Category Archives: Guest Blogger

How to End the Crisis

By Marriner S. Eccles
(via e-mail from Thorvald Grung, Central Bank of Norway)

Marriner Eccles was Chairman of the Federal Reserve under President Franklin D. Roosevelt. This note consists of excerpts from an address he gave to the US Senate’s Committee on Finance in 1933 before he was called to Washington for public service by FDR. The original address contained in the Congressional Records has been reduced from over thirty pages (including questions and answers) to only three pages here that contain his essential message. The address has been edited by Thorvald Grung Moe, Visiting Scholar at Levy Economics Institute. Some parts have been slightly modified to fit the current time and crisis. Additions or alteration to the text has been marked by square brackets. All original figures used by Eccles in the address have been inflated by a factor of 16.4 according to the official US CPI index.

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The Fable Of The Marbles And The Teacher

By Aitor Calero García

Once upon a time, in a small and remote village across the mountains, in a faraway country, there was a small rural school. It was one of those schools with children of different ages together in a single classroom, a village school like any other, but this is a minor detail. It had a strict teacher. However, everybody in the village loved the teacher, as she was just and fair and she cared very much for her pupils. She was the kind of teacher who gave advice like “you always have to not live beyond your means.”

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A Federally-Funded Jobs Program? Lessons from the WPA

By John Henry

 
In the current debates surrounding various jobguarantee programs (in association with the Chartalistor Modern Money perspectives), it might prove helpful to review some aspects ofthe Works Progress Administration (renamed in 1939 as Work ProjectsAdministration).  While the WPA was not a“job guarantee” program, it nevertheless points to a number of issues that areunder current discussion, including those of the nature of the projectsundertaken, impact on the larger economy, concerns surrounding bureaucraticimpediments, etc.  Let’s begin with an introductory statement pertainingto the political and economic orientation of Franklin Delano Roosevelt (and hisAdministration).
 
Roosevelt was nota progressive. He ran on a balanced budget platform, and initially attempted tofulfill his campaign promise of reducing the federal budget by slashingmilitary spending from $752 million in 1932 to $531 million in 1934, includinga 40% reduction in spending for veteran’s benefits which eliminated thepensions of half-a-million veterans and widows and reduced the benefits forthose remaining on the rolls. As well, federal spending on research andeducation was slashed and salaries of federal employees were reduced. Suchprograms were reversed after 1935. And one might recall that Rooseveltattempted to return to a balanced budget program in 1937, just as the economyappeared to be slowly recovering. The result was a renewed depression thatbegan in the fall of that year and ran through 1938.

Not only in Germany: The ECB now wants export-driven growth for whole Europe!

By Andrea Terzi
(Cross-posted from Mecpoc)

One claimed objective of the single currency area in Europe is (or should I say was?) to create a large single market for producers. But now the ECB is pressing national governments to gear their policies to enhance competitiveness so that they can “count on external demand” and increase their net exports! Mario Draghi, President of the ECB, and a key figure in the team now managing the European crisis, made this statement while responding to an Italian journalist, in the Q&A session of the ECB press conference of 8 December 2011.

Earlier, Draghi had described the ECB’s view of the 3-pillar recipe to end the euro crisis as follows:

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The Real Deception in Advertising: What the New York Times Doesn’t Say about the Economics of Training Elite Lawyers

By June Carbone 

In an article on the front page of the New York Times, David Segal writes that, surprise, surprise, law school faculties do not systematically train students for practice. The article is one of a series Segal has written about supposed law school excesses. Some describe genuinely questionable practices; this describes a complaint at least a century old. I’m sure Mr. Segal thinks of himself as a muckracker. What the article doesn’t acknowledge is that it also advances the agenda of the 1%.

Let me explain. The complaint about law school for over a century has been that they do not train students for practice. The only thing that is new today is that the most elite corporate clients are attempting to cut their legal bills by shifting the costs of the training to law schools – and ultimately therefore to the students. It is one thing to argue that the law schools of the future will need to pay more attention to practical training in order to compete with each other; this is almost certainly true. It is another thing to suggest that this is somehow a matter of consumer protection.

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Why David Brooks Misses the Real Source of Moral Decay: Thirty Years of Class Warfare Against the Working Class

By June Carbone*

The New York Times told two separate stories earlier this week, with no apparent recognition that they might be related. On September 12, David Brooks published a column decrying the moral “relativism and nonjudgmentalism” of the young. On September 13, a front page story announced that “Soaring Poverty Casts Spotlight on ‘Lost Decade,’” explaining how the economic decline of the bottom half of the population over the past decade has grown worse during the financial crisis.

What do the two stories have to do with each other? Brooks writes as though the country has – or should have – a set of shared values. Yet, he ignores class and cultural differences in the way values are formed and expressed. In doing so, he fails to address the most critical question the country faces: how can we maintain a sense of shared values when the institutions that support one part of the country flourish at the expense of those critical to the part of the country in decline. In short, the decline of the middle class and the soaring poverty rates the second story describes are far more significant issues than anything in Brooks’ column.


Brooks misses the connection between the two because he conflates a centuries-long phenomenon – the development of modernism — with more recent changes that are appropriately a source of concern: the decline of community. Studies of the difference in values between modernists and traditionalists emphasize, as does Brooks, the importance of community. These researchers find that traditionalist communities, whether they consist of specific church groups, developing world nations or working class neighborhoods, tend to be characterized by close kin networks, while modernist communities have networks more likely to be defined by something other than blood ties.  These differences mean that the source and content of moral transmission varies: modernists tend to rely on individualized internalized values transmitted within private networks while traditionalists depend more on the health of institutions that articulate and reinforce pubic values.

In the United States, the differences between kin based traditionalist networks and individualistic, modernist ones tend to be strongly associated with class. In the Italian-American community of my youth, for example, my father simply moved in with my mother and grandfather when they married. We lived next door to an aunt and uncle. Another aunt and uncle and three of their four grown children lived on the next block. My mother spoke to her sisters every day. I never had a babysitter to whom I was not closely related. And we all attended the same church. I realized only as an adult that while we all identified as Catholics, our views ranged from deep devotion to profound skepticism. Yet, we were imbedded in close-knit family networks that tended to reinforce Catholic teachings about acceptable behavior.

All that changed when my cousins and I attended college far from home. We have each made individual decisions about what church to attend and what identities to embrace. I have had far more intense discussions about my moral and philosophical views with my college-educated colleagues than I ever did with the family members or co-religionists of my youth. The discussions occur in part because we do not share the same assumptions about the source of values.

This selection, articulation, and promotion of individual values takes more effort than my home community’s allegiance to a particular religion or ethnicity. It also requires respect for the views of others. The ability to combine strong individual values with tolerance in a diverse society is what education for democracy means. It is a critical legacy of the Enlightenment and the foundation of modernist societies.

In contrast, traditionalist approaches, which rest on morality that is “revealed, inherited and shared,” require strong institutions. Institutional leadership, rather than individual virtue, is necessary to combine group allegiances with public tolerance and to mediate the tensions between group interests and membership in a broader society.

What Brooks doesn’t tell you is that the real crisis in contemporary American society is the weakening of the institutions that serve those on the losing end of the American economic ladder. One of the startling observations in the Moynihan Report of the mid-sixties was his finding that as jobs disappeared from rustbelt inner cities so, too, did church attendance. A half century later, Brad Wilcox has found the same thing among the working class more generally. With economic decline that has disproportionately affected traditionalist America, the institutions that produced cohesive communities, including churches, schools, families and civic organizations, are in decay. Modernity with all its faults, however, is not the principal source of the problem. And the risk Brooks does not acknowledge is that attacks on modernity in the name of morality often become attacks on tolerance. Let’s address the real sources of institutional decay and stop conflating the challenges of the last few years with the cultural changes a millennia in the making.

* The author is Edward A. Smith/Missouri Chair of the Constitution Law and Society University of Missouri-Kansas City