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Science, PseudoScience and Society

Advance of Zombie ideas in XX and XXI centuries

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  Programmers have a very precise understanding of truth. You can’t lie to a compiler. Try it sometime. Garbage in, garbage out. Booleans, the ones and zeros, trues and falses, make up the world programmers live in. That’s all there is! I think programming is deep, it teaches us about the non-cyber universe we live in. There’s something spiritual about computers, and I want to understand it.

Nick Geoghegan

Science has been misused for political purposes many times in history. However, the most glaring examples of politically motivated pseudoscience happened just recently, in XX century. That means that it is useful to review historic examples of "Zombie ideas" used for political purposes and the pattern that defines that abuse.

The important lesson of XX century is that discredited economic and political ideas, no matter how absurd,  don't die as long as they serve well power that be.  In a way they are real living dead, sucking blood from humans.  Those ideas that should have died long ago, still shamble forward, like Zombies. Usage of such ideas is one of the most dangerous deception schemes practiced  by modern elites

It's not easy to write about pseudo science. The problem has to do with the fluid nature of the concept. It has no single, precise meaning and there is little agreement about its constituent elements. But first and foremost it involved subjugation of scientific aims to political goals and deliberate attempt in deception and subsequent cover up. But recently almost all social and economic science became political and all politics involved deception: to say that a politician is not lying is the same as to say that an alcoholic is not drinking. Still there are different degrees of lies and different level of density of the "cloud of deception".

Discredited ideas with political support or "Zombies" can be extremely dangerous for people who oppose them.  Lysenkoism probably represents classic early example when an set of obvious lies was supported by repressive apparatus of state and dissenters were prosecuted and sentenced to Gulag.  For nearly 45 years, the Soviet government used propaganda to foster unproven theories of agriculture promoted by Trofim Lysenko. Scientists seeking favor with the Soviet hierarchy produced fake experimental data in support of Lysenko’s false claims. Contradicting scientific evidence from the fields of biology and genetics was simply banned. University programs taught only Lysenkoism . This state supported attempt to suppress generics  continued for over forty years, until 1964, and even managed to spread to other communist countries, such as  China.

What we saw it as a tragedy in Stalin's Russia genetics, we now see it as a farce in USA economics with neo-classical economics flourishing with the supportive guidance of neoliberal state and financial oligarchy.

The whole neoclassical economics is essentially a set of zombie ideas which are kept in the forefront by financial oligarchy. The financial crisis of 2008 buried key ideas of  'free market liberalism' (aka neoliberalism), such as the 'Efficient Markets Hypothesis', yet these zombie ideas still were dug our, dressed and continue to be sold via major newspapers and journals. Much like Lysenkoism in the USSR by CPSU. See

This is  a real Faustian bargain for academic scholars. One can trade the independence for political influence, good salary and other perks. It is also helps in the power grab. And despite popular image of scientists, they proved to be as corruptible, if not more corruptible, as anybody else. Historically the scientific community is generally held together and all its affairs are peacefully managed through its joint acceptance of the same fundamental scientific beliefs. Science is best practiced in a voluntary, peaceful and free atmosphere.

But that idyllic arrangement firmly belongs to  the past. Now we can talk only about the level of political pressure on scientists via research grants, not so much about presence or absence of such a pressure.  What really matters as far as politics and science is concerned is what type of environment the individual scientists have to work in and what degree of freedom they can enjoy.

Historically the situation changed irrevocably since early XX contrary, which signified discovery of atomic particles.  It should be understood that the modern scientist, built in the modern "neoliberal" democracies, is at the same time - and it is possible that even in the first place - a political agent, a manipulator. For the unwashed masses a public scientist represent the ultimate carrier of truth for a given discipline, so his opinion have a distinct political weight. And the architects of these systems use this values of scientists to the fullest extent possible. Like we can see with neoclassical economics, scientists have turned into an instrument of cognitive manipulation, when  under the guise of science financial oligarchy promote beneficial to itself a false and simplistic picture of the world, which brainwash the masses into "correct" thinking.

