Tuesday, July 22, 2014

Krugman Hits "Deficit Scolds"

Paul Krugman writing at his blog today:
"I got some correspondence from people telling me to read Rob Portman’s op-ed in the WSJ, intended to refute the growing evidence that the budget deficit has been grossly overrated as an issue. And it is an interesting piece — it’s a very good illustration both of the desperate desire to see a debt crisis, and what happens when someone (Portman, or more likely the staffer who wrote it) tries to be a Very Serious Person without actually understanding the numbers or having followed any of the analysis...
Finally, whenever someone warns about the supposedly unsupportable costs of entitlements decades into the future, you should ask why, exactly, it’s urgent that we solve that conjectural future problem now — and why it has any bearing at all on current fiscal issues. Don’t say that it’s obvious; it isn’t, and in fact deficit scolds bob and weave when confronted with that question.

But the deficit scolds do love their looming disaster, and they love making tough proposals that someone always involve sacrifices by the little people."
Debt Disaster Dead-Enders, by Paul Krugman, NY Times

Steven Pressman — Picketing Wealth Inequality

Review of Capital in the Twenty-First Century

Dollars & Sense
Picketing Wealth Inequality
Steven Pressman

Reasons To Turn Away From The MICC & Other Enemies of Peace. We Must Once Again Save Them From Themselves.

   (Commentary posted by Roger Erickson.)

The MICC and the usual enemies of peace have become a too perfect instrument, possessing their own institutional momentum. We may hate the outcome, but we have to honestly embrace the components of the MICC as well as our other Innocent Frauds, as a part of ourselves, and reform it and them, while not falling prey to the useless frictions of hating a part of ourselves.
  “We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
  They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
  Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.”

Franklin D. Roosevelt

“I have seen war. I have seen war on land and sea. I have seen blood running from the wounded. I have seen men coughing out their gassed lungs. I have seen the dead in the mud. I have seen cities destroyed. I have seen 200 limping, exhausted men come out of line—the survivors of a regiment of 1,000 that went forward 48 hours before. I have seen children starving. I have seen the agony of mothers and wives. I hate war.”
Franklin D. Roosevelt
War? Monopoly? Speculation? Reckless banking? Profiteering? This all sounds so drearily familiar. We can put these demons back in their box, and this time make it a coffin, firmly nailed shut. We just need the courage - and honesty - to act as our grandparents did. 

Just as a child going through a growth spurt, our cultural growth spurt has rendered us temporarily clumsier, before we can become agile again in our new condition. Yet we can regain cultural and policy agility, by the simple application of distributed cultural practice, thereby retraining our growing numbers to adaptive rather than divisive Public Purpose.

Randy Wray — Mission-Oriented Finance for Innovation, London 22-24 July

Conference announcement and presentation.

Economonitor — Great Leap Forward
Mission-Oriented Finance for Innovation, London 22-24 July
L. Randall Wray | Professor of Economics, University of Missouri at Kansas City

Monday, July 21, 2014

Translating Aggregate Laws to Some Specific Laws of Sovereign Currency

   (Commentary posted by Roger Erickson.)

FDR said something similar, about 10 years after after Shewhart, although in a narrow context.

So let's turn our attention to observing some of the many, emerging "Aggregate's Laws" empirically documented in the course of evolution.

It is much easier to understand Aggregate Laws if one keeps in mind one reference Aggregate Rule, or rule of autocatalysis:
"The whole point of aggregation is to VOLUNTARILY [and doggedly] swap SOME local degrees of freedom, for SOME uniquely aggregate degrees of freedom, exactly because of the net BENEFIT of that exchange. That's what we call a SOCIAL species."
Rigorous selection is required, of course, and the corollary trick of adaptive aggregation is to slowly figure out context-specific methods which make it harder for potential aggregate members to work at cross purposes. Building up the requisite array of feedback loops that shepherd more coordination and less friction is the secret hiding in plain sight.

Any aggregate must - to be an aggregate - attend to an unpredictably large & diverse set of hard-learned coordination lessons, and hence to the rules-of-thumb that result. The beginning of these rules predate the dawn of human culture, and hence are even more ancient than homo sapiens. The following 10, trivial rules & points of logic just happen to be some that comically bedevil the ~320 million supposedly intelligent humans in the USA, in the year +200,000 of homo sapiens history - not to mention multiple billions elsewhere on planet Earth.

