Monday, June 27, 2016

George Monbiot — We’re Not as Selfish as Economists Think We Are. Here’s the Proof.

In complex adaptive systems, optimization involves adaptation through feedback and learning, as well as taking into account return on coordination. This happens naturally and spontaneously not only cognitively but also affectively since it a positive evolutionary trait. Evolutionary success involves a combination of competition and cooperation through coordination, as in teamwork. Homo socialis is the reality rather than homo economicus.

We’re Not as Selfish as Economists Think We Are. Here’s the Proof.
George Monbiot

John Ross — Studying the real forces driving innovation is vital for China

Important as the other side of the coin. MMT reveals how to do the funding, but the funding has to be directed in real terms. The contributions of the state in promoting education and R&D are fundamental to fostering innovation. Moreover, investment is the driver.

Ross also provides a useful economic summary of the economic factors involved in innovation.
Economic fundamentals illustrate clearly why innovation is so critical for China. Analyzing in terms of classical "growth accounting," an economy's supply side inputs are capital, labour and "total factor productivity" (TFP) – the latter being all growth that can't be explained by increases in capital and labor. More precise versions add "intermediate products" – the inputs of one economic sector into another produced by increasing division of labour and specialization. Innovation's effects are measured as part of the TFP.
In most economies the most powerful forces of economic development are, in descending order of importance, intermediate products, fixed investment, labour inputs and TFP. This applies during periods of high innovation.
Garage startups as the source of innovation is a myth, along with individuals' creativity and ingenuity being all there is to it. In fact, the "garage" is the state, as Mariana Mazzucato showed in The Entrepreneurial State, and the state provides incubation for creativity and ingenuity, which don't come out of nowhere. People have to be trained and basic research and development funded. China is well-poised to take advantage of this. The leadership understands the opportunities and challenges and has the tools to deal with them.
Studying the real forces driving innovation is vital for China
John Ross, columnist with

See also
Heiko Khoo, columnist with

Alexander Mercouris — Russia Arrests its only Liberal Regional Governor

Of course, the West will see this sting as persecution, as it has the conviction of many other corrupt liberal oligarchs and politicians. Not to imply that Russian liberals have a monopoly on corruption in Russia.
Inevitably there are already claims that the arrest and prosecution of Russia’s only liberal governor is politically motivated – supposedly as a tightening up exercise in light of the forthcoming parliamentary elections. The Russian authorities of course deny this, and the reasons for supposing a political motive are not obvious. Belykh is hardly a popular figure and as governor of the remote and underpopulated Kirov Region he is hardly a threat to the authorities in Moscow. If he was they would have presumably dismissed him before now. As it happens Belykh is the third Russian regional governor to be arrested on corruption charges this year, which suggests that he has simply fallen foul of an ongoing anti-corruption campaign.…
Belykh’s political longevity notwithstanding the scandals of his administration and his all-too obvious administrative incompetence is an indication of how Russian liberals – far from being the persecuted minority they claim to be – in reality enjoy extraordinary privileges in a country where they are widely disliked. His arrest however suggests that his incompetence and/or corruption have finally caught up with him.
Russia recently appointed an independent investigator whose reputation for honesty and effectiveness is high to lead the offensive against endemic corruption. Xi Jinping has acted similarly in China, since corrupt is a major drag there as well as it Russia. Needless to say, the West sees this as an ominous sign of political repression. Damned if you do, damned if you don't.

The Duran
Russia Arrests its only Liberal Regional Governor
Alexander Mercouris

Alex Christoforou — Erdogan Folds, Apologizes to Putin

President Erdogan said he is willing to deal with the crisis in relations between Russia and Turkey. According to Kremlin spokesman Dmitry Peskov, Erdogan said that Turkey…
“shares the pain of downed Su-24 pilot’s death with his family” and “sees it as Turkey’s pain”
It’s no secret that Turkey’s economy has been beaten and battered by Russia’s sanction, especially in the tourism sector where Turkish hotels (once the primary destination for Russian summer travellers) remain completely abandoned and empty.
Let’s not even mention Syria, where Erdogan’s once grand ambition to overthrow Assad, and get a Saudi/Qatari pipeline flowing through Turkey on route to Europe, has been obliterated by Russia’s targeting of Turkey/NATO trained ISIS and Al Nusra forces.…
The Duran
Erdogan Folds, Apologizes to Putin
Alex Christoforou