In this sense one can say that Lysenkoism represented a natural side effect of  shrinking of freedom of the scientific community and growing influence of political power on science. As by Frederick Seitz noted in his The Present Danger To Science and Society

Everyone knows that the scientific community faces financial problems at the present time. If that were its only problem, some form of restructuring and allocation of funds, perhaps along lines well tested in Europe and modified in characteristic American ways, might provide solutions that would lead to stability and balance well into the next century. Unfortunately, the situation is more complex, made so by the fact that the scientific establishment has become the object of controversy from both outside and inside its special domain. The most important aspects of the controversy are of a new kind and direct attention away from matters that are sufficiently urgent to be the focus of a great deal of the community's attention.

The assaults on science from the outside arise from such movements as the ugly form of "political correctness" that has taken root in important portions of our academic community. There are to be found, in addition, certain tendencies toward a home-grown variant of the anti-intellectual Lysenkoism that afflicted science in the Stalinist Soviet Union. So-called fraud cases are being dealt with in new, bureaucratic ways that cut across the traditional methods of arriving at truth in science. From inside the scientific community, meanwhile, there are challenges that go far beyond those that arise from the intense competition for the limited funds that are available to nourish the country's scientific endeavor.

The critical issue of arriving at a balanced approach to funding for science is being subordinated to issues made to seem urgent by unhealthy alliances of scientists and bureaucrats. Science and the integrity of its practitioners are under attack and, increasingly, legislators and bureaucrats shape the decisions that determine which paths scientific research should take. There is, in addition, a sinister tendency, especially in environmental affairs, toward considering the undertaking of expensive projects that are proposed by some scientists to remedy worst-case formulations of problems before the radical and expensive remedies are proven to be needed. They are viewed seriously though they are based on the advice of opportunistic alarmists in science who leap ahead of what is learned from solid research to encourage support for the expensive remedies they perceive to be necessary. The potential for very great damage to science and society is real.

Of course, the rise of 'Lysenkoism' in the Soviet Union in the late 40th of the twentieth century is one of the most tragic pages of the history of science.  Trofim Lysenko, a Soviet agronomist, came to prominence as the proponent of a theory of heredity that stood in direct opposition to Mendelianism. The details of this theory need not concern us, except to note that it was 'Larmarckist' in its contention that it is possible for organisms to inherit acquired characteristics.  This was wrong and the principles of Mendelianism - the theory of heredity - were well understood by then. But Lysenko theory fitted nicely with the Soviet ideology. Particularly, the idea that acquired characteristics could be inherited held out the promise of the perfectibility of mankind which as strange as it may sound was the necessary precondition to irreversible victory of socialism/communism (later when nationalistic forces  tore apart the USSR  it became clear that such hopes are completely misplaced). 

So the Stalinist state intervened in the pre-exiting scientific struggle by declaring the victor and the consequences, certainly for many of the scientists involved and arguably also for the USSR agriculture, were disastrous.  The essence of Lysenkoism is that pseudo-scientific theory became a pseudo-religious cult and the power of state was used to suppress dissidents. Many scientists were exiled; some killed. Unfortunately we cannot dismiss the obviously pernicious use of ideology by Lysenko and his supporters simply as an aberration of the era that is often brushed aside as 'the cult of personality' (with or without naming the personality in question). This proved to be much more dangerous and at the same time remarkably resilient phenomenon that survived the dissolution of the USSR. Actually the situation repeated with the USA economics when anything that was not neo-classic was suppressed was by-and-large similar although this time this time it happened without any killings.

Do not fool yourself that Lysenkoism is irrevocably connected with communist ideology. The link was poorly accidental. In reality Lysenkoism emerged more like a cult which was extremely convenient for the control freaks in high position in government. It's not a secret that a lot of high-level administrators in academic institutions belong to the category of micromanagers and as such they are naturally predisposed to Lysenkoism.  

In general "Lysenkovisation of  science" occurs when the state tries to control both the methodologies and goals of scientific activity and that happens all over the world, although to different degree.

