Tuesday, May 26, 2015

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Mark Buchanan — In Economics, What Calculates Isn't Always Right

This mathematical-purist approach came from a rather odd place. As Roy Weintraub relates in his excellent book "How Economics Became a Mathematical Science," Debreu took his perspective from a secret group of French mathematicians who, starting in the 1930s, worked under the pseudonym “Nikolas Bourbaki.” The Bourbaki group thought mathematics should have an almost religious purity, refined and unsullied by contact with the practical. Educated in Paris, Debreu came under their influence, and then shifted from mathematics to economics. 
Weintraub argues that Debreu played a decisive role in transforming economics -- “not only the field's self-image, but its concept of inquiry itself.” Ever since, economic math has been Bourbakian, primarily concerned with formal structure. Practitioners downplay the need for realistic assumptions, as Paul Fleiderer noted in his brilliant essay on chameleons. They use highly dubious suppositions to generate a result, which they then use as a foundation for giving advice to policy makers. This is pretty much the opposite of good science. 
Scientists generally enlist mathematics only as a tool, and ultimately value practical understanding above theoretical rigor. They care deeply about the plausibility of the assumptions used in any model. Models, of course, are always oversimplified -- one might say “wrong” -- but it's what they get right that matters. A sphere is a good model for the Earth not because it lacks any geographical detail, such as mountains or valleys, but because it gets the rough shape right. 
The Bourbakian influence in pure mathematics actually caused a rift between physicists and mathematicians back in the 1980s. The formal and pure Bourbakian approach seemed useless to the physicists, whose more practical approach seemed suspect to the mathematicians. Since then, that rift has disappeared as math has moved on. Economics apparently hasn't recovered yet.
Good article on how conventional economics got where it is. 

It's all in the head.

Bloomberg View
In Economics, What Calculates Isn't Always Right
Mark Buchanan

See also

Lars P. Syll’s Blog
Anti-Romer
Lars P. Syll | Professor, Malmo University

One thing I can tell you...really wonderful people come to this blog. I am convinced of that.

I met a really nice guy named Josh today, who was visiting NYC from Australia and he asked to meet up with me for a coffee.

Josh is a follower of this blog and he is a wonderfully intelligent and thoughtful person. It's little things like that that make this thing worthwhile and sometimes, you know, I've expressed my frustration with all of these efforts, but it's those emails from you--the readers--or face to face encounters that are extremely gratifying.

Let me say, too, that there is a common thread among everyone I hear from, whether face to face or, via email or message and this goes for the contributors here as well; guys like Tom and Matt, Justin, Roger, et al...their intelligence, thoughtfulness, humor, earnestness, passion, honesty and courage, all shine through. They're great people as are the folks who come here to learn and contribute in ways big and small.

Thank you.

-Mike Norman

John Feffer — Tomgram: John Feffer, Why the World Is Becoming the Un-Sweden

Today, TomDispatch regular John Feffer, the director of Foreign Policy In Focus, offers a cunning bow to the convergence theorists of the Cold War era, a crew of thinkers who imagined that someday the two superpowers would merge into one conglomerate creature in strangely upbeat ways. In reality, as he points out, “convergence” (even in an era that lacks the Soviet Union) has turned out to be a dismally downbeat process. He does, however, skip the earliest convergence theorist of them all, who happened to be a novelist rather than an economist or a philosopher. I’m talking about George Orwell who, in his novel 1984 (published in 1948 just as the Cold War was ramping up to a low burn), imagined the convergence of the worst of West and East, of capitalist America and communist Russia, in a state so memorably malign that, almost seven decades later, everyone, including Edward Snowden, still remembers Big Brother.

