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Author Topic: Business & Economics News (moved to Statist News Blog)  (Read 90546 times)

Luck

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Re: Economics (U.S. Fascists Lose Out)
« Reply #105 on: November 24, 2014, 01:37:02 pm »

Why Obama Got Nothing at APEC
http://www.counterpunch.org/2014/11/14/why-obama-got-nothing-at-apec/

President Obama was talking mainly to his American base, and to the Republican Party in particular to work on the Trans-Pacific Partnership, as well as to his Democratic base. His vision is a Trans-Pacific Partnership that will abolish government regulation of the environment, abolish regulation of banking, and implicitly nullify the Dodd-Frank Act. If a bank misbehaves or a government requires higher reserve requirements, then under the new international law that Mr. Obama is pushing, the government have to pay the private bank as if it weren’t regulated. And if a government such as China imposes environmental fines on a company for polluting the environment, the government will have to pay the company whatever it would have made if it didn’t have any such fines. []

Mr. Obama said that the United States is also going to cut back carbon emissions. But he’s still pushing for the XL Pipeline with Alberta to bring tar sands oil into the United States. That is the most high polluting activity on the planet.

What has been less talked about are the banking changes that have been announced. []

Mr. Putin said that as a result of these deals, Russian trade with China and the rest of Asia is going to increase from 25 percent to 40 percent of Russia’s GDP. This leaves Europe out in the cold. What’s been clear at the meeting is that there’s a coming together between China and Russia. This has been the opposite of what American foreign policy has been trying to push for since the 1980s. What is ironic is that where the United States thought that it was putting pressure on Russia and sanctions following the NATO adventure in Ukraine, what it’s actually done is bring Russia and China closer together. []

what U.S. Cold Warriors really want is to break up Russia and China, and to interrupt their financial and banking services to disorient their economies. So Russia, China and Iran – and presumably other Asian countries – are now moving to establish their own currency clearing systems. []

In the next few days you’re going to see Europe being left out. The sanctions that the United States and NATO have insisted that it impose on Russia have led to Russian counter-sanctions against French and Baltic and European exports. French farmers are already demonstrating, and Marine Le Pen’s nationalists are likely to win the next election. The Baltic States are also screaming from losing their farm exports. France, Latvia, and even Germany had been looking to Russia as a growing market the last few years. Yet their leaders obeyed U.S. demands not to deal with the Russian market. This leaves Europe in a position of economic stagnation.

As for the sanctions isolating Russia economically, this is just what it needs to protect its industrial revival and economic independence. In conjunction with China, it’s integrating the Russian economy with that of China, Kazakhstan and Iran. Russia is now going to be building at least two atomic reactors in Iran. The center of global investment is shifting to Asia, leaving the United States out as well as Europe.

So you can expect at the G20 Brisbane meetings next week to increase pressure from Europe to break away from the U.S. sanctions. All the United States has diplomatically at the present time is military pressure, while Russia and China have economic growth – markets and investment opportunities opening up. []

what Obama essentially said, it’s “I’m a Republican and I’m supporting Wall Street.” He’s letting the Republicans know he’s pushing for the kind of giveaways that the lobbyists have written into the Trans-Pacific Partnership. []


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Re: Economics (Wisc. Coming Privatization Error)
« Reply #106 on: December 16, 2014, 01:39:15 am »

The budget 'tool' Gov. Scott Walker should not use

Wisconsin yet again faces mounting budget deficit projections. The danger is that Gov. Scott Walker will now sell off the public's property to fill the fiscal potholes created by his tax policies. Chanting the GOP refrain of "lower tax rates good, higher tax rates bad" as if it were a magic incantation, he seemed to believe Arthur Laffer's infamous cocktail napkin "Laffer Curve" depicting lower tax rates delivering higher tax revenues.

We already have seen what happened in Kansas when that state followed this failed fiscal path. Kansas Gov. Sam Brownback, also a Republican, promised voters that cutting taxes would raise tax revenues. Instead, cutting taxes created such deep revenue shortfalls that the state became an object lesson in fiscal folly for others to avoid.

This is now forcing cutbacks in public services — and the GOP is telling voters that they will have to tighten their belts. Services permitting the upward mobility of working people are being cut, as if U.S. voters live in a Third World country.

Now it's Wisconsin's turn. Walker has voiced the same income tax cutting catechism that Brownback imposed on Kansas. Walker ran for re-election in large part on having eliminated a $3.6 billion inherited budget shortfall while cutting taxes — and, more to the point, by making cuts in public employee benefits while holding most state worker wage increases to below the rate of inflation.

Reducing living standards for workers in the public sector is cutting consumer demand in the state's economy. In effect, Walker plugged the tax deficit in the short-term by reducing consumer spending at local restaurants, taverns, car dealers and the innumerable goods and services tendered by Wisconsin's local businesses.

The governor pretended that cutting inflation-adjusted wages and benefits in the public sector would not reduce consumer demand in the economy, if the "savings" were spent by the taxpayers now having lower tax bills.

This argument ignores the fact that the tax cuts disproportionately go to the wealthiest, who typically spend and invest more of their money out of state, or indeed on more Wall Street stocks and bonds and foreign luxury purchases. The supposed savings thus escape Wisconsin rather than being spent locally, thereby slowing economic growth.

Entering his new term,Walker no longer faces balanced budgets. The state deficit is projected to widen to $2.2 billion. Revenue shortfalls are not new, but at least they have not been chronic. Former Gov. Jim Doyle inherited budget imbalances and began to slowly pay them down, but the deficits again widened after the Great Recession that began in late 2007.

Then, as now, part of the problem was poor tax and economic development policy failing to maximize wealth creation in Wisconsin. Just as important as how many taxes are collected is how they are collected. The key is to structure tax policies in ways that maximize wealth creation. Walker's tax policies, however, risk cutting the bone, not the fat.

He now confronts a dilemma. His "tools" of income and property tax cuts have not "repaired" the budget. As he pursues the 2016 GOP presidential nomination, the danger is that he will respond with another "tool": selling off the public domain by renewing his attempts to sell state power plants and prime public land in Madison in no-bid contracts.

These privatization sell-offs will raise short-term revenue allowing the governor to take a victory lap on fiscal rectitude just in time for the 2016 GOP presidential primaries. But this will be by selling off Wisconsin's "family silver" — land, power plants and other basic infrastructure that are supposed to benefit taxpayers.

The governor and his party's state Legislature should not sell off this public property, currently owned free of debt. This would provide rent-extraction opportunities for the buyers, turning Wisconsin's taxpayers into renters of property they once owned free and clear.

To be sure, there is room for investigating whether a private vendor could better manage our state-owned power plants or if a private developer should construct and manage buildings on public land thus permitting maximum value creation from them, but this is different than selling the underlying asset owned by the taxpayers.

The risk is that the governor's ambition might rationalize actions in his political self-interest, but not the public's. Tax rates can be lowered or raised in response to budgetary needs and adjusting for errors by past political office holders, but public assets cannot be easily acquired again once sold.

