A deeper look at Modern Monetary Theory

Of course Paul Krugman is correct when he says that right now a bigger deficit would help rather than hurt.

But he also argues that adherents to the unorthodox Modern Monetary Theory, which says that deficits are never important, are wrong.  Deficits are only harmless and even desireable now because we are at the zero interest bound and facing disinflation if not deflation.

Steve Randy Waldman takes a deeper look at MMT and claims Krugman's formulation is unfair.  Waldman, as usual, gives a very intelligent examination.  He holds his cards close to his chest, however, so I'm not sure what I'll think of his take until in next post he reveals it.  However, I don't quite agree, based on what he says now, that what Krugman says is unfair, Krugman is merely being brief and Krugman admits that.

I think it's interesting to click through Randy's links, such as this one:

http://rodgermmitchell.wordpress.com/2011/03/27/why-the-politicians-the-media-and-even-many-economists-still-dont-get-it/

Stiglitz, Krugman, Delong, many others won't sign

Part of the how our plutocratic government appears to be a responsible democracy is through endless "seriousness" about the federal budget deficit.

This has been decried by many great and leading economists, Paul Krugman, Brad DeLong, Dean Baker, and many others.  DeLong has often called the politicians Bowles and Simpson "budget arsonists" for their previous recklessness in voting for spending programs (like Medicare Part D, which could not negotiate drug prices) or tax cuts.  But now they are "serious" about the deficit.  As in seriously insane, and serious only about one thing: more plutocracy.

Now Joe Stiglitz has written editorial describing why he didn't sign on to Erkin Bowles flim flam, the main purpose of which appears to be whitewashing the deficit creating politicians.

Why Conservatives Can't Govern

Great essay by Alan Wolfe from 2006:

http://www.washingtonmonthly.com/features/2006/0607.wolfe.html

Whether through the ideas of James Madison, Immanuel Kant, or John Stuart Mill, liberals have viewed violent conflict as regrettable and the use of political institutions as the best way to contain it. Conservatives, from the days of Machiavelli to such twentieth-century figures as Germany's Carl Schmitt, have, by contrast, viewed politics as an extension of war, complete with no-holds-barred treatment of the enemy, iron-clad discipline in the ranks, cries of treason against those who do not support the effort with full-throated vigor, and total control over any spoils won. From a conservative point of view, separation of powers is divisive, tolerance a luxury, fairness another word for weakness, and cooperation unnecessary. If conservatives will not use government to tame Hobbes' state of nature, they will use it to strengthen Hobbes' state of nature. Victory is the only thing that matters, and any tactic more likely to produce victory is justified.

The Ricardian Prison

It seems the ideal world, as Barro, the coiner of the term "Ricardian Equivalence" would have it, is one in which ultimately returns to capital stay the same or increase to totality.

Such a world, which does ultimately increase capital to totality by strong tendency, is the Ricardian Prison, a slave ship, in which everyone born with no wealth (or reborn after bankruptcy) is a slave to pre-existing wealth.  Instead, the proportionate returns to labor, in place of capital, should increase over time so ultimately all return, as such, is to labor.  (There is also implied return to all, the meeting of their maximum needs possible to be as physically and socially fufilled as possible.  But such is by rights, not by privileges.  What I have been describing is the privileges of being socially productive.)

What needs to happen over time is that returns to wealth decrease over time, and ultimately collapse to zero, so fhat everyone is a free person, and fully equipped to their maximum possible extent by the infinity wealthy (or impoverished by capitalism) commonwealth.

In the meantime, the first chip to fall must be that wealth has no power, because if wealth has power, it will use it to continue to improve the returns to wealth in spite of total destruction of the commonwealth.

So all investment must be non-voting shares in the commonwealth.  There can be no other capital ownership.  Such shares pay a democratically determined dividend to the advantage of the recipient's living, but not to influence the quality of other's living disproportionately.  All power should be exerted through direct democratic means, as people talking with one another.  Democracy (perhaps Participatory Economics) should be our way of making decisions fairly and collectively about the common wealth.

Another chip to fall should be private inheiritance.

Great video on peak oil and climate change

Great video on climate change including Bill McKibben, Richard Heinberg, and Noam Chomsky.