The NSA's global surveillance state, revealed by Snowden, managed to put even the dreams of the totalitarian states of the previous century in the shade (and caused sales of 1984 to spike) -- and it's but one reminder of Orwell’s foresight. So many other details of our moment from black sites and kidnapping schemes to torture and assassination programs remind us that, despite the disappearance of the Soviet Union, convergence of a sort still seems to be in the cards. Here’s the strange thing, though: if a kind of eerie version of convergence is indeed underway, as Feffer so memorably suggests, in the organized precincts of what used to be called the First and Second Worlds -- the U.S., Europe, Russia, and China -- in the former Third World, or at least across vast stretches of the Greater Middle East and parts of Africa, a process that might be called divergence seems to be gaining strength. The power of states is weakening, fragmenting, or simply dissolving amid the growth of extremist organizations, sectarian or sectional militias, and terror groups.

As miraculous as Orwell was -- and in the earliest days of the television age he managed to conjure up a future world in which the screen would be omnipresent and everyone could be surveilled, tracked, and controlled through it -- he had no way of imagining such a strange form of divergence. Its origins seem to lie, at least in part, in a twenty-first-century American urge to take its much-ballyhooed role as the planet’s last remaining superpower to heart and essentially try to rule the world. This desire to create a planetary Pax Americana (and an American Pax Republicana) led the Bush administration to punch a devastating hole in the oil heartlands of the planet, setting off a storm of sectarian chaos within which old systems of control, already frayed, began to collapse and whose endpoint is, at present, beyond our ken.

Convergence and divergence, centralization and fragmentation: it’s a vision of a planet that’s not exactly Orwellian, but certainly represents a nightmare worthy of some still-to-be-discovered Orwell of our moment. In the meantime, while we await the novel 2051, let John Feffer tell you about the dark, converging world of 2015. Tom
Tom Dispatch
Tomgram: John Feffer, Why the World Is Becoming the Un-Sweden
John Feffer

Dirk Ehnts — What exactly is the role of an inflation-targeting central bank?

The euro zone, I argue, is a disaster because of the separation of fiscal and monetary. The ECB bails out banks, not governments. This leads to blackmailing sovereign governments into reforms that they would never have undertaken because the people would never have voted for austerity. The way that Germany handles its newfound power is destructive, imposing poverty and stagnation on the periphery. Central banks – ECB and national central banks – have found a new, enlarged role for themselves. I wonder whether the public benefits from this change.
econoblog 101
What exactly is the role of an inflation-targeting central bank?
Dirk Ehnts | Berlin School for Economics and Law

This is central bank autocracy rather than independence.

Forcing reform on democratic countries that would not institute reforms since it was politically unpopular was the purpose of the creation of the currency union in the form it took.

The Guardian (UK)
Robert Mundell, evil genius of the euro
Greg Palast | guardian.co.uk




Economy Watch — Vatican Proposes New World Economic Strategies Marrying Impoverished Care with Environmental Preservation

In a recent discussion, Pope Francis' deputy, Cardinal Pietro Parolin, the Vatican's Secretary of State, said the world would need to develop a new model of economic development. The Vatican believes this new model must marry economic growth with plans to combat poverty by seeking ways to use resources in a sustainable manner. 
Cardinal Parolin, speaking on behalf of the Pope, went on to indicate that both political and economic commitments would be necessary for this plan to work, but that the Vatican believes it is the only way to ensure the health of the planet for future generations. Such changes have been slow to occur, and the Vatican wishes to push the dialogue along in order to facilitate the change in the global population's mindset necessary to make these sorts of commitments possible. 
In a report by the Durango Herald, Parolin is quoted as saying, "When the future of the planet is at stake, there are no political frontiers, barriers or walls behind which we can hide to protect ourselves from the effects of environmental and social degradation … There is no room for the globalization of indifference, the economy of exclusion or the throwaway culture so often denounced by Pope Francis."...
Pope Francis has publicly endorsed economic development models that provide employment and opportunity to the poor while simultaneously utilizing new technologies that are cleaner, more energy efficient, and produce less carbon. However, many fear that these types of initiatives may fall out of favor due to short-term concerns by countries around the world about immediate economic growth and job transitions. 
Former Mexican President Felipe Calderon, who heads the Global Commission on the Economy and Climate, has cited these fears as the biggest factor in preventing such changes, but he refers to the findings of a study by the commission finding just the opposite.
According to Calderon, "We can foster economic growth and mitigate climate risk at the same time...In fact, this is the only way to achieve long-term, sustained economic growth, and through it to alleviate poverty for the millions of souls that need, demand and deserve it." 

