Author Archives: Devin Smith

Keeping It Real: Law, Coercion, & The Frontiers of Public Finance

By Raúl Carrillo

“Where does money come from?” That’s our question. That’s the trump card Deficit Owls play to explain why the case for austerity is shallow and sadomasochistic, now and forever. When one spreads the true answer—that the Federal Reserve creates dollars with keystrokes, that the U.S. government, unlike like a state or a household, can’t possibly “go broke”, that Uncle Sam has to worry about inflation but doesn’t need to tax or borrow to spend—policy creativity explodes. The false choices of public finance are illuminated. We can decrease taxes AND increase expenditures. We can achieve full employment AND price stability at the same time. Once we align conversation with operational reality, and recognize that we can’t collectively run out of money, we can have an honest—if always antagonistic—conversation about what institutions should do to create, administer, and regulate stocks and flows of resources.

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Gary Becker Treatment of Women who Work for Pay as “Deviants”

By William K. Black

This is the second article in my five-part series on Gary Becker as an exemplar of the book we are writing about why economics is the only field in which one can receive the top award for proving wrong, anti-social, and intellectually dishonest.  In keeping with that triple failure the Swedish Central Bank prize in economics is frequently awarded in the year in which the recipients’ failures and intellectual dishonesty has become so obvious that only the most dogmatic of theoclassical central bankers could pretend not to recognize reality.  Becker’s award exemplifies this unintentional exercise in self-parody.

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The Reactionary University Critiqued by a Reactionary who Ignores Reactionary Economists

By William K. Black

Victor Davis Hanson begins an article with an interesting title: “America’s Medieval Universities.”  His fundamental critique of the universities is:

“Employment rates for college graduates are dismal. Aggregate student debt is staggering. But university administrative salaries are soaring. The campus climate of tolerance has utterly disappeared. Only the hard sciences and graduate schools have salvaged American universities’ international reputations.

For over two centuries, our superb system of American public and private higher education kept pace with radically changing times and so ensured our prosperity and reinforced democratic pluralism.

But a funny thing has happened on the way to the 21st century. Colleges that were once our most enlightened and tolerant institutions became America’s dinosaurs.

Start with ossified institutions. Tenure may have been a good idea in the last century to ensure faculty members free expression. But such a spoils system now encourages the opposite result of protecting monotonies of thought.”

Some of these statements are accurate, though Hanson (a recovering classicist at Hoover) provides no logical basis for blaming the universities and tenure for the faults.

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The Tories’ Colonial Mindset and Independence for Scotland

By William K. Black

Family tradition says my relatives came from Ireland, Scotland, Germany, and Denmark – so I’m probably a typical American mutt.  As an Irish-American I learned early about London’s disgraceful treatment of its first colony, Ireland.  Indeed, but for London’s malign neglect my Irish relatives would likely never have emigrated and I would not exist.  I cannot, therefore, claim objectivity when it comes to the subject of independence for Scotland.  While I have no right to tell Scots how they should vote I would personally vote for independence.

My focus is on how the Tories are seeking to intimidate Scots to vote against independence.  The point is made in the title of a recent New York Times article:  “Scots Are Divided Over Independence, and Its Economic Costs.”

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Fundamentals of Shadow Banking: Dealer Model

Dr. Perry Merhling presented this seminar at UMKC on 4/30/14. He presented on the Shadow Banking System, in particular, the Dealer Model. The slides are immediately below the video.

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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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