Category Archives: William K. Black

The Broader Costs of Lethal Lemons: “We Have so Many Ranas”

Posted on May 1, 2013 by Devin Smith | 3 comments

This is the third article in a series on some of the additional lessons we should learn from the mass murder of Bangladeshi garment workers by anti-employee control frauds. I discuss new allegations about the senior executives involved in producing the terrible loss of life and maiming of so many workers because they are relevant to the broader harms that control fraud can cause that I discussed in the first and second articles in this series. Continue reading →

3 Comments

Posted in William K. Black

Tagged Bangladesh, Control Fraud, criminogenic environment, crony capitalism

The Lethal Lemons on the Road to Bangladesh

Posted on April 30, 2013 by Devin Smith | 5 comments

By William K. Black

I wrote yesterday about the “control frauds” (in which the person controlling a seemingly legitimate entity uses it as a “weapon” to defraud) that target purchasers of bad quality goods (“lemons”) and employees. The example I used to explain these concepts was the collapse of the building housing garment factories in Bangladesh. Continue reading →

5 Comments

Posted in William K. Black

Tagged austerity, Bangledesh, criminogenic, neoclassical economics, troika, wages

What if George Akerlof had written about Lethal “Lemons?”

Posted on April 29, 2013 by Devin Smith | 7 comments

By William K. Black
(Cross Posted at Benzinga.com)

If you have studied economics at the university level in the last 35 years it is likely you were introduced to the concept of “asymmetrical information” and George Akerlof’s famous 1970 article on markets for “lemons” (American slang for an automobile of terrible quality). The Nobel committee that awards the prize in economics singled out that article for special praise in deciding to make him a Nobel Laureate in 2001. The article discusses the implications of asymmetrical information in a number of contexts, but at least two of the contexts involved what criminologists call “control fraud” and a third involves the risk of fraud by borrowers. Most of the examples Akerlof discussed involved fraud. The frauds he analyzes concern deceit about the quality of goods being sold or the borrowers’ ability or willingness to repay a loan. Continue reading →

7 Comments

Posted in William K. Black

Tagged Akerlof, asymmetrical information, Bangledesh, Control Fraud

Robert Reich has a Good Heart but an Inadequate Grasp of Economics

Posted on April 17, 2013 by Devin Smith | 6 comments

By William K. Black
(Cross posted from Benzinga.com)

Robert Reich has written a column entitled “Why this is the Worst Recovery on Record.” It’s an odd title because the article makes no reference to this being “the worst recovery on record.” Unlike a newspaper column, we know that Reich chose the title, because it comes from his own blog.

The current U.S. recovery is not “the worst recovery on record” – it is not faintly close to the worst recovery on record. Rhetorical claims like this are dependent on highly selective choices of what years one compares. In 1937 and 1938, President Roosevelt listened to the incoherent claims of his economic advisors that stimulus was bankrupting the Nation and that it had spurred a sufficiently robust recovery that the private sector could now be relied upon to lead the Nation promptly back to prosperity. The advisors recommended that FDR act urgently to impose austerity. FDR cut spending and increased taxes and the Federal Reserve tightened the monetary supply. The result was that a robust recovery from the Great Depression that reduced unemployment by two-thirds during FDR’s first term from a high of 25%. Real GDP growth averaged 12% during that term. Continue reading →

6 Comments

Posted in William K. Black

Tagged austerity, MMT, Modern Monetary Theory, reich

“Nobody in Europe” sees a “contradiction” between austerity and growth

Posted on April 10, 2013 by Devin Smith | 4 comments

By William K. Black

The two most revealing sentences about the gratuitous Eurozone disaster – the creation of the deepening über-Depression – was reported today. The context (rich in irony as I will explain) is that U.S. Treasury Secretary Lew spent his Spring Break in Europe meeting with his counterparts. The Wall Street Journal’s article’s title explains Lew’s mission and its failure: “U.S. Anti-Austerity Push Gets Cool Reception in Europe.” Here are the sentences that capture so well why Germany’s destructive economic policies caused the über-Depression: ““Nobody in Europe sees this contradiction between fiscal policy consolidation and growth,” said Mr. Schäuble. “We have a growth-friendly process of consolidation.” Continue reading →

4 Comments

Posted in William K. Black

Tagged austerity, contraction, debt reduction, depression, lew, obama, Rehn, Schauble, über-Depression

The New York Times Thinks Bleeding Cyprus is “Strong Medicine”

Posted on April 8, 2013 by Devin Smith | 3 comments

By William K. Black
(Cross posted at Benzinga.com)

I’m announcing the New York Times award for incompetence in macroeconomic reporting (IMR, pronounced like “screamer”). I suggest that the paper offer as a prize to awardees a two hour lunch with Krugman in which he provides a remedial economics lecture. My premise is that it is impossible to be a NYT reporter and fail to know that the paper has a Nobel Laureate in economics who writes a regular column for the paper and frequently discusses making economic downturns worse by inflicting self-destructive austerity. Even the most casual reader of Paul Krugman’s columns would know that opposition to austerity has long been the dominant view among economists and that over the last five years events here and in Europe have again confirmed that view. Continue reading →

3 Comments

Posted in William K. Black

Tagged 1 percent, austerity, Eurozone, krugman, nyt

The Truthseeker: Looting of America

Posted on April 6, 2013 by Devin Smith | 2 comments

NEP’s William Black and Stephanie Kelton appear on RT’s Truthseeker. This episode focuses on the looting of America.

2 Comments

Posted in Stephanie Kelton, William K. Black

Tagged banksters, Financial crisis

Comparing Unemployment During the Great Depression and the Great Recession

Posted on April 5, 2013 by Devin Smith | 4 comments

By William K. Black

Barry Eichengreen’s and Tim Hatton’s January 1988 paper entitled “Interwar Unemployment in International Perspective” is a useful starting point for any effort to compare unemployment during the Great Depression and the Great Recession.

It is useful to begin by recognizing three related cautions that the authors make in that paper. First, the modern sense of the term “unemployment” (willing and able to work, but unable to find a job commensurate with the worker’s skills) was not common until the decades before the Great Depression. The prior assumption was that people were unemployed because they were lazy. There was little understanding of business cycles or inadequate demand, little sympathy for the unemployed, and no sense that business or government were primarily responsible for the the level of unemployment. This meant that keeping data on unemployment was rarely a concern of government. Data on unemployment in Europe was largely collected through industrial trade unions.

Continue reading →

4 Comments

Posted in William K. Black

Tagged austerity, Eurozone, MMT, Modern Monetary Theory, unemployment

The NY Times Calls Third Way “Center-Left” and Turns a Study on its Head

Posted on March 21, 2013 by Devin Smith | 18 comments

By William K. Black

Some lies will not die. As I have demonstrated repeatedly, Third Way is Wall Street on the Potomac. It is funded secretly by Wall Street (it refuses to reveal its donors), it is openly run by Wall Street, and it lobbies endlessly for Wall Street. Third Way, like every Pete Peterson front group, is dedicated to shredding the safety net as its highest priority and throwing the Nation back into a gratuitous recession through self-destructive austerity. Continue reading →

18 Comments

Posted in William K. Black

Tagged austerity, false flag, The Third Way

Yglesias Cheers a Double Betrayal of Cyprus

Posted on March 20, 2013 by Devin Smith | 37 comments

By William K. Black

Slate’s Matthew Yglesias writes columns about economics and finance. Yglesias has been writing about Cyprus, and my critiques of the policies he has been proposing are the subject of this column. The short version of the background one needs to understand the issues is that Cyprus is in a crisis and the EU is willing to bail out its collapsing banks only if Cyprus raises revenues. The EU is unwilling to make the banks’ sophisticated creditors – the bondholders – take any losses. The EU wanted the banks’ least sophisticated creditors – the depositors – to take losses, even if their deposits were small enough to be within the deposit insurance limit. The reality, which the EU wishes to obscure by calling its proposal a tax, is that that the EU was insisting that depositors no longer be fully protected from loss by government deposit insurance. The EU demand was made shortly after the EU and Cyprus’ government pledged that depositors under the insurance limit would suffer no losses. Continue reading →