China issues first white paper on military strategy


ECNS.cn
China issues first white paper on military strategy

China promises not to join nuclear arms race

Monday, May 25, 2015

Bill Mitchell — Structural reform – code for smash the worker resistance

The ECB had another lavish annual talkfest in Portugal over the weekend just gone in the guise of their – Forum on Central Banking. Like all these EU-type gatherings there was plenty of fine food and wines. They even provided footagealong those lines. The President of the ECB Mario Draghi gave the opening speech – href=”http://www.ecb.europa.eu/press/key/date/2015/html/sp150522.en.html”>Structural reforms, inflation and monetary policy – on May 22, 2015. There was also talk about how “structural and cyclical policies … are heavily interdependent” but then a denial of the same. The message from the President was like a record stuck on the turntable – “to accelerate structural reforms in Europe … even in a weak demand environment”. Well here is my message – similarly like a stuck record – structural imbalances occur because of weak demand and the best time to assess structural policy is when you have first attained full employment by appropriate setting of fiscal deficits, not before. It is madness to deliberately constrain fiscal balances to levels that ensure high and entrenched unemployment and rising underemployment and then expect citizens to support microeconomic policies that further undermine their welfare and damage what job security they have. But that is the EU way and that is why the Eurozone is a massive basket-case failure.
Must-read.

Bill Mitchell – billy blog
Structural reform – code for smash the worker resistance
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Daniel Little — The similarity space of actor-centered research frameworks

  
Actor-centered sociology
Analytical sociology
Rational choice theory
Social outcomes derive from the actions of socially constituted actors in relations with each other
Explain outcomes as the aggregate result of the actions and interactions of purposive individuals
Individuals behave as economically rational agents. Explain outcomes as the aggregate result of these actions
Attention to “thick” theories of the actor
Desire-belief-opportunity framework for actors (DBO)
Narrow economic rationality: consistent preferences and maximization of utilities
Actors are formed and shaped by the social relations in which they develop
Causal models; commitment to the causal mechanisms approach
Equilibrium models; commitment to mathematical solutions for well-defined problems of choice. 
Narrative accounts of the development of social outcomes give actions of the actors
Primacy of Coleman’s boat: explanation occurs from micro to macro and macro to micro
Game theory is used to represent interactions among rational agents

Agnostic about microfoundations
Commitment to requirement of microfoundations
Commitment to requirement of microfoundations

Understanding Society
The similarity space of actor-centered research frameworks
Daniel Little | Chancellor of the University of Michigan-Dearborn, Professor of Philosophy at UM-Dearborn and Professor of Sociology at UM-Ann Arbor

Joshua Gans — Economics in One Lesson: Nash

Indeed, even opportunity cost can be rarely computed without working out the full equilibrium of a path not taken. This is why, if I were to re-write Economics in One Lesson, it is Nash equilibrium that would be the lesson and not opportunity cost.
John Quiggin, are you listening?

Digitopoly
Economics in One Lesson: Nash
Joshua Gans | Jeffrey Skoll Chair in Technical Innovation and Entrepreneurship at the Rotman School of Management, University of Toronto
ht Mark Thoma at Economists View

Also

Econospeak
Gnash Equilibrium
Sandwichman

Read Barkley Rosser's comment, too. I considered writing my doctoral dissertation on the subject that he comments on at the behest of one of my professors who was interested in working on the ethical prospect of it, but didn't have the time himself. The US strategists were "crazy rational" then, as they had already demonstrated in the Vietnam conflct.

