Author Archives: Devin Smith

Let’s Fight Poverty, Not the Poor

By Fadhel Kaboub
(cross posted from freepress.org)

This year marks the 50th anniversary of the so-called “War on Poverty” that President Lyndon B. Johnson declared when the official poverty rate was at 19%. Five decades later, the poverty rate stands at 15% with 46.5 million people living below the official poverty line, which is about $23,000 for a family of four (2012 Census Data). More than 20 million people earn less than half the poverty line, in other words, they live in extreme poverty in the richest country in the history of the world. The statistics are even more depressing when we consider that the child poverty rate (under age 18) is an alarming 21.8%. Even worse, for children under the age of 5, some states register poverty rates of up to 36%.

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Role of Microeconomics and Heterodox Economics: A View of a Micro Theorist

This is the last graduate heterodox microeconomics lecture presented by Dr. Fred Lee for Academic Year 2013/2014.

Piketty’s Regressive Views on Public Debt and the Potential Impact of His Book

By Philip Pilkington
(Cross posted from Fixing The Economists)

uncle_sam_brokePiketty’s Wikipedia page says that he’s a Keynesian. Well, I don’t see it at all. His book contains a section on the public debt in historical perspective and it is desperately misinformed.

A caveat first though: I actually like Piketty’s book in a lot of ways. While not extremely well written, it is highly readable (if you are an historical data sort of person). And it is very nice to see what is effectively a work of economic history get so much play. Because economists should be far more interested in reality than in modelling and this book could spur that interest.

But the history presented in Piketty’s book is selective and, I think, ultimately untrustworthy. Even the way he chooses to present data — both in terms of the averaging of the time periods and aggregates used — is often quite misleading. I don’t want to get too far into this here but I’m pretty concerned that people who are broadly ignorant about economic history are reading this book and coming away, in many ways, misinformed.

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It’s Good – no – Great to be the CEO Running a Huge Criminal Bank

By William K. Black

Every day brings multiple new scandals.  At least they used to be scandals.  Now they’re simply news items strained of ethical content by business journalists who see no evil, hear no evil, and speak not about evil.  The Wall Street Journal, our principal U.S. financial journal ran two such stories today.  The first story deals with tax evasion, and begins with this cheery (and tellingly inaccurate) headline: “U.S. Banks to Help Authorities With Tax Evasion Probe.”  Here’s an alternative headline, drawn from the facts of the article: “Senior Officers of Goldman Sachs and Morgan Stanley Aided and Abetted Tax Fraud by Wealthiest Americans, Failed to Make Required Criminal Referrals, and Demanded Immunity from Prosecution for Themselves and the Banks before Complying with the U.S. Subpoenas: U.S. Department of Justice Caves in to Banker’s Demands Continuing its Practice of Effectively Immunizing Fraud by Most Financial Elites.”

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Speculation in the Commodities Market: Part 2 A Response to Price Asset Management

By Ben Strubel

Recently, a nice man named George H. Rohrs Jr. from Price Asset Management, a firm that specializes only in commodities and managed futures investments, emailed me a copy of the newsletter his firm sent to clients in which he wrote a response to my article on commodity funds. Mr. Rohrs asserted:

I wouldn’t call Ben Strubel, the author of this article “stupid.” I would just call him “ignorant” and “unprofessional” and “biased.” I just believe that he ought to get his facts straight before embarrassing himself by publishing the compendium of misinformation contained in his article.

I wouldn’t call Mr. Rohrs an expert in the usage of quotation marks but I would call him a man with some very strong opinions about me. Let’s look at the points he raises in his article and find out if I am in fact ignorant, unprofessional, and biased. Okay. I’m currently sitting in my office not wearing my shoes, so I’ll cop to the unprofessional part.

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Speculation in the Commodities Market: Part 1

By Ben Strubel

This week’s Dumb Investment of the Week is commodity funds. Commodities are physical products such as corn, oil, or sugar. Commodity investments only used to be a way that Wall Street parted institutional investors from their money, but over the past decade banks have been increasingly targeting individual investors either directly or through financial advisors, brokers, and mutual fund companies.

Prior to 2000, commodity markets were strictly regulated. Then, in 2000, the Commodity Futures Modernization Act was passed which, among other things, did away with position limits in commodities markets. While commodity index funds have existed since 1991, it wasn’t until recently that they became popular and could handle large inflows of funds. In 2003, several academics published research showing that commodities did not have strong correlations with other asset classes like stocks, bonds, or real estate. Wall Street, never having met a fee-generating idea it didn’t like, seized on this research and began creating and selling commodity index funds to retail and institutional investors. Over the better part of the next decade, $350B flowed to newly created commodity funds.

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The Kamikaze Economics and Politics of Forcing Austerity on the Ukraine

By William K. Black

We all understand why Russia is waging economic war on the Ukraine, but why is Obama doing so?  The New York Time’ web site has posted a remarkable Reuters story (dated April 5, 2014) entitled “Ukraine PM Says Will Stick to Austerity Despite Moscow Pressure.”

“The Kiev government will stick to unpopular austerity measures ‘as the price of independence’ as Russia steps up pressure on Ukraine to destabilise it, including by raising the price of gas, Prime Minister Arseny Yatseniuk told Reuters.”

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Ten Lessons We Must Learn from Charles Keating

By William K. Black

I knew Charles Keating, the head of Lincoln Savings, in my capacity as a financial regulator and as the subject of his wrath.  His fraud schemes and the manner in which they targeted our system’s vulnerabilities in an era before Citizens United made the corruption of politicians by fraudulent CEOs child’s play remain the play book for the world’s most destructive financial frauds.  Our failure to learn the ten lessons has caused immense suffering.  Keating’s life, and the great harm he caused, will not have been in vain if we step back and use the occasion of his death to reflect on the changes we need to make.

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MMT and Social Movements

By Tadit Anderson*

The probability of demonstrating the democratic functionality of MMT/ff economic and fiscal policies in an academic or literate fashion to persuade politicians toward a conversion experience is unlikely. Even with our best communicators speaking in a mass media context or other public forums there are various other factors that need to be examined, such as learning styles and self-interest. Even if the analysis is right and validated by history the politicians will act upon the net amount of political influence supporting one set of policy priorities over another set of interests. When it comes to the influence of campaign contributions, thanks to the delusional decision that money is a form of free speech, the many will be usually outweighed by the few who have the money to buy political influence. While that is the unfortunate law of the land, the advocacy for democratic functionality will usually end up in second place.  However, the actual history of socializing movements suggests that an alternative path is not just possible, but also necessary. Given that the public discourse is also largely occupied by corporate interests, we have to also find different ways to grow a socializing movement other than relying upon public spectacles, such as mass demonstrations of protest and resistance.

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Stock Flow Consistent Modeling

On March 22, 2014, Marc Lavoie of University of Ottawa presented a workshop on Stock Flow Consistent Modeling at University of Missouri Kansas City. Prof. Lavoie graciously provided his slides and they available below the video.

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