Yet don't laugh. It's actually not funny.
"We sent men to the moon 40 years ago, cram mind boggling technology into
cell phones, do robotic surgery, and don't understand how a simple
spreadsheet called the monetary system works."
 Warren Mosler

Currency Law 1) Sovereign currency "comes from" the distributed IOUs inherent in dynamic Public Initiative. Sovereign currency denominates the constantly increasing volume of social credit, and all forms of “money” represent inter-person IOUs. (a)

Currency Law 2) Aggregate austerity obviously can't work. The more that aggregate initiative - e.g., "Public" initiative, aka, currency budget - is constrained, then the lower the aggregate capabilities, options and outcomes are. (b)

Currency Law 3) There is a fundamental difference between a Currency Issuer, and the distributed Currency Users, so that a "balanced budget" for a currency issuer is an absolute oxymoron, unless an aggregate has "achieved" zero aggregate growth. (c)

Currency Law 4) The unit of social credit - and also a given currency unit - naturally & constantly depreciates in evolving real terms. (d)

Currency Law 5) The purpose of right-sizing & right-distributing currency supply is to constantly grow cultural agility and policy agility. 
  The concept of a "deficit" in fiat currency, fiat or Public Initiative is simply arbitrary & misleading use of variable semantics, and a logical oxymoron if any meaning outside the narrow jargon of accounting is applied. (e)

Currency Law 6) To constantly enlarge national National Policy Space and increase Policy Agility, inter-national currency Exchange Rates absolutely must float. (f)

Currency Law 7) There is no national challenge which is not optimally addressed through collective policy, aggregate mobilization and distributed adjustments in coordination, invariably involving an increase in Public Initiative and it's corollary, public spending. (g)

Currency Law 8) The core purpose of National Monetary Policy is Banking Regulation, not trying to manage patterns within aggregate demand by micromanaging interest rates. (h)

Currency Law 9) Foreign Currency Reserve policy is always politics by any other name. (i)

Currency Law 10) Fiscal Policy is the final arbiter of National Adaptive Rate.
  To both grow and adaptively tune aggregate degrees of freedom, any aggregate population is required to manage distribution, in real time, of enough sovereign currency - through agile combinations of public spending, taxing and regulation – to do 2 things.
One) grow the nation's Adaptive Rate as our primary Desired Outcome,
(by enforcing and self regulating aggregate policies, specifically by allowing residents to pay all enacted taxes enforced in that currency,) 
AND ... 
Two) protect & grow the distributed Adaptive Rates of all citizens, as our key methodology (By constantly providing enough extra currency - i.e. purely nominal "deficit" spending - to allow residents to adequately explore all distributed options which also help coordinate evolving aggregate policy). That requires allowing ALL citizens to:
i) efficiently transact all necessary exchanges of goods & services (i.e., full involvement and employment);
ii) maintain SHORT TERM buffer currency savings adequate for exploring & selecting novel, adaptive innovations and transaction patterns.

a) While it is theoretically possible for aggregates to be highly organized WITHOUT some tax-based or penalty-based currency system, none that I know of seem to exist in nature. The very process of being organized indicates that some aggregate scoring method to "trust but verify" is in use. Failure to meet the measurable level of trust standard set by the aggregate triggers a statistical range of vetting processes, ranging by uncorrected decay & attrition to active auto-immune rejection of a component by the aggregate. It seems that only the form of currency systems vary, their function is always to mediate information AND accurately denominate levels of coordination demanded by the aggregate. In the case of modern humans in the USA, public currency is distributed ONLY via public initiative, as public spending. Some is returned as public taxes, and residents use the excess (nominal “deficit” spending in accounting jargon) for nominal private financial savings or multi-step liquidity allowing highly agile and distributed transaction chains to be easily interleaved. Modern currency is simply bookkeeping, tracking individual responsibility for social credit within a nation. Given a prepared electorate, there is always room for more, and never any sense for less.

b) Why? The whole reason for being an aggregate, i.e., a social species, is because the highest return of all is always the return-on-coordination. Said inversely, the cost of coordination is always the highest cost, and the return-on-coordination is the only return that outstrips the coordination cost. Our path is clear, though littered with obstacles.
  To visualize this, compare the different methods employed by less capable versus more capable aggregates. All branches of organization tuning boil down to "staging, linking and sequencing" disparate actions coordinated across aggregate subparts.

Staging requires consensus desired outcomes, plus preparation of static & dynamic assets.

Linking requires understanding of interdependencies, & reliance upon feedback and timing.

Sequencing, the last & devastatingly effective step of aggregate agility, specifically requires differentially timed actions by all aggregate parts, whether cells in muscle groups, or humans in cultural groups. To take increasing advantage of sequential actions, the parts of an aggregate must extend & rely upon increasingly extensive inter-component credit, in order for all to reap the return on group coordination. If you can picture the range and frequency of credits extended and received, then you can understand sovereign currency and the method for denominating, tracking and managing social credit. If persons A, B & C each agree to perform distinct actions on days 1, 2 and 3, in order for all to participate in the outcome generated - say on day 5 - then they have all extended credit to one another, and expressed it in the form of their cooperation and shared return. Rather than only repeating their actions, if they all want to take their cooperative spirits elsewhere, or just simultaneously participate in distinct & interleaved transaction chains, then they may utilize a group-backed credit-scoring or credit-denomination system, often called a Sovereign Currency. Simplistic currency systems may take the form of distributed IOUs, while more sophisticated currencies allow more agility, by replacing all IOUs as multiple units of some standard unit of social credit.

c) An organized aggregate cannot run out of sovereign currency any more than it's citizens can run out of IOUs to exchange with one another. All they can run out of is the memory of how they once organized & created their currency system, or the practiced capability & intelligence to keep the currency system organized. Arbitrarily railing against increasing currency supply is like railing against increasing blood volume as a child grows. Growth, blood supply, sovereign currency and what an aggregate DOES with it's growing "limbs" are orthogonal issues. The only solution is tuning, and NEVER arbitrarily limiting any of the above. National currency supply balances must float automatically, as a function of distributed citizen transaction rates. Currency Issuer and Currency User currency budgets are completely different. Populations distribute currency in order to efficiently denominate and manage distributed social-credit contributions to public purpose. National budgets are formally denominated terms of public initiative, and “balance” only when nations achieve zero net growth rates. Sub-national budgets are formal judgments of sub-population use to a nation, as measured by currency throughput. Subcomponents seeking budget portability between nations are, like stockholders, risking citizen benefits and responsibilities for commodity measures. Nominal, national currency budgets have no relevance to sub-groups accounting for local responsibility. National populations are NOT COLLECTIVELY ACCOUNTABLE to one another for how much currency each circulates (see corollary A).
  The ONLY thing a modern currency is guaranteed "convertible" to upon demand (collectively, not even personally) .... is national initiative. $US international exchange value is based entirely upon confidence in US initiative.

d) Why? It's a simple function of dynamic system logic. Currency supply must expand as some function of the net amount and rate of social credit being expressed, as Public Initiative. With any combination of changing aggregate numbers, changing individual & group capabilities, changing transaction rates, and changing complexity of interleaved transaction chains .... the net flow of the linked social credit & sovereign currency must constantly grow, just to satisfy the demand for increasing liquidity. Since the aggregate is evolving new capabilities, the very form, number and unit of 1 instantaneous social credit is constantly depreciating - as new aggregate capabilities diversify beyond the relevance of old aggregate capabilities and old social credits.
  Simply put, while adaptive rate is non-zero, the return on future coordination swamps the return on simple hoarding of static assets, and neither social credit nor Public Initiative can be saved at all, only invested. Hoarding current fiat only reduces future options.

e) How good would an Army remain if weapons sat in warehouses while soldiers were under-equipped, or if the officers and especially generals hoarded all the weapons? Ditto for an electorate and it's currency supply.
  And the semantics? Humans use dynamic semantics in order to maintain a small linguistic base applicable across multiple contexts. As a result, many if not most words mean different things in different contexts. For Jane & Joe Sixpack, the typical meaning of a "deficit" is that something they require is missing. However, in the formal practice of Double Entry Accounting used for currency tracking, every new social credit or currency unit created is labeled as a "+" or source, and must be matched by an equal and opposite numeral in a matching column, labeled as a "-" or sink ... or, in accounting jargon, as a "deficit" - even though nothing at all is missing, except the logical capability of those people who are alarmed by semantic diversity. If you ran around a track 5 times, and entered a "5" in your exercise chart ... and used Double Entry Bookkeeping ... you'd have to enter a -5 in an opposite column, and declare a "lap deficit." Heck, to accountants, you'd even end up with an accumulating personal exercise debt. Some slow thinkers would even conclude that you're passing on that exercise debt to your grandchildren, thereby condemning them to be couch potatoes. Sheesh! You call this an informed electorate?
  After removing maladaptive constraints, then national budget balances for a purely NOMINAL currency matter no more than how many points are used during a hockey league season. Do leagues worry much about the # of points scored or taken away? No. During play, does it matter how points are awarded and/or penalized? Yes. Overall, stakeholders track individual, team and league initiative - the plus/minus transaction ratings of players and teams throughout games & seasons - as indicators. However it doesn't matter whether a league balances nominal "hockey point" budgets. Nor does it matter whether a nation balances a purely nominal currency budget which - like hockey points - is used only to instrument transactions. [It would matter, if hockey-points & currency were made of or guaranteed convertible to gold at FIXED rather than floating rates.]
  Can either access to hockey points (tickets) or national currency be traded for, say football tickets? Certainly. Do leagues compete to create demand for their as opposed to other league's points & tickets? Certainly. Yet they do so through initiative, not by manipulating interest rates on storage or trading of league points .
  Neither a league or a nation, however, can function if there are not enough hockey points or currency to allow "transactions" to occur. If a league lets the supply of hockey points get too low, or arbitrarily restricts their use too much, then aggregate demand from stakeholders may melt away and take years to rebuild - if it recovers at all. Ditto for modern currency.

f) Modern currency reserves can be used to affect currency exchange rates, but cannot guarantee stable buying power of ANY commodity, goods or services. In contrast, public initiative, like a hockey league's initiative, sets the value of a national currency. International exchange value of the $US is most efficiently managed via collective initiative, which does more to inflate $US value than any interest rate set by bankers.

g) Solvency and Deficit Terrorists. For modern or nominal currency, supposed fiat currency "deficits" have become exactly that, NOMINAL - just as with hockey leagues. Modern currency is simply less cumbersome than attaching spreadsheets to every citizen. We needn't run out of spreadsheet columns, leagues needn't run out of hockey-points, and we needn't ever run out of our own, monopoly currency. Granted, international exchange rates can fluctuate, based upon demand by international traders. IF that ratio matters to enough co-citizens it is best managed via national initiative, not by constraining use of either hockey points or sovereign currency.

h) In the USA, the purpose of "Monetary" policy is to preserve the sovereignty and trustworthiness of the national currency and our banking system. Attempting to do that by manipulating the cost of currency generates more complications than it can possibly solve. Therefore the core purpose of Banking Policy is regulation, so that banks meet the terms of behavior dictated by local and national banking licenses. Correspondingly, the purpose of collective, civil government is to protect REAL net aggregate demand as the sum of adequately distributed demand. No part of our economy should ever be allowed to hinder net aggregate demand simply for fear of not balancing purely nominal currency budgets. Manage public initiative & aggregate demand, not "hockey point" balances.
  Exactly how much money we do or don't print matters little, other than that we should never have so little circulating that people can't easily transact business (deflation), nor so much that it becomes a nuisance (inflation) - nor confuse buyers & sellers with frequent & swings which they cannot easily anticipate. It would be better to track only too-little/too-much ratings, like plus/minus ratings in sports leagues.

i) Given that the purpose of Government Policy is to serve national interests, it is impossible to separate Foreign Currency Reserves from other policy processes. The immediate corollary of this reality is that "Free Trade" is a complete oxymoron, as much as "Free Crime," "Free Patents," "Free Citizenship" and "Free War." Every inter-nation interaction, not just war, is an extension of politics by any other name.
  We needn't much care how much of our currency other countries hold, since reserves only affect exchange rates, and we have adequate policy options in response to ANY moves by any other country to increase or dump their foreign currency reserves. It is only a question of exercising policy agility. If a population desires different Fx rates, the best tool is national initiative, not confusion about whether to express more allegiance to international traders or to our nation. Modern currency does NOT store intrinsic value. If robbers instantly stole all cash throughout the USA - leaving behind only empty ATM machines, a barrel of oil, and toys with lead paint & melamine - citizens could simply distribute a new currency and take the initiative to find alternatives to imported oil, lead & melamine.

Randy Wray — Mission Finance: why money matters

The second guest post in this series comes from L Randall Wray, professor of economics at the University of Missouri-Kansas City. If the first was a call to arms for role of the state as entrepreneur, this is another big idea: we need to rethink the role of money in order to recognise the true challenge for finance.
The Financial Times — FT Alphaville
Mission Finance: why money matters
Guest Writer: L. Randall Wray | Professor of Economics, University of Missouri at Kansas City

Julio Huato — The Piketty Phenomenon

Why Picketty is no Marxist.

The Piketty Phenomenon
Julio Huato

Revealing tweet from the Right Libertarian Faction

So they think it provides some sort of "means of freedom" and some sort of "benefit".

I don't get it at all.  It cannot provide any sort of "freedom" for mankind anyway, that is completely absurd its use in fact subjects the entirety of mankind to the metal itself.

If used as "money", it can only "benefit" those who can obtain the limited amounts of it as opposed to state currency which we can issue/tax as required in working to achieve our economic objectives.

These right libertarians are just too stupid to see any of the hypocrisy in all of this I guess, scrambled eggs instead of brains.

BBC News — Iraqi Christians flee after Isis issue Mosul ultimatum

Bodes ill not only for Iraqi Christians. The US Christian right is going to amp up against Islam even more. The US is far from done with Iraq.

BBC News
Iraqi Christians flee after Isis issue Mosul ultimatum

See also Noah Shachtman And Spencer Ackerman, U.S. Military Taught Officers: Use ‘Hiroshima’ Tactics for ‘Total War’ on Islam, at Wired.
International laws protecting civilians in wartime are “no longer relevant,” [Army Lt. Col. Matthew A.] Dooley continues. And that opens the possibility of applying “the historical precedents of Dresden, Tokyo, Hiroshima, Nagasaki” to Islam’s holiest cities, and bringing about “Mecca and Medina['s] destruction.”
Spencer Ackerman, Soldier Who Taught ‘Total War’ Against Islam Threatens to Sue Top Military Officer, at Wired.

Claude Salhani, The Islamic State: Be Afraid, Be Very Afraid, at OilPrice.
Groups like the Islamic State realize that sooner or later they are bound to clash with the United States and Western powers, and with that in mind are very likely preparing to attack or counterattack the U.S…. 
Ariel Cohen, a leading U.S. energy and geopolitics expert and the principal of International Market Analysis, said the Islamic State has an “ambitious agenda” to try and conquer large territories, setting up violent clashes with multiple armies, governments and civilian fighters. “We may be, for all intents and purposes, looking at a multi-century conflict,” he said.
Hmm. Religious conflicts have been some of the worst historically. This as all the makings of one.

Sunday, July 20, 2014

Jay Walljasper — The Conservative Case for a Commons Way of Life

“There is less difference than many suppose between the ideal socialist system, in which the big businesses are run by the state, and the present capitalist system, in which the state is run by the big businesses. They are much nearer to each other than either is to my own ideal; of breaking up the big businesses into a multitude of small businesses.”
— G. K. Chesterton
The Conservative Case for a Commons Way of Life
Jay Walljasper

Interesting post on Distributism, but not sure what this has to do with the commons though.

Lord Keynes — How Noah Smith Should Have Criticised Austrian Economics

Outline of a complete critique of Austrian Economics with references, pointing out the similarities and differences of the different strains of Austrian economics and Post Keynesianism.

Social Democracy For The 21St Century: A Post Keynesian Perspective
How Noah Smith Should Have Criticised Austrian Economics
Lord Keynes

Washington's Blog — Exclusive: High-Level NSA Whistleblower Says Blackmail Is a Huge – Unreported – Part of Mass Surveillance

Just when you thought it couldn't get any worse. Oh, and turns out it has been going on for a long time. J. Edgar Hoover was a master at it, and Harry Truman denounced it specifically. Yukky.

Mish Shedlock — Video of MH17 Hit by Missile; Update From Jacob Dreizin; Black Box Thoughts

Interesting post by Mish on several aspects of the Ukrainian situation, including remarks by Ron Paul who has some sensible things to say.

Leo Kolivakis — On the Brink of Another World War?

The fact that we are asking this question is worrisome, and actions of supposedly responsible people in the West rushing to judgment is a bad sign of hubris.

Might be premature to project WWIII, but "the situation is fluid." Western grandstanding could backfire. Fortunately, Vladimir Putin is remaining cool —so far. But if he is driven into a corner, he will react. Washington is pretty sure of this and the neocons are fixed on driving him into a corner. Will President Obama be stupid enough to get sucked into this? Let's hope not.

Best not to go around poking bears in the eye.

Pension Plus
On the Brink of Another World War?
Leo Kolivakis

Shortly after we first reported about the MH-17 tragedy, we said that the key variable would be proving who the shooter was, as the grand fingerpointing theater was about to begin. We also noted that the actual answer to "who did it" was irrelevant, for the great propaganda machine had already made up its mind and was on overdrive. It promptly led to such ridiculous comments from non other than the Pentagon which said that, on one hand: 

 and yet:
So, "we don't know who did it" as long as Putin did it.…
As expected, the narrative that the jet was shot down over Ukraine by Putin promptly became the go to version of the western media, and in the absence of actual facts, the appeal to emotions took over and quickly hit a fever pitch. Below is a sampling of some UK newspaper front pages. Clearly, facts be damned, the media knows all already.
Once again the answer is simple: Western military intervention, this time in the conflict zone, under the guise of public anger against Putin, to reinforce the dwindling Ukraine army forces and to repel the separatists, in the process regaining the critical industrial regions of Ukraine which also are the location of vast natural gas deposits. Certainly showing to Gazprom just who was in charge of this key natural gas nexus wouldn't hurt either. After all the west has already invested so much in the current Ukraine government, it can't all be for nothing. 
And we know that because a few hours ago, the biggest Dutch newspaper, Telegraaf, openly asked for military intervention by NATO to protect MH 17 and calls Putin a "KGB liar."

Rob Wile — One Of Bitcoin's Strongest Backers Reveals The Two Big Reasons Why It's Still Not Mainstream

Still too many roll-out issues that Bitcoin has yet to break through.

But let's recall that when automobiles first appeared there were few gas stations or mechanics and plenty of flats and breakdowns. And when airplanes first appeared, there were few airports. Moreover, people had to be wait and see to determine whether  they were safe. People actually used to buy flight insurance at an airport booth even in the Sixties, prior to taking a flight.

So while it's premature to write off Bitcoin as a failed experiment, it's not yet ready for prime time.