The problem I have with this approach is that games are defined by rules — like <a href="http://calvinandhobbes.wikia.com/wiki/Calvinball">Calvinball</a>. Fine when the rules are explicit, but in social games they seldom are, or there are parties able to change the rules. Often parties to the "same game" are playing by different rules. So one parties tries to guess with the other party is thinking about the game, assuming "rationality." How? By introspection.


Last day to get my Special Offer $250 price deal for my Forex course videos!


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This is the regular week-long course that I normally charge $2995 for. However, I am offering the videos of this course for the unbelievably low price of $250. This is the FULL COURSE, each day, covering the following:

Forex theory and fundamentals
Applied MMT
Oanda trading platform
Trading tactics and strategy
Mental Game

Once again, this is the FULL WEEK-LONG COURSE on video. You will also have access to me, Mike Norman, via email  or FB message if you have questions or need some mentoring.

This is an ubelievable deal. If you want to learn my amazing and highly effective Forex trading approach and the all-important mental game, then take advantage and buy these tapes TODAY! This offer is only good through Monday, May 25.
 Forex course instructional videos

Sunday, May 24, 2015

TeleSur — Rafael Correa and Ecuador's 21st Century Socialism


Very nicely done and good information. Take a look.

BTW, Correa received master's and doctoral degrees in economics from the University of Illinois at Urbana-Champaign.

TeleSur
Rafael Correa and Ecuador's 21st Century Socialism

teleSur — Warren Buffet: The Poor Are Not Poor Because the Rich are Rich

In an article published in The Wall Street Journal Thursday, the third wealthiest man in the world affirmed that the poor should stop blaming the rich for income inequality. Multimillionaire and CEO of Berkshire Hathaway Warren Buffet stated that, “The poor are most definitely not poor because the rich are rich. Nor are the rich undeserving.” In his opinion, successful businessmen like Henry Ford and Steve Jobs have improved the quality of life of the world’s population, and keep doing so. 
According to Buffet, such inequalities are “an inevitable consequence of an advanced market-based economy ... because [most] jobs [in the past] could also be carried out by almost any willing worker.” Now that most of the tasks have been mechanized, only a few workers manage to take advantage of their skills and benefit from a substantial income. For this reason, improving education or raising the minimum wage cannot be a viable solution, he argued.
There is no solution under capitalism according to Buffett. It's just “an inevitable consequence of an advanced market-based economy...."

I guess his solution is — get used to it.

teleSur
Warren Buffet: The Poor Are Not Poor Because the Rich are Rich

RT — Polish President Komorowski concedes defeat to conservative challenger in runoff election

During his campaign Duda – a moderate Eurosceptic - stressed that Poland shouldn't transfer so much cash to the EU. Also he promised a vote on exiting the bloc if the people want it. 
"Perhaps these years have been good, but only for a narrow group," Duda told his supporters on Friday. "Yes, it's time for change, time to end this sluggish, indolent presidency." 
Komorowski, the incumbent president, stands for closer ties with the EU and NATO as the only way to stand up to "the threats of the modern world.”...
RT

TASS — Pushkov says US’ criticism of Russian law on ‘undesirable organizations’ staggering

The law that was signed by Russian President Vladimir Putin on Saturday and posted on the official web portal of legal information says that a foreign or international, but only non-governmental (NGO), organization can be recognized as undesirable if it "poses a threat to fundamentals of the constitutional system of the Russian Federation, to the country’s defence capacity and security." A decision to this effect is passed by Russia’s prosecutor general or his deputies in coordination with the Russian Foreign Ministry. The Ministry of Justice is to be in charge of making up lists of ‘undesirable organizations’ and of publishing them. 
The law imposes, in particular, a ban on activities, setting up and opening of structural subdivisions of an ‘undesirable organization’ in the Russian Federation and distribution of its information materials.
This is actually funny. The US criticizing Russia for outlawing NGO's that fund opposition groups in Russia aimed at regime change, when the US has made such activity illegal from the anti-Communist days and requires disclosure of foreign lobbying. There is even a push underway to get rid of Chinese-government funded Confucian Institutes at American universities that teach about Chinese culture. The level of hypocrisy is astounding.