In the USSR huge bureaucratic institutions such as VASKhNIL and VIEM had been set up with the specific goal to control resources and, especially, scientific press.  Part of the reason that Lysenkoism gained official support in the Soviet Union was because the Mendelian approach to genetics contradicted official ideology, in particular, Engels's dialectical materialism. In early 50th, just before his death Stalin began to sense that Lysenkoism can hinder practical science by interfering with the academic atmosphere of toleration of dissent most conducive to scientific accomplishment. He even went as far as to declare that

“no science can develop and proper without the clash of opinions, without freedom of criticism.”

But it was too late...

Other governments are also far from being immune from this kind of tendency to select between scientific theories on the basis of ideology rather than the balance of evidence.

More benign variant of Lysenkoism that does not rely on the power of the state is usually called Cargo Cult ScienceAnother related term is "Mayberry Machiavellis". A long time ago -- well, actually it was just a year, but it seems like a lot longer than that -- a former Bush advisor John DiIulio got into quite a bit of trouble for revealing to Esquire that the White House did not possess, in any conventional definition of the term, a policy-making process:

...on social policy and related issues, the lack of even basic policy knowledge, and the only casual interest in knowing more, was somewhat breathtaking—discussions by fairly senior people who meant Medicaid but were talking Medicare; near-instant shifts from discussing any actual policy pros and cons to discussing political communications, media strategy, et cetera. Even quite junior staff would sometimes hear quite senior staff pooh-pooh any need to dig deeper for pertinent information on a given issue...

This gave rise to what you might call Mayberry Machiavellis—staff, senior and junior, who consistently talked and acted as if the height of political sophistication consisted in reducing every issue to its simplest, black-and-white terms for public consumption, then steering legislative initiatives or policy proposals as far right as possible.

Dan Gardner - Senior Writer for The Ottawa Citizen writes: "Cabinet meetings were scripted, Mr. O'Neill discovered, by White House staffers who sent advance notes to cabinet secretaries telling them when they were 'supposed to speak, about what, and for how long.'" Is this the shadow of Politburo or what?

There are also strong analogies between Reaganomics and Lysenkoism. Useful discussion is at  "The Financial Crisis and the Systemic Failure of Academic Economics"

The Financial Crisis and the Systemic Failure of Academic Economics, by David Colander, Hans Föllmer, Armin Haas, Michael Goldberg, Katarina Juselius, Alan Kirman, and Thomas Lux: [From the conclusion] ..."We believe that economics has been trapped in a sub-optimal equilibrium in which much of its research efforts are not directed towards the most prevalent needs of society. Paradoxically self-reinforcing feedback effects within the profession may have led to the dominance of a paradigm that has no solid methodological basis and whose empirical performance is, to say the least, modest. Defining away the most prevalent economic problems of modern economies and failing to communicate the limitations and assumptions of its popular models, the economics profession bears some responsibility for the current crisis. It has failed in its duty to society to provide as much insight as possible into the workings of the economy and in providing warnings about the tools it created. It has also been reluctant to emphasize the limitations of its analysis. We believe that the failure to even envisage the current problems of the worldwide financial system and the inability of standard macro and finance models to provide any insight into ongoing events make a strong case for a major reorientation in these areas and a reconsideration of their basic premises."

While at the surface it looks like rent-seeking behavior of dishonest economists the analogy is pretty strong. A broad critique of Neoclassical economics has been put forward in the book Debunking Economics by Steve Keen  See, for example:

Dr. Nikolai Bezroukov


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If history repeats itself...how incapable must Man be of learning from experience

George Bernard Shaw

"No science is immune to the infection of politics and the corruption of power."

Jacob Bronowski (1908-1974),
British scientist, author.
Encounter (London, July 1971).

