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Financial skeptic

Notes on "neoliberalism enforced" cruise to Frugality Island for 401K Lemmings

News Neoliberalism as a New Form of Corporatism Recommended Links Peak cheap Energy and Oil Price Slump Secular Stagnation under Neoliberalism Rational Fools vs. Efficient Crooks: The efficient m hypothesis Casino Capitalism
Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime Neoliberal Attacks on Social Security Unemployment Inflation vs. Deflation Coming Bond Squeeze Notes on 401K plans Vanguard
401K Investing Webliography Retirement scams Stock Market as a Ponzy scheme Financial Sector Induced Systemic Instability Neoclassical Pseudo Theories The Great Stagnation Investing in Vanguard Mutual Funds and ETFs
OIL ETNs Peak Cheap Energy and Oil Price Slump Notes on 100-your age investment strategy behavior in rigged markets Chasing a trade The Possibility Of No Mean Reversion Junk Bonds For 401K Investors Tax policies
John Kenneth Galbraith The Roads We Take Economics Bookshelf Who Rules America Financial Quotes Financial Humor Etc

“When the capital development of a country becomes a by-product
of the activities of a casino, the job is likely to be ill-done.”

John Maynard Keynes

"Life is a school of probabilities."

Walter Bagehot

Neoliberal economics (aka casino capitalism) function from one crash to another. Risk is pervasively underpriced under neoliberal system, resulting in bubbles small and large which hit the economy periodically. The problem are not strictly economical or political. They are ideological. Like a country which adopted a certain religion follows a certain path, The USA behaviour after adoption of neoliberalism somewhat correlate with the behaviour of alcoholic who decided to booze himself to death. The difference is that debt is used instead of booze.

Hypertrophied role of financial sector under neoliberalism introduces strong positive feedback look into the economic system making the whole system unstable. Any attempts to put some sand into the wheels in the form of increasing transaction costs or jailing some overzealous bankers or hedge fund managers are blocked by political power of financial oligarchy, which is the actual ruling class under neoliberalism for ordinary investor (who are dragged into stock market by his/her 401K) this in for a very bumpy ride. I managed to observe just two two financial crashed under liberalism (in 2000 and 2008) out of probably four (Savings and loan crisis was probably the first neoliberal crisis). The next crash is given, taking into account that hypertrophied role of financial sector did not changes neither after dot-com crisis of 200-2002 not after 2008 crisis (it is unclear when and if it ended; in any case it was long getting the name of "Great Recession").

Timing of the next crisis is anybody's guess but it might well be closer then we assume. As Mark Twain aptly observed: "A thing long expected takes the form of the unexpected when at last it comes" ;-):

This morning that meant a stream of thoughts triggered by Paul Krugman’s most recent op-ed, particularly this:

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.

As most 401K investors are brainwashing into being "over bullish", this page is strongly bearish in "perma-bear" fashion in order to serve as an antidote to "Barrons" style cheerleading. Funny, but this page is accessed mostly during periods of economic uncertainty. At least this was the case during the last two financial crisis(2000 and 2008). No so much during good times: the number of visits drops to below 1K a month.

Still I hope it plays a small but important role: to warn about excessive risk taking by 401K investors in neoliberal economic system. It designed to serve as a warning sign and inject a skeptical note into MSM coverage. There are not many such sites, so a warning about danger of taking excessive risk in 401K accounts under neoliberalism has definite value. The following cartoon from 2008 illustrated this point nicely

As far as I know lot of 401K investors are 100% or almost 100% invested at stocks. Including many of my friends. I came across a very relevant to this situation joke which nicely illustrated the ideas of this page:

Seven habits that help produce the anything-but-efficient markets that rule the world by Paul Krugman in Fortune.

1. Think short term.
2. Be greedy.
3. Believe in the greater fool
4. Run with the herd.
5. Overgeneralize
6. Be trendy
7. Play with other people's money

I would like to stress again that it is very difficult to "guess" when the next wave of crisis stikes us: "A thing long expected takes the form of the unexpected when at last it comes".

But mispricing of risk in 401K accounts is systemic for "overbullish" 401 investors, who expect that they will be able to jusp of the train in time, before the crash. Usually such expectations are false. And to sell in the market that can lose 10% in one day is not easy psychologically. I remember my feelings in 2001-2002 and again 2008-2009. That's why many people who planned to "jump" stay put and can temporarily lose 30 to 50% of value of their 401k account in a very short period of time (and if you think that S&P500 can't return to 1000, think again; its all depends on FED). At this point some freak out and sell their holdings making paper losses permanent.

Even for those who weathered the storm and held to their stock holdings, it is important to understand that paper losses were eliminated mostly by Fed money printing. As such risks remains as at one point FED might find itself out of ammunition. The fact that S&P500 recovered very nicely it does not diminish the risk of such behavior. There is no guarantee that the third crisis will behave like previous two.

Next crash will have a new key determinant: the attitude toward the US government (and here I mean the current government of Barack Obama) and Wall Street after 2008 is the lack of trust. That means that you need to hope for the best but prepare for the worst. Injection on so much money into financial system was a novel experiment which is not ended yet. So how it will end is anybody's guess. We are now in uncharted waters. I think when Putin called Bernanke a hooligan, he meant exactly this. Since Bernanke was printing money out of thin air to buy financial paper, his action were tantamount to shoplifting. In some way this probably is more similar to running meth labs inside Fed building. The system was injected with narcotics. Everybody felt better, but the mechanism behind it was not healthy.

The complexity of modern financial system is tremendous and how all those new financial instruments will behave under a new stress is unknown. At the same time in the Internet age we, the great unwashed masses, can't be keep in complete obscurity like in good old time. Many now know ( or at least suspect ) that the neoliberal "show must goes on" after 2008 is actually going strongly at their expense. And while open rebellion is impossible, that results in lack of trust which represents a problem for financial oligarchy which rules the country. The poor working slobs are told be grateful for Walmart's low (poverty-subsidized) prices. Middle class is told that their declining standard of living is a natural result of their lack of competitiveness in the market place. Classic "bread and circuses" policy still works but for how long it will continue to work it is unclear.

But nothing is really new under the sun. To more and more people it is now clear that today the US is trying to stave off the inevitable decline by resorting to all kinds of financial manipulations like previous empires; yesterday, it was the British Empire and if you go further back, you get the USSR, Hapsburg empire, Imperial Russia, Spanish empire, Venetian empire, Byzantium and Roman empire. The current "Secretary of Imperial Wars" (aka Secretary of Defense) Ashton Baldwin Carter is pretty open about this:

“We already see countries in the region trying to carve up these markets…forging many separate trade agreements in recent years, some based on pressure and special arrangements…. Agreements that…..leave us on the sidelines. That risks America’s access to these growing markets. We must all decide if we are going to let that happen. If we’re going to help boost our exports and our economy…and cement our influence and leadership in the fastest-growing region in the world; or if, instead, we’re going to take ourselves out of the game.”

For the US elite it might be a time to rethink its neocon stance due to which the US is exposing ourselves to the enmity of the rising economic powers, and blowing serious cash to maintain it hegemony via maintaining huge military budget, financing wars and color revolutions in distant countries. In a way the US foreign policy became a financial racket, and racket can't last forever because it incite strong opposition from other countries.

Neoliberalism (aka casino capitalism) as a social system entered the state of decline after 2008. Like communism before it stopped to be attractive to people. But unlike communism it proved to have greater staying power, surviving in zombie state as finanfial institutions preserved political power and in some cases even enhanced it. It is unclear how long it will say in this state. Much depends on the availability of "cheap oil" on which neoliberal globalization is based.

But the plausible hypothesis is that this social system like socialism in xUSSR space before entered down slope and might well be on its way to the cliff. Attempts to neo-colonize other states by the West became less successful and more costly (Compare Ukraine, Libya and Iraq with previous instances of color revolutions). Some became close to XIX century colonial conquests with a lot of bloodshed (from half million to over a million of Iraqis, by different estimates, died ). As always this is mainly the blood of locals, which is cheap.

Libya and Ukraine are two recent examples. Both countries are now destroyed (which might be the plan). In Ukraine population is thrown in object poverty with income of less that $5 a day for the majority of population. And there is no other way to expand markets but to try to "neo-colonize" new countries by putting them into ominous level of debt while exporting goods to the population on credit. That is not a long term strategy as Greece, Bulgaria, and now Spain and Portugal had shown. With shrinking markets stability of capitalism in general and neoliberalism in particular might decrease.

Several researchers points to increased importance Central banks now play in maintaining of the stability of the banking system. That's already a reversal of neoliberal dogma about free (read "unregulated") markets. Actually the tale about "free markets", as far as the USA is concerned, actually was from the very beginning mainly the product designed for export (read about Washington consensus).

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[Apr 21, 2017] Elizabeth Warren on Big Banks and Their (Cozy Bedmate) Regulators - The New York Times

Apr 21, 2017 | www.nytimes.com

Wells Fargo 's board and management are scheduled to meet shareholders at the company's annual meeting Tuesday in Ponte Vedra Beach, Fla. With the phony account-opening scandal still making headlines , and the company's stock underperforming its peers, it's a good bet the bank's brass will have some explaining to do.

How could such pernicious practices at the bank be allowed for so long? Why didn't the board do more to stop the scheme or the incentive programs that encouraged it? And where, oh where, were the regulators?

Wells Fargo's management has conceded making multiple mistakes over many years; it also says it has learned from them. In a meeting this week with reporters at The New York Times, Timothy J. Sloan, Wells Fargo's chief executive, said the bank had made substantive changes to its structure and culture to ensure that dubious practices won't take hold again.

But there's a deeper explanation for why Wells Fargo's corrosive sales practices came about and continued for years. And it has everything to do with the bank-friendly regulatory regime in Washington and the immense sway that institutions like Wells Fargo have there. This poisonous combination contributes to a sense among giant banking institutions that they answer to no one.

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The capture of our regulatory and political system by big and powerful corporations is real. And it is a central and disturbing theme in the new book by Senator Elizabeth Warren , Democrat of Massachusetts.

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"This Fight Is Our Fight" contains juicy but depressing anecdotes about how our most trusted institutions have let us down. It also shows why, years after the financial crisis, big banks are still large, in charge and, basically, unaccountable for their actions.

"In too many of these organizations, there are rewards for cheating and punishments for calling out the cheaters," Ms. Warren said in an interview Wednesday. "As long as that's the case, the biggest financial institutions will continue to put their customers and the economy at risk."

Ms. Warren's no-nonsense views are bracing. But they are also informed by a thorough understanding of how dysfunctional Washington now is. This failure has cost Main Street dearly, she said, but has benefited the powerful.

Wells Fargo got a lot of criticism from Ms. Warren, both in her book and in my interview - and on live television during the Senate Banking Committee hearing on the account-opening mess in September. She was among the harshest cross-examiners encountered by John G. Stumpf, who was Wells Fargo's chief executive at the time. "You should resign," she told him , "and you should be criminally investigated." (Mr. Stumpf retired the next month.)

This week, Ms. Warren called for the ouster of the company's directors and a criminal inquiry into the bank.

"Yes, the board should be removed, but that's not enough," she told me. "There still needs to be a criminal investigation. The expertise is in the regulatory agencies, but the power to prosecute lies mostly with the Justice Department, and if they don't have either the energy or the talent - or the backbone - to go after the big banks, then there will never be any real accountability."

Banks are not the only targets in Ms. Warren's book. Others include Wal-Mart, for its treatment of employees; for-profit education companies, for the way they pile debt on unsuspecting students; the Chamber of Commerce, for battling Main Street; and prestigious think tanks, for their undisclosed conflicts of interest.

My favorite moments in the book involve the phenomenon of regulatory capture: the pernicious condition in which institutions that are supposed to police the nation's financial behemoths actually come to view them as clients or pals.

Photo

One telling moment took place in 2005, when Ms. Warren, then a Harvard law professor, was invited to address the staff at the Office of the Comptroller of the Currency, a top regulator charged with monitoring the activities of big banks.

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She was thrilled by the invitation, she recalled in the book. After years of tracking various problems consumers experienced with their banks - predatory lending, sky-high interest rates and dubious fees - Ms. Warren felt that, finally, she'd be able to persuade the regulators to crack down.

Her host for the meeting was Julie L. Williams, then the acting comptroller of the currency. In a conference room filled with economists and bank supervisors, Ms. Warren presented her findings: Banks were tricking and cheating their consumers.

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After the meeting ended and Ms. Williams was escorting her guest to the elevator, she told Ms. Warren that she had made a "compelling case," Ms. Warren writes. When she pushed Ms. Williams to have her agency do something about the dubious practices, the regulator balked.

"No, we just can't do that," Ms. Williams said, according to the book. "The banks wouldn't like it."

Ms. Warren was not invited back.

Ms. Williams left the agency in 2012 and is a managing director at Promontory , a regulatory-compliance consulting firm specializing in the financial services industry. When I asked about her conversation with Ms. Warren, she said she had a different recollection.

"I told her I agreed with her concerns," Ms. Williams wrote in an email, "but when I said, 'We just can't do that,' I explained that was because the Comptroller's office did not have jurisdiction to adopt rules to ban the practice. I told her this was the Federal Reserve Board's purview."

Interestingly, though, Ms. Warren's take on regulatory capture at the agency was substantiated in a damning report on its supervision of Wells Fargo, published by a unit of the Office of the Comptroller of the Currency on Wednesday.

The report cited a raft of agency oversight breakdowns regarding Wells Fargo. Among them was its failure to follow up on a slew of consumer and employee complaints beginning in early 2010. There was no evidence, the report said, that agency examiners "required the bank to provide an analysis of the risks and controls, or investigated these issues further to identify the root cause and the appropriate supervisory actions needed."

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Neither did the agency document the bank's resolution of whistle-blower complaints, the report said, or conduct in-depth reviews and tests of the bank's controls in this area "at least from 2011 through 2014." ( The agency recently removed its top Wells Fargo examiner, Bradley Linskens, from his job running a staff of 60 overseeing the bank.)

"Regulatory failure has been built into the system," Ms. Warren said in our interview. "The regulators routinely hear from the banks. They hear from those who have billions of dollars at stake. But they don't hear from the millions of people across this country who will be deeply affected by the decisions they make."

This is why the Consumer Financial Protection Bureau plays such a crucial role, she said. The agency allows consumers to sound off about their financial experiences, and their complaints provide a heat map for regulators to identify and pursue wrongdoing.

But this setup has also made the bureau a target for evisceration by bank-centric politicians.

"There was a time when everything that went through Washington got measured by whether it created more opportunities for the middle class," Ms. Warren said. "Now, the people with money and power have figured out how to invest millions of dollars in Washington and get rules that yield billions of dollars for themselves."

"Government," she added, "increasingly works for those at the top."

[Apr 21, 2017] The Reason Behind The Sales-Surge For Nuclear-Proof Bunkers Zero Hedge

Notable quotes:
"... On April 17 th , Scott Humor, the Research Director at the geostrategic site "The Saker," headlined "Trump has lost control over the Pentagon" , and he listed (and linked-to) the following signs that Trump is following through with his promise to allow the Pentagon to control U.S. international relations: ..."
"... March 14 th , the US National Nuclear Security Administration field tested the modernized B61-12 gravity nuclear bomb in Nevada . ..."
"... April 7, Liberty Passion, loaded with US military vehicles, moored at Aqaba Main Port, Jordan ..."
"... On April 7 th the Pentagon US bombed Syria's main command center in fight against terrorists ..."
"... April 10, United States Deploying Forces At Syrian-Jordanian Border ..."
"... April 11, The US Air Force might start forcing pilots to stay in the service against their will, according to the chief of the military unit's Air Mobility Command. ..."
"... April 12, President Donald Trump has signed the US approval for Montenegro to join NATO ..."
"... April 13, NATO chief Jens Stoltenberg announced the alliance's increased deployment in Eastern Europe ..."
"... On April 13 th , the Pentagon bombed Afghanistan. The US military has bombed Afghanistan with its GBU-43/B Massive Ordnance Air Blast Bomb (MOAB) ..."
"... April 13, the US-led coalition bombed the IS munitions and chemical weapons depot in Deir ez-Zo r killing hundreds of people ..."
"... April 14, The Arleigh Burke-class, guided-missile destroyer USS Stethem (DDG 63) has been deployed to the South China Sea ..."
"... April 14, the US sent F-35 jets to Europe ..."
"... April 14, Washington failed to attend the latest international conference hosted by Moscow, where 11 nations discussed ways of bringing peace to Afghanistan . The US branded it a "unilateral Russian attempt to assert influence in the region". ..."
"... April14, the US has positioned two destroyers armed with Tomahawk cruise missiles close enough to the North Korean nuclear test site to act preemptively ..."
"... On April 16 th , the US army makes largest deployment of troops to Somalia since the 90s. ..."
"... or there will be WW III. ..."
Apr 15, 2017 | www.zerohedge.com
> Authored by Eric Zuesse via The Strategic Culture Foundation,

On April 15th, Zero Hedge bannered "Doomsday Bunker Sales Soar After Trump's Military Strikes", but this growth in the market for nuclear-proof bunkers is hardly new; it started during the Obama Administration, in Obama's second term, specifically after the Russia-friendly government of Ukraine, next-door to Russia, got taken over in 2014 by a rabidly anti-Russian government that's backed by the U.S. government.

This boom in nuclear-bunker sales is only increasing now, as the new U.S. President, Donald Trump, tries to out-do his predecessor in demonstrating his hostility toward the other nuclear superpower, Russia, and displaying his determination to overthrow the leader of any nation (such as Syria and Iran) that is at all friendly toward Russia. For earlier examples of feature-articles on this booming market for homes that allegedly would enable buyers to survive the first blast effects, and the most immediate nuclear contaminations, of a Third World War, see here, and here, and here, and here, and here, and here, and here, and here, and here, and here.

This surging demand for nuclear bunkers started right after the U.S. government arranged a coup in Ukraine that replaced the existing Moscow-friendly democratically elected President by installing a rabidly anti-Russian Prime Minister and national-security appointees from Ukraine's two nazi Parties, the Right Sector Party, and the former Social Nationalist Party of Ukraine (which the CIA renamed "Svoboda" meaning "Freedom" so as to enable it to be acceptable to the American public). Then, the intensifying U.S. effort to replace the secular pro-Russian Syrian leader Bashar al-Assad by a sectarian jihadist government that would be dependent upon the Saudi-Qatari-UAE-Turkish-U.S. alliance, has only intensified further the demand for these types of "second homes".

Whereas all of the purchasers of these bunkers are being kept secret, the U.S. federal government provides, free-of-charge, to top officials, nuclear bunkers, so as to allow the then-dictatorship (continuation of America's current dictatorship) to function, in order, supposedly, to serve their country, which they'd already have destroyed (along with destroying the rest of the world) by their determination to conquer Russia. No one knows what the reality would actually be in such a post-WW-III world, except that there would be no functioning electrical grid, nights would be totally dark for anyone whose sole reliance is on the grid, and all rivers and other water-sources would be intensely radioactive from the fallout, so that groundwater soon would also be unusable - and, of course, the air itself would also be toxic; so, lifespans would be enormously shortened, and excruciating, not to say extremely depressing.

No one has published a computer-model of a U.S.-Russia nuclear war, because doing that would be unacceptable to the "military-industrial complex" including the U.S. government, but in 2014 a "limited, regional nuclear war between India and Pakistan" was computer-modeled and projected to produce global ozone-depletion and "the coldest average surface temperatures in the last 1000 years", which "could trigger a global nuclear famine". But such a war would be only 50 bombs instead of the 10,000+ that would be used in a WW III scenario; and, so, everyone who is paying money in order to survive WW III is simply wasting money.

But, somehow, there are people who either want a Russia-U.S. war, or else whose preparations for it are directed at surviving in such a world, instead of at ending the current grip on political power in the United States, on the part of the people who are working to bring about this type of (end to the) world. At least the owners of the major U.S. armaments-firms, such as Raytheon Corporation, would have an explosive financial boost during the build-up toward that war, but buying bunkers in order to survive it, would seem to be a dubious follow-up to such an investment-plan. On the other hand, it might appeal to some thrill-seekers who don't even feel the need for a good computer-simulation of a post-WW-III world; maybe they've got money to burn and a craving to experience 'the ultimate thrill', and don't want unpleasant knowledge to spoil the thrill.

After President Trump threw out his National Security Advisor Michael Flynn and replaced him with the rabidly anti-Russian H.R. McMaster, and then lobbed 59 cruise missiles against the Syrian government (which is protected by the Russian government), the cacophony of press that had been calling for President Trump to be impeached and replaced by his rabidly anti-Russian Vice President Mike Pence, considerably quieted down; and, so, the Obama-Trump market for nuclear bunkers seems now to be established on very sound foundations, for the foreseeable immediate future. And, if anyone in the U.S. federal government has been planning to prepare the U.S. for a post-WW-III world, that has not been publicly announced, and no newsmedia have even been inquiring about it - so, nothing can yet be said about it.

The general message, thus far, is that, after World War III, everyone will be on his or her own, but that the dictators will (supposedly) be in a far better position than will anyone outside that ruling group. However, if the survivors end up merely envying the dead, it will be no laughing matter, regardless of how silly those nuclear bunkers are. It would be nothing funny at all.

On April 17th, Scott Humor, the Research Director at the geostrategic site "The Saker," headlined "Trump has lost control over the Pentagon", and he listed (and linked-to) the following signs that Trump is following through with his promise to allow the Pentagon to control U.S. international relations:

March 14th, the US National Nuclear Security Administration field tested the modernized B61-12 gravity nuclear bomb in Nevada.

April 7, Liberty Passion, loaded with US military vehicles, moored at Aqaba Main Port, Jordan

On April 7th the Pentagon US bombed Syria's main command center in fight against terrorists

April 10, United States Deploying Forces At Syrian-Jordanian Border

April 11, The US Air Force might start forcing pilots to stay in the service against their will, according to the chief of the military unit's Air Mobility Command.

April 12, President Donald Trump has signed the US approval for Montenegro to join NATO

April 13, NATO chief Jens Stoltenberg announced the alliance's increased deployment in Eastern Europe

On April 13th, the Pentagon bombed Afghanistan. The US military has bombed Afghanistan with its GBU-43/B Massive Ordnance Air Blast Bomb (MOAB)

April 13, the US-led coalition bombed the IS munitions and chemical weapons depot in Deir ez-Zor killing hundreds of people

April 14, The Arleigh Burke-class, guided-missile destroyer USS Stethem (DDG 63) has been deployed to the South China Sea

April 14, the US sent F-35 jets to Europe

April 14, Washington failed to attend the latest international conference hosted by Moscow, where 11 nations discussed ways of bringing peace to Afghanistan. The US branded it a "unilateral Russian attempt to assert influence in the region".

April14, the US has positioned two destroyers armed with Tomahawk cruise missiles close enough to the North Korean nuclear test site to act preemptively

On April 16th, the US army makes largest deployment of troops to Somalia since the 90s.

Mr. Humor drew attention to an article that had been published in "The Daily Beast" a year ago, on 8 April 2016, "CALL OF DUTY: The Secret Movement to Draft General James Mattis for President. Gen. James Mattis doesn't necessarily want to be president-but that's not stopping a group of billionaire donors from hatching a plan to get him there". Though none of the alleged "billionaires" were named there, one prominent voice backing Mattis for the Presidency, in that article, was Bill Kristol, the Rupert Murdoch agent who co-founded the Project for a New American Century, which was the first influential group pushing the "regime-change in Iraq" idea during the late 1990s, and which also advocated for the foreign policies that George W. Bush, Barack Obama, Hillary Clinton, and Donald Trump, have since been pursuing, each in his own way. It seems that whomever those "billionaires" were, they've now gotten their wish, with a figurehead Donald Trump as President, and James Mattis actually running foreign policy. Humor also noted that Mattis wants to boost the budget of the Pentagon by far more than the 9% that Trump has proposed. Perhaps Trump knew that even to get a 9% Pentagon increase passed this year would be almost impossible to achieve. First, the unleashed Pentagon needs to place the military into an 'emergency' situation, so as to persuade the public to clamor for a major invasion. That 'emergency' might be the immediate goal, toward which the March-April timeline of events that Humor documented is aiming.

As regards the military comparisons of the personnel and equipment on both sides of a U.S.-Russia war, the key consideration would actually be not the 7,000 nuclear warheads that Russia has versus the 6,800 nuclear warheads that the U.S. has, but the chief motivation on each of the respective sides: conquest on the part of the U.S. aristocracy, defense on the part of the Russian aristocracy. (Obviously, the U.S. having continued its NATO military alliance after the Soviet Union's Warsaw Pact military alliance ended in 1991, indicates America's aggressive intent against Russia. That became a hyper-aggressive intent when NATO absorbed Russia's former Warsaw Pact allies. NATO even brought in some parts of the former USSR itself, when in 2004, Estonia, Latvia, and Lithuania, entered NATO, and in 2014 U.S. President Obama tried to get Ukraine into NATO, and these five countries hadn't even been Warsaw Pacters, but had instead been parts of the USSR itself. It was as if Russia had grabbed not only America's allies, but some states in the U.S. itself. This constituted extreme aggression, and shows the U.S. aristocracy's obsessive intent for global empire - to include Russia.)

Any limited war between the two powers would become a nuclear war once the side that's losing this limited war becomes faced with the choice of either surrendering that limited territory (now likely Syria) or else going nuclear. On Russia's side, allowing such military conquest of an ally would be unacceptable; the war would then expand with the U.S. and its allies invading Russian territory for Russia's continuing refusal to accept the U.S.-Saudi and other allies' grabbing of Syria (on 'humanitarian grounds', of course - as if, for example, the Sauds aren't far more brutal than Assad). After the traditional-forces' invasion of Russia, Russia's yielding its sovereignty over its own land has never been part of Russia's culture: If Russia were to be invaded by allies of the U.S., then launching all of Russia's nuclear weapons against the U.S. and America's invasion-allies, would be a reasonably expected result. Here's how it would develop: On America's side, which (very unlike Russia) has no record of any foreign invasion against its own mainland (other than the Sauds' own 9/11 'false flag' attacks), the likely response in the event of Russia's crushing its invaders would be for the U.S. President to seek to negotiate a face-saving end to that limited war, just as the American President Richard Nixon did regarding America's invasion and occupation of Vietnam.

However, a reasonable question can be raised as to whether, in such a situation, Russia would accept anything less than America's total surrender, much as Franklin Delano Roosevelt in WW II was determined to accept nothing less than Germany's total surrender, at the end of that war. If Trump wants to play Hitler, then Putin (acting in accord with Russian tradition) would probably play both FDR and Stalin, even if it meant the end of the world. For Russia to be conquered, especially by such intense evil as those invaders would be representing, would probably be viewed by Russians as being even worse than ending everything, and this would probably be Putin's view as well. If America did not simply capitulate, Putin would probably nuclear-blitz-attack the U.S. and its allies, rather than give Trump (or Pence) the opportunity to blitz-attack Russia and to sacrifice all of the U.S. side's invading troops in Russia so as to 'win' the overall war and finally conquer Russia. It would be like WW II, except with nuclear weapons - and thus an entirely different type of historical outcome after the war.

Consequently, either the U.S. will cease its designs on Russia, or there will be WW III. Russia's sovereignty will never be yielded, especially not to the thuggish gang who have come to rule the U.S. (both as "Republicans" and as "Democrats"). The bipartisan neoconservative dream of America's aristocrats (world-conquest) will never be achieved. Russia will never accept it. If America's rulers continue to press it, the result will be even worse than when the Nazis tried. It's just an ugly pipe-dream, but any attempt to make it real would be even uglier. And nobody who buys a 'nuclear-proof bunker' will get what he or she thinks is being bought - safety in such a world as that. It won't exist.

Shemp 4 Victory -> Crash Overide , Apr 20, 2017 10:56 PM

Fred Reed knocks one out of the park:

First Transgender President: Trump Becomes Hillary http://www.unz.com/freed/first-transgender-president-trump-becomes-hillary/

Luc X. Ifer -> Shemp 4 Victory , Apr 20, 2017 11:24 PM

False. We have a simulation, and it is far worse than people can even imagine.

[...

  • Even humans living in shelters equipped with many years worth of food, water, energy, and medical supplies would probably not survive in the hostile post-war environment.

    ...]

    http://www.nucleardarkness.org/warconsequences/hundredfiftytonessmoke/

  • Luc X. Ifer -> Luc X. Ifer , Apr 20, 2017 11:41 PM

    Another reason why USSA is in hurry to have the war with Russia ASAP is that they know that very soon - if not even now in the present, USSA ICBM defense is outdated and 100% ineficient against the newest Russian ICBMs, if by any bad chance Russia launches the 1st strike Disney Land USSA is Bye Felicia without even a chance to retaliate.

    https://www.rt.com/news/340588-hypersonic-warhead-sarmat-tested/

    winged -> Luc X. Ifer , Apr 20, 2017 11:41 PM

    If that time truly comes, make sure you know who's really responsible.

    http://biblicisminstitute.wordpress.com/2015/03/17/the-truth-about-the-c...

    [Apr 21, 2017] President Trump dropped the biggest bomb

    Apr 21, 2017 | economistsview.typepad.com

    Fred C. Dobbs , April 20, 2017 at 04:30 AM

    Mother of All Bombs https://nyti.ms/2pFwhOS
    NYT - ALI M. LATIFIAPRIL 20, 2017

    A journey to the Afghan village where
    President Trump dropped the biggest bomb.

    ACHIN, AFGHANISTAN - I spent the evening of April 13 with a cousin and two aunts in the upscale Wazir Akbar Khan neighborhood in Kabul, Afghanistan. My aunts mostly talked about their relaxed, liberal early youth in the 1960s among the Kabul elite. As we waited in the driveway for our car, my cousin told me about an explosion in Nangarhar, the eastern province of Afghanistan, where our family comes from. We scrolled through our phones. As we drove out, it became clear it wasn't the beginning of the Taliban's so-called Spring Offensive.

    Around 8 p.m. Afghan time, the United States had dropped a 21,600-pound, $16 million bomb on Asadkhel, a tiny village nestled between two forested hills, to attack a decades-old tunnel system that was being used by fighters claiming allegiance to the Iraq- and Syria-based Islamic State.

    Afghanistan has been at war for almost four decades now. Our people lived through the Soviet occupation and the war the mujahedeen fought against the Soviets with the support of the United States; freedom from the Soviet occupation was stained by a brutal civil war between mujahedeen factions (warlords had ruled large parts of the country and exacted a terrible human cost).

    The Taliban rule followed. We watched them being bombed into submission and escape after Sept. 11, celebrated a few years of relative calm, and saw the Taliban return to strength and wage a long, bloody insurgency that continues to this day. We watched the world tire of our forever war and forget us.

    Throughout the years of war, we had come to make lists of many firsts in Afghanistan - horrors, military victories, defeats, weapons used, atrocities committed, improbable lives saved. The explosion of the "mother of all bombs" on April 13 was a striking addition to the list of "firsts."

    (So...)

    I set out for Nangarhar. Leaving Kabul can be a dangerous affair. If you travel south of the city, every mile on the road is living with the prospect of an encounter with the Taliban, the possibility of a tire rolling over a lethal roadside bomb.

    I was, fortunately, driving east to Jalalabad, one of the largest Afghan cities. I drove for three hours through tunnels carved into the mountainside, past streams flowing beside forested mountains, and arrived in Jalalabad in the afternoon. The bombing site was two hours away. The city did not betray any anxiety. Rickshaws whizzed from roundabout to roundabout; kebab stands on sidewalks did brisk business; men and women filled the bazaars, shopping before the Friday prayer.

    Some Afghan officials from Jalalabad took a group of journalists to Achin district, about 40 miles south. We drove through Bati Kot and Shinwar, two districts in between, where the Islamic State had established a significant presence in 2014. Thousands of residents had fled and sought refuge in Jalalabad and Kabul, among other places. Most of them were yet to return, but people carried on with their lives in village bazaars.

    We passed an unfinished luxury-housing complex named for Amanullah Khan, the beloved former king of Afghanistan. We passed the site of a proposed university. As we approached Achin, white and purple poppy plants popped up in the green grass fields.

    A few miles before Asadkhel, the bombed village, the road turned into a mountainous stretch of rock, dirt and gravel. A market of about 200 stores lay abandoned; the stores had been destroyed in weekslong military operations against the Islamic State fighters. Crumbling foundations, caved-in roofs and some tattered pieces of cloth were all that remained.

    Not far from the ruined market, I met two boys: 11-year-old Safiullah and 13-year-old Wajed. They described the explosion as "very loud" but insisted that it did not scare them. Safiullah held on to his unruly goat that he was walking home. "I am used to it," he said. "I have heard so many bombings."

    Wajed, who had come to bring water to the police, agreed. They said they were glad that the Islamic State fighters were gone. Safiullah had interacted a little with Islamic State fighters as he took his goat for grazing. They told him, "Don't grow poppy and don't shave your beard."

    We finally reached a hilltop overlooking a green valley besides Asadkhel. A small cluster of mud houses stood along the hill. Every now and then a child would pass by. We saw no adults.

    Two hills obstructed view of the bombed area. American helicopters flew overhead. Three hours passed but we weren't allowed to proceed further. Officials spoke cheerfully of resounding success and precision of the operation.

    Yet every time we sought permission to visit the bombed area, they found excuses to keep us away: "The operation is ongoing!" "There are still Daesh" - Islamic State - "fighters on the loose!" "There are land mines!" and finally, "The area is being cleared!" "No civilians were hurt!"

    We weren't allowed anywhere near the bombed village. We were simply told that about 94 Islamic State fighters had been killed.

    In the end, "Madar-e Bamb-Ha" became the star of a grotesque reality television show. We know how much it weighs, what it costs, its impact, its model number and its code name. We know nothing about the people it killed except they are supposed to be nameless, faceless, cave-dwelling Islamic State fighters. It was a loud blast, followed by a loud silence. It is yet another bomb to fall on Afghan soil, and the future of my homeland remains as uncertain as ever.

    Related: The 'Mother of All Bombs' blast site is still
    off-limits, but here's who it may have killed http://read.bi/2pCdkiN via @Business Insider

    ... In a move reminiscent of Vietnam-era body-count assessments, Afghan officials have released estimates of the number of ISIS fighters killed in the MOAB strike, upping the total from 36 to 96 over the last six days. ...

    ilsm -> Fred C. Dobbs... , April 20, 2017 at 03:18 PM
    body count worked so well in Vietnam and for the Russians in Kabul.........

    Imagine if the winds were not compensated for.....

    Let no one in, like Idbil, then the story is safe.

    [Apr 21, 2017] West does not want to investigate incident in Idlib, Russian diplomat says

    Apr 21, 2017 | economistsview.typepad.com
    RGC , April 20, 2017 at 05:36 AM
    West does not want to investigate incident in Idlib, Russian diplomat says

    Russian Politics & Diplomacy April 20, 8:28 UTC+3


    "We guess that Americans probably have something to hide, since they persistently want to take the Shayrat airport out of the investigation," the diplomat said


    THE HAGUE, April 20. /TASS/ Western countries do not want to properly investigate the incident with the possible use of chemical weapons in the Syrian province of Idlib, Alexander Shulgin, Permanent Representative of the Russian Federation to the Organization for the Prohibition of Chemical Weapons (OPCW) told TASS.

    On Wednesday, the meeting of the OPCW Executive Council took place. During that meeting Russia and Iran submitted a revised draft proposal for the investigation of the incident in the Syrian province of Idlib.

    However, the United States opposed the visit of the Syrian Chemical Weapons Detection Mission to the Shayrat airfield, since it "has nothing to do with the situation," the diplomat said.


    The US delegation "spoke out against the involvement of any national experts in the work of the mission, they accused Russia of trying to "mix tracks and lead the investigation to a dead end."

    "But the connection between the incident in Idlib and the airfield of Shayrat was established by the Americans themselves, who stated that the Syrian planes had flown from this airfield," the Permanent Representative stressed. "Therefore, it is absolutely necessary to determine if sarin or other chemical munitions were stored there or not," he stressed.

    "Our view is that the Western countries are acting extremely inconsistently," the Russian diplomat said.

    "We guess that Americans probably have something to hide, since they persistently want to take the Shayrat airport out of the investigation. Maybe they knew from the start there was no chemical weapons there, and all this was used only as an excuse?" he added.


    On April 7, US President Donald Trump ordered a strike on Syria's Shayrat military air base located in the Homs Governorate. The attack, involving 59 Tomahawk Land Attack Missiles (TLAM), came as a response to the alleged use of chemical weapons in the Idlib Governorate on April 4. The US authorities believe that the airstrike on Idlib was launched from the Shayrat air base.

    http://tass.com/politics/942237

    pgl -> RGC... , April 20, 2017 at 05:51 AM
    TASS is the Russian News Agency. Somehow I do not find them all that credible.
    RGC -> pgl... , April 20, 2017 at 06:01 AM
    When the New York Times and Washington Post offer you fake news or no news, you might want to see what other sources say.

    It might be wise to check one against the other and then decide which is the more credible.

    pgl -> RGC... , April 20, 2017 at 06:08 AM
    Does other news sources include Faux News and Billo? Oh wait - Billo just got canned.

    BTW - we know sarin gas was used on the citizens of Syria. I guess you want to blame the French or something.