And of course the feigned outrage over human rights is ridiculous in light of historical and recent US behavior.

Oh, and when was the last time that the US criticized human rights violations by allies like Saudi Arabia.


The puppets echo their puppet master even as they have to admit hosting US black torture sites.

USA: Law on "undesirable organizations" leads to Russia’s international isolation

On the other hand
Is the most dangerous country in the world the United States of America? According to a new poll from WIN and Gallup International, the U.S. represents the largest threat to world peace today. 
In their annual End of Year [2013] poll, researchers for WIN and Gallup International surveyed more than 66,000 people across 65 nations and found that 24 percent of all respondents answered that the United States “is the greatest threat to peace in the world today.” Pakistan and China fell significantly behind the United States on the poll, with 8 and 6 percent, respectively. Afghanistan, Iran, Israel and North Korea all tied for fourth place with 4 percent.
International Business Times
In Gallup Poll, The Biggest Threat To World Peace Is ... America?By Eric Brown

Clive Crook — A Bad Case of Piketty Syndrome


Either Clive Crook can't do the math or he understands MMT, and I don't think it is the latter.
The policy agenda this seems to recommend would focus on improving the schools that serve low-income families, and on raising the incomes of the households concerned -- through lower taxes and higher wage subsidies. The study also backs efforts to get more women into the workforce and to enable people to move from irregular or part-time employment to proper jobs. 
Well said -- but this isn't what springs most readily to mind, in the U.S. at any rate, when the discussion turns to inequality. That conversation isn't mainly about poverty and low incomes; it's preoccupied with the depredations of the 1 percent.
Is Crook suggesting, with MMT, that taxes don't fund spending? I doubt it since he has never taken that position previously. 

So the conclusion is that he doesn't get the argument that to fund addressing inequality at the bottom either the deficit must increase, other spending has to be cut or taxes have to rise. Do the math.

Many Americans are of the view that the top of the town can afford to pay more taxes rather than increase the deficit, which remains unpopular due to ignorance, or making spending cuts elsewhere in an already tight budget.

Crook seems to be implying that the math is irrelevant here and that the "depredation" of the rich is due to envy, which is the belief of most of the rich. Well, he is writing for Bloomberg, after all, so that is his audience — the rich and the wannabe rich.

Bloomberg View
A Bad Case of Piketty Syndrome
Clive Crook

Putin_Slil — Russia's international reserves grew by $3.8 billion between May 8 and 15B


Russian central bank selling rubles apparently to keep the exchange rate from rising and hurting exports and import substitution.

Fort Russ
Russia's international reserves grew by $3.8 billion between May 8 and 15B
Putin_Slil
Original Russia's international reserves grew by $3.8 billion between May 8 and 15
Translated from Russian by J.Hawk

Rujournalist — Supported Sanctions--Lost Election

J.Hawk's Comment: This is a stunner and, frankly, a minor political earthquake for all of EU. Even in January [Bronislaw ] Komorowski seemed unbeatable. A Polish political pundit famously said that to lose the election, "Komorowski would need to run over a pregnant Catholic nun while drunk." Well, close enough! But it's not just the sanctions and apples. Komorowski can also thank his Kiev Bandera-worshipping "partners and friends" for the untimely demise of his political career. The tide of the Polish public opinion turned very sharply against Ukraine in the last few months ("you can't fool all the people all the time"), and Komorowski paid the price... 
As to [Andrzej] Duda, he is as Russophobic as his predecessor, if not more so (he believes, for example, that Putin had the Polish president Kaczynski murdered by staging a plane crash in Smolensk in 2010...), but at the same time he is a Euroskeptic similar Hungary's Viktor Orban and he enjoys extensive support by Poland's Catholic Church which is, well, you can imagine. But Russophobia and Euroskepticism can't happily coexist, not in the Polish state, at any rate, so very soon Duda will have to make a choice. And ultimately Duda's politics are actually closer to Putin's (when it comes to the fundamental beliefs concerning sovereignty, national security, and basic human values) than to EU's.
Fort Russ
Supported Sanctions--Lost Election
Rujournalist
Original Supported Sanctions--Lost Election
Translated from Russian by J.Hawk

