Tuesday, January 24, 2017

TASS — Analyst believes China’s missiles near Russian borders targeted against US.

China has deployed inter-continental ballistic missiles near Russia with the aim to be able to reach targets in the United States, Canada and Europe, the president of the Academy of Geopolitical Problems, Doctor of Military Science Konstantin Sivkov, has said.
Earlier, the daily Global Times said China had deployed inter-continental ballistic missiles of its own design (DF-41) in northeastern Heilongjiang province bordering Russia....
"This is China’s response to threats pronounced by the new US president, Donald Trump. Also, Chinese missiles would be able to use a more advantageous northern strategic route for approaching targets in the United States, thus bypassing the US missile defense," Sivkov said.
The three-stage solid propellant ICBM DF-41 (Dongfeng-41, also known by its NATO reporting name CSS-X-10), was designed by China’s Academy of Rocket Motor Technology. It is presumably armed with a multiple warhead consisting of ten to twelve independently targetable reentry vehicles.... 

Jeffrey Sommers — This Is How the New Cold War Turns Hot

American journalists keep saying Alexander Dugin is Putin’s ideological adviser. One problem: He’s not.
More inflammatory fake news about Russia from the lame stream media, specifically New York Times columnist David Brooks.

The Nation
Jeffrey Sommers | Professor at the University of Wisconsin-Milwaukee and Senior Fellow at their Institute of World Affairs. He is also Visiting Professor at the Stockholm School of Economics in Riga

Richard N. Haass — World Order 2.0

Richard N. Haass is president of the Council on Foreign Relations, the public face of the "Masters of the Universe." What he says about is therefore significant as the public agenda of the plutocrats and technocrats.

He begins with describing the old world order as that following the Peace of Westphalia in 1648, which made national sovereignty the priority. Haas asserts that this order is no longer appropriate for a globalizing world and the new world order needs to be founded on internationalism.

Guess who wants to write the rules for international obligations of states?

Haas bemoans that this view is antithetical to Donald Trump's America First policy.

Battle brewing.

Project Syndicate
World Order 2.0
Richard N. Haass, President of the Council on Foreign Relations

James Kwak — What’s Wrong With Econ 101

Both Hayek and Friedman saw themselves as participants in a battle of ideas against encroaching socialism. In their hands, an analytical framework became a universal worldview: Economics 101 became economism. Economism is the belief that basic economics lessons can explain all social phenomena — that people, companies, and markets behave according to the abstract, two-dimensional illustrations of an Economics 101 textbook. Ideally, students should learn that the competitive market model is just that — a model, which by definition abstracts from the real world. According to the rhetoric of economics, however, the lessons of Economics 101 can be transplanted directly into the real world. The central idea that free markets generate the greatest possible economic well-being for society becomes a universal framework for understanding and answering any policy question.
Economism may not accurately describe reality, but its reduction of complex phenomena to simple concepts was a major asset in the battle of ideas. The political landscape of the United States after World War II was dominated by the shadow of the New Deal and the idea that the government could and should play a major role in managing the economy. Businesses that opposed intrusive regulations and wealthy individuals who feared higher taxes needed an intellectual counterweight to the New Deal, a conceptual framework that explained why an activist government was bad not just for their profits and their pocketbooks, but for society as a whole. Economism filled that need....
Economism aka Econ 101 is ideology, pure and simple, masquerading as science — because the math "proves" it.
As the mantra of free markets, small government, and lower taxes became more popular with voters, Democrats adapted by also paying homage to competitive markets. It was Bill Clinton who said, "The era of big government is over." And Barack Obama’s signature health-care-reform program is centered on the idea of using (regulated) market competition to expand access to health insurance.…
Economism is the reduction of social reality not just to Economics 101, but to just one Economics 101 lesson: the model of a competitive market driven by supply and demand.
If we were to redesign Economics 101, what would it look like? One possibility is to begin not with abstract models, but with the real world. How do companies use technology to produce goods, and how are those companies organized? How are products and services distributed, and how do manufacturers, intermediaries, and retailers set prices? How are wages determined — not in the theoretical model, but in real life? What factors determine the set of opportunities available to different people on different parts of the planet?...
Connecting the dots between Adam Smith and Donald Trump.