The long-term fiscal damage from their sale is permanent. That is what England learned from the devastating wave of Thatcherism that raised fees taxpayers pay for transportation, water and other hitherto public services that have been privatized and financialized.

The problem with Wisconsin is that unlike Britain, whose economy was saved by North Sea oil revenues coming online precisely at the point when Thatcher's policies were cutting demand in the economy, Wisconsin has no such natural resource windfall to save it from a sell-off of the public's property.

Wisconsinites would be well-advised to avoid this path and be vigilant against attempts to liquidate the public's property in order to provide short-term fixes to budgetary shortfalls created by tax cuts chiefly benefiting the most affluent.

Wisconsin and the whole country need a new discourse on wealth creation. Blanket lowering or raising taxes will not balance our state budgets or deliver prosperity.

The type of tax structure selected is paramount — to make it progressive instead of regressive and to incentivize investment over speculation. What must be avoided at all costs is selling off the public's property.

This Walker "tool" will not "repair" our budgets but instead risks shattering budgets and the middle class alike.

Jeffrey Sommers is a visiting faculty member at the Stockholm School of Economics in Riga, Latvia. Michael Hudson is the visiting distinguished research professor of economics at the University of Missouri-Kansas City.

http://www.jsonline.com/news/opinion/the-budget-tool-gov-scott-walker-should-not-use-b99402389z1-284940861.html
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Re: Economics (Obama & NeoCons' New Cold War Policy Is Backfiring)
« Reply #107 on: December 24, 2014, 12:58:50 am »

U.S. “New Cold War” Policy Has Backfired – And Created Its Worst Nightmare. Shift in Trade Patterns and Military Alliances
http://www.globalresearch.ca/u-s-new-cold-war-policy-has-backfired-and-created-its-worst-nightmare-shift-in-trade-patterns-and-military-alliances/5419470
By Michael Hudson

[See also recent Michael Hudson interview at http://www.globalresearch.ca/russia-pivots-to-eurasia-for-trade-and-military-alliances/5420185 ]

The world’s geopolitics, major trade patterns and military alliances have changed radically in the past month. Russia has re-oriented its gas and oil trade, and also its trade in military technology, away from Europe toward Eurasia.

The result is the opposite of America’s hope for the past half-century of dividing and conquering Eurasia: setting Russia against China, isolating Iran, and preventing India, the Near East and other Asian countries from joining together to create an alternative to the U.S. dollar area. American sanctions and New Cold War policy has driven these Asian countries together in association with the Shanghai Cooperation Organization as an alternative to NATO, and in the BRICS moves to avoid dealing with the dollar area, the IMF and World Bank austerity programs.

Regarding Europe, America’s insistence that it join the New Cold War by imposing sanctions on Russia and blocking Russian gas and oil exports has aggravated the Eurozone’s economic austerity, making it even more of a Dead Zone. This week a group of Germany’s leading politicians, diplomats and cultural celebrities wrote an open letter to Angela Merkel protesting her pro-U.S. anti-Russian policy. By overplaying its hand, the United States is in danger of driving Europe out of the U.S. economic orbit.

Turkey already is moving out of the U.S.-European orbit, by turning to Russia for its energy needs. Iran also has moved into an alliance with Russia. Instead of the Obama administration’s neocons dividing and conquering as they had planned, they are isolating America from Europe and Asia. Yet there has been almost no recognition of this in the U.S. press, despite its front-page discussion throughout Europe and Asia. Instead of breaking up the BRICS, the dollar area is coming undone.

This week, President Putin is going to India to negotiate a gas and arms deal. Last week he was in Turkey diverting what was to be the South Stream pipeline away from southern Europe to Turkey. And Turkey is becoming an associate of the Shanghai Cooperation Organization integrating the BRICS in a defensive alliance against the United States, now that it is obvious that it has no chance of joining the EU.

A few months earlier, Russia announced the largest oil and gas trade and pipeline investment ever, with China – along with a transfer of missile defense technology.

2. There has been almost no discussion of this vast geopolitical realignment in the U.S. media, largely because it represents a defeat for the New Cold War policy pushed by the neocons over the past year, ever since Russia convinced President Obama not to go to war in Syria, which had been a neocon military aim.

Their response was to isolate Russia and economically attack its trade and hence balance-of-payments strength: its gas and oil trade with Europe. Last February, U.S. diplomats engineered a Pinochet-style coup d’état in Ukraine, and used this as a lever to reverse Europe’s buildup of trade with Russia.

The aim was to punish Russia’s economy – and in the process to press for a regime change against Putin, putting in place a more pro-U.S., neoliberal Yeltsin-style regime by causing a financial crisis.

The assumption underlying this policy was that since the Soviet Union was dissolved in 1991, Russia was turning toward Europe to re-integrate its economy and society. And Europe for its part sought to make Russia its main energy supplier – of oil as well as gas, through new pipelines being built to circumvent Ukraine. Northstream ran via the North Sea to northern Europe. Southstream was to be built via Bulgaria and Serbia to southern Europe – mainly Italy and Austria.

Germany for its part looked to Russia as an export market, to earn the rubles to pay for Russian gas and oil. Other European countries stepped up their agricultural trade with Russia, and France agreed to build the enormous Mistral aircraft carrier. In short, the ending of the Cold War promised to bring a much closer economic and hence political integration of Russia with Europe – cemented largely by a gas pipeline network.

3. U.S. Cold Warriors have tried to disrupt this trade. The plan was to isolate Russia and lock Europe into the U.S. economy. The dream was to export U.S. shale gas to Europe, squeezing out Russia and thereby hurting its balance of payments.

This was always a pipedream. But what U.S. heavy-handed military confrontation with Russia really has done is to drive a political wedge between the United States and Europe. Last week, Putin gave a speech saying he found little point in negotiating with European politicians, because they simply followed U.S. orders via NATO and by U.S. pressure on German politicians, French politicians and other European politicians.

In following U.S. New Cold War confrontation, Europe has been acting against its own economic interests. Its neoliberal Third Energy law has effectively blocked Russia from having any economic gain in selling more gas to Europe.

4. Rentier pipeline politics --- [FASCIST GREED]
The U.S. neoliberal plan has been to insist on non-Russian control of the pipelines that would carry Russian gas and oil to Europe. The idea is to use this pipeline as a tollbooth to siphon off the revenue that Russia had hoped to receive from Europe.

Here’s the best way to understand what has occurred. Imagine that the United States had a law that owners of buildings could not also own the elevators in them. This would mean that the owners of the Empire State Building, for instance, could not own their elevators. Some other investors could buy the elevators, and then tell the building’s renters or other occupants that they would have to pay a fee each time they rode up to the 40th floor, the 50th floor, the 60th floor, and so forth.

The result would be that instead of the landlord receiving the rental value of the Empire State Building, the elevator owner could demand the lion’s share. Without access, the building would be a walk-up and its rents would fall – unless renters paid the elevator tollbooth.