Bill Mitchell — The rise of non-standard work undermines growth and increases inequality

One of the on-going themes that emerges from the neo-liberal commentariat is that fiscal deficits undermine the future of our children and their children because of the alleged higher implied tax burdens. The theme is without foundation given that each generation can choose its own tax structure, deficits are never paid back, and public spending can build essential long-lived infrastructure, which provides benefits that span many generations. The provision of a first-class public education system feeding into stable, skilled job structures is the best thing that a government can do for the future generations. Sadly, government policy is undermining the future generations but not in the way the neo-liberals would have us believe. One of my on-going themes is the the impact of entrenched youth unemployment, precarious work and degraded public infrastructure on the well-being and future prospects of society as neo-liberal austerity becomes the norm. This theme was reflected (if unintentionally) in a new report, release last week by the OECD – In It Together: Why Less Inequality Benefits All. The Report brings together a number of research findings and empirical facts that we all knew about but are stark when presented in one document.
Misplaced priorities.

Bill Mitchell – billy blog
The rise of non-standard work undermines growth and increases inequality
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

David Usborne — Puerto Rico, island of lost dreams: People are leaving the debt-hit territory in droves as near neighbour Cuba's star rises


The Greek disease hits the US.

The Independent
Puerto Rico, island of lost dreams: People are leaving the debt-hit territory in droves as near neighbour Cuba's star rises
David Usborne
ht Clonal

Ambrose Evans-Pritchard — HSBC fears world recession with no lifeboats left

Stephen King from HSCB warns that the global authorities have alarmingly few tools to combat the next crunch, given that interest rates are already zero across most of the developed world, debts levels are at or near record highs, and there is little scope for fiscal stimulus.

"The world economy is sailing across the ocean without any lifeboats to use in case of emergency," he said.
In a grim report - "The World Economy's Titanic Problem" - he says the US Federal Reserve has had to cut rates by over 500 basis points to right the ship in each of the recessions since the early 1970s. "That kind of traditional stimulus is now completely ruled out. Meanwhile, budget deficits are still uncomfortably large," he said....
The US cannot easily launch a fresh New Deal. Public debt was just 38pc on GDP when Franklin Roosevelt took power in 1933, and there were few contingent liabilities hanging over future US finances.
Looks like all we can afford is depression, and, of course, war.

But not to worry, economics is a science.
HSBC's Mr King says the global authorities face awful choices if the world economy hits the reefs in its current condition. The last resort may have to be "helicopter money", a radically different form of QE that injects money directly into the veins of economy by funding government spending.

It is a Rubicon that no central bank wishes to cross, though the Bank of Japan is already in up to the knees.
Lots of data on the global economy in the article though.

Telegraph
HSBC fears world recession with no lifeboats left
Ambrose Evans-Pritchard

Eric Lonergan — Does the central bank’s balance sheet matter?