Steve Cecchetti and Kim Schoenholtz — A Primer on Helicopter Money

Helicopter money is not monetary policy. It is a fiscal policy carried out with the cooperation of the central bank. That is, if the Fed were to drop $100 bills out of helicopters, it would be doing the Treasury’s bidding.
We are wary of joining the cacophony of commentators on helicopter money, but our sense is that the discussion could use a bit of structure. So, as textbook authors, we aim to provide some pedagogy. (For the record, here are links to Ben Bernanke’s excellent blog post, to a summary of Vox posts, and to Willem Buiter’s technical paper.)
To understand why helicopter money is not just another version of unconventional monetary policy, we need to describe both a bit of economic theory and some relevant operational practice. We use simple balance sheets of the central bank and the government to explain.…
Money & Banking
A Primer on Helicopter Money
Steve Cecchetti and Kim Schoenholtz

Neil Wilson — Move to Medium

Most of my written stuff is probably going to appear on Medium now. It's a lot easier platform to write on than Blogger, and much easier to manage.
So catch up with me over there.
Move to Medium
Neil Wilson

Bill Black — BREXIT: Populism and Democracy: Part 1

The UK vote in favor of BREXIT has stoked the fears of the New York Times to a fevered pitch. Their greatest collective fear is the rise of “populism.” The NYT fashions itself the last redoubt of “serious people” under siege by the rabble. BREXIT is an opportunity to drive home to the rabble the folly of failing to fall in line with the policies of the serious people featured in the NYT. The moral of the story is a simple one – when the electorate in a democratic election ignores the technocrats the result is an economic and social catastrophe.
Even for the NYT, however, their attacks on the UK electorate for daring to vote for BREXIT were extraordinary in their intensity and multiplicity. At least seven articles, each of them negative about the UK voters, were featured in today’s paper. (I had no strong views on the vote. I think reasonable UK voters could disagree on the desirability of BREXIT.)
This is the first in a seven-part series discussing each of these seven articles decrying BREXIT. I focus on the unintended aspect of each article, for each demonstrates the contempt that a broad range of elites have for the voters and democracy.…
New Economic Perspectives
BREXIT: Populism and Democracy: Part 1
William K. Black | Associate Professor of Economics and Law, UMKC

Bill Mitchell — Why the Leave victory is a great outcome

The class struggle is back! Who would have thought. After years of being told by the likes of John Major and then Tony Blair that “the class war is over” (Blair) and the we now all live in “the classless society” (Major) the working class has fought back, albeit under the motivation of the looney, populist Right rather than a progressive left, who remain a voice for capital. Remember when we were told that the Left-Right continuum was irrelevant now in this global world where nation states had given way to grand communities (like the EU) and that, in this new post-modern world, we could all be entrepreneurs (meaning we sell our labour to a capitalist!). And now we know that class never went away. It might have been hi-jacked by the Right but it is there – and it is powerful. Planet Earth to British Labour – do something about it or wither away and make way for a progressive new organised working class movement.…
Bill Mitchell – billy blog
Why the Leave victory is a great outcome
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Brexit buy signal. Jim Rogers says this will be the worst recession in our lifetime.

This hysterical clown is making another "bold" prediction. He says that Brexit will lead to the worst recession in our lifetimes.

You just got your buy signal.

Sunday, June 26, 2016

The Guardian — Boris Johnson breaks silence to set out leadership platform

Boris Johnson has broken cover for the first time since reacting to the vote for Brexit to set out how the country may look if he wins the race to succeed David Cameron as prime minister.
Amid clamour for the leave campaign’s leaders to set out what happens next, Johnson claimed Britain will be able to introduce a points-based immigration system while maintaining access to the European single market.
Johnson sought to reassure remain voters the UK will continue to intensify cooperation with the EU and told his fellow leave supporters they must accept the 52-48 referendum win was “not entirely overwhelming”.…
The Guardian
Boris Johnson breaks silence to set out leadership platform

France24 — Spain's conservatives [sic] win general election, but fail to get a majority

Spanish elections delivered a hung parliament for the second time in six months on Sunday, adding to political uncertainty in Europe after last week’s shock Brexit vote and piling intense pressure on Spain’s warring politicians to form a government.
Acting Prime Minister Mariano Rajoy’s centre-right People’s Party (PP) again emerged with the single biggest bloc of seats but fell short of a majority, leaving the euro zone’s fourth-largest economy at risk of another lengthy political stalemate.
Spain in political limbo.

Spain's consernatives win general election, but fail to get a majority

Steve Randy Waldman — Attributions of causality

On Brexit, but more important for the thoughts on causes versus conditions and factors.

