Tuesday, September 1, 2015

Daniel Little — M I Finley on the dynamics of the Roman Empire

One of the books I found influential in graduate school in philosophy was M. I. Finley's The Ancient Economy, which appeared in 1973. Finley's book sought to explain important parts of the Roman world by piecing together the best knowledge available about the economic relations that defined its socioeconomic foundation. And the book proposes to consider economic history in a new way:
There is a fundamental question of method. The economic language and concepts we are all familiar with, even the laymen among us, the "principles", whether they are Alfred Marshall's or Paul Samuelson's, the models we employ, tend to draw us into a false account. For example, wage rates and interest rates in the Greek and Roman worlds were both fairly stable locally over long periods ... , so that to speak of a "labour market" or a "money market" is immediately to falsify the situation. (23)
Finley's point here is that we need to conceptualize the ancient economy in terms that are not drawn from current understandings of capitalist market economies; these economic concepts do not adequately capture the socioeconomic realities of the ancient world. …
Understanding Society
M I Finley on the dynamics of the Roman Empire
Daniel Little | Chancellor of the University of Michigan-Dearborn, Professor of Philosophy at UM-Dearborn and Professor of Sociology at UM-Ann Arbor

Nicolai N. Petro — Russia's Orthodox Soft Power

For many analysts the term Russky mir, or Russian World, epitomizes an expansionist and messianic Russian foreign policy, the perverse intersection of the interests of the Russian state and the Russian Orthodox Church.
Little noted is that the term actually means something quite different for each party. For the state it is a tool for expanding Russia's cultural and political influence, while for the Russian Orthodox Church it is a spiritual concept, a reminder that through the baptism of Rus, God consecrated these people to the task of building a Holy Rus.
The close symphonic relationship between the Orthodox Church and state in Russia thus provides Russian foreign policy with a definable moral framework, one that, given its popularity, is likely to continue to shape the country's policies well into the future.
More on the concept of "the Russian World," or Russky mir. This is a short article that is profusely documented.

Carnegie Council
Russia's Orthodox Soft Power
Nicolai N. Petro

Russia Beyond the Headlines — Poll: Russians consider U.S. amoral and devoid of spiritual values

This is a rejection of American liberalism as a cultural model. Russians view the US as becoming increasingly dysfunctional in comparison with a similar poll twenty-five years ago. This indicates a significant decline in US soft power.

Russia Beyond the Headlines
Poll: Russians consider U.S. amoral and devoid of spiritual values

Alexrpt — Putin calls the US ISIS bluff. Moves Russian forces into Syria to also help fight the fake caliphate?

Wait for the New York Times headline, "Putin invades Syria".

Red Pill Times
Putin calls the US ISIS bluff. Moves Russian forces into Syria to also help fight the fake caliphate?


The Saker says, not so fast.
So the rumor about a Russian intervention is at least credible. And yet, I don’t buy it.
I will gladly admit that I cannot prove a negative and that I have absolutely no privileged access to any special Russian sources. All I can offer are my conjectures and nothing more, and there is a good chance that I might be wrong. But having said that, here is my personal reaction to this rumor.
The Vineyard of the Saker
A Russian military intervention in Syria? I very much doubt it
The Saker

Red Pill Times
Merkel trying to deal with migrant crisis, “This is not a natural catastrophe.” It is however a NATOural catastrophe

Brian Beutler — The Rehabilitationists

How a small band of determined legal academics set out to persuade the Supreme Court to undo the New Deal—and have almost won.
In case anyone was wondering why philosophy — or call it foundational studies if you think the term "philosophy" is outdated — is important.

As the article observes, Libertarianism is a form of conservatism. However, it is based on an assumption of self-sovereignty that is actually an extreme form of liberalism in that it prioitizes prioritizes individual freedom.

But how can a conservative position be liberal?

The answer lies in the paradoxes of liberalism. Economic liberalism leads to disparity of wealth and income and the de facto institution of social class and political power through economic means. This is anti-democratic, which Libertarian dismisses as the tyranny of the majority over the individual.

So Libertarianism leads to neo-feudalism of "capital" under economics liberalism unrestrained by social and political liberalism through democratic governance based on government of the people, by the people and for the people under popular sovereignty, a pillar of political liberalism.