    RGC -> pgl... , April 20, 2017 at 06:24 AM
    People other than Russians have questioned the story.

    Like a prof at MIT:

    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

    By Theodore A. Postol, professor emeritus of science, technology, and national security policy at MIT.

    http://www.washingtonsblog.com/2017/04/67102.html

    pgl -> RGC... , April 20, 2017 at 06:32 AM
    Read more carefully:

    "The conclusion of this summary of data is obvious – the nerve agent attack described in the WHR did not occur as claimed. There may well have been mass casualties from some kind of poisoning event, but that event was not the one described by the WHR."

    He is not saying attack did not occur. He is only saying the way the White House reported it was not entirely accurate. Yuuuge difference. Like Sean Spicer gets the details right every time - not.

    RGC -> pgl... , April 20, 2017 at 06:42 AM
    "This means that the allegedly "high confidence" White House intelligence assessment issued on April 11 that led to the conclusion that the Syrian government was responsible for the attack is not correct.

    For such a report to be so egregiously in error, it could not possibly have followed the most simple and proven intelligence methodologies to determine the veracity of its findings.

    Since the United States justified attacking a Syrian airfield on April 7, four days before the flawed National Security Council intelligence report was released to the Congress and the public, the conclusion that follows is that the United States took military actions without the intelligence to support its decision."

    RGC -> pgl... , April 20, 2017 at 06:27 AM
    NYT Mocks Skepticism on Syria-Sarin Claims
    April 18, 2017

    Exclusive: The New York Times and other major media have ruled out any further skepticism toward the U.S. government's claim that Syrian President Assad dropped a sarin bomb on a town in Idlib province, reports Robert Parry.
    ................
    Today, however, particularly on foreign policy issues, the major U.S. news outlets, such as The New York Times and The Washington Post, apparently believe there is only one side to a story, the one espoused by the U.S. government or more generically the Establishment.
    .....................
    https://consortiumnews.com/2017/04/18/nyt-mocks-skepticism-on-syria-sarin-claims/

    pgl -> RGC... , April 20, 2017 at 06:35 AM
    Facts on the ground in Assad's brutal regime are confusing? Stop the presses. I blame Assad. And no - I still do not trust the Russians.
    RGC -> pgl... , April 20, 2017 at 06:44 AM
    And I would never trust your judgement.
    pgl -> RGC... , April 20, 2017 at 06:48 AM
    Likewise! BTW it is judgment (only 1 e).
    RGC -> pgl... , April 20, 2017 at 07:02 AM
    This source says G_d is on my side:

    "judgement is the form sanctioned in the Revised Version of the Bible, & the OED prefers the older & more reasonable spelling. Judgement is therefore here recommended –Fowler p. 310."

    http://www.dailywritingtips.com/judgement-or-judgment/

    RGC -> RGC... , April 20, 2017 at 02:29 PM
    And of course, that means the devil is on your side.

    Just as I suspected.

    JohnH -> pgl... , April 20, 2017 at 07:02 AM
    What facts on the ground? There has been no investigation...only assertions made by the usual suspects.

    A nice summary of the story:
    https://youtu.be/rkj9UCHO0Tc

    As in economics, pgl is a staunch supporter of the dominant narrative and the conventional wisdom...one of those who believed that Saddam had WMDs.

    pgl -> JohnH... , April 20, 2017 at 07:29 AM
    The dominant narrative in Moscow is TASS. I guess you work for them now. BTW - I was doubting the Saddam WMD tale back in 2002. So take your usual lies somewhere else troll.
    JohnH -> pgl... , April 20, 2017 at 08:08 AM
    The dominant narrative among NY elites is the NY Times, whose reporting they swallow hook, line and sinker.

    Yet you won't see any mention Theodore Postol's critique of Trump's allegations about the Syrian chemical attack. When it comes to foreign affairs, the NY Times salutes and follows the party line...as do virtually all American news outlets.
    http://fair.org/home/out-of-46-major-editorials-on-trumps-syria-strikes-only-one-opposed/

    pgl is happy to join into the groupthink no questions asked...

    pgl -> JohnH... , April 20, 2017 at 07:35 AM
    Did you check your source here? The James Corbett Report? Featured here at American Loons:

    http://americanloons.blogspot.com/2013/06/584-james-corbett.html

    Even The Onion would not go here.

    JohnH -> pgl... , April 20, 2017 at 08:10 AM
    Question is, what facts in the Corbett Report were wrong? Seems to me that they pretty much nailed the contradictions and hypocrisy of the trumped up charges against Syria.
    pgl -> JohnH... , April 20, 2017 at 08:36 AM
    See below. The news today sort of debunks your apologist attitude toward Assad the Butcher.
    JohnH -> pgl... , April 20, 2017 at 12:26 PM
    Well, now we have the room and may have the weapon. But who done it? Colonel Mustard, Professor Plum, or Miss Scarlet?

    It is well known that the Syrian rebels also use chemical weapons.
    http://www.telegraph.co.uk/news/worldnews/middleeast/syria/10039672/UN-accuses-Syrian-rebels-of-chemical-weapons-use.html

    But that doesn't dissuade pgl from believing everything that Trump the compulsive liar says! Until Trump bombed Syria, libruls like pgl didn't believe a word Trump said. Now they'll believe anything!!!

    After a lifetime of watching the US start pointless and futile wars under false pretenses (Vietnam, Iraq, Libya, etc.), pgl has no hesitation about gulping down the kool aid as fast as he can! In fact, libruls like pgl seem absolutely delighted when money that could be used for socially useful purposes like education and healthcare get diverted to fight phantom enemies abroad.

    anne -> pgl... , April 20, 2017 at 06:33 AM
    http://economistsview.typepad.com/economistsview/2017/04/krugman-elizabeth-warren-lays-out-the-reasons-democrats-should-keep-fighting.html#comment-6a00d83451b33869e201bb09927277970d

    April 19, 2017

    "Bernie Sanders was of course a civil rights activist in the 1960s..."

    A couple of marches does not make on Martin Luther King or John Lewis. I spent more time in the trenches than Sanders did back then...

    http://economistsview.typepad.com/economistsview/2017/04/links-for-04-20-17.html#comment-6a00d83451b33869e201b8d279eb0e970c

    April 20, 2017

    I guess you want to blame the French or something....

    ilsm -> pgl... , April 20, 2017 at 03:24 PM
    Like VOA which had a long agitprop piece today.

    Do you think the Sarin was stored near the planes that could get to Idlib? Or maybe those cruise missiles damaged a Sarin site?

    Why not find the igloo that help the Sarin?

    Or do you want to believe the staged vids and pix?

    OPCW said to was Sarin...... or such!

    And French are selling the US' tale like they sold killing Qaddafi and that unneeded involvement in Europe 100 years ago.

    [Apr 21, 2017] Petty bourgeois class is not the same thing as middle income: source of income matters hugely

    Notable quotes:
    "... Petty rentiers live off others above the compensation for inflation and retireds are not earning wages anymore. Even if they live on social security and pensions ..."
    "... Income ranking regardless of source is a muddle ..."
    "... Most people are in the job class, not the asset owning / one percent class. "High taxes and redistribution do the job nicely, just ask Norway." Not a sufficient answer to issues Marxism raises, just a facile one. ..."
    "... I don't have a problem with class warfare. I don't have a problem with Democrats either. I have a problem with losing. ..."
    "... I agree with above on workers now retired. However their solidarity with the still active workers is not a sure thing ..."
    "... Yep. Further proof that the rich are parasites killing their host. ..."
    "... Torturing, not killing is how they get their satisfaction. ..."
    "... Yes, but their lack of restraint is killing the host. ..."
    Apr 21, 2017 | economistsview.typepad.com
    paine -> paine... April 20, 2017 at 06:09 AM
    Bourgeois (petty) class is not the same thing as middle income: source of income matters hugely

    Petty rentiers live off others above the compensation for inflation and retireds are not earning wages anymore. Even if they live on social security and pensions

    Income ranking regardless of source is a muddle

    RC AKA Darryl, Ron -> paine... , April 20, 2017 at 06:44 AM

    Easy on those retireds. Prefer to think of them as former wage class living off their social dividend for past services rendered. In any case, retirement is still the best job that I have ever had. Got to go cut the grass now, first time this season and way too tall. We were in a drought for a time, but it broke last weekend.
    reason -> RC AKA Darryl, Ron... , April 20, 2017 at 08:33 AM
    Good thanks. I just think that paine's world view is dated. I don't like class war of either type (down or up) it is too costly for the bystanders (just like any war). Today most people don't fit cleanly into one class (workers) or the other (capitalists) -- actually they never did women and children are a majority not to mention the increasing ranks of the retired. We live in a world where most people are both workers and owners - that is almost the definition of a middle class society. And many rely on "rents" from their hard won qualifications. Marxism is just too simple a view of world, and as it turns out unnecessary. High taxes and redistribution do the job nicely, just ask Norway.
    Peter K. -> reason ... , April 20, 2017 at 08:49 AM
    Most people are in the job class, not the asset owning / one percent class. "High taxes and redistribution do the job nicely, just ask Norway." Not a sufficient answer to issues Marxism raises, just a facile one.
    RC AKA Darryl, Ron -> reason ... , April 21, 2017 at 03:49 AM
    I don't have a problem with class warfare. I don't have a problem with Democrats either. I have a problem with losing.

    I also have a problem with winning and then just flubbing the replacement. I am mostly for just letting future generations work this out however they can once given the tools of a more democratic political system.

    paine -> RC AKA Darryl, Ron... , April 20, 2017 at 09:00 AM
    I agree with above on workers now retired. However their solidarity with the still active workers is not a sure thing
    ilsm -> paine... , April 20, 2017 at 03:13 PM
    instead of make it easier poor make it frequent to escape poor
    RC AKA Darryl, Ron -> ilsm... , April 21, 2017 at 03:50 AM
    Yep.
    DrDick -> reason ... , April 20, 2017 at 06:45 AM
    Yep. Further proof that the rich are parasites killing their host.
    RC AKA Darryl, Ron -> DrDick... , April 20, 2017 at 07:21 AM
    Torturing, not killing is how they get their satisfaction.
    DrDick -> RC AKA Darryl, Ron... , April 20, 2017 at 08:34 AM
    Yes, but their lack of restraint is killing the host.

    [Apr 21, 2017] Since Obama appointed Derugulating Larry , Tax-evading Timmy and Too-big-to-jail Eric , maybe those appointments were not that good

    Apr 21, 2017 | economistsview.typepad.com
    reason , April 20, 2017 at 02:31 AM
    It seems Paul Krugman isn't the economist who doesn't necessarily agree with Sanders all the time.

    http://conversableeconomist.blogspot.de/2017/04/personnel-is-policy-presidential.html

    Still, all this really shows is how incredibly dysfunctional the ancient US system is. Time for a constitutional renewal process.

    Fred C. Dobbs -> reason ... , April 20, 2017 at 03:54 AM
    (Shocking stuff, no?)

    'For example, late in the Obama administration the board that is supposed to oversee the US Postal Service had zero members out of the nine possible appointments. The reported reason is that Senator Bernie Sanders put a hold on all possible appointees, as a show of solidarity with postal workers. If it isn't obvious to you how Sanders preventing President Obama from appointing new board members would influence the US Postal Service in the directions that Sanders would prefer, given that President Trump could presumably appoint all nine members of the board, you are not alone.'

    Timothy Taylor
    conversableeconomist@gmail.com

    RGC -> Fred C. Dobbs... , April 20, 2017 at 07:25 AM
    Since Obama appointed "Derugulatin' Larry", "Tax-evadin' Timmy" and "Too-big-to-jail Eric", maybe those appointments weren't very good.

    [Apr 20, 2017] Against False Arrogance of Economic Knowledge

    Notable quotes:
    "... By Amit Bhaduri, Professor Emeritus, Jawaharlal Nehru University and Visting Professor, Council for Social Development. Originally published at the New Economic Perspectives website ..."
    "... why do we accept the artificial devolution of political economy into economics and politics? ..."
    "... gets interest from ..."
    "... Economics should be transferred to the divinity school. Then it will be untouchable! ..."
    Apr 19, 2017 | www.nakedcapitalism.com
    Yves here. I'm using the original headline from INET even though "false arrogance" seems like rhetorical overkill. After all, arrogance and hubris are closely related phenomena (my online thesaurus list "arrogance" as the first synonym for "hubris"). But in Greek tragedies, the victims of hubris were all legitimately accomplished, yet let their successes go to their heads. Thus the use of "false arrogance" presumably means that economists' high opinion of themselves is not warranted.

    By Amit Bhaduri, Professor Emeritus, Jawaharlal Nehru University and Visting Professor, Council for Social Development. Originally published at the New Economic Perspectives website

    The problem of any branch of knowledge is to systematize a set of particular observations in a more coherent form, called hypothesis or 'theory.' Two problems must be resolved by those attempting to develop theory: (1) finding agreement on what has been observed; (2) finding agreement on how to systematize those observations.

    In economics, there would be more agreement on the second point than on the first. Many would agree that using the short-hand rules of mathematics is a convenient way of systematizing and communicating knowledge - provided we have agreement on the first problem, namely what observations are being systematized. Social sciences face this problem in the absence of controlled experiments in a changing, non-repetitive world. This problem may be more acute for economics than for other branches of social science, because economists like to believe that they are dealing with quantitative facts, and can use standard statistical methods. However, what are quantitative facts in a changing world? If one is dealing with questions of general interest that arise in macroeconomics, one has to first agree on 'robust' so-called 'stylized' facts based on observation: for example, we can agree that business cycles occur; that total output grows as a long term trend; that unemployment and financial crisis are recurring problems, and so on.

    In the view of the economic world now dominant in major universities in the United States - with its ripple effect around the world - is these are transient states, aberrations from a perfectly functioning equilibrium system. The function of theory, in this view, is to systematize the perfectly functioning world as a deterministic system with the aid of mathematics. One cannot but be reminded of the great French mathematician Laplace, who claimed with chilling arrogance, two centuries after Newton, that one could completely predict the future and the past on the basis of scientific laws of motion - if only one knew completely the present state of all particles. When emperor Napoleon asked how God fitted into this view, Laplace is said to have replied that he did not need that particular hypothesis. Replace 'God' by 'uncertainty', and you are pretty close to knowing what mainstream macro-economists in well-known universities are doing with their own variety of temporal and inter-temporal optimization techniques, and their assumption of a representative all knowing, all-seeing rational agent.

    Some find this extreme and out-dated scientific determinism difficult to stomach, but are afraid to move too far away, mostly for career reasons. They change assumptions at the margin, but leave the main structure mostly unchallenged. The tragedy of the vast, growing industry of 'scientific' knowledge in economics is that students and young researchers are not exposed to alternative views of how problems may be posed and tackled.

    This exclusion of alternative views is not merely a question of vested interest and the ideological view that we live in the best of all possible worlds where optimum equilibria rule, except during transient moments. It stems, also, from a misplaced notion of the aesthetics of good theory: Good theory is assumed to be a closed axiomatic system. Its axioms can, at best, be challenged empirically - e.g. testing the axiom of individual rationality by setting up experimental devices - but such challenges hardly add up to any workable alternative way of doing macro-economics.

    There is however an alternative way, or, rather, there are alternative ways. We must learn to accept that when undeniable facts stare us in the face and shake up our political universe - e.g. growing unemployment is a problem, and money and finance have roles beyond medium of payment in an uncertain world shaken by financial crises - they are not transient problems; they are a part of the system we are meant to study. It is no good saying my axiomatic system does not have room for them. Instead, the alternative way is to take each problem and devise the best ways in which we are able to handle them analytically. Physicist Feynman (economist Dow (1995) made a similar distinction) had made a distinction between the Greek way of doing mathematics axiomatically, and the Babylonian way, which used separate known results (theorems) without necessarily knowing the link among them. We must accept this Babylonian approach to deal with macro-economic problems, without pretending that it must follow from some grand axiom.

    Awareness of history must enter economic theory by showing that concepts such as cost, profit, wage, rent, and even commercial rationality have anthropological dimensions specific to social systems. The humility to accept that economic propositions cannot be universal would save us from self-defeating arrogance.

    8 0 0 1 0 This entry was posted in Guest Post , Ridiculously obvious scams , Science and the scientific method , The dismal science on April 19, 2017 by Yves Smith .
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    Subscribe to Post Comments 63 comments fresno dan , April 19, 2017 at 10:03 am

    I can't tell you how much I agree with the article.
    For example, what CRITERIA are used that something is a "good" job. Before you even start to debate the "facts" at least set up the criteria by which you will evaluate them. It seems evident to me (pension, "good" – what is "good" health care) but apparently, one of the "pre-eminent" economists, at least according to another economist, thinks part time jobs are just as good as retail .

    http://cepr.net/blogs/beat-the-press/paul-krugman-gets-retail-wrong-they-are-not-very-good-jobs?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+beat_the_press+%28Beat+the+Press%29

    Cujo359 , April 19, 2017 at 1:10 pm

    It works for me as an executive summary, but almost every paragraph would probably require a similarly-sized essay to explain it. I agree with its judgment that too many economists view the world as being governed by some sort of universal economic law (or "laws"), when in reality those laws work in very limited circumstances. Whether it's possible there could be such laws some day, I don't have an opinion one way or another, and nothing in this article sheds much light on that issue.

    Benedict@Large , April 19, 2017 at 1:20 pm

    It's my experience that the overwhelming number of economists don't know squat about employment/ unemployment, including why and employer hires and why people look for and accept jobs. I assume this is because all of these things are rare event in the personal lives of economists, who spend little time looking for or between jobs. An economist is either employed, or he/she is not an economist, and so once they gain experience with the above, they are no longer in a position where they can speak about it among others still in the field.

    jrs , April 19, 2017 at 2:19 pm

    pension + black lung = good job? I mean if we're saying coal mining is a "good job" now noone who can do better wants it though, that's what a "good job" it is. Compensation matters but so do working conditions, and by the way externalities matter, and "coal mining" as a good job certainly doesn't account for that and the whole community being a cancer cluster etc.

    Moneta , April 20, 2017 at 8:20 am

    The thing is that there are an awful lot of bad jobs that need to be done and will never go away.

    Dead Dog , April 19, 2017 at 5:24 pm

    As an economist, now semi retired (author, handyman, carer ), I can speak of my own experiences.

    I think one aspect of my degree course was a lack of normative studies and not enough, 'well that is the mainstream theory, now this is what we observe in practice' (and why eg control fraud, captured political interests)

    We were also mispoken to about how private banks create money, taxes fund government spending and so on.

    My choice to study economics was regretted years later, yet it gave me a lift up career-wise.

    It now seems sad that the profession has become mis-trusted and denigrated. We don't all think alike.

    Moneta , April 20, 2017 at 8:36 am

    When I studied economics, I realized how absurd a lot of it was so I answered according to what the prof wanted to see.

    However, I'm under the impression that my education in a Cdn university was way less dogmatic than in the US.

    Externalities were discussed, as was the dubious quality of GDP growth. I had a book on the history of the Cdn financial system. It explained very well how we went from gold standard to current system.. and how the leading countries used devaluations (France, UK, US) to their advantage.

    The problem with objective economists is that they realize that there exists something called the law of unintended consequences. Once you realize there are too many variables to control, you become a leaf in the wind. And no one likes ambivalent people. They want leaders who KNOW the answers. So leaders who appear to have answers are chosen.

    Eric Anderson , April 20, 2017 at 2:10 pm

    Well said. I always appreciated having my undergraduate economic theory class delivered by an active duty Marine Corp Major. A hardened realist with a talent for illuminating theory.

    sgt_doom , April 19, 2017 at 6:51 pm

    No offense to Dean Baker, but what doesn't Krugman NOT get wrong? His public disagreement with Real Economist, Steve Keen, would have been hilarious had it not been so pathetic in demonstrating either what a sheer idiot he is, or professional liar, whatever the case may be. (Krugman was claiming that banks do not create credit as Krugman has no understanding of that rather simple fractional reserve banking system. I once wrote to Krugman to correct him on his supply-and-demand theory as to the cause of that incredible spiking upwards of oil/energy costs around 2008, even though the Baltic Exchange Index ad pretty much collapsed, with an incredible number of oil tankers floating off the coasts of Singapore and Malaysia, in an inactive state – – attempting to explain to him about Goldman Sachs and Morgan Stanley, et al., speculating up the prices on ICE via commodity futures speculation or wash sales, and he didn't get that either!)

    But this reminds me of a local (Seattle) witless talk show (KIRO radio station: the John and Curley Show) where the two snarky hosts, as ignorant as can be, go on and on about their love of globalization, scoffing at those who don't understand that offshoring manufacturing (they ignored all the other categories) jobs to China and elsewhere was most clever, and "freed up America to manufacture high-end goods" - evidently ignorant of the fact as to where most chip fabs are located, and that 70% to 100% of many auto parts and aircraft parts are manufactured overseas, shipped back to America only for assembling purposes.

    That ultra-boondoggle, the F-35, is manufactured across 9 foreign countries plus America - wonder why it's such a cluster screw-up, huh?

    JustAnObserver , April 19, 2017 at 10:16 am

    In Greek tragedy wasn't hubris always followed by nemesis as the Gods took their revenge on the upstart humans ?

    witters , April 19, 2017 at 6:03 pm

    A further aside: I don't see all Greek tragedies as turning on hubris. Where is the hubris, say, of Oedipus? He is the King, there is a plague, the people call on him for help, he helps. And the plague is vanquished (mind you, he and his family – the ones still living – are in a mess. But that – Sophocles seems to be saying – is Life).

    RBHoughton , April 19, 2017 at 8:22 pm

    The important thing according to the Greek scholar Michael Scott is to recognize that Greek theater and Greek democracy are joined at the hip. The former educated the electorate in the difficult choices they would have to make as managers of their own political existence. We have political theater today but no-one considers it instruction in one's civic duty.

    JTMcPhee , April 19, 2017 at 10:18 am

    "We" here can say it to each other, over and over, in different and ever-better-documented ways, that almost all economics and the "findings" it generates, and almost all economists and their credentials, are BS, MS, Ph.D (bullish!t, more sh!t, piled higher and deeper). But how to reach a larger, and large enough, set of people who actually have votes that count and can "call bullsh!t" and demand and get an end to the "policies" that are built on and gather "legitimacy" from the "findings" of all those faux 'economists?" Who after all do have those (feedback-loop-granted) "credentials," and so many sous-chefs to keep pumping out the mega-gallons of Bernays sauce to make the sh!t sandwiches seem au courant, de rigeur, and somehow palatable?

    washunate , April 19, 2017 at 10:35 am

    Agreed, I think that's the issue. Debating whether or not economics is a science plays right into the prevailing power structure. Rather, the question is why do we accept the artificial devolution of political economy into economics and politics? There are lots of quantitative (and qualitative) "facts" in the world about economics; it can be a scientific discipline like any other. The important civic debate is the political part: what values should guide our interpretation and implementation of those economic understandings?

    nycTerrierist , April 19, 2017 at 11:28 am

    x1000!

    Left in Wisconsin , April 19, 2017 at 7:11 pm

    why do we accept the artificial devolution of political economy into economics and politics?

    This is the right question if we change "why to we accept" to "how is it that we now have" – that is, if we ask an empirical, historical question and not a metaphysical or psychological question. In an academic sense, I would say the answer has to do with a long battle within economics that was decisively won in the 50s or 60s by one "school" to the extent that they could ostracize and ignore alternative "schools" without much effective criticism, and an implicit "bargain" with sociology and political science to craft an academic division of labor. And then, inertia and serious pushback against any and all challengers.

    In the non-academic world, the answer has to do with a certain confluence of interest between neoclassical economics and existing social and economic power.

    a different chris , April 19, 2017 at 8:15 pm

    (never mind, I seem to have missed half of your good post)

    Ulysses , April 19, 2017 at 11:16 am

    "But how to reach a larger, and large enough, set of people who actually have votes that count and can "call bullsh!t" and demand and get an end to the "policies" that are built on and gather "legitimacy" from the "findings" of all those faux 'economists?"

    I think one method, to move in that direction, is to make a very small number of very specific demands. Single payer healthcare, and a living wage. We demand them!! Why don't we have them??!!

    When the "economists" tie themselves up into illogical pretzels, trying to "explain" why we can't have these nice things, they destroy their credibility– to the point where their dogma is revealed as false and inhuman. Then, we can shake off their dead hand and begin to build a new society on more rational and humane principles.

    dontknowitall , April 19, 2017 at 1:02 pm

    I understand and share your frustration with a brand of economics being used as a cudgel to tell us we cannot have nice things even as each individual US state's GDP is the equivalent to that of (at least) a medium EU nation which individually can afford far better health insurance schemes than we do. It should be the economists' job to smooth the way, to find ways so that we can have nice things not just leave it at can't.

    I disagree with washunate that to engage with economists who are failing is a waste of time that plays into the hands of the prevailing power structure. Neoliberal economists should be hearing from us that they are not scientists no matter how much math they dress their pet theories with. The greatest glory of a science is the predictive powers of its foundational theories and in that regard neoliberal economics fails spectacularly. It is not by any definition a science and they should hear it as often as possible. Of course they know this in their bones but their theories give their funders significant political cover as they seek more undeserved goods for themselves. It is our job to remind everyone who will hear that neoliberal theories are fiction not science.

    steelhead23 , April 19, 2017 at 7:15 pm

    Why don't we have universal health care? Sadly, I think the answer is quite simple – the elasticity of demand for health is infinite as the alternative is death. Hence, Genentech can and does charge $20,000 for a round of rituxan, which is very effective on non-Hodgkins lymphoma. Is it worth it? Of course it is – lymphoma is deadly.

    My point is that while the social benefit of universal health care is high, so is the opportunity cost to the healthcare industry. And since the industry is free to bribe politicians (sans a quid pro quo of course) we are unlikely to ever get it. As discussed above, economics divorced from politics is useless.

    a different chris , April 19, 2017 at 8:20 pm

    wow pretty awesome that Europe/Great Britain and Japan don't have politicians . just teasing you, how though did those countries manage to get around your problem is the question//

    AbateMagicThinking but Not money , April 20, 2017 at 12:22 am

    The British learned from the washout of the first world war that the usual politicians could not be trusted to produce a country fit for heroes as was promised, so they voted for socialism.

    As for the Japanese, my memory is that the US set their health system up! Dang!

    AbateMagicThinking but Not money , April 20, 2017 at 12:49 am

    The British polititician who lost out big time in that election that brought the Labour Party's version of socialism into power, was Winston Churchill – after the end of World War Two.
    It goes to show that you might need one kind of leader in existential-wartime, and another for peacetime. However, nowadays how do you know whether the there is an existential struggle or not?

    Katharine , April 19, 2017 at 10:38 am

    Yes, hubris was the tragic flaw. Treating it as a mere synonym for arrogance is a fine example of why to avoid thesaurusi. A good dictionary with synonymies is more reliable.

    Katharine , April 19, 2017 at 11:34 am

    That was supposed to be a reply to JustAnObserver. Don't know what happened.

    sgt_doom , April 19, 2017 at 6:57 pm

    Speaking of hubris, there's a recently published book by a "professor of national security" (good luck with that one!!!), Tom Nichols, titled: The Death of Expertise , and it's a real hoot!

    Not because the author got anything right, he got almost everything completely wrong, and simply for that reason!

    At one point in this garbage book by Nichols, he is repeating an exchange between a political appointee whom he believes to be an "expert" and a grad student concerning Reagan's spaced-based missile defense {SDI or Star Wars - in this case I believe it was the space-based platform} of which much of it turned out to be a hoax meant to mislead the Soviets – – and historically we know the grad student was correct, and Jastrow, if I recall his name correctly, was most incorrect – – but you would never know it from this author! ! !

    (If you observe any American space-based missile platforms, please be sure to let me know!)

    flora , April 19, 2017 at 8:40 pm

    Hubris: "My theory, divorced from reality, supersedes reality."

    CD , April 19, 2017 at 11:09 am

    Besides acknowledging that economic theory is bound to time and society, it would also be good to give some fresh thought to familiar economic concepts we take as Bible-given.

    Let's re-examine the ideas of interest [can we do without it], growth [can we have a no-growth economy], and differential pay [need we pay a much higher salary for "higher" work],

    I would go on to look at profit [should there be profit in all economic activities, such as health care, education, and others], oligopolies [is it good to have very large corporations], and competition [should we promote competition is all aspects of life].

    Some of these have been questioned in these pages, such as the question of oligopoly. I encourage raising more and continued questioning, as we've done here.

    JTMcPhee , April 19, 2017 at 1:00 pm

    It tends to draw fire when I mention it, but "Sharia or Islamic banking and finance" is supposed to be done without any interest. And the system (now under assault by Western interest-holders, by physical violence and subversion of many types, and co-optation via corruption) kind of relies on actual trust and risk-sharing. Here's some details for anyone "interested:" http://www.islamic-banking.com/islamic_banking_principle.aspx

    So there is a model to look toward, though there will be all kinds of nationalist and kleptocratic resistance, http://www.wnd.com/2015/07/major-u-s-city-poised-to-implement-islamic-law/ . Though of course because Muslims have money, our banksters are adapting and even bringing semi-pseudo-Sharia banking and finance inside Western borders, https://www.usatoday.com/story/money/business/2014/10/11/shariah-compliant-islamic-financing-usa-europe/16828599/ .

    Once again, "we" need to look at what "we" means - hardly a collective with any mass or teeth, mostly just an aspirational conversation tic.

    Larry Motuz , April 19, 2017 at 1:29 pm

    Thank you for your first reference, JTMcPhee, from the Institute of Islamic Banking. It makes a great deal of sense that lenders bear risk along with borrowers when we are talking about financing entrepreneurship. In this view, the lender has an interest in rather than gets interest from . [I very much suspect that the former meaning became detached from the latter very early on in human history, which is why the latter was condemned as 'usury', a result itself of an imbalance of power leading to coercive lending.]

    I wonder, however, about 'consumer lending' where there is clearly no entrepreneurial risk.

    Do you have a useful reference about how this 'consumer lending' occurs without 'interest' in the Islamic world?

    JTMcPhee , April 19, 2017 at 1:36 pm

    Try this: http://news.bbc.co.uk/2/hi/business/8401421.stm
    It's not easy being halal Not when all that "green" is floating around

    fresno dan , April 19, 2017 at 11:14 am

    https://www.theguardian.com/global-development-professionals-network/2017/apr/06/kate-raworth-doughnut-economics-new-economics

    In 1955, the economist Simon Kuznets thought he had found such a law of motion, one that determined the path of income inequality in a growing economy. The scant data that he could gather together seemed to suggest that, as a nation's GDP grows, inequality first rises, then levels off, and ultimately starts to fall. Despite Kuznets' explicit warnings that his work was 5% empirical, 95% speculation and "some of it possibly tainted by wishful thinking", his findings were soon touted as an economic law of motion, immortalized as "the Kuznets Curve"– resembling an upside-down U on the page – and has been taught to every economics student for the past half century.

    As for the curve's message? When it comes to inequality, it has to get worse before it can get better, and more growth will make it better. And so the Kuznets Curve became a perfect justification for trickle-down economics and for enduring austerity today in the pursuit of making everyone better off some day.

    Forty years later, in the 1990s, economists Gene Grossman and Alan Krueger thought they too had found an economic law of motion, this time about pollution. And it appeared to follow the very same trajectory as Kuznets' curve on inequality: first rising then falling as the economy grows. Despite the familiar caveats that the data were incomplete, and available for local air and water pollutants only, their findings were quickly labeled the "Environmental Kuznets Curve". And the message? When it comes to pollution, it has to get worse before it can get better and – guess what – more growth will make it better. Like a well-trained child, growth will apparently clean up after itself.

    Except it doesn't.
    ===================================================================
    More fuel to the fire

    MyLessThanPrimeBeef , April 19, 2017 at 2:11 pm

    They both seem typical of the human search for knowledge, with or without resorting to the Scientific Method.

    Typical in that

    1. we fail to recognize our knowledge is always partial and limited
    1A. Sometimes with the added arrogance of saying we know it's partial and limited
    (Some can't afford that added arrogance, because they have been exposed already, like, say, fortune tellers)

    And yet
    2. we use that knowledge as if it's complete and applicable everywhere.

    Michael Hudson , April 19, 2017 at 11:21 am

    The Greek concept of hubris was not merely arrogance, but involved an INJURY to others. (I discuss this in J is for Junk Economics.) The main examples were creditors and land monopolizers - and kings. Nemesis not only fight hubris, but specifically supported the weak and poor who were the main injured parties. The iconography is quite similar to Sumerian Nanshe of Lagash.
    So the concept of hubris is linked to affluenza: irresponsibility of wealth, injuring society at large.

    HopeLB , April 19, 2017 at 3:31 pm

    My Lord! The best economist on the planet is commenting! Our Economist God! (As someone here aptly characterized you a few weeks ago when Yves ran your discussion of Jubilees.)
    I'll come right out with it, I'm a Michael Hudson super fan/groupie and after Yves published one of your articles, which of course, I had already read being a big fan/internet tube tracker, I suggested we concerned citizens, get a Michael Hudson fan club going and somehow convince you to take your stellar, economics distilling/demystifying self on the road along with other exemplary economists and some musicians and comedians. Like that stadium event you did in Europe or that Irish Econ Conference, but this would be for the education of the vast citizenry, hence the addition of a bit of music/comedy to entice. A touring TED/Coachella or South by Southwest but for the Economic Edification of the 99%. (You wouldn't neccessarily have to deliver all of your addresses in person. Some could be taped.)
    You would be bigger than Bernie if the millenials became familiar with your work, but more importantly, you and other like minded economists, could arm people with the deeper understanding that is essential to overturning the prevailing paradigm.

    Thank You For Your Works!
    Hope

    ps I looked into getting Economic Rock Star as a website but it is taken.

    clinical wasteman , April 19, 2017 at 11:53 pm

    Yes, 'injury' as in injustice ! Of course that may entail physical damage, but the recent tendency to reduce 'injury' to that narrow sense alone misses most of the point.
    Thanks for the connection to 'hubris', concerning which I was Classically clueless until a few minutes ago. If hubris corresponds to injury in the proper sense, perhaps 'arrogance' should be paired with 'insult', i.e. the gratuitous gloating (= self-aggrandizement of the unjust) and gleeful blaming of the injured that at least in living memory seems almost always to be packaged with the injustice?

    fresno dan , April 19, 2017 at 11:23 am

    https://www.bloomberg.com/view/articles/2017-04-18/california-tries-to-refill-its-biggest-reservoir

    None of these practices is new, although their use has expanded over the years. What does seem to be new, as Bettina Boxall of the Los Angeles Times reported this week, is that some California farmers are now experimenting with flooding fields that have grapevines and almond trees growing on them. And in general, people in California are paying a lot more attention to groundwater than they used to.

    In 2014, the California Legislature approved a package of groundwater-management laws - long after most other Western states had done so - that are now slowwwwwly beginning to take effect. Local groundwater-management agencies are being formed that will have to come up with plans to reach groundwater sustainability within 20 years.

    ========================================================
    You can look at this optimistically or pessimistically. With the population growing year, after year, after year, it doesn't take high intelligence that water demand will exceed water supply. And yet CA government choose to deal with this freight train coming down the tracks in ..2014.

    Arizona Slim , April 19, 2017 at 1:50 pm

    And, once again, the elephant in the room is not addressed. Population growth.

    Too many people in this world already. We need to question the pro-natalist bias in our culture.

    Spring Texan , April 19, 2017 at 2:14 pm

    Yes. See this NY Times article from this week. https://www.nytimes.com/2017/04/16/business/fewer-children-in-greece-may-add-to-its-financial-crisis.html

    Wisdom Seeker , April 19, 2017 at 3:35 pm

    > With the population growing year, after year, after year, it doesn't take high intelligence that water demand will exceed water supply.

    Supply is not fixed. A lot of the current "supply" (rainfall) isn't being retained, stored, or used intelligently. So there's still quite a bit of room for population growth, particularly in the northern, wetter parts of the state. Even without artificial restrictions on usage.

    On the other had, I agree with the point that humanity should not have as its primary goal the maximization of population on a single finite sphere. And thus economics should not have as its primary goal the maximization of "growth".

    flora , April 19, 2017 at 11:30 am

    "The problem of any branch of knowledge is to systematize a set of particular observations in a more coherent form, called hypothesis or 'theory.' Two problems must be resolved by those attempting to develop theory: (1) finding agreement on what has been observed; (2) finding agreement on how to systematize those observations."

    How will modern economists agree to agree on anything real now that post-modernist thought and critique has entered the economics field?

    "But Foucault had belatedly spotted that post-modernism and "neo-liberal" free-market economics, which had developed entirely independently of each other over the previous half-century, pointed in much the same direction. "
    http://www.economist.com/node/8401159

    Thanks for this post.

    flora , April 19, 2017 at 1:00 pm

    adding: The economists who use a post-modernist approach( all is uncertain and events are transient and therefore immaterial to the core theory) to defend a scientific determinist* core theory are engaging in double-think. I'm not an economist so maybe there's a there there I cannot see.

    *
    "Popper insisted that the term "scientific" can only be applied to statements that are falsifiable. Popper's book The Open Universe: An Argument For Indeterminism defines scientific determinism as the claim that any event can be rationally predicted, with any desired degree of precision, if we are given a sufficiently precise description of past events, together with all the laws of nature, a notion that Popper asserted was both falsifiable and adequately falsified by modern scientific knowledge.