Business Insider
One Of Bitcoin's Strongest Backers Reveals The Two Big Reasons Why It's Still Not Mainstream
Rob Wile

DEUTSCHE BANK — Here's The Worst-Case Scenario For The Russia-Ukraine Conflict

"Core issues in the Ukraine crisis remain unresolved," said Deustche Bank analysts Raj Hindocha and Marcos Arana in a presentation before the MH17 incident. "[T]he risk of escalation into a wider regional military conflict can't be ruled out." 
Hindocha and Arana included this slide laying out three scenarios for the region.
Business Insider

masaccio — Piketty and His Critics Chapter 4: Netroots Nation

We need to focus our energy on one fight, going straight for the beating heart of the filthy rich.I heard a little about inequality at Netroots Nation, but there was a depressing sameness to it. Everyone wants to talk about income inequality. No one wants to talk about our horrifying wealth inequality and the enormous damage it does to our society.…

The plain fact is that these crackpot billionaires and all the millionaires who own or manage businesses are ruining the country, using their fabulous wealth to trample every decent impulse of decent people into the muck. There are probably 60,000 households in this country who can afford to buy a congressman or a senator or a crucial bureaucrat to support their pet issue by paying $300,000 into their campaigns or hiring their family or contributing to their favorite charity or putting a little something into their pockets on their way in or out of the revolving door into government service or paying them $200,000 for a meaningless speech and a meet and greet.…
We know that the Oligarchs have three principal goals:
1. Protecting and preserving wealth
2. Insuring the unrestricted use of wealth
3. Acquiring more wealth.…

The solution is obvious: we have to force these cheats and thugs to move back to goal 1, defending their wealth. Piketty has laid out the plan. We tax wealth world-wide. We raise marginal tax rates on the highest incomes. We increase the estate tax on huge estates. We enforce those rules through aggressive use of the records the financial sector maintains. He suggests imposing a small tax at first on wealth, so that we can know who actually owns it. I’d add that then we say that undisclosed and untaxed wealth escheats to the nation that finds it, with a reward to any individual who is directly or indirectly responsible for disclosure. As a side benefit, we get to learn about drug lords, arms runners and Ponzi Schemers.
This idea isn’t about some supposed need to raise revenues to fund the budget, because we know there is no need to do that. Taxes For Revenue is Obsolete, as we learned from by Beardsley Ruml, Chairman of the Federal Reserve Bank of New York, in 1946. Taxes serve a number of purposes, including limiting political power of the rich. Raising revenue isn’t one of them, as Ruml demonstrates. The point is to engage directly on the issue of the undeserved and unwarranted political influence of the rich, not to suggest that we lack the resources to live in a decent society. We focus our energy on one fight, going straight for the beating heart of the filthy rich.

Scott Fullwiler — CBO—Still Out of Paradigm after All These Years

The Congressional Budget Office (CBO) published its long-term deficit and national debt projections last week. These are the projections most widely cited in policy discussions about long-term “sustainability” of the national debt and entitlement programs. In this post I focus on a small but very important part of the report—the CBO’s discussion of the “Consequences of a Large and Growing Debt,” which can be found on pages 13-15. This section can be found in past reports going back several years, and hasn’t change much if it has changed at all during this time. It is also consistent with the thinking of most economists on these issues. As readers of this blog will recognize, the CBO’s analysis is “out of paradigm” in that it is inapplicable to a sovereign, currency-currency issuing government operating under flexible exchange rates such as the US, Japan, Canada, UK, Australia, etc.
I would not call it "out of paradigm" as much as being just wrong due to ignorance.

New Economic Perspectives
CBO—Still Out of Paradigm after All These Years
Scott T. Fullwiler | James A. Leach Chair in Banking and Monetary Economics and is an Associate Professor of Economics at Wartburg College

Timothy B. Lee — The FCC wants to let cities build their own broadband. House Republicans disagree.

More money and machines over people and the environment.

The FCC wants to let cities build their own broadband. House Republicans disagree.
Timothy B. Lee

RT — Malaysia MH17 Crash: Ten Questions Russia wants Ukraine to Answer

Speaking to RT, Russia’s Deputy Defense Minister Anatoly Antonov has criticized Western countries for jumping to conclusions just “24 hours after the crash” while there is no evidence.
“They try to show to the whole world that we are responsible for the crash. It is very strange that without any evidence my colleagues from western media would like to find somebody who is responsible for the crash,” Antonov said. “It seems to me that this is part of information warfare which has been started against the Russian Federation and armed forces.”
It's called shaping the narrative.

Global Research
Malaysia MH17 Crash: Ten Questions Russia wants Ukraine to Answer

reddit — The evidence is building that the Kiev military shot down Malaysian Airlines Flight MH17 in Ukraine

More sleuthing.

The evidence is building that the Kiev military shot down Malaysian Airlines Flight MH17 in Ukraine

How the Iron Law of Oligarchy Extends to Peer Production

Paper: Laboratories of Oligarchy? How the Iron Law Extends to Peer Production. By Aaron Shaw, Benjamin Mako Hill. Computers and Society (cs.CY); Social and Information Networks (cs.SI); Report number: ci-2014/96 
“Peer production projects like Wikipedia have inspired voluntary associations, collectives, social movements, and scholars to embrace open online collaboration as a model of democratic organization. However, many peer production projects exhibit entrenched leadership and deep inequalities, suggesting that they may not fulfill democratic ideals. Instead, peer production projects may conform to Robert Michels’ “iron law of oligarchy,” which proposes that democratic membership organizations become increasingly oligarchic as they grow. Using exhaustive data of internal processes from a sample of 683 wikis, we construct empirical measures of participation and test for increases in oligarchy associated with growth. In contrast to previous studies, we find support for Michels’ iron law and conclude that peer production entails oligarchic organizational forms.P2
P Foundation
How the Iron Law of Oligarchy Extends to Peer ProductionMichel Bauwens

The causal mechanism behind the "iron law of oligarchy" as democratic organizations grow is that the organization tends to become hierarchical above a certain number owing to the transaction cost of consensus decision making. Hierarchical organization, along with power relationships and structure, is simply more efficient, as Peter F. Drucker has convincingly argued about the development of the firm.

This is a reason that subsequent to the hunter-gather stage at which a sparse humanity could function more or less on consensus-building, the agricultural stage and then the industrial stages led to increasing organization and power relationship and structure, especially after the development of the ancient city-state as a political institution. This was a natural and evolutionary development in accordance with the law of least action, otherwise known as "water runs downhill."

This is the dilemma facing humanity since the advent of liberalism in the Enlightenment. There is an inherent tension between popular, participatory democracy and efficient organization. The social, political and economic challenge is to work out tradeoffs that enable humanity to recapture the liberty and dignity of Rousseau's noble savage"while also harnessing the advantage of modern organization and management.

RT — Australian PM hints Putin may dropped from G20 summit over MH17 crash

The push is on to isolate and marginalize Vladimir Putin in order to effect regime change in Russia to a pro-Western regime.

Bad strategy. This puts the Global South on notice that it has no choice but to cooperate in organizing against the Global North and continued dominance of neoliberalism, neoconservatism, neo-imperialism, and neocolonialism. 

Demographically, the Global North cannot win this in the long run. Worse, it pits Caucasians against the rest of the races. Talk about a recipe for disaster.

Australian PM hints Putin may dropped from G20 summit over MH17 crash

Lars P. Syll — Macroeconomic quackery

Formalism (Lucas) v. empiricism (Summers)

Lars P. Syll’s Blog
Macroeconomic quackeryLars P. Syll | Professor, Malmo University

Matt Bruenig — Environmentalism poses a problem for libertarian ideology

George Monbiot had an article in the Guardian on Monday about bastardised libertarianism and its inability to understand the real freedoms being fought for by environmentalists and social justice advocates. However, Monbiot’s treatment of environmentalism’s threat to libertarianism was a bit sloppy. He got sucked into the negative freedom and positive freedom debate, and although he worked his way to the correct conclusion ultimately, I felt like the clarity was lacking.
So I want to explain more clearly just how much environmentalists stick in the side of libertarian ideology. First, consider what libertarians of the sort Monbiot criticizes are really about philosophically: they favor a procedural justice account of the world based heavily on property rights. This is the newest face of libertarianism. Gone is the appeal to utility and desert. The modern libertarians try to prop up their political ideas almost solely through a rigid formalism of property rights.
I have written before about the problem with the procedural accounts of property rights, but here I want to just accept the libertarian property rights premise. Somehow individuals can grab up pieces of the world and exclude those pieces from everyone else forever. Once those individuals become owners of their respective property, nobody else can touch that property or do anything whatsoever to that property without their consent. Coming onto my property without my consent is a form of trespass under this picture. Doing anything to my property — whether it be painting it, dumping stuff on it, or causing some other harm to it — is totally off limits.
So environmentalists point out that carbon emissions are warming the planet, one consequence of which is that harm will be done to the property of others. Most environmentalists — being the leftists that they generally are — do not make too much of the property rights issues, but one certainly could. Coal plants release particulates into the air which land on other people’s property. But no permission is ever granted for that. Coal plants do not contract with every nearby property owner to allow for them to deposit small amounts of particulate matter on their neighbors’ land. They are guilty of a form of property trespass.
Beyond that, all sorts of industrial processes have environmental externalities that put things into the air or the water that ultimately make their way into the bodies of others. This is a rights-infringing activity under the procedure-focused libertarian account. The act of some industry is causing pieces of matter to land on me and enter into my body. But I never contracted with them to allow them to do so.…
The short of is that environmentalists totally smash open the idea that property rights theories can really account for who is permitted to do what with the land that they own. Almost all uses of land will entail some infringement on some other piece of land that is owned by someone else. So how can that ever be permitted? No story about freedom and property rights can ever justify the pollution of the air or the burning of fuels because those things affect the freedom and property rights of others. Those actions ultimately cause damage to surrounding property and people without getting any consent from those affected. They are the ethical equivalent — for honest libertarians — of punching someone in the face or breaking someone else’s window.…
Admitting that someone’s use of their own property almost certainly entails an infringement on someone else’s property makes the whole libertarian position basically impossible to act out in the real world.
Matt Bruenig

Lord Keynes — A Candid Admission from Hayek?

Hayek therefore seems to have conceded the need for monetarist or Keynesian interventions to prevent deflationary depressions: he renounced his earlier liquidationism.
But to return to the more interesting point: if Hayek’s ABCT never claimed to explain anything but “the upper turning point of the typical nineteenth-century business cycle,” then why did Hayek apply it to 20th century business cycles and the Great Depression?

Social Democracy For The 21St Century: A Post Keynesian Perspective
A Candid Admission from Hayek?Lord Keynes

Lambert Strether — False Flag?

Pushing Ukraine to the Brink Counterpunch (bwilli123). Fun read from July 9. Because it would be irresponsible not to speculate:

[A]ll Putin has to do is sit-tight and he wins, mainly because the EU needs Moscow’s gas. If energy supplies are terminated or drastically reduced, prices will rise, the EU will slide back into recession, and Washington will take the blame. So Washington has a very small window to draw Putin into the fray, which is why we should expect another false flag incident on a much larger scale than the fire in Odessa. Washington is going to have to do something really big and make it look like it was Moscow’s doing. Otherwise, their pivot plan is going to hit a brick wall.
Then again, we could be looking at opportunists taking advantage of a happy accident! That said, it does make one wonder whether the Dutch being self-sufficient in gas could have formed part of the realpolitik….
Anyone who didn't think of this before reading the Counterpunch article either wasn't paying attention or is not much of an analyst, especially based on the history of Washington and London's black ops stretching back at least to the overthrow of democratically elected Mohammad Mosaddegh and install at of the domestically repressive but US compliant regime of the Shah in the Iranian coup of 1953 — to which the CIA has recently admitted (Operation Ajax) and the overthrow and murder of democratically elected Salvador Allende and his replacement by US compliant dictator Augusto Pinochet. Only fools would not suspect another false flag operation to accomplish the same "dirty tricks" in the Ukraine, given that Washington and the US intelligence service were involved in the overthrow of democratically elected Viktor Yanukovych. Anyone see a pattern of thuggery here?

This is particularly suspect in the rush to judgment in blaming Vladimir Putin and the Ukrainian "rebels," who are actually fighters in a civil war that is raging, and branding them as terrorists. Russia had no motivation to do this, and in fact, the strategy it has been pursuing is contrary to it. Nor did the Ukrainian opposition have anything to gain by it. On the other hand, there is a strong motivation on the part of both the Ukrainian government and the United States, both of which have a lot to gain in provoking Moscow to react.

Not rushing to judgment here. Let's wait for an investigation if one ever transpires. Jus' saying'.

Naked Capitalism
Links 7/20/14
Lambert Strether

Lambert documents it in The Mystery of Flight MH17: Motives, Missiles, Flight Plans, and the Media

Wonkish, but your future depends on the outcome of this. Russia is neither an Iran of 1953 nor Chile of 1973. Nor is it just another minor nuclear state like NK. The Russian military can inflict terminal damage on CONUS (military jargon for continental US).

John Napier Tye — Meet Executive Order 12333: The Reagan rule that lets the NSA spy on Americans

Even after all the reforms President Obama has announced, some intelligence practices remain so secret, even from members of Congress, that there is no opportunity for our democracy to change them….
The Washington Post
Meet Executive Order 12333: The Reagan rule that lets the NSA spy on Americans
John Napier Tye
(h/t Lambert Strether at Naked Capitalism)
John Napier Tye served as section chief for Internet freedom in the State Department’s Bureau of Democracy, Human Rights and Labor from January 2011 to April 2014. He is now a legal director of Avaaz, a global advocacy organization.

Saturday, July 19, 2014

Mark Ames — Homophobia, racism and the Kochs: San Francisco’s tech-libertarian “Reboot” conference is a cesspool

Institutional Libertarianism's racism and fascism issues. Of course, not all Libertarians are not institutional Libertarians, but many leaders of the political movement are. Interesting documentation.

Matt Welch responds, Reason Spuriously Accused by Conspiracy Theorist of Institutionally Supporting Apartheid in the 1970s and ‘80s
You decide.

Norbert Haering — George Soros’ INET: A conspiracy theory assessment

Is INET a Trojan horse, planted to distract from real reform? Haering finds the evidence ambivalent. I think that the conspiracy theory is unsupported but there is reason to think that rather than new economic thinking there's a lot of useful idiocy mixed in with genuine reform.

World Economics Association
George Soros’ INET: A conspiracy theory assessment
Norbert Haering