails, Hillary Clinton's 2016 campaign killed a Bloomberg story that tried to link Hillary Clinton's stance to her husband's paid gig, which means Donald Trump might not be the only 2016 candidate with a conflict of interest related to Russia. 
Let's get some perspective here.

TRNN
Aaron Mate interviews Michael Sainato

See also
It's official: The self-appointed foreign collusion police have forgiven themselves for colluding with a foreign government. It was all in the past. To quote Barack Obama after we "tortured some folks": Forward!
The familiar, "It's only bad when others do it," syndrome. Seems to be rampant in the American elite.

Russia Insider
High-Ranking Democrat Weighs in on DNC Collusion With Foreign Government: "No Biggie"
Michael Hering

Oleg Komlik — Pierre Bourdieu: Economism is a form of ethnocentrism


Economic liberalism, typified by "economism," is not only an ideology based on restrictive assumptions that are normative and prescriptive in addition to positive. It is also ethnocentric, being based on Western culturally dominant concepts and values, and in particular Anglo-American concepts and values that have been dominant post-WWII, and which economic liberals have insisted upon universalizing as "natural."

Economic Sociology and Political Economy
Pierre Bourdieu: Economism is a form of ethnocentrism
Oleg Komlik | founder and editor-in-chief of the ES/PE, Chairman of the Junior Sociologists Network at the International Sociological Association, a PhD Candidate in Economic Sociology in the Department of Sociology and Anthropology at Ben-Gurion University, and a Lecturer in the School of Behavioral Sciences at the College of Management Academic Studie

see also

Fast Company
Are You Ready To Consider That Capitalism Is The Real Problem?
Jason Hickel And Martin Kirk



Bill Mitchell — Austerity will not work for France right now

It didn’t take long from Emmanuel Macron to get started on his neo-liberal agenda. That should be no surprise, given he championed the insidious El Khomri Law when he was Minister of Economy and Finance in the second Manuel Valls Cabinet. In a major speech in Paris on Monday (July 17, 2017), Macron, demanded that local governments in France slash spending by 13 billion euros by 2022 as part of an effort to cut the French fiscal deficit. Why they would want to be cutting the fiscal deficit with growth creeping along and the unemployment rate stuck close to 10 per cent, among other problems facing the French nation is another matter. Clearly, they are under pressure from the Excessive Deficit Mechanism given that the overal fiscal deficit remains around 3.5 per cent (above the 3 per cent threshold) and doesn’t look like coming down any time soon. And it is clear that Brussels will not turn a blind eye to France, as it did for Spain when it allowed the deficit to rise to support growth as part of the strategy to get the conservatives re-elected. The elites in the Eurozone have their boy in power in France so no further political support is required. But austerity will not work for France right now.
Look for more political unrest in France.

Bill Mitchell – billy blog
Austerity will not work for France right now
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

See also
Backlash against painful budget cuts coming from both sides as military, teachers, local authorities push back..
A backlash against budget cuts was to be expected in France, but for the first shots to be fired from the military is unusual, and a sign that Macron should be prepared to be hit from both ends of the political spectrum.
Honeymoon over?

Asia Times
Revolt against Macron begins, chief of French armed forces resigns
Chris Scott

Brian Romanchuk — Presentation At MMT Conference

I will be doing a presentation at the First International Conference of Modern Monetary Theory in Kansas City in September 2017 (conference dates are September 21-24, website: http://www.mmtconference.org/). I will be presenting an introduction to my Python stock-flow consistent models package -- sfc_models. This article is a rough draft of what I think the slides will look like.
Bond Economics
Presentation At MMT Conference
Brian Romanchuk

Tuesday, July 18, 2017

Erica Klarreich — In Game Theory, No Clear Path to Equilibrium


Game theory in math and economics.

Quanta Magazine
In Game Theory, No Clear Path to Equilibrium
Erica Klarreich

Colin Marshall — Hunter S. Thompson Chillingly Predicts the Future, Telling Studs Terkel About the Coming Revenge of the Economically & Technologically “Obsolete” (1967)

I recall reading Hell's Angels: The Strange and Terrible Saga of the Outlaw Motorcycle Gangs back then. It was a good read, as was Tom Wolfe's The Electric Kool-Aid Acid Test. This was new in journalism and investigative reporting. It took a lot of nerve."To see the Hell’s Angels as caretakers of the old 'individualist' tradition 'that made this country great' is only a painless way to get around seeing them for what they really are," Thompson writes in that book, calling them "the first wave of a future that nothing in our history has prepared us to cope with. The Angels are prototypes. Their lack of education has not only rendered them completely useless in a highly technical economy, but it has also given them the leisure to cultivate a powerful resentment... and to translate it into a destructive cult which the mass media insists on portraying as a sort of isolated oddity" destined for extinction.
Studs Terkel, after reading that passage out loud in a 1967 interview with Thompson, calls it "the key" to the entire book. "Here we have technology, we have the computer, we have labor-saving devices," he says to Thompson, but we also "have the need for more and more college education for almost any kind of job, and we have this tremendous mass of young who find themselves obsolete." But Thompson replies that the real consequences have only started to manifest: "The people who are being left out and put behind won't be obvious for years. Christ only knows what'll happen in, say, 1985 — a million Hell's Angels. They won't be wearing the colors; they'll be people who are just looking for vengeance because they've been left behind."
What we are seeing in the US that the upper 20% of workers are doing well and have bright prospects, while the other 80% are stuck where they are, are stagnating in place, or are doing worse. Moreover, employment for the lower 80% is becoming more precarious. This is resulting in social dysfunction and political reaction.