A growing number of economists are advocating granting central banks the power to make payments to households. Most recently, Mark Blyth, Simon Wren-Lewis and I argue in The Guardian that the Bank of England should be given this power – not with a view to using it now, but as a contingency. Currently, contingency planning amounts to keeping our fingers crossed and hoping there is no negative shock to demand – that is irresponsible. Further QE, negative interest rates, and attempts to raise the inflation target are all terrible policy options – probably ineffective, and potentially self-defeating. Making payments to the household sector, by contrast, is in many ways preferable to conventional monetary policy.
Encouragingly, the predominant objection to this proposal is rarely about efficacy. The main area of concern is the potential impact on the Bank of England’s balance sheet – and, by the implication, on future control of inflation. This subject can be made very complex and confused. But the crux of the matter is straightforward, and the balance sheet issues that arise are not unique to our proposal.
Lonergan goes on to point out the problem is a pseudo-problem in that it arises from accounting conventions and can be addressed by the same. It is the government's bank, and the government makes the rules.

A central bank of a government that floats its currency and doesn't incur financial obligations other than in its currency is not remotely like a private financial institution because the government is the currency issuer. Its liabilities are not like private liabilities other than in the accounting sense.

Many interesting points, many of which have been made by MMT and Post Keynesian economists and financial experts.

Sample of one
Does the central bank’s balance sheet matter?
Eric Lonergan

Brian Romanchuk — Mathiness


In "Protecting the Norms of Science in Economics", Paul Romer writes: 
"About math: I have studied physics as an undergraduate.I’ve seen clear evidence that math can facilitate scientific progress toward the truth.  
"If you think that math is worthless or dangerous, I’m sure that there are people who will be happy to discuss this with you. I’m not interested. I’m busy."
I'll see his undergraduate degree in physics, and raise him by a Ph.D. in applied mathematics (Control Systems Theory). Undergraduate physicists study highly polished and elegant models which have been chosen because they describe aspects of physical behaviour quite well. Conversely, engineers study complex systems which may or may not appear to follow those simplified laws of nature*, and are forced to make educated guesses on how to simplify the analysis of the systems. Economics is dealing with complex systems that are a lot closer to the reality of engineering than the ivory tower of undergraduate physics. 
One needs to push down the expectations of what mathematics can accomplish. Mathematics consists of two things:....
May should like it is going to go all wonkish, but it doesn't.  Brain makes some killer points. Nice job.

Bond Economics
Mathiness
Brian Romanchuk

Roger Farmer — GDP: A Brief But Affectionate Review

It is a premise of the monetarist position, that the real economy is self-stabilizing and that a rule based monetary policy is the most effective way to ensure both low inflation and maximum sustainable employment.

Keynes claimed, in contrast, that the real economy can get stuck in a position of high unemployment and that permanent high involuntary unemployment can persist as an equilibrium phenomenon. See my earlier post on the neo-paleo-keynesian perspective. If Keynes is correct, and I believe he is, a single instrument, monetary policy, is not enough to hit two targets. Fiscal policy in one form or another, is an important second string to the policy maker's bow.
I think we can agree with this much, although Farmer's policy prescription is quite different from MMT. However, he has tuned into some significant points that are in agreement with MMT analysis regarding the relationship of growth, employment and price level. In addition, he agrees that accounting is important in economics. And he has an influential voice in the mainstream.

Roger Farmer's Economic Window
GDP: A Brief But Affectionate Review

Secular stagnation: a neo-paleo-Keynesian perspective
Roger Farmer | Distinguished Professor of Economics, Department of Economics, UCLA

Robert Reich — Whatever Happened to Antitrust?

Last week’s settlement between the Justice Department and five giant banks reveals the appalling weakness of modern antitrust.

The banks had engaged in the biggest price-fixing conspiracy in modern history. Their self-described “cartel” used an exclusive electronic chat room and coded language to manipulate the $5.3 trillion-a-day currency exchange market. It was a “brazen display of collusion” that went on for years, said Attorney General Loretta Lynch.

But there will be no trial, no executive will go to jail, the banks can continue to gamble in the same currency markets, and the fines – although large – are a fraction of the banks’ potential gains and will be treated by the banks as costs of doing business.

America used to have antitrust laws that permanently stopped corporations from monopolizing markets, and often broke up the biggest culprits.

No longer. Now, giant corporations are taking over the economy – and they’re busily weakening antitrust enforcement....
Because "free markets." How does that follow? Doesn't have to.

And it's not just the big banks. It's also pharma, insurance, you name it.

The result is economic power, economic rent extraction, prices higher than they would be in a competitive market, higher "profits"and higher corporate share to worker share.

Welcome to neoliberalism.

Robert Reich
Whatever Happened to Antitrust?

Yanis Varoufakis — The truth about Riga


Yanis calls foul.  Sets record straight.

Yanis Varoufakis
The truth about Riga

Saturday, May 23, 2015

Special Sale this weekend only. Get the videos to my full Forex class for only $250!


This is a Special Offer through Monday, May 25. I am lowering the price of full set of all five videos of my complete, Forex Trading Course--the regular weeklong course that I charge $2995 for--for the unbelievably low price of $250. This is the FULL COURSE, each day, covering the following:

Forex theory and fundamentals
Applied MMT
Oanda trading platform
Trading tactics and strategy
Mental Game

Once again, this is the FULL WEEK-LONG COURSE on video. You will also have access to me, Mike Norman, via email  or FB message if you have questions or need some mentoring.

This is an ubelievable deal. If you want to learn my amazing and highly effective Forex trading approach and the all-important mental game, then take advantage and buy these tapes TODAY! This offer is only good through Monday, May 25.
 Forex course instructional videos

Lambert Strether — Good news on TPP, as Senate passes Fast Track bill with human trafficking poison pill


The plot thickens.
Complicating the picture even more, when you think about it, is the potential for agita in 2016. Suppose Obama, very ironically, gets the anti-slavery provisions “fixed,” i.e. removed, and the bill passes in time. The campaign ads practically write themselves. “A vote for TPP is a vote for human trafficking.” “Why does Senator X support slavery?” Cue the ominous music. Cue pictures of skeletal women and children. Cue the die-ins on the trail. I’m sure campaign shops on both sides are practically drooling with joy, because the only way TPP will pass is with bipartisan support. Getting that amendment in there was GENIUS, and we’ll get to how that happened in a moment.
Corrente
Good news on TPP, as Senate passes Fast Track bill with human trafficking poison pill
Lambert Strether

Pepe Escobar — BRICS trample US in South America

So the long-term Big Picture remains inexorable; BRICS and South American nations – which converge in the Unasur (The Union of South American Nations) – are betting on a multipolar world order, and a continental process of independence.
RT
BRICS trample US in South America
Pepe Escobar

Simon Wren-Lewis — Consensus in macroeconomics


Simon Wren-Lewis seemingly assumes (wrongly) that economics is a natural science. So the rest of the argument about plurality of expert opinion is wrong.

This is basis of the contention that SWL thinks is bogus. Heterodox economists don't assume that economics is a natural science and neoclassical economists do. It's a methodological assumption, just like methodological individualism upon which microfoundations and rational utility maximization are constructed. No matter that such assumptions are called into question by other social sciences, law and government, and business practice.

If only it were that simple, psychology and the social sciences including economics would be achieving the precision of the natural sciences and social engineering would be straightforward. Firms would be run by economists. That is not the case. This is why the debate over economic methodology is contentious.

"It's the assumptions, stupid." What justifies the assumptions? What are the hidden assumptions? This is no longer confined within economics as a discipline. It is philosophy of science, philosophy of social science, and philosophy of economics.

Philosophy is a critical exercise.  "The unexamined life is not worth living." — Socrates

A fundamental question is, "How do you know?" There are a lot of good reasons that the methodological assumptions of economics are incorrect, including that it is a natural science. Neoclassical economists want to sweep this off the table as "already settled." That just dogmatism rather than either science or critical philosophy.

Moreover, SWL admits that there are major disagreements in the mainstream and charges his opposition with being unscientific. How contentious is that?

Mainly Macro
Consensus in macroeconomics
Simon Wren-Lewis | Professor of Economics, Oxford University