This is what would happen with an oil pipeline owned by parties hostile to Russia. It is to avoid this that Gazprom insisted on building its own pipeline, under Russian control, to prevent rent-extracting investors. When Europe sought to block this by pretending that “free markets” meant separating pipeline ownership from the gas suppliers, it was trying to carve out a rent-extraction opportunity to siphon off Russian gas revenue.

The European Commission earlier had pressed an anti-Gazprom policy last year, in the process of imposing its austerity program on Greece. It insisted that Greece pay the IMF for having bailed out foreign bondholders by selling off assets in the public domain. The largest asset was Greece’s oil rights in the Aegean and its commercial oil-related infrastructure. When Gazprom was the largest bidder, Europe blocked the sale. The result has been to impose even deeper austerity on Greece, polarizing that nation’s politics in an increasingly anti-EU and anti-IMF stance – and hence, anti-US Cold War politics.

5. What is occurring is a radical shift in U.S.-European diplomacy – in a way that according to textbook theory is inherently unstable and unworkable.

Europe has inverted the major textbook premises of how national diplomacy is conducted. Instead of basing this diplomacy on economic and commercial interests, it is subordinating these interests to U.S. control. And as for Europe’s membership in NATO, instead of viewing military policy as an arm of foreign diplomacy, it is subordinating economic diplomacy, trade patterns, gas and oil supplies, export markets for industry and agriculture all to serve NATO’s military ends.
The objective no longer is military security as originally was the logic for NATO. Europe’s economic realignment against Russia threatens to bring military conflict directly into the continent as a result of the proxy war in Ukraine.

It has been said that nations do not have friends or enemies, only national interests. Most of these are economic. But today in Europe, German Chancellor Merkel seems to be ignoring German and other European economic interests. Still obsessed with her hatred of the East German Communist regime, she sees in Russia only an enemy, not an economic market and supplier of raw materials and customer for German manufactures and technology. Likewise, her political love for the United States deems it Europe’s natural friend, without taking into account how its New Cold War policy toward Europe – “Let’s you and Russia fight” – undercuts European continental interests and exacerbates its austerity.

The United States for its part has adopted von Clausewitz’s statement that war is an extension of foreign policy by other means in a very limited form: war seems to be the only lever that the United States is using in its foreign policy these days. And lacking an ability to mount a ground invasion, its only real threat is to tear economies apart by aerial bombing, as it has done to Iraq, Afghanistan, Libra and now Syria – and is doing by backing a proxy war in Ukraine.
« Last Edit: December 24, 2014, 01:18:57 am by Luck »
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Re: Economics (Video: Bankers Are Parasites, Not Part Of The Real Economy)
« Reply #108 on: January 07, 2015, 03:20:03 pm »

Ravdeep Kanda‎Stuff They Don't Want You to Know
December 25, 2014 at 2:56pm
https://www.facebook.com/ConspiracyStuff/posts/1516179875333220

Play video
https://www.youtube.com/watch?v=A10bor8FBAk

Economist Michael Hudson Explains Bank and Bankers Are Parasites And Not Part Of The Real Economy. They Enslave The American People Into Debt Forever And Ever.
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Re: Economics (Video: Banned Ted Talk? on Fixing Money)
« Reply #109 on: January 11, 2015, 12:36:46 am »

This doesn't look quite like an ordinary TED talk, but it claims it is. Regardless, it's a very interesting talk about how to fix the money system, using simple computer, internet and software engineering: https://www.youtube.com/watch?v=NZBRJU6YLtY
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Re: Economics (Michael Husdon on IMF Hits on Ukraine & Greece)
« Reply #110 on: March 01, 2015, 11:49:24 pm »

The Russian Loan and the IMF’s One-Two Punch: Ukraine Denouement
by MICHAEL HUDSON
February 16, 2015

Has the IMF Annexed Ukraine?
http://www.globalresearch.ca/has-the-imf-annexed-ukraine/5431718
By Michael Hudson
Video and Transcript
Global Research, February 17, 2015
Real News Network and Information Clearing House
This interview with Michael Hudson makes clear that the loan to Ukraine is wildly out of line with IMF rules, making it painfully obvious that this “rescue” is all about propping up the government so it can continue to wage war rather than economic development.

Greek Finance Minister Varoufakis Wants Austerity ... for the Rich
http://www.truthdig.com/avbooth/item/greek_finance_minister_varoufakis_wants_austerity_for_the_rich_20150225
Truthdig
Video and Transcript
“The finance ministers of Europe are not all in favor of balancing the budget if it has to be balanced by taxing the rich,” economist Michael Hudson told ...
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Re: Economics (Michael Husdon on Economic Parasites: Banks+)
« Reply #111 on: November 04, 2015, 09:58:29 am »

Real Economics Interview with Michael Hudson
See also Adam Smith vs. von Mises (Libertarian Vs Fascist) at http://forum.freestateproject.org/index.php?topic=28460.0

MH: Economists for the last 50 years have used the term “host economy” for a country that lets in foreign investment. This term appears in most mainstream textbooks. A host implies a parasite. The term parasitism has been applied to finance by Martin Luther and others, but usually in the sense that you just talked about: simply taking something from the host.

But that’s not how biological parasites work in nature. Biological parasitism is more complex, and precisely for that reason it’s a better and more sophisticated metaphor for economics. The key is how a parasite takes over a host. It has enzymes that numb the host’s nervous system and brain. So if it stings or gets its claws into it, there’s a soporific anesthetic to block the host from realizing that it’s being taken over. Then the parasite sends enzymes into the brain. A parasite cannot take anything from the host unless it takes over the brain.

The brain in modern economies is the government, the educational system, and the way that governments and societies make their economic policy models of how to behave. In nature, the parasite makes the host think that the free rider, the parasite, is its baby, part of its body, to convince the host actually to protect the parasite over itself.

That’s how the financial sector has taken over the economy. Its lobbyists and academic advocates have persuaded governments and voters that they need to protect banks, and even need to bail them out when they become overly predatory and face collapse. Governments and politicians are persuaded to save banks instead of saving the economy, as if the economy can’t function without banks being left in private hands to do whatever they want, free of serious regulation and even from prosecution when they commit fraud. This means saving creditors – the One Percent – not the indebted 99 Percent.

It was not always this way. A century ago, two centuries ago, three centuries ago and all the way back to the Bronze Age, almost every society has realized that the great destabilizing force is finance – that is, debt. Debt grows exponentially, enabling creditors ultimately to foreclose on the assets of debtors. Creditors end up reducing societies to debt bondage, as when the Roman Empire ended in serfdom.

About a hundred years ago in America, John Bates Clark and other pro-financial ideologues argued that finance is not external to the economy. It’s not extraneous, it’s part of the economy, just like landlords are part of the economy. This means that if the financial sector takes more revenue out of the economy as interest, fees or monopoly charges, it’s because finance is an inherent and vital part of the economy, adding to GDP, not merely siphoning it off from producers to pay Wall Street and the One Percent. So our economic policy protects finance as if it helps us grow, not siphons off our growth.

A year or two ago, Lloyd Blankfein of Goldman Sachs said that the reason Goldman Sachs’ managers are paid more than anybody else is because they’re so productive. The question is, productive of what? The National Income and Product Accounts (NIPA) say that everybody is productive in proportion to the amount of money they make/take. It doesn’t matter whether it’s extractive income or productive income. It doesn’t matter whether it’s by manufacturing products or simply taking money from people, or simply by the fraud that Goldman Sachs, Citigroup, Bank of America and others paid tens of millions of dollars in fines for committing. Any way of earning income is considered to be as productive as any other way. This is a parasite-friendly mentality, because it denies that there’s any such thing as unearned income. It denies that there’s a free lunch. Milton Friedman got famous for promoting the idea that there’s no such thing as a free lunch, when Wall Street knows quite well that this is what the economy is all about. It’s all about how to get a free lunch, with risks picked up by the government. No wonder they back economists who deny that there’s any such thing!

ED: To get to the root of the issue, what’s interesting to me about this analogy that we’re talking about is that we hear the term neoliberalism all the time. It is an ideology I that’s used to promote the environment within which this parasitic sort of finance capital can operate. So could you talk a bit about the relationship between finance capital and neoliberalism as its ideology.

MH: Today’s vocabulary is what Orwell would call DoubleThink. If you’re going to call something anti-liberal and against what Adam Smith and John Stuart Mill and other classical economists described as free markets, you pretend to be neoliberal. The focus of Smith, Mill, Quesnay and the whole of 19th-century classical economics was to draw a distinction between productive and unproductive labor – that is, between people who earn wages and profits, and rentiers who, as Mill said, “get rich in their sleep.” That is how he described landowners receiving groundrent. It also describes the financial sector receiving interest and “capital” gains.

The first thing the neoliberal Chicago School did when they took over Chile was to close down every economics department in the country except the one they controlled at the Catholic University. They started an assassination program of left wing professors, labor leaders and politicians, and imposed neoliberalism by gunpoint. Their idea is you cannot have anti-labor, deregulated “free markets” stripping away social protections and benefits unless you have totalitarian control. You have to censor any idea that there’s ever been an alternative, by rewriting economic history to deny the progressive tax and regulatory reforms that Smith, Mill, and other classical economists urged to free industrial capitalism from the surviving feudal privileges of landlords and predatory finance.

[See http://real-economics.blogspot.com/2015/10/michael-hudson-on-baleful-effects-of.html for the rest of the interview.]
« Last Edit: November 10, 2015, 03:45:57 pm by Luck »
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Re: Economics (Michael Husdon on Economic Parasites: Banks+)
« Reply #112 on: November 10, 2015, 04:14:19 pm »

[See previous post for more detailed article.]

Updated Debt No More! How Obama can defeat Austerity Thugs by Using the Constitution and Debt-Free Money
http://www.opednews.com/articles/Updated-Debt-No-More-How-by-Scott-Baker-Banks_Constitution-In-Crisis_Constitution-The_Constitutional-Amendments-151026-698.html
Support has come from Paul Krugman , ex-regulator of the 1990s S&L crisis Bill Black , Blogger Joe Firestone, Economist Dr. Michael Hudson, MMT co-founders Randall Wray and Warren Mosler , Ellen...
10/26/15 04:32 opednews.com

Economist Michael Hudson notes that “the greatest fortunes of our time have come from privatizing the public domain”.

‘Debt that can’t be paid, won’t be’
https://philebersole.wordpress.com/2015/11/03/debt-that-cant-be-paid-wont-be/
See his book, Bubbles Always Burst: the Education of an Economist by Michael Hudson
11/03/15 05:22 philebersole.wordpress.com
Wall Street’s prosperity and the income of the super-rich came more and more from extracting wealth from the system, rather than facilitating the creation of new wealth. As Hudson repeatedly wrote, debt that can’t be paid, won’t be.  The result was the financial crash of 2008.  The question then became who would absorb the loss. The rational method would have been to write down the debts to what the borrowers could afford to pay, which would have allowed the economy to restart and would have taught lenders and holders of mortgage-backed securities a lesson about prudence. Instead the Federal Reserve and the U.S. Treasury bailed out the banks and the bond-holders, while allowing foreclosures to proceed.

Michael Hudson: The Paradox of Financialized Industrialization
http://www.nakedcapitalism.com/2015/10/michael-hudson-the-paradox-of-financialized-industrialization.html
10/17/15 02:36 nakedcapitalism.com
What worries me about the political consequences of Roemer’s model is that it focuses only on what Marx said about the production sector and employer-labor relations. It does not ask how “endowments” come into being – or how China has changed so radically in the past generation. It therefore neglects the danger of industrial capitalism lapsing back into a rent-and-interest economy. And by the same token, it underplays the threat to China and other socialist economies of adopting the West’s surviving pre-feudal practices of predatory Bubble Finance (debt leveraging to raise prices) and wealth in the form of land-rent charges. These two dynamics – interest and rent – represent a privatization of banking and land that rightly are public utilities.

Money, Money, Money
http://prairiemary.blogspot.com/2015/10/money-money-money.html
10/12/15 00:02 prairiemary.blogspot.com

Real economics: Michael Hudson on the baleful effects of banksterism
http://real-economics.blogspot.com/2015/10/michael-hudson-on-baleful-effects-of.html
10/07/15 01:00 real-economics.blogspot.com

Fiscal Myths of Campaign 2016: A New Kindle e-Book
http://www.correntewire.com/fiscal_myths_of_campaign_2016_a_new_kindle_e_book
- Most of the world, and most notably the United States, is in the grip of fiscal myths fostered by the ideology of neoliberalism. There is virtual unanimity across the major political parties in the United States in accepting the viewpoint of neoliberalism, and the fiscal myths associated with it.
-This book analyzes and rejects numerous fiscal myths in these categories. Myths about: “Running Out of Money”; Government Debt; the “Burden of Government Debt”; the Government “Family” or “Household;”; “Spending Too Much,” Inflation, and Hyper-inflation; “Shared Sacrifice” and “Government Austerity”; “Our Economic Future”; “Money”; and “Fiscal Responsibility”; and concludes with a comparison of “Fiscal Myths and Fiscal Truths”.

« Last Edit: November 10, 2015, 07:01:20 pm by Luck »
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Re: Economics (From Debt Austerity to Global Rebellion)
« Reply #113 on: November 18, 2015, 09:49:11 am »

Can debt catalyse the next global rebellion?
http://magazine.ouishare.net/2013/10/graeber-morality-debt/
I have no doubts that professional economists can work it out: people like Michael Hudson and Steve Keen (see the video) have already come up with actual models.