[Oct 08, 2018] What an Audacious Hoax Reveals About Academia

Notable quotes:
"... Scholarship based less upon finding truth and more upon attending to social grievances has become firmly established, if not fully dominant, within these fields, and their scholars increasingly bully students, administrators, and other departments into adhering to their worldview. ..."
"... This worldview is not scientific, and it is not rigorous. For many, this problem has been growing increasingly obvious, but strong evidence has been lacking. For this reason, the three of us just spent a year working inside the scholarship we see as an intrinsic part of this problem." ..."
"... We spent that time writing academic papers and publishing them in respected peer-reviewed journals associated with fields of scholarship loosely known as "cultural studies" or "identity studies" (for example, gender studies) or "critical theory" because it is rooted in that postmodern brand of "theory" which arose in the late sixties. ..."
Oct 08, 2018 | www.moonofalabama.org

Dr. Buddy Tubside , Oct 8, 2018 3:41:22 AM | link

What an Audacious Hoax Reveals About Academia

Three scholars wrote 20 fake papers using fashionable jargon to argue for ridiculous conclusions.

Harvard University's Yascha Mounk writing for The Atlantic:

"Over the past 12 months, three scholars -- James Lindsay, Helen Pluckrose, and Peter Boghossian -- wrote 20 fake papers using fashionable jargon to argue for ridiculous conclusions, and tried to get them placed in high-profile journals in fields including gender studies, queer studies, and fat studies. Their success rate was remarkable


Sokal Squared doesn't just expose the low standards of the journals that publish this kind of dreck, though. It also demonstrates the extent to which many of them are willing to license discrimination if it serves ostensibly progressive goals.

This tendency becomes most evident in an article that advocates extreme measures to redress the "privilege" of white students.

Exhorting college professors to enact forms of "experiential reparations," the paper suggests telling privileged students to stay silent, or even BINDING THEM TO THE FLOOR IN CHAINS

If students protest, educators are told to "take considerable care not to validate privilege, sympathize with, or reinforce it and in so doing, recenter the needs of privileged groups at the expense of marginalized ones. The reactionary verbal protestations of those who oppose the progressive stack are verbal behaviors and defensive mechanisms that mask the fragility inherent to those inculcated in privilege."

In an article for Areo magazine, the authors of the hoax explain their motivation: "Something has gone wrong in the university -- especially in certain fields within the humanities.

Scholarship based less upon finding truth and more upon attending to social grievances has become firmly established, if not fully dominant, within these fields, and their scholars increasingly bully students, administrators, and other departments into adhering to their worldview.

This worldview is not scientific, and it is not rigorous. For many, this problem has been growing increasingly obvious, but strong evidence has been lacking. For this reason, the three of us just spent a year working inside the scholarship we see as an intrinsic part of this problem."

We spent that time writing academic papers and publishing them in respected peer-reviewed journals associated with fields of scholarship loosely known as "cultural studies" or "identity studies" (for example, gender studies) or "critical theory" because it is rooted in that postmodern brand of "theory" which arose in the late sixties.

As a result of this work, we have come to call these fields "grievance studies" in shorthand because of their common goal of problematizing aspects of culture in minute detail in order to attempt diagnoses of power imbalances and oppression rooted in identity.

We undertook this project to study, understand, and expose the reality of grievance studies, which is corrupting academic research.

Because open, good-faith conversation around topics of identity such as gender, race, and sexuality (and the scholarship that works with them) is nearly impossible, our aim has been to reboot these conversations.''

To read more, see Areo magazine + "academic grievance studies and the corruption of scholarship"

[Oct 02, 2018] Randy Wray Modern Monetary Theory How I Came to MMT and What I Include in MMT naked capitalism

Notable quotes:
"... By L. Randall Wray, Professor of Economics at Bard College. Originally published at New Economic Perspectives ..."
"... Treatise on Money ..."
"... State Theory of Money ..."
"... Money and Credit in Capitalist Economies ..."
"... Understanding Modern Money ..."
"... Modern Money Theory ..."
"... Payback: Debt and the shadow side of wealth ..."
"... Reclaiming the State ..."
"... Austerity: The History of a Dangerous Idea ..."
"... permanent Zirp (zero interest rate policy) is probably a better policy since it reduces the compounding of debt and the tendency for the rentier class to take over more of the economy. ..."
"... that one of the consequences of the protracted super-low interest rate regime of the post crisis era was to create a world of hurt for savers, particularly long-term savers like pension funds, life insurers and retirees. ..."
"... income inequality ..."
"... even after paying interest ..."
"... It seems to me that the US macroeconomic policy has been operating under MMT at least since FDR (see for example Beardsley Ruml from 1945). ..."
"... After learning MMT I've occasionally thought I should get a refund for the two economics degree's I originally received. ..."
"... See: https://mythfighter.com/2018/08/27/ten-answers-that-are-contrary-to-popular-wisdom/ ..."
"... There is no avoiding bad government. ..."
"... "Taxes or other obligations (fees, fines, tribute, tithes) drive the currency." ..."
"... "JG is a critical component of MMT. It anchors the currency and ensures that achieving full employment will enhance both price and financial stability." ..."
Oct 02, 2018 | www.nakedcapitalism.com