Edward Harrison — Some thoughts on full employment and this asset-based economic recovery

My answer is that monetary policy is the only game in town. In fact, if you look at the US compared to the rest of the G-7, fiscal policy has been tighter in the US than in any other country. It’s been even tighter than Spain, which has been forced to cut under the EU’s excessive deficit procedure.
Credit Writedowns
Some thoughts on full employment and this asset-based economic recovery
Edward Harrison
This is going to be a quick follow-on to the last post on monetary policy as the only game in town. I feel like the obvious question that post doesn’t answer is this one: what other policy tools should we use? And I want to tee up that question with this post.

Asia Unhedged — Three misconceptions in the US about China’s economy

Former chairman of Morgan Stanley Asia talked to CNBC about the three main misconceptions he sees being thrown around about China’s economy:
  1. “Number one, they have pushed their system to the point of Japanese style implosion, with all the debt, and I think that is wrong.
  2. And, number two, that they have a centrally planned economic structure, every bit of which is driven by the government, and I think that’s wrong. I think that the private economy is actually thriving.
  3. And, number three, the west does not believe that China innovates. It continues to believe that China is aggressive at stealing intellectual property, and yet, the wave of innovation that is evident in their private-based economy, anything from e-commerce to medical sciences, is really quite spectacular right now. […]
The Chinese have defied a lot of naysaying for close to 40 years, and I think that will continue to be the case. All the talk about a crash landing, a slowdown, a debt-induced Japanese-like end game, those fears are largely overblown. […]
Asia Times
Three misconceptions in the US about China’s economy
Asia Unhedged

Nick Johnson — Production and realization of surplus value – Marxists, Keynesians and others

Many Marxists follow the man himself by emphasising that capitalism is a profit-driven system. By contrast, Keynesians, particularly the more radical post-Keynesians, see the system as demand-driven and therefore responsive to a policy of demand-expansion during a slowdown or recession.…

In sum then, I find the above quote from Marx on the contradiction between the production and realization of surplus value and profit very helpful. It offers tremendous insight into the dynamics of capitalism, which has given rise to periods of growth and crisis throughout its history. 
If Marx is right, different kinds of crisis may require different solutions: if the production of surplus value and profitability is insufficient, then some kind of restructuring is required; if its realization is weak due to inadequate demand, then policies which boost investment or consumption may be appropriate.
The Political Economy of Development

Cyrus Farivar — Security experts from Google, Facebook, Crowdstrike want to save US elections. "Defending Digital Democracy" will "generate innovative ideas" to safeguard democracy.


Get ready for  de facto censorship? The tell? "Safeguarding democracy."
A new group at Harvard University staffed by the former campaign managers of the Hillary Clinton and Mitt Romney campaigns, along with other top security experts, have banded together to help mitigate various types of online attacks that threaten American democracy.
The initiative, dubbed "Defending Digital Democracy," will be run by former chief of staff for the secretary of defense, Eric Rosenbach.
"Americans across the political spectrum agree that political contests should be decided by the power of ideas, not the skill of foreign hackers," Rosenbach said in a Tuesday statement. "Cyber deterrence starts with strong cyber defense—and this project brings together key partners in politics, national security, and technology to generate innovative ideas to safeguard our key democratic institutions."
Of course these people have no agenda. Heh heh.

Meanwhile the felony leaks from anonymous government sources continue, and there seems to be nothing being done about uncovering the leakers. Thank heaven it's not disrupting democracy to mount a soft coup against a sitting president. Actually, the people involved profess to be "safeguarding democracy" from the American electorate "since it made a poor choice" that the "grownups" need to fix.

Tim Duy — This Expansion Will End in a Fizzle, Not a Bang

The Fed is growing increasingly concerned that this expansion will end like the last two, with a collapse in asset prices that brings down the economy. That concern will lead the central bank down the path of excessive tightening. Worse, that logic misses a key point. In both of the last two cycles, there was a sizable imbalance in the economy that extended beyond financial assets themselves. So far, the current environment lacks such an imbalance. That suggests the expansion ends with more of a fizzle than a bang....
The central point is this: High asset prices alone do not imply that a fall in those prices will bring the economy down. Those asset prices need to be linked in a very tangible way to a fairly significant and widespread imbalance in the economy for their decline to bring about a broader economy collapse....
Bloomberg View — Opinion
This Expansion Will End in a Fizzle, Not a Bang
Tim Duy | Director of Undergraduate Studies of the Department of Economics at the University of Oregon, the Director of the Oregon Economic Forum, and blogger at Tim Duy's Fed Watch

John Helmer — The Improper Association (Maybe Crime) of Victor Pinchuk With Hillary, Bill and Chelsea Clinton, Covered Up by the Us Media, Us Department of Justice, and the International Monetary Fund