The Chronicle of Higher Eduation
What’s Wrong With Econ 101
James Kwak | Associate Professor of Law at the University of Connecticut School of Law

Bill Mitchell — Mario Draghi uses TARGET2 to cower Italy into staying within the Eurozone

The new US President has now scrapped the TPP and is turning his attention to NAFTA. These are developments that those on the Left should applaud. No so the conservative, neo-liberal government in Australia which is claiming it is pushing ahead with the TPP (sure, with Indonesia) and hinting that China might be part of a new TPP arrangement sans the US. That, in itself, is incredible given that the TPP was designed to counter the growing trade strength of China. But the ground is certainly shifting. Even the IMF is embracing China and added the Renminbi to the Special Drawing Rights basket last September (along with the USD, the euro, Yen and pound), which is recognition that the IMF doesn’t think the Chinese have been manipulating the currency – one of the paranoid claims of the new US President. But in Europe, people are getting anxious after the President of the ECB Mario Draghi decided to put pressure on Italy with threats they would owe the Eurosystem (through the Banca d’Italia) some 358.6 billion euros, which are that nation’s TARGET2 liabilities as at November 2016. The real currency manipulator, German who continues to game its Eurozone partners (via an undervalued euro) is also claiming it is owed cash as a result of its increasing TARGET2 assets. The threat from Draghi is hollow and Italy should just ignore it and get on with leaving the Eurozone and restoring its prosperity as an independent currency-issuing state.…
Bill Mitchell – billy blog
Mario Draghi uses TARGET2 to cower Italy into staying within the Eurozone
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Lars P. Syll — Public debt and economic growth

Jaume Ventura & Joachim Voth quote:
Towering debts, rapidly rising taxes, constant and expensive wars, a debt burden surpassing 200% of GDP. What are the chances that a country with such characteristics would grow rapidly? Almost anyone would probably say ‘none’.
Lars P. Syll’s Blog
Public debt and economic growth
Lars P. Syll | Professor, Malmo University

Axios bearish

Axios calling a top here.

The smart money on Wall Street agrees: The Wall Street Journal reports that big-bank executives have sold close to $100 million worth of stock since the election. If the likes of Morgan Stanley's James Gorman are exiting the market, perhaps you should too.

EU Steel Prices Firm

Anti-dumping measures leading to firmer prices in the EU.

third country import volumes were very restricted, due to trade defence measures and high third country quotations.

Suppressor Sales Booming

US firearm noise suppressor sales expected to increase even more with the removal of a $200 federal sales tax.

Monday, January 23, 2017

Gordon M. Hahn — REPORT: Towards a Realist American Russia Policy (Revised Final Edition, Parts 1 and 2)

American foreign policy, especially its Russia policy, is a runaway train without rails, driven by a troubling confluence of hubristic ideological influences and bureaucratized sectoral interests networked through Washington. These two kinds of influence too often are neither disinterested, nor in the American interest, and deprive U.S. foreign policy of a strategic imperative. The former influence consists of American democratic messianism and revolutionism that push for regime change on a far too broad basis, weakening our foreign policy’s realist component while simultaneously discrediting its idealist component. Bureaucractic influences is made up of out-of-control bureaucratic, military, military-industrial, think tank, and ideological interests that manipulate or sincerely foster American messianism and revolutionism. The combination of uncontrolled messianism and sectoral interests and imperatives have resulted in an ‘imperial overstretch’ that far outstrips America’s declining capacity and power in the world. This growing gap between American ambitions and capacity is compounded by China’s rise, Russia’s resurgence, and the Sino-Russian strategic partnership. This paper focuses on problems in U.S.-Russian relations and their possible solutions....
Russian and Eurasian Politics
REPORT: Towards a Realist American Russia Policy (Revised Final Edition, Parts 1 and 2)
Gordon M. Hahn, analyst and Advisory Board member at Geostrategic Forecasting Corporation, member of the Executive Advisory Board at the American Institute of Geostrategy, a contributing expert for Russia Direct, a senior researcher at the Center for Terrorism and Intelligence Studies, Akribis Group, and; and an analyst and consultant for Russia – Other Points of View

Pepe Escobar — Trump Will Try to Smash the Russia-China-Iran Triangle. Here Is Why He Will Fail

The strategy of Henry Kissinger, Trump’s unofficial foreign policy guru, is a mix of “balance of power” and “divide and rule”. It will consist of seducing Russia away from its strategic partner China; keeping China constantly on a sort of red alert; and targeting Islamic State while continuing to harass Iran.

All this has the potential to backfire splendidly.
South China Morning Post

TPP move start of coalition theft

Like Tom has been saying...

Trump’s Plan to Rebuild Military Hits Manpower Shortfalls

Why would it be safe to assume that the same could not be said for manufacturing/industrial/infrastructure jobs?