New Socialist Government Keeps Portuguese People Under The Whip
http://www.paulcraigroberts.org/2015/11/12/portuguese-revolution-falls-far-short-paul-craig-roberts/

L. Randall Wray – Modern Money Theory
https://money4nothingchicks4free.wordpress.com/2015/11/15/l-randall-wray-modern-money-theory-intellectual-origins-and-policy-implications/
Video: Intellectual Origins and Policy Implications

Weekly Update:
The case for a global debt writedown
https://philebersole.wordpress.com/2015/11/18/the-case-for-a-global-debt-writedown/

Bubbles Always Burst: the Education of an Economist, an excerpt from Michael Hudson’s Killing the Host.
http://www.counterpunch.org/2015/09/28/bubbles-always-burst-the-education-of-an-economist/

Reforming the U.S. Financial and Tax System, an interview of Michael Hudson for station KPFK in Los Angeles.
http://michael-hudson.com/2011/11/reforming-the-u-s-financial-and-tax-system/

Parasites in the Body Economic: the Disasters of Neoliberalism, an interview of Michael Hudson for Counterpunch Radio.
http://www.counterpunch.org/2015/10/05/parasites-in-the-body-economic-the-disasters-of-neoliberalism/

Why Greece’s Debt Is Illegal, an interview of Michael Hudson for the Real News Network.
http://michael-hudson.com/2015/07/why-greeces-debt-is-illegal/

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Re: Economics (Michael Hudson: My Education as an Economist)
« Reply #114 on: December 02, 2015, 10:04:09 pm »

GLOBAL GLASS ONION: reality is only those delusions that we have in common...
http://globalglassonion.blogspot.com/2015/11/week-ending-nov-28.html

Bill Mitchell – billy blog: Modern Monetary Theory … macroeconomic reality
http://bilbo.economicoutlook.net/blog/?p=32379#comment-42424

Part 1.
My Education as an Economist: How I Learned to Reject the Market Dogma That Dominates the Profession
http://www.alternet.org/economy/my-education-economist-how-i-learned-reject-market-dogma-dominates-profession
A personal journey through economic thought.
By Michael Hudson / CounterPunch
September 28, 2015

I did not set out to be an economist. In college at the University of Chicago I never took a course in economics or went anywhere near its business school. My interest lay in music and the history of culture. When I left for New York City in 1961, it was to work in publishing along these lines. I had worked served as an assistant to Jerry Kaplan at the Free Press in Chicago, and thought of setting out on my own when the Hungarian literary critic George Lukacs assigned me the English-language rights to his writings. Then, in 1962 when Leon Trotsky’s widow, Natalia Sedova died, Max Shachtman, executor of her estate, assigned me the rights to Trotsky’s writings and archive. But I was unable to interest any house in backing their publication. My future turned out not to lie in publishing other peoples’ work.

My life already had changed abruptly in a single evening. My best friend from Chicago had urged that I look up Terence McCarthy, the father of one of his schoolmates. Terence was a former economist for General Electric and also the author of the “Forgash Plan.” Named for Florida Senator Morris Forgash, it proposed a World Bank for Economic Acceleration with an alternative policy to the existing World Bank – lending in domestic currency for land reform and greater self-sufficiency in food instead of plantation export crops.
My first evening’s visit with him transfixed me with two ideas that have become my life’s work. First was his almost poetic description of the flow of funds through the economic system. He explained why most financial crises historically occurred in the autumn when the crops were moved. Shifts in the Midwestern water level or climatic disruptions in other countries caused periodic droughts, which led to crop failures and drains on the banking system, forcing banks to call in their loans. Finance, natural resources and industry were parts of an interconnected system much like astronomy – and to me, an aesthetic thing of beauty. But unlike astronomical cycles, the mathematics of compound interest leads economies inevitably into a debt crash, because the financial system expands faster than the underlying economy, overburdening it with debt so that crises grow increasingly severe. Economies are torn apart by breaks in the chain of payments.
That very evening I decided to become an economist. Soon I enrolled in graduate study and sought work on Wall Street, which was the only practical way to see how economies really functioned. For the next twenty years, Terence and I spoke about an hour a day on current economic events. He had translated A History of Economic Doctrines: From the Physiocrats to Adam Smith, the first English-language version of Marx’s Theories of Surplus Value – which itself was the first real history of economic thought. For starters, he told me to read all the books in its bibliography – the Physiocrats, John Locke, Adam Smith, David Ricardo, Thomas Malthus, John Stuart Mill and so forth.
The topics that most interested me – and the focus of this book – were not taught at New York University where I took my graduate economics degrees. In fact, they are not taught in any university departments: the dynamics of debt, and how the pattern of bank lending inflates land prices, or national income accounting and the rising share absorbed by rent extraction in the Finance, Insurance and Real Estate (FIRE) sector. There was only one way to learn how to analyze these topics: to work for banks. Back in the 1960s there was barely a hint that these trends would become a great financial bubble. But the dynamics were there, and I was fortunate enough to be hired to chart them.
My first job was as mundane as could be imagined: an economist for the Savings Banks Trust Company. No longer existing, it had been created by New York’s then-127 savings banks (now also extinct, having been grabbed, privatized and emptied out by commercial bankers). I was hired to write up how savings accrued interest and were recycled into new mortgage loans. My graphs of this savings upsweep looked like Hokusai’s “Wave,” but with a pulse spiking like a cardiogram every three months on the day quarterly dividends were credited.
The rise in savings was lent to homebuyers, helping fuel the post-World War II price rise for housing. This was viewed as a seemingly endless engine of prosperity endowing a middle class with rising net worth. The more banks lend, the higher prices rise for the real estate being bought on credit. And the more prices rise, the more banks are willing to lend – as long as more people keep joining what looks like a perpetual motion wealthcreating machine.
The process works only as long as incomes are rising. Few people notice that most of their rising income is being paid for housing. They feel that they are saving – and getting richer by paying for an investment that will grow. At least, that is what worked for sixty years after World War II ended in 1945.
But bubbles always burst, because they are financed with debt, which expands like a chain letter for the economy as a whole. Mortgage debt service absorbs more and more of the rental value of real estate, and of homeowners’ income as new buyers take on more debt to buy homes that are rising in price.
Tracking the upsweep of savings and the debt-financed rise in housing prices turned out to be the best way to understand how most “paper wealth” has been created (or at least inflated) over the past century. Yet despite the fact that the economy’s largest asset is real estate – and is both the main asset and largest debt for most families – the analysis of land rent and property valuation did not even appear in the courses that I was taught in the evenings working toward my economics PhD.
When I finished my studies in 1964, I joined Chase Manhattan’s economic research department as its balance-of-payments economist. It was proved another fortunate on-the-job training experience, because the only way to learn about the topic was to work for a bank or government statistical agency. My first task was to forecast the balance of payments of Argentina, Brazil and Chile. The starting point was their export earnings and other foreign exchange receipts, which served as were a measure of how much revenue might be paid as debt service on new borrowings from U.S. banks.
Just as mortgage lenders view rental income as a flow to be turned into payment of interest, international banks view the hard-currency earnings of foreign countries as potential revenue to be capitalized into loans and paid as interest. The implicit aim of bank marketing departments – and of creditors in general – is to attach the entire economic surplus for payment of debt service.
I soon found that the Latin American countries I analyzed were fully “loaned up.” There were no more hard-currency inflows available to extract as interest on new loans or bond issues. In fact, there was capital flight. These countries could only pay what they already owed if their banks (or the International Monetary Fund) lent them the money to pay the rising flow of interest charges. This is how loans to sovereign governments were rolled over through the 1970s.
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Re: Economics (Michael Hudson: My Education as an Economist)
« Reply #115 on: December 02, 2015, 10:34:55 pm »