Attributions of causality
Steve Randy Waldman

Xinhua — Chinese growth philosophy to help navigate through new industrial revolution: Klaus Schwab

China's 13th Five-Year Plan reflects its ability to embrace the new industrial revolution and its growth philosophy will help it play a leading role in the process, World Economic Forum founder and executive chair Klaus Schwab said Saturday. [Special coverage]
The Fourth Industrial Revolution is not science fiction -- we are already in the midst of it, he told Xinhua in an exclusive interview ahead of the upcoming Annual Meeting of the New Champions 2016, also known as the Summer Davos Forum.
"It will not only change what we are doing and how we communicate, but the whole of society and our identity," he said.
More than half of the Chinese population are prepared for the Fourth Industrial Revolution and the 13th Five-Year Plan reflects this ability, he added. The blueprint, released last year, outlines China's development path for the next five years, with growth driven by innovation, coordination, green development, opening up and sharing.
Schwab expects the five principles to be beneficial to China's future economic growth, and among them, innovation is the most important principle to the progress of the Fourth Industrial Revolution.
The new wave of technological developments will not only bring opportunities such as increased productivity, but might widen the gap between the rich and the poor due to exposure to the latest tools, he pointed out.
Therefore, sharing is important. Governments should ensure the benefits of new technology are shared domestically and globally, he said.
There might be some layoffs due to technology such as robotics. The process will be a kind of destructive creation, with old jobs reduced and new jobs created. The challenges lies in the different speeds of the two process, he said, adding that the government and business communities should ensure people are retrained and new jobs created.
Building a green economy should be the goal of all efforts, and that will take coordination and synergy between governments and the business community. More than that, there needs to be more networking, not only within a country, but also on a global scale, thus, underscoring the need to continue to open up, Schwab said.
China is one of the largest markets for robots and is supplying the world in many other technological areas, said Schwab, who was impressed with the flexibility and reliability of the latest drone product developed by the Shenzhen-based technology firm DJI, a leading manufacturer of commercial and recreational drones for aerial photography and videography.
"I think China can play a leading role in shaping the Fourth Industrial Revolution," he said.
Meanwhile, as China is part of the global economy, it should facilitate global dialogue and cooperation to manage development within a fair environment, Schwab added.
Klaus Schwab is German engineer and economist, best known as the founder and executive chairman of the World Economic Forum. His wife and former secretary, Hilde, co-founded the Schwab Foundation for Social Entrepreneurship. — Wikipedia
The first of the achievements is that the SCO has advocated and put into practice the pioneering Shanghai Spirit, which features mutual trust, mutual benefit, equality, consultation, respect for diverse civilizations and pursuit of common development, said the Chinese president.

Now what? Brexit aftermath. What we're facing.

Ambrose Evans-Pritchard — Parliament must decide what Brexit means in the interests of the whole Kingdom

Ambrose Evans-Pritchard previously wrote a stirring essay supporting Leave for reasons of preserving national sovereignty that was linked to at MNE. AEP is well-connected and this piece sets forth the presumable maneuvers now taking place behind the scenes in London and the major EU capitals. It's going to be a negotiated settlement.

The Telegraph
Parliament must decide what Brexit means in the interests of the whole Kingdom
Ambrose Evans-Pritchard

Andrew Batson — What is nationalism anyway, and why is it so powerful?

I would say that looking for a definition in terms of an essence is the wrong approach since terms that are not defined technically or operationally often have different senses dependent on their use in a context that gives them their meaning in that context.

However, Professor Gellner brings out an important meaning of "nationalism" in relation to national sovereignty, which is key in popular sovereignty as the basis of the modern concept of liberal democracy. Andrew riffs off that.

The historical development of nations from clans and tribes adds the element of kinship, which connects the concept of a nation with evolutionary theory in addition to political theory, anthropology, sociology, and history.

We are going to be hearing a lot more about this as the historical dialectic between the opposing forces of nationalism and internationalism deepens.

Andrew Batson's Blog 

Brian Romanchuk — Brexit - A Cautious Panic

Calm down, this is not happening overnight, says Brian.
For those of us outside the United Kingdom, the "Leave" victory in the referendum is not enough to cause worries about the real economy. We have entered the thin summer market period, so some form of financial turbulence is likely, but until some defaults occur it is not going to matter for non-levered investors. For the U.K., the most likely outcome is going to be an extremely long period of technical negotiations, which will eventually be pushed out of the news cycle by news about the Royal Family and football.
Bond Economics
Brexit - A Cautious Panic
Brian Romanchuk

Tom Hickey — Summary on the reaction to Brexit

1. Social

The “little people” as they are called in the US, or “lower classes,” asserted their right to rule as the majority in a democracy. This was unforeseen by pundits and the elite in general, who believed that the media could influence the public to vote as usual with the elite. The result is surprise and even shock reverberating in the bubble. The flood of punditry pouring out now is masking confusion resulting from the disruption of the social order since who the winners and losers will be is unclear. Everyone is trying to rescue what they can by getting head of the curve in shaping the narrative, which is in flux. This is not revolution yet, but it is major disruption and signals trouble ahead for elites, who depend on maintaining the social order that privileges them. Some are actually scared, as are some in the US over the rise of populism and dissatisfaction with inequality.

