By Thornton Parker
Discussions on this forum generally treat MMT in isolation rather than in the context of other forces that drive an economy. In Japan, for example, the sales tax increase to reduce the government’s deficit is widely seen as a recent cause of its lagging economy. But a bit of history shows a different picture.
At the end of World War II, the country was decimated. Many of its young men were dead; its industries and cities were in ruins; its people were humiliated and overwhelmed by two atomic bombs; even its religion was repudiated. An island nation, it had no local friends, little fuel, and almost no raw materials. The only thing it was rich in was poor people.
Most western economists believed it was destined to remain a basket case indefinitely. But the Japanese rejected that assessment, saying if that was what conventional economics predicted, they would invent their own economics. And they did just that.
By Felipe Rezende
If you’ve been tracking the news on Brazil’s presidential election, you already knew that incumbent Rousseff will face Neves in a runoff election for Brazil’s presidency on October 26th. The tight election reflects the perception of a downward trend of the nation’s economic outlook augmented by news that Brazil’s economy has fallen into recession in the first and second quarters of 2014. This really isn’t looking like the election the Workers’ Party expected. Brazil’s unemployment rate has hit record lows, real incomes have increased, bank credit has roughly doubled since 2002, it has accumulated US$ 376 billion of reserves as of October 2014 and it has lifted the external constraint. The poverty rate and income inequality have sharply declined due to government policy and social inclusion programs, it has lifted 36 million out of extreme poverty since 2002. Moreover, the resilience and stability of Brazil’s economic and financial systems have received attention as they navigated relatively smoothly through the 2007-2008 global financial crisis. Brazil’s response to the largest failure of capitalism since the Great Depression included a series of measures to boost domestic demand.
By Tadit Anderson
There is an interesting provenance between the defaming of the democracy of Pericles’s Athens as dysfunctional and the use of this fiction to support an “aristocratic” form of governance in opposition to democracy, even two thousand years later. The life of this misrepresentation was then extended in fabrication of creation myths about the peculiar nature of allegedly modern “democracy.” By the end of the 19th century a more reliable analysis of the Golden age of Athenian democracy was available. This new narrative should have replaced the misrepresentation by Plato and his lineage, but propaganda, if repeated often enough will begin to seem true. Making a distinction between a form of oligarchy and a functional democracy seems to be difficult when gaining unearned wealth is such a disincentive.
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.
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.
By Philip Pilkington
(Cross posted from Fixing The Economists)
Piketty’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.
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.
On March 21, 2014, Marc Lavoie of University of Ottawa presented a seminar on Heterodox and Post-Keynesian Economics at University of Missouri Kansas City. Prof. Lavoie graciously provided his slides and they available below the video.
By Anonymous Student*
And there I was, a teenager, strolling on the Kingsway – a district with a long road that encompasses high-end shops, restaurants, and hotels on both sides of the road and as the name implies, it literally used to be the King’s way to his palace – when I saw a few street children walking around begging the privileged passersby for mercy-money. Sadly, I observed that the street children were invisible to almost everyone. The fortunes would look straight at them and see right pass through them. I wondered why those shoppers who could afford to spend on high-end designer handbags could not show mercy on those children and spend a few dollars on them. One of the conclusions I reached was that maybe because they were so used to encountering not only those underprivileged children, but also, a lot of other underprivileged people in their daily lives in that society that they were immune to them. This story is of a developing country and as with a lot of developing nations, the income gap between the “haves” and the “have-nots” was pretty high and consequently, inequality persisted in every aspect of life among the citizens there.