Author Archives: William Black

BREXIT: Populism and Democracy: Part 1

Posted on June 27, 2016 | 13 comments

By William K. Black
June 24, 2016     Kansas City, MO

The UK vote in favor of BREXIT has stoked the fears of the New York Times to a fevered pitch.  Their greatest collective fear is the rise of “populism.”  The NYT fashions itself the last redoubt of “serious people” under siege by the rabble.  BREXIT is an opportunity to drive home to the rabble the folly of failing to fall in line with the policies of the serious people featured in the NYT.  The moral of the story is a simple one – when the electorate in a democratic election ignores the technocrats the result is an economic and social catastrophe.

Even for the NYT, however, their attacks on the UK electorate for daring to vote for BREXIT were extraordinary in their intensity and multiplicity.  At least seven articles, each of them negative about the UK voters, were featured in today’s paper.  (I had no strong views on the vote.  I think reasonable UK voters could disagree on the desirability of BREXIT.)

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The Myriad Mendacious Myths of “Market Regulation” of Finance

Posted on June 8, 2016 | 6 comments

By William K. Black
June 7, 2016     Bloomington, MN

Representative Jeb Hensarling, Chair of the House Financial Services Committee has announced that he will introduce a Republican plan to repeal key provisions of the Dodd-Frank Act and replace them with “market-based” regulation.  I have explained in a prior column how theoclassical economists, for over 40 years, have created repeated criminogenic environments in finance due to their unholy ideological war against effective financial regulation.  The dominant policy view among economists and senior anti-regulatory policy advisers of every administration since President Carter embraced the myth that economists had invented means by which the “markets” will effectively “regulate” finance.

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The Lie That “China Wins” if the TPP Kangaroo Tribunals are Stopped

Posted on June 6, 2016 | 1 comment

By William K. Black
June 5, 2016     Bloomington, MN

Proponents of the Trans-Pacific Partnership (TPP) know that they have a major problem.  Bernie Sanders, Hillary Clinton, and Donald Trump each oppose the deal.  CEOs, however, have not given up on their dream of being able to rig the international system through the creation of kangaroo tribunals that can, effectively, destroy effective regulation and the enforcement of rules to protect the public.  As I explained in my most recent column on this subject, “trade” is simply the pretext for this assault on the rule of law and national sovereignty.  President Obama plans to try to get the TPP approved by the lame duck Senate after the November elections.  Outgoing officials no longer must fear (or respect the will of) the voters and they are eager to cash in on the corporate largess that will reward politicians that vote for the international CEO impunity deals.

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Krugman’s Karma Forces Him to Feel the Bern and Attack the Kochs for “Buying Politicians”

Posted on June 6, 2016 | 8 comments

By William K. Black
June 4, 2016     Bloomington, MN

When last we read Paul Krugman he was repeatedly demanding that Bernie Sanders cease criticizing Hillary Clinton for a lifetime addiction of taking tens of millions of dollars in political contributions and hundreds of thousands of dollars in speakers’ fees from Goldman Sachs and other business interests.  (I am an economic adviser to Bernie.)  While Professor Krugman consistently stressed that the data show that business campaign contributions do rig the system, Hillary Surrogate Krugman suddenly professed that business political campaign contributions and speaker fees have no corrupting effect on politicians.

Economists should be honest for all the usual reasons, but economists who wish to affect policy have an additional reason to embrace intellectual honesty.  Karma means that an intellectually dishonest economist is likely to be promptly confronted by the desirability of telling the truth in order to prevent disastrous policy on precisely the subject he or she just lied about.

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GOP Trumphemisms: “Completely Unacceptable” Means the Opposite

Posted on June 5, 2016 | 3 comments

By William K. Black

Trump’s bigotry de jour was quadrupling down on his claim that the judge hearing the fraud lawsuit against the Trumphemistically-named “Trump U” (which was not a university and involved solely Trump’s wallet rather than his “leadership”) was biased against Trump because the judge, while born here, was of Mexican descent.  Trump’s free-floating bigotry is, of course, simply the norm, so the story here is the reaction of GOP leaders who have made public their support for making an open bigot our President.