2. Political

The majority of the political commentary from the side of the elite, which owns the media, is critical of the referendum as an instrument of direct democracy. Pundits agree that the people (Greek demos) cannot be trusted to vote even in their own real interest, let alone of the country as whole. Therefore, the elite concludes that the use of the referendum needs to be abolished or at least hobbled, for example, by requiring a supermajority such as 60% rather than a simple majority:  This cannot be permitted to happen again and it was foolish to let it happen in the first place. The rise of the rabble is the worst fear of conservatives, who assume that the people should be ruled by "their betters."

3. Economic

Being unexpected by elites that predominantly control markets, who were taken by surprise even though polling was close, the result produced a shock that sent markets into a tailspin. Whether this will spread to the real economy is unclear, as are the intermediate and long term economic effects of the referendum. Since voting for leaving is not actually leaving, which will take years if it happens at all, powerful forces are gathering in the UK, Europe and the US to ensure it doesn’t, since taking apart existing arrangements and replacing them would be a mess that would likely be terrible for business and finance with uncertainty undermining confidence. Moreover, this is a direct blow struck at the internationalist world order that Western liberal elites have been pursuing since the end of WWII to extend transnational capitalism globally.

4. International

The vote is being denounced as a blow to the liberal world order fashioned since WWII in order to "spread freedom and democracy" and "end all wars." While this is the advertised goal of liberal internationalism as well as to neoconservatism, both are really based on spreading “freedom and democracy” as a euphemism for liberalization, privatization and deregulation as a means to reduce the size and influence of government on business and finance, and to transfer public assets to private ownership under transnational capitalism controlled by the West and the US in particular. The world order under neoliberal globalization is perceived as threatened politically by rising nationalism asserting itself a presence for  national sovereignty and democracy over internationalism and economically by a demand for distributive justice over transnational capitalism. The leave vote has ratcheted this up several notches.


Brexit is an elite nightmare all around. Expect a strong reaction to reverse course and return to the status quo, or if this not possible to salvage what can be salvaged of the internationalists' project for neoliberal globalization under Western liberal leadership and control. The immediate objective is to prevent contagion.

Michael Brune — TransCanada Files NAFTA Suit Demanding More Than $15 Billion for Keystone XL Rejection

On June 24, foreign oil company TransCanada filed a lawsuit against the U.S. under NAFTA, the North American Free Trade Agreement, arguing that the U.S. rejection of the Keystone XL pipeline violated NAFTA’s broad rights for foreign investors by thwarting the company’s “expectations.” As compensation, TransCanada is demanding more than $15 billion from U.S. taxpayers.
TransCanada’s case will be heard in a private tribunal of three lawyers who are not accountable to any domestic legal system, thanks to NAFTA’s “investor-state” system, which is also included in the proposed Trans-Pacific Partnership (TPP). The controversial TPP would empower thousands of additional corporations, including major polluters, to follow TransCanada’s example and use this private tribunal system to challenge U.S. climate and environmental policies.…
Oh what the heck, it isn't "taxpayer money" – just government on the hook. (snark)

TransCanada Files NAFTA Suit Demanding More Than $15 Billion for Keystone XL Rejection
Michael Brune
ht Dan Crawford at Angry Bear

Consensus: Fed on Hold due to Brexit

If consensus view on rates materializes, it means continued US fiscal drag via Fed policies. Then you have to wonder if this becomes semi-permanent policy as each European nation goes thru their own Brexit-like catharsis now over a the next year.

Saturday, June 25, 2016

EU Bankster Contagion — Chris Hedges interviews Michael Hudson

Summary: Great Britain’s decision to leave the EU presages a global financial meltdown that could resemble the 1930s. Banks will demand massive bailouts. We will be forced, if the banks are bailed out again, to endure harsher austerity and a prolonged depression.
Michale Hudson
EU Bankster Contagion
Chris Hedges interviews Michael Hudson

How Western Military Interventions Shaped the Brexit Vote — Gregory Wilpert interviews Michael Hudson

Michael Hudson argues that military interventions in the Middle East created refugee streams to Europe that were in turn used by the anti-immigrant right to stir up xenophobia.
Actually, Michael Hudson sees much more than immigration at work. But immigration was probably the final straw.