Randy Wray: Modern Monetary Theory – How I Came to MMT and What I Include in MMT Posted on October 2, 2018 by Yves Smith By L. Randall Wray, Professor of Economics at Bard College. Originally published at New Economic Perspectives

I was asked to give a short presentation at the MMT conference. What follows is the text version of my remarks, some of which I had to skip over in the interests of time. Many readers might want to skip to the bullet points near the end, which summarize what I include in MMT.

I'd also like to quickly respond to some comments that were made at the very last session of the conference -- having to do with "approachability" of the "original" creators of MMT. Like Bill Mitchell, I am uncomfortable with any discussion of "rockstars" or "heroes". I find this quite embarrassing. As Bill said, we're just doing our job. We are happy (or, more accurately pleasantly surprised) that so many people have found our work interesting and useful. I'm happy (even if uncomfortable) to sign books and to answer questions at such events. I don't mind emailed questions, however please understand that I receive hundreds of emails every day, and the vast majority of the questions I get have been answered hundreds, thousands, even tens of thousands of times by the developers of MMT. A quick reading of my Primer or search of NEP (and Bill's blog and Warren's blogs) will reveal answers to most questions. So please do some homework first. I receive a lot of "questions" that are really just a thinly disguised pretense to argue with MMT -- I don't have much patience with those. Almost every day I also receive a 2000+ word email laying out the writer's original thesis on how the economy works and asking me to defend MMT against that alternative vision. I am not going to engage in a debate via email. If you have an alternative, gather together a small group and work for 25 years to produce scholarly articles, popular blogs, and media attention -- as we have done for MMT -- and then I'll pay attention. That said, here you go: wrayr@umkc.edu .

******************************************************************************

As an undergraduate I studied psychology and social sciences -- but no economics, which probably gave me an advantage when I finally did come to economics. I began my economics career in my late 20's studying mostly Institutionalist and Marxist approaches while working for the local government in Sacramento. However, I did carefully read Keynes's General Theory at Sacramento State and one of my professors -- John Henry -- pushed me to go to St. Louis to study with Hyman Minsky, the greatest Post Keynesian economist.

I wrote my dissertation in Bologna under Minsky's direction, focusing on private banking and the rise of what we called "nonbank banks" and "off-balance sheet operations" (now called shadow banking). While in Bologna, I met Otto Steiger -- who had an alternative to the barter story of money that was based on his theory of property. I found it intriguing because it was consistent with some of Keynes's Treatise on Money that I was reading at the time. Also, I had found Knapp's State Theory of Money -- cited in both Steiger and Keynes–so I speculated on money's origins (in spite of Minsky's warning that he didn't want me to write Genesis ) and the role of the state in my dissertation that became a book in 1990 -- Money and Credit in Capitalist Economies -- that helped to develop the Post Keynesian endogenous money approach.

What was lacking in that literature was an adequate treatment of the role of the state–which played a passive role -- supplying reserves as demanded by private bankers -- that is the Post Keynesian accommodationist or Horzontalist approach. There was no discussion of the relation of money to fiscal policy at that time. As I continued to read about the history of money, I became more convinced that we need to put the state at the center. Fortunately I ran into two people that helped me to see how to do it.