Never in the field of American conflict with Russia has so much wool pulled over the eyes been owed to so few sheep. That was during the losing presidential campaign of Hillary Clinton. Now, in the investigations of President Donald Trump and his family, it’s a case of so many sheep producing so little wool.
The case of the $13 million paid to the Clinton family by the Ukrainian oligarch Victor Pinchuk, in exchange for personal favours and escalation of the war against Russia, was reported in detail throughout 2014. Click to read the opener, and more....
Dances with Bears
The Improper Association (Maybe Crime) of Victor Pinchuk With Hillary, Bill and Chelsea Clinton, Covered Up by the Us Media, Us Department of Justice, and the International Monetary Fund
John Helmer

Robert Parry — Netanyahu Pushes Trump Toward Wider Wars

Russia-gate is empowering Israeli Prime Minister Netanyahu to strong-arm President Trump into escalating the Syrian war by abandoning a recent cease-fire and challenging Iran and Russia, reports Robert Parry
A weakened, even desperate President Donald Trump must decide whether to stand up to Israeli Prime Minister Benjamin Netanyahu or to repudiate the Syrian partial ceasefire, which Trump hammered out with Russian President Vladimir Putin on July 7.

Whether intentionally or not, this crossroads is where the months of Russia-gate hysteria have led the United States, making Trump even more vulnerable to Israeli and neoconservative pressure and making any cooperation with Russia more dangerous for him politically.
After meeting with French President Emmanuel Macron in Paris on Sunday, Netanyahu declared that Israel was totally opposed to the Trump-Putin cease-fire deal in southern Syria because it perpetuates Iranian presence in Syria in support of the Syrian government of President Bashar al-Assad.
Netanyahu’s position increases pressure on Trump to escalate U.S. military involvement in Syria and possibly move toward war against Iran and even Russia. The American neocons, who generally move in sync with Netanyahu’s wishes, already have as their list of current goals “regime changes” in Damascus, Tehran and Moscow – regardless of the dangers to the Middle East and indeed the world.…
Armageddon arriving.

Consortium News
Netanyahu Pushes Trump Toward Wider Wars
Robert Parry
Under Prime Minister Netanyahu, Israel continues to become more and more intolerant both in its treatment of Palestinians and its attitude toward more liberal tendencies in Judaism, as ex-CIA analyst Paul R. Pillar explains.
The Lost Liberalism of Netanyahu’s Israel
Paul R. Pillar

Chris Dillow — Facts, frictions & "mainstream" economics


A major problem with conventional economics is that it is like doing physics without taking friction into account. OK for creating simple teaching models to illustrate fundamentals, maybe. But disastrous in doing advanced theory and especially in applications like engineering.

There are a lot of inefficiencies in economic behavior that are difficult to measure and very difficult to reduce in a cost-effective way, such as transaction cost. Ignoring these factors or pretending that they don't contribute substantially to results can render modeling quite non-representational when predictions are compared to evidence.

And this is in addition to "theonomic" assumptions!

Stumbling and Mumbling
Facts, frictions & "mainstream" economics
Chris Dillow | Investors Chronicle

Cristina Casabón — More people live inside this circle than outside it - and other demographic data you should know


With the progressive integration of China, India and other large developing countries into the world economy, hundreds of millions will compete in the global market to reach higher living standards. Global structures of production, trade, employment and wages will change with the relocation of people, enterprises, capital flows and financial globalisation.

The consequences of global population changes will affect billions of people, and therefore, we will need to revise migration policies and implement new changes in their economic models. It's ok to raise concern about this challenge, but we never shouldn't underestimate our ability to innovate, solve problems and create ideas, as this is the only solution to confront our global challenges. The world grows and changes, and more brains thinking solutions and policies will be necessary.
Emerging challenges — and opportunities.

World Economic Forum
More people live inside this circle than outside it - and other demographic data you should know
Cristina Casabón | Digital Content Specialist

Bill Mitchell — A government can always afford high-quality health care provision


Must-read on the abysmal state of the American health care system. Disseminate widely.
The only way that these sorts of debates will progress, however, is to take them out of the fiscal policy realm where they are largely inapplicable and start talking about rights and what different interpretations of these rights concepts have for real resources allocations and redistributions.
Whether a nation can afford first-class health care depends only on the real resources that are available to it for that purpose.
If all available real resources are being fully utilised then to expand their use in one area requires another area(s) give up its (their) claim on those resources.
In US politics, affordability of health care provision is only one side of the coin. The other side is the highly contentious "right versus privilege" issue.

Liberals and progressives generally hold that access to quality healthcare is a right whereas conservatives generally hold that health care is a privilege, although many conservatives would agree that all should have access to emergency treatment. Many conservatives argue that access to emergency rooms, which only treat acute conditions, is sufficient provision.

The abysmal state of health care in the US is a cultural outcome of a highly individualistic framework and a political plutonomy.

On the other hand, polling shows that the public is in favor of universal access to quality health care through something like Medicare for all.

Bill Mitchell – billy blog
A government can always afford high-quality health care provision
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia