Sunday, April 23, 2017

Andrew Batson — What is the real driver of the Russian revanche?

Important. Another paradox of liberalism. Liberalism creates its own enemies.

Andrew Batson's Blog
What is the real driver of the Russian revanche?

Ingrid Harvold Kvangraven — 200 Years of Ricardian Trade Theory: How Is This Still A Thing?

On Saturday, April 19th 1817, David Ricardo published The Principles of Political Economy and Taxation, where he laid out the theory of comparative advantage, which since has become the foundation of neoclassical, ‘mainstream’ international trade theory. 200 years – and lots of theoretical and empirical criticism later – it’s appropriate to ask, how is this still a thing?

This week we saw lots of praise of Ricardo, by the likes of The Economist, CNN, Forbes and Vox. Mainstream economists today tend to see the rejections of free trade implicit in Trump and Brexit as populist nonsense by people who don’t understand the complicated theory of comparative advantage (“Ricardo’s Difficult Idea”, as Paul Krugman once called it in his explanation of why non-economists seem to not understand comparative advantage). However, there are fundamental problems with the assumptions embedded in Ricardo’s theory and there’s little evidence, if any, to back up the Ricardian claim that free trade leads to benefits for all. On this bicentenary, I therefore think it’s timely to revisit some of the fundamental assumptions behind Ricardo’s theory of comparative advantage, that should have led us to consider alternative trade theories a long time ago....
Good summary backgrounder. "It's more complicated than that," the "that" being what is assumed.

The following quote contains an important lesson about logic and epistemology.
Rather than accept that there is something wrong with the exchange rate theory itself, empirical discrepancies are explained by measurement problems and/or imperfections in the market because of currency ‘manipulation’ (see for example Eichengreen 2013 or Gagnon 2012). In fact, neoclassical trade theory is so highly regarded that economists, almost across the board, cannot imagine any reason for China’s trade surplus with the US other than the Chinese manipulating their exchange rate in order to stimulate their exports.
What has happened here is that the theoretical model become the criterion for assessing truth rather than a model to be compared with observation in measurement.

Take probability theory. Probability theory shows the outcome of a long run roll of a coin toss, regardless of whether it is an ensemble of 1000 coins tossed at once or a single coin tossed a 1000 times. If the outcome does not converge on 0.50, then the fairness of the coin becomes suspect and not the theory.

This is not necessarily the case with a scientific theory. In the case of an anomaly scientists check the experiment but after checking and finding no errors, the theory becomes suspect. Repeated failures result in re-thinking the theory.

Because it is difficult to impossible to run controlled experiments in economics in many cases, trade being one of them, the dominant theory is never questioned. It serves as a criterion of truth whose truth is privileged from question.

Developing Economics
200 Years of Ricardian Trade Theory: How Is This Still A Thing?
Ingrid Harvold Kvangraven | PhD student in Economics at the New School for Social Research

Brian Romanchuk — SFC Models And Introductory MMT-Style Fiscal Analysis

The usefulness of Stock-Flow Consistent (SFC) models is that they allow us to illustrate concepts in economics without relying solely on verbal descriptions.
In this article, I will discuss my interpretation of some of the ideas floating around in Modern Monetary Theory (MMT). I will note that these are my interpretations of statements made by others, illustrated by an extremely simple model. The key is that even simple models can be used to clarify our thinking.
This article is only a partial response to an article by Gerard MacDonell. He is unhappy about some of the writings of Professor Bill Mitchell, one of the leading MMT economists.
I am not going to argue on Mitchell's behalf, rather I just want to offer some analysis that touches on some of the technical issues Gerard made. He noted that Federal taxation and spending are roughly similar, so how does that square with MMT pronouncements about the independence of taxation and spending? This outcome is not surprising, as it is exactly the sort of thing that is predicted by SFC models -- and MMT mathematical analysis of the economy uses SFC models.
For those if you who are not fully up-to-date on post-Keynesian factionalism, please note that SFC models were meant to be a mathematical lingua franca for post-Keynesian economics. In other words, MMT economists use SFC models, but they are not exclusive to MMT.
Since I want to work with my Python modelling framework here, and it currently cannot support full business cycle analysis (extensions will be added later), I cannot do complete justice to Functional Finance. Therefore, I have to just focus on a couple of more basic ideas about fiscal polict
  1. there is little relationship between taxes and spending; and
  2. governments cannot control the budget deficit.
I will address these here in turn....
Bond Economics
SFC Models And Introductory MMT-Style Fiscal Analysis
Brian Romanchuk

Saturday, April 22, 2017

Jason Smith — Economics to physics phrasebook


Information Transfer Economics
Economics to physics phrasebook
Jason Smith

See also

Good ideas do not need lots of invalid arguments in order to gain public acceptance

Branko Milanovic — A theory of the rise and fall of economic leadership: review of Bas van Bavel’s “The Invisible Hand?”

The recently published “The invisible hand?: How market economies have emerged and declined since AD 500” (Oxford University Press, 2016, 330 pages) by Bas van Bavel has, like all important books, a relatively simple core theory which Van Bavel, a well-known economic historian teaching at the University of Utrecht, illustrates on five historical examples: Iraq between 500 and 1100, Central and Northern Italy 1000-1500, the Low Countries 1100-1800, England 1800-1900, and the United States 1800-today. (The first three cases are discussed in detailed separate chapters, each running to 50-60 pages, while the last two, to which Western Europe may be appended, are discussed in a single chapter called “Epilogue”)....
Global Inequality
A theory of the rise and fall of economic leadership: review of Bas van Bavel’s “The Invisible Hand?”
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

JW Mason — At Dissent: A Cautious Case for Economic Nationalism

I have an article in the new issue of Dissent, arguing that “As long as democratic politics operates through nation-states, any left program will require some degree of delinking from the global economy.”…
One thing that’s probably not as clear as it should be in the Dissent piece, is that the case for delinking is much stronger for most other countries than for the United States. For most countries, free trade and, even more, free capital mobility, drastically reduce the choices available to national governments. (This “disciplining” of the state by foreign investment is sometimes acknowledged as its real function.) For the US, I don’t think this is true – I don’t think the threat of capital flight meaningfully constrains policy here. And in particular I don’t think it makes sense to see a more positive trade balance as necessary or even particularly desirable to boost demand, for reasons laid out here and here.
The US is a special case in many respects and American leaders, media and much of the public project the American case on the world either as the general case or the general case to be achieved, and often this is not even the actual case but the dominant narrative.

J. W. Mason's Blog
At Dissent: A Cautious Case for Economic Nationalism
JW Mason | Assistant Professor of Economics, John Jay College, City University of New York

The Mélenchon Economy

Jean-Luc Mélenchon’s senior economic advisor explains his proposals to grow the economy and carry out an ecological transition.
Regardless of whether Mélenchon wins, he is having a similar effect in France to that of Bernie Sanders in the US and Jeremy Corbyn in the UK:  People are realizing that there is an alternative.

Vive le populisme de gauche!

The Mélenchon Economy
Liêm Hoang-Ngoc is an economic advisor to Jean-Luc Mélenchon and a lecturer in economics at the Panthéon-Sorbonne University. He is also the President of the New Socialist Left Party and a regional councillor in Occitan

Also at Jacobin:
Two hundred French educators explain why they’re supporting Jean-Luc Mélenchon in tomorrow’s presidential election.
Another World Is Possible With Jean-Luc Mélenchon

David F. Ruccio — Science and socialism

"It's doesn't take an Einstein," although Einstein did put his finger on it.

Occasional Links & Commentary
Science and socialism
David F. Ruccio | Professor of Economics, University of Notre Dame

Friday, April 21, 2017

James Kwak — How Ideologues Use Grade-School Economics to Distort Minimum Wage Debates

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 pay 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.…
In short, conventional economics is propaganda for an ideology rather than being a science as advertised. "Simplify and conquer" was added to "divide and conquer."

How Ideologues Use Grade-School Economics to Distort Minimum Wage Debates
James Kwak | Associate Professor of Law at the University of Connecticut School of Law

Lynn Parramore — America is Regressing into a Developing Nation for Most People

A new book by economist Peter Temin finds that the U.S. is no longer one country, but dividing into two separate economic and political worlds.
You’ve probably heard the news that the celebrated post-WW II beating heart of America known as the middle class has gone from “burdened,” to “squeezed” to “dying.” But you might have heard less about what exactly is emerging in its place.

In a new book, The Vanishing Middle Class: Prejudice and Power in a Dual Economy, Peter Temin, Professor Emeritus of Economics at MIT, draws a portrait of the new reality in a way that is frighteningly, indelibly clear: America is not one country anymore. It is becoming two, each with vastly different resources, expectations, and fates....
The US begins to resemble Latin America as the American Dream fades into memory for many Americans.
Along with Thomas Piketty, whose Capital in the Twenty-First Century examines historical and modern inequality, Temin’s book has provided a giant red flag, illustrating a trajectory that will continue to accelerate as long as the 20 percent in the FTE sector are permitted to operate a country within America’s borders solely for themselves at the expense of the majority. Without a robust middle class, America is not only reverting to developing-country status, it is increasingly ripe for serious social turmoil that has not been seen in generations....
Expect increased sales of The Communist Manifesto and Mein Kampf.

America is Regressing into a Developing Nation for Most People
Lynn Parramore 

Warren Mosler — Credit check

See any reason not to panic?

The Center of the Universe
Credit check
Warren Mosler

Darius Shahtahmasebi — Journalist Who Blew Lid off War Crimes: CIA Fighting ‘Parallel’ War in Afghanistan

The first thing to note is that the dropping of a large bomb in Afghanistan and publicizing it to the world with its malignant title “the mother of all bombs” – that bomb was not aimed at ISIS fighters. It was aimed at the new administration in Washington. It was bringing them into line. It was conditioning them – to turn them from being anti-interventionists into being routine overseers of a huge military which goes its own way to a large extent. We shouldn’t misunderstand what went on there; that was a political gesture in my strong opinion....
The Anti-Media
Journalist Who Blew Lid off War Crimes: CIA Fighting ‘Parallel’ War in Afghanistan — Exclusive
Darius Shahtahmasebi

Fred Nagel — It’s “Deep State” Time Again

Whenever there are obvious conflicts within the ruling class, the concept of a Deep State is brought out to explain why our government seems to be coming apart at the seams. When the tired rhetoric of our two party system can’t bring us to a satisfying catharsis, there is always the deus ex machina of grand conspiracies and hidden rulers.
The actual nature of our oppression, however, has been in plain sight for decades, although assiduously avoided by much of our media. The criminality of the CIA and the FBI is a case in point. Both agencies have long been well beyond Congressional oversight. The dirty tricks, political harassment, and illegal spying carried out by the FBI, as well as the foreign assassinations, political coups, and massive surveillance of the CIA have only been thoroughly investigated once, and that was during the Church Committee hearings of 1975. The hearings exposed the lawlessness of FBI and CIA, but made little difference in either agencies’ long term accountability, despite the creation of the U.S. Senate Select Committee on Intelligence.
Thirty-two years later, Senator Jay Rockefeller, then Chair of the Senate Intelligence Committee, was asked what progress his organization had made in finding out about the secret operations of the nation’s intelligence agencies. In exasperation, he told a young freelance reporter, “Don’t you understand the way intelligence works? Do you think that because I’m chairman of the Intelligence Committee that I just say ‘I want it, give it to me’? They control it. All of it. All of it. All the time.”…
Who's in charge around here anyway?

Fred Nagel

Diana Johnstone — The Main Issue in the French Presidential Election: National Sovereignty

The confusion is due to the fact that most of what calls itself “the left” in the West has been totally won over to the current form of imperialism – aka “globalization”. It is an imperialism of a new type, centered on the use of military force and “soft” power to enable transnational finance to penetrate every corner of the earth and thus to reshape all societies in the endless quest for profitable return on capital investment. The left has been won over to this new imperialism because it advances under the banner of “human rights” and “antiracism” – abstractions which a whole generation has been indoctrinated to consider the central, if not the only, political issues of our times.
The fact that “sovereignism” is growing in Europe is interpreted by mainstream globalist media as proof that “Europe is moving to the right”– no doubt because Europeans are “racist”. This interpretation is biased and dangerous. People in more and more European nations are calling for national sovereignty precisely because they have lost it. They lost it to the European Union, and they want it back.
That is why the British voted to leave the European Union. Not because they are “racist”, but primarily because they cherish their historic tradition of self-rule.…
The Trotskyites so-called "leftists" aka have blown themselves up by self-identifying with the neo-imperialists globalists. Charles De Gaulle is laughing in his grave.

Another illustration of the paradox of liberalism involving social, political and economic liberalism in which social liberalism is being used as tool to target economic liberalism at the expense of political liberalism. This is another instance illustrating how difficult it is to integrate social, political and economic liberalism. As result, many are losing confidence in liberalism as a viable social, political and economic theory and are looking for alternatives. This is freaking out the liberal establishment, which views the only alternatives to liberalism as being either fascism or communism. As a result debate has become irrational.

Good backgrounder on French politics going to the presidential election, too.

Peter Radford — Nailed to Its Perch

Economics, in its majority form, is simply dumb and wrongheaded. It is a dangerous technology based on a severely anti-social premiss. It seeks to contort the world to match itself rather than to describe the world as it is....
The project of the economic liberalism that dominates the economics profession is to model an idealized world based on highly restrictive assumptions based on ideology, chiefly methodological individualism that assumes ontological individualism, and then recommend policy that attempts to conform the real world to the model.

The Radford Free Press
Nailed to Its Perch
Peter Radford

Asia Unhedged — China just established seven new FTZs—here’s what they’re all about

The new batch of free trade zones includes five inland provinces, and gives clues regarding China’s long-term strategy.
Asia Times
China just established seven new FTZs—here’s what they’re all about
Asia Unhedged

Thursday, April 20, 2017

Jeff Spross — You’re Hired!

The Democrats are looking for a big idea? Here’s one: a guaranteed job for anyone who wants one. It’s not as crazy as it sounds.
Democracy — A Journal of Ideas
You’re Hired!
Jeff Spross

Robert Parry — Why Not a Probe of ‘Israel-gate’?

The question that must not be asked.
As Official Washington fumes about Russia-gate, Israel’s far more significant political-influence-and-propaganda campaigns are ignored. No one dares suggest a probe of Israel-gate, says Robert Parry.
An exploration of the heart of the snake pit.

Consortiums News
Why Not a Probe of ‘Israel-gate’?
Robert Parry

Todd Royal — Geopolitics is becoming the main driver of global oil prices

The first summit earlier this month between US President Donald Trump and his Chinese counterpart, Xi Jinping, focused on the North Korean nuclear threat and trade accords between the two global superpowers. The impact of the two-day meeting will also affect fossil-fuel and related energy policy for Asia and the world more than any action by Opec or the prices set by major oil producers.
China is now the largest buyer of US oil exports, accordingto Bloomberg. And since Beijing has blocked North Korean coal imports to sanction Pyongyang for its nuclear and ballistic missile programs, China is buying US coal instead. The coal blockade indirectly helps Trump fulfill a continued pledge of “putting US coal miners back to work.” China’s economy is still dependent on the country’s coal-fired power plants, and the move to buy more US coal in support of UN sanctions against North Korea illustrates how geopolitics will drive energy policy....

Martin S. Feldstein — Why the U.S. Is Still Richer Than Every Other Large Country

Will America maintain these advantages? In his 1942 book, Socialism, Capitalism, and Democracy, Joseph Schumpeter warned that capitalism would decline and fail because the political and intellectual environment needed for capitalism to flourish would be undermined by the success of capitalism and by the critique of intellectuals. He argued that popularly elected social democratic parties would create a welfare state that would restrict entrepreneurship.
Although Schumpeter’s book was published more than 20 years after he had moved from Europe to the United States, his warning seems more appropriate to Europe today than to the United States. The welfare state has grown in the United States, but much less than it has grown in Europe. And the intellectual climate in the United States is much more supportive of capitalism.
If Schumpeter were with us today, he might point to the growth of the social democratic parties in Europe and the resulting expansion of the welfare state as reasons why the industrial countries of Europe have not enjoyed the same robust economic growth that has prevailed in the United States.
What's wrong with Martin Feldstein's argument?

First, he defines national wealth based on real GDP per capita regardless of distributional effects. Biased and skewed away from distributed prosperity.

Secondly, he proposes no rigorous method for identifying causal factors, determining their relationships and priority of importance, and isolating confounding factors. Methodologically unsound.

Thirdly,  it is blatantly political. A view of economics is used to promote a political viewpoint. Ideology rather than science.

He knows better. Fail. A grade for persuasion based on ideology though. It even appeals to authority (Schumpeter). And Feldstein is also using his own authority to persuade.

Harvard Business Review
Why the U.S. Is Still Richer Than Every Other Large Country
Martin S. Feldstein | George F. Baker Professor of Economics at Harvard University, and the president emeritus of the National Bureau of Economic Research

CNBC — Republicans have a new plan to repeal Obamacare — and here it is

Republican lawmakers have a new plan to repeal and replace Obamacare in a bid to bridge the gap between the House Freedom Caucus and moderates, according to a document obtained by CNBC....
A Freedom Caucus source told CNBC the changes to the health bill would secure 25 to 30 "yes" votes from the Freedom Caucus, and the new bill would get "very close" to 216 votes. The source said that 18 to 20 of those "yes" votes would be new.

Two senior GOP aides told CNBC no vote is scheduled for next week, but a discussion is expected via conference call on Saturday....
Republicans have a new plan to repeal Obamacare — and here it is
Berkeley Lovelace Jr. and Kayla Tausche

Thomas Palley — Trumponomics:NeoconNeoliberalism Camouflaged with Anti-Globalization Circus

A Post Keynesian's view of Trumponomics.
A key element of Trump’s political success has been his masquerade of being pro-worker, which includes posturing as anti-globalization. However, his true economic interest is the exact opposite. That creates conflict between Trump’s political and economic interests. Understanding the calculus of that conflict is critical for understanding and predicting Trump’s economic policy, especially his international economic policy.
As part of maintaining his pro-worker masquerade, Trump will engage in an anti-globalization circus, but the bark will be worse than the bite because neoliberal globalization has increased corporate profits, in line with his economic interests. He will also feed his political base’s racist immigration policy as long as that does not adversely impact corporate profitability.
Lastly, Trump expresses neocon unilateralist tendencies that play well with much of the US electorate. His neocon unilateralism is not a one-off temporary political aberration. Instead, it reflects intrinsic and enduring features of the current US polity. That has profound implications for the international relations order, and is something many Western European governments may not yet have digested.
Social Europe
Trumponomics:NeoconNeoliberalism Camouflaged with Anti-Globalization Circus
Thomas Palley | Schwartz Economic Growth Fellow at the New America Foundation

Bill Mitchell — MMT is what is, not what might be

Must-read. 'Nuff said.

Bill Mitchell – billy blog
MMT is what is, not what might be
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Wednesday, April 19, 2017

Pictures of Two Morons

Moron #1:

Moron #2:

Both exhibiting the falsehood: "We're out of munnie!"

Moon of Alabama — The Nerve Agent Attack that Did Not Occur - Khan Sheikhun Summary Report by Prof. Postol

MIT Professor Theodore Postol, a well known missile expert and former scientific advisor to the U.S. Chief of Naval Operations, analyzed the available evidence of the alleged April 4 Sarin attack on Khan Sheikhun in Syria. He comes to the conclusion that the White House allegations and its report are false. The White House report was not created or vetted by knowledgeable intelligence analysts. This confirms our own analysis published earlier on Moon of Alabama.
Here is Prof. Postol's summary report: The Nerve Agent Attack that Did Not Occur, April 19(pdf, 18 pages).
Previously three preliminary versions of Prof. Postol's analysis were released by him:
Moon of Alabama
The Nerve Agent Attack that Did Not Occur - Khan Sheikhun Summary Report by Prof. Postol


Washington's Blog
The Nerve Agent Attack that Did Not Occur: Analysis of the Times and Locations of Critical Events in the Alleged Nerve Agent Attack at 7 AM on April 4, 2017 in Khan Sheikhoun, Syria

Jim Lobe — Bannon Down, Pentagon Up, Neocons In?

Balanced article on US politics relative to international relations and foreign and military policy.

Bannon Down, Pentagon Up, Neocons In?
Jim Lobe

Masha Gessen — The Real Madman

Where Putin’s unpredictable persona is a carefully cultivated one, Trump has given no evidence that his madman act is an act.
I disagree with notorious Putin-basher critic Masha Gessen, who is Russian-born and is fluent in Russian, and should know better. Putin may appear to be a "madman" from the Western POV, but his actions are perfectly rational based on Russian interests, for which he is willing to take risks, which Gessen seems not to understand or does not want to understand.

Putin actually met with her at the Kremlin on several occasions. Has any US president every met with a prominent critic like Noam Chomsky, let along invited one to the White House? I didn't think so.

On the other hand, Trump? Gessen is also a foe of Donald Trump, and she is on firmer ground on this score.

The New York Review of Books
The Real Madman
Masha Gessen

Fabius Maximus — Our Right & Left have lost their way. Saul Alinsky points to a better politics.

Summary: As US politics becomes a cacophony of lies and nonsense (now descending into street violence), we need to know that it can be better. This post reminds us of Saul Alinsky’s famous “Rules for Radicals”, which will work for any political movement.
Some Alinsky excerpts. It's short and worth a read.

Fabius Maximus
Our Right & Left have lost their way. Saul Alinsky points to a better politics.

Brink Lindsey and Steven M. Teles — Worried About Concentration? Then Worry About Rent-Seeking

While concentration can lead to rent seeking, rent-seeking can also lead to concentration.

ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business
Worried About Concentration? Then Worry About Rent-Seeking
Brink Lindsey, vice president for research at the Cato Institute, and Steven M. Teles | associate professor of political science at Johns Hopkins University and a senior fellow at the Niskanen Center
ht Mark Thoma at Economist's View

Bill Mitchell — Subsidiarity – a European Union smokescreen to justify failure

One of the various smokescreens that were erected by the European Commission and the bevy of economists that it either paid or were ideologically aligned to justify the design of the monetary union around the time of the Maastricht process was the concept of subsidiarity.
In 1993, the Centre for Economic Policy Research (a European-based research confederation) published its Annual Report – Making Sense of Subsidiarity: How Much Centralization for Europe? – which attempted to justify (ex post) the decisions imported from the 1989 Delors Report into the Maastricht Treaty that eschewed the creation of a federal fiscal capacity. It was one of many reports at the time by pro-Maastricht economists that influenced the political process and pushed the European nations on their inevitable journey to the edge of the ‘plank’ – teetering on the edge of destruction and being saved only because the European Central Bank has violated the spirit of the restrictions that a misapplication of the subsidiarity principle had created. It is interesting to reflect on these earlier reports. We find that the important issues they ignored remain the central issues today and predicate against the monetary union ever being a success....
Bill Mitchell – billy blog
Subsidiarity – a European Union smokescreen to justify failure
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Tuesday, April 18, 2017

Peter Cooper — Government Money and Democracy

How the currency issuer creates money democratically and how the democratic process can be sidelined with respect to money creation.

Government Money and Democracy
Peter Cooper

USAFacts beta courtesy of Steve Ballmer

USAFacts was inspired by a conversation Steve Ballmer had with his wife. She wanted him to get more involved in philanthropic work. He thought it made sense to first find out what government does with the money it raises. Where does the money come from and where is it spent? Whom does it serve? And most importantly, what are the outcomes?
With his business background, Steve searched for solid, reliable, impartial numbers to tell the story… but eventually realized he wasn’t going to find them.
USAFacts beta

Wendy McElroy — Your Bitcoins Open to CIA and Criminals, Heed Wikileaks’ Warning

More on Vault 7.
This Wikileaks dump reiterated something we already knew; Our devices are fundamentally unsafe. No matter what kind of encryption we use, no matter which secure messaging apps we take care to run, no matter how careful we are to sign up for two-factor authentication, the CIA—and, we have to assume, other hackers—can infiltrate our operating systems, take control of our cameras and microphones, and bend our phones to their will. The same can be said of smart TVs, which could be made to surreptitiously record our living-room conversations.
Back to carrier pigeons?

Monday, April 17, 2017

Bill Black — Dodd-Frank Was Designed to Fail – and Trump Will Make it Worse

Here is what [out-going chairman of the Federal Financial Institutions Examination Council Daniel] Tarullo actually admitted about Dodd-Frank’s fatal flaw. President Obama and Congress did not frame it as a coherent response to the perverse incentives that cause our recurrent, intensifying financial crises. Wall Street CEOs rigged our structures to institutionalize perverse incentives. Refusing to change those structures after a catastrophe was, of course, significantly insane. President Obama and Congress failed to engage in a rigorous, honest investigation of those structural causes and then refused to fix the structural defects.
The structures that institutionalize perverse incentives have in common the creation of conflicts of interest. CEOs do this primarily by creating perverse compensation systems, but they also do it through combining investment and commercial banking. Systemically dangerous institutions (SDIs) (“too big to fail”) create another conflict of interest. Politicians dependent on their contributions and pathetic regulators treat them as untouchable. Astonishingly, Obama and Congress refused to fix any of these three primary conflicts of interest that drive our recurrent crises.
New Economic Perspectives
Dodd-Frank Was Designed to Fail – and Trump Will Make it Worse
William K. Black | Associate Professor of Economics and Law, UMKC

Pam and Russ Martens — Has Former Goldman Sachs President, Gary Cohn, Gone Rogue on Glass-Steagall?

Backgrounder on former Goldman President Gary Cohn, who is becoming increasingly influential in the Trump administration domestically, just as Generals James Mattis and H. R. McMaster with respect to international affairs.

Wall Street On Parade
Has Former Goldman Sachs President, Gary Cohn, Gone Rogue on Glass-Steagall?
Pam Martens and Russ Martens

Yen Nee Lee — China's start-ups are changing, and that has major global implications

China's non-financial outbound investments rose from $5.5 billion in 2004 to a new high of $170.11 billion in 2016, according to data compiled by the country's National Bureau of Statistics.….

"Chinese enterprises have begun to rapidly increase their global investment to achieve mid- to long-term growth. With the 'One Belt, One Road' initiative and other strategies serving as a powerful engine, more Chinese enterprises are expected to invest overseas and, therefore, a double-digit growth rate in China's outward [foreign direct investment] is expected in the next few years," Loletta Chow, global leader of EY's China Overseas Investment Network, said in a report....
China's start-ups are changing, and that has major global implications
Yen Nee Lee

Sunday, April 16, 2017

Scotty — Trump has lost control over the Pentagon

Cutting through this heavy bureaucratic American doublespeak, the White House will be informed, but would have no commanding authority over the US military.…
It’s important to realize that this Trump’s decision to give more freedom to the US general to decide where to start a war, or as it’s been dubbed “the New Approach” had come after the fact that was “on display this week in Afghanistan, where Gen. John Nicholson, head of the U.S.-led coalition there, decided to use one of the military’s biggest nonnuclear bombs—a Massive Ordnance Air Blast bomb, or MOAB.”
After the MOAB was dropped, repeating without the presidential approval, the Media came out heralding this bombing of Afghanistan as “America’s top military commanders are implementing the vision articulated by Defense Secretary Jim Mattis: U.S. military commanders to make more battlefield decisions on their own.”
“A senior administration official said Mr. Trump didn’t know about the weapon’s use until it had been dropped.”
The Vineyard of the Saker
Trump has lost control over the Pentagon

Ira Chernus — Love Trumps Domination (Without the Combover)

Another influential thinker of that era was a German-American philosopher, Herbert Marcuse. (Some radicals even marched in rallies carrying signs reading “Marx, Mao, Marcuse.”) For him, the dehumanization of modernity was rooted in the way science and technology led us to view nature as a mere collection of “things” having no inherent relation to us -- things to be analyzed, controlled, and if necessary destroyed for our own benefit.
Capitalists use technology, he explained, to build machines that take charge both of the workers who run them and of aspects of the natural world. The capitalists then treat those workers as so many things, not people. And the same hierarchy -- boss up here, bossed down there -- shows up at every level of society from the nuclear family to the international family of nations (with its nuclear arsenals). In a society riddled with structures of domination, it was no accident that the U.S. was pouring so much lethal effort into devastating Vietnam.
As Marcuse saw it, however, the worst trick those bosses play on us is to manipulate our consciousness, to seduce us into thinking that the whole system makes sense and is for our own good. When those machines are cranking out products that make workers’ lives more comfortable, most of them are willing to embrace and perpetuate a system that treats them as dominated objects....
In every arena, as Marcuse explained back in the 1960s, the system of hierarchy and domination remains self-perpetuating and self-escalating.
What’s the remedy for this malady, now as lethally obvious at home as it once was in Vietnam?
The end of domination [is] the only truly revolutionary exigency,” Marcuse wrote. True freedom, he thought, means freeing humanity from the hierarchical system that locks us into the daily struggle to earn a living by selling our labor. Freedom means liberating our consciousness to search for our own goals and being able to pursue them freely. In Martin Luther King’s words, freedom is “the opportunity to fulfill my total capacity untrammeled by any artificial barrier.”

How to put an end not only to America’s war in Vietnam, but to a whole culture built on domination? King’s answer on that April 4th was deceptively simple: “Love is somehow the key that unlocks the door... The first hope in our inventory must be the hope that love is going to have the last word.”
 A call to non-violent revolution.

Tomgram: Ira Chernus, Love Trumps Domination (Without the Combover)
Ira Chernus | professor emeritus of Religious Studies at the University of Colorado Boulder and author of the online MythicAmerica: Essays

Another view

Um. Grow Up. We Want The Warlords To Rule. The Entire Militia of Them. ;)
Curt Doolittle

Reuters — Wall Street banker Cohn moving Trump toward moderate policies

Heritage Foundation's Stephen Moore out; ex-Goldman CEO Gary Cohn in. 

Cohn is a Democrat. Conservatives are not happy.

James Oliphant and Svea Herbst-Bayliss

David Fields — New Book: Reading “Capital” Today – Marx after 150 Years

Recent years have seen a surge of interest in Marxian political economy, particularly evident by the resurgence of readers picking up Marx’s most famous work, Capital. Now 150 years after its original publication, there are still fresh interpretations of Capital that can help readers find new pathways to progressive or revolutionary change. Marking the 150th anniversary of its publication, Reading “Capital” Today offers a wide range of leading thinkers’ reflections on this influential text—its political legacy, its limitations, and its continuing relevance in our world....
Radical Political Economy
New Book: Reading “Capital” Today – Marx after 150 Years
David Fields

Ramanan — The Paradox Of Costs And Other Macro Paradoxes

I love paradoxes. In economics the fallacy of composition accounts for a lot of them. This is a problem with assuming microfoundations uncritically.

The Case for Concerted Action
The Paradox Of Costs And Other Macro Paradoxes
V. Ramanan

Diane Coyle — Economics and its soul

Diane Coyle argues that economics has actually regained its soul by reincorporating institutionalism. So a lot of the current criticism about neoclassical economics dominating the profession is no longer valid.

Noah Smith has also been arguing that economics is also becoming a lot more data-oriented, that is, empirically based, than formal now.

The Enlightened Economist
Economics and its soul
Diane Coyle | freelance economist and a former advisor to the UK Treasury. She is a member of the UK Competition Commission and is acting Chairman of the BBC Trust, the governing body of the British Broadcasting Corporation

Saturday, April 15, 2017

Reeves Wiedeman — The Duke Lacrosse Scandal and the Birth of the Alt-Right

It not only launched [Richard] Spencer’s career, but that of White House adviser Stephen Miller, too.
Richard Spencer has become somewhat of a fringe Alt-Right character if not caricature. Conversely, Steve Miller is a presidential adviser in the Trump administration with a West Wing office adjacent to the Oval Office along with Jared Kushner, Steve Bannon, Reince Priebus, Sean Spicer, and Kellyanne Conway, in addition to VP Mike Pence. Miller is the youngest of the group and an up-and-comer in US politics. He is a person to watch.

New York Magazine
The Duke Lacrosse Scandal and the Birth of the Alt-Right
Reeves Wiedeman

See also
Miller parlayed his experiences as a conservative activist at Duke into a job on Capitol Hill, where he worked for former Minnesota Representative Michele Bachmann, then for Alabama Senator Jeff Sessions, Trump’s choice for attorney general. It’s in Sessions’s office where he came into his own in Washington.
Miller was someone on whom Sessions “relied very heavily,” said Andrew Logan, who worked as Sessions’s press secretary while Miller served as communications director. “He sort of necessarily became involved in all of the policy areas as well.” According to Logan, Miller was involved in writing nearly all of Sessions’s speeches.
Miller quickly became associated with the hardline anti-immigration, anti-globalist views that characterize Sessions and which became a main theme of the Trump campaign....
Miller is also closely connected with Bannon.
Though Miller preceded Bannon on the Trump campaign, they got to know each other while Bannon was still running Breitbart.

“I know Bannon feels the same way that I do about him,” said one Breitbart News staffer who spoke on condition of anonymity. “Always expressed a lot of admiration for him.”
The staffer referred back to a speech Jeff Sessions gave at a Breitbart-sponsored CPAC event two years ago in which Sessions spoke about being a populist, and tied it to Miller.
“That Sessions speech at CPAC was basically Breitbart laying down the ‘This is what we believe on immigration’ and that’s pretty much inseparable from Miller,” the staffer said.

Asked to describe Bannon and Miller’s relationship, a former Breitbart Newsstaffer said “Sponsor-client relationship from what I can tell, or mentor-mentee, which is the policy Bannon regularly adopts with younger people.”
“You could not get where we are today with this movement if it didn’t have a center of gravity that was intellectually coherent,” Bannon told Politico Magazine last year. “And I think a ton of that was done by Senator Sessions’s staff, and Stephen Miller was at the cutting edge of that.”
The Atlantic
How Stephen Miller's Rise Explains the Trump White House
Rosie Gray

Sarah Ellison — The Inside Story Of The Kushner-Bannon Civil War

It's more about the reality show than the title. Weekend read.
Hate-watching is a key element of reality television: viewers get a surge of superiority and catharsis when watching characters they do not respect but in some strange way are drawn to. “It’s incredibly satisfying to hate-watch [Trump],” Shapiro said—and the same goes for watching members of his staff. Senior West Wing aides, like the president himself, exhibit a trait that is essential for a successful reality-TV show: they are largely unself-aware, not fully realizing “how they are perceived, because they will keep stumbling into the same mess over and over again, and they are really easy to place in a cast of characters,” said UnReal’s Shapiro. They are, in part, reliable caricatures of themselves.
Vanity Fair
The Inside Story Of The Kushner-Bannon Civil War
Sarah Ellison

Xinhua — China's self-driving truck passes test

A Chinese-made self-driving truck has passed a navigation test, heralding the era of intelligent, automated heavy vehicles.
FAW Jiefang, the leading truck manufacturer, debuted the self-driving truck at FAW Tech Center in Changchun City, Jilin Province. The truck was able to recognize obstacles, slow down, make a detour, and speed up.
The truck reacted correctly to traffic lights, adaptive cruise control, remote commands and successfully overtook, company sources said.
FAW Jiefang now plans to commercialize the intelligent driving vehicle as early as 2018.
Hu Hanjie, FAW Jiefang general manager, said the company has built a whole industry chain partnership to develop, manufacture, sell, and service self-driving trucks. The participation of more firms across the sector will accelerate the technology's use on heavy-duty vehicles, Hu said.
Leading Chinese tech firms, including Baidu and Tencent, have invested in self-driving entities. Baidu, for example, has tested driverless mini cars at the annual World Internet Conference for the last two years.
Industry insiders, however, said the technology may prove more practical when it is used on trucks than private cars as truck drivers are more likely to drive tired. The new systems could cut operational costs by replacing drivers.
Xinhua | Editor: Yao Lan

Constantin Gurdgiev — Swift & Digital Money: Cybersecurity Questions

Shadow Brokers.

true economics
15/4/17: Swift & Digital Money: Cybersecurity Questions
Constantin Gurdgiev | chairman of the Ireland-Russia Business Association, contributor and former editor of Business & Finance Magazine, and lecturer in Finance with Trinity College, Dublin

Counter Current News — Massive Blow To Federal Reserve: Texas Introduces Bill To Recognize Gold & Silver as Legal Tender

The crazy is spreading.

It's not mentioned here but they want a balanced budget amendment, too, to bring prosperity to all that work hard to earn their money.


I have not been posting much on politics and global affairs of late. The crazy is even more rampant there, and the level of moronism astonishing. "What a revoltin' development" as Chester A Riley (played by William Bendix) used to say on "The Life of Riley." But this is not funny.

Counter Current News
Massive Blow To Federal Reserve: Texas Introduces Bill To Recognize Gold & Silver as Legal Tender

Rutger Bregman — No, wealth isn’t created at the top. It is merely devoured there

Must read article on work versus rent and free-riding. 

Attacking false consciousness by consciousness-raising.

The Guardian
No, wealth isn’t created at the top. It is merely devoured there
Rutger Bregman
Crossposted at Evonomics

China's exchange rate

James Hamilton explains a complication of Rodik's trilemma for China.

China’s tetralemma
James Hamilton


Short answer: maybe, but probably not.

Is China’s Currency Undervalued? A Reality Check
Menzie Chinn

Ramanan — Effective Demand And The Labour Market

Noah Smith asks, “Why the 101 model doesn’t work for labor markets”.|

He realizes the answer but attributes it to Nick Hanauer.…
So Smith indeed concedes that the profession missed it out. But the attribution is incorrect. All this was figured out by Michal Kalecki in the 1930s....
The Case for Concerted Action
Effective Demand And The Labour Market
V. Ramanan

See also

Information Transfer Economics
It's a production input. No, it's a market good. Relax, it's both.
Jason Smith

Noah Smith: "Why the 101 model doesn't work for labor markets"

Brian Romanchuk — Book Review: The Road To Ruin

James Rickards recently published The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis.
Interesting not because of Jim Rickards, but rather for what Brian has to say.

Bond Economics
Book Review: The Road To Ruin
Brian Romanchuk

Friday, April 14, 2017

Noah Smith — Why the 101 model doesn't work for labor markets

Favorite line: 
If you raise the minimum wage, the increased income to those with jobs will also boost labor demand indirectly (somehow, activist and businessman Nick Hanauer figured this out when a whole lot of econ-trained think-tankers missed it!).
Anyone familiar with MMT would not have missed it either.

Why the 101 model doesn't work for labor markets
Noah Smith

Thomas Phippen — The Story You’ve Been Hearing About The ‘Mother Of All Bombs’ Is Totally Wrong'

The actual cost of the bomb is unknown. The actual cost of the program isn’t publicly available because the Mother of All Bombs, officially known as GBU-43 or the Massive Ordnance Air Blast (MOAB), is manufactured by the military and not a private defense company.
In fact, the Air Force doesn’t even keep track of the per unit cost, nor the cost of the program as a whole, because it is not manufactured privately.
“We don’t have a cost per unit” for the MOAB, Air Force spokesperson Ann Stefanek told The Daily Caller News Foundation. “These munitions were produced in-house so we don’t have a standard procurement cost associated with them.”
The Air Force mostly used existing technologies and hardware for the first MOAB prototypes and never contracted out the full production of the bomb, so they did not need to itemize and add the cost of each weapon component, Stefanek told TheDCNF.
Many reports Thursday, including USA Today, the Washington Examiner, CNBC and others, claimed the MOAB cost $314 million to develop, citing a 2011 Los Angeles Times report.
The cost estimates in that article, however, only refer to the cost of the Air Force’s biggest bunker busting bomb, the 5,300 pound Massive Ordnance Penetrator (MOP), or GBU-57, which is built by private defense contractor Boeing Company.
Look ma, no accounting!

The National Interest
The Story You’ve Been Hearing About The ‘Mother Of All Bombs’ Is Totally Wrong'
Thomas Phippen

Pete Dolack — Austerity Never Ends: Economists Say Wages Are Too High

Lars Syll and David Ruccio get a shoutout.

Austerity Never Ends: Economists Say Wages Are Too High
Pete Dolack

Stansfield Smith — Ecuador’s Accomplishments Under the 10 Years of Rafael Correa’s Citizen’s Revolution

Ecuador’s economic collapse and social explosion was similar to Greece’s a few years later. But in 2006, after nine presidents in ten years, the Ecuadoran people elected Rafael Correa, who was no capitulating Greek Syriza Prime Minister Tsipras or Berrnie Sanders. Correa’s government carried out programs that peoples in progressive social movements have advocated throughout the West, if not the world. Ecuador provides an example for what Greece could have done when its crisis hit, if it had a firm anti-neoliberal, anti-imperialist leadership....
Ecuador’s Citizens Revolution, not a socialist revolution as in Cuba, arose from a popular repudiation of neoliberalism and neocolonialism, similar to Chavista Venezuela and Evo’s Bolivia. It shows what can be accomplished with social programs and infrastructure investments when national wealth is redirected to benefit the majority instead of the 1%, while still confined in a capitalist system.
As long as a capitalist system remains in place, those gains are tenuous and likely only temporary, as in Brazil.

Stansfield Smith

Jason Smith — Is economics scientific? A short play in one act.

Fun and instructive.

Information Transfer Economics
Is economics scientific? A short play in one act.
Jason Smith

Moon of Alabama — Why North Korea Needs Nukes - And How To End That

Why does NK needs nukes? Because the US constantly trying to destabilize NK (b explains). Nukes are the most cost-effective deterrent for a poor country facing the most powerful and unpredictable country the world.

John Helmer — SecState Tillerson’s COS Margaret Peterlin Has Been Managing Us Cyber Warfare Operations Against Russia For Years

When US Secretary of State Rex Tillerson was telling the Russians and the US state press yesterday to stop hacking into American politics, sitting beside him was a former US Navy signals officer and lawyer named Margaret Peterlin (lead image, red circle). Peterlin’s job for the last two years was managing a Boston company specializing in cyber warfare weapons, including the latest in US computer programmes to mimic foreign hackers and convince US targets they have been hacked by Russians. Peterlin was also an advisor to Donald Trump during the presidential transition. Her targets then included Hillary Clinton and her campaign organization....
Dances with Bears
John Helmer

Dan Goodin — NSA-leaking Shadow Brokers just dumped its most damaging release yet

The Shadow Brokers—the mysterious person or group that over the past eight months has leaked a gigabyte worth of the National Security Agency's weaponized software exploits—just published its most significant release yet. Friday's dump contains potent exploits and hacking tools that target most versions of Microsoft Windows and evidence of sophisticated hacks on the SWIFT banking system of several banks across the world....
Ars Technica
NSA-leaking Shadow Brokers just dumped its most damaging release yet
Dan Goodin | Security Editor at Ars Technic

Timothy Taylor — A Truckload of Tips for Teaching Economics

Back in 1990, William McEachern started editing a semiannual newsletter that he called "The Teaching Economist." Each issue had a handful of pithy article, with a heavy emphasis on concrete suggestions linked to actual experience. After 26 years and 52 issues, McEachern has decided to that the Spring 2017 issue, #52, will be the last. However, all the past newsletters are freely available online, and they offer many nuggets for teachers willing to mine the archives.
For his work as a teacher and textbook author, as well as in editing "The Teaching Economist," McEachern has earned the right to offer some lessons and myths. Here they are:
Conversable Economist
A Truckload of Tips for Teaching Economics
Timothy Taylor | Managing editor of the Journal of Economic Perspectives, based at Macalester College in St. Paul, Minnesota

Thursday, April 13, 2017

Andrew Spannaus — Roots of Trump’s ‘Economic Nationalism’ in the American System of Economics

Trump spoke of the need for a new economic model, and then recalled how protectionism is far from a bad word in US history; rather, it was seen as a means to promote manufacturing and build industry.
Trump said, “Like Henry Clay, we want to put our own people to work. […] “Clay was a fierce advocate for American manufacturing. He said that free trade would throw wide open our ports to foreign production without duties while theirs remained closed to us […] Clay said that trade must be fair, equal and reciprocal.”
Trump then went on to use the term “American System”, associated with the current of economic nationalism promoted by figures such as Alexander Hamilton, Clay and Henry Carey, champions of investment in industry and infrastructure, and protection against the free market claims of European empires, which sought to undermine American economic independence in order to defend their own pre-eminence.
“In explaining his American System, Clay argued that the sole object of the tariff is to tax the produce of foreign industry with a view of promoting American industry,” Trump said. “For too long our government has abandoned the American System.”...
Consortium News
Roots of Trump’s ‘Economic Nationalism’
Andrew Spannaus

Dean Baker — China and Currency Values: Fast Growing Countries Run Trade Deficits

No specific mention of the USD peg. Of course, a country that pegs to another currency is "manipulating its currency" (Trump before Xi visit) or "managing" its currency (Baker), which amounts to the same thing. The country is not allowing the market to set the rate by floating the currency.

To be consistent the US should be pressuring China to drop its peg to the USD.

My own reading is that China wants to hold the peg awhile longer, not to manipulate the relative value but rather to reduce exchange rate volatility. It needs and wants a stable currency.

Beat the Press
China and Currency Values: Fast Growing Countries Run Trade Deficits
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

Lars P. Syll — Economics — an empty and inexact science

The debate over economics "laws" continues. Science or storytelling?

Lars P. Syll’s Blog
Economics — an empty and inexact science
Lars P. Syll | Professor, Malmo University

Robert Waldmann — To me the common assertion about health care reform and tax reform makes no sense

I honestly don’t get it. I’m sure I’m missing something. I am also sure, 100% sure, that, even if passage of the AHCA were to make it easier for the GOP.
Angry Bear
To me the common assertion about health care reform and tax reform makes no sense
Robert Waldmann

Sputnik — Russia Increases RNCB Authorized Capital to Promote Crimea Investment

The Russian government has increased the authorized capital of the Russian National Commercial Bank (RNCB) by 15 billion rubles ($264.8 million) to facilitate the implementation of investment projects in Crimea.
"The decision will allow the RNCB to ensure the implementation of major investment projects, the stable functioning of the credit and financial system, the satisfaction of business and population demand for quality banking and related financial products and services, will contribute to the growth of Crimea’s economy," a statement released by the Russian Cabinet on Thursday says.
Sputnik International
Russia Increases RNCB Authorized Capital to Promote Crimea Investment

Wednesday, April 12, 2017

Andrew J. Bacevich — Memo for McMaster


The American Conservative
Memo for McMaster
Andrew J. Bacevich | Professor of International Relations and History at Boston University

Don Quijones — Trump Flips On Five Core Key Campaign Promises In Under 24 Hours

Blink, and you missed Trump’s blistering, seamless transformation into a mainstream politician.
In the span of just a few hours, President Trump flipped to new positions on several core policy issues, backing off on no less than five repeated campaign promises....
Hey, if you can't drain the swamp, you can outdo the swamp.

You heard, "If you can't beat 'em, join 'em." That's not Trump's style. He's modified it to, "If you can beat 'em, lead 'em."

John Helmer — Rue, Ruse Or Rule – President Putin’s Options Facing The Us Military Junta

How to rule a country which is a target of war by the mad figurehead of a military junta in another country?

This is not a historical question about Joseph Stalin’s options in August 1939, before he and Adolph Hitler decided on the time-buying ruse known as the German–Soviet Non-aggression Pact. Nor is this a current question about Bashar al-Assad and Syria, nor about Kim Jong-un and North Korea.

It’s the question President Vladimir Putin is obliged to ask about Russia’s options facing a US regime in which, as the Kremlin now acknowledges, a military junta has installed itself behind President Donald Trump. “We have seen this all before”, Putin declared yesterday… .
Dances with Bears
Rue, Ruse Or Rule – President Putin’s Options Facing The Us Military Junta
John Helmer

Officials working at the NSC, State Department, and Department of Defense "are not happy that Jared is so powerful in foreign policy," said one White House official. "They are expected to implement the president's agenda, but have no input or ability to get ideas in front of Jared. It's a one-man show and that's creating a lot of frustration."

The installation of Dina Powell, a confidant of Kushner's wife Ivanka, to the NSC is said to have been orchestrated by Kushner in order to solidify his power over the foreign policy organization, sources said....
Kushner, in many ways, has even overshadowed McMcaster, who sources described as seeking to avoid infighting in the White House. This has only minimized his power on the NSC, officials said.
Who's in charge here anyway?

 Washington Free Beacon
New Front In White House Civil War as Kushner Asserts Authority at NSC
Adam Kredo

Both of the post are important. War clouds are gathering.

Matias Vernengo — Economic Regularities and "Laws" and the Riksbank Prize too

I've been reading The Nobel Factor: The Prize in Economics, Social Democracy, and the Market Turn by Avner Offer, Gabriel Söderberg, an interesting critique of the use of the Nobel Prize to undermine the Welfare State, essentially by conservative groups in Sweden, that were influential within the Central Bank (Riksbank), that disliked the Social Democratic policies in place in the 1960s.…
My comment on section of the post on laws. Economists need lose the term "law." There are no "laws of economics," or any other social science, that are comparable the laws of nature discovered in the natural science, owing to the differences in subject matter. There are no "laws of history," and economics is historical — regardless of how much formalists would like to believe otherwise.

There may be regularities that observable in economics, but they do not rise to the level of universality that is characteristic of laws of nature. Economists should stop implying they they do. It is dishonest, and it is bringing considerable criticism down on the profession for apparent failures.

These failures appear because of the way economist approach their discipline. They set narrow scope conditions that are instead advertised as law-based. Then they they have to resort to "exogenous factors" when things go wrong. This is not doing science. It is either confused, or else ideological persuasion based on rhetoric rather than reasoning and evidence.

My advice is to declare your scope conditions and then don't give the impression that you are able to provide answers for anything beyond the scope of the modeling assumptions. Of course, this limits what economists can claim because restrictive assumptions narrow the scope of the model.

Those who like to pontificate about "laws" don't like that. Now they are on the receiving end of not only criticism but also derision because of the exaggerated expectations about prediction and certainty they cultured in their audience that imploded in the GFC, for instance, and their prescription afterward have shown that they don't know how to fix thing they were involved in breaking.

So when you hear "economic laws," think BS.
Naked Keynesianism
Economic Regularities and "Laws" and the Riksbank Prize too
Matias Vernengo | Associate Professor of Economics, Bucknell University

Dirk Ehnts — … and austerity for all! (Martin Schulz reloaded)

I expect the Schulz effect to fizzle out before September. German social-democrats are on the same trajectory as their European comrades. They become a splinter party, trying to be progressive with a neoliberal mind set. The Netherlands, France, Greece, and (probably) soon Spain, depending on which leadership the party choses, show that the progressive left will reorganize along new lines.
econoblog 101
… and austerity for all! (Martin Schulz reloaded)
Dirk Ehnts | Lecturer at Bard College Berlin

TASS— China to impose sanctions on North Korea in case of nuclear test — diplomat

China will impose sanctions on North Korea if Pyongyang carries out a nuclear test, South Korea’s Chosun Ilbo newspaper said Wednesday citing a senior Chinese diplomat currently on a visit to South Korea.
"Among the restrictive measures currently under the consideration is the suspension of the deliveries of fuel and other goods, as well as the deportation of North Korean citizens working in China," the paper quoted Wu Dawei, China’s special representative for Korean Peninsula Affairs, as saying.
Trump wins a round?

China to impose sanctions on North Korea in case of nuclear test — diplomat

Talking over phone with US President Donald Trump on Wednesday, Chinese leader Xi Jinping reaffirmed Beijing's commitment to the peaceful resolution of the Syrian crisis.|
Sputnik International
China Remains Committed to Political Solution of Syrian Crisis, Xi Jinping Says

Michael Hiltzik — Trump's proposal to eliminate the Social Security payroll tax may be his worst idea yet

The morons believe that the currency issuer has to obtain the currency it issues from the private sector instead of the private sector needing to obtain the currency from the issuer to pay taxes that the issuer imposes on users.

Los Angeles Times
Trump's proposal to eliminate the Social Security payroll tax may be his worst idea yet
Michael Hiltzik

Tuesday, April 11, 2017

Mike Murphy — Trump declines to endorse Bannon, says U.S. ‘not going into Syria’

President Donald Trump declined to give top adviser Steve Bannon a vote of confidence during a New York Post interview published Tuesday, in which he also said the U.S. was not headed toward a ground war in Syria.…
When asked Monday by Post columnist Michael Goodwin if he still had confidence in Bannon, Trump didn’t exactly give a ringing endorsement: “I like Steve, but you have to remember he was not involved in my campaign until very late. I had already beaten all the senators and all the governors, and I didn’t know Steve. I’m my own strategist and it wasn’t like I was going to change strategies because I was facing crooked Hillary.”...
In the same interview, Trump told Goodwin that, despite last week’s airstrike, U.S. policy toward Syria has not changed. “We’re not going into Syria,” Trump said. “Our policy is the same — it hasn’t changed. We’re not going into Syria.”...
Trump declines to endorse Bannon, says U.S. ‘not going into Syria’
Mike Murphy

Eric Zuesse — Trump Is Losing Some of His Base

The main pro-Trump news-site, Breitbart News, is getting predominantly negative reader-comments on its articles that relate to Russia and the war in Syria. Whereas the reporters who write the articles trumpet the Trump line, the leading reader-comments to those Trump-trumpeters, under “Sort by Best” (meaning that at the top are the comments that have the highest net number of up-marks from readers, which indicates that the given comment is shared by the largest number of the readership), are hostile toward Trump, and are disappointed in the site itself for its remaining pro-Trump on the given matter....
Pretty amazing accomplishment in less than 100 days in office. But then, Trump does everything bigly.

Washington's Blog
Trump Is Losing Some of His Base
Eric Zuesse

Marcelo Gullo — The Structure Of Hegemony

Short summary of world history since 1492 and the rise of the West to prominence and dominance.

The Structure Of Hegemony
Marcelo Gullo

Deposit effects on bank Leverage Ratio

From American Banker magazine from a while back and out of paradigm but still relevant.

"One of the many problems with a high leverage ratio stems from the flight to safety during periods of stress, which causes bank deposits to soar. Since 2008, while the U.S. economy has struggled, deposits have risen by $2.6 trillion, often with pronounced temporary spikes that remain on a bank's balance sheet for just a few weeks. A recent example of this occurred during the politically charged debt-ceiling crisis. At that time, deposits jumped by $73 billion, according to Federal Deposit Insurance Corp. data. Deposits provide crucial funding for all banks, but as deposits surge, bank leverage ratios drop. Worse, sudden changes in deposit flow make banks' leverage ratios volatile. Most banks simply manage this volatility by staying well above the current leverage ratio requirements. That is, they are generally over-capitalized."


Marjorie Cohn — Trump’s Syria Attack Trampled Many Laws

As the U.S. mainstream media hails President Trump’s missile strike on Syria, there has been almost no attention to either the truth about its justification or the myriad of laws violated in its execution, writes Marjorie Cohn
See you in the dock.

Consortium News
Trump’s Syria Attack Trampled Many Laws
Marjorie Cohn | professor emerita at Thomas Jefferson School of Law, former president of the National Lawyers Guild, and a member of the advisory board of Veterans for Peace

Gilbert Doctorow — Russia’s Disdain for Tillerson and Trump

Summary of Russian TV talk shows with the political pundits. 

Summary of the summary: Crazy Americans. Why are we bothering to talk to Tillerson anyway?

Consortium News
Russia’s Disdain for Tillerson and Trump
Gilbert Doctorow

Lucas Nolan — Chinese Social Media Rages over United Airlines Controversy

Knock-on effects.
Wang Guanxiong, a venture-capital investor, also posted his disapproval of the company on Weibo, saying, “Overselling is the responsibility of the airlines. Why was it an Asian who got beaten? This is purely racial discrimination…boycott United Airlines.”...
Breitbart News
Chinese Social Media Rages over United Airlines Controversy
Lucas Nolan

Charlie Spiering — Sean Spicer Scrambles to Correct Hitler Comments in White House Press Briefing

They really need to get this guy of the world stage before he makes a bigger fool of himself and the administration too. Not like this is his first gaffe.

Breitbart News
Sean Spicer Scrambles to Correct Hitler Comments in White House Press Briefing
Charlie Spiering

Reuters — Tillerson heads to Moscow carrying Western call for Russia to abandon Assad

Wha does Russia get in return for abandoning an ally and losing its foothold in the Levant?

Nothing. I thought so. Such a deal.

Why is Tillerson bothering going to Russia?

Oh right, so the US can say that Putin sabotaged the "deal."

This is pure propaganda persuasion.

Tillerson heads to Moscow carrying Western call for Russia to abandon Assad
Steve Scherer and Andrew Osborn

Category error. Adding apples and oranges.

China will get better U.S. trade deal if it solves North Korea problem: Trump
David Lawder

Nick Johnson — Moseley’s macro-monetary Marx – a review and partial critique

Good short review of Fred Moseley's Money and Totality.

I submitted a comment there.

The Political Economy of Development
Moseley’s macro-monetary Marx – a review and partial critique
Nick Johnson

Robert Barnes — If Trump Loses Bannon, Trump Loses the Presidency

Bannon – uniquely among the Trump team – threads together the policy weaves of the Trump electoral majority, a majority dependent upon newfound GOP support from the working class, especially in the northern half of the country, but also the southern upcountry and Appalachia….
Three issues allowed Trump to distinguish himself, both in the GOP primaries and in the general election, to appeal to these GOP skeptic voting constituencies:
  1. No preachy politics.
  2. No more dumb war.
  3. No more job-killing deals.
Bannon understands, intricately, each of these issues and, as important, the intimate way each of these issues connects the new constituencies of the Trump electoral majority. 
Bannon also understands the adversary – an alliance of Deep-State, administrative-regulatory-state, professional-class career bureaucrats and their media lapdogs and allies....
Lose Bannon, lose the country. Lose Bannon, lose the presidency. Trump needs to bet on Bannon, or it will be time to no longer bet on Trump.
The American Thinker
If Trump Loses Bannon, Trump Loses the Presidency
Robert Barnes

SST — McMaster and Russia by Willy B

Has H. R. McMaster gone over to the Dark Side? A former fan of his thinks it may be the case.

Sic Semper Tyrannis
McMaster and Russia by Willy B

Sarah Zheng — Chinese firm halves worker costs by hiring army of robots to sort out 200,000 packages a day

The robots aren't coming, they're already here.
Sarah Zheng

Sputnik — IOM Reveals Slave Markets Operate in Southwestern Libya

The International Organization for Migration (IOM) reported on Tuesday about the existence of slave markets in Northern Africa, in which hundreds of African migrants and refugees bound for Libya are being sold.

The report emerged amid the rescue of a number of sub-Saharan migrants after they had been sold and held captive for months in slave markets in Sabha in southwestern Libya.
Collateral damage. But getting rid of Gaddafi was worth, right? (snark)

Sputnik International
IOM Reveals Slave Markets Operate in Southwestern Libya

Sputnik — Tillerson, Haley 'Distract the Audience' While Trump 'Carries Out Real Plot'

US Ambassador to the UN Nikki Haley and Secretary of State Rex Tillerson’s statements on regime change in Syria are nothing more than a sideshow given they have little influence on President Donald Trump’s actual decision-making, former White House National Security Council adviser Gwenyth Todd told Sputnik....
Trump playing 4-D chess?

Sputnik International
Tillerson, Haley 'Distract the Audience' While Trump 'Carries Out Real Plot'

Josh Jones — John Coltrane Draws a Picture Illustrating the Mathematics of Music

This is a very interesting article, and it is also short. Everyone interested in music, math, mysticism, and Sufism should enjoy this. Who knew that John Coltrane was attempting to put Einstein to music.

Open Culture
John Coltrane Draws a Picture Illustrating the Mathematics of Music
Josh Jones

RT — Idlib ‘chemical attack’ was false flag to set Assad up, more may come – Putin

As Secretary Tillerson begins talks with Foreign Minister Lavrov, the message is clear. You are lying.

Idlib ‘chemical attack’ was false flag to set Assad up, more may come – Putin


Kremlin, angry at Syria missile strike, says Putin won't meet Tillerson
Maria Tsvetkova and Andrew Osborn | MOSCOW

Business Insider
Rex Tillerson just gave Russia an ultimatum
Josh Lederman, Associated Press

Who knew. Trump is a worse monger than Killary.


The "monitor" is the Syrian Observatory of Human Rights. Looks like Putin knew what he was talking about. That was quick.

Monitor says Syria drops barrel bombs despite U.S. warning; Syria denies

And don't miss this. The alt right knows Trump better than anyone.

Occidental Dissent
The Ivanka Doctrine
 Hunter Wallace

Asia Unhedged — First UK to China freight train sets off

The journey will take half the time of shipping by boat.
Historic moment. Britain kicks off One Belt One Road.

Asia Times
First UK to China freight train sets off
Asia Unhedged

David F. Ruccio — “Money makes time”

Mainstream economists argue that time makes money. According to the Austrians, production takes time, because of “roundabout” methods, which creates the additional value that flows to capital. Neoclassical economists have a different theory: the return to capital is the reward for savings created by time-deferred consumption. However, in both cases, time is the basis of the value that is captured as profits.*….
Occasional Links & Commentary
“Money makes time”
David F. Ruccio | Professor of Economics, University of Notre Dame

Mark Buchanan — Market complexity also makes for instability

Looks like another fallacy of composition is at work in finance to increase system instability by assuming that increasing the stability of individual institutions will increase the stability of the system as a whole. This post suggest that this is apparently not the case owing to network effects.

Physics Perspective
Market complexity also makes for instability
Mark Buchanan

Monday, April 10, 2017

Patrick J. Buchanan — Is Trump Joining the War Party?

The original America Firster schools Donald Trump in what "America First" means.

The American Conservative
Is Trump Joining the War Party?
Patrick J. Buchanan

The Saker — A multi-level analysis of the US cruise missile attack on Syria and its consequences

I don’t think that anybody seriously believes that Assad or anybody else in the Syrian government really ordered a chemical weapons attack on anybody. To believe that it would require you to find the following sequence logical: first, Assad pretty much wins the war against Daesh which is in full retreat. Then, the US declares that overthrowing Assad is not a priority anymore (up to here this is all factual and true). Then, Assad decides to use weapons he does not have. He decides to bomb a location with no military value, but with lots of kids and cameras. Then, when the Russians demand a full investigation, the Americans strike as fast as they can before this idea gets any support. And now the Americans are probing a possible Russian role in this so-called attack. Frankly, if you believe any of that, you should immediately stop reading and go back to watching TV. For the rest of us, there are three options:
Please read the whole thing.

The Vineyard of the Saker
A multi-level analysis of the US cruise missile attack on Syria and its consequences
The Saker

Alex Pfeiffer — Tillerson Says U.S. Will Defend Innocents Around The World

The Trump administration goes full-on liberal interventionist and assume the role of US as world's policeman as integral to American leadership.

Oh wait,
Spicer said a press briefing Monday, “The Trump doctrine is something that he articulated throughout the campaign, which is that America’s first. We are going to make sure that our national interests our protected, that we do what we can to make sure our interests both economically and national security are at the forefront.”
“We aren’t going to just become the world’s policemen running around the world,” Spicer added. “We have to have a clear and defined interest wherever we act, and it’s our national security first and foremost that has to deal with how we act.”
Can someone help me out. Who is in charge here, anyone?