Part 2.
My Education as an Economist
Their foreign debts mounted up at compound interest, an exponential growth that laid the ground for the crash that occurred in 1982 when Mexico announced that it couldn’t pay. In this respect, lending to Third World governments anticipated the real estate bubble that would crash in 2008. Except that Third World debts were written down in the 1980s (via Brady bonds), unlike mortgage debts.
My most important learning experience at Chase was to develop an accounting format to analyze the balance of payments of the U.S. oil industry. Standard Oil executives walked me through the contrast between economic statistics and reality. They explained how using “flags of convenience” in Liberia and Panama enabled them to avoid paying income taxes either in the producing or consuming countries by giving the illusion that no profits were being made. The key was “transfer pricing.” Shipping affiliates in these tax-avoidance centers bought crude oil at low prices from Near Eastern or Venezuelan branches where oil was produced. These shipping and banking centers – which had no tax on profits – then sold this oil at marked-up prices to refineries in Europe or elsewhere. The transfer prices were set high enough so as not to leave any profit to be declared.
In balance-of-payments terms, every dollar spent by the oil industry abroad was returned to the U.S. economy in only 18 months. My report was placed on the desks of every U.S. senator and congressman, and got the oil industry exempted from President Lyndon Johnson’s balance-of-payments controls imposed during the Vietnam War.
My last task at Chase dovetailed into the dollar problem. I was asked to estimate the volume of criminal savings going to Switzerland and other hideouts. The State Department had asked Chase and other banks to establish Caribbean branches to attract money from drug dealers, smugglers and their kin into dollar assets to support the dollar as foreign military outflows escalated. Congress helped by not imposing the 15 percent withholding tax on Treasury bond interest. My calculations showed that the most important factors in determining exchange rates were neither trade nor direct investment, but “errors and omissions,” a euphemism for “hot money.” Nobody is more “liquid” or “hot” than drug dealers and public officials embezzling their country’s export earnings. The U.S. Treasury and State Department sought to provide a safe haven for their takings, as a desperate means of offsetting the balance-of-payments cost of U.S. military spending.
In 1968 I extended my payments-flow analysis to cover the U.S. economy as a whole, working on a year’s project for the (now defunct) accounting firm of Arthur Andersen. My charts revealed that the U.S. payments deficit was entirely military in character throughout the 1960s. The private sector – foreign trade and investment – was exactly in balance, year after year, and “foreign aid” actually produced a dollar surplus (and was required to do so under U.S. law).
My monograph prompted an invitation to speak to the graduate economics faculty of the New School in 1969, where it turned out they needed someone to teach international trade and finance. I was offered the job immediately after my lecture. Having never taken a course in this subject at NYU, I thought teaching would be the best way to learn what academic theory had to say about it.
I quickly discovered that of all the subdisciplines of economics, international trade theory was the silliest. Gunboats and military spending make no appearance in this theorizing, nor do the all-important “errors and omissions,” capital flight, smuggling, or fictitious transfer pricing for tax avoidance. These elisions are needed to steer trade theory toward the perverse and destructive conclusion that any country can pay any amount of debt, simply by lowering wages enough to pay creditors. All that seems to be needed is sufficient devaluation (what mainly is devalued is the cost of local labor), or lowering wages by labor market “reforms” and austerity programs. This theory has been proved false everywhere it has been applied, but it remains the essence of IMF orthodoxy.
Academic monetary theory is even worse. Milton Friedman’s “Chicago School” relates the money supply only to commodity prices and wages, not to asset prices for real estate, stocks and bonds. It pretends that money and credit are lent to business for investment in capital goods and new hiring, not to buy real estate, stocks and bonds. There is little attempt to take into account the debt service that must be paid on this credit, diverting spending away from consumer goods and tangible capital goods. So I found academic theory to be the reverse of how the world actually works. None of my professors had enough real-world experience in banking or Wall Street to notice.
I spent three years at the New School developing an analysis of why the global economy is polarizing rather than converging. I found that “mercantilist” economic theories already in the 18th century were ahead of today’s mainstream in many ways. I also saw how much more clearly early economists recognized the problems of governments (or others) relying on creditors for policy advice. As Adam Smith explained, a creditor of the public, considered merely as such, has no interest in the good condition of any particular portion of land, or in the good management of any particular portion of capital stock. … He has no inspection of it. He can have no care about it. Its ruin may in some cases be unknown to him, and cannot directly affect him.
The bondholders’ interest is solely to extricate as much as they can as quickly as possible with little concern for the social devastation they cause. Yet they have managed to sell the idea that sovereign nations as well as individuals have a moral obligation to pay debts, even to act on behalf of creditors instead of their domestic populations.

My warning that Third World countries would not to be able to pay their debts disturbed the department’s chairman, Robert Heilbroner. Finding the idea unthinkable, he complained that my emphasis on financial overhead was distracting students from the key form of exploitation: that of wage labor by its employers. Not even the Marxist teachers he hired paid much attention to interest, debt or rent extraction.
I found a similar left-wing aversion to dealing with debt problems when I was invited to meetings at the Institute for Policy Studies in Washington. When I expressed my interest in preparing the ground for cancellation of Third World debts, IPS co-director Marcus Raskin said that he thought this was too far off the wall for them to back. (It took another decade, until 1982, for Mexico to trigger the Latin American “debt bomb” by announcing its above-noted inability to pay.)
In 1972 I published my first major book, Super Imperialism: The Economic Strategy of American Empire, explaining how taking the U.S. dollar off gold in 1971 left only U.S. Treasury debt as the basis for global reserves. The balance-of-payments deficit stemming from foreign military spending pumped dollars abroad. These ended up in the hands of central banks that recycled them to the United States by buying Treasury securities – which in turn financed the domestic budget deficit. This gives the U.S. economy a unique free financial ride. It is able to self-finance its deficits seemingly ad infinitum. The balance-of-payments deficit actually ended up financing the domestic budget deficit for many years. The post-gold international financial system obliged foreign countries to finance U.S. military spending, whether or not they supported it.
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Re: Economics (Michael Hudson: My Education as an Economist)
« Reply #116 on: December 02, 2015, 10:36:48 pm »

Part 3.
My Education as an Economist
Some of my Wall Street friends helped rescue me from academia to join the think tank world with Herman Kahn at the Hudson Institute. The Defense Department gave the Institute a large contract for me to explain just how the United States was getting this free ride. I also began writing a market newsletter for a Montreal brokerage house, as Wall Street seemed more interested in my flow-of-funds analysis than the Left. In 1979 I wrote Global Fracture: The New International Economic Order, forecasting how U.S. unilateral dominance was leading to a geopolitical split along financial lines, much as the present book’s international chapters describe the strains fracturing today’s world economy.
Later in the decade I became an advisor to the United Nations Institute for Training and Development (UNITAR). My focus here too was to warn that Third World economies could not pay their foreign debts. Most of these loans were taken on to subsidize trade dependency, not restructure economies to enable them to pay. IMF “structural adjustment” austerity programs – of the type now being imposed across the Eurozone – make the debt situation worse, by raising interest rates and taxes on labor, cutting pensions and social welfare spending, and selling off the public infrastructure (especially banking, water and mineral rights, communications and transportation) to rent-seeking monopolists. This kind of “adjustment” puts the class war back in business, on an international scale.
The capstone of the UNITAR project was a 1980 meeting in Mexico hosted by its former president Luis Echeverria. A fight broke out over my insistence that Third World debtors soon would have to default. Although Wall Street bankers usually see the handwriting on the wall, their lobbyists insist that all debts can be paid, so that they can blame countries for not “tightening their belts.” Banks have a self-interest in denying the obvious problems of paying “capital transfers” in hard currency. My experience with this kind of bank-sponsored junk economics infecting public agencies inspired me to start compiling a history of how societies through the ages have handled their debt problems. It took me about a year to sketch the history of debt crises as far back as classical Greece and Rome, as well as the Biblical background of the Jubilee Year. But then I began to unearth a prehistory of debt practices going back to Sumer in the third millennium BC. The material was widely scattered through the literature, as no history of this formative Near Eastern genesis of Western economic civilization had been written.
It took me until 1984 to reconstruct how interest-bearing debt first came into being – in the temples and palaces, not among individuals bartering. Most debts were owed to these large public institutions or their collectors, which is why rulers were able to cancel debts so frequently: They were cancelling debts owed to themselves, to prevent disruption of their economies. I showed my findings to some of my academic colleagues, and the upshot was that I was invited to become a research fellow in Babylonian economic history at Harvard’s Peabody Museum (its anthropology and archaeology department).
Meanwhile, I continued consulting for financial clients. In 1999, Scudder, Stevens & Clark hired me to help establish the world’s first sovereign bond fund. I was told that inasmuch as I was known as “Dr. Doom” when it came to Third World debts, if its managing directors could convince me that these countries would continue to pay their debts for at least five years, the firm would set up a self-terminating fund of that length. This became the first sovereign wealth fund – an offshore fund registered in the Dutch West Indies and traded on the London Stock Exchange.
New lending to Latin America had stopped, leaving debtor countries so desperate for funds that Argentine and Brazilian dollar bonds were yielding 45 percent annual interest, and Mexican medium-term tessobonos over 22 percent. Yet attempts to sell the fund’s shares to U.S. and European investors failed. The shares were sold in Buenos Aires and San Paolo, mainly to the elites who held the high-yielding dollar bonds of their countries in offshore accounts. This showed us that the financial managers would indeed keep paying their governments’ foreign debts, as long as they were paying themselves as “Yankee bondholders” offshore. The Scudder fund achieved the world’s second highest-ranking rate of return in 1990.
During these years I made proposals to mainstream publishers to write a book warning about how the bubble was going to crash. They told me that this was like telling people that good sex would stop at an early age. Couldn’t I put a good-news spin [on the dark forecast] and tell readers how they could get rich from the coming crash? I concluded that most of the public is interested in understanding a great crash only after it occurs, not during the run-up when good returns are to be made. Being Dr. Doom regarding debt was like being a premature anti-fascist.
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Re: Economics (Michael Hudson: My Education as an Economist)
« Reply #117 on: December 02, 2015, 10:38:46 pm »

Part 4. (End)
My Education as an Economist
So I decided to focus on my historical research instead, and in March 1990 presented my first paper summarizing three findings that were as radical anthropologically as anything I had written in economics. Mainstream economics was still in the thrall of an individualistic “Austrian” ideology speculating that charging interest was a universal phenomena dating from Paleolithic individuals advancing cattle, seeds or money to other individuals. But I found that the first, and by far the major creditors were the temples and palaces of Bronze Age Mesopotamia, not private individuals acting on their own. Charging a set rate of interest seems to have diffused from Mesopotamia to classical Greece and Rome around the 8th century BC. The rate of interest in each region was not based on productivity, but was set purely by simplicity for calculation in the local system of fractional arithmetic: 1/60th per month in Mesopotamia, and later 1/10th per year for Greece and 1/12th for Rome.
Today these ideas are accepted within the assyriological and archaeological disciplines. In 2012, David Graeber’s Debt: The First Five Thousand Years tied together the various strands of my reconstruction of the early evolution of debt and its frequent cancellation. In the early 1990s I had tried to write my own summary, but was unable to convince publishers that the Near Eastern tradition of Biblical debt cancellations was firmly grounded. Two decades ago economic historians and even many Biblical scholars thought that the Jubilee Year was merely a literary creation, a utopian escape from practical reality. I encountered a wall of cognitive dissonance at the thought that the practice was attested to in increasingly detailed Clean Slate proclamations.
Each region had its own word for such proclamations: Sumerian amargi, meaning a return to the “mother” (ama) condition, a world in balance; Babylonian misharum, as well as andurarum, from which Judea borrowed as deror, and Hurrian shudutu. Egypt’s Rosetta Stone refers to this tradition of amnesty for debts and for liberating exiles and prisoners. Instead of a sanctity of debt, what was sacred was the regular cancellation of agrarian debts and freeing of bondservants in order to preserve social balance. Such amnesties were not destabilizing, but were essential to preserving social and economic stability.
To gain the support of the assyriological and archaeological professions, Harvard and some donor foundations helped me establish the Institute for the Study of Long-term Economic Trends (ISLET). Our plan was to hold a series of meetings every two or three years to trace the origins of economic enterprise and its privatization, land tenure, debt and money. Our first meeting was held in New York in 1984 on privatization in the ancient Near East and classical antiquity. Today, two decades later, we have published five volumes rewriting the early economic history of Western civilization. Because of their contrast with today’s pro-creditor rules – and the success of a mixed private/public economy – I make frequent references in this book to how earlier societies resolved their debt problems in contrast with how today’s world is letting debt polarize and enervate economies.
By the mid-1990s a more realistic modern financial theory was being developed by Hyman Minsky and his associates, first at the Levy Institute at Bard College and later at the University of Missouri at Kansas City (UMKC). I became a research associate at Levy writing on real estate and finance, and soon joined Randy Wray, Stephanie Kelton and others who were invited to set up an economics curriculum in Modern Monetary Theory (MMT) at UMKC. For the past twenty years our aim has been to show the steps needed to avoid the unemployment and vast transfer of property from debtors to creditors that is tearing economies apart today.
I presented my basic financial model in Kansas City in 2004, with a chart that I repeated in my May 2006 cover story for Harper’s. The Financial Times reproduced the chart in crediting me with [as] being one of the eight economists to forecast the 2008 crash. But my aim was not merely to predict it. Everyone except economists saw it coming. My chart explained the exponential financial dynamics that make crashes inevitable. I subsequently wrote a series of op-eds for the Financial Times dealing with Latvia and Iceland as dress rehearsals for the rest of Europe and the United States.
The disabling force of debt was recognized more clearly in the 18th and 19th centuries (not to mention four thousand years ago in the Bronze Age). This has led pro-creditor economists to exclude the history of economic thought from the curriculum. Mainstream economics has become blindly pro-creditor, pro-austerity (that is, anti-labor) and anti-government (except for insisting on the need for taxpayer bailouts of the largest banks and savers). Yet it has captured Congressional policy, universities and the mass media to broadcast a false map of how economies work. So most people see reality as written by the One Percent, and it is a travesty of reality.
Spouting ostensible free market ideology, the pro-creditor mainstream rejects what the classical economic reformers actually wrote. One is left to choose between central planning by a public bureaucracy, or even more centralized planning by Wall Street’s financial bureaucracy. The middle ground of a mixed public/private economy has been all but forgotten, denounced as “socialism.” Yet every successful economy in history has been a mixed economy.
This essay is excerpted from the introduction to Killing the Host.
Michael Hudson’s new book, Killing the Host is published in e-format by CounterPunch Books and in print by Islet. He can be reached via his website, mh@michael-hudson.com
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Re: Economics (Michael Hudson: My Education as an Economist)
« Reply #118 on: December 09, 2015, 02:44:19 pm »

[See Hudson's bio in previous posts.]

Debt is Different this Time
http://permaliv.blogspot.com/2015/12/debt-is-different-this-time.html

Paul Krugman on Challenging the Oligarchy
http://real-economics.blogspot.com/2015/12/paul-krugman-on-challenging-oligarchy.html

Is Full Employment also on the Table, Malcolm?
http://theaimn.com/is-full-employment-also-on-the-table-malcolm/#comment-413441

How to Get Rid of Your Landlord and Socialize American Housing, in 3 Easy Steps:
Homelessness, unaffordable urban real estate, devastating gentrification, and the housing bubble are all rooted in privatized housing.
http://www.thenation.com/article/how-to-get-rid-of-your-landlord-and-socialize-american-housing-in-3-easy-steps/
[Article Excerpt:]
- Closer to home, private ownership of land underlies racist segregation. The aforementioned FHA policy, for instance, designed to protect homeowners’ access to gains in their houses’ location value, provided white people with the incentive to take their capital and flee urban centers for sprawling exurban developments, there to adopt racial exclusivity covenants, in order to prevent black people from moving in and undermining the location price—thus, the plot of A Raisin in the Sun. In the resulting “inner city,” which the public Home Owners’ Loan Corporation “red-lined” on its residential security maps, black people who were locked out of “middle-class” neighborhoods were conscripted to capital-starved, decaying ghettos, where parasitic slumlords reigned supreme.
- Finally, developers have an incentive to snap up urban land and then leave it vacant until it appreciates in value, driven by community development around it, and then sell it. Meanwhile, residents have to live with the social repercussions of a community riddled with vacant lots.
- What to do?
- There are a few ways to turn land and housing stock toward the public good.

- An exclusion fee
- For a start, everyone should be compensated for their exclusion from passage over certain locations on the earth. To do this, we ought to levy an exclusion fee whereby the location price of the property in question would be returned to its rightful recipient, the community. As long as land value is socially created and land ownership is duty-free, a theft is occurring.
- The idea for such a fee was most famously advocated by political economist Henry George in his book Progress and Poverty, under the name “single tax” or “land-value tax.” Several municipalities in George’s native Pennsylvania have a version of it: a two-tiered property tax, wherein the assessed value of the location is taxed at a higher rate than the assessed value of the building. For best results, 100 percent of the location price should be confiscated and invested in a sovereign wealth fund, the way Alaska’s oil royalties are. That fund could either pay out universal dividends, the way the Alaska Permanent Fund does, or provide the public with a huge pool of resources with which to invest in public institutions. How huge? Michael Hudson estimates that the land value of New York City alone is greater than the total combined worth of the entire country’s productive infrastructure.
- Community land trusts
- But why endow private profit-motivated interests control over construction at all? There is no reason to suspect that a given property-development capitalist should be more capable of determining for a community what optimally desirable new buildings to produce than the community itself is. Luckily, there is an entity capable of turning development over to the most concerned parties: nonprofit community land trusts, their boards typically composed at least one-third of residents, take land off the market, and lease homes long-term to residents at below-market rates, retaining the majority of the home equity gained over time.
- The predominantly black and Latino residents of the Dudley Street area of Roxbury, one of Boston’s poorest neighborhoods, got Boston city officials to take the unprecedented step of granting the power of eminent domain to the community for more than 1,300 parcels of abandoned land. With this tract, the Dudley Street Neighborhood Initiative (DSNI) established a community land trust that has democratically directed a renovation project resulting in hundreds of affordable-housing units and other public spaces, among them community centers, new schools, a community greenhouse, parks, and playgrounds.
- While the rest of Boston has lately struggled with a blight of post-bubble vacancies, followed by a massive wave of turn-overs due to rising rents, residents of DSNI’s land trust maintained a stable community. Most of the first batch of houses sold on the trust still contain their initial owners, who are passing them on to their children. “If you’re looking to buy a house, flip it, and speculate elsewhere,” says Tony Hernandez, longtime resident and director of operations for the land trust, “you’d better move on, because that’s not what this is intended for.”
[More at link above.]


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Re: Economics (The Progressive "Give Up" Formula & Austerity)
« Reply #119 on: December 16, 2015, 07:03:28 pm »

49194
An Excerpt from Real Fiscal Responsibility, Vol I: the Progressive Give-up Formula
http://www.correntewire.com/an_excerpt_from_real_fiscal_responsibility_vol_i_the_progressive_give_up_formula

[This Kindle e-book, along with the forthcoming vol II, is intended to contribute to an effort to dispel the austerian myths about fiscal sustainability/responsibility that prevent Americans from understanding what policies can contribute toward fulfilling public purpose and what policies only take us further away from that goal. A great struggle for the future of American Democracy and for the heritage of the New Deal, the Fair Deal, and the Great Society is underway. The outcome is likely to depend on people developing a correct understanding of real fiscal responsibility, so that the full policy space available to the Federal Government in seeking public purpose can be used, if there is a will to do that. The perspectives developed in the book, will, hopefully, help to secure and extend US democracy in all its dimensions, and also FDR’s Economic Bill of Rights, the unfinished business of the New Deal.]
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