First there was Warren Mosler, who I met online in the PKT discussion group; he insisted on viewing money as a tax-driven government monopoly. Second, I met Michael Hudson at a seminar at the Levy Institute, who provided the key to help unlock what Keynes had called his "Babylonian Madness" period -- when he was driven crazy trying to understand early money. Hudson argued that money was an invention of the authorities used for accounting purposes. So over the next decade I worked with a handful of people to put the state into monetary theory.

As we all know, the mainstream wants a small government, with a central bank that follows a rule (initially, a money growth rate but now some version of inflation targeting). The fiscal branch of government is treated like a household that faces a budget constraint. But this conflicts with Institutionalist theory as well as Keynes's own theory. As the great Institutionalist Fagg Foster -- who preceded me at the University of Denver–put it: whatever is technically feasible is financially feasible. How can we square that with the belief that sovereign government is financially constrained? And if private banks can create money endogenously -- without limit -- why is government constrained?

My second book, in 1998, provided a different view of sovereign spending. I also revisited the origins of money. By this time I had discovered the two best articles ever written on the nature of money -- by Mitchell Innes. Like Warren, Innes insisted that the dollar's value is derived from the tax that drives it. And he argued this has always been the case. This was also consistent with what Keynes claimed in the Treatise, where he said that money has been a state money for the past four thousand years, at least. I called this "modern money" with intentional irony -- and titled my 1998 book Understanding Modern Money as an inside joke. It only applies to the past 4000 years.

Surprisingly, this work was more controversial than the earlier endogenous money research. In my view it was a natural extension -- or more correctly, it was the prerequisite to a study of privately created money. You need the state's money before you can have private money. Eventually our work found acceptance outside economics -- especially in law schools, among historians, and with anthropologists.

For the most part, our fellow economists, including the heterodox ones, attacked us as crazy.

I benefited greatly by participating in law school seminars (in Tel Aviv, Cambridge, and Harvard) on the legal history of money -- that is where I met Chris Desan and later Farley Grubb, and eventually Rohan Grey. Those who knew the legal history of money had no problem in adopting MMT view -- unlike economists.

I remember one of the Harvard seminars when a prominent Post Keynesian monetary theorist tried to argue against the taxes drive money view. He said he never thinks about taxes when he accepts money -- he accepts currency because he believes he can fob it off on Buffy Sue. The audience full of legal historians broke out in an explosion of laughter -- yelling "it's the taxes, stupid". All he could do in response was to mumble that he might have to think more about it.

Another prominent Post Keynesian claimed we had two things wrong. First, government debt isn't special -- debt is debt. Second, he argued we don't need double entry book-keeping -- his model has only single entry book-keeping. Years later he agreed that private debt is more dangerous than sovereign debt, and he's finally learned double-entry accounting. But of course whenever you are accounting for money you have to use quadruple entry book-keeping. Maybe in another dozen years he'll figure that out.

As a student I had read a lot of anthropology -- as most Institutionalists do. So I knew that money could not have come out of tribal economies based on barter exchange. As you all know, David Graeber's book insisted that anthropologists have never found any evidence of barter-based markets. Money preceded market exchange.

Studying history also confirmed our story, but you have to carefully read between the lines. Most historians adopt monetarism because the only economics they know is Friedman–who claims that money causes inflation. Almost all of them also adopt a commodity money view -- gold was good money and fiat paper money causes inflation. If you ignore those biases, you can learn a lot about the nature of money from historians.

Farley Grubb -- the foremost authority on Colonial currency -- proved that the American colonists understood perfectly well that taxes drive money. Every Act that authorized the issue of paper money imposed a Redemption Tax. The colonies burned all their tax revenue. Again, history shows that this has always been true. All money must be redeemed -- that is, accepted by its issuer in payment. As Innes said, that is the fundamental nature of credit. It is written right there in the early acts by the American colonies. Even a gold coin is the issuer's IOU, redeemed in payment of taxes. Once you understand that, you understand the nature of money.

So we were winning the academic debates, across a variety of disciplines. But we had a hard time making progress in economics or in policy circles. Bill, Warren, Mat Forstater and I used to meet up every year or so to count the number of economists who understood what we were talking about. It took over decade before we got up to a dozen. I can remember telling Pavlina Tcherneva back around 2005 that I was about ready to give it up.

But in 2007, Warren, Bill and I met to discuss writing an MMT textbook. Bill and I knew the odds were against us -- it would be for a small market, consisting mostly of our former students. Still, we decided to go for it. Here we are -- another dozen years later -- and the textbook is going to be published. MMT is everywhere. It was even featured in a New Yorker crossword puzzle in August. You cannot get more mainstream than that.

We originally titled our textbook Modern Money Theory , but recently decided to just call it Macroeconomics . There's no need to modify that with a subtitle. What we do is Macroeconomics. There is no coherent alternative to MMT.

A couple of years ago Charles Goodhart told me: "You won. Declare victory but be magnanimous about it." After so many years of fighting, both of those are hard to do. We won. Be nice.

Let me finish with 10 bullet points of what I include in MMT:

1. What is money: An IOU denominated in a socially sanctioned money of account. In almost all known cases, it is the authority -- the state -- that chooses the money of account. This comes from Knapp, Innes, Keynes, Geoff Ingham, and Minsky.

2. Taxes or other obligations (fees, fines, tribute, tithes) drive the currency. The ability to impose such obligations is an important aspect of sovereignty; today states alone monopolize this power. This comes from Knapp, Innes, Minsky, and Mosler.

3. Anyone can issue money; the problem is to get it accepted. Anyone can write an IOU denominated in the recognized money of account; but acceptance can be hard to get unless you have the state backing you up. This is Minsky.

4. The word "redemption" is used in two ways -- accepting your own IOUs in payment and promising to convert your IOUs to something else (such as gold, foreign currency, or the state's IOUs).

The first is fundamental and true of all IOUs. All our gold bugs mistakenly focus on the second meaning -- which does not apply to the currencies issued by most modern nations, and indeed does not apply to most of the currencies issued throughout history. This comes from Innes and Knapp, and is reinforced by Hudson's and Grubb's work, as well as by Margaret Atwood's great book: Payback: Debt and the shadow side of wealth .

5. Sovereign debt is different. There is no chance of involuntary default so long as the state only promises to accept its currency in payment. It could voluntarily repudiate its debt, but this is rare and has not been done by any modern sovereign nation.

6. Functional Finance: finance should be "functional" (to achieve the public purpose), not "sound" (to achieve some arbitrary "balance" between spending and revenues). Most importantly, monetary and fiscal policy should be formulated to achieve full employment with price stability. This is credited to Abba Lerner, who was introduced into MMT by Mat Forstater.

In its original formulation it is too simplistic, summarized as two principles: increase government spending (or reduce taxes) and increase the money supply if there is unemployment (do the reverse if there is inflation). The first of these is fiscal policy and the second is monetary policy. A steering wheel metaphor is often invoked, using policy to keep the economy on course. A modern economy is far too complex to steer as if you were driving a car. If unemployment exists it is not enough to say that you can just reduce the interest rate, raise government spending, or reduce taxes. The first might even increase unemployment. The second two could cause unacceptable inflation, increase inequality, or induce financial instability long before they solved the unemployment problem. I agree that government can always afford to spend more. But the spending has to be carefully targeted to achieve the desired result. I'd credit all my Institutionalist influences for that, including Minsky.

7. For that reason, the JG is a critical component of MMT. It anchors the currency and ensures that achieving full employment will enhance both price and financial stability. This comes from Minsky's earliest work on the ELR, from Bill Mitchell's work on bufferstocks and Warren Mosler's work on monopoly price setting.

8. And also for that reason, we need Minsky's analysis of financial instability. Here I don't really mean the financial instability hypothesis. I mean his whole body of work and especially the research line that began with his dissertation written under Schumpeter up through his work on Money Manager Capitalism at the Levy Institute before he died.

9. The government's debt is our financial asset. This follows from the sectoral balances approach of Wynne Godley. We have to get our macro accounting correct. Minsky always used to tell students: go home and do the balances sheets because what you are saying is nonsense. Fortunately, I had learned T-accounts from John Ranlett in Sacramento (who also taught Stephanie Kelton from his own, great, money and banking textbook -- it is all there, including the impact of budget deficits on bank reserves). Godley taught us about stock-flow consistency and he insisted that all mainstream macroeconomics is incoherent.

10. Rejection of the typical view of the central bank as independent and potent. Monetary policy is weak and its impact is at best uncertain -- it might even be mistaking the brake pedal for the gas pedal. The central bank is the government's bank so can never be independent. Its main independence is limited to setting the overnight rate target, and it is probably a mistake to let it do even that. Permanent Zirp (zero interest rate policy) is probably a better policy since it reduces the compounding of debt and the tendency for the rentier class to take over more of the economy. I credit Keynes, Minsky, Hudson, Mosler, Eric Tymoigne, and Scott Fullwiler for much of the work on this.

That is my short list of what MMT ought to include. Some of these traditions have a very long history in economics. Some were long lost until we brought them back into discussion. We've integrated them into a coherent approach to Macro. In my view, none of these can be dropped if you want a macroeconomics that is applicable to the modern economy. There are many other issues that can be (often are) included, most importantly environmental concerns and inequality, gender and race/ethnicity. I have no problem with that.

Hilary Barnes , October 2, 2018 at 3:01 am

Out of my depth: "7. For that reason, the JG is a critical component of MMT." The JG?

BillC , October 2, 2018 at 3:07 am

Job guarantee (especially as distinguished from a basic income guarantee). See here for fairly recent coverage by Lambert.

Epistrophy , October 2, 2018 at 6:16 am

I had exactly the same question. Thank you.

skippy , October 2, 2018 at 7:04 am

A JG is to discontinue NAIRU or structural under-unemployment with attendant monetarist/quasi inflation views. Something MMT has be at pains to point out wrt fighting a nonexistent occurrence due to extended deflationary period.

dcrane , October 2, 2018 at 5:31 am

The paragraph on "double entry book-keeping" is also a bit too inside-baseball. Otherwise I enjoyed the essay.

PlutoniumKun , October 2, 2018 at 6:11 am

Yup, he lost me on quadruple entry book-keeping, thats the first time I ever heard of that concept.

Quanka , October 2, 2018 at 8:02 am

Its double entry accounting counting both sides of the equation. Fed deposits money into bank requires 4 entries, a double entry for the Fed and for the bank. Typical double entry accounting only looks at the books of 1 entity at a time. Quadruple Entry accounting makes the connection between the government monetary policy and private business accounting. I'm not an accountant, I may have butchered that.

todde , October 2, 2018 at 12:15 pm

that's pretty much it

Peter Pan , October 2, 2018 at 1:37 pm

Does Steve Keen's "Minsky" program utilize quadruple-entry bookkeeping?

Todde , October 2, 2018 at 1:47 pm

Double entry

Grebo , October 2, 2018 at 3:12 pm

Yes it does. Double entry for each party to the transaction.

todde , October 2, 2018 at 3:29 pm

you are right – it does give each parties transactions.

horostam , October 2, 2018 at 8:43 am

think about banks and reserves, your money is on the bank's liability side (and your asset), while the reserves are on the bank's asset side (and gov't or fed's liability.)

i think its the reserves that quadruple it, reserves are confusing because when you move $5 from a bank account to buy ice cream its not just one copy of the $5 that moves between checking accounts, there is another $5 that moves "under the hood" so to speak in reserve world

HotFlash , October 2, 2018 at 12:10 pm

Very briefly, double entry bookkeeping keeps track of how money comes in/out, and where it came from/went. Cash is the determining item (although there may be a few removes). Hence, say I buy a $20 dollar manicure from you. I record my purchase as "Debit (increase) expense: manicure $20, credit (decrease) cash, $20". Bonus! If my bookkeeping is correct, my debits and credits are equal and if I add them up (credits are minus and debits are plus) the total is zero – my books "balance". So, double-entry bookkeeping is also a hash-total check on my accounting accuracy. But I digress.

On your books