Conservatism is about rule by most qualified, that is, the privileged few who rise to the top, on the assumption that this is chiefly due to merit when violence is taken off the table under the rule of law in which the basic law is self-autonomy and an absolute right to private property. Sociologists beg to differ.

Libertarians are correct however in arguing that America was founded as conservative country rather than a liberal one as the founding documents and the controversy around their composition and adoption reveal. Slavery was enshrined in the constitution, which is illiberal as it gets.

The American government is that of a republic rather than a popular democracy, which early debate reveals was designed to favor those who able to amass political power, which is typically a matter of wealth in societies in which violence is ruled out as a political tool. The design is to preclude "the rule of the rabble."

The New Republic
The Rehabilitationists
Brian Beutler

Yanis Varoufakis — Democratizing the Eurozone

Only very recently, as a result of the Greek government’s intense negotiations with its creditors, did Europe’s citizens realize that the world’s largest economy, the eurozone, is run by a body that lacks written rules of procedure, debates crucial matters “confidentially” (and without minutes being taken), and is not obliged to answer to any elected body, not even the European Parliament.
Project Syndicate
Democratizing the Eurozone
Yanis Varoufakis | former finance minister of Greece, is a member of parliament for Syriza and Professor of Economics at the University of Athens

Pull That Temple Down

Now less material evidence exists of these once important structures used in our ancient and highly successful socio-economic systems.

Ancient successful and effective socio-economic (ie: material) systems that have manifestly been abandoned by mankind.

Monday, August 31, 2015

Phil Butler — The Impossible Truth About MH17

The plot thickens. Is there no information forthcoming from the US and Russian intelligence services since that would reveal capabilities and weaknesses to adversaries?

New Eastern Outlook
The Impossible Truth About MH17
Phil Butler

Seve141 on "Overseas Profits"

MNE commentator Seve141 dispensed a keeper earlier today:

I believe the author's choice of words are somewhat misleading. 
"stash $2.1 trillion in profits in overseas banks" 
The $2.1 trillion is net of taxes already paid from taxable income in foreign (non-US) jurisdictions. Generally speaking, these are foreign subsidiaries of a US parent company domiciled in the US for tax purposes. 
The bank accounts that hold this money are legally owned by the foreign subsidiaries of US parent companies and may well be at BoA in Manhattan or not. The physical location of the actual bank account isn't important. 
Also, the $2.1 trillion is an aggregate translation of all the local currencies to US dollars, It is not physical US dollars or US dollar bank balances.
The US parent company (domiciled in the US for tax purposes) would very much like to dividend the cash from the subs to the parent and then use that $2.1 trillion for shareholder dividends, share repurchases, bonuses, investments etc. However, if they do so, the US tax code will tax them on that cash dividend from the subsidiary to the parent -- hence the phrase "allowing them to stash $2.1 trillion in profits in overseas banks to avoid paying taxes" 
The US multinational corporations are lobbying and playing a waiting game hoping for another tax holiday ( such as in 2004) allowing them to repatriate foreign profits to the United States without tax consequences.
The phrase stash $2.1 trillion in profits in overseas banks is a loaded one.
Aces Seve.

Jason Smith — Is human agency Noah's big unchallenged assumption?

More on foundations.

Information Transfer Economics
Is human agency Noah's big unchallenged assumption?
Jason Smith

Michael Stephens — Folbre on the Consequences of Ignoring Unpaid Work

Nancy Folbre, who recently joined the Levy Institute roster as senior scholar, was interviewed by Dollars & Sense on the topic of how conventional economics and policymaking deal with (or rather, fail to deal with) household and caring labor….
Multiplier Effect
Folbre on the Consequences of Ignoring Unpaid Work
Michael Stephens

Eric Schliesser — Smith, Design, Hume/Kant, and Transcendental Illusions

Adam Smith versus David Hume on foundations. Smith and Hume, who were contemporaries, were correspondents.

Smith, Design, Hume/Kant, and Transcendental Illusions
Eric Schliesser | Professor of Political Science, University of Amsterdam’s (UvA) Faculty of Social and Behavioural Sciences

Dirk Ehnts — Zhi: A Critique of Modern Money Theory and the Disequilibrium Dynamics of Banking and Government Finance

Such is the title of Tianhao Zhi’s recent paper. Zhi sums up MMT like this:
MMT is getting around.

econoblog 101
Zhi: A Critique of Modern Money Theory and the Disequilibrium Dynamics of Banking and Government Finance
Dirk Ehnts | Lecturer at Bard College Berlin

Jesse Livermore — Fiscal Inflation Targeting and the Cost of Large Government Debt Accumulation

The insight that fiscal policy can be used to manage inflation, in the way that monetary policy is currently used, is not new, but is attributable to the founders of functional finance, who were the first to realize that inflation, and not the budget, is what constrains the spending of a sovereign government. Advocates of modern monetary theory (MMT), the modern offshoot of functional finance, notably Scott Fulwiller [sic] of Wartburg College, have offered policy ideas for how to implement a fiscally-oriented approach. 
My view, which I elaborated on in a 2013 piece, is that the successful implementation of any such approach will need to involve the transfer of control over a portion of fiscal policy from the legislature and the treasury to the central bank. Otherwise, the implementation will become mired in politics, which will prevent the government’s fiscal stance from appropriately responding to changing macroeconomic conditions. 
There are concerns that such a policy would be unconstitutional in the United States, since only the legislature has the constitutional authority to levy taxes. But there is no reason why the legislature could not delegate some of that authority to the Federal Reserve in law, in the same way that it delegates its constitutional authority to create money. In the cleanest possible version of the proposal, the legislature would pass a law that creates a special broad-based tax, and that identifies a range of acceptable values for it, to include negative values–say, +10% to -10% of earned income below some cutoff. The law would then instruct the Federal Reserve to choose the rate in that range that will best keep inflation on target, given what is happening elsewhere in the economy and elsewhere in the policy arena.
Ultimately, the chief obstacle to the acceptance and implementation of fiscal inflation targeting is the fear that it would lead to the accumulation of large amounts of government debt. And it would, particularly in economies that face structural weakness in aggregate demand and that require recurrent injections of fiscal stimulus to operate at their potentials. But for those economies, having large government debt wouldn’t be a bad thing. To the contrary, it would be a good thing, a condition that would help offset the weakness.
The costs of large government debt accumulation are not well understood–by lay people or by economists. In this piece, I’m going to try to rigorously work out those costs, with a specific emphasis on how and in what circumstances they play out. It turns out that there is currently substantial room, in essentially all developed economies that have sovereign control over credible currencies, to use expansive fiscal policy to combat structural declines in inflation, without significant costs coming into play.

The reader is forewarned that this piece is long. It has to be, in order to make the mechanisms fully clear. For those that want a quick version, here’s a bulleted summary of the key points:
Philosophical Economics
Fiscal Inflation Targeting and the Cost of Large Government Debt AccumulationJesse Livermore
ht Phillipe in the comments

Chris Hedges — The Great Unraveling

The ideological and physical hold of American imperial power, buttressed by the utopian ideology of neoliberalism and global capitalism, is unraveling. Most, including many of those at the heart of the American empire, recognize that every promise made by the proponents of neoliberalism is a lie. Global wealth, rather than being spread equitably, as neoliberal proponents promised, has been funneled upward into the hands of a rapacious, oligarchic elite, creating vast economic inequality. The working poor, whose unions and rights have been taken from them and whose wages have stagnated or declined over the past 40 years, have been thrust into chronic poverty and underemployment, making their lives one long, stress-ridden emergency. The middle class is evaporating. Cities that once manufactured products and offered factory jobs are boarded up-wastelands. Prisons are overflowing. Corporations have orchestrated the destruction of trade barriers, allowing them to stash $2.1 trillion in profits in overseas banks to avoid paying taxes. And the neoliberal order, despite its promise to build and spread democracy, has hollowed out democratic systems to turn them into corporate leviathans.

Democracy, especially in the United States, is a farce, vomiting up right-wing demagogues such as Donald Trump, who has a chance to become the Republican presidential nominee and perhaps even president, or slick, dishonest corporate stooges such as Hillary Clinton, Barack Obama and, if he follows through on his promise to support the Democratic nominee, even Bernie Sanders. The labels “liberal” and “conservative” are meaningless in the neoliberal order. Political elites, Democrat or Republican, serve the demands of corporations and empire. They are facilitators, along with most of the media and most of academia, of what the political philosopher Sheldon Wolin calls our system of “inverted totalitarianism.”
How could I not post a link to an article with a lede like that?

The Great Unraveling
Chris Hedges
ht Don Quijones at Naked Bull-Shit

Izabella Kaminska — Scaling and why it matters

Not enough attention is paid to scale. Scaling is the basis of civilization. As Roger Erickson has pointed out, it is also the basis of evolution. Dizzy calls our attention to it with respect to the push for decentralization and sharing. Descaling won't work, especially in a capitalistic system in which there are economies of scale.

Scaling and why it matters
Izabella Kaminska

David F. Ruccio — The idea that we shouldn’t be concerned about inequality is bullshit

I think that "inequality" is the wrong term and concept here. The opposite inequality and none of the parties to the debate is arguing for equality of income or wealth. The problem is not resolved just by giving the poor more since the issues are broader and deeper. The problem is not "inequality," but asymmetry and disparity.

Asymmetry and disparity affect not only individual but also systemic functioning. This is both immoral and uneconomic and the two should be kept distinct since one is chiefly a normative issue and the other a factual one.

Better to emphasis basic rights along with systemic asymmetries and social disparity that results in privilege at the top and exclusion from the system at the bottom, both unmerited for the most part. The result is social, political and economic dysfunction.

In addition, there needs to be a distinction drawn between needs and wants. Basic needs that are vital are matters of right instead of merit in situations in which they can be met. Disparity in satisfying wants is not itself crucial. The issues resulting from disparity of wealth and income relate more to the resultant social, political and economic asymmetries that lead to systemic dysfunction.

Occasional Links & Commentary
The idea that we shouldn’t be concerned about inequality is bullshit
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

See also

Capitalism—a love story

Lars P. Syll — Brad DeLong is wrong on realism and inference to the best explanation

Lars follows up on Brad's post on David Little.

I think that debate could be clarified logically by a discussion of criteria. There seem to be a lot of implicit assumptions about this. Best to make them explicit.

This gets back to the philosophical debate over ontological reality and epistemic knowledge of reality. The history of philosophy is a large measure an enquiry about three fundamental questions:
  1. What is there? (Ontology and Metaphysics)
  2. What can be know about what there is? (Epistemology and Theory of Knowledge)
  3. What can we express about what is? (Philosophical logic, Analytic Philosophy, and Semiotics)
Realism holds that humans have immediate knowledge of what is. Idealism holds that knowledge is mediated by the mind, process of experience, or confined to the mind, so that "reality" for humans is consciousness-based and determined by human consciousness. Some idealists hold that while knowledge is confined to experience, human believe that there is something independent of experience responsible for it, but that humans have no way of going beyond experience, which is phenomenal, that is, appearance.

The philosophical issue is about reality versus appearance.

Naïve realism aka the commonsense view of the world holds that we know what is directly as a matter of self-evidence. This is the view that is generally held. This is disputed in the history of philosophy from ancient time. Now the debate has extended to cognitive science and psychology.

Critical realism holds that we know reality directly and attempts to explain how.

Idealism hold that knowledge is of the mind rather than external reality. Positivism and empiricism are subjective idealists, holding that knowledge is model-based and sense-based. Subjective idealism as phenomenalism because widespread among those who appreciated science after the discovery of how perception functions through the senses being receptive to light and sound waves from the environment. From this point of view it seemed as if realism must wrong since all humans know about what is comes by way of experience, which is phenomenal.

Pragmatists attempt to avoid the issue by holding that knowledge is about experience. But human experience is phenomenal unless one assumes that experience is reality, in which case idealism follows from the assumption unless an explanation based on solid criteria is forthcoming about how experience is not mentally based.

Idealistic views involve a denial of intellectual intuition that bridges the knowledge gap between experience as appearance and reality existing prior to and independently of experience.

Why is this significant? It relates, for example, to the issue of certainty versus uncertainty, true knowledge versus opinion. It also relates to causality. Is so-called causality over constant conjunction of observables, as Hume asserted, or it causality the structure and functioning of real things that exist ontologically independently of observation.

Hume held that knowledge is limited to sense data and logical operations, and universals are mental abstractions. Aristotle held that in addition to sense intuition by which objects are known, human also use intellectual intuition to know the essences of objects as universals.

In between these two positions there is a lot of waffling. (Just kidding.)

Wittgenstein says to look to how language works as a symbolic system, and especially, examine the criteria. In my view, this is a prerequisite to debate. Much of the debate is misplaced, since the participants don't appreciate the issues and don't formulate them in a sound form that makes assumptions explicit. So parties end up at loggerheads over implicit assumptions.

While these questions may seem to some to be trivial, exotic, or even a waste of time, everyone makes assumptions about them that determine one's ideological framework that shapes one's worldview. This influences thought and action, and so the consequences are far-reaching, for example, in macroeconomics and political economy with respect to policy formulation.

Lars P. Syll’s Blog
Brad DeLong is wrong on realism and inference to the best explanation
Lars P. Syll | Professor, Malmo University

Cheap oil always boosts economic growth - UK economist

If you remember back when it was going up, everybody thought it would cause a collapse, now with it going down, everybody thinks it will cause a collapse.

Sunday, August 30, 2015

Brad DeLong — Live from Yellowstone Lake Lodge: WTF!? Daniel Little: The Case for Realism in the Social Realm

Brad gets critical about critical realism. Regardless of who is correct (how can we know?), it is good to see economists dealing with fundamental ontological and epistemological questions.

Grasping Reality
Live from Yellowstone Lake Lodge: WTF!? Daniel Little: The Case for Realism in the Social RealmBrad DeLong | Professor of Economics, UCAL Berkeley

Bill Mitchell — Monetary liquidity operations and fiscal policy interventions

Today, is the official launch of my new book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale – in Maastricht, which is an appropriate geographic location given the book proposes to dismantle the Eurozone. It just happens to be the place (Maastricht University), where we established CofFEE-Europe (a sister centre to my research centre in Australia). There are two excellent guest speakers (see below) and I am very grateful that they agreed to accept the invitations. The upshot is that I haven’t all that much time today. Over the next few days I will address some points that were raised in question time or at the reception (aka cup of tea and cakes) after the event in London last Thursday evening. There is still work to be done if the progressive side of politics is to fully understand Modern Monetary Theory (MMT) and the implications of it for policy development and choice.
Hopefully, the book will have a broad and deep readership, and make a difference.

Bill Mitchell – billy blog
Monetary liquidity operations and fiscal policy interventions
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Saturday, August 29, 2015

Conn M. Hallinan — Europe’s New Barbarians

On one level, the recent financial agreement between the European Union (EU) and Greece makes no sense: not a single major economist thinks the $96 billion loan will allow Athens to repay its debts, or to get the economy moving anywhere but downwards. It is what former Greek Economic Minister Yanis Varoufakis called a “suicide” pact, with a strong emphasis on humiliating the leftwing Syriza government. 
Why construct a pact that everyone knows will fail?
Dispatches from the Edge
Europe’s New Barbarians
Conn M. Hallinan is a columnist for Foreign Policy In Focus, “A Think Tank Without Walls, and an independent journalist. He holds a PhD in Anthropology from the University of California, Berkeley. He oversaw the journalism program at the University of California at Santa Cruz for 23 years, and won the UCSC Alumni Association’s Distinguished Teaching Award, as well as UCSC’s Innovations in Teaching Award, and Excellence in Teaching Award. He was also a college provost at UCSC, and retired in 2004. He is a winner of a Project Censored “Real News Award,” and lives in Berkeley, California.
ht Clonal

Friday, August 28, 2015

Sputnik International — Weak Ruble Drives Russian Car Production Boom

Volkswagen and Hyundai representatives have announced unprecedented plans to increase the production of their cars in Russian factories, for eastern export markets
Russian manufacturers gearing up too.

Russia Insider
Weak Ruble Drives Russian Car Production Boom
Sputnik International

Alexrpt — Forbes Fail! Western media outlet publishes fake Russian troop casualty article, and its zombie readers actually believe it

Funny. Especially since the butt of the joke is Paul R. Gregory, a noted Russophobe "expert," who got punked, along with a few others.

Paul R. Gregory is a Research Fellow, Hoover Institution, Cullen Professor of Economics, University of Houston, research professor at the German Institute for Economic Research in Berlin, chair of the International Advisory Board of the Kiev School of Economics, and co-editor of the Yale-Hoover Series on Stalin, Stalinism, and Cold War. He has co-edited archival publications, such as the seven volume History of Stalin’s Gulag (2004) and the three-volume Stenograms of Meetings of the Politburo (2008). Gregory is the organizer of the Hoover Sino-Soviet Archives Workshop that takes place in the summer at the Hoover Institution. His recent publications include Lenin’s Brain and Other Tales from the Secret Soviet Archives (Hoover 2004) and Terror by Quota (Yale, 2009).

Red Pill Times
Forbes Fail! Western media outlet publishes fake Russian troop casualty article, and its zombie readers actually believe it

SYRIZA is slipping. New poll shows only a 3.5 point lead over rival pro-EU party New Democracy

Forget the Greek elections. Ex-finance minister Varoufakis is launching Pan-Εuropean network to fight austerity

F. William Engdahl — China Rails Linking Eurasia

China has become the world’s leading makers of modern railroads and equipment. It has done so as part of a long-term strategy to weld a new economic space, build entirely new markets where none before existed. They studied the European rail-makers, studied the German ICE high-speed railways, engaged Siemens and a German consortium to build the world’s first magnetically levitated (maglev) train to link Shanghai’s international convention center to its new international airport at speeds between 300-400 km per hour. Now they are working on an entire new concept of fast rail as well as negotiating with some 28 countries to build high-speed conventional rail lines. China has become the address when it comes to rails and it is changing the world as we know it.….
New Eastern Outlook
China Rails Linking Eurasia
F. William Engdahl

Susie Cagie — Best way to solve homelessness? Give people homes.

Homelessness has always been more a crisis of empathy and imagination than one of sheer economics. Governments spend millions each year on shelters, health care and other forms of triage for the homeless, but simply giving people homes turns out to be far cheaper, according to research from the University of Washington in 2009. Preventing a fire always requires less water than extinguishing it once it’s burning.

By all accounts, Housing First is an unusually good policy. It is economical and achievable. The only real innovation lies in how to inspire the necessary compassion and foresight to spur governments into building those needed homes.

But Housing First is not very popular. It runs directly counter to the US meritocratic mythology, where one is presumed to fail or succeed by one’s own hand. The homeless are presumed to have earned their place on the street.

Complement to the Job Guarantee. Food, shelter, health care and a job guarantee are vital needs that should be recognized as human rights in developed societies. The opportunity cost is low when compared with the alternative — a dysfunctional society that perpetuates itself. 

The argument against it seems to be that this would destroy incentive and undermine a capitalistic economy, where capital is prioritized over people and the environment. Societies with socialistic economies get this, however, since they prioritize people and the environment over capital.

Moreover, the argument might have made sense when people had access to resources for obtaining food and shelter by their own initiative, but since primitive accumulation and the proliferation of private property that no longer applies, especially in modern urban life.

It is societal institutions that produced this change and therefore it is up to society to address the consequences adequately so that the social fabric is maintained and no one suffers needlessly where there are adequate resources.

Aeon Magazine
Best way to solve homelessness? Give people homes
Susie Cagie

Toyota Lowering Prices

Toyota lowering the price of Prius liftbacks in USD terms (at least temporarily):

Matias Vernengo — Thirlwall à la Godley

Arguably Godley had a version of Thirlwall's Law in his model too. As noted by Zezza: "the ideas underlying the ‘New Cambridge Hypothesis,’ which assumed... that the private sector would adjust rather quickly to a shock, to restore its desired income/assets ratio." In this sense, in the long run in a steady state Godley assumed that the net acquisition of financial assets would be zero. This would be a stock version of the flow equilibrium between investment and savings, the private balance.
Naked Keynesianism
Thirlwall à la Godley
Matias Vernengo | Associate Professor of Economics, Bucknell University

Yannis Palaiologos — Parallel currency would have led to Grexit, says Jeffrey Sachs

Jeffrey Sachs confirms Yanis Varoufakis's side of the story.

Parallel currency would have led to Grexit, says Jeffrey Sachs
Yannis Palaiologos
ht Clonal

Tropical Update

Notice how our qualified and competent meteorologists have included the time domain in their analysis and resultant predictive path for the current tropical storm Erika: