Category Archives: Guest Blogger

State of Thieves

By Deirdre N.  McCloskey
University of Illinois at Chicago

Nearly as published, Wall Street Journal, Saturday, Feb 28, 2015

The theme of Sarah Chayes’s “Thieves of State” is that corruption can’t be ignored as a source of international instability.  The injustice of it enrages people.  Corruption thus becomes “an important driver of conflict worldwide,” as Ms. Chayes puts it.  “Abusive government corruption prompts extreme responses and thus represents a mortal threat to security.”  Ms. Chayes, who in her seven years in Afghanistan worked as a reporter for National Public Radio, as an NGO administrator and as an advisor to Gen.  Stanley McChrystal, witnessed programs against corruption initiated by the NGOs, NATO, and the U.S.  Army fail and fail again, co-opted by the Karzai brothers and worse.  She tells the story of what happened in Afghanistan brilliantly, and compares her experience there with the current corruption in Egypt, Russia and the dismal rest.  In all of these places, the officials extract money from the system, the citizens cheat the system, and the business interests co-opt the system.  It’s an old story, from the corrupt judges the prophet Amos blasted to the love-besotted governor in squeaky-clean Oregon.

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Senator Bernie Sanders presents Tcherneva’s research to Show How Reagan Helped Destroy the Middle Class

By Michael McAuliff
(cross posted from Huff Post)

WASHINGTON — President Ronald Reagan remains a venerated figure in American politics, even as folks on the left have been taking a more critical look at his economic legacy in recent years.

So perhaps it’s not a surprise that Vermont independent Sen. Bernie Sanders would not think well of the Gipper. But when Sanders took to the Senate floor Thursday evening to offer a broad vision for how to do something to help the declining middle class, he offered a stunning chart that showed just how poorly most Americans have fared during economic recoveries since the advent of Reaganomics.

The chart starts by showing that in the decades after World War II, the bottom 90 percent of the country captured most of the growth in income during rebounds from tough times. But then came the Reagan era, and what George H. W. Bush once dubbed “voodoo economics.” After Reagan implemented his policies, the top 10 percent grabbed nearly 80 percent of the growth in incomes coming out of the oil crises of the late ‘70s.

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Getting Out of Our Lanes: Understanding Discrimination in the Digital Economy

By Raúl Carrillo

In the fall of 2013, on the 50th anniversary of the March on Washington for Jobs and Freedom, Ohio State University Law Professor Michelle Alexander penned a brilliant essay in The Nation, entitled “Breaking My Silence¨. In the piece, Alexander, author of the groundbreaking book, The New Jim Crow, urged social justice advocates to get out of our “lanes” and “do what Dr. King demanded we should: connect the dots between poverty, racism, militarism and materialism.”

In this spirit, I am writing to encourage readers to take up yet another task, one I’ve unfortunately only recently shouldered myself: to understand how digital surveillance reinforces socioeconomic hierarchies.

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The Politics of MMT (Strange Bedfellows)

By Jonathan Denn

There are the cut-and-dried facts, about how money actually works, which MMT succinctly explains—that those who were unaware—seem to readily grasp.

  1. The US is the issuer of currency not just currency users like households, towns, businesses and US States.
  2. If a country has a marvelous productive capacity, a free floating sovereign currency, and little to no debt denominated in foreign funds—then there is no external reason it cannot spend regardless of taxing or borrowing.
  3. The last seven US depressions were preceded by seven rare public surpluses.
  4. A public deficit is a non public surplus, which means a private surplus after taking into account what leaked overseas.
  5. A private surplus is the point of a prosperous nation, as long as it doesn’t cause hyperinflation.
  6. Banks create money, too. But since it usually has to paid back someday, those dollars are temporary.

The conclusion is that the US is the monopoly issuer of net financial assets. So, given a stable foreign trade balance the only way the private sector can grow is with increased government spending, asset appreciation (inflation), people spending out of savings, or people/businesses borrowing (temporarily) from banks.

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Absentee Governance by the “Captains of Solvency”

By John Nicolarsen

Recent events surrounding the bill passed for the funding of the United States Government for most of 2015, especially viewed in light of the bailouts throughout the financial crisis, prompt this piece, a brief reminder of the prescience with which the contributions of Thorstein Veblen stand up to vividly contouring the “credit system” of his day and, I argue, of our times presently. In addition to Veblen we benefit in seeing the past and future rescue measures from the work of János Kornai, in re-affirming and slightly filling out the “social process” of the extents taken as a result of the “soft budget constraint” syndrome. [1]

For Veblen, the “effectual control of the economic situation, in business, industry, and civic life, rests on the control of credit.” [2] The extension and control of the “fabric of credit” in determining production and output and “what the market will bear” is undertaken by a “conscientious withdrawal of efficiency, as dictated by the law of balanced return,”[3] and “Balanced Return involves Balanced Unemployment.” [4]

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MMT and the Next Growth Cycle

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.

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Did Ms. Rousseff’s epiphany come too late?

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.

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Pericles and the Socialization of Economics – Part I

By Tadit Anderson

[Part I]


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.

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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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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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