I have joined the National Committee to Preserve Social Security and Medicare

I have joined the National Committee to Preserve Social Security and Medicare.  Right now there is no actual deficit crisis, in fact we would be better off having the government borrow trillions more at the current near zero rates and put everyone to work rebuilding America's infrastructure, particularly for using renewable energy.  But Republicans and plutocracy driven media (including NPR) are following the Shock Doctrine and beating the class war drums to cut all social programs, which would be disasterous for all.  Unfortunately, Obama is not fighting back, so we must take action.  Like Paul Krugman and Dean Baker, the NCPSSM are good and knowledgeable, not tools or fools.
http://www.ncpssm.org/


Here's a great Krugman OpEd about the phony deficit mania (really just cover for more trickle down economics):
http://www.nytimes.com/2011/03/11/opinion/11krugman.html?partner=rssnyt&emc=rss


The Angry Bear blog gets down into the nuts and bolts of things and has accountants who have analyzed Social Security very thoroughly. All it needs to meet all currently projected benefits and COLA's is pocket change fraction of a percent increases in the dedicated payroll tax which funds it, starting maybe 10 years from now, depending on how things go.  There is no "crisis" now in either Social Security or the government deficit, just a terrible recession and unemployment caused by accumulated trickle down economics and the bubblenomics rather than real reform to change that.  Social Security cannot, by law, draw on any funds except the payroll tax and bonds and interest from them.  IMO, Social Security is just about the only decent thing about the US government (which is maybe why all the crooks want to trash it).
http://www.angrybearblog.com/


The main (and almost only) long term problem with the federal budget involves projected increases in healthcare costs (because the US government already pays 60% of all healthcare costs in the USA).  Former NBER analyst and now economics professor Brad Delong continues to emphasize this theme.
http://delong.typepad.com/


Dean Baker monitors the media and dissects all the lies and distortions even in supposedly liberal outlets like the New York Times, the Washington Post, and NPR.  Contrary to the "liberal media" myth, all these sources are really fools or tools of the plutocracy.
http://www.cepr.net/index.php/beat-the-press/


Here's a great piece by Dean Baker on how NPR misrepresents the budget and Social Security.  Unfortunately, this sort of thing happens daily even on "the liberal media."


The actual progressive media consists of good bloggers like the above, Democracy Now!, Link TV (on both satellite networks), Free Speech TV (on Dish satellite network), Pacifica, Grit TV, and the always reliable The Nation magazine.

Krugman: education won't solve inequality

Here's the great Op-Ed by Krugman, which doesn't actually make the point I made earlier about technology, it was about education:

http://www.nytimes.com/2011/03/07/opinion/07krugman.html?partner=rssnyt&emc=rss

So if we want a society of broadly shared prosperity, education isn’t the answer — we’ll have to go about building that society directly. We need to restore the bargaining power that labor has lost over the last 30 years, so that ordinary workers as well as superstars have the power to bargain for good wages. We need to guarantee the essentials, above all health care, to every citizen.

Unfolding nuclear disaster(s) in Japan

We don't yet know how this is going to turn out.  In general, the situation at the Fukujima plant has gone from bad to worse from Saturday to Monday.

Nuclear engineers in the USA have responded to the problem with various arguments to the effect "don't let this convince you that nuclear power is not the safest kind."  Some of these seem incredibly shallow from a social welfare perspective (can you really say nuclear power is fine if it only kills 1/10 as many people as the disaster which caused it?).

Where do you go for an authoritative account by experts who aren't nuclear power ideologues (and aren't necessarily anti-nuclear ideologues either, but just calmly look at the facts)?

The All Things Nuclear blog  of the Union of Concerned Scientists.

David Lochbaum of UCS has also written a great Op-Ed in the New York Times.

I learned about these by reading comments on Brad DeLong's blog, an excellent place to start every day.

Greg Palast has some interesting stories about other backup generators at nuke plants failing the test too, under nothing like the aftermath of a Tsunami.

http://www.gregpalast.com/no-bs-info-on-japan-nuclearobama-invites-tokyo-electric-to-build-us-nukes-with-taxpayer-funds/#more-4497

Don't believe the constantly repeated lie that we need nuclear power.  Scientists have shown that we could meet all our energy needs with renewable energy and energy storage.  Of course it will take a massive rebuilding of our energy and transportation infrastructure.  But that would be required for the full on nuclear strategy as well, and the full on nuclear option is actually more costly (and less safe) when all costs are factored in.

*** Tuesday Update

The New York times has published article on the Mark I containment system (designed in the 1960's by GE) used in the Fukushima reactors as well as 23 operating in the US.  As far back as 1972, US regulators questioned the wisdom of this design and considered banning it.  The plants were not banned for political reasons, essentially that it would make nuclear power look bad.  Instead, a series of retrofits were ordered to beef up emergency systems.

http://www.nytimes.com/2011/03/16/world/asia/16contain.html?pagewanted=1&_r=2&seid=auto&smid=tw-nytimesscience

The problem with Mark I is that the lighter weight containment structure might fail due to loss of power and other events during a critical cool down period.  Mark II reactors use a much heavier "brute force" containment structure which is believed to be better be able to contain such failures.  However, no reactors have ever been built with the ultimately proposed Mark III containment, which was claimed to be able to withstand any kind of cooling failure without releasing radiation.  Here is a map of nuclear facilities in the US with the ability to show reactors of different types:

http://www.ucsusa.org/nuclear_power/reactor-map/embedded-flash-map.html

The whole rationale for the Mark I system was that it was cheaper to build.

