Michael Meeropol on Mankiw’s Mendacity about Adam Smith

By William K. Black
Quito: April 26, 2015

One of our many distinguished readers of New Economic Perspectives is the economist Michael Meeropol. Mike contacted me after reading my columns about Mankiw pushing the Trans-Pacific Partnership (TPP) to alert me to another way in which Mankiw, who purports to be relying on Adam Smith, actually willfully misinterprets Smith through what Mike refers to as “pedagogical malpractice.” I thank him for bringing it to my attention.

Mike laid this out in an article in 2004. Reading Mike’s entire superb article is, of course, the best solution. For those with less time I have quoted extensively from the most relevant portion of his article, which includes a lengthy footnote. Mike’s major point can be summarized briefly: Smith believed fervently in emphasizing domestic manufacturing and agricultural production, domestic trade, and domestic investment as the essential means of building a Nation’s wealth. Mike’s article builds on the work of Joseph Persky. I’ve deleted two footnotes from his text.

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Indicting the Trans – Pacific Partnership: Even One of These Counts Is Sufficient to Vote to Kill It!

To really appreciate what a travesty the TPP is, and the scandal of the failure of our Congress to reject it, and the “Fast Track Authority“ sought for it, out of hand, I’m going to list 23 negative consequences that would likely follow from it. Any one of these, would, by itself be sufficient for any representative of the people, Senator or Congressperson, to vote to kill it. I’ll offer this list in the form of stanzas appropriate for a chant, except for the starting point in the list.

The tune of the chant that might be used is the tune used for Dayenu, the passover seder chant in which Dayenu means “It would have been sufficient,” where the reference is to all the things the almighty is purported to have done for the Israelites on their way out of Egypt and during their wanderings in the Sinai. I’m sure the President is familiar with this chant since he has had seders at the White House more than once. I’m also sure that he never envisioned using Dayenu to highlight the horrors of one of his favorite projects, the passage of “Fast Track Authority,” the TPP, and other “free trade” agreements such as the TTIP, and the TISA, all of which would get “Fast Track Authority” if the present bill passes. Continue reading

Mankiw Mendacity and Morality and his League of Failed Economists

By William K. Black
Quito: April 24, 2015

I met N. Gregory Mankiw for the first and only time in 1993 when he was a discussant for George Akerlof and Paul Romer’s paper on “Looting: The Economic Underworld of Bankruptcy for Profit.” The meeting was at Brookings, so it was attended by a wide range of economists. Brooking was by that time working closely with AEI on an anti-regulatory agenda, particularly in finance. Those of us old enough to recall when Brookings was referred to under Republican administrations as “the Democratic Party in exile” are very old. I attended as Akerlof and Romer’s specially invited guest because of my contributions to their article. The meeting taught me a great deal about Mankiw and the state of the economics academy.

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Obama & TPP: Every One That Doeth Evil Hateth the Light

By William K. Black
Quito: April 25, 2015

President Obama wants the world to know that he takes it personally that the Democratic Party’s base opposes his latest effort to sell out the people of the world to the worst corporations through the infamous Trans-Pacific Partnership (TPP) deal. Obama blurted out at a press conference a number of conservative Republican memes as his sole basis for pushing TPP. He then launched personal attacks on Senator Elizabeth Warren and labor leaders (without naming them). Obama, who is famous for keeping his cool when criticized by the GOP, is thin-skinned when criticized by Democrats. Obama never raged at the Republicans’ “death panel” attacks on him, but he raged at Warren as supposedly making an equivalently openly dishonest attack on TPP’s secret drafting process.

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How Can Our Senators and Representatives Vote for Giving Away Our Monetary Sovereignty?

Right now the US fulfills the three essential conditions for monetary sovereignty: 1) it issues its own non-convertible currency, 2) which it allows to float on international currency markets; and 3) it owes no debts in any currency other than dollars. Because it is monetarily sovereign, and can always meet its obligations the US can never be forced into insolvency.

It can become insolvent due to Congressional decisions such as failing to raise or repeal the debt ceiling, or Executive decisions such as failing to use its platinum coin minting authority to fill the public purse and then pay its bills once it has reached the debt ceiling. But again, it cannot be forced into insolvency by external financial or economic factors that are beyond the control of the Federal Government (including the Congress).