    "In his book, A Brief History of Time, Hawking claims that predictability is required for 'scientific determinism' (start of chapter 4). He defines 'scientific determinism"" as meaning: 'something that will happen in the future can be predicted.' "

    http://psychology.wikia.com/wiki/Scientific_determinism

    fresno dan , April 19, 2017 at 11:37 am

    https://www.bloomberg.com/view/articles/2017-04-18/why-social-networks-are-becoming-too-viral

    By measures that register actual human engagement – rather than fake accounts and bot activity - Facebook does not seem to be growing at all. In 2016, its users generated about 25 percent less original content than in 2015. The time users spend on Facebook dropped from 24 hours in mid-2015 to 18.9 hours in February, Comscore reported.

    ========================================
    One can only hope.
    I am only on Facebook because a friend and co-worker signed me up (without my knowledge or consent, but I think most people looked upon it like getting a greeting card) back in the day when the Facebook fad was at its peak. And I was interested in it as a social and economic phenomenon.

    My own anecdotal experience is that the most ardent users (multi daily postings) have declined by 95%. The occasional 2 or 3 times weekly posters are down to once monthly, and so on.
    And the response to postings seems to have had even greater declines. Even good friends who I used to TRY and keep up with postings, I scarcely ever bother now – and when I do open one, people who used to get near 100 "looks" have 2 or 3 – maybe once in a while for something real (somebody died, instead this is a picture of a meal I eated) , maybe 5.

    Woolworths used to be a juggernaut – so was Sears. Who remembers "My Space" ???

    Arizona Slim , April 19, 2017 at 1:55 pm

    The Presidential election of 2016 did it for me.

    I saw too many people turning into Trump Fraidy Cats before the election ("Vote for Hillary because Trump! He's so awful!") or Vote Shamers ("You're voting third party? Shame on you!").

    After the election, Facebook seemed like a psych ward. Too many sobbing, crying, and raving loons for my taste.

    Cutting back on Facebook is part of my larger goal of spending less time on social media and more time in social reality.

    Cujo359 , April 19, 2017 at 2:00 pm

    I had a similar experience on Twitter, which is why I stopped going there. Too depressing.

    Kalen , April 19, 2017 at 11:49 am

    Bravo, another critical issue absent from MSM or even worse purposefully being confused.

    It would help a lot if people take time to understand the money in itself that permeates every aspect of life since it is a central feature of any financial system under any economic system ancient or contemporary.

    Here is an simple essay that explains without financial jargon what money is in itself as a social construct and whom in reality it serves:

    https://contrarianopinion.wordpress.com/2015/04/14/plutus-and-the-myth-of-money/

    Disturbed Voter , April 19, 2017 at 12:41 pm

    Economics isn't economical, it is political-economics. Politics first, economics second. Politics is the art, not the science, of sharing out the wealth, power and fame in a society in an organized way. If your politics is corrupt, then your economics will be corrupt also.

    Blame Pythagoras. From Pythagoras and Croesus, we got the idea that value was a number, and that everything had a value, and that a market (aka city state) is where the hidden hand determined the relationship between prices, goods and services. The actual "cost" per capita, of running a subsistence agrarian society hasn't changed since the days of Babylon. We simply have more technical bookkeeping (and accounting). A shekel was the weight of 180 grains of dried barley seed. The Babylonians didn't have a primitive society they had monarchy, theocracy, militarism and receipts. A thing might be valued in so many shekels of silver, but the receipt accomplished what a coin would have, because it was honored. Clay money instead of paper money. You got your receipt for your socialist food dole, went to the temple granary to pick it up (this was long before Rome), visited the temple prostitutes (way better than Roman games), then went home. And as has been pointed out, this was a clay fiat and honesty was just as vanishing then as now. And yes, it was a debt system, not a credit system. The US and the world has moved from a credit system to a debt system in the last 100 years. The Great Whore, Babylon is still awaiting her destiny.

    "Daniel reads the words MENE, MENE, TEKEL, PARSIN and interprets them for the king: MENE, God has numbered the days of your kingdom and brought it to an end; TEKEL, you have been weighed and found wanting; and PERES, the kingdom is divided and given to the Medes and Persians."

    Paul Greenwood , April 19, 2017 at 1:19 pm

    Having once held a 1776 edition of Wealth of Nations in my hand I recall Smith was a Moral Philosopher and that Economics was a branch of Moral Philosophy choosing between Goods and Bads and seeing Utility Functions as Demand Curves.

    Then I recall Keynes, the Mathematician, writing beautiful prose in The General Theory. Somewhere the Reduced Form Equation boys started to play with Stochastic Variables to make the R2 fit Deterministic equations replaced Moral choices and an obsession with Beta proceeded to ignore Alpha.

    Economics is something of an academic joke. Steve Keen has introduced some life into a dead subject with his Hyman MInsky analysis since so much of Economic Theory as propounded is simply a Java Box running inside the main system

    Hope Larkin-Begley , April 19, 2017 at 5:35 pm

    Steve Keen is great like Michael Hudson. Did you read this hilarious post;

    http://eprints.kingston.ac.uk/36353/

    flora , April 19, 2017 at 6:18 pm

    +1. Moral philosophy. Yes.

    Cujo359 , April 19, 2017 at 1:23 pm

    We must learn to accept that when undeniable facts stare us in the face and shake up our political universe - e.g. growing unemployment is a problem , and money and finance have roles beyond medium of payment in an uncertain world shaken by financial crises - they are not transient problems; they are a part of the system we are meant to study.

    I think studying some of these things might be better left to psychologists. I emphasized the phrase about unemployment as a case in point – it could be argued that we have the unemployment we have right now thanks to telling ourselves, collectively, that we can't employ people. Anyone who chooses to look around and observe can find things we could be paying people to do, like fixing our streets and bridges, educating our young, exploring space and advancing science, providing medical care to the significant portion of our population who don't have access, but we are told that this would be bad for some reason, and many of us seem to believe this.

    I don't know if that confirms the author's ideas or not, but as several of us have observed now in these comments, our economic problems have less to do with the dismal science (or lack of it) and more to do with what people are inclined to believe is true, regardless of the facts.

    PKMKII , April 19, 2017 at 2:15 pm

    Economics needs to think of itself as a branch of sociology, and not money physics.

    Justicia , April 19, 2017 at 3:05 pm

    Actually, economics is more like a branch of medieval scholasticism. It's about forcing reality to fit dogma by imposing methodological and epistemological gag rules on its practitioners so that they're blinded to substance by form - and the non-expert public is bamboozled into mute acquiescence. Econned, as Yves would say.

    Andrew Baker , April 20, 2017 at 7:46 am

    + 1

    Spring Texan , April 19, 2017 at 2:18 pm

    Yes, I'm baffled that we hear all this about oh jobs are going away becuz robots and maybe UBI and on and on when there are SO MANY UNFILLED JOBS staring us in the face where filling them would be of enormous benefit to all. Are they looking around at ALL?

    Thanks, Cujo349

    Cujo359 , April 19, 2017 at 2:59 pm

    As you can see, I'm baffled, too. UBI might be a good idea, and various forms of technology have certainly eliminated jobs over the years, but when so much work remains to be done, I don't see how you can argue that we've reached an age where most of us are truly unemployable.

    FTM, what is employment? Put most simply, it is one person or entity who has money paying someone to perform some task(s), possibly to a minimum acceptable quality. There are many forms of work we do that no one wants to pay us to do. My work at an amateur theatre falls into that category, as does the work of the people in the food bank/soup kitchen next door. Maybe our concept of what constitutes useful work needs to change, too.

    Cujo359 , April 19, 2017 at 3:06 pm

    Let me revise that to say "most of us who are now unemployed are truly unemployable".

    JEHR , April 19, 2017 at 3:27 pm

    The place to start paying decent wages is for all kinds of housework, daycare and elder care. All are undervalued and underpaid while that latter two are essential for a healthy community. None of these should be consigned to robots as only human contact can do the job well.

    washunate , April 19, 2017 at 3:39 pm

    But the irony of basic income is that's one of the things it does. A huge portion of "housework, daycare, and elder care" is better done informally , outside of the GDP-measured formal economy of employers and jobs and wages and benefits, especially given how crappy the formal jobs tend to be in those sectors. Income supports that lack formal work requirements by definition create more time for people to do things in the informal economy.

    Left in Wisconsin , April 19, 2017 at 7:18 pm

    But wouldn't it be better to pay parents and caregivers for caring? First of all, it's work and deserves to be remunerated like work. Second, keeping care work in the informal economy only "works" if people have other income with which to satisfy their needs and wants. There is no possibility that any basic income grant will provide a single parent with the funds to allow them to work taking care of their children, which is the socially optimal situation in almost all cases.

    craazyman , April 19, 2017 at 6:30 pm

    pretty funny. that's been standard econ cirricuulum at the University of Magonia for, oh, let's see, 1, 2 3 4 5 6 7 8 9. Nine! Nine years!

    Pretty funny. Is this still April 1st? I guess not. Oh well, a day late, a dollar short (no pun intended) is better than a year late and a grand short, or a century late and a million short. There's a pattern there! it goes back to the Testament of Amram, Manuscript B. The Dead Sea Scrolls. That's what we teach in econo 101 during the "money" unit. Money, at the Universtiy of Magonia, is an idea that mediates the boundary wtihin a society between cooperation and conflict.. That's not a theory, it's a reality. Everybody has heard this before in the peanut gallery so I won't reapeat myself.

    They should send a delegation from Harvard to the Universtiy of Magonia for a seminar in money and economics. hahahaha. That's pretty funny even to think about. Believe me. They'd learn a few things but they might get ontological shock and end up like MIT mathematical economist Ed Bucks who spent two months in the New Hampshire woods looking at deer through binoculars in search of a theory of economics that could survive a collision with nature AND be deterministic and mathematically rigorous. He pretty much had a nervous breakdown and ended up back at MIT sucking up grant money like a baby at his mamas tits. Many are called, but few are chosen. LOL

    wilroncanada , April 19, 2017 at 8:06 pm

    Magonia? Isn't that the university that was threatening to move to San Seriffe, because they got a big donation from President Pica?

    Expat , April 19, 2017 at 7:10 pm

    Economics should be transferred to the divinity school. Then it will be untouchable!

    [Apr 19, 2017] Trump folded. The purple revolution against him succeeded. He was unable withstand the pressure of anti-Russian attacks and Trump as a Russian agent smear. Few

    Notable quotes:
    "... One thing worth reiterating: Trump has largely shown himself to be no different than standard Republicans on budget issues, and his core supporters still love him. It's as though they actually care little about economic issues ..."
    Apr 19, 2017 | economistsview.typepad.com
    Sanjait, April 19, 2017 at 08:32 AM
    Bernstein on garbage duty.

    One thing worth reiterating: Trump has largely shown himself to be no different than standard Republicans on budget issues, and his core supporters still love him. It's as though they actually care little about economic issues and just want a guy who acts terribly towards minorities and foreigners.

    jonny bakho -> Sanjait... , April 19, 2017 at 08:57 AM
    The southern rednecks who control the GOP believe in the Plantation Economy. The Plantation owner exploits the slave and white trash labor and then hires the privileged white guys with the money he extorts. White guys get ahead by brown nosing the wealthy plantation owner.

    The alternative economy that is thriving is entrepreneurial and many people find it easy to suck up to a rich white guy than to go on their own. It is a failing economic model but the only one some people know.

    libezkova -> Sanjait... , April 19, 2017 at 10:14 AM
    "his core supporters still love him"

    I am not so sure. Trump folded. The "purple" revolution against him succeeded. He was unable withstand the pressure of anti-Russian attacks and "Trump as a Russian agent" smear. Few people love turncoats.

    Now he is within just sex change operation difference from Hillary Clinton on foreign policy issues. In other words he betrayed anti-war right -- an important part of his base. He also lost paleoconservatives, another less important, but still a sizable part of his former base.

    Out of his domestic promise the only part that still stands is the Trump Wall -- "building the wall on the border with Mexico" project :-)

    Also, on domestic issues he proved to be so incompetent, that I am not sure that any of his supporters are exited about him. His dealing with Obamacare issues were not only disastrously incompetent and also did not correspond to his election promises. And that was noted.

    He promised to "drain the swamp" but instead he became a part of the swamp himself.

    Politically he is Obama II -- a Republican version of Obama: another king of "bait and switch".

    "Agent Orange" now wants to use jingoism to artificially propel hid approval ratings, but his attack on Syrian airbase is not just a war crime. It is much worse. It was a blunder.

    In other words large part of his supporters see that "the king is naked."

    libezkova -> pgl... , April 19, 2017 at 10:24 AM
    Actually analogy with Obama is deeper than the "king of bait and switch" characterization.

    Like Obama before him, he played the role of a "tabula rasa" -- an empty board on which the frustrated Americans could project their desire for the change ("change we can believe in"), but who, in reality, was just another sell-out.

    [Apr 19, 2017] Paul Krugman Gets Retail Wrong: They are Not Very Good Jobs

    Apr 19, 2017 | economistsview.typepad.com
    anne , April 17, 2017 at 05:55 AM
    http://cepr.net/blogs/beat-the-press/paul-krugman-gets-retail-wrong-they-are-not-very-good-jobs

    April 17, 2017

    Paul Krugman Gets Retail Wrong: They are Not Very Good Jobs

    Paul Krugman used his column * this morning to ask why we don't pay as much attention to the loss of jobs in retail as we do to jobs lost in mining and manufacturing. His answer is that in large part the former jobs tend to be more white and male than the latter. While this is true, although African Americans have historically been over-represented in manufacturing, there is another simpler explanation: retail jobs tend to not be very good jobs.

    The basic story is that jobs in mining and manufacturing tend to offer higher pay and are far more likely to come with health care and pension benefits than retail jobs. A worker who loses a job in these sectors is unlikely to find a comparable job elsewhere. In retail, the odds are that a person who loses a job will be able to find one with similar pay and benefits.

    A quick look at average weekly wages ** can make this point. In mining the average weekly wage is $1,450, in manufacturing it is $1,070, by comparison in retail it is just $555. It is worth mentioning that much of this difference is in hours worked, not the hourly pay. There is nothing wrong with working shorter workweeks (in fact, I think it is a very good idea), but for those who need a 40 hour plus workweek to make ends meet, a 30-hour a week job will not fit the bill.

    This difference in job quality is apparent in the difference in separation rates by industry. (This is the percentage of workers who lose or leave their job every month.) It was 2.4 percent for the most recent month in manufacturing. By comparison, it was 4.7 percent in retail, almost twice as high. (It was 5.2 percent in mining and logging. My guess is that this is driven by logging, but I will leave that one for folks who know the industry better.)

    Anyhow, it shouldn't be a mystery that we tend to be more concerned about the loss of good jobs than the loss of jobs that are not very good. If we want to ask a deeper question, as to why retail jobs are not very good, then the demographics almost certainly play a big role.

    Since only a small segment of the workforce is going to be employed in manufacturing regardless of what we do on trade (even the Baker dream policy will add at most 2 million jobs), we should be focused on making retail and other service sector jobs good jobs. The full agenda for making this transformation is a long one (higher minimum wages and unions would be a big part of the picture, along with universal health care insurance and a national pension system), but there is one immediate item on the agenda.

    All right minded people should be yelling about the Federal Reserve Board's interest rate hikes. The point of these hikes is to slow the economy and reduce the rate of job creation. The Fed's concern is that the labor market is getting too tight. In a tighter labor market workers, especially those at the bottom of the pecking order, are able to get larger wage increases. The Fed is ostensibly worried that this can lead to higher inflation, which can get us to a wage price spiral like we saw in the 70s.

    As I and others have argued, *** there is little basis for thinking that we are anywhere close to a 1970s type inflation, with inflation consistently running below the Fed's 2.0 percent target, (which many of us think is too low anyhow). I'd love to see Krugman pushing the cause of full employment here. We should call out racism and sexism where we see it, but this is a case where there is a concrete policy that can do something to address it. Come on Paul, we need your voice.

    * https://www.nytimes.com/2017/04/17/opinion/why-dont-all-jobs-matter.html

    ** https://www.bls.gov/news.release/empsit.t19.htm

    *** http://cepr.net/blogs/beat-the-press/overall-and-core-cpi-fall-in-march

    -- Dean Baker

    Fred C. Dobbs -> anne... , April 17, 2017 at 06:17 AM
    PK: Consider what has happened to department stores. Even as Mr. Trump was boasting about saving a few hundred jobs in manufacturing here and there, Macy's announced plans to close 68 stores and lay off 10,000 workers. Sears, another iconic institution, has expressed "substantial doubt" about its ability to stay in business.

    Overall, department stores employ a third fewer people now than they did in 2001. That's half a million traditional jobs gone - about eighteen times as many jobs as were lost in coal mining over the same period.

    And retailing isn't the only service industry that has been hit hard by changing technology. Another prime example is newspaper publishing, where employment has declined by 270,000, almost two-thirds of the work force, since 2000. ...

    (To those that had them, they were probably
    pretty decent jobs, albeit much less 'gritty'
    than mining or manufacturing.)

    BenIsNotYoda -> anne... , April 17, 2017 at 06:42 AM
    Dean is correct. Krugman just wants to play the racism card or tell people those who wish their communities were gutted that they are stupid.
    JohnH -> BenIsNotYoda... , April 17, 2017 at 06:48 AM
    Elite experts are totally flummoxed...how can they pontificate solutions when they are clueless?

    Roger Cohen had a very long piece about France and it discontents in the Times Sunday Review yesterday. He could not make heads or tails of the problem. Not worth the read.
    https://www.nytimes.com/2017/04/14/opinion/sunday/france-in-the-end-of-days.html?rref=collection%2Fcolumn%2Froger-cohen&action=click&contentCollection=opinion&region=stream&module=stream_unit&version=latest&contentPlacement=2&pgtype=collection&_r=0

    And experts wonder why nobody listens to them any more? Priceless!!!

    BenIsNotYoda -> JohnH... , April 17, 2017 at 07:34 AM
    clueless experts/academics. well said.
    paine -> anne... , April 17, 2017 at 08:27 AM
    Exactly dean
    Tom aka Rusty -> anne... , April 17, 2017 at 07:39 AM
    Krugman is an arrogant elitist who thinks people who disagree with him tend to be ignorant yahoos.

    Sort of a Larry Summers with a little better manners.

    anne -> Tom aka Rusty... , April 17, 2017 at 08:18 AM
    Krugman is an arrogant elitist who thinks people who disagree with him tend to be ignorant yahoos.

    [ This is a harsh but fair criticism, and even the apology of Paul Krugman was conditional and showed no thought to the other workers insulted. ]

    cm -> Tom aka Rusty... , April 17, 2017 at 08:11 AM
    There is a lot of elitism to go around. People will be much more reluctant to express publicly the same as in private (or pseudonymously on the internet?). But looking down on other people and their work is pretty widespread (and in either case there is a lot of assumption about the nature of the work and the personal attributes of the people doing it - usually of a derogatory type in both cases).

    I find it plausible that Krugman was referring those widespread stereotypes about job categories that (traditionally?) have not required a college degree, or have been relatively at the low end of the esteem scale in a given industry (e.g. in "tech" and manufacturing, QA/testing related work).

    It must be possible to comment on such stereotypes, but there is of course always the risk of being thought to hold them oneself, or indeed being complicit in perpetuating them.

    As a thought experiment, I suggest reviewing what you yourself think about occupations not held by yourself, good friends, and family members and acquaintainces you like/respect (these qualifications are deliberate). For example, you seem to think not very highly of maids.

    Of course, being an RN requires significantly more training than being a maid, and not just once when you start in your career. But at some level of abstraction, anybody who does work where their autonomy is quite limited (i.e. they are not setting objectives at any level of the organization) is "just a worker". That's the very stereotype we are discussing, isn't it?

    anne -> cm... , April 17, 2017 at 08:26 AM
    Nicely explained.
    paine -> anne... , April 17, 2017 at 08:40 AM
    Yes
    anne -> Tom aka Rusty... , April 17, 2017 at 08:24 AM
    Krugman thinks nurses are the equivalent of maids...

    [ The problem is that Paul Krugman dismissed the work of nurses and maids and gardeners as "menial." I find no evidence that Krugman understands that even after conditionally apologizing to nurses. ]

    paine -> anne... , April 17, 2017 at 08:42 AM
    Even if there are millions of mcjobs
    out there
    none are filled by mcpeople

    [Apr 17, 2017] Microsoft says users are protected from alleged NSA malware

    Notable quotes:
    "... In a blog post , Microsoft Corp. security manager Phillip Misner said that the software giant had already built defenses against nine of the 12 tools disclosed by TheShadowBrokers, a mysterious group that has repeatedly published NSA code . The three others affected old, unsupported products. ..."
    "... "Most of the exploits are already patched," Misner said. ..."
    "... The post knocked back warnings from some researchers that the digital espionage toolkit made public by TheShadowBrokers took advantage of undisclosed vulnerabilities in Microsoft's code. That would have been a potentially damaging development because such tools could swiftly be repurposed to strike across the company's massive customer base. ..."
    Apr 17, 2017 | economistsview.typepad.com
    im1dc, April 16, 2017 at 09:52 AM
    Good to Know & Need to Know Data Security Information

    "Microsoft says users are protected from alleged NSA malware"

    http://abcnews.go.com/Technology/wireStory/microsoft-users-protected-alleged-nsa-malware-46815251

    "Microsoft says users are protected from alleged NSA malware"

    By Raphael Satter, AP Cybersecurity writer...PARIS...Apr 15, 2017

    "Up-to-date Microsoft customers are safe from the purported National Security Agency spying tools dumped online, the software company said Saturday, tamping down fears that the digital arsenal was poised to wreak havoc across the internet.

    In a blog post , Microsoft Corp. security manager Phillip Misner said that the software giant had already built defenses against nine of the 12 tools disclosed by TheShadowBrokers, a mysterious group that has repeatedly published NSA code . The three others affected old, unsupported products.

    "Most of the exploits are already patched," Misner said.

    The post knocked back warnings from some researchers that the digital espionage toolkit made public by TheShadowBrokers took advantage of undisclosed vulnerabilities in Microsoft's code. That would have been a potentially damaging development because such tools could swiftly be repurposed to strike across the company's massive customer base.

    Those fears appear to have been prompted by experts using even slightly out-of-date versions of Windows in their labs. One of Microsoft's fixes, also called a patch, was only released last month .

    "I missed the patch," said British security architect Kevin Beaumont, jokingly adding, "I'm thinking about going to live in the woods now."

    Beaumont wasn't alone. Matthew Hickey, of cybersecurity firm Hacker House, also ran the code against earlier versions of Windows on Friday. But he noted that many organizations put patches off, meaning "many servers will still be affected by these flaws."

    Everyone involved recommended keeping up with software updates.

    "We encourage customers to ensure their computers are up-to-date," Misner said."

    ---

    "Online:

    Raphael Satter is reachable on: http://raphaelsatter.com"

    [Apr 17, 2017] In teams, an individuals marginal product is beyond his control

    Notable quotes:
    "... Secondly, in football there's a high ratio of noise to signal: performances are due in part to luck. This is true not just in football. ..."
    "... Thirdly, imagine a top goalkeeper were playing for a better side than Sunderland. His performances would then make a difference to his team's points: a couple of great saves per game would convert losses to draws or wins, rather than 4-0 defeats into 2-0 ones. His marginal product would be higher. ..."
    "... This tells us that, in teams, an individual's marginal product is beyond his control: if Pickford had better colleagues, his marginal product would be higher. A similar problem arises in many large firms. As the late Herbert Scarf wrote: ..."
    Apr 17, 2017 | economistsview.typepad.com
    Peter K. , April 16, 2017 at 08:52 AM
    For fans of football/soccer and leftist economics.

    http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2017/04/against-marginal-product.html

    April 16, 2017

    AGAINST MARGINAL PRODUCT
    by Chris Dillow

    David Moyes says Jordan Pickford has been a better player than Dele Alli this season. This set me wondering about marginal productivity theory.

    To see my point, think about how we'd test Moyes' claim. We could look at what the two teams did in games which Alli and Pickford missed. But there are too few of these to draw robust inferences, and doing so would be impossible for a player who hadn't missed any games*. Instead, we could compare how Sunderland would have done if Pickford were replaced with a next-best alternative to how S***s would have done with a next-best replacement for Alli. In effect, we're asking: what are their marginal products?

    I suspect that Pickford's marginal product consists in converting heavy defeats into narrower ones: this still leaves Sunderland relegated, only with a lesser goal difference. Alli, by contrast, has converted draws or losses into wins. That's a bigger difference.

    This, I think, highlights three problems with marginal productivity analysis.

    The first is that marginal product is the result of a hypothetical question. For example, in considering my own marginal product, I ask: how would the IC do without me? That's a hypothetical to which we cannot give a precise answer. This is true of much of neoclassical economics. As Noah says:

    Demand curves aren't actually directly observable. They're hypotheticals - "If the price were X, how much would you buy?"

    In this, he's echoing Sraffa:

    The marginal approach requires attention to be focused on change, for without change either in the scale of an industry or in the 'proportions of the factors of production' there can be neither marginal product nor marginal cost. In a system in which, day after day, production continued unchanged in those respects, the marginal product of a factor (or alternatively the marginal cost of a product) would not merely be hard to find - it just would not be there to be found. (Production of Commodities by Means of Commodities, pv)

    Secondly, in football there's a high ratio of noise to signal: performances are due in part to luck. This is true not just in football.

    Consider two men of equal ability who become CFOs of start-ups. One start-up becomes massive, the other struggles. The man who joined the former will be many times richer than the latter. But that's more to do with fortune than with human capital or marginal product: firms don't usually grow big because they've got a slightly better CFO than the firm down the road. Anyone who's mind isn't befuddled by Randian nonsense will know that our lives and incomes are the product of luck. But we know that people are terrible at distinguishing luck from skill – in part because they suffer from the outcome bias.

    Thirdly, imagine a top goalkeeper were playing for a better side than Sunderland. His performances would then make a difference to his team's points: a couple of great saves per game would convert losses to draws or wins, rather than 4-0 defeats into 2-0 ones. His marginal product would be higher.

    This tells us that, in teams, an individual's marginal product is beyond his control: if Pickford had better colleagues, his marginal product would be higher. A similar problem arises in many large firms. As the late Herbert Scarf wrote:

    If economists are to study economies of scale, and the division of labor in the large firm, the first step is to take our trusty derivatives, pack them up carefully in mothballs and put them away respectfully; they have served us well for many a year. But derivatives are prices, and in the presence of indivisibilities in production, prices simply don't do the jobs that they were meant to do. They do not detect optimality; they aren't useful in comparative statics; and they tell us very little about the organized complexity of the large firm.

    For me, flaws such as these mean that marginal product theory doesn't make much sense as an explanation of wage levels. We should abandon it as a mental model in favour of bargaining (pdf) models. In these, matches between workers and jobs lead to surpluses, and the surplus is divided according to the balance of power.

    In such models, human capital raises wages insofar as it generates surplus and gives its holders outside options which enhance their bargaining power. But human capital and "marginal product" aren't the whole story. All the things that affect bargaining power, such as technology and unions, also matter. Such models are consistent with the theory that inequality is due to the rise of superstar firms (pdf). They're also consistent with the fact that minimum wages don't destroy many jobs. And they help explain rising CEO pay better than marginal product theory.

    What I'm appealing for here is for economists to abandon unscientific just-so stories and to think instead about the real world. In this world, wages are determined not by unobservable entities such as marginal product but by – among other things – power (pdf).

    * S***s did well during Harry Kane's injury. Few would say this is evidence that Kane is a poor player, and not should they.

    Peter K. -> Peter K.... , April 16, 2017 at 08:56 AM
    See Denis Drew. I guess Keynes was in favor of trade unions but Keynesian economists never discuss them. Neither do bloviating, blowhards like EMichael.

    PGL used to brag about how Hillary supported striking Verizon workers during the election but that was just a photo-op, like how all of the building trade unions hob-nobbed with Trump. It's BS. Unions have collapsed under the watch of New Democrats. They've done nothing.

    In his final speech Obama said we have to beware of automatization. There's no evidence of it. It's an excuse. No, the Democrats have sold us out. So what that they raised taxes on the rich a little. The rich have never had is so good.

    Peter K. -> Peter K.... , April 16, 2017 at 09:01 AM
    "The first is that marginal product is the result of a hypothetical question. For example, in considering my own marginal product, I ask: how would the IC do without me? That's a hypothetical to which we cannot give a precise answer. This is true of much of neoclassical economics. As Noah says:

    Demand curves aren't actually directly observable. They're hypotheticals - "If the price were X, how much would you buy?"

    In this, he's echoing Sraffa:

    The marginal approach requires attention to be focused on change, for without change either in the scale of an industry or in the 'proportions of the factors of production' there can be neither marginal product nor marginal cost. In a system in which, day after day, production continued unchanged in those respects, the marginal product of a factor (or alternatively the marginal cost of a product) would not merely be hard to find - it just would not be there to be found. (Production of Commodities by Means of Commodities, pv)"

    Is this related to the price of airline tickets?

    http://www.interfluidity.com/v2/6846.html

    Steve Randy Waldman

    ...

    It's a cliché that the government builds "bridges to nowhere" that the private sector never would build. That's true. And it's a credit to the public sector. Bridges to nowhere are what turn nowheres into somewheres. We need many, many more bridges to nowhere.

    Finally, I want to express my annoyance at a trope in punditry about air travel that is as common as it is mistaken. Here is Kevin Drum:

    So flying sucks because we, the customers, have made it clear that we don't care. We love to gripe, but we just flatly aren't willing to pay more for a better experience. Certain individuals (i.e., the 10 percent of the population over six feet tall) are willing to pay for legroom. Some are willing to pay more for extra baggage. Some are willing to pay more for a window seat. But most of us aren't. If the ticket price on We Care Airlines is $10 more, we click the link for Suck It Up Airlines. We did the same thing before the web too. As usual, the fault lies not in the stars, but in ourselves.

    Here is Megan McArdle, in a piece titled (by somebody) "Hate Flying? It's Your Fault":

    Ultimately, the reason airlines cram us into tiny seats and upcharge for everything is that we're out there on Expedia and Kayak, shopping on exactly one dimension: the price of the flight. To win business, airlines have to deliver the absolute lowest fare. And the way to do that is . . . to cram us into tiny seats and upcharge for everything. If American consumers were willing to pay more for a better experience, they'd deliver it. We're not, and they don't.

    cm -> Peter K.... , April 16, 2017 at 06:35 PM
    So it is my fault that for my travel needs, I have very few choices of carriers, if I have a strong preference for few stopovers? As soon as I accept 1-2 additional stops than minimally necessary (and the corresponding doubling or more of travel time, nevermind increased risk of missing flights, delays, etc.), I can find more connections.

    My problem, if I pay for the trip, is flight availability. It is usually not an option to pay even twice as much for flying when or how I want or need to.

    I know absolutely nothing about the economics of air travel (any experts here?), but how about airport gates and airport passenger/flight processing capacity as bottlenecks, and long-distance flights favoring if not requiring larger aircraft (which cannot use every airport for regular flights). With larger aircraft you have the problem of selling all seats on all flights, which would seem to favor multi-hop trips via major routes, with all the multiple de/boardings, security checks, and as we have recently seen increased chances of "re-accommodation".

    cm -> cm... , April 16, 2017 at 06:50 PM
    When I travel for business, my choices are further restricted by "appropriate" departure and arrival times. Then it also becomes a multivariate problem - arriving one day earlier leads to one more hotel stay, car rental day, etc.

    In my current situation I could "save" the company around a hundred bucks by using a cheaper carrier that has a direct flight from where I am to where I need to go, and for returning, there is a multi-hop flight that takes ~3 hours longer to get home than the hundred bucks more expensive competition (arriving not in the late evening but after midnight), because the first leg of the flight is in the opposite direction of where I need to go. No thanks, if I can avoid it! I take the more "expensive" carrier which has direct flights in both directions.

    cm -> cm... , April 16, 2017 at 06:59 PM
    It seems to me it may be a similar problem as the debate over public transit experience vs. driving. In public transit, unless your travel endpoints are close to a single route, it is usually the line changes and distance between end stations and the actual destinations that make up half the total time or more.

    The problem can be "addressed" by more N-to-N routes, but then the transit agency has a problem with getting enough ridership on every route (and where to store all the transit vessels outside of peak traffic hours, and fleet operation/maintenance overheads, etc.).

    reason -> cm... , April 17, 2017 at 08:27 AM
    Which is where driverless cars (as taxi alternative) could come in. That is the real potential revolution.

    [Apr 17, 2017] Washington Post Gets It Wrong: An $800 Billion Stimulus Following the Collapse of the Housing Bubble Was Not Big

    Notable quotes:
    "... In fact, it wasn't even $800 billion, but the Washington Post has never been very good with numbers. The issue came up in a column by Paul Kane telling Republicans that they don't have to just focus on really big items. ..."
    "... The stimulus was actually closer to $700 billion since around $70 billion of the "stimulus" involved extensions of tax breaks that would have been extended in almost any circumstances. This was actually a very small response to the collapse of a housing bubble that cost the economy close to $1,200 billion dollars in annual demand (6-7 percent of GDP). ..."
    Apr 17, 2017 | economistsview.typepad.com
    anne , April 16, 2017 at 09:11 AM
    http://cepr.net/blogs/beat-the-press/wapo-gets-it-wrong-an-800-billion-stimulus-following-the-collapse-of-the-housing-bubble-was-not-big

    April 16, 2017

    Washington Post Gets It Wrong: An $800 Billion Stimulus Following the Collapse of the Housing Bubble Was Not "Big"

    In fact, it wasn't even $800 billion, but the Washington Post has never been very good with numbers. The issue came up in a column by Paul Kane telling Republicans that they don't have to just focus on really big items. The second paragraph refers to the Democrat's big agenda after President Obama took office:

    "Everyone knows the big agenda they pursued - an $800 billion economic stimulus, a sweeping health-care law and an overhaul of Wall Street regulations."

    The stimulus was actually closer to $700 billion since around $70 billion of the "stimulus" involved extensions of tax breaks that would have been extended in almost any circumstances. This was actually a very small response to the collapse of a housing bubble that cost the economy close to $1,200 billion dollars in annual demand (6-7 percent of GDP).

    The Obama administration tried to counteract this huge loss of demand with a stimulus that was roughly 2 percent of GDP for two years and then trailed off to almost nothing. This was way too small as some of us argued at the time. **

    The country has paid an enormous price for this inadequate stimulus with the economy now more than 10 percent below the level that had been projected by the Congressional Budget Office for 2017 before the crash. This gap is close to $2 trillion a year or $6,000 for every person in the country. This is known as the "austerity tax," the cost the country pays because folks like Peter Peterson and the Washington Post (both the opinion and news section) endlessly yelled about debt and deficits at a time when they clearly we not a problem.

    It is also worth noting that the overhaul of Wall Street was not especially ambitious. It left the big banks largely in tack and did not involve prosecuting any Wall Street executives for crimes they may have committed during the bubble years, such as knowingly passing on fraudulent mortgages in mortgage backed securities.

    * https://www.washingtonpost.com/powerpost/republicans-may-be-making-a-mistake-by-swinging-only-for-the-fences/2017/04/15/b82da176-21e8-11e7-a0a7-8b2a45e3dc84_story.html

    ** http://cepr.net/documents/publications/housing-crash-recession-2009-03.pdf

    -- Dean Baker

    [Apr 17, 2017] If you put the two trends together-increased individual income inequality and increased corporate savings-what were witnessing then is increasing private control over the social surplus

    Notable quotes:
    "... Wealthy individuals and large corporations are able to capture and decide on their own what to do with the surplus, with all the social ramifications associated with their decisions to invest where and when they want-or not to invest, and thus to accumulate cash, repay debt, and repurchase their own equity shares. ..."
    "... Any proposals to decrease tax rates for wealthy individuals and corporations will only increase that private control. ..."
    Apr 17, 2017 | economistsview.typepad.com
    RGC , April 16, 2017 at 07:23 AM
    Why is it anyone would want to save such an economic system?

    April 11, 2017

    from David Ruccio

    "If you put the two trends together-increased individual income inequality and increased corporate savings -- what we're witnessing then is increasing private control over the social surplus.

    Wealthy individuals and large corporations are able to capture and decide on their own what to do with the surplus, with all the social ramifications associated with their decisions to invest where and when they want-or not to invest, and thus to accumulate cash, repay debt, and repurchase their own equity shares.

    Any proposals to decrease tax rates for wealthy individuals and corporations will only increase that private control.

    Why is it anyone would want to save such an economic system?"

    https://rwer.wordpress.com/2017/04/11/why-is-it-anyone-would-want-to-save-such-an-economic-system/#more-28993

    [ Tie that to the private banking system ]

    anne -> RGC... , April 16, 2017 at 07:40 AM
    Possibly I do not understand the matter, but I can find no evidence that corporate "saving" as a share of GDP in the United States is increasing. Actually, the reverse.
    RGC -> anne... , April 16, 2017 at 07:50 AM
    http://voxeu.org/article/global-corporate-saving-glut
    anne -> RGC... , April 16, 2017 at 08:00 AM
    https://fred.stlouisfed.org/graph/?g=dnZ6

    January 30, 2017

    Net Corporate Saving * as a share of Gross Domestic Product, 1948-2016

    * Undistributed profits

    https://fred.stlouisfed.org/graph/?g=dnYR

    January 30, 2017

    Net Corporate Saving * as a share of Gross Domestic Product, 1980-2016

    * Undistributed profits

    anne -> anne... , April 16, 2017 at 06:12 PM
    Again, I was and am right.

    I can find no evidence that corporate "saving" as a share of GDP in the United States is increasing. Actually, the reverse:

    https://fred.stlouisfed.org/graph/?g=dnZ6

    anne -> RGC... , April 16, 2017 at 08:03 AM
    http://voxeu.org/article/global-corporate-saving-glut

    April 5, 2017

    The global corporate saving glut: Long-term evidence

    By Peter Chen, Loukas Karabarbounis, and Brent Neiman

    Corporate saving has increased relative to GDP and corporate investment across the world over the past three decades, reflecting how the global decline in the labour has led to increased corporate profits. This column characterises these trends using national income accounts and firm-level data, and relates them to firm characteristics and the accumulation of financial assets. In response to declines in the components of the cost of capital, a model with capital market imperfections generates an increase in corporate saving similar to that found in the data.

    [ I am grateful for the reference, but I had already read the paper carefully and found no reason to agree with the assertion that there is long term evidence of a corporate saving glut. ]

    RGC -> anne... , April 16, 2017 at 02:55 PM

    2.2 National Accounts Structure and Identities

    National accounts data include sector accounts that divide the economy into the corporate sector, the government sector, and the household and non-profit sector.

    For most economies, the corporate sector can be further disaggregated into financial and non-financial corporations and the household sector can be distinguished from the non-profit sector.

    National accounts data also include industry accounts that divide activity according to the International Standard Industrial
    Classification, Rev. 4 (SIC).

    A set of accounting identities that hold in the aggregate as well as at the sector or industry
    level serve as the backbone for the national accounts.

    In these accounts, the value of final
    production (i.e. production net of intermediate goods) is called gross value added (GVA). When
    aggregated to the economy level, GVA equals GDP less net taxes on products. GVA is detailed
    in the generation of income account and equals the sum of income paid to capital, labor, and
    taxes:


    GVA = Gross Operating Surplus (GOS) + Compensation to Labor
    + Net Taxes on Production.


    GOS captures the income available to corporations and other producing entities after paying for labor services and after subtracting taxes (and adding subsidies) associated with production.


    The distribution of income account splits GOS into gross saving, dividends, and other payments to capital such as taxes on profits, interest payments, reinvested foreign earnings, and other transfers:


    GOS = Gross Saving (GS) + Net Dividends | {z } Accounting Profits
    + Taxes on Profits + Interest
    − Reinvested Earnings on Foreign Direct Investment + Other Transfers.


    Net dividends equal dividends paid less dividends received from subsidiaries or partially-owned entities. Other transfers include social contributions and rental payments on land.

    In our analyses, we define (accounting) profits as the sum of gross saving and net dividends.


    The capital account connects the flow of saving to the flow of investment as follows:

    GS = Net Lending + Gross Fixed Capital Formation + Changes in Inventories + Changes in Other Non-Financial Produced Assets.

    The net lending position is defined as the excess of gross saving over investment spending.

    https://minneapolisfed.org/research/wp/wp736.pdf

    RGC -> RGC... , April 16, 2017 at 03:22 PM
    GOS = Gross Saving (GS) + Net Dividends + Taxes on Profits + Interest − Reinvested Earnings on Foreign Direct Investment + Other Transfers.
    reason -> RGC... , April 16, 2017 at 07:51 AM
    "Wealthy individuals and large corporations are able to capture and decide on their own what to do with the surplus, with all the social ramifications associated with their decisions to invest where and when they want-or not to invest, and thus to accumulate cash, repay debt, and repurchase their own equity shares."

    Or in the case of say Bill Gates in deciding which causes get assistance and which not rather than people voting on it (not that I think Bill Gates is necessarily doing harm - but why should he get to decide?).

    RC AKA Darryl, Ron -> reason... , April 16, 2017 at 09:33 AM
    $democracy
    RGC -> reason... , April 16, 2017 at 03:25 PM
    Right. And private banks get to do it routinely.

    [Apr 17, 2017] 04/15/2017 at 9:35 am

    Notable quotes:
    "... Hopefully everyone involved in defending Bakken production upswings will not disappear into the woodwork next month, or the month after, when production drops again. ..."
    "... Of course marginal shale oil wells that are at or below economic limits get shut in during winter, or get shut in and stay shut in because workover costs to restore production simply do not make economic sense. ..."
    "... Re-frac's cost more money. At $20.00 per barrel net back prices a $2.5-3.0M re-frac requires ANOTHER 137,000 BO to payout. Productivity should never be confused with profitability (or lack thereof); in the end the latter always wins out. ..."
    "... A little more time and realized production data will prove that downsizing actually reduced UR per incremental well and was yet another economic disaster in a string of economic disasters for the shale oil industry, the biggest being oversupply and an ensuing 70% drop in product prices. ..."
    Apr 17, 2017 | peakoilbarrel.com
    Mike 04/15/2017 at 9:35 am
    Hopefully everyone involved in defending Bakken production upswings will not disappear into the woodwork next month, or the month after, when production drops again.

    Of course marginal shale oil wells that are at or below economic limits get shut in during winter, or get shut in and stay shut in because workover costs to restore production simply do not make economic sense. There are gazillions of those kinds of well in all three of America's shale oil basins. There need not be a flush 'uptick' of production when those wells come back on line (that's investor presentation dribble), in fact it can be just the opposite because of bubble point/higher water saturations.

    Re-frac's cost more money. At $20.00 per barrel net back prices a $2.5-3.0M re-frac requires ANOTHER 137,000 BO to payout. Productivity should never be confused with profitability (or lack thereof); in the end the latter always wins out.

    And this SPE paper pretty much shoots the hell out of all that "halo" bunk: https://www.spe.org/en/jpt/jpt-article-detail/?art=2819 .

    Imagine a situation where you are drilling these $6.5M wells so close together (Marathon at 330 feet, toe to toe) that you have to "protect" them by shutting them in for prolonged periods of time while you frac a new well 3000 feet away. That makes a lot of sense, doesn't it?

    A little more time and realized production data will prove that downsizing actually reduced UR per incremental well and was yet another economic disaster in a string of economic disasters for the shale oil industry, the biggest being oversupply and an ensuing 70% drop in product prices.

    People do really stupid things with OPM.

    George Kaplan 04/14/2017 at 10:31 am
    Dennis,

    ... ... ...

    The actual reserve that is being produced in the Bakken was "discovered, undeveloped and developed" in 2013, and not covered by the USGS. It's difficult to find break out information for individual areas in most companies reports but I don't think there was more than about 5 Gb developed and undeveloped reserves in 2013, and it might have declined a bit since then, even including actual production.

    [Apr 17, 2017] Bakken average well profile from June 2015 to Dec 2017

    Apr 17, 2017 | peakoilbarrel.com
    Dennis Coyne, 04/14/2017 at 12:42 pm
    Hi George,

    When I give the cumulative output of the scenarios, it is from the start of production in the Bakken/TF in ND, about 1.6 Gb had been produced at the end of 2015 and Bakken Three Forks proved reserves were about 5 Gb at the end of 2015, that gets us to 6.6 Gb, typically there are probable reserves as well, though we would have to guess at how much. Also as oil prices increase in the future 2P reserves are likely to increase.

    Note that the F95 USGS TRR estimate for the ND Bakken Three Forks is about 7.2 Gb, if we assume probable reserves at the end of 2012 were zero (in my view not a very good assumption). What do you think is a reasonable estimate for probable reserves if proved reserves are 5 Gb? Your guess would be better than mine. For UK North Sea a typical number would be 3 Gb of probable for 5 Gb of proved (all UK North Sea reserves). For the Bakken it would likely be lower, maybe 1 Gb of probable for 5 Gb of proved reserves might be a reasonable guess.

    Bakken average well profile from June 2015 to Dec 2017 shown below (after that the EUR decreases).

    Dennis Coyne says: 04/14/2017 at 4:56 pm
    Hi George,

    That is the study I use.

    https://pubs.usgs.gov/fs/2013/3013/

    If you pull up data at shaleprofile.com
    and look at wells from 2014 to 2017, there are 1388 Three Forks wells that have been producing for 20 months (cumulative is 118kb) and there are 1689 Middle Bakken wells (cumulative is 143kb@20 months). So lately (past 3 years) a fairly large proportion of wells have been Three Forks wells (about 45%). After 36 months the difference in cumulative output is about 30 kb (TF is lower at 155kb@36 mo, Bakken is 185 kb at 36 months).

    George Kaplan says: 04/15/2017 at 2:52 am
    I think you are mixing proved reserves from EIA with the undiscovered numbers from USGS. The proved reserves might have some basis and 5 to 6 might be right, I haven't sen any kind of detail of how they are arrived at. But that is not the same oil as in the USGS report – it was mostly already known about in 2012 when the E&Ps stopped drilling wildcats. Since then they have been converting probable to proven, and in some cases writing off some of the reserves. If you want to include the USGS data then it should be added to whatever there was as 2P in 2012 as a final recovery.

    I don't know where there 1300+ Three Forks wells come from – the ND production wells for January shows only 1 well in the Three Forks and 45 Three Forks / Bakken. There are other pool's like Sanish and Madison. Madison is a big producer so maybe that is counted as Three Forks in USGS. The ND DMR overall production up to 2015 gives 10 million for Three Forks / Bakken, 1600 for Bakken, 950 for Madison and < 1 for Three Forks alone.

    The 220,000 EUR I quoted was for the Three Forks alone from USGS, not Bakken.

    [Apr 17, 2017] Changes in technology and industry practices, combined with an increased understanding of the regional geologic framework, can have a significant effect on what resources become technically recoverable

    Apr 17, 2017 | peakoilbarrel.com
    texas tea says: 04/14/2017 at 1:53 pm
    https://www.oilandgas360.com/energy-lifetime-usgs-bumps-natgas-estimate-70-tcf-304-tcf-bossier-haynesville/

    The money lines which can not be more accurate as it relates to those on this forum who take 1 or 2 data points and make industry wide conclusions 😜 are:

    "Changes in technology and industry practices, combined with an increased understanding of the regional geologic framework, can have a significant effect on what resources become technically recoverable. "

    "It's amazing what a little more knowledge can yield," said USGS scientist Stan Paxton, lead author of the assessment."

    Boomer II says: 04/14/2017 at 2:44 pm
    Which means gas prices will stay low, further killing coal.

    And it may also mean more support for the Paris Accord so that gas producers will see pressure for countries to switch from coal to gas. Gas producers will have something to gain if coal burning is phased out.

    Boomer II says: 04/14/2017 at 8:10 pm
    It also occurred to me that if natural gas prices stay low, that should keep electricity prices low, which should help EVs. I've already seen my local utility promoting the Nissan Leaf.

    If electric utilities can move into transportation that gives them a very big new market. It also expands their influence.

    [Apr 17, 2017] China crude oil imports increased to a record 9.21mb/day in March 2017 versus 8.32mb/day in February 2017

    Apr 17, 2017 | peakoilbarrel.com
    Energy News says: 04/15/2017 at 10:35 am
    China crude oil imports increased to a record 9.21mb/day in March 2017 versus 8.32mb/day in February 2017 (7.33 barrels per ton conversion) – Chinese customs data. I guess China is still filling it's SPR.

    Before I had read this I had been wondering why news articles were saying that world oil inventories had decreased a little. Inventories often build into April. Also news agencies estimates are still saying that OPEC oil exports are holding steady and have not decreased in line with their production cuts, I guess that they have been exporting from their inventories.

    inventory declines, news clips

    Reuters Apr 11, 2017 – Nordic bank SEB said global oil inventories in weekly data have dropped by 42 million barrels in the last four weeks.
    http://uk.reuters.com/article/uk-oil-opec-storage-idUKKBN17D1NH

    Bloomberg 2017-04-04 – Since mid-February, between 10 million and 20 million barrels have left the Caribbean
    https://www.bloomberg.com/news/articles/2017-04-03/oil-traders-said-to-drain-caribbean-hoards-as-opec-impact-hits

    Clipper Data Apr 6, 2017 – This week we have seen Iranian barrels drop to 5 million barrels, while barrels offshore of United Arab Emirates have halved in the last week, dropping to just under 10 million barrels.
    http://blog.clipperdata.com/floating-storage-holding-up-despite-iran-drop

    [Apr 17, 2017] The two party system is THE PROBLEM.

    Notable quotes:
    "... A big chunk of Trump's voters voted for him in spite of their dislike. ..."
    "... European neoliberalism in many ways created the conditions that the far right has recently exploited to convince people that their problems are caused by immigrants. Does what's going on in Finland with the decline in the far-right parties and the increasing success of left parties point to a way out throughout Europe (and maybe here as well)? ..."
    "... The big difference is that in the US the "R&D" are so dominant that in combination with how the election system is structured, they are basically the only two national parties. The option of jumping between "significant fringe" parties that influence policy through coalition forming simply doesn't exist. ..."
    "... US presidential, senatorial, and congressional candidates basically run not with a platform, but with a party. This is also how Sanders got outmaneuvered - he couldn't run as a non-Democrat. ..."
    Apr 17, 2017 | economistsview.typepad.com
    EMichael, April 16, 2017 at 07:55 AM
    "Liberals now looking to commune with the Trump base should check out the conscientious effort to do exactly that by the Berkeley sociologist Arlie Russell Hochschild. As we learn in her election-year best seller, Strangers in Their Own Land: Anger and Mourning on the American Right, she poured her compassion, her anthropological sensibility, and five years of her life into "a journey to the heart of the American right." Determined to burst out of her own "political bubble," Hochschild uprooted herself to the red enclave of Lake Charles, Louisiana, where, as she reports, there are no color-coded recycling bins or gluten-free restaurant entrées. There she befriended and chronicled tea-party members who would all end up voting for Trump. Hochschild liked the people she met, who in turn reciprocated with a "teasing, good-hearted acceptance of a stranger from Berkeley." And lest liberal readers fear that she was making nice with bigots in the thrall of their notorious neighbor David Duke, she offers reassurances that her tea-partyers "were generally silent about blacks." (Around her, anyway.)

    Hochschild's mission was inspired by Thomas Frank's What's the Matter With Kansas? She wanted "to scale the empathy wall" and "unlock the door to the Great Paradox" of why working-class voters cast ballots for politicians actively opposed to their interests. Louisiana is America's ground zero for industrial pollution and toxic waste; the stretch of oil and petrochemical plants along the Mississippi between New Orleans and Baton Rouge is not known as "cancer alley" for nothing. Nonetheless, the kindly natives befriended by Hochschild not only turned out for Trump but have consistently voted for local politicians like Steve Scalise (No. 3 in Paul Ryan's current House leadership), former senator David Vitter, and former governor Bobby Jindal, who rewarded poison-spewing corporations with tax breaks and deregulation even as Louisiana's starved public institutions struggled to elevate the health and education of a populace that ranks near the bottom in both among the 50 states. Hochschild's newfound friends, some of them in dire health, have no explanation for this paradox, only lame, don't–wanna–rock–Big Oil's–tanker excuses. Similarly unpersuasive is their rationale for hating the federal government, given that it foots the bill for 44 percent of their state's budget. Everyone who takes these handouts is a freeloader except them, it seems; the government should stop favoring those other moochers (none dare call them black) who, in their view, "cut the line." Never mind that these white voters who complain about "line cutters" are themselves guilty of cutting the most important line of all - the polling-place line - since they are not subjected to the voter-suppression efforts being inflicted on minorities by GOP state legislatures, the Roberts Supreme Court, and now the Jeff Sessions–led Department of Justice.

    In "What So Many People Don't Get About the U.S. Working Class," a postelection postmortem published to much op-ed attention by the Harvard Business Review (and soon to be published in expanded form as what will undoubtedly be another best-selling book), the University of California law professor Joan C. Williams proposes that other liberals do in essence what Hochschild did. "The best advice I've seen so far for Democrats is the recommendation that hipsters move to Iowa," Williams writes - or to any other location in the American plains where "shockingly high numbers of working-class men are unemployed or on disability, fueling a wave of despair deaths in the form of the opioid epidemic." She further urges liberals to discard "the dorky arrogance and smugness of the professional elite" (epitomized in her view by Hillary Clinton) that leads them to condescend to disaffected working-class whites and "write off blue-collar resentment as racism."

    Hochschild anticipated that Williams directive, too. She's never smug. But for all her fond acceptance of her new Louisiana pals, and for all her generosity in portraying them as virtually untainted by racism, it's not clear what such noble efforts yielded beyond a book, many happy memories of cultural tourism, and confirmation that nothing will change anytime soon. Her Louisianans will keep voting for candidates who will sabotage their health and their children's education; they will not be deterred by an empathic Berkeley visitor, let alone Democratic politicians."

    http://nymag.com/daily/intelligencer/2017/03/frank-rich-no-sympathy-for-the-hillbilly.html

    Peter K. -> EMichael... , April 16, 2017 at 08:41 AM
    http://talkingpointsmemo.com/edblog/the-fight-in-the-borderlands

    The Fight in the Borderlands by Josh Marshall

    "We hear people constantly saying 'Nothing will change his supporters' minds. They're with him no matter what.' First of all this is enervating defeatism which is demoralizing and loserish. But it also misses the point. It is factually wrong. For the supporters those people have in mind, they're right.

    They're true believers, authoritarians who are energized by Trump's destructive behavior. But there are not that many of those people. A big chunk of Trump's voters voted for him in spite of their dislike. Those people can be carved away. But Democrats will regain power by winning it in what amount to our 21st century internal American borderlands, not in the big cities or rural areas mainly but in between. So what's happening now to lay that groundwork for 2018?"

    Peter K. -> Peter K.... , April 16, 2017 at 08:45 AM
    interview with Matthew Brueing

    https://www.jacobinmag.com/2017/04/trump-health-obamacare-welfare-medicaid-racism-republicans-democrats/

    DD: European neoliberalism in many ways created the conditions that the far right has recently exploited to convince people that their problems are caused by immigrants. Does what's going on in Finland with the decline in the far-right parties and the increasing success of left parties point to a way out throughout Europe (and maybe here as well)?

    MB: The Finland situation is very promising from a leftist view. Finland's political system is mostly dominated by six parties: the Green Party, similar to the Greens here; a Social Democratic Party. which is like the Labor Party; the Left Alliance, which is the communists and socialists. This is the Left.

    On the other side, you have the Centre Party, which was like the Farmers' Party but doesn't really have an economic definition, so sometimes they join coalitions with left-wing or right-wing parties; you have the National Coalition Party, the right-wing business party; then, lately, you have the Finns Party - which used to be called the True Finns, which kind of gives you a hint of what they're about. They're like an ethno-nationalist party, though they will deny that.

    In 2015, the top three parties in Finland were conservative: in order was the Centre Party, the National Coalition Party, and then the Finns. They came together and formed the center-right Bourgeois Government (which is what they actually call their governments). Combined, the three parties have about 60 percent of the public behind them.

    The Finns join the center-right party that's mostly interested in austerity of various sorts - trimming down wages and benefits, increasing competitiveness of exports, which also means trimming down labor costs and making people work longer and cutting vacations.

    When the Finns join that government, their support just collapses. It goes from over 20 percent to less than 10 percent over a year or two. If you read the Finnish newspapers, the consensus is that they are basically supported by blue-collar people who are also racists. But ultimately, they don't want a party that comes in and cuts their wages and benefits even if the party is racist and satisfies their anti-immigrant tendencies.

    Their support base looks at the Finns Party and says, "You're a traitor to the working class - to hell with you." Only left parties picked up voters as the ethno-nationalist party declined.

    This shows that even people who are have very bad views on immigration and diversity - if they get screwed on just basic pocketbook issues, they jump ship and go back over to their old homes in the Left.

    That's a good sign for the American context, especially because Trump and the Republicans are not going to run a government that benefits working-class people. His base is going to get disillusioned and be open to supporting a Bernie-style candidate or someone like that who speaks to their issues and actually intends to follow through with them, instead of just using them rhetorically and then abandoning them once they get into office. So it's promising.

    cm -> Peter K.... , April 16, 2017 at 05:48 PM
    The big difference is that in the US the "R&D" are so dominant that in combination with how the election system is structured, they are basically the only two national parties. The option of jumping between "significant fringe" parties that influence policy through coalition forming simply doesn't exist.

    US presidential, senatorial, and congressional candidates basically run not with a platform, but with a party. This is also how Sanders got outmaneuvered - he couldn't run as a non-Democrat.

    reason -> cm... , April 17, 2017 at 03:06 AM
    Yep.

    The two party system is THE PROBLEM.

    [Apr 17, 2017] News became propaganda when alternative viewpoints are not fairly represented or worse, supressed

    This is how the US MSM covered Niki Haley demise by Bolivian representative. " Nikki Haley forces public UN meeting to put Assad's defenders in 'full public view '"
    Apr 17, 2017 | economistsview.typepad.com
    reason

    I made a comment that was swallowed?

    I think Simon Wren-Lewis When journalism becomes propaganda - mainly macro
    missed the main point here.

    Propaganda is when:

    1. Alternative viewpoints are not fairly represented

    2. News and opinion are not clearly delinearated (as Dean Baker tirelessly points out).

    We need a good discussion of how to de-propagandize and de-polarize society. Getting rid of winner-take-all politics would sure help.

    [Apr 16, 2017] US banks are now new OPEC and can dictate poil prices. Supply-demand equilibrium is a neoclassic way of thinking that does not take into account the existence of banks. Oil is the strategic, political tool. So the price of the oil is a politically important variable. Thats why oil wars were fought.

    Notable quotes:
    "... I tend to now think oil shortages may be sooner rather than later. ..."
    "... A couple of big project start-ups for Angola and Kazakhstan have been delayed for a year, Iran and Iraq are not developing at all as quickly as they'd planned (and others expected), there are much fewer, short cycle, small tie backs getting approved than I thought would be the case, offshore drilling in general just isn't picking up, and there seems to be early indications that the cuts in maintenance and brownfield investments from 2014 are impacting availabilities (e.g. with more unplanned downtime) and decline rates (i.e. steeper). So instead of late 2018 for start of big stock draws it may be autumn this year. ..."
    "... It depends also, of course, on how demand changes, whether OPEC (really Saudi) are making voluntary cuts and have increasing spare capacity, or are following a forced decline due to surface facility limitations, and what happens in the Permian which at the moment seems increasingly desperate and bonkers by both investors and the E&Ps, but may turn out to be exactly right. ..."
    "... I think this is a neoclassic way of thinking. Oil is the strategic, political tool. So price of oil is a politically important variable. That's why oil wars were fought. As simple as that. ..."
    "... We already saw that world oil production was virtually flat in 2015 and 2016 (2015: 96.80 vs. 2016: 97.17 ) but demand increased (1.4 Mb/d per year I think, so around 2.8 Mb/d for two years) which for some reason did not affect much oil prices. ..."
    "... I think the elephant in the room is the financial system and its interaction with the oil industry. They are now new OPEC and are able to dictate the price (within certain limits) via derivatives. Probably not without some help from KSA, which practiced damping in 2015 and 2016. ..."
    "... Most assumed that in a year or year and a half max prices will return to more or less "normal" levels, as non-OPEC producers, which usually have higher cost of production, will be decimated. And then should move higher. ..."
    "... At prices below $80 or so shale oil production is impossible without generating junk bonds and that means that money are still flowing to shale drillers. Not as much as in good old times, but they are flowing; despite clear indication that most probably those loans will never be repaid in full. Something is really fishy here. ..."
    "... I wonder if the USA is able to keep oil under $60 (outside few spikes) for two more years. ..."
    Apr 16, 2017 | peakoilbarrel.com
    George Kaplan says: 04/14/2017 at 3:07 am
    This is worth a read:

    http://oilprice.com/Energy/Energy-General/Supply-Crunch-Or-Oil-Glut-Investment-Banks-Cant-Agree.html

    I think I tend to agree with the banks – i.e. I don't really have a clue, and cover myself by changing my mind every couple of days.. But I tend to now think oil shortages may be sooner rather than later.

    A couple of big project start-ups for Angola and Kazakhstan have been delayed for a year, Iran and Iraq are not developing at all as quickly as they'd planned (and others expected), there are much fewer, short cycle, small tie backs getting approved than I thought would be the case, offshore drilling in general just isn't picking up, and there seems to be early indications that the cuts in maintenance and brownfield investments from 2014 are impacting availabilities (e.g. with more unplanned downtime) and decline rates (i.e. steeper). So instead of late 2018 for start of big stock draws it may be autumn this year.

    It depends also, of course, on how demand changes, whether OPEC (really Saudi) are making voluntary cuts and have increasing spare capacity, or are following a forced decline due to surface facility limitations, and what happens in the Permian which at the moment seems increasingly desperate and bonkers by both investors and the E&Ps, but may turn out to be exactly right.

    On the other hand IEA OMR report come out yesterday – and their worries about a supply crash soon, which were evident a few months back, seem to have gone away, at least for the moment.

    https://www.iea.org/oilmarketreport/omrpublic/

    "Indeed, although the oil market will likely tighten throughout the year, overall non-OPEC production, not just in the US, will soon be on the rise again. Even after taking into account production cut pledges from the eleven non-OPEC countries, unplanned outages in Canada as well as in the North Sea, we expect production will grow again on a year-on-year basis by May."

    Dennis Coyne says: 04/14/2017 at 8:55 am
    Hi George,

    You said,

    I don't really have a clue, and cover myself by changing my mind every couple of days..

    LOL

    You are not alone. I tend to think eventually output will fall below demand and oil prices will rise if that ever occurs. When that actually happens? I do not know, perhaps never, my latest guess is first half of 2018 (tomorrow the guess may change.)

    AlexS says: 04/14/2017 at 9:12 am
    "I tend to think eventually output will fall below demand and oil prices will rise "

    And then output will again rise faster than demand and prices will fall. And that will repeat several times until the oil age ends.

    Dennis Coyne says: 04/14/2017 at 12:09 pm
    Hi AlexS,

    I suppose over the short term there will be cycles. In a very optimistic scenario by 2032 the 3 year centered moving average of World C+C output will be trending lower (with three year average output peaking at 87 Mb/d). A more pessimistic scenario has the 3 year peak in 2016 at about 80.5 Mb/d and a reasonable guess is mid way between these scenarios with a 3 year average peak in 2024 at about 84 Mb/d. Growth rates will vary with the boom bust cycle, so smooth trend lines will not be followed, output will cycle above and below in ways that are difficult to predict in advance.

    likbez says: 04/16/2017 at 12:56 am
    AlexS,

    I think this is a neoclassic way of thinking. Oil is the strategic, political tool. So price of oil is a politically important variable. That's why oil wars were fought. As simple as that.

    We already saw that world oil production was virtually flat in 2015 and 2016 (2015: 96.80 vs. 2016: 97.17 ) but demand increased (1.4 Mb/d per year I think, so around 2.8 Mb/d for two years) which for some reason did not affect much oil prices.

    I think the elephant in the room is the financial system and its interaction with the oil industry. They are now new OPEC and are able to dictate the price (within certain limits) via derivatives. Probably not without some help from KSA, which practiced damping in 2015 and 2016.

    I think there are powerful forces that will try to keep oil below $60 because that's the difference between the US economics in secular stagnation mode and the US economics in recession.

    In this sense the balance of supply and demand does not matter until there are real oil shortages. Only in the latter case derivatives are of no or little help.

    It is very interesting how primitive was behavior of OPEC in late 2016: they decided to cheat on themselves as Ron pointed out. This is really primitive, almost tribal level of thinking. And it might repeat. That's another factor that might limits upside. Unless they are really in trouble and reached peak production capacity.

    Rereading posts and articles from early 2015 is also very sobering if you assume neoclassical "supply and demand stochastic equilibrium" exists for oil (which IMHO is a false assumption).

    It suggests that few people in 2015 understood the predicament. Most assumed that in a year or year and a half max prices will return to more or less "normal" levels, as non-OPEC producers, which usually have higher cost of production, will be decimated. And then should move higher.

    That did not happen. Instead we have had almost flat level of non-OPEC production(2015: 58.77 vs. 2016: 58.18 ); it lies probably within the accuracy of measurements +- 0.5 MB/d .

    At prices below $80 or so shale oil production is impossible without generating junk bonds and that means that money are still flowing to shale drillers. Not as much as in good old times, but they are flowing; despite clear indication that most probably those loans will never be repaid in full. Something is really fishy here.

    Also please compare your old views with the current situation:

    http://peakoilbarrel.com/open-thread-oil-and-gas/comment-page-1/#comment-541443

    I wonder if the USA is able to keep oil under $60 (outside few spikes) for two more years.

    [Apr 15, 2017] Man made political and economic institutions underlie economic success or lack of it

    Notable quotes:
    "... The World Economic Forum has called for "reimagining" and "reforming" capitalism. To what extent is this need for reform the result of disruption brought by technological change, globalization, and immigration and to what extent is it the effect of rent-seeking and regulatory capture? ..."
    "... "Martin Hellwig and I discuss "global competitiveness" and THE PARTICULARLY HARMFUL SYMBIOSIS BETWEEN BANKS AND GOVERNMENTS in our book The Bankers' New Clothes: What's Wrong with Banking and What to Do about It." ..."
    "... Private/public arrangements are often a way for private parties to bleed wealth from society. Our current banking system is the most egregious example of this. ..."
    "... With the same idea that the "vanguard" recruited mainly from "Intelligentsia" will drive sheeple to the "bright future of all mankind" using bullets for encouragement, if needed. And this "bright future of all mankind" is the global neoliberal empire led by the USA. ..."
    "... Including full scale use of three letter agencies. Also like Bolshevism before, neoliberalism created its own "nomenklatura" -- the privileged class which exists outside the domain of capital owners, which along with high levels management and professionals include neoclassical economists. They are integral and important part of neoliberal nomenklatura and are remunerated accordingly. ..."
    "... Because you can't be half-pregnant -- it is difficult to try anything else when neoliberalism still dominates globally and try to enforce its will via global financial institutions. They do not hesitate to punish detractors for Washington consensus. ..."
    "... It is difficult to survive trying to find alternatives to neoliberalism on the continent with Uncle Sam and his extremely well financed three letter agencies which operate with impunity. And it does not cost too much money to implement more moderate variant of Chile Pinochet coup model -- create economic difficulties and then bring neoliberals back to power on the wave of dissatisfaction with the current government due to economic difficulties. ..."
    "... Difficulties of finding the right balance avoid sliding into opposite extreme -- "over-regulating" the economy. In view of sabotage experienced (and encouraged), which produces natural (and damaging) counteraction, this is almost impossible. Looks like a real trap -- the efforts of the USA to undermine the economy of countries with left wing governments produce a counteraction which helps to undermine the economy and pave the way for restoration of neoliberal regime ..."
    "... In this sense Trump is just Obama II -- neoliberal "bait and switch" artist, who capitalized on pre-existing discontent using fake slogans and then betrayed the electorate. ..."
    "... "Class dictatorship. Raw or refined" ..."
    "... My interpretation is that it's a class project, now masked by a lot of rhetoric about individual freedom, liberty, personal responsibility, privatisation and the free market. ..."
    "... That rhetoric was a means towards the restoration and consolidation of class power, and that neoliberal project has been fairly successful ..."
    Apr 15, 2017 | economistsview.typepad.com
    From a ProMarket interview with Anat Admati:
    ... Q: The World Economic Forum has called for "reimagining" and "reforming" capitalism. To what extent is this need for reform the result of disruption brought by technological change, globalization, and immigration and to what extent is it the effect of rent-seeking and regulatory capture?

    Acemoglu and Robinson argued in Why Nations Fail: The Origins of Power, Prosperity, and Poverty that "man-made political and economic institutions underlie economic success (or lack of it)." Technological developments have highlighted the immense power associated with controlling information. The business of investigative reporting is in a crisis. Corporations often play off governments, shopping jurisdictions and making bargains. For capitalism to work, the relevant institutions must work effectively and avoid excessive rent extraction. The governance challenge of the global economy is daunting.

    RGC said...

    "Martin Hellwig and I discuss "global competitiveness" and THE PARTICULARLY HARMFUL SYMBIOSIS BETWEEN BANKS AND GOVERNMENTS in our book The Bankers' New Clothes: What's Wrong with Banking and What to Do about It."

    [Private/public arrangements are often a way for private parties to bleed wealth from society. Our current banking system is the most egregious example of this.]

    libezkova , April 15, 2017 at 01:53 PM

    "Acemoglu and Robinson argued in Why Nations Fail: The Origins of Power, Prosperity, and Poverty that "man-made political and economic institutions underlie economic success (or lack of it)."

    Neoliberalism is the second after Marxism social system that was "invented" by a group of intellectuals (although there was no any single dominant individual among them) and implemented via coup d'état. From above. Much like Bolshevism.

    Looks like it is more resilient then Marxism based economic systems and it demonstrated staying power even after 2008 -- when the ideology itself was completely discredited and became a joke.

    Neoliberalism survived the demise of neoliberal ideology and entered zombie stage. Much like many sects with discredited predictions like the Second Coming.

    Neoliberalism borrowed quite a lot from Marxism. Actually analogies with Marxism are too numerous to list. But one is very important: neoliberalism replaced "Dictatorship of proletariat" with the dictatorship of "free markets" and proletariat itself with so called "creative class".

    With the same idea that the "vanguard" recruited mainly from "Intelligentsia" will drive sheeple to the "bright future of all mankind" using bullets for encouragement, if needed. And this "bright future of all mankind" is the global neoliberal empire led by the USA.

    They also demonstrated the same ruthlessness in the best style of "end justifies means". Killed are mainly "brown people" (is we do not count ten thousand Ukrainians)

    In short, neoliberalism is a kind of "Trotskyism for rich." Gore Vidal once famously said that the neoliberal economic system is "free enterprise for the poor and socialism for the rich." As unforgettable Bush II said "I'm a free market guy. But I'm not gonna let this economy crater in order to preserve the free market system" – George W. Bush, December 17, 2008, William Simon, President Nixon's Treasury Secretary, once famously observed of those who preach free markets typically are simultaneously rushing to the public treasury: "I watched with incredulity as businessmen ran to the government in every crisis, whining for handouts or protection from the very competition that has made this system so productive always, such gentlemen proclaimed their devotion to free enterprise and their opposition to the arbitrary intervention into our economic life by the state. Except, of course, for their own case, which was always unique and which was justified by their immense concern for the public interest."

    And neoliberalism uses the same repressive tactics including dominance in MSM and the control of the university education to get and stay in power, which were invented by Bolsheviks/Trotskyites.

    Including full scale use of three letter agencies. Also like Bolshevism before, neoliberalism created its own "nomenklatura" -- the privileged class which exists outside the domain of capital owners, which along with high levels management and professionals include neoclassical economists. They are integral and important part of neoliberal nomenklatura and are remunerated accordingly.

    That fact the deification of markets is a "fools gold" was know from the Great Recession (and Karl Polanyi famous book), but when 50 years passed and generation changed they manage to shove it down throat. Because the generation which experienced horrors of the Great Depression at this point was gone (and that include cadre of higher level management which still have some level of solidarity with workers against capital owners). The new generation switched camps and allied with capital owners against the working class.

    When the old generation was replaced with HBS and WBS graduates -- ready made neoliberals -- quite coup (in Simon Johnson terms) naturally followed ( https://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/ ) and we have hat we have.

    In this sense the ascendance of neoliberalism and Managerialism ( https://en.wikipedia.org/wiki/Managerialism ) are closely related.

    Both treat the country the same way as bacteria treat a squirrel carcass.

    Typically, these countries are in a desperate economic situation for one simple reason-the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit-and, most of the time, genteel-oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Russia grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon-correctly, in most cases-that their political connections will allow them to push onto the government any substantial problems that arise.

    As Paine noted neoliberalism in zombie state (which it entered after 2008) remains dangerous and is able to counterattack -- the US sponsored efforts of replacement of left regimes in LA with right wing neoliberal regimes were by-and-large successful.

    Among them are two key LA countries -- Brazil and Argentina. That happened despite that this phase of neoliberal era has been marked by slower growth, greater trade imbalances, and deteriorating social conditions. In Latin America the average growth rate was lower by 3 percent per annum in the 1990s than in the 1970s, while trade deficits as a proportion of GDP are much the same.

    Contrary to neoliberal propaganda the past 25 years (1980–2005) have also characterized by slower rate of improvement of key social indicators for the vast majority of low- and middle-income population of LA countries [compared with the prior two decades ]

    In an effort to keep growing trade and current account deficits manageable, third world states, often pressured by the IMF and World Bank, used austerity measures (especially draconian cuts in social programs) to slow economic growth (and imports). They also deregulated capital markets, privatized economic activity, and relaxed foreign investment regulatory regimes in an effort to attract the financing needed to offset the existing deficits. While devastating to working people and national development possibilities, these policies were, as intended, responsive to the interests of transnational capital in general and a small but influential sector of third world capital. This is the reality of neoliberalism.

    As for the question "Why?" there might be several reasons.

    1. Because you can't be half-pregnant -- it is difficult to try anything else when neoliberalism still dominates globally and try to enforce