Lara Merling — Germany Does Have Unfair Trade Advantages

While China is commonly accused of currency manipulation to provide cheap exports, the IMF has recently decided the renminbi (RMB) is no longer undervalued and added it in its reserve currency basket, along with other major currencies. However, an IMF analysis of Germany’s currency found “an undervaluation of 5-15 percent” for the Euro in the case of Germany. Thus for Germany, the Euro has a significantly lower value than a solely German currency would have....
The Minskys
Germany Does Have Unfair Trade Advantages
Lara Merling

Stephanie Kelton BLOCKED ME on Twitter. Wow.

Wow. That's all I can say is wow.

Trump kills US in TPP

Acting on campaign promise.

Bill Mitchell — When mainstream economists jump the shark and lose it completely

There was an Op Ed last week from an Australian academic who attacked Modern Monetary Theory (MMT) along the lines that its proponents are “a bunch of cranks” and practice “charlatanism”. He also considers us to be sellers of “snake oil” and other nasty things. It was an extraordinary public intervention given that the argument was based on assertions drawn from an intermediate mainstream macroeconomics textbook, bereft of historical understanding and bereft of any real knowledge of the way the monetary system and the institutions within it (government, central bank, commercial banks) actually work. The MMT critique went like this: (a) misrepresent MMT through attributing claims to its proponents that are not remotely to be found in the literature; (b) claim you are not misrepresenting the MMT literature by selective quotes that are not actually consistent with the misrepresentations; (c) bring in one liners from textbooks that have been demonstrated to have no real world application and are patently wrong in many key elements of the banking system and the way bond markets operate; (d) call us fools for not knowing any of this. Well, it doesn’t take long into the article to realise who the fool is. The other point is that MMT is now clearly at the stage of development where the mainstream think they have to attack us and put us down. That is the next stage in our development (following years of being totally ignored). Progress is being made....
"First they ignore you. Then they ridicule you. And then they attack you and want to burn you. And then they build monuments to you.…" — Union leader Nicholas Klein in 1914 (a similar quote is often misattributed to Mahatma Gandhi)
Mathematics is just a language – one of many. Sometimes it helps to sort out problems that other languages cannot solve. Usually that is not the case, especially is a social science like economics.
The use of formality is only justified if it simplifies what cannot be easily said in words. Otherwise, it just perpetuates the idea that economics is just a cult of the cognoscenti who have learned a few elementary rules of pure mathematics.
It is used as a faux authority to discourage people who are outside the camp, from challenging the assertions.
Bill Mitchell – billy blog
When mainstream economists jump the shark and lose it completely
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Shale Oil in Recovery

Shale people liking this $50 level...

Sunday, January 22, 2017

George Lakoff — The Women’s Marches and the Politics of Care: The Best Response to Trump’s Inaugural Address

Trump is a textbook example of Strict Father Morality. In a Strict Father family the father is the ultimate authority. Father knows best. He gets his authority from the claim to know right from wrong, and what he says is by definition always right. His word is law and needs to be strictly enforced through strength — swift painful punishment. Even a show is disrespect deserves to be punished.
There is a Strict Father logic: Discipline needs to be imposed. Children need to learn not to do what feels good (like “feel-good liberals”), but to do what they are told. If they do, they will become disciplined and go out into the world and become prosperous. What if they are not prosperous? That just shows that they are not disciplined, which means they cannot be moral, and so deserve their poverty. In short, the poor are poor because they’re lazy and so it’s their own fault. Responsibility is individual responsibility. There is no social responsibility.…
I think George Lakoff pretty well summarizes the opposition to Donald Trump coming from the left.

But I am not getting this from Donald Trump or Steve Bannon. My take is that Bannon has convinced Trump that the liberal Democrats have abandoned their constituency by taking it for granted, while the GOP establishment never aimed at it at all, so they can pick it by showing that they actually care. Bannon has stated that quite clearly as his aim and his task in the Trump administration. 

Is Lakoff being doctrinaire in his application of his theory. and maybe overly simplistic?

George Lakoff
The Women’s Marches and the Politics of Care: The Best Response to Trump’s Inaugural Address
George Lakoff | Director of the Center for the Neural Mind & Society and retired Distinguished Professor of Cognitive Science and Linguistics at the University of California at Berkeley 

Oleg Komlik — Karl Polanyi on the Rise of Fascism and Market Economy

Karl Polanyi was deeply concerned by the essence of Fascism and focused on the institutional structure from which Fascism starts its march. He devoted the final parts of his magnum opus The Great Transformation specifically to this crucial topic and elaborated a bright analysis of the dark rise of Fascism between the two world wars. 
The following passage is composed from excerpts I selected from this insightful classic book and assembled them as a short article. I urge you to delve into this piece (and then to read the full original chapters) and to mull over the substance of fascist situations and moves, as well as their linkage to free market and economy of self-interest, which generate anti-individualistic and repressing endeavors directed to change not only the political sphere and societal fabrics, but human consciousness itself.
Economic Sociology and Political Economy
Karl Polanyi on the Rise of Fascism and Market Economy
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 Studies

BBC — Theresa May under pressure over Trident missile test

Accidents do happen. May not ready to talk about it.

Theresa May under pressure over Trident missile test

Tony Wikrent — Rex Tugwell of FDR's Brain Trust: The New Deal in Retrospect

Rexford Guy Tugwell (1891-1979) was an economist and one of the most important and innovative members of President Franklin D. Roosevelt's first Brain-Trust. Tugwell studied economics at the Wharton School of the University of Pennsylvania under Simon Patten, at the time one of the leading economists in the USA and one of the last great economists to emphasize the difference between productive economic activity, and economic rent seeking. Patten was a founder of the American Economics Association. 
This was decades before Wharton was infested by neoliberalism and became an MBA mill.

This account by Tugwell provides an excellent short history of the pre-war Roosevelt administration. I greatly wish I had been aware of it nine years ago, in time to have posted it during Obama's first campaign. It would have served as a signpost to an alternative to neoliberalism, which Obama unfortunately followed steadily as he moved from one accommodation with Wall Street to the next. In addition to my reading of countless articles these past 8 years, I have read Obama’s two autobiographies, Plouffe’s book, and the biographies by Halperin and Heilemann, Remnick, and Alter, and the excellent book detailing the influence of Wall Street by Suskind, Confidence Men: Wall Street, Washington, and the Education of a President. One thing that strikes me is that neither Obama, nor Plouffe, nor anyone else close to Obama, ever spoke of Franklin Roosevelt and the New Deal as if they were actually familiar with them or wished to emulate FDR. I suspect they have never studied Roosevelt and the New Deal, at least not with the goal of learning how to govern as well and as dynamically as FDR did. Obama and his team certainly never discussed the heroic measures Roosevelt and Harry Hopkins took to get millions of people a paying job so they wouldn’t starve in the winter of 1933-34....
Obama, like Bill Clinton, modeled himself on Ronald Reagan rather than FDR. Actually, it was Jimmie Carter that began the turn of the Democratic establishment to the right.

The post contains a copy of R. G. Tugwell's "The New Deal in Retrospect," The Western Political Quarterly, December, 1948, Vol. 1, No. 4.
It also contains a link to Michael Hudson's article on Simon Patten on productive investment versus economic rent.

Dani Rodrik — Is Global Equality the Enemy of National Equality?

The question in the title is perhaps the most important question we confront, and will continue to confront in the years ahead. I discuss my take in this paper.
More on nationalism versus internationalism.

Dani Rodrik's Weblog
Is Global Equality the Enemy of National Equality?
Dani Rodrik | Ford Foundation Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University

Julie Matthaei — The Women’s March on Washington and the Coming of Age of Feminism

"Heaven has no rage like love to hatred turned, 
Nor hell a fury like a woman scorned." 
— spoken by Perez in Act 3, Scene 2, The Mourning Bride (1697) by William Congreve

Signs of the Fourth American Spiritual Awakening?

Branko Milanovic — My interview for a Korean paper "Hankyoreh"

Good summary of Branko Milanovic's views.
Interviewer: First, could you please introduce your book briefly. What was your motivation to write this book, and what is your main argument in it?

BM: My motivation was to present a picture of the world and the distribution of income and economic power in it during the era of globalization. This is a very remarkable period in terms of its effects on income distribution, not solely within countries but between countries as well. It is probably the greatest reshuffle of global income positions with people from formerly poorer countries going up in the global income distribution since the Industrial revolution. I thought it was very important to describe and analyze these changes....
Global Inequality
My interview for a Korean paper "Hankyoreh"
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 Romanchuk — Postscript To Misunderestimating MMT

Gerard MacDonell has a follow up article to his earlier critique of MMT (my previous article was my response to his critique). I just want to expand on a couple of points, and respond to his response...
Bond Economics
Postscript To Misunderestimating MMT
Brian Romanchuk

Lars P. Syll — The inequality gap — five sickening facts

The points that Oxfam lists are results rather than causes. The symptom is asymmetrical distribution. The question is the causal factors and attendant conditions underlying those results and how to correct them before there is political upheaval.

One of the causal factors is asymmetrical distribution of power, socially (class status and networks), politically (influence, privilege), and economically (wealth begets increased class status, power and wealth).

The challenge is not wealth redistribution but leveling the distribution of social, political and economic power.

Lars P. Syll’s Blog
The inequality gap — five sickening facts
Lars P. Syll | Professor, Malmo University

David Deming — Will Manufacturing Jobs Come Back?

What this Means:

Automation is a long-run problem that demands a long-run solution. Convincing manufacturing companies to keep — or bring back — jobs, one company at a time, is not going to restore the millions of jobs that have been lost to technological change. We must reorient educational institutions and job training around “human” skills that are difficult to automate. These skills include creativity, complex problem-solving, and the ability to work with others in fluid, team-based settings.
Deming also notes,
Employment could also be increased through public sector “make work” programs, although these programs are generally inefficient and do little to address long-term structural issues.
A job guarantee can be a component of a solution but it is not the solution. The job guarantee is chiefly addressed toward cyclical rather than structural unemployment, although it is possible to include structural issues, too, such as including public funding of retraining.

But the structural problems that global society and the global economy face owing to technological innovation will require creative solutions that can only be addressed by out of the box thinking. The whole concept of "work" and "jobs" needs to be revisited as the world embarks on the Information Age, the Knowledge Society and the Third and Fourth Industrial Revolution that are happening simultaneously owing to technological innovation.

What Deming doesn't consider is distributing the increased opportunity for leisure owing to technological innovation and the reduced need for labor. This could be accomplished by longer time spent in education and earlier retirement by providing public funding as a social dividend. Leisure has long been the basis for culture. Increased distributed leisure can be expected to generate unprecedented cultural benefits.

The economy, including technology, is the material life-support system of a society. Culture is the spiritual foundation of a society. Leisure waters the root of culture by nourishing the human spirit.

Will Manufacturing Jobs Come Back?
David Deming | Professor at the Harvard Kennedy School and the Harvard Graduate School of Education and a research associate at the National Bureau of Economic Research

Material people taking over in the Grand Alliance

We can see the Trump speech stressing infrastructure and seeing it also as a means to a political ends:

it was telling how much time he spent talking about infrastructure and jobs for ALL Americans, twice sounding racially inclusive notes. 
Stephen Miller, the speech's principal writer, and Steve Bannon, whose worldview dominated and who helped with the prose , see a huge infrastructure bill as a way to attract voters, especially minorities, who opposed Trump in 2016. 
They argue privately they will shake up voting coalitions if they run new roads, repair tunnels and provide web access to other classes or regions of forgotten Americans.

And UK's May coming over this week as Trump's first visitor has a similar plan in mind for the UK domestically:

The prime minister has promised to deliver a blueprint to “get the whole economy firing”, and cover themes such as training, research and development, “place”, and infrastructure. 
 The strategy aims to tackle a “long tail” of underperformance in industries, places and individuals in a bid to reduce inequalities, Mrs May will announce.  It will include a £170m boost for technical education. 
The prime minister will say she wants to “extend the same opportunity and respect we give university graduates to those people who pursue technical routes”. 
 The cash will be used to set up Institutes of Technology across the country to deliver high-level training in STEM subjects: science, technology, engineering and mathematics. 
There will also be an expansion of maths education in secondary schools, a review of regional inequality in STEM graduates, and more centralised information about technical training courses for potential applicants.

So you see the non-material people getting thrown out and now some material oriented people taking over.

Material system outcomes will accordingly improve over the next 4 years.

Peter Turchin — A Quantitative Prediction for Political Violence in the 2020s

In 2010 I made the prediction that the United States will experience a period of heightened social and political instability during the 2020s. Recently, several people challenged me to make this prediction more quantitative. There are all kinds of caveats, and I will get to them eventually.
But first, the TL;DR version.
Structural-demographic theory (SDT) suggests that the violence spike of the 2020s will be worse than the one around 1970, and perhaps as bad as the last big spike during the 1920s. Thus, the expectation is that there will be more than 100 events per 5 years (see the upper panel in the figure). In terms of the second metric (the lower panel) we should expect more than 5 fatalities per 1 million of population per 5 years, if the theory is correct.
And there you have it. If violence doesn’t exceed these thresholds by 2025, then SDT is wrong.
Cliodynamica — A Blog about the Evolution of Civilizations
A Quantitative Prediction for Political Violence in the 2020s
Peter Turchin | Professor in the Department of Ecology and Evolutionary Biology at the University of Connecticut, Research Associate in the School of Anthropology, University of Oxford, and Vice-President of the Evolution Institute