Showing posts from November, 2015

Right wing turn in Latin America?

No shame
Slow posting during the Thanksgiving break. Just a brief follow up on my recent post on Argentina. By a relative small margin the right wing candidate, Mauricio Macri, won the election. As noted in the previous post the most dangerous result would be an attack on the human rights policies followed by the current government, that have led to jail more than 400 human rights violators (noted that several were acquitted by lack of proofs as it should happen in a civilized society; so this was not witch hunt).

La Nación, the main conservative daily, that benefited economically from the last dictatorship and supported it, had an editorial demanding an end to 'revenge.' They called the left of center militants the true terrorists of the 1970s, even though the vast majority had committed no violent crime (and even those that did commit crimes should have been prosecuted according to the law, not tortured, and summarily executed). Macri has suggested that he will not stop the …

On the blogs

Trading Places -- David Warsh on the rise and fall of Keynesianism (i.e. Narayana Kocherlakota) at the Federal Reserve Bank of Minneapolis. A bit old, but worth reading

October Fed Minutes Reinforce New Neutral View -- Richard Clarida on the October minutes, which everybody thinks confirm that rates will rise in December. Minutes are here

The expansionary austerity zombi -- Krugman on why it doesn't go away. Funny thing, it's a New Keynesian invention

Reading Keynes in Buenos Aires

Keynes reading (not the same)

New paper just published in the Cambridge Journal of Economics. From the abstract:
Keynes had a profound influence on Prebisch in terms of the diagnosis about the main failures of market economies and the need to pursue pro-active and anti-cyclical policies. However, Prebisch was critical of some aspects of Keynes’s General Theory of Employment, Interest and Money, in particular on the theory of interest and the multi- plier. His attitude can be explained by a difference in the object and method of analysis. Prebisch’s interests focussed on dynamics and the cycle, themes that were peripheral to Keynes’s central message. Prebisch’s Keynesian influence and his rejection of some aspects of Keynes’s magnum opus explains why at the same time that Prebisch is often described as the Latin American Keynes, he is portrayed as concerned mainly with the long-run development problem of Latin America and without proper consideration to demand factors as fundamental de…

Misconceptions about Heterodox Economics in general and Sraffian in particular

I had discussed before the meaning of heterodox economics. I suggested a definition based on positive contributions (rather than as a critique of the mainstream) and based on concepts rather than schools of thought. In my view the two principles that were central for defining heterodoxy were the Principle of Effective Demand (PED), based on Keynes and Kalecki's ideas, and the idea that distribution is the result of class conflict, which in my view is best expressed in Sraffa's recovery of the surplus approach. And I suggested that several authors within various schools of thought (Post Keynesians, Marxists, Institutionalists, Sraffians, Feminists, Ecological economists, Structuralists, and even some Evolutionary or Schumpeterian economists) could probably accept both propositions (not Austrians, which are a fringe version of Marginalism, and as a result not an heterodox school per se). In that sense, there could be a view of heterodoxy as not necessarily fragmented set of Sch…

Crazy proposals about government

Most stories about this were comparisons with Rick Perry forgetting which government agencies he would close (including the NYTimes). But the real story is he wants to close the IRS, the Housing, Energy and Commerce departments (yes he doesn't know how to count to 5). So presumably there will be no income tax, or how in hell is that going to be managed? How is tax collection better managed without an agency dedicated to that? Glad he doesn't want to close the whole Treasury Department. It is as if he wanted to reduce crime by eliminating the police (and that would be a less crazy idea than the closing the IRS, although reforming the police might be a more reasonable one). The level of crazy in the GOP is out of control.

PS: If you close the Commerce Dept. what would happen to the BEA? Would it be closed too? So no more national accounts? In all fairness no macroeconomic data would help President Cruz avoid scrutiny for his crazy policies. And if you think he is not serious re…

Comparative Advantage and Capitalism

From CAPITALISM the documentary by Ilan Ziv. In this short clip a discussion of comparative advantage and its limitations, with Pascal Lamy, Robert Boyer and yours truly (many others in this chapter, including Geoff Hodgson and Ha-Joon Chang).

The Mexican secretary of finance that appears in the video is actually NOT talking about the Ricardian model of trade, which at least given its assumptions is logically correct, but about the neoclassical or Heckscher-Ohlin-Samuelson (HOS) model that has significant problems (see here).

I should note also that in my view Ricardo should not be seen as Robert Boyer suggests (not shown in the video above) as a precursor of mainstream neoclassical economics for his role in the development of formal models. Formal models can be marginalist or not, and actually Ricardo's ideas led to Marx. As I noted in my interview (in parts that do not appear in he documentary), Ricardo was the first economist to formalize the idea of a distributive conflict be…

On the blogs

Lies, Damn Lies, and Argentine Industrial Output -- Joe Francis shows that Roberto Cortés Conde's estimates for Argentine output growth in the late 19th century are way off

On brilliant, neglected women economists – for Woman’s Hour -- Ann Pettifor on Joan Robinson, Vicky Chick, Susan Strange and gender bias in economics

Autonomous demand and economic growth: some empirical evidence -- Alejandro Fiorito at Circus links to a paper on the supermultiplier by Daniele Girardi and Riccardo Pariboni

The GOP’s pipe dream of radical tax cuts -- not a post, but a Post editorial, which follows my post last Friday. I'm not concerned about the size of debt, as WAPO seems to be, but we agree that the GOP's tax plans do not add up

Supply-Siders, Gold Bugs and other Cranks at the Rick Smith Show

Five Republican Myths About Taxes

The last Republican debate exposed some of the GOP myths about taxes. Okay, so not all were discussed in the debate per se, but a few were, and the others are pretty much part of the implicit assumptions in the Republican mainstream. A short list must include these ideas:
Corporate taxes are high in the US Lower taxes boost investment50% don't pay taxes, including immigrantsA flat tax would simplify the tax codeReducing taxes could still finance big government But it is well-known that reality has a liberal bias, so facts do not bode well for these GOP talking points. The common strategy in these positions is to purposely misrepresent the truth with statistics (Disraeli’s third kind of lie, as per his dictum that there are three kinds of lies, lies, damned lies and statistics).

The corporate tax rate is indeed high in the US, but as noted by the Center on Budget and Policy Priorities (CBPP): “The U.S. corporate tax code includes a host of special provisions that significantly redu…

Roundtable on the Future of Argentina, 11/25

It will be after the election. So if you're in Buenos Aires...
I'll be teaching a couple of classes on financial crisis and inflation for the students of the masters in economic development too.

First computer at 70

NYTimes, February 1946
ENIAC (Electronic Numerical Integrator and Computer), the first functional computer, was finished in mid-November 1945, just after the end of World War II. Developed for military purposes and financed by the war effort, it is probably the most important technological innovation associated with the state during the war, beating that other project, the atomic bomb. This is the quintessential example of the developmental state or what Mariana Mazzucato has more recently called the entrepreneurial state.

And yes, the internet, which allows you to read this in your computer, was also funded and developed by the state (see ARPANET). True, conservatives are right (did anybody saw the debate yesterday?), without entrepreneurs unimpeded by government regulations (what did they want? drown the state in a bathtub?) there would be no progress. This computer/internet business must be a conspiracy to spy on you.

Down memory lane

Since the blog is now almost 5 years old, and several issues have been discussed before, I decided once in a while to post links to old entries. This one actually with two posts one from Triple Crisis, which started the year before, and in a sense pushed me to start my own blog.

Since yesterday the Donald had an op-ed in the Wall Street Journal on currency manipulation here my two cents on how much China is really a problem.

Currency Wars and Global Rebalancing

On China and Jobs

The Argentinean election, the economy and more

On Sunday, November 22, Argentineans are going to the polls. The two candidates represent significantly different projects, and not just in economic terms. On the one hand, there is Daniel Scioli, governor of Buenos Aires, ex-vice-president during Néstor Kirchner’s presidency and (even if not completely trusted by those closer to President Cristina Fernández de Kirchner) the candidate of continuity. On the other hand, Mauricio Macri—wealthy scion a business family with origins as public works contractors, president of a popular soccer team, and currently mayor of the city of Buenos Aires—is the main opposition candidate.
The election takes place during uncertain economic times.

The Argentine economy grew spectacularly from 2003 (the year after the default) to 2011, including a speedy recovery from the global economic crisis in 2008-9. However, since then the economy has basically stagnated, and inflation has been high. As a result, real wages—which grew fast during the …

Grenoble Post Keynesian Winter School

For more info go here.

On the job numbers at the Rick Smith Show

Full time employment finally above previous peak!

By the way, if you count workers employed full time only in August this year we surpassed the December 2007 peak, and after a fall in September, we're over again now.
So it took only about 8 years to get back were we were. Yes, the economy is peachy.

The economy is performing well; good to know

New Employment Situation Report is out. Not bad, given the last couple of months. In October, total nonfarm payroll employment increased by 271,000 and the unemployment rate is at 5%. The employment-population ratio, which seemed to start to inch up last year, however, now looks again stagnant. Even though it seems markets are happy with job creation above 200k per month, we need something more like 400 for a healthy recovery, and to bring the employment-population ratio up. Earnings have inched up a bit.
The danger here is that Yellen and the FOMC use this to really start hiking interest rates by December, after all she says she thinks "the economy is performing well." The question of course is for whom it's performing well.

Debtors' Prisons

Recently NPR had a story about the criminalization of poverty in the US, and the fact that now poor people that get a parking ticket and the fees that go with that for processing, for court expenses, and what not, may end up in jail. At least now a series of lawsuits are challenging this kind of abuse.

Bowles on Capitalism and Institutions

As I noted before I've been teaching a Political Economy course, which I assumed right before classes began, and, I decided to keep the textbook, since it was already ordered. The book is written by Bowles, Edwards, and in the last edition, Roosevelt and is titled Understanding Capitalism. I discussed before the meaning of capitalism here (see also this on the use of the term capitalism as a proxy for free market policies).

Here just a brief comment on the use of the idea of modes of production (economic systems in the textbook). The book discusses the economic system in the US from colonial times to the present and suggests that it was not capitalist early on (it even says that no economy ever started as capitalists).While it is true that settlement colonies are not like exploitation colonies, I find this proposition hard to defend.

Caio Prado Jr. one of the early Marxist analysts of Brazilian economic development noticed that Brazilian economic development was in effect from inc…

On the blogs

The Hamptons Hyperinflation Endorsement -- Paul Krugman on Marco Rubio's endorsement (see also here) by Paul Singer, Vulture Fund owner extraordinaire, and establishment GOP donor

Demand Creates its Own Supply -- Roger Farmer, an uncoventional Keynesian (in my view he defies simple classifications; he remains tied to neoclassical views on the relevance of microfoundations, but does not agree with New Keynesians, or Old Neoclassical Synthesis ones, that wage rigidity is central for Keynesian results)

Keynes never left Canada, and intends to stay -- Simon Wren-Lewis on Nick Rowe's views of Canadian fiscal policy. Not sure about this one, but, at any rate, certainly if you compare the US and Canada with Europe, the former look Keynesian