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Consent of the Governed: Stop the Emerging Tyranny!

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, . . .

This, of course, is from the Declaration of Independence, one of the sacred texts of American politics and political theory. When the consent of the governed is superceded, or is not given due to force or manipulation, then that is tyranny and illegitimate, because no powers of such a government are or can be just.

So, let’s ask, based on what we know about the proposed Trans Pacific Partnership Agreement from leaks of current drafts, and also based on the proposed procedures for enacting it, and those for exiting the agreement, is it true that the TPP, if passed, would have the consent of the governed and hence be legitimate? Or would it be an instance of imposition of tyranny on the American people and also on the people of other signatory nations?

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NEP’s Randy Wray’s interview in el Diario

For our Spanish speaking friends… Randy has an interview in the Spanish publication el Diario where he is talking about employment guarantee programs. You can view it here.

 

Lanny Breuer’s Defense of Not Prosecuting HSBC and its Officers

By William K. Black
Quito: April 19, 2015

I have been researching the HSBC frauds for a column I am doing about Loretta Lynch, the U.S. Attorney who refused to prosecute HSBC or any of its officers for the largest and most destructive money laundering and anti-terror finance sanctions-busting in history and continues to fail to do so even though her own appointed monitor at HSBC reports that HSBC is not complying with the sweetheart deal Lynch gifted them and even though she is now aware (of something she should have been well aware of for years) that senior HSBC officials continued to violate the laws to aid the wealthy and criminal evade taxes while HSBC’s lawyers were negotiating the sweetheart deal with Lynch about other mass felonies.  That research caused me to reexamine Lanny Breuer’s statements at the press conference celebrating the great Department of Justice (DOJ) “victory” in failing to hold any HSBC officer or employee accountable and for the anti-regulators acting to ensure that the bank was not held accountable for those crimes in any meaningful fashion.

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La Lista Loca – Part 1

By William K. Black
IAEN, UMKC, U. Minnesota

This is the first column in a five-part series about money laundering. When you think about Ecuador and international financial regulation the fact that leaps out at you as bizarre is Ecuador’s presence on the short list of nations that purportedly have “strategic [money laundering/funding of terrorism] deficiencies that have not made sufficient progress in addressing the deficiencies….”  Algeria, Ecuador, and Myanamar (Burma) are the only three nations on the Financial Action Task Force (FATF) (GAFI, in Spanish) “gray” list.  There are two nations on the FATF “black list” for providing funding to terrorists – North Korea and Iran.

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The Media Fall for Hillary Clinton’s Gensler Gambit

By William K. Black
Quito: April 16, 2015

Richard Cordray (former Attorney General of Ohio), the head of the Consumer Finance Protection Bureau (CFPG) and Gary Gensler (a former disaster under Bill Clinton and Goldman Sachs) have been the two great appointments by President Obama in the field of finance.  Obama’s other appointments at Treasury, the financial regulatory agencies, and the (non) prosecutors who are supposed to specialize in financial prosecutions have been nightmarishly bad.

Gensler was another Rubinite from Goldman Sachs who, under Bill Clinton, helped destroy Brooksley Born’s effort to protect the nation from the financial derivatives that blew up AIG and much of the financial world through passage of the infamous Commodity Futures Modernization Act of 2000.  As Obama’s appointee to chair the Commodity Futures Trade Commission (CFTC), however, Gensler justly earned praise for attempting to restore effective regulation.  Gensler was a grave disappointment to Obama’s administration, which thought it was sending a reliably pro-finance Rubinite to run a fairly obscure agency he had helped emasculate.  When Gensler showed a spine Obama refused to reappoint him and replaced Gensler with Timothy G. Massad, a Timothy Geithner minion noted for his pro-industry views.  Massad’s claim to fame was being one of the principal unprincipled architects of the failed homeowner relief programs.  As I pointed out in my first Bill Moyers interview, failing (for the right political reasons) proves you are a reliable “team player” and gets you promoted in Washington, D.C.  As Geithner found out, succeeding gets you your walking papers.  Jesse Eisinger, as his norm, wrote a great piece about Massad when Obama nominated him in November 2013.  An alternative view can be found in the American Banker, which gave prominently space to an op ed praising Massad’s nomination written by the head of a firm that trains CFTC staff.

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