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Cochrane Proposes “Restoring the Rule of Law” by Letting CEOs Defraud with Impunity

Posted on May 18, 2016 | 3 comments

By William K. Black
May 16, 2016     Bloomington, MN

John Cochrane is a theoclassical economist.  I struggle to explain to readers how radical theoclassical economics has become.  The more their anti-regulatory policies prove disastrous the more extreme their policies become.  Cochrane wrote a column recently in the Wall Street Journal that exemplifies this pattern.  We are just emerging from the worst financial crisis since the Great Depression.  The three “de’s” (deregulation, desupervision, and de facto decriminalization) caused the three most destructive epidemics of financial control fraud in history.  Much of this was driven by the perverse financial incentives that CEOs crafted to rig the system and produce an intensely criminogenic environment.

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Mankiw’s Mythical Ten Commandments of Theoclassical Economics

Posted on May 17, 2016 | 2 comments

By William K. Black
May 16, 2016     Bloomington, MN

This is the second column in a series on the N. Gregory Mankiw’s myths and dogmas that he spreads in his economic textbooks.  The first column exposed the two (contradictory) meta-myths that begin his preface.  This column de-mythologizes Mankiw’s unprincipled “principles” of economics – the ten commandments of theoclassical economics’ priestly caste.  Some of these principles, correctly hedged, could be unobjectionable, but in each case Mankiw dogmatically insists on pushing them to such extremes that they become Mankiw myths.

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The Unprincipled and Mythical Mankiw Principles of Economics

Posted on May 16, 2016 | 3 comments

By William K. Black
May 15, 2016     Bloomington, MN

In this first installment I discuss the unacknowledged contradiction that lies at the core of the two meta-myths in the preface to N. Gregory Mankiw’s textbooks.  Mankiw is among the leading providers of introductory economics textbooks.  In his preface to these volumes he preaches his first meta-myth in his first substantive sentence about economics.

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Stop Calling Deals That Help CEOs Pillage with Impunity “Free Trade”

Posted on May 15, 2016 | 4 comments

By William K. Black
May 14, 2016     Bloomington, MN

This is the second column in my series on the “Mankiw’s myths and Mankiw morality.”  In the first column I showed that N. Gregory Mankiw’s own unprincipled principles of economics predicted that the financial system would be rigged by and for the financial CEOs.  In his New York Times column Mankiw purported to be writing to dispel myths, but actually did the opposite, asserting that the financial system could not be rigged.  I explained in the first column how Mankiw famously decreed that it would be “irrational” (rather than ethical) for a CEO not to “loot” a firm that he controlled.  I term this view that being ethical is irrational for a CEO “Mankiw morality.”  Under Mankiw morality, financial CEOs would have the incentive and the ability to rig the system and would do so repeatedly.

My second column responds to some of Mankiw’s myths about the “trade deals.”  I again apply Mankiw morality and theory to refute Mankiw’s myths about “trade deals” being good for America.  Mankiw morality predicts that CEOs, whenever they can personally get away with it, will rig the system to create a “sure thing” allowing the CEO to become wealthy through fraud and other abuses.  The CEOs see regulators and prosecutors as the paramount risks to their ability to get away with rigging the system.  They look for every opportunity to discredit and render ineffective regulation, to make it difficult to prosecute elite white-collar criminals, and to ensure that agency heads and attorney generals will be appointed who are unwilling to effectively regulate and prosecute corporate elites.

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Mankiw Morality in a Mash Up with Mankiw Myths

Posted on May 9, 2016 | 9 comments

By William K. Black
May 8, 2016     Kansas City, MO

N. Gregory Mankiw writes leading textbooks in economics that present neoliberal economic nostrums as economic “principles.” Mankiw wrote a column in the New York Times entitled “The Economy Is Rigged, and Other Presidential Campaign Myths.” The title reflects the central nature of his attack on Bernie Sanders explaining how the economy is rigged in favor of elite bank fraudsters.  This first column in a series responds to Mankiw’s myths about the rigged financial system.  The next column deals with Mankiw’s myths about the trade deals.

Mankiw misfires immediately because he does not even attempt to refute Bernie’s explanations of how finance is rigged.  Instead, Mankiw conflates income inequality and the rigging of finance.

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