Thursday, October 28, 2010

Interesting Links for October 28

Here, a blogger quotes from Robert H. Nelson's book "Economics as Religion: from Samuelson to Chicago and Beyond"

Here, Bill Gross discusses the decline in the population growth rate.  It isn't good for capitalism.  I agree with that part of his analysis but disagree with his take on it.  In my view, it simply shows that capitalism cannot work in the long run; it is inherently a Ponzi scheme which depends on unlimited growth.  We need a sustainable society and Capitalism cannot provide that.

Here, Ezra Klein interviews Joseph Stiglitz.  Unlike other liberal economists (such as Krugman) and centrist economists (such as Brad DeLong), Stiglitz opposes Quantitative Easing 2, a new boost to the money supply to restore the economy.  Stiglitz says we need more economic stimulus, not QE2, mainly because QE2 will not be effective or cost-effective.  I agree except that I would go further, much further.  We need economic planning, public takeover of strategic sectors like energy, and government guaranteed full employment.

Here, Bradford Delong discusses deflation.  He thinks it's bad.  I think he's being far too generous.  As usual he's very smart but only about half right.  But that's better than zero, where you find the Chicago economists.  I'm not sure why I'm linking to this, maybe just so I can finally close the browser window on it.  But just in case you were still wondering why deflation is worse than inflation.

Wednesday, October 27, 2010

Good Reform Idea: Mortgages based on value not income

Steve Keen is an Australian economist who has written a great book on the errors of mainstream neoclassical economics.  Along with Paul Krugman, Dean Baker, and James K. Galbraith, he is one of my favorite economists (and remember, economics is religion and not science, regardless of what they tell you, so it's very important to select the best guides).

Here he has an idea wrt keeping housing prices from inflating out-of-sight as they did just before the Global Economic Crisis of 2008.

If we instead based the level of debt on the income-generating capacity of the property being purchased, rather than on the income of the buyer, then we would forge a link between asset prices and incomes that is currently easily punctured by rising debt. It would still be possible–indeed necessary–to buy a property for more than ten times its annual rental. But then the excess of the price over the loan would be genuinely the savings of the buyer, and an increase in the price of a house would mean a fall in leverage, rather than an increase in leverage as now. There would be a negative feedback loop between house prices and leverage. That hopefully would stop house price bubbles developing in the first place, and take dwellings out of the realm of speculation back into the realm of housing, where they belong.
The original article is here:

Why We Need a Deep Left

The use of the term "left" in politics goes way back to the French Revolution if not before.  The "Left" are those who wish to empower and enfranchise everyone on a more or less equal basis, and oppose the tyranny imposed on them by the wealthy and through institutions which serve the wealthy best.  While government and religion are included in these institutions,  the self conscious deep left does not ignore that the primary source of oppression is the institution of property itself, and the existance of property ultimately corrupts all other social institutions.

I have chosen the left as my side.

But over the past 100 years, the left has been defamed.  Authoritarians have re-defined communism and socialism in their own terms, and the Right has been happy to accept these definitions.  Thus in many people's minds the far left is authoritarian and anti-democratic.  That is not my Deep Left or the one most actual leftists ascribe to.

Meanwhile, identity politicians, often responding to very real oppression but without a universal vision, have also re-defined the Left for their own purposes.  But identity politics is not unifying, it is fragmenting, and it is not a framework that will ever work for the left, because WE must stick together, that is the only way We can win.

This blog will attempt to find the deep left that gets to the roots of freedom, that appeals to universal rights rather than identity politics, and that embraces democracy and not authoritarianism.