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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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[Jun 25, 2017] The idea of basic income is incompatible with the neoliberalism

Notable quotes:
"... What's needed is not the arbitrary adoption of UBI, but a conversation about what a welfare state is for. In their incendiary book Inventing the Future, the authors Alex Williams and Nick Srnicek argue for UBI but link it to three other demands: collectively controlled automation, a reduction in the working week, and a diminution of the work ethic. Williams and Srnicek believe that without these other provisions, UBI could essentially act as an excuse to get rid of the welfare state. ..."
"... What's needed is not the arbitrary adoption of UBI, but an entirely different conversation about what a welfare state is for. As David Lammy MP said, after the Grenfell Tower disaster: "This is about whether the welfare state is just about schools and hospitals or whether it is about a safety net." The conversation, in light of UBI, could go even further: it's possible for the welfare state not just to act as a safety net, but as a tool for all of us to do less work and spend more time with our loved ones, pursuing personal interests or engaging in our communities. ..."
Jun 25, 2017 | economistsview.typepad.com

Christopher H. June 25, 2017 at 07:01 AM

https://lanekenworthy.net/2017/06/23/in-work-poverty-in-the-us/

Lane Kenworthy's article shows how America is already great, with many more people working in poverty than in the UK, Ireland or Australia. Maybe the robots stole better paying jobs? Maybe they need more education and to skill up?

Christopher H. , June 25, 2017 at 07:02 AM

https://www.theguardian.com/commentisfree/2017/jun/23/universal-basic-income-ubi-welfare-state?CMP=share_btn_tw

Love the idea of a universal basic income? Be careful what you wish for

Ellie Mae O'Hagan

Friday 23 June 2017 10.36 EDT

Yes, UBI could be an important part of a radical agenda. But beware: its proponents include neoliberals hostile to the very idea of the welfare state

For some time now, the radical left has been dipping its toes in the waters of universal basic income (or unconditional basic income, depending on who you talk to). The idea is exactly as it sounds: the government would give every citizen – working or not – a fixed sum of money every week or month, with no strings attached. As time goes on, universal basic income (UBI) has gradually been transitioning from the radical left into the mainstream: it's Green party policy, is picking up steam among SNP and Labour MPs and has been advocated by commentators including this newspaper's very own John Harris.

Supporters of the idea got a boost this week with the news that the Finnish government has piloted the idea with 2,000 of its citizens with very positive results. Under the scheme, the first of its kind in Europe, participants receive €560 (£473) every month for two years without any requirements to fill in forms or actively seek work. If anyone who receives the payment finds work, their UBI continues. Many participants have reported "decreased stress, greater incentives to find work and more time to pursue business ideas." In March, Ontario in Canada started trialling a similar scheme.

Given that UBI necessarily promotes universalism and is being pursued by liberal governments rather than overtly rightwing ones, it's tempting to view it as an inherently leftwing conceit. In January, MEPs voted to consider UBI as a solution to the mass unemployment that might result from robots taking over manual jobs.

From this perspective, UBI could be rolled out as a distinctly rightwing initiative. In fact it does bear some similarity to the government's shambolic universal credit scheme, which replaces a number of benefits with a one-off, lower, monthly payment (though it goes only to people already on certain benefits, of course). In the hands of the right, UBI could easily be seen as a kind of universal credit for all, undermining the entire benefits system and providing justification for paying the poorest a poverty income.

In fact, can you imagine what UBI would be like if it were rolled out by this government, which only yesterday promised to fight a ruling describing the benefits cap as inflicting "real misery to no good purpose"?

Despite the fact that the families who brought a case against the government had children too young to qualify for free childcare, the Department for Work and Pensions still perversely insisted that "the benefit cap incentivises work". It's not hard to imagine UBI being administered by the likes of A4e (now sold and renamed PeoplePlus), which carried out back-to-work training for the government, and saw six of its employees receive jail sentences for defrauding the government of £300,000. UBI cannot be a progressive initiative as long as the people with the power to implement it are hostile to the welfare state as a whole.

What's needed is not the arbitrary adoption of UBI, but a conversation about what a welfare state is for. In their incendiary book Inventing the Future, the authors Alex Williams and Nick Srnicek argue for UBI but link it to three other demands: collectively controlled automation, a reduction in the working week, and a diminution of the work ethic. Williams and Srnicek believe that without these other provisions, UBI could essentially act as an excuse to get rid of the welfare state.

What's needed is not the arbitrary adoption of UBI, but an entirely different conversation about what a welfare state is for. As David Lammy MP said, after the Grenfell Tower disaster: "This is about whether the welfare state is just about schools and hospitals or whether it is about a safety net." The conversation, in light of UBI, could go even further: it's possible for the welfare state not just to act as a safety net, but as a tool for all of us to do less work and spend more time with our loved ones, pursuing personal interests or engaging in our communities.

UBI has this revolutionary potential – but not if it is simply parachuted into a political economy that has been pursuing punitive welfare policies for the last 30 years.

On everything from climate change and overpopulation to yawning inequality and mass automation, modern western economies face unprecedented challenges. These conditions are frightening but they also open up the possibility of the kind of radical policies we haven't seen since the postwar period. UBI could be the start of this debate, but it must not be the end.

Christopher H. -> Christopher H.... , June 25, 2017 at 07:06 AM
"In January, MEPs voted to consider UBI as a solution to the mass unemployment that might result from robots taking over manual jobs."

MEPs stands for Members of the European Parliament.

Julio -> Christopher H.... , June 25, 2017 at 08:41 AM
One of the reasons I support UBI is that it refocuses political discussions to some of the fundamental issues, as this article points out.
libezkova -> Julio ... , June 25, 2017 at 11:21 AM
> "One of the reasons I support UBI is that it refocuses political discussions to some of the fundamental issues, as this article points out."

I agree. UBI might probably be the most viable first step of Trump's MAGA. But he betrayed his electorate. Similarly it would be a good step in Obama's "change we can believe in" which never materialized. The level of automation that currently exists makes UBI quite a possibility.

But...

The problem is the key idea of neoliberalism is "socialism for rich and feudalism and/or plantation slavery for poor." So neither Republicans, nor Clinton Democrats are interested in UBI. It is anathema for neoliberals.

[Jun 25, 2017] Trump voters were taken for a ride. Trump proved to be even worse than Obama as for bait and switch propensity. Syria tomahawk attack proved that he is a vain and mediocre politician, inclined to theatrical gestures

Jun 25, 2017 | economistsview.typepad.com

im1dc -> Fred C. Dobbs... June 25, 2017 at 12:05 PM

No it is not possible, the Republican Party in D.C. is wholly owned by Daddy Big Bucks and Trump supporters do not see it, in fact they see the opposite b/c that's what he tweets and says when he stands before a microphone.

His behavior however tells the real story which is 'destroy the Federal Safety Net and other protections of the 99% as much and as fast as possible while I'm in office.'

Facts not Fiction.

im1dc -> im1dc... , June 25, 2017 at 12:06 PM
Correction

"Trump supporters"

Should be

Trump voters

libezkova -> im1dc... , June 25, 2017 at 04:42 PM
Trump voters were taken for a ride. He proved to be even worse than Obama as for "bait and switch" propensity.

Also while there was rumors, now it is an established fact that he is a vain and mediocre politician, inclined to theatrical gestures like his Tomahawk missile attack after a primitive "false flag" operation by Syria rebels.

https://www.welt.de/politik/ausland/article165905578/Trump-s-Red-Line.html

[Jun 25, 2017] Toward the defition of neoliberalism as an ideology and practice

Jun 25, 2017 | economistsview.typepad.com
libezkova -> im1dc... , June 25, 2017 at 09:29 AM
> Define "neoliberal" as you mean it otherwise it is a meaningless word

Let my try.

Like a communist is the person who subscribed/is indoctrinated/brainwashed into Marxism as an ideology (which is actually different from Marxism as a political economy; Marx claimed that he is not a Marxist), neoliberal is the person who subscribed/is indoctrinated/brainwashed to neoliberalism as an ideology.

Neoliberalism as an ideology was formulated mainly by Mont Pelerin Society with academic criminals of Chicago School such as Milton Friedman playing outsize role.

Typically neoliberalism is imposed on the society via coup. One of the first experiments of imposing neoliberalism on the society was military coup in Chile. In the USA it took the form of "quiet coup" https://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/

We can assume that neoliberals are in power, and neoliberalism is enforced as the dominant ideology in the USA since 1980. Since 9/11 it took a new form called "inverse totalitarism" (Sheldon Wolin) -- a flavor of national security state without mass repression of opponents. The suppression is performed mainly by exclusion and silencing of the opponents. But the level of surveillance of citizens probably exceeds the level typical for GDR with its STASI.

Neoclassic economics is the major tool for the indoctrination into neoliberalism in the US universities. Ann Rand objectivism is another pillar of neoliberalism ("creators myth").

The main points of neoliberal ideology include:

http://www.corpwatch.org/article.php?id=376

1.THE RULE OF THE MARKET. Liberating "free" enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. Greater openness to international trade and investment, as in NAFTA. Reduce wages by de-unionizing workers and eliminating workers' rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say "an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone." It's like Reagan's "supply-side" and "trickle-down" economics -- but somehow the wealth didn't trickle down very much.

2.CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like education and health care. REDUCING THE SAFETY-NET FOR THE POOR, and even maintenance of roads, bridges, water supply -- again in the name of reducing government's role. Of course, they don't oppose government subsidies and tax benefits for business.

3.DEREGULATION. Reduce government regulation of everything that could diminsh profits, including protecting the environmentand safety on the job.

4.PRIVATIZATION. Sell state-owned enterprises, goods and services to private investors. This includes banks, key industries, railroads, toll highways, electricity, schools, hospitals and even fresh water. Although usually done in the name of greater efficiency, which is often needed, privatization has mainly had the effect of concentrating wealth even more in a few hands and making the public pay even more for its needs.

5.ELIMINATING THE CONCEPT OF "THE PUBLIC GOOD" or "COMMUNITY" and replacing it with "individual responsibility." Pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves -- then blaming them, if they fail, as "lazy."

The unofficial manifest of neoliberalism is "Capitalism and Freedom" by Milton Friedman (1962, University of Chicago Press). In foreign policy neoliberalism is defined by so called Washington consensus (Wikipedia):

1.Fiscal policy discipline, with avoidance of large fiscal deficits relative to GDP;

2.Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;

3.Tax reform, broadening the tax base and adopting moderate marginal tax rates;

4.Interest rates that are market determined and positive (but moderate) in real terms;

5.Competitive exchange rates;

6.Trade liberalization: liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs;

7.Liberalization of inward foreign direct investment;

8.Privatization of state enterprises;

9.Deregulation: abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions;

10.Legal security for property rights.

Neoliberalism is closely connected (but is not identical) with the Neoconservatism in the USA (Trotskyism for the rich). Simplifying, neocons are just neoliberals with the gun.

Like Trotskyism and Bolshevism before, neoliberalism creates its own form of perverted rationality called "neoliberal rationality" http://lchc.ucsd.edu/cogn_150/Readings/brown.pdf Here are some quotes from Wendy Brown interview "What Exactly Is Neoliberalism" to Dissent Magazine (Nov 03, 2015):

"... I treat neoliberalism as a governing rationality through which everything is "economized" and in a very specific way: human beings become market actors and nothing but, every field of activity is seen as a market, and every entity (whether public or private, whether person, business, or state) is governed as a firm. Importantly, this is not simply a matter of extending commodification and monetization everywhere-that's the old Marxist depiction of capital's transformation of everyday life. Neoliberalism construes even non-wealth generating spheres-such as learning, dating, or exercising -- in market terms, submits them to market metrics, and governs them with market techniques and practices. Above all, it casts people as human capital who must constantly tend to their own present and future value. ..."

"... The most common criticisms of neoliberalism, regarded solely as economic policy rather than as the broader phenomenon of a governing rationality, are that it generates and legitimates extreme inequalities of wealth and life conditions; that it leads to increasingly precarious and disposable populations; that it produces an unprecedented intimacy between capital (especially finance capital) and states, and thus permits domination of political life by capital; that it generates crass and even unethical commercialization of things rightly protected from markets, for example, babies, human organs, or endangered species or wilderness; that it privatizes public goods and thus eliminates shared and egalitarian access to them; and that it subjects states, societies, and individuals to the volatility and havoc of unregulated financial markets. ..."

"... with the neoliberal revolution that homo politicus is finally vanquished as a fundamental feature of being human and of democracy. Democracy requires that citizens be modestly oriented toward self-rule, not simply value enhancement, and that we understand our freedom as resting in such self-rule, not simply in market conduct. When this dimension of being human is extinguished, it takes with it the necessary energies, practices, and culture of democracy, as well as its very intelligibility. ..."

"... For most Marxists, neoliberalism emerges in the 1970s in response to capitalism's falling rate of profit; the shift of global economic gravity to OPEC, Asia, and other sites outside the West; and the dilution of class power generated by unions, redistributive welfare states, large and lazy corporations, and the expectations generated by educated democracies. From this perspective, neoliberalism is simply capitalism on steroids: a state and IMF-backed consolidation of class power aimed at releasing capital from regulatory and national constraints, and defanging all forms of popular solidarities, especially labor. ..."

"... The grains of truth in this analysis don't get at the fundamental transformation of social, cultural, and individual life brought about by neoliberal reason. They don't get at the ways that public institutions and services have not merely been outsourced but thoroughly recast as private goods for individual investment or consumption. And they don't get at the wholesale remaking of workplaces, schools, social life, and individuals. For that story, one has to track the dissemination of neoliberal economization through neoliberalism as a governing form of reason, not just a power grab by capital. There are many vehicles of this dissemination -- law, culture, and above all, the novel political-administrative form we have come to call governance. It is through governance practices that business models and metrics come to irrigate every crevice of society, circulating from investment banks to schools, from corporations to universities, from public agencies to the individual. It is through the replacement of democratic terms of law, participation, and justice with idioms of benchmarks, objectives, and buy-ins that governance dismantles democratic life while appearing only to instill it with "best practices." ..."

"... Progressives generally disparage Citizens United for having flooded the American electoral process with corporate money on the basis of tortured First Amendment reasoning that treats corporations as persons. However, a careful reading of the majority decision also reveals precisely the thoroughgoing economization of the terms and practices of democracy we have been talking about. In the majority opinion, electoral campaigns are cast as "political marketplaces," just as ideas are cast as freely circulating in a market where the only potential interference arises from restrictions on producers and consumers of ideas-who may speak and who may listen or judge. Thus, Justice Kennedy's insistence on the fundamental neoliberal principle that these marketplaces should be unregulated paves the way for overturning a century of campaign finance law aimed at modestly restricting the power of money in politics. Moreover, in the decision, political speech itself is rendered as a kind of capital right, functioning largely to advance the position of its bearer, whether that bearer is human capital, corporate capital, or finance capital. This understanding of political speech replaces the idea of democratic political speech as a vital (if potentially monopolizable and corruptible) medium for public deliberation and persuasion. ..."

"... My point was that democracy is really reduced to a whisper in the Euro-Atlantic nations today. Even Alan Greenspan says that elections don't much matter much because, "thanks to globalization . . . the world is governed by market forces," not elected representatives. ..."

anne -> im1dc... ,
Define "neoliberal":

Neoliberal means let there be markets everywhere and let governments leave markets alone. There is no other word of definition needed.

libezkova -> anne... , June 25, 2017 at 12:37 PM
This is wrong. You completely misunderstand the role of government under neoliberalism. Under neoliberalism it is the government that impose markets on people via deregulation. Impose "from above" like socialism in socialist states. So it is the government that is an instrument for "imposition of markets everywhere". And, if necessary, by brute force.

Unlike libertarian ideology, under neoliberalism the government is not passive, it is an active player which forcefully "opens markets" everywhere.

In foreign countries this takes the form of neocolonialism, and color revolutions or direct military intervention are typical tool for bending "not so democratic as we would like" countries, especially with oil or other valuable deposits. In this sense, it is very similar to Islamic fundamentalism and can be called "market fundamentalism."

In other words this more vicious ideology then just promotion of "markets" as in "socialism for the rich and feudalism or plantation slavery for the poor"

[Jun 25, 2017] Alliance of Trump and the deep state ont he basis of neocon agenda is quite possible

Jun 25, 2017 | economistsview.typepad.com

libezkova, June 24, 2017 at 11:06 PM

This is a warning to several prominent commenters of this blog: it is quite possible that Faustian bargain of alliance with the deep state to depose Trump might backfire and produce completely opposite result -- strong and durable alliance of Trump and the deep state on the basis of the same model that existed from 2003 -- inverted totalitarism introduced by Bush II. In this case you can kiss hopes not only for impeachment, but also for 2020 reversal goodbye.

http://original.antiwar.com/Todd_Pierce/2017/06/23/criminal-laws-counterinsurgency/

Many "never-Trumpers" see the deep state's national security bureaucracy as their best hope to destroy Trump and thus defend constitutional government, but those hopes are misguided.

After all, the deep state's bureaucratic leadership has worked arduously for decades to subvert constitutional order.

As Michael Glennon, author of National Security and Double Government, pointed out in a June 2017 Harper's essay, if "the president maintains his attack, splintered and demoralized factions within the bureaucracy could actually support - not oppose - many potential Trump initiatives, such as stepped-up drone strikes, cyberattacks, covert action, immigration bans, and mass surveillance."

Inverted totalitarism is completely compatible with Trumpism ("bastard neoliberlaism"):

Princeton University political theorist Sheldon Wolin described the US political system in place by 2003 as "inverted totalitarianism." He reaffirmed that in 2009 after seeing a year of the Obama administration. Correctly identifying the threat against constitutional governance is the first step to restore it, and as Wolin understood, substantive constitutional government ended long before Donald Trump campaigned. He's just taking unconstitutional governance to the next level in following the same path as his recent predecessors.

However, even as some elements of the "deep state" seek to remove Trump, the President now has many "deep state" instruments in his own hands to be used at his unreviewable discretion.

[Jun 25, 2017] Obama basically decided against marketing his healthcare plan.

www.unz.com

JohnH -> kurt... , June 23, 2017 at 07:05 PM

Jun 25, 2017 | economistsview.typepad.com
Obama basically decided against marketing his healthcare plan. In February, 2009 the Obama campaign contacted campaign workers and asked them to convene neighborhood groups to make suggestions for the plan. My wife and eye convened such a group. We believed it was to be part of a national grass roots push to overwhelm the naysayers.

We sent in the neighborhood's suggestions. We were told they would get back to us. They never did. Grassroots organizing was eliminated. There was no grassroots push. Obama hardly marketed his plan, letting Republicans define it for him.

That was when I began to smell a rat...

JohnH -> sanjait... , June 23, 2017 at 07:48 PM
"It's the Message, Stupid"
http://inthesetimes.com/article/5030/its_the_message_stupid

Back in 2009, Greenberg, Carville and Bauman developed a strategy for selling healthcare reform to the public...most of which Democrats just ignored. http://www.democracycorps.com/wp-content/files/dcorps-healthcare-062509.pdf

Much of it still applies today, but Democrats are clueless...they fear their big donors would revolt if they actually stated what the American people want and need.

JohnH -> mulp ... , June 23, 2017 at 08:06 PM
"actually works" is in the eye of the beholder.

Numbers of economists defended Bernie's proposals...but establishment ones linked with the Democratic Party did not.
http://observer.com/2016/02/liberal-economists-defend-bernie-sanders-against-a-chorus-of-critics/

Bill Black and Jaimie Galbraith were among the most prominent...but you never heard about their push-back because the liberal media blocked it out.

pgl , June 23, 2017 at 12:04 PM
Steve Beshear who was the Democratic Kentucky Governor who did a great job of implementing Obamacare for his state was asked about the stances of his state's two Senators. He really laid in McConnell which was no surprise. His comment re Rand Paul? Senator Paul wants to take our nation back to the 18th century.
jonny bakho -> Lee A. Arnold ... , June 23, 2017 at 05:12 PM
Please... Susan Collins is just as bad as the rest of them. Her carefully crafted public image is all show.

GOP moderates always cave because they are not moderates, they just play to the tastes of their purple states

The GOP will throw a few crumbs, make a big show about the "moderates" improving the bill and then they will be free to vote for it.
Trump, ever the con artist will sell it as Trump steak

JohnH -> kurt... , June 23, 2017 at 04:05 PM
Oh, BS. That the party is corrupt was made evident to anyone who watched Bubba sign away Glass-Steagall, just in time for Hillary to announce her run for Senator from New York/Wall Street. Of course, Bubba insists that there was no quid quo pro. Those who believe him would be good customers for buying the Brooklyn Bridge...

Since then, it's only gotten worse.

[Jun 24, 2017] The Secret Republican Plan to Unravel Medicaid by Robert Reich

Jun 24, 2017 | economistsview.typepad.com

Christopher H, June 23, 2017 at 01:23 PM

http://robertreich.org/post/162168911075

The Secret Republican Plan to Unravel Medicaid

by Robert Reich

FRIDAY, JUNE 23, 2017

Bad enough that the Republican Senate bill would repeal much of the Affordable Care Act.

Even worse, it unravels the Medicaid Act of 1965 – which, even before Obamacare, provided health insurance to millions of poor households and elderly.

It's done with a sleight-of-hand intended to elude not only the public but also the Congressional Budget Office.

Here's how the Senate Republican bill does it. The bill sets a per-person cap on Medicaid spending in each state. That cap looks innocent enough because it rises every year with inflation.

But there's a catch. Starting 8 years from now, in 2025, the Senate bill switches its measure of inflation – from how rapidly medical costs are rising, to how rapidly overall costs in the economy are rising.

Yet medical costs are rising faster than overall costs. They'll almost surely continue to do so – as America's elderly population grows, and as new medical devices, technologies, and drugs prolong life.

Which means that after 2025, Medicaid will cover less and less of the costs of health care for the poor and elderly.

Over time, that gap becomes huge. The nonpartisan Urban Institute estimates that just between 2025 and 2035, about $467 billion less will be spent on Medicaid than would be spent than if Medicaid funding were to keep up with the expected rise in medical costs.

So millions of Americans will lose the Medicaid coverage they would have received under the 1965 Medicaid act. Over the long term, Medicaid will unravel.

Will anyone in future years know Medicaid's unraveling began with this Senate Republican bill ostensibly designed to repeal and replace the Affordable Care Act? Probably not. The unraveling will occur gradually.

Will future voters hold Republicans responsible? Again, unlikely. The effects of the unraveling won't become noticeable until most current Republican senators are long past reelection.

Does anyone now know this time bomb is buried in this bill?

It doesn't seem so. McConnell won't even hold hearings on it.

Next week the Congressional Budget Office will publish its analysis of the bill. CBO reports on major bills like this are widely disseminated in the media. The CBO's belated conclusion that the House's bill to repeal and replace the Affordable Care Act would cause 23 million Americans to lose their health care prompted even Donald Trump to call it "mean, mean, mean."

But because the CBO's estimates of the consequences of bills are typically limited to 10 years (in this case, 2018 to 2028), the CBO's analysis of the Senate Republican bill will dramatically underestimate how many people will be knocked off Medicaid over the long term.

Which is exactly what Mitch McConnell has planned. This way, the public won't be tipped off to the Medicaid unraveling hidden inside the bill.

For years, Republicans have been looking for ways to undermine America's three core social insurance programs – Medicaid, Medicare, and Social Security. The three constitute the major legacies of the Democrats, of Franklin D. Roosevelt and Lyndon Johnson. All continue to be immensely popular.

Now, McConnell and his Senate Republican colleagues think they've found a way to unravel Medicaid without anyone noticing.

Don't be fooled. Spread the word.

[Jun 24, 2017] Michael Hudson: Are Students a Class?

Notable quotes:
"... the use of debt as a primary weapon in class warfare ..."
"... They were in hock to the man, and eventually became slaves to him. This structure, of sharecropping and usury, held together by political violence, continued into the 1960s in some areas of the South. As late as the 1960s, Kennedy would see rural poverty in Arkansas and pronounce it 'shocking'. These were the fruits of usury, a society built on unsustainable debt peonage. ..."
"... Today, we are in the midst of creating a second sharecropper society ..."
"... Today, the debts do not involve liens against crops. People in modern America carry student loans, credit card debt, and mortgages. All of these are hard to pay back, often bringing with them impenetrable contracts and illegal fees. Credit card debt is difficult to discharge in bankruptcy and a default on a home loan can leave you homeless. A student loan debt is literally a claim against a life - you cannot discharge it in bankruptcy, and if you die, your parents are obligated to pay it. If the banks have their way, mortgages and deficiency judgments will follow you around forever, as they do in Spain. ..."
"... By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is J is for Junk Economics ..."
"... Students usually don't think of themselves as a class. They seem "pre-class," because they have not yet entered the labor force. They can only hope to become part of the middle class after they graduate. And that means becoming a wage earner – what impolitely is called the working class. ..."
"... But as soon as they take out a student debt, they become part of the economy. They are in this sense a debtor class. But to be a debtor, one needs a means to pay – and the student's means to pay is out of the wages and salaries they may earn after they graduate. And after all, the reason most students get an education is so that they can qualify for a middle-class job. ..."
"... Shedding crocodile tears for the slow growth of U.S. employment in the post-2008 doldrums (the "permanent Obama economy" in which only the banks were bailed out, not the economy), the financial class views the role industry and the economy at large as being to pay its employees enough so that they can take on an exponentially rising volume of debt. Interest and fees (late fees and penalties now yield credit card companies more than they receive in interest charges) are soaring, leaving the economy of goods and services languishing. ..."
"... Students are the new NINJAs: No Income, No Jobs, No Assets. But their parents have assets, and these are now being grabbed, even from retirees. Most of all, the government has assets – the power to tax (mainly labor these days), and something even better: the power to simply print money (mainly Quantitative Easing to try and re-inflate housing, stock and bond prices these days). Most students hope to become independent of their parents. But burdened by debt and facing a tough job market, they are left even more dependent. That's why so many have to keep living at home. ..."
"... A must-read primer on debt peonage and how universities are basically real estate hoarders and debtor magnets for the banks. ..."
"... Not to mention the incredible amount of cheating that goes on at universities. I guess cheating at college is training for joining the Kleptocracy. ..."
"... The question to ask, I think, is about the sustainability of this inversion of the dream of education as the path to upward mobility. People do not need to fully, or even partially, intellectually grasp the causes of their misery and sense of failure and futility to overthrow the status quo. This is the ideal -typically coming from the left- where informed citizens will recognize class conflict in its current form, neoliberal policies enriching the 1% and impoverishing most of the rest, and take over the government by voting out corrupt and captured politicians. ..."
"... Once the difference between education and indoctrination is learned, thee student and debtors in general can be "woke." How many students even think they should put themselves through a process of de-institutionalization, especially if they've followed the course of 1st grade to college graduation without a break? ..."
"... Today, the debts do not involve liens against crops. People in modern America carry student loans, credit card debt, and mortgages ..."
"... Perhaps Michael Hudson is – somewhat sloppily – referring to the IIRC typical case where getting the loan requires someone to sign on as guarantor, normally the student's parents. ..."
Jun 01, 2017 | www.nakedcapitalism.com

Yves here. Matt Stoller anticipated the situation Michael Hudson describes, the use of debt as a primary weapon in class warfare. From a 2010 post :

A lot of people forget that having debt you can't pay back really sucks. Debt is not just a credit instrument, it is an instrument of political and economic control.

It's actually baked into our culture. The phrase 'the man', as in 'fight the man', referred originally to creditors. 'The man' in the 19th century stood for 'furnishing man', the merchant that sold 19th century sharecroppers and Southern farmers their supplies for the year, usually on credit. Farmers, often illiterate and certainly unable to understand the arrangements into which they were entering, were charged interest rates of 80-100 percent a year, with a lien places on their crops. When approaching a furnishing agent, who could grant them credit for seeds, equipment, even food itself, a farmer would meekly look down nervously as his debts were marked down in a notebook. At the end of a year, due to deflation and usury, farmers usually owed more than they started the year owing. Their land was often forfeit, and eventually most of them became tenant farmers.

They were in hock to the man, and eventually became slaves to him. This structure, of sharecropping and usury, held together by political violence, continued into the 1960s in some areas of the South. As late as the 1960s, Kennedy would see rural poverty in Arkansas and pronounce it 'shocking'. These were the fruits of usury, a society built on unsustainable debt peonage.

Today, we are in the midst of creating a second sharecropper society

Today, the debts do not involve liens against crops. People in modern America carry student loans, credit card debt, and mortgages. All of these are hard to pay back, often bringing with them impenetrable contracts and illegal fees. Credit card debt is difficult to discharge in bankruptcy and a default on a home loan can leave you homeless. A student loan debt is literally a claim against a life - you cannot discharge it in bankruptcy, and if you die, your parents are obligated to pay it. If the banks have their way, mortgages and deficiency judgments will follow you around forever, as they do in Spain.

Young people and what only cynics might call 'homeowners' have no choice but to jump on the treadmill of debt, as debtcroppers. The goal is not to have them pay off their debts, but to owe forever. Whatever a debtcropper owes, a wealthy creditor owns.

And as a bonus, the heavier the debt burden of American citizenry, the less able we are able to organize and claim our democratic rights as citizens. Debtcroppers don't start companies and innovate, they don't take chances, and they don't claim their political rights. Think about this when you hear the calls from ex-Morgan Stanley banker and current World Bank President Robert Zoellick and his nebulous mutterings pining for the gold standard. Or when you hear Warren Buffett partner Charlie Munger talk about how the bailouts of the wealthy were patriotic, but we mustn't bail out homeowners for fear of 'moral hazard'.

Or when you hear Pete Peterson Foundation President and former Comptroller General David Walker yearn nostalgically for debtor's prisons.

Focusing on students, Hudson shows how much "progress" has been made in a mere seven years.

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is J is for Junk Economics

Students usually don't think of themselves as a class. They seem "pre-class," because they have not yet entered the labor force. They can only hope to become part of the middle class after they graduate. And that means becoming a wage earner – what impolitely is called the working class.

But as soon as they take out a student debt, they become part of the economy. They are in this sense a debtor class. But to be a debtor, one needs a means to pay – and the student's means to pay is out of the wages and salaries they may earn after they graduate. And after all, the reason most students get an education is so that they can qualify for a middle-class job.

The middle class in America consists of the widening sector of the working class that qualifies for bank loans – not merely usurious short-term payday loans, but a lifetime of debt. So the middle class today is a debtor class.

Shedding crocodile tears for the slow growth of U.S. employment in the post-2008 doldrums (the "permanent Obama economy" in which only the banks were bailed out, not the economy), the financial class views the role industry and the economy at large as being to pay its employees enough so that they can take on an exponentially rising volume of debt. Interest and fees (late fees and penalties now yield credit card companies more than they receive in interest charges) are soaring, leaving the economy of goods and services languishing.

Although money and banking textbooks say that all interest (and fees) are a compensation for risk, any banker who actually takes a risk is quickly fired. Banks don't take risks. That's what the governments are for. (Socializing the risk, privatizing the profits.) Anticipating that the U.S. economy may be unable to recover under the weight of the junk mortgages and other bad debts that the Obama administration left on the books in 2008, banks insisted that the government guarantee all student debt. They also insisted that the government guarantees the financial gold-mine buried in such indebtedness: the late fees that accumulate. So whether students actually succeed in becoming wage-earners or not, the banks will receive payments in today's emerging fictitious "as if" economy. The government will pay the banks "as if" there is actually a recovery.

And if there were to be a recovery, then it would mean that the banks were taking a risk – a big enough risk to justify the high interest rates charge on student loans.

This is simply a replay of what banks have negotiated for real estate mortgage lending. Students who do succeed in getting a job hope to start a family, or at least joining the middle class. The most typical criterion of middle-class life in today's world (apart from having a college education) is to own a home. But almost nobody can buy a home without getting a mortgage. And the price of such a mortgage is to pay up to 43 percent of one's income for thirty years, that is, one's prospective working life (in today's as-if world that assumes full employment, not just a gig economy).

Banks know how unlikely it is that workers actually will be able to earn enough to carry the costs of their education and real estate debt. The costs of housing are so high, the price of education is so high, the amount of debt that workers must pay off the top of every paycheck is so high that American labor is priced out of world markets (except for military hardware sold to the Saudis and other U.S. protectorates). So the banks insist that the government pretends that housing as well as education loans not involve any risk for bankers.

The Federal Housing Authority guarantees mortgages that absorb up to the afore-mentioned 43 percent of the applicant's income. Income is not growing these days, but job-loss is. Formerly middle-class labor is being downsized to minimum-wage labor (MacDonald's and other fast foods) or "gig" labor (Uber). Here too, the fees mount up rapidly when there are defaults – all covered by the government, as if it is this compensates the banks for risks that the government itself bears.

From Debt Peons to Wage Slaves

In view of the fact that a college education is a precondition for joining the working class (except for billionaire dropouts), the middle class is a debtor class – so deep in debt that once they manage to get a job, they have no leeway to go on strike, much less to protest against bad working conditions. This is what Alan Greenspan described as the "traumatized worker effect" of debt.

Do students think about their future in these terms? How do they think of their place in the world?

Students are the new NINJAs: No Income, No Jobs, No Assets. But their parents have assets, and these are now being grabbed, even from retirees. Most of all, the government has assets – the power to tax (mainly labor these days), and something even better: the power to simply print money (mainly Quantitative Easing to try and re-inflate housing, stock and bond prices these days). Most students hope to become independent of their parents. But burdened by debt and facing a tough job market, they are left even more dependent. That's why so many have to keep living at home.

The problem is that as they do get a job and become independent, they remain dependent on the banks. And to pay the banks, they must be even more abjectly dependent on their employers.

It may be enlightening to view matters from the vantage point of bankers. After all, they have $1.3 trillion in student loan claims. In fact, despite the fact that college tuitions are soaring throughout the United States even more than health care (financialized health care, not socialized health care), the banks often end up with more education expense than the colleges. That is because any interest rate is a doubling time, and student loan rates of, say, 7 percent mean that the interest payments double the original loan value in just 10 years. (The Rule of 72 provides an easy way to calculate doubling times of interest-bearing debt. Just divide 72 by the interest rate, and you get the doubling time.)

A fatal symbiosis has emerged between banking and higher education in America. Bankers sit on the boards of the leading universities – not simply by buying their way in as donors, but because they finance the transformation of universities into real estate companies. Columbia and New York University are major real estate holders in New York City. Like the churches, they pay no property or income tax, being considered to play a vital social role. But from the bankers' vantage point, their role is to provide a market for debt whose magnitude now outstrips even that of credit card debt!

Citibank in New York City made what has been accused of being a sweetheart deal with New York University, which steers incoming students to it to finance their studies with loans. In today's world a school can charge as much for an education as banks are willing to lend students – and banks are willing to lend as much as governments will guarantee to cover, no questions asked. So the bankers on the school boards endorse bloated costs of education, knowing that however much more universities make, the bankers will receive just as much in interest and penalties.

It is the same thing with housing, of course. However much the owner of a home receives when he sells it, the bank will make an even larger sum of money on the interest charges on the mortgage. That is why all the growth in the U.S. economy is going to the FIRE sector, owned mainly by the One Percent.

Under these terms, a "more educated society" does not mean a more employable labor force. It means a less employable society, because more and more wage and consumer income is used not to buy goods and services, not to eat out in restaurants or buy the products of labor, but to pay the financial sector and its allied rentier class. A more educated society under these rules is simply a more indebted society, an economy succumbing to debt deflation, austerity and unemployment except at minimum-wage levels.

For half a century Americans imagined themselves getting richer and richer by going into debt to buy their own homes and educate their children. Their riches have turned out to be riches for the banks, bondholders and other creditors, not for the debtors. What used to be applauded as "the middle class" turns out to be simply an indebted working class.

HBE , June 1, 2017 at 8:21 am

In today's world a school can charge as much for an education as banks are willing to lend students – and banks are willing to lend as much as governments will guarantee to cover, no questions asked.

Banks are (debt) slave owners, but universities are the (debt) slave merchants and overseers. Which is probably why campuses aren't filled with groups fighting for labor rights or discussing the abysmal economic reality they face.

Instead virtue signalling, woke IdPol is the dominant focus, which is just fine with the overseer, and nurtured by the comfortable tenured faculty, who are often quite happy having little debt slave house servants of their own (grad students, adjuncts).

And even worse the overseers (universities) don't put the revenue generated by slaves into improving classes, hiring more full time faculty, or a host of other factors that improve the quality of education.

They funnel it into aesthetics to make things look more appealing on tours, and materials, they use to attract more slaves, all the while crapifying quality of education. Which is the moat odious aspect of their role, they arent using the slaves to build a better educational system, but to get more slaves. The number of useless PowerPoint lectures I sat through makes me angry when I think about it.

Universities are the wives (or husbands) that look on and enable child abuse Almost, if not more disgusting than the abuser (banks).

And this is coming from a lucky grad who managed to stay out of the gig economy.

nycTerrierist , June 1, 2017 at 8:42 am

Well put. Outstanding posts by Stoller and Hudson. A must-read primer on debt peonage and how universities are basically real estate hoarders and debtor magnets for the banks.

hemeantwell , June 1, 2017 at 5:59 pm

Credit where it's due: I'm a fan of both Stoller and Hudson, but I believe Hudson has been emphasizing debt in his writings far longer than Stoller. From Wikipedia:

Hudson [aged 78] devoted his entire scientific career to the study of debts: both domestic (loans, mortgages, interest payments) and external. In his works he consistently advocates the idea that loans and exponentially growing debts that outstrip profits from the economy of the "real" sphere are disastrous for both the government and the people of the borrowing state: they are washing money (going to payments to usurers and rentiers) from turnover, not leaving them to buy goods and services, and thus lead to "debt deflation" of the economy "

Stephen Gardner , June 1, 2017 at 9:05 am

The rentier class is just a bit out over its skis on this. First, college debt is not "out of sight our of mind" the way rural poverty in the deep south is and was. The victims of the banks are geographically well distributed and numerically much greater than southern sharecroppers. I don't think the demographics of the Bernie Sanders movement is any accident. Young people in this country are not illiterate farmers. They often are well educated. Furthermore an education is something that cannot be confiscated by a bank in lieu of payment on a loan. Geographic distribution of victims is very important from the point of view of networking. As much as we have become more isolated as individuals due to some of the forces present in American society, victims of the rentier class are in close proximity to one another and in contact. They are also present all over the US. Like a fire fed by uncut underbrush in a forest the flames may spread quickly. When it happens, none of the prognosticators will have seen it coming–not even those of the left.

justanotherprogressive , June 1, 2017 at 10:09 am

While I agree with your post, I quibble with your first line. I don't think the rentier class is "over its skis" with this one any more than the airline industry is "over its skis" with what it has been doing. As long as people are willing to put up with these tactics, they will continue .and get worse. There is no incentive for them to stop or slow down .

UserFriendly , June 2, 2017 at 12:30 am

It's not that people put up with it I know dozens that just have no hope, faith, or sense that change is even possible; so crippled with anxiety over their finances that they are utterly useless, myself included. When there is no light at the end of the tunnel it is almost impossible to muster the effort to do anything.

David , June 1, 2017 at 10:36 am

"Furthermore an education is something that cannot be confiscated by a bank in lieu of payment on a loan."

..which is why the government guarantee exists – coupled with the fact that the "education" for most is largely a myth – a degree is not an education.

As widely reported in NYC public schools last year – the graduation rate is 86%, but tests show less than 4% comprehension for math and english as reported in the NYP last year – same is largely true for higher education except for the price tag. The sharecroppers at least had tangibles to show from the financing exercise however meager they might be at the end of the day – the degree is largely worthless.

The banks will do .. fine

Allegorio , June 1, 2017 at 12:22 pm

Not to mention the incredible amount of cheating that goes on at universities. I guess cheating at college is training for joining the Kleptocracy.

DanB , June 1, 2017 at 11:43 am

The question to ask, I think, is about the sustainability of this inversion of the dream of education as the path to upward mobility. People do not need to fully, or even partially, intellectually grasp the causes of their misery and sense of failure and futility to overthrow the status quo. This is the ideal -typically coming from the left- where informed citizens will recognize class conflict in its current form, neoliberal policies enriching the 1% and impoverishing most of the rest, and take over the government by voting out corrupt and captured politicians.

What is far more likely is that scapegoats are offered -a la Trump or some other demagogue. (But scapegoating leaves exploitation unresolved.) Whichever occurs, the current system of exploitation cannot go on, especially when all the other factors associated with hitting the limits to growth are considered.

LT , June 1, 2017 at 12:16 pm

Once the difference between education and indoctrination is learned, thee student and debtors in general can be "woke." How many students even think they should put themselves through a process of de-institutionalization, especially if they've followed the course of 1st grade to college graduation without a break?

Dead Dog , June 1, 2017 at 10:20 am

Thank you Michael. I studied economics at ANU and went through the period when Australia considered the cost of a university education, which back in the early 80s was free (I think we paid around $150 by way of Union subs). One of the new questions for students was the issue of education being a private or public good.

The Labor Treasurer at the time (and later Prime Minister), Paul Keating, made it quite clear that education had more of the characteristics of a private good and the benefits (public good aspect) of a quality education for the country were erased and have never been seen (discussed) again.

Money changed university and that change has not been positive for the institutions or the citizens they serve.

Grumpy Engineer , June 1, 2017 at 10:21 am

This article is a little misguided. I absolutely agree that excess student debt is becoming a major problem in American society that is causing all sorts of real problems, but to blame "the bankers" is to point a finger at the wrong culprit.

The true culprit is grotesque symbiosis between the colleges & universities and the US Department of Education , which issues over 90% of student loans. If you want to know who the predatory lender is here, look to Washington. The banks are just participating at the edges of our student loan fiasco.

Part of the problem is the popular concept of "good debt" vs. "bad debt", as espoused by economists such as Jared Bernstein. "Good debt" helps increase your earning potential, so the more good debt the government pushes on the populace, the better. Right? It's a popular concept in DC.

And it's crap. And the government is crushing an entire generation of students with excess debt in the process. I think Michelle Singletary summarized it well: Yes, All Debt is Bad Debt .

diptherio , June 1, 2017 at 11:05 am

So you think that the banksters are only profiting on this by accident? Who do you think is lobbying to have student loan debt made non-dischargeable? Who do you think is lobbying the Dept. of Ed. to guarantee all those loans?

For sure, there is more than enough blame to go around, and multiple actors have earned their share. But to place the majority of the blame outside the financial sector that, as Hudson points out, always profits MORE from debt than the people whose products that debt is used to buy, is a bit on the bizarre side.

Banks make money by creating debt and getting their victims er, customers to take that debt on. Therefore, bankers have an interest in increasing the overall level of debt in an economy. When you see debt skyrocketing, look around for an unscrupulous banker.

Grumpy Engineer , June 1, 2017 at 11:34 am

Your understanding of student loans is behind the times. The federal government hasn't guaranteed any privately-issued student loans since June of 2010. That was seven years ago.

This was Obama's great "improvement" to student lending. Cut the bankers out of the loop and have the government issue loans directly. And somehow the total amount of debt being carried by students managed to skyrocket anyway. It actually accelerated . And the government routinely employs debt collection practices (like seizing Social Security checks) that were rightly outlawed in the private sector. Those evil debt-collection companies that you regularly hear about in the news? Hired by our government for purposes of collecting on federal student loans.

Private banks only hold $150 billion out of $1.44 trillion in total student debt. That's barely 10%. Sure, the banks make some profit here. But the bulk of the problem is the federal loans. It's our own government that is crushing an entire generation of students with excess debt.

Eleanor Rigby , June 1, 2017 at 12:21 pm

If I understand correctly, this change was implemented as a part of Obamacare. "We won't know what is in it until we pass it." I wonder what else is in that bill.

Allegorio , June 1, 2017 at 12:38 pm

Your comment does not contradict Hudson's assertion that student debt creates compliant employees, making it difficult to change employment or stand up to employers. Likewise all the surveillance makes people afraid to protest and demonstrate, in case they lose their jobs.

The true evil is compound interest where the interest on a loan far exceeds the original loan. Economic activity increases linearly, interest geometrically. Does risking x dollars entitle you to x^n compensation. It is interesting to note, that in the ancient world the majority of slaves were not due to conquest but default on debt. The revival of slavery and serfdom is an obsession with the .001%ers. No robot can ever match the service of a subjugated human being. This country is ruled by murderers and thieves, sad to say.

Alejandro , June 1, 2017 at 2:50 pm

In this latest mutation, how and who does the loan servicing?

Left in Wisconsin , June 1, 2017 at 3:29 pm

Someone else may know better but I believe the govt hired 4 of the former loan originators/servicers to do all of the servicing nationwide.

Grumpy Engineer , June 1, 2017 at 4:25 pm

The Department of Education has contracted out the loan servicing, a practice that has led to even further abuse of borrowers. I found this list of about a dozen different servicers, but it's from 2013 and is likely out of date:

http://thecollegeinvestor.com/9892/the-complete-list-of-federal-student-loan-servicers/

Sam Adams , June 1, 2017 at 1:21 pm

Uncle Joe Biden.
Contribute to the Joe Biden (student debt peonage fund) 2020 PAC.

Paul art , June 1, 2017 at 3:35 pm

Marvelous hijack of the thread here buddy. Start talking about lousy Government instead of everything else. Brilliant move. You should apply to some Right Wing Think Tanks. I reckon they will pay handsomely for a brain like yours.

PhilM , June 1, 2017 at 6:41 pm

Yeah, buster, don't be going and confusing people with interesting facts and points of view that haven't already been expressed thousands of times! What do you think this is, an anechoic chamber?

djrichard , June 1, 2017 at 11:30 am

the US Department of Education, which issues over 90% of student loans

Usually something like this would trigger hand waving about the Fed Gov crowding out the private sector. But in this case, crickets. I wonder why.

In a related note, presumably any loans issued by the Fed Gov do not actually increase the monetary base. So in a way, the Fed Gov is at cross purposes with the Fed Reserve which is doing everything in its power to create private debt inflation (increase of the monetary base). Banks to indebted students: "wake me up when you paid off Uncle Sam and we can do bidness."

Which triggers my suspicion on why the banks are pro immigration – because I believe immigrants would more or less be free of debt. Banks to themselves: "what's not to love? Oops, I mean give us your down-trodden, your poor".

Lynne , June 1, 2017 at 10:34 am

Today, the debts do not involve liens against crops. People in modern America carry student loans, credit card debt, and mortgages

Hard to say just how angry this makes me. I know most of the county likes to sneer at farmers, even more than others in flyover country. But to read this statement in a supposedly thoughtful article makes my blood boil. Given the vast consolidation in land ownership (Zuckerberg's attempt to strong arm Hawaiians was merely an attempt to follow the example of Ted Turner, after all), and the way Tyson destroyed whole segments of the market, crops are a large lever. Used to be crops and equipment, but John Deere has done its best to make farmers captives as well. But no, they don't exist (except to pay outrageous tuition to ag and vo-tech colleges) and MODERN Americans eat food that springs magically into existence in Trader Joe's. Bah, a plague on their houses. /sarc

Maybe the student loan debtors should start picketing the home of that Democratic hero, Joe Biden. Or take a look at just why post grad tuition has skyrocketed.

Grumpy Engineer , June 1, 2017 at 10:57 am

Why has post-graduate tuition skyrocketed? Because federal loan limits for graduate school are higher:

$57,500 for undergraduates and $138,500 for graduate or professional students, per https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized .

The objective of this game is for schools to extract as much money as possible from the government, with the students being held responsible for paying it back. Higher loan limits are the cause of higher tuition rates, not the effect.

diptherio , June 1, 2017 at 11:21 am

Being from MT and a (one-time) ag family, I hear you on the issue of farmer indebtedness that is a serious problem, as it always has been. I've been hearing forever about the realities of farming - go into debt during planting and hope you get enough at harvest to pay it off and still have a little left over to live on.

However, as you point out, land consolidation by the likes of Cargill and their ilk has greatly reduced the number of family farms and the amount of family farm debt along with it. Total student loan debt right now is over $1.4T, whereas total ag debt is only $395B i.e. there is 4 times as much student loan debt as ag debt.

I'm pretty sure that Hudson wasn't trying to downplay the plight of family farmers in this country, or the crushing amounts of debt that they, individually, often end up taking on. I think he's just pointing out that on the macro-level, student debt has become the main contributor to overall indebtedness (along with mortgages).

Allegorio , June 1, 2017 at 12:49 pm

Not that all that money goes to hiring teaching staff. The majority of courses are taught by poorly paid adjutants and grad students. There is however an ever burgeoning class of college administrators all with six figure incomes pensions and medical care. It is jobs program for the well connected and ethnically privileged. Try getting a job at a university, not if you don't know somebody. The level of corruption at universities is truly astounding. I guess it is par for the course in our mafia culture. Free tuition would certainly increase pressure on cleansing the Stygian Stables, but until the electoral system is reformed and publicly financed there can be no reform of our education system. Finally, I second the emotion, may Joe Biden rot in hell.

shinola , June 1, 2017 at 10:39 am

I am reminded of an old coal miners song:

Ya load 16 tons and what do ya get
Another day older and deeper in debt
St. Peter don't ya call me 'cause I can't go
I owe my soul to the company store

Off The Street , June 1, 2017 at 7:59 pm

I came across the term leet-man the other day. That was in reference to John Locke, yes, that John Locke . He used the term in reference to his work on the South Carolina constitution of a few centuries ago. That was a bad idea then, and has gotten worse in the current context.
Meet the new boss, same as the old boss.

Locke's preamble stated: "that we may avoid erecting a numerous democracy;" Locke's "constitution" established the eight lords proprietors as a hereditary nobility, with absolute control over their serfs, called "leet-men":

"XIX: Any lord of a manor may alienate, sell, or dispose to any other person and his heirs forever, his manor, all entirely together, with all the privileges and leet-men there unto belonging .

"XXII: In every signory, barony and manor, all the leet-men shall be under the jurisdiction of the respective lords of the said signory, barony, or manor, without appeal from him. Nor shall any leet-man, or leet-woman, have liberty to go off from the land of their particular lord, and live anywhere else, without license from their said lord, under hand and seal.

"XXIII: All the children of leet-men shall be leet-men, and so to all generations."

Jesper , June 1, 2017 at 10:42 am

& the risk versus reward is completely skewed . The risk of default is (should be) based on the best credit rating of the borrower or the guarantor. In this case it seems that the risk premium is based on the worst credit rating so difference between risk and reward is completely off.
Personally I'd never ever guarantee someone elses debt – I'd rather borrow the money and lend it myself to whoever wanted me to be guarantor as in effect the risk would be the same as being a guarantor and the costs would be less as the middle man would be cut out.
Therefore I consider this:

banks insisted that the government guarantee all student debt

an unsurprising ask by banks but agreeing to it is idiocy. "Yes we can" does (or should not) mean saying yes to everything
https://en.wikipedia.org/wiki/Barack_Obama_presidential_campaign,_2008#Slogan

Grumpy Engineer , June 1, 2017 at 11:08 am

Aye. Saying "yes" to somebody who wants to borrow $120k for a masters in "motivational speaking" from a crappy knockoff of Trump University isn't exactly doing them a favor. But the US government will do it anyway. They pretty much say "yes" to everything when it comes to student borrowing, regardless of how likely it is that the student will be able to repay.

Assessing a potential borrower's ability to repay (a.k.a., underwriting) and sometimes saying "no" is an important part of lending. Keeps people from getting in over their heads. Well, it used to be. Nobody seems to bother these days. Especially the US government.

Allegorio , June 1, 2017 at 12:53 pm

The point being that the banks and the government want people to get in over their heads to feed the beast and to marginalize them with debt.

PhilM , June 1, 2017 at 6:44 pm

There's another way to look at it. If the government takes on all this debt, then forgives it, hasn't it given a tuition-free education "by the back door"? This could have been an outrageously ingenious move by Obama to slide free education in via the MMT back door.

Yves Smith Post author , June 1, 2017 at 7:20 pm

Coming off as an ideologue isn't a way to persuade people.

No one here likes making students borrow to pay for education. Even the Fed has found tuition subsides will lower default rates. But you don't get what the objective is. It is ostensibly to get more people educated, which of course allows for the continued inflation of college costs.

The Fed article pointed the issue of what the apparent real aims are:

Our results suggest that if the goal of education policy is to improve aggregate welfare, then merit-based tuition subsidies are preferable to both need-based subsidies and higher government borrowing limits, as merit-based subsidies promote college investment without increasing default rates in the student loan market. However, if the goal is to deliver high college enrollment rates, then need-based subsidies are preferable to merit-based subsidies and higher government borrowing limits, but come at the cost of higher default rates on student loans.

https://www.federalreserve.gov/pubs/feds/2014/201466/201466pap.pdf

And the payoff to having a degree is even higher than before given rising income inequality (one of my buddies was just at an investment conference where this was a prominent point made). So if you can't get a college education, you will be left out of what is left of the middle class. But one of many problems is only something like 57% of the students complete their degrees even in 6 years.

http://www.latimes.com/opinion/op-ed/la-oe-mcpherson-complete-college-20160822-snap-story.html

jerry , June 1, 2017 at 10:48 am

Any bankruptcy attorneys out there who can give me a good reason not to declare chapter 7 with 10-15k in unsecured debt, low income, and no medium term (5-10 years) prospects of needing a good credit score? Seems like the only tool left in the toolkit for us wage slaves these days?

LT , June 1, 2017 at 12:07 pm

In the 90s, a radio promotion man from a music label was the first person to explain the the sharecropper analogy to me during a discussion about recording artist contracts. And the internet (or the information people give in service of it) has not changed the dynamic in music or any other industry because it concentrated power and made creditors and credit reporting agencies more powerful.

WeakenedSquire , June 1, 2017 at 12:46 pm

A student loan debt is literally a claim against a life - you cannot discharge it in bankruptcy, and if you die, your parents are obligated to pay it.

No. The second half of that is a flat-out wrong statement. Student loans are discharged upon the borrower's death. Every time I read Hudson, I find myself incredibly frustrated that a man of such brilliance resorts to lazy and hyperbolic exaggerations to make a point when there is no bloody need to do so. Reality is grotesque enough.

JustAnObserver , June 1, 2017 at 1:40 pm

Perhaps Michael Hudson is – somewhat sloppily – referring to the IIRC typical case where getting the loan requires someone to sign on as guarantor, normally the student's parents.

Q for those who know: Am I right in thinking this ?

nycTerrierist , June 1, 2017 at 12:48 pm

As if it isn't bad enough, enter Betsy Devos:

http://www.slate.com/blogs/moneybox/2017/04/18/betsy_devos_is_wasting_no_time_screwing_over_student_borrowers.html

http://www.prwatch.org/news/2017/01/13207/betsy-devos-ethics-report-reveals-ties-student-debt-collection-firm

Gordon , June 1, 2017 at 12:50 pm

Here in the UK today's undergraduates are graduating with a debt in the high £40ks. That is getting on for twice the per capita national debt (around £27k if memory serves) so, given that about half now go to university, that will in time nearly double the national debt – except it will have been privatised so that's ok (/sarc).

Actually, it's not ok. After buying or renting (mostly renting) ridiculously expensive houses and paying off their student loans, today's graduates will not/cannot possibly generate enough economic surplus to pay the pensions of their parents. Somehow/sometime this is going to break.

Wisdom Seeker , June 1, 2017 at 3:16 pm

One aspect of this needs additional consideration: one person's debt is another person's asset. But whose asset? Blaming "rentiers" is insufficiently precise; we ought to know who lent the money. Demand for "bonds" comes from many sources, including retiree pensions, 401Ks, and so on.

Most of the student loans are federally guaranteed, but are the principal and interest payments actually going to Uncle Sam, or to Sallie Mae bond tranche owners? Are the boomers – at least those with pensions and 401ks – enslaving students through their ravenous demand for income-producing assets to fund their retirements?

Most people are blindly funding "life cycle" retirement funds, not realizing that those very "investments" are enabling all the behavior they decry as exploitative. The huge national debt, student loan, housing and auto loan bubbles are all funded by people who think of themselves as "investors", but are actually ENABLERS.

I fear the abuses won't end until people wake up and realize that their 401K retirement fund is abetting all the evils they abhor, and start demanding better investment options. But many simply won't care, and the finance industry will fight tooth and claw to prevent reform of their gravy train

P.S. In past years, when I searched I was not able to easily find a single bond mutual fund or ETF of any size that doesn't fund either the national debt, the TBTF banks, the housing, student loan or auto bubbles. One would think there would be some funds investing in bonds issued by non financial productive corporations; are there any? I would give good coin to a 401K or IRA-compatible fund or ETF which indexed non-financial corporate bonds, especially if it used a socially-responsible overlay to screen out the other forms of corporate abuse (monopolies, pollution, slave-labor practices etc.).

bob , June 1, 2017 at 7:43 pm

Are the boomers – at least those with pensions and 401ks – enslaving students through their ravenous demand for income-producing assets to fund their retirements?

– YES –

VietnamVet , June 1, 2017 at 7:08 pm

Two industries not yet outsourced are education and healthcare. Rural college towns are the only oases of prosperity in mid-America. This article explains why. All the money being spent there is coming from the student's future earnings. It is unsustainable. The percentage of middle class families have fallen from 62% in 1970 to 43% in 2014. This is why government took over student loans. To keep the scam going. Debt that can't be paid back won't be. Healthcare has likewise been finanicizlized. Housing is well into its second bubble blown in part by Chinese flight capital. Something will pop. The prick could be as simple as a successful soft coup by the global media and the intelligence community that forces Donald J Trump to resign.

[Jun 22, 2017] Playing Games with Drugs at the Wall Street Journal

Jun 22, 2017 | economistsview.typepad.com

anne , June 21, 2017 at 05:02 AM

http://cepr.net/blogs/beat-the-press/playing-games-with-drugs-at-the-wall-street-journal

June 20, 2017

Playing Games with Drugs at the Wall Street Journal

A column * in the Wall Street Journal by Dana P. Goldman and Darius N. Lakdawalla presents a case for high drug prices by making an analogy to the salaries of major league baseball players. They ask what would happen if the average pay of major league players was cut from $4 million to $2 million. They hypothesize that the current crew of major leaguers would continue to play, but that young people might instead opt for different careers, leaving us with a less talented group of baseball players. Their analogy to the drug market is that we would see fewer drugs developed, and therefore we would end up worse off as a result of paying less for drugs.

This analogy is useful because it is a great way to demonstrate some serious wrong-headed thinking. It also leads those of us who had the privilege of seeing players like Bob Gibson, Sandy Koufax, Henry Aaron, and Willie Mays in their primes to wonder if there somehow would have been better players 50 years ago if the pay back then was at current levels.

But the issue is not just how much we should for developing drugs, but how we should pay. Suppose that we paid fire fighters at the point where they came to the fire. They would assess the situation and make an offer to put out the fire and save the lives of those who are endangered. We could haggle if we want. Sometimes we might get the price down a bit and in some occasions a competing crew of firefighters may show up and offer some competition. Most of us would probably pay whatever the firefighters asked to rescue our family members.

This could lead to a situation where firefighters are very highly paid, since at least the ones who came to rich neighborhoods could count on payouts in the millions or even tens of millions of dollars. Suppose someone suggested that we were paying too much for firefighters' services and argued that there we could drastically reduce what we pay for a service we all recognize as tremendously important. Well, Goldman and Lakdawalla would undoubtedly respond with a Wall Street Journal column telling us that fewer people will want to be firefighters.

But this is really beside the point. Just about everyone agrees that it does not make sense to be determining firefighters' pay when they show up at the fire. We pay them a fixed salary. While they sit around waiting most of the time, occasionally they provide an incredibly valuable service saving valuable properties from destruction or even more importantly saving lives.

No one thinks that firefighters get ripped off because they don't walk away millions of dollars when they save an endangered family. They get paid their salary (which we can argue whether too high or too low) for work that we recognize as dangerous, but which will occasionally result in enormous benefits to society.

In the case of developing drugs, we are now largely in the situation of paying the firefighters when they show up at the burning house. As a result of historical accident, we rely on a relic of the medieval guild system, government granted patent monopolies, to finance most research into developing new drugs. These monopolies allow drug companies to charge prices that are several thousand percent ** above the free market price.

This leads to all the corruption and distortion that one would expect from a trade tariff of 1000 or even 10,000 percent. These markups lead drug companies to expend vast resources marketing their drugs. They also frequently misrepresent the safety and effectiveness of their drugs to maximize sales. They make payoffs to doctors, politicians, and academics to enlist them in their sales efforts. And, they use the legal system to harass potential competitors, often filing frivolous suits to dissuade generic competitors.

This system also leads to a large amount of wasted research spending. This is in part because competitors will try to innovate around a patent to share in the patent rents. In a world of patent monopolies it is generally desirable to have competing drugs, however if the first drug was selling at its free market price, it is unlikely that it would make sense to spend large amounts researching the development of a second, third, and fourth drug for a condition for which an effective treatment already exists, rather than researching drugs for conditions for which no effective treatment exists.

Patent monopolies also encourage secrecy in research, as drug companies disclose as little information as possible so that they prevent competitors from benefiting from their research. This also slows the research process.

The obvious alternative would upfront funding, just like firefighters are paid a fixed salary for their work. Under this system a condition of the funding would be that all the research findings are posted on the web as quickly as practical to maximize the ability of the scientific community to benefit. We already do this to some extent with the $32 billion a year that goes to the National Institutes of Health, although this amount would likely have to be doubled or even tripled to make up for the research currently supported by government granted patent monopolies. (I outline a system for this in my book "Rigged: How Globalization and the Rules of the Modern Economy Have Been Structured to Make the Rich Richer" *** - it's free.)

Anyhow, it would be good if we could be having a debate about how we finance drug research rather than just telling silly stories about baseball players salaries. Bernie Sanders, Elizabeth Warren, Al Franken, Sherrod Brown and thirteen other senators have already introduced a bill that would have the government pick up the tab on some clinical trials and then putting the rights to successful drugs in the public domain so they can be sold at generic prices. The bill also has a patent buyout fund that would accomplish the same goal.

It is absurd that we charge people hundreds of thousands of dollars for life-saving drugs that cost a few hundred dollars to produce. Too bad the Wall Street Journal has so little creativity that it cannot even imagine an alternative to a grossly antiquated institution when it comes to financing prescription drug development.

* https://www.wsj.com/articles/take-me-out-to-the-pill-game-1497913367

** http://www.thebodypro.com/content/78658/1000-fold-mark-up-for-drug-prices-in-high-income-c.html

*** https://deanbaker.net/images/stories/documents/Rigged.pdf

-- Dean Baker

[Jun 22, 2017] These are dark times for neoliberal free marketeers.

Jun 22, 2017 | economistsview.typepad.com

Christopher H., June 21, 2017 at 06:56 AM

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2017/06/free-markets-need-equality.html

June 21, 2017

FREE MARKETS NEED EQUALITY
by Chris Dillow

These are dark times for free marketeers. Voters are only lukewarm about the virtues of capitalism; the Grenfell disaster is widely regarded as showing the case for greater regulation; and, as Sam Bowman says, even the Tories "have totally failed to make a broad-brush case for free markets."

I share some of their disquiet. Flawed as they are, markets have virtues as selection and information-aggregation mechanisms.

What, then, can be done to strengthen the case for markets?

There's one thing that's crucial – equality of power. For free markets to have public acceptance, the worst-off must have bargaining power. Without this, "free" markets merely become a device for exploitation.

Imagine, for example, that we had overfull employment and/or high out-of-work benefits. Workers would then be able to reject low wages and bad working conditions. Market forces would then deliver higher wages and good, safer, conditions simply because employers that didn't offer these wouldn't have any workers. Equally – though it's harder to imagine – if we had an abundance of housing, landlords who offered shoddy or dangerous accommodation would either have to refurbish their property to acceptable standards or suffer a lack of tenants.

We wouldn't, therefore need "red tape." The market would raise working and living standards.

We don't need thought experiments to see this. We have empirical evidence too.

Philippe Aghion and colleagues have shown that there's a negative correlation across countries between unions density and minimum wage laws. Countries with strong unions have less stringent minimum wage laws – because greater bargaining power reduces the need for such laws. Remember that the UK adopted minimum wages in the 1990s, when unions had been emasculated. In the 60s and 70s, when unions were strong, the market raised wages.

Also, there is a negative correlation across developed countries between inequality (as measured, imperfectly, by Gini coefficients) and business freedom. Egalitarian Denmark and Sweden, for example, score better on the Heritage Foundation's index of freedom than the unequal US. There's a simple reason for this. Working people want what they regard as a fair deal. If they can't get it through bargaining in free markets, they'll seek it through politics and regulation.

The inference here is, for me, obvious. If you are serious about wanting free markets you must put in place the conditions which are necessary for them – namely, greater bargaining power for tenants, customers and workers. This requires not just strong anti-monopoly policies but also policies such as a high citizens income, full employment and mass housebuilding.

In short, free markets require egalitarian policies. Free marketeers who don't support these are not the friends of freedom at all, but are merely shills for exploiters.

Christopher H. -> Christopher H.... , June 21, 2017 at 07:02 AM
"Egalitarian Denmark and Sweden, for example, score better on the Heritage Foundation's index of freedom than the unequal US. There's a simple reason for this. Working people want what they regard as a fair deal. If they can't get it through bargaining in free markets, they'll seek it through politics and regulation."

Hillary Clinton famously said "we're not Denmark" to distinguish herself from the "unserious" Bernie Sanders in the primary debates.

She was trying to appeal to meritocratic Democrats and Republicans. As Josh Marshall wrote of yesterday's special election:

"The district is relatively diverse for a GOP district and educated and affluent. In other words, it's made up of just the kind of Republicans who proved most resistant to Trump."

Hillary was trying to appeal to the affluent and indoctrinated and educated meritocrats. The "non-deploreables."

And she lost. Corbyn running on an anti-austerity platform and a manifesto that pointed more in the direction of Denmark pulled off a biggest swing in votes since 1945.

Of course the center left, PGL and Krugman were silent about Corbyn's great showing and complained about people who wanted to discuss it. But it's okay to discuss the disappointing outcome in yesterday's special election.

RGC -> Christopher H.... , June 21, 2017 at 07:18 AM
Free markets need "a comprehensive socialization of investment":

"In some other respects the foregoing theory is moderately conservative in its implications. For whilst it indicates the vital importance of establishing certain central controls in matters which are now left in the main to individual initiative, there are wide fields of activity which are unaffected. The State will have to exercise a guiding influence on the propensity to consume partly through its scheme of taxation, partly by fixing the rate of interest, and partly, perhaps, in other ways. Furthermore, it seems unlikely that the influence of banking policy on the rate of interest will be sufficient by itself to determine an optimum rate of investment. I conceive, therefore, that a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment; though this need not exclude all manner of compromises and of devices by which public authority will co-operate with private initiative. But beyond this no obvious case is made out for a system of State Socialism which would embrace most of the economic life of the community. It is not the ownership of the instruments of production which it is important for the State to assume. If the State is able to determine the aggregate amount of resources devoted to augmenting the instruments and the basic rate of reward to those who own them, it will have accomplished all that is necessary. Moreover, the necessary measures of socialisation can be introduced gradually and without a break in the general traditions of society"

-J M Keynes

https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch24.htm

Paine -> RGC... , June 21, 2017 at 06:09 PM
Caution
The path to Keynesian futures turned out to have a long back traverse
From 1973 to 2008 and beyond

As yet we have not moved forward
but at least the power
driving the back traverse is over
We can recommence the advance toward greater socialization of net investment

[Jun 22, 2017] Americans have a blind spot on the actions of the USA. That's natural. But that blindness produces pretty idiotic comments even from commenters that are able to discuss intelligently other topics

Jun 21, 2017 | economistsview.typepad.com

DrDick -> Paine ... , June 21, 2017 at 08:33 AM

Also historically moronic, since China had become increasingly isolationist from the 16th century on. This is not to say that China has not been deliberately annoying their neighbors lately, especially in the South China Sea, however. Clearly China has been extending its influence, mostly economically, around the world, especially in Africa, for a couple of decades now, but I do not see this as any different from what we do in the same regions. It is certainly not nearly as troubling as what Russia has been doing under Putin.
libezkova said in reply to DrDick... , June 21, 2017 at 09:09 PM
Compare your viewpoint with Forbes:

https://www.forbes.com/sites/kenrapoza/2017/06/16/in-final-oliver-stone-interview-putin-predicts-when-russia-us-crisis-ends/


In Final Oliver Stone Interview, Putin Predicts When Russia-US Crisis Ends

Jun 20, 2017 | www.forbes.com

But with Trump in the White House, the Trump-Putin conspiracy theory is one reality TV show the news media can't shake. Stone's love for foreign policy intrigue at least makes him a Putin kindred spirit here. America's age old fear of the Russians, has made Putin public enemy number one and Stone his sounding board. For some unhappy campers, like John McCain, Putin has " no moral equivalent " in the United States. He's a dictator , a war criminal and tyrant .

"You've gone through four U.S. presidents: Clinton, Bush, Obama and now Trump. What changes?" Stone asks him.

"Almost nothing. Your bureaucracy is very strong and it is that bureaucracy that rules the world," he says. Then, solemnly, "There is change...when they bring us to the cemetery to bury us."

In the last installment of the Putin interviews, the Russian leader admitted to liking Trump. "We still like him because he wants to restore relations. Relations between the two countries are going to develop," he said. It's a sentence very few in congress would say, and almost no big name politicians outside of Trump would imagine saying on television. On Russia, you scold. There is no fig leaf.

In a recent sanctions bill in the senate, only Republicans Rand Paul and Mike Lee voted against it, making for a 97-2 landslide in favor of extra-territorial sanctions against Russian companies, namely oil and gas.

Stone asked him why did he bother hacking the Democratic National Committee's emails if he believed nothing would change on the foreign policy front.

STONE: Our political leadership and NATO all believe you hacked the election.

PUTIN: We didn't hack the election at all. It would be hard to imagine any country, even Russia, being capable of seriously influencing the U.S. election. Someone hacked the DNC, but I don't think it influenced the election. What came through was not a lie.

They were not trying to fool anybody. People who want to manipulate public opinion will blame Russia. But Trump had his finger on the pulse of the Midwest voter and knew how to pull at their hearts. Those who have been defeated shouldn't be shifting blame to someone else....We are not waiting for any revolutionary changes.

Just then, editors cut to a video of Trump talking about Putin.

TRUMP: I hope I get along with Putin. I hope I do. But there is a good chance that I won't.

PUTIN: It almost feels like hatred of a certain ethnic group, like antisemitism. They are always blaming Russians, like antisemites are always blaming the Jews.

The editors then flashed to footage of John McCain on the floor of the Senate ranting and raving about Putin. Then Joseph Biden in the Ukrainian parliament, ranting about Russia. Putin tells Stone all of this is unfortunate. He thinks their view is"old world." He reminds Stone that Russia and the U.S. were allies in World War I and World War II. It was Winston Churchill that started the Cold War from London, despite having respect for Russia's strongman leader at the time, the real dictator, Joseph Stalin.

libezkova -> libezkova... , June 21, 2017 at 09:13 PM
The point is the Americans have a blind spot on the actions of the USA.

That's natural. But that produced pretty idiotic comments in this blog even from commenters that are able to discuss intelligently other topics.

[Jun 21, 2017] Neoliberalism and opioids abuse

Jun 21, 2017 | economistsview.typepad.com

libezkova, June 21, 2017 at 07:25 PM

Over 33K people in US died of opiates overdoses in 2015 according to the Centers for Disease Control and Prevention.

Not only unemployed abuse opioids, but more and more college students and recent graduates are abusing the opioids as well, according to a survey of 1200 college aged adults commissioned the same year by Christie foundation.

Federal law does not require colleges to report drug death unless they are deemed criminal. But fatal overdoses have been rising at schools nationwide underscoring and horrifying reality of for administrators: in addition to binge drinking and marijuana, they have another crisis firmly entrenched on campus.

Now losing 30K people in one year is like small scale civil war (like the one they have in Ukraine) and in a way it is: war of wealthy and medical industrial complex against those in difficult circumstances, with dreams crashed and, especially, unemployed.

https://www.usnews.com/news/news/articles/2016-06-14/opioids-linked-with-deaths-other-than-overdoses-study-says

== quote ==

CHICAGO (AP) - Accidental overdoses aren't the only deadly risk from using powerful prescription painkillers - the drugs may also contribute to heart-related deaths and other fatalities, new research suggests.

Among more than 45,000 patients in the study, those using opioid painkillers had a 64 percent higher risk of dying within six months of starting treatment compared to patients taking other prescription pain medicine. Unintentional overdoses accounted for about 18 percent of the deaths among opioid users, versus 8 percent of the other patients.

"As bad as people think the problem of opioid use is, it's probably worse," said Wayne Ray, the lead author and a health policy professor at Vanderbilt University's medical school. "They should be a last resort and particular care should be exercised for patients who are at cardiovascular risk."

His caution echoes recent advice from the Centers for Disease Control and Prevention, trying to stem the nation's opioid epidemic. The problem includes abuse of street drugs like heroin and overuse of prescription opioids such as hydrocodone, codeine and morphine.

The drugs can slow breathing and can worsen disrupted breathing that occurs with sleep apnea, potentially leading to irregular heartbeats, heart attacks or sudden death, the study authors said.

In 2014, there were more than 14,000 fatal overdoses linked with the painkillers in the U.S. The study suggests even more have died from causes linked with the drugs, and bolster evidence in previous research linking them with heart problems.

The study involved more than 45,000 adult Medicaid patients in Tennessee from 1999 to 2012. They were prescribed drugs for chronic pain not caused by cancer but from other ailments including persistent backaches and arthritis.

Half received long-acting opioids including controlled-release oxycodone, methadone and fentanyl skin patches. Fentanyl has been implicated in the April death of Prince, although whether the singer was using a fentanyl patch, pills or other form of the drug hasn't been publicly revealed.

Long-acting opioids remain in the body longer. The study authors noted that the body's prolonged exposure to the drugs may increase risks for toxic reactions.

The remaining study patients had prescriptions for non-opioid drugs sometimes used to treat nerve pain, including gabapentin; or certain antidepressants also used for pain.

There were 185 deaths among opioid users, versus 87 among other patients. The researchers calculated that for every 145 patients on an opioid drug, there was one excess death versus deaths among those on other painkillers.

The two groups were similar in age, medical conditions, risks for heart problems and other characteristics that could have contributed to the outcomes.

The results were published Tuesday in the Journal of the American Medical Association .

The study involved only Medicaid patients, who include low-income and disabled adults and who are among groups disproportionately affected by opioid abuse.

Ray noted that the study excluded the sickest patients and those with any evidence of drug abuse. He said similar results would likely be found in other groups.

Dr. Chad Brummett, director of pain research at the University of Michigan Health System, said the study highlights risks from the drugs in a novel way and underscores why their use should be limited.

[Jun 21, 2017] People are thinking of locating solar panels to provide shade to irrigation canals or to bike lanes. Car roofs are a good spot too. There are so many two-fers out there - why are we missing all these opportunities?

Jun 21, 2017 | economistsview.typepad.com

pgl, June 21, 2017 at 01:36 AM

Re: Fisticuffs Over the Route to a Clean-Energy Future - NYTimes

"It is critically important to bring this debate into the open. For too long, climate advocacy and policy has been inflected by a hope that the energy transformation before us can be achieved cheaply and virtuously - in harmony with nature. But the transformation is likely to be costly. And though sun, wind and water are likely to account for a much larger share of the nation's energy supply, less palatable technologies are also likely to play a part."

Eduardo Porter on the debate as to whether 100% of our energy needs can be met by renewables. OK - it may involve certain costs increasing this from a mere 10% to something closer to 100% even if we do not entirely get to 100%. But not trying would be very costly.

reason, June 21, 2017 at 02:17 AM
One thing that certainly annoys me about this, is that to me the incentives must be wrong.

I see the German railway building solar banks on perfectly good land (which could for instance grow trees), and the railways rolling past large numbers of houses with south-facing roofs and no solar panels.

I see electric cars being built without solar panels on the roof, parked in the sun. I sort of wonder - something is wrong here, why?

I read in the scientific American that people are thinking of locating solar panels to provide shade to irrigation canals. Or we could use solar panels to provide weather protection to bike lanes (shade + rain + snow protection). There are so many two-fers out there - why are we missing all these opportunities?

reason -> reason ... , June 21, 2017 at 02:26 AM
Think of another possibility (a sliding solar on the roof of an electric car - so it could provide windscreen shade when parked and have extra collecting area as well).

Ok, ok it is summer and 34 degrees C here today, so solar energy is everywhere.

libezkova -> reason ... , June 21, 2017 at 08:26 PM
One thing that certainly annoys me about this, is that to me the incentives must be wrong.

I see the german railway building solar banks on perfectly good land (which could for instance grow trees), and the railways rolling past large numbers of houses with south-facing roofs and no solar panels.

I see electric cars being built without solar panels on the roof, parked in the sun. I sort of wonder - something is wrong here, why?

I read in the scientific American that people are thinking of locating solar panels to provide shade to irrigation canals. Or we could use solar panels to provide weather protection to bike lanes (shade + rain + snow protection). There are so many two-fers out there - why are we missing all these opportunities?

That's a great comment !!!

Thank you so much.

[Jun 21, 2017] We Are Inches From A New World War, And Clintonists Are To Blame

Jun 21, 2017 | economistsview.typepad.com

RGC Reply , June 21, 2017 at 06:52 AM

We Are Inches From A New World War, And Clintonists Are To Blame

Published June 20, 2017 by Caitlin Johnstone

"This is your fault, Clinton Democrats. You created this, and if our species is plunged into a new world war or extinction via nuclear holocaust, it will be your fault. You knuckle-dragging, vagina hat-wearing McCarthyite morons made this happen."

https://counterpropa.com/inches-new-world-war-clintonists-blame/

RGC - , June 21, 2017 at 07:46 AM
Five takeaways from Iran's missile strike in Syria

Tehran's strike was targeted at Islamic State but it also puts US bases in the region on notice and exposes the flimsiness of the Trump Administration's Middle East policy
........................
From all accounts, the missiles hit their target with devastating precision. Simply put, Iran has notified the US that its 45,000 troops deployed in bases in Iraq (5,165), Kuwait (15,000), Bahrain (7,000), Qatar (10,000), the UAE (5,000) and Oman (200) are highly vulnerable.

http://www.atimes.com/article/five-takeaways-irans-missile-strike-syria/

RGC, June 21, 2017 at 07:58 AM
Unlike the US military, Iran appears to put effectiveness ahead of private profit.
Paine, June 21, 2017 at 03:51 PM
No. Iran is hardly foolish

Hell truck bombs aimed at marine barracks aren't any longer on Iran's to do list . Even thru their junior partners Hezbollah
Assad might want them to clobber a syrian Kurd stronghold. But not even that gets the green light by the mad mullahs of Teheran

Paine, June 21, 2017 at 03:54 PM
Uncle is the clear aggressor against Iran. Just as he is against Venezuela. The Shia Arabs are a strategic target for uncles containment horse play. Iran is their steadfast ally
ilsm, June 21, 2017 at 04:29 PM
The Wahhabi coalition funded, armed and equipped by Uncle Sam killed 300 women and children last month in its quest to use ISIS as an excuse to give Syria and upper Iraq to al Qaeda.

It also shot down a Syria jet trying to push US' jihadis who are making Turley mad back toward ISIS to fight them rather than occuoy Syria.

Paine, June 21, 2017 at 05:57 PM
The Saud family are up there with the Walton's. And they outnumber the Walton's ten thousand to 4. There will be an awful reckoning....some day
ilsm - , June 21, 2017 at 06:43 PM
US presidents since Nixon have not committed one (1.0) of the US' 2.5 planned wars to the welfare of the Saudi family's palaces.
RGC - , June 21, 2017 at 08:12 AM
The Growing U.S.-Iran Proxy Fight in Syria. The scramble for Islamic State territory is raising the risks of escalation

https://www.theatlantic.com/international/archive/2017/06/iran-syria-trump-saudi-arabia-escalation-isis/530844/

ilsm - , June 21, 2017 at 04:34 PM
While we are talking about the Wahhabi invasions of Syria:

https://en.wikipedia.org/wiki/Daraa_offensive_(February%E2%80%93June_2017)

The Syrian government is pushing against the Israeli supported branch of al Qaeda in the Daraa governate. Israelis interest is the Golan which it grabbed in 1973.

While in al Tanf, Syria in the middle of no where related to fighting ISIS US F-15E shot down an armed drone allegedly attacking the US run training center for future jihadis who will go after the US and Europe like bin Laden. All the conditions for US tied down supporting evil like 1964..........

Paine - , June 21, 2017 at 03:46 PM
I like johnstone. She wrote a lot on Serbia v croatia. And then Bosnia Kosovo. The national elements of deliquescent Yugoslavia. That former hot spot of humanist outrage. But keep your pants on girl

Nothing anywhere now threatens catastrophic collisions between great powers. Uncles just too strong

ilsm, June 21, 2017 at 04:37 PM
The legacy of Sarajevo and the East German armor US facilitated to Croatia is the US maintains an oversized "NATO" mechanized brigade plus extras in Camp Bonesteel......

Keeping dissected Kosovo county free unlike Iraq......

ilsm, June 21, 2017 at 04:40 PM
"Uncles just too strong"

not really, it is less. risky to do Vietnams..... Syria has the potential to make Vietnam type counter insurgency experiments look new again. Until US runs out of lenders!

too strong......puleeeze

Paine , June 21, 2017 at 06:00 PM
Of course. Vietnams are always possible. In fact they keep great powers busy. Bleeding each other by proxy
ilsm , June 21, 2017 at 06:38 PM
Iraq, Afghanistan, Syria, Yemen, Djibouti, Sudan are all Vietnams sans draftees and no hippy music. What is Neil Young and Joani Mitchell up to?
libezkova - , June 21, 2017 at 07:53 PM
There is probably a silver lining in the alliance of neocons and liberal interventionists (which actually are the same as DemoRats -- Clinton's wing of Democratic party) attempt to impeach Trump on faked charges.

It might delay the war. Looks like Trump is hell bent to crush Iran.

Which is a theocratic state, but still not as bad as KAS and some other US allies in the region.

[Jun 21, 2017] Unions in Decline Some International Comparisons

Jun 21, 2017 | economistsview.typepad.com
libezkova , June 21, 2017 at 11:55 AM
" This pattern suggests that existence of unions, one way or another, may be less important for economic outcomes than the way in which those unions function. "

This is a typical neoliberal Newspeak. Pretty Orwellian.
In reality atomization of workforce and decimation of unions is the explicit goal of neoliberal state.

Neoliberalism war on organized labor started with Reagan.

Neoliberalism is based on unconditional domination of labor by capital ("socialism for rich, feudalism for labor").

American scholar and cultural critic Henry Giroux alleges neoliberalism holds that market forces should organize every facet of society, including economic and social life, and promotes a social Darwinist ethic which elevates self-interest over social needs.

That means maintaining the unemployment level of sufficiently high level and political suppression of workers rights to organize.

A new class of workers, facing acute socio-economic insecurity, emerged under neoliberalism. It is called 'precariat'.

Neoliberal policies led to the situation in the US economy in which 30% of workers earn low wages (less than two-thirds the median wage for full-time workers), and 35% of the labor force is underemployed; only 40% of the working-age population in the U.S. is adequately employed.

The Center for Economic Policy Research's (CEPR) Dean Baker (2006) argued that the driving force behind rising inequality in the US has been a series of deliberate, neoliberal policy choices including anti-inflationary bias, anti-unionism, and profiteering in the health industry.

Amazon, Uber and several other companies have shown that neoliberal model can be as brutal as plantation slavery.

Central to the notion of the skills agenda as pursued by neoliberal governments is the concept of "human capital."

Which involves atomization of workers, each of which became a "good" sold at the "labor market". Neoliberalism discard the concept of human solidarity. It also eliminated government support of organized labor, and decimated unions.

Under neoliberalism the government has to actively intervene to clear the way for the free "labor market." Talk about government-sponsored redistribution of wealth under neoliberalism -- from Greenspan to Bernanke, from Rubin to Paulson, the government has been a veritable Robin Hood in reverse.

[Jun 21, 2017] The CIAs principal house organ, the New York Times, published a lead editorial Sunday on the investigation into alleged Russian meddling in the 2016 US presidential election that is an incendiary and lying exercise in disinformation aimed at whipping up support for war with Russia.

Jun 21, 2017 | economistsview.typepad.com

RGC

, June 21, 2017 at 06:44 AM
The New York Times steps up its anti-Russia campaign
21/06/2017

The CIA's principal house organ, the New York Times, published a lead editorial Sunday on the investigation into alleged Russian meddling in the 2016 US presidential election that is an incendiary and lying exercise in disinformation aimed at whipping up support for war with Russia.
....................

Not a single one of the reports in the Times or Post is the product of a genuine investigation by journalists. Instead, the main reporting on the "Russian hacking" affair consists of taking dictation from unidentified intelligence officials. In not a single case did these officials offer evidence to substantiate their claims, invariably made in the form of ambiguous phrases like "we assess," "we believe," "we assess with high confidence," etc. Such claims are worth no more than previous assertions that Iraq possessed weapons of mass destruction-a lie used to justify a war that has killed more than one million people.

http://www.defenddemocracy.press/the-new-york-times-steps-up-its-anti-russia-campaign/

RGC -> RGC... , June 21, 2017 at 06:47 AM
Bernie Sanders and Rand Paul Buck Party Consensus on Russia and Iran Sanctions


Investigative journalist Max Blumenthal explains that these sanctions punish Russia and Iran and unnecessarily intensifies the conflict between the US and these countries

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=19337

sanjait -> RGC... , June 21, 2017 at 10:55 AM
Dead wrong about Bernie:

http://www.independent.co.uk/news/world/americas/us-politics/bernie-sanders-donald-trump-russia-blackmail-links-vladimir-putin-nice-things-democratic-senator-a7647546.html

Nice try though!

RGC -> sanjait... , June 21, 2017 at 11:26 AM
Thursday, June 15, 2017

WASHINGTON, June 15 – Sen. Bernie Sanders (I-Vt.) issued the following statement Thursday after he voted against a bill that would impose new sanctions on Iran and Russia:

"I am strongly supportive of the sanctions on Russia included in this bill. It is unacceptable for Russia to interfere in our elections here in the United States, or anywhere around the world. There must be consequences for such actions. I also have deep concerns about the policies and activities of the Iranian government, especially their support for the brutal Assad regime in Syria. I have voted for sanctions on Iran in the past, and I believe sanctions were an important tool for bringing Iran to the negotiating table. But I believe that these new sanctions could endanger the very important nuclear agreement that was signed between the United States, its partners and Iran in 2015. That is not a risk worth taking, particularly at a time of heightened tension between Iran and Saudi Arabia and its allies. I think the United States must play a more even-handed role in the Middle East, and find ways to address not only Iran's activities, but also Saudi Arabia's decades-long support for radical extremism."

https://www.sanders.senate.gov/newsroom/press-releases/sanders-statement-on-iran-and-russia-sanctions

anne -> RGC... , June 21, 2017 at 07:25 AM
https://www.nytimes.com/2017/06/17/opinion/mr-trumps-dangerous-indifference-to-russia.html

June 17, 2017

Mr. Trump's Dangerous Indifference to Russia

anne -> anne... , June 21, 2017 at 01:21 PM
https://www.nytimes.com/2017/06/17/opinion/mr-trumps-dangerous-indifference-to-russia.html

June 17, 2017

Mr. Trump's Dangerous Indifference to Russia

A rival foreign power launched an aggressive cyberattack on the United States, interfering with the 2016 presidential election and leaving every indication that it's coming back for more - but President Trump doesn't seem to care.

The unprecedented nature of Russia's attack is getting lost in the swirling chaos of recent weeks, but it shouldn't be. American intelligence agencies have concluded that Russia took direct aim at the integrity of American democracy, and yet after almost five months in office, the commander in chief appears unconcerned with that threat to our national security. The only aspect of the Russia story that attracts his attention is the threat it poses to the perceived legitimacy of his electoral win.

If not for the continuing investigation into possible collusion between the Trump campaign and the Russians - and whether Mr. Trump himself has obstructed that investigation - the president's indifference would be front-page news.

So let's take a moment to recall the sheer scope and audacity of the Russian efforts.

Under direct orders from President Vladimir Putin, hackers connected to Russian military intelligence broke into the email accounts of...

ilsm -> anne... , June 21, 2017 at 04:22 PM
Not to worry Trump is doing all Obama did and more to sell Syria to al Qaeda.

Too busy keeping the Wahhabis happy to want to mess with Russia over a few millions Balts' desires.

The US is not offering the last drop of US soldiers' blood to the Balts it is already committed to the Wahhabis.

anne -> anne... , June 21, 2017 at 01:24 PM
https://www.nytimes.com/2017/06/17/opinion/mr-trumps-dangerous-indifference-to-russia.html

Under direct orders from President Vladimir Putin, hackers connected to Russian military intelligence broke into the email accounts of...

[ Interesting passage. ]

Paine -> RGC... , June 21, 2017 at 08:45 AM
Why critique this campaign against Russia
As if the kremlin may to have interfered and even collaborated with trump operatives to do it

Anything less would be dereliction of duty by a great powers leadership

Point out the motivation

Which is indeed a new forward policy on Russian containment by the deep state
As we now call the corporate planted cultivated and coddled security apparatus
With its various media cut thrus cut outs and compadres

Yes the NYT and the WP

Both are working with the deep state
Once called the invisible government
Much as they have in he past

Why I like he color revolution analogy

These media titans are working with the DS
Because they want to topple trump like they wanted to topple Nixon
And to a lesser extent wobble Reagan

Paine -> Paine ... , June 21, 2017 at 08:47 AM
Typo hazard

Russia is obviously tampering as much as optimal

Nothing new

Hence my suggesting putin is jut acting like all great powers must act to be great powers

ilsm -> Paine ... , June 21, 2017 at 04:23 PM
It would have been appeasement for Putin to stand by and let the Hillary neocon take over America and offer the last drop of US soldiers' blood to the Balts.

Ignoring Clinton was like letting Hitler have Prague!

Paine -> ilsm... , June 21, 2017 at 04:37 PM

Indeed
anne -> Paine ... , June 21, 2017 at 09:08 AM
Important, incisive perspective or argument, but a direction seldom taken. A Cold War sort of atmosphere makes us wary of using any such argument, and we have been forming a Cold War environment for several years now. This atmosphere by the way involves the way in which China is generally regarded, and I believe colors economic analysis even among academics.

[Jun 19, 2017] Republicans are embarrassing Democrats by showing them how legislation gets passed with a bare majority, when Democrats failed with a filibuster proof majority

Jun 19, 2017 | economistsview.typepad.com

JohnH, June 19, 2017 at 06:48 AM

Republicans are embarrassing Democrats by showing them how legislation gets passed with a bare majority...when Democrats could barely get anything done with a filibuster proof majority!

Moral of the story? Democrats under Obama didn't really want to get much done. Rather, they preferred to do nothing and blame Republicans instead. Worse, now that Republicans want to destroy what precious little Democrats managed to accomplish, Democrats are just standing around, frozen like deer in the headlights, clueless as to how to use their 48 votes.

How pathetic can Democrats get?

libezkova, June 19, 2017 at 06:40 PM
"Republicans are embarrassing Democrats by showing them how legislation gets passed with a bare majority...when Democrats could barely get anything done with a filibuster proof majority!"

Not only that.

Neoliberal stooges like Krugman now shed crocodile tears after pushing Sanders under the bus.

They essentially gave us Trump and now have an audacity to complain. What a miserable hypocritical twerp this Nobel laureate is!

Where is the DemoRats "Resistance" now? Are they fighting against the war in Syria on behave of Israel and Gulf states? Protesting sanctions against Cuba? Complaining about the record arms sale with Saudi Arabia (with its possible 9/11 links ?)

No, they are all on MSNBC or CNN dragging out a stupid investigation all the while pushing Russia to war. And congratulating themselves with the latest Russian sanctions designed to block supplies of Russian gas to Western Europe...

I want to repeat this again: Neoliberal Democrats created Trump and brought him to the victory in the recent Presidential elections.

[Jun 18, 2017] Economic bungee jumping without cord: Comment on Simon Wren-Lewis on 'Raising the inflation target'

Notable quotes:
"... The argument for a higher inflation target is NOT straightforward, once you understand two things. First interest theory is axiomatically false.#1 Because of this monetary policy never had sound scientific foundations. Second the same holds for fiscal policy.#2 ..."
"... The argument AGAINST higher inflation is that it REDUCES employment. Given the overall situation, the ONLY sensible policy is to increase the average wage rate, such that the rate of change of the wage rate is greater than the rate of change of productivity, because this increases employment. This is a SYSTEMIC necessity and has NOTHING to do with social policy. Employment is co-determined by the relationship between average wage rate, price and productivity. This relationship should automatically produce full employment but does not. ..."
Jun 18, 2017 | economistsview.typepad.com

Egmont Kakarot-Handtke, June 17, 2017 at 08:31 AM

Economic bungee jumping without cord: Comment on Simon Wren-Lewis on 'Raising the inflation target'

You say: "The argument for a higher inflation target is straightforward, once you understand two things. First the most effective and reliable monetary policy instrument is to influence the real interest rate in the economy, which is the nominal interest rate less expected inflation. Second nominal short term interest rates have a floor near zero (the Zero Lower Bound, or ZLB)."

The argument for a higher inflation target is NOT straightforward, once you understand two things. First interest theory is axiomatically false.#1 Because of this monetary policy never had sound scientific foundations. Second the same holds for fiscal policy.#2

Let us assume for a moment that, for whatever reasons, neither monetary nor fiscal policy is applicable. So, given investment expenditures of the business sector and the expenditure ratio of the household sector, the only alternative left is to directly influence the macroeconomic price mechanism.#3

The argument AGAINST higher inflation is that it REDUCES employment. Given the overall situation, the ONLY sensible policy is to increase the average wage rate, such that the rate of change of the wage rate is greater than the rate of change of productivity, because this increases employment. This is a SYSTEMIC necessity and has NOTHING to do with social policy. Employment is co-determined by the relationship between average wage rate, price and productivity. This relationship should automatically produce full employment but does not.

Standard employment theory is false.#4 The proposal to get the economy going by increasing price inflation is the direct result of the complete lack of understanding how the market economy works.

Egmont Kakarot-Handtke

#1 See 'The Emergence of Profit and Interest in the Monetary Circuit'
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1973952

#2 See 'Austerity and the utter scientific ignorance of economists'
http://axecorg.blogspot.de/2015/12/austerity-and-utter-scientific.html

#3 For more details see 'Think deeper'
http://axecorg.blogspot.de/2017/06/think-deeper.html

#4 For details of the bigger picture see cross-references Employment
http://axecorg.blogspot.de/2015/08/employmentphillips-curve-cross.html

[Jun 18, 2017] Economist's View Links for 06-17-17

Jun 18, 2017 | economistsview.typepad.com
anne , June 17, 2017 at 12:01 PM
http://www.newyorker.com/magazine/2017/06/19/are-china-and-the-united-states-headed-for-war

June 19, 2017

Are China and the United States Headed for War?
Professors, pundits, and journalists weigh in on a heated topic.
By Ian Buruma

Overheated topics invariably produce ill-considered books. Some people will remember the time, in the late nineteen-eighties, when Japan was about to buy up America and conquer the world. Many a tidy sum was made on that premise. These days, the possibility of war with China is stirring emotions and keeping publishers busy. A glance at a few new books suggests what scholars and journalists are thinking about the prospect of an Asian conflagration; the quality of their reflections is, to say the least, variable.

The worst of the bunch, Graham Allison's "Destined for War," may also be the most influential, given that its thesis rests on a catchphrase Allison has popularized, "Thucydides's Trap." Even China's President, Xi Jinping, is fond of quoting it. "On the current trajectory," Allison contends, "war between the U.S. and China in the decades ahead is not just possible, but much more likely than currently recognized." The reason, he says, can be traced to the problem described in the fifth century B.C.E. in Thucydides' account of the Peloponnesian War. Sparta, as the established power, felt threatened by the rising might of Athens. In such conditions, Allison writes, "not just extraordinary, unexpected events, but even ordinary flashpoints of foreign affairs, can trigger large-scale conflict."

Allison sees Thucydides' Trap in the wars between a rising England and the established Dutch Republic in the seventeenth century, a rising Germany versus Britain in the early twentieth century, and a rising Japan versus the United States in the nineteen-forties. Some historical tensions between rising powers and ruling ones were resolved without a catastrophic war (the Soviet challenge to U.S. dominance), but many, Allison warns, were not. And there's no disputing China's steep military and economic rise in recent decades. Its annual military budget has, for most of the past decade, increased by double digits, and the People's Liberation Army, even in its newly streamlined form, has nearly a million more active service members than the United States has. As recently as 2004, China's economy was less than half that of the United States. Today, in terms of purchasing-power parity, China has left the United States behind. Allison is so excited by China's swift growth that his prose often sounds like a mixture of a Thomas Friedman column and a Maoist propaganda magazine like China Reconstructs. Rome wasn't built in a day? Well, he writes, someone "clearly forgot to tell the Chinese. By 2005, the country was building the square-foot equivalent of today's Rome every two weeks."

Allison underrates the many problems that could slow things down quite soon...

Paine - , June 17, 2017 at 01:58 PM
This thesis assumes its conclusion

However we all can act to diffuse this arms race hype

ilsm - , June 17, 2017 at 02:57 PM
Thucydides trap* is foggy bottom 'soft porn'!

Besides in 30 years the "power balance" between China and US will not favor the sea power.

*even less foundation in logic than applying the 'prisoner dilemma' to the war room in "Fail Safe".

Paine - , June 18, 2017 at 09:06 AM
This is great game higgly piggly

Nothing more

The MIC has trump punctured with the sap can

Budgets for sharp toys will rise
With or without
Alt news on People's China

Paine - , June 18, 2017 at 09:09 AM
The congress is supine at the feet of the MIC

Only a POTUS can hope to restrain the MIC
With the minimal help of a less then stalwart house progressive caucus

And a few dove lobby groups

With Trump we have MIC goon in chief

anne , June 17, 2017 at 12:01 PM
https://www.nytimes.com/2017/06/15/books/review/everything-under-the-heavens-howard-french-destined-for-war-graham-allison.html

June 16, 2017

America's Collision Course With China
By JUDITH SHAPIRO

EVERYTHING UNDER THE HEAVENS
How the Past Helps Shape China's Push for Global Power
By Howard W. French

DESTINED FOR WAR
Can America and China Escape Thucydides's Trap?
By Graham Allison

The Chinese superpower has arrived. Could America's failure to grasp this reality pull the United States and China into war? Here are two books that warn of that serious possibility. Howard W. French's "Everything Under the Heavens: How the Past Helps Shape China's Push for Global Power" does so through a deep historical and cultural study of the meaning of China's rise from the point of view of the Chinese themselves. Graham Allison's "Destined for War: Can American and China Escape Thucydides's Trap?" makes his arguments through historical case studies that illuminate the pressure toward military confrontation when a rising power challenges a dominant one. Both books urge us to be ready for a radically different world order, one in which China presides over Asia, even as Chinese politicians tell a public story about "peaceful rise." The books argue persuasively that adjusting to this global power shift will require great skill on both sides if conflagration is to be avoided.

French says in his exhaustively researched and fascinating account of geopolitics, China style, that the Chinese era is upon us. But, he asks, "How will the coming China-driven world look?" To what extent will China support the international order that emerged when it was suffering humiliation at the hands of foreign powers? What are the drivers and motivations for the new ways China projects its power? How best should its neighbors and its rival North American superpower respond?

French, a former reporter for The Washington Post and The New York Times, argues that China's historical and cultural legacy governs its conduct of international relations, a legacy that sits uncomfortably with the Western notions of equality and noninterference among states. China's relations with its neighbors in Japan and Southeast Asia were for millenniums governed by the concept of tian xia, which held that everything "under the heavens" belonged to the empire. A superior civilization demanded deference and tribute from vassal neighbors and did not hesitate to use military force. China's testy relationship with Vietnam became fraught whenever a Vietnamese leader dared to demand equal footing with a Chinese emperor; the Japanese claim to divine origins was unacceptable....

anne - , June 17, 2017 at 12:05 PM
American and British writing about China now, strikes me as writing about a country that is invented rather than the country I would like to think I know. I find the writing distressing, nonetheless there are the articles from the New Yorker and New York Times.
Paine - , June 17, 2017 at 02:07 PM
The book purporting to see the world thru chineses history conditioned eyes is
Patently ridiculous nastiness

One might ask who today
is actively trying to contain the other
Who today is trying to maintain its mandate as global hegemon

But really the problem is the clash of roving corporate sociopaths RCSs

Let us control ours and urge the Chinese to control theirs even as we know
Both states are drastically influenced by these RCSs

[Jun 18, 2017] Amazon is monopolist which just became bigger

Jun 18, 2017 | economistsview.typepad.com

Fred C. Dobbs , June 17, 2017 at 01:59 AM

(Is this anything?)

The Amazon-Walmart Showdown That Explains the Modern
Economy https://nyti.ms/2sxhIkx via @UpshotNYT
NYT - Neil Irwin - June 16

With Amazon buying the high-end grocery chain Whole Foods, something retail analysts have known for years is now apparent to everyone: The online retailer is on a collision course with Walmart to try to be the predominant seller of pretty much everything you buy.

Each one is trying to become more like the other - Walmart by investing heavily in its technology, Amazon by opening physical bookstores and now buying physical supermarkets. But this is more than a battle between two business titans. Their rivalry sheds light on the shifting economics of nearly every major industry, replete with winner-take-all effects and huge advantages that accrue to the biggest and best-run organizations, to the detriment of upstarts and second-fiddle players.

That in turn has been a boon for consumers but also has more worrying implications for jobs, wages and inequality.

To understand this epic shift, you can look not just to the grocery business, but also to my closet, and to another retail acquisition announced Friday morning. ...

Walmart to Buy Bonobos, Men's Wear Company, for $310 Million https://nyti.ms/2tuGhf9

paine - , June 17, 2017 at 08:10 AM
When you lose confidence in your
existing biz you buy bizes
Fred C. Dobbs - , June 17, 2017 at 10:19 AM
It turns out Neil Irwin has
a thing for fine dress shirts.
pgl - , June 17, 2017 at 10:41 AM
WTF? Amazon has not lost confidence in creating a monopsony for buying and selling stuff. It just expanded their empire to groceries.
Paine - , June 17, 2017 at 12:35 PM
Cornering as many markets as possible
is a fools mission

The problem
corporations get to keep their cash flow

Review the nonsense oil companies got into when rolling in cash
Thanks to OPEC

pgl - , June 17, 2017 at 02:38 PM
WTF? You clearly never looked at Amazon's income statement.
JohnH - , June 17, 2017 at 04:28 PM
Amazon's business model is to become the dominant intermediary between producers and consumers.

Whole Foods positions it to ideally serve this role in every local market in America...one stop shopping, whether you're buying from China or from the local Chinatown.

When a company like Amazon is capturing market share, profits don't matter, as its stock price shows.

And Bezos ownerships of the Washington Post gives him a powerful bully pulpit against anyone with thoughts about anti-trust...that and his deep pockets.

cm - , June 17, 2017 at 12:38 PM
I wouldn't call it confidence. Any line or mode of business can be grown only to a certain size. At some point S-curve effects and scale complexity lead to diminishing returns, even if the business is managed as well as it can be. Also in some cases there may simply not be enough demand for the one or few things the company does.

Then companies have to branch out into other ways of business, typically outside their current activities. Sometimes there is synergy, sometimes not, and it's just about buying market and revenue with the imagination one can manage it better to a higher rate of profit.

Paine - , June 17, 2017 at 01:31 PM
Or

They can turn into passive cash cows

cm - , June 17, 2017 at 04:40 PM
Yes, though usually there is a growth mandate imposed by management or "investors".
Paine - , June 18, 2017 at 07:11 AM
Now we are in the heart of darkness

Growth mandates
Where growth is earnings
Or revenues or market shares or

And indeed too often
management v stock holders mandates overt or tacit obtain

Gibbon1 - , June 17, 2017 at 10:19 PM
Comment over brunch: Must be getting late in the cycle. Amazon shrewdly using it's internet valuation to buy tangible things.
Paine - , June 18, 2017 at 07:11 AM
True