Not just the UK.
Europe is sort of like the Soviet Union in the ‘30s and ‘40s. There was an argument, is it reformable or not? There is a feeling, and I think it’s correct, that the European Union, the eurozone, and the euro, is not reformable, as a result of the Lisbon treaties and the other treaties that have created the euro. Europe has to be taken apart in order to be put together not on a right-wing, neoliberal basis, but on a more social basis.
Now, ironically, the parties who call themselves socialists are now moved to the ultra-right, to the neoliberal. The French socialists, the German social democrats. But you’re having real radical parties arise in Italy, Spain, Portugal, and potentially in Greece, again, that are going to say, well, the key of any government, of any national government, has to be the ability to issue our own money, to run a deficit, spending into the economy to make the economy recover. We cannot recover under the Lisbon agreements, under the eurozone, where the central bank will only create money to give to banks, not money to spend into the economy, to actually finance new investment and new employment. And we cannot be part of a eurozone that insists that pensions have to be cut back in order to make the banks whole and save the one percent losing money.…
The Real News Network
How Western Military Interventions Shaped the Brexit Vote
Gregory Wilpert interviews Michael Hudson

John Pilger — Why the British said no to Europe

The majority vote by Britons to leave the European Union was an act of raw democracy. Millions of ordinary people refused to be bullied, intimidated and dismissed with open contempt by their presumed betters in the major parties, the leaders of the business and banking oligarchy and the media.
This was, in great part, a vote by those angered and demoralised by the sheer arrogance of the apologists for the "remain" campaign and the dismemberment of a socially just civil life in Britain.…
Why the British said no to Europe
John Pilger

The Hidden Billionaires behind Trump The Foreclosure King, The Three-Headed Dog From Hell and Goldman Sachs — Dennis J Bernstein interviews Greg Palast

Palast drags Donald Trump and John Paulson through the mud of their own creation.

Greg Palast
The Hidden Billionaires behind Trump The Foreclosure King, The Three-Headed Dog From Hell and Goldman Sachs
Dennis J Bernstein interviews Greg Palast for Nation of Change


The above link no longer works. Here a link to the podcast without transcript.

Mark Leonard — The Rise of Demotic Democracy in Europe

"Demotic democracy" is a euphemism for "rule of the rabble," demos meaning "people" in Greek.

This is the worst nightmare of the elite and the basis of conservatism as the principle that some are better than others.

Obviously, the elite will marshall all means available to counter the rise of the rabble, which threatens the end of their privilege.

Project Syndicate
The Rise of Demotic Democracy in Europe
Mark Leonard | Director of the European Council on Foreign Relations

Barkley Rosser — The Tale of the Dragon Slayer

Black humor. And it's short.

The Tale of the Dragon Slayer
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

The Minskys — The Job Guarantee: The Coolest Economic Policy You Never Heard Of

When you think of economic issues what are the first things that come to mind? Poverty, inequality, unemployment, inflation, and crisis are all common answers to the question. Wouldn’t it be great if there was a policy that could address all of those issues (and more) in a cost-effective manner? In this piece I will give a very brief introduction to Job Guarantee (JG) schemes, the proverbial economic silver bullet.…
The Minskys — an economics blog created by graduate students from the Levy Economics Institute
The Job Guarantee: The Coolest Economic Policy You Never Heard Of
Written by Carlos Maciel & Vitor Mello
Illustrations by Heske van Doornen

James K. Galbraith — The Day After

The European Union has sowed the wind. It may reap the whirlwind. Unless it moves, and quickly, not merely to assert a hollow “unity” but to deliver a democratic, accountable, and realistic New Deal – or something very much like it – for all Europeans.
James K. Galbraith | Lloyd M. Bentsen Jr. Chair in Government/Business Relations and Professor of Government at the Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin

Voltaire Network — The White House and NATO prepare the sabotage of Brexit

No sources cited, but it would be surprising if this were not already in gear.

Voltaire Network
The White House and NATO prepare the sabotage of Brexit

The Saker — US Options in the Ukraine: trigger a religious war?

The Saker admits this is pure speculation on his part but it is useful backgrounder for understanding the complicated situation in Eastern Europe and Turkey, home of the Patriarchate of Constantinople.

Like the Middle East and North Africa (MENA) tEastern Europe and Russia, which border Turkey, have a long history and people today have been enculturated into it. Orthodoxy is central to the culture there.

The Vineyard of the Saker
US Options in the Ukraine: trigger a religious war?
The Saker