Closest to my home, the existing South Texas plants are typical Mark II "Pressurized Water Reactors."  However, the new proposed units at South Texas were going to be similar to Mark I "Boiling Water Reactors" but redesigned with better containment structure (and built by Japanese).

Technology alone won't solve human problems

Krugman said it very well recently.  But, actually, this analysis goes way back, probably before recorded history (in the times when things like agriculture were invented).

As regards to industrailized/industrializing societies, Proudhon said it well in his book System of Economic Contradictions.

“What the economists ought to say is that machinery, like the division of labour, in the present system of social economy is at once a source of wealth and a permanent and fatal cause of misery”

and:

“very far from freeing humanity, securing its leisure, and making the production of everything gratuitous, these things would have no other effect than to multiply labour, induce an increase of population, make the chains of serfdom heavier, render life more and more expensive, and deepen the abyss which separates the class that commands and enjoys from the class that obeys and suffers”

From a great discussion of the possibility (or impossibility) of mechanized intelligence for the human future in this Crooked Timber thread:

http://crookedtimber.org/2011/03/09/when-the-machine-started/#comments

Sharp increase in US oil production under Obama

Despite sharp increase in oil production (way up from Bush II even), Republicans are blaming Obama for high oil prices.

http://climateprogress.org/2011/03/09/drill-baby-drill-fails-oil-prices-soar-production-obama-barbour-blame/#more-43798

The solution is not drill baby drill, but higher CAFE standards (we're lagging way behind Europe) and vehicle electrification, things Republicans consistently oppose.

And in letters to the above, it is suggested that cross-ownership of US auto companies by oil companies and oil company holders is one reason why US automakers consistently oppose standards they could easily meet.

BTW, here is Climate Progress's "Peak Oil" section:

http://climateprogress.org/category/peak-oil/

Climate Progress is another blog to read daily, or start with reading all their "reference" posts:

http://climateprogress.org/

Latest news on the global warming front: new JPL study released March 2011 says polar ice melting faster than expected, and they've done best calculation so far showing we're on path to 1 foot sea level rise by 2050.

The shortsighted-plutocracy trap

I posted this to Brad DeLong's blog today:

http://delong.typepad.com/sdj/2011/03/the-singularity-already-happened.html#comments

The problem that causes unemployment is that there is insufficient demand. If the demand comes only from private sources, as conservatives claim to want it, there has to be profit potential. Profit potential means someone else's income not diverted to saving or necessities. If more and more people are just barely able to afford necessities, there's no profit in the other stuff.

We had and may be loosing a society based on meeting the needs of the majority of people and then creating new needs for them to have: the middle class society. A potential future society is one in which we are all the serfs of the very rich, polishing their boats and such. I'm not making this up, Paul Krugman said something like this, that such as society would be economically possible, not that most people would welcome it.

But as I see it, such a society would be at the end of a long and painful deflationary spiral. Mass consumption and mass production depend on a middle class. If it's only the elites being served, they don't want mass production, but rather relatively inefficient specialized production. So we become less and less efficient at doing just what the very richest people want, everyone else be damned.

Rising prices of energy, loss of fertile land through desertification and pollution, rising sea levels, etc., all these things will add to the downward spiral.

We don't have to go this way. We could put everyone to work building the renewable energy and sustainable transportation systems needed in the future. But current economic elites don't want to go that way now. They want to milk the current setup for all it's worth. They don't see the downside in that. And every year these reactionaries have gotten more powerful. And the cheap energy which would make possible the construction of new energy systems, etc., is being used up.

Maybe we'll escape from this shortsighted-plutocracy trap. But to me, it looks like extraction-based growth-capitalist-economics is over. We're headed straight back to, I'd say the middle ages, but it was never this bad before, because it used to be that there was unused fertile land over the next hill. Now, over the next hill, the land was ruined by ..., and there are 10 million people fighting for it.

I later continued this post with another:

I think both DeLong and Krugman are correct here. DeLong is correct that a singularity happened, and it worked out OK [so far]. Krugman is correct in saying if we want a better society, we just have to build it, technology won't make it happen, and the key thing is greater equality.

It's the lack of thinking about equality or even society as an issue that is the flaw in singularist thinking. Our need is not for greater intelligence, as such. We already have the intelligence and knowledge we need, but it isn't being listened to. Great intelligence doesn't necessarily destroy the myths (such as the zombie economic myths, or global warming denialism) that surround us and leading us down the deflationary spiral of the collapse of extraction based capitalism into global destruction. Those myths are preserved because they seem to suit the present needs of the plutocracy. Great intelligence can be used to prop up myths as well as destroy them. So giving the masters of the universe more intelligence means more arcane zombie economics and global warming denialism, not less. Even more than humans, machines can be purely instrumental and not concerned with the welfare of others, exactly what the plutocrats want.

For the children, we must spend more on education, etc.

I posted this to Brad DeLong's blog today (corrected below):

http://delong.typepad.com/sdj/2011/03/obama-made-a-substantial-unforced-error-in-choosing-deficit-arsonist-alan-simpson-to-co-chair-his-deficit-commission.html

If we cared about our children, we would be building renewable energy and sustainable transportation systems as if we were fighting WWII. We would be investing maximally in education and zeroing out unemployment.

We would stand for the principle that Social Security is not merely a government program (with it's own dedicated tax, and triggered pocket change increases to deal with potential shortfalls) but a social contract which will not ever be reduced, even at the expense of restoring sane taxation on rich people. It's supposed to be "secure", get it? That is for the children too, get the rich old retired so the next generation can learn the ropes and look forward to getting their own.

But apparently the only children we care about are the children of the giga rich, except that their lives are not going to be spared the consequences of our capitulation to antidemocracy.

Interesting thought

I've been thinking along these lines, recently, though I never thought to describe the phase the United States is in right now as a "secular decline."  I see both secular and international dimensions to the current malaise.  So I found this blog entry (from  Krugman's post on new thinking at the IMF) interesting (though I disagree with the allegation of harmful effects of allegedly existing "US welfare policies").  Below is post by Jake Wagner of Santa Barbara, CA):

In the past, the IMF imposed fiscal discipline on third world countries.

Now economists such as Krugman argue that fiscal discipline, austerity if you will, is not needed, for the US. He cites Keynesian ideas which are absolutely valid in the mathematical models as mechanisms for mitigating the business cycle. But the US is in secular decline and Keynesian policies are irrelevant for that.

What the US needs is first of all to cut its population growth to zero. It is better to do this through policy than to pretend we are offering our citizens freedom by encouraging them to have larger families than they can support. And the US welfare policies do just that.

Second, the US needs to raise taxes on the wealthy and use the proceeds to create jobs in education, in infrastructure construction, in government-sponsored research projects like NASA.

It's really simple: create government jobs to ease unemployment, raise taxes and control population growth.

Econo blogs

Paul Krugman today commented about his inclusion in Time Magazine's list of the best finance blogs.

After reading the comments bashing his as "not a finance blog" I wrote this:

In addition to Thoma, I would add

 Angry Bear
Beat the Press
John Quiggin
DebtDeflation
Interfluidity

By some definitions, a "finance blog" would be the racing forms. Few of the listed entries are of that nature anyway, most are some form of social-political-economic commentary. Some people equate "finance blog" as a pollitcal-economic blog devoted to supply side economics and anti-democracy.

Tailgating is the new normal

Tailgating seems virtually standard nowadays.  I still try to apply the rules I learned in Driver's Ed, increasing distance from the car in front of me as I pick up speed, to allow for human response time, and especially in cases where traffic flow is irregular.

But many others do not.  People will get right behind my bumper in any lane, or regardless of whether I may be passing cars on the right or not.  When people get right behind me, I try to avoid sudden changes in speed.  In order to do that, I leave even more distance from the car in front.  Mind you, I'm still keeping up with it, just falling back slightly.  But that can infuriate some of these drivers enough to make a big scene squeezing around me and blasting up to the next car where they can pull the same stunt again.

The most important thing is not getting to work 1/10 of a second earlier.  The important thing is staying alive long enough to retire and therefore not to have to drive to work every day.  But for many people, I think this goes beyond impatience.  It is a tribal display of their Ayn Rand allegiance, ironically an allegiance to promote anti-social behavior.

Another problem with universal tailgating is that it becomes more and more difficult to get on the freeway or change lanes.  You may need to let a long line of tailgating cars to pass, or somehow get ahead of it.

One of the worst places in driving nowadays in Texas is trying to get out of a shopping mall parking lot into an "access road".   People barrel down access roads as if they were highway.  There is no protected turn signal, you have to wait for some kind of gap.  And sometimes, it can be a very long wait, with cars behind you honking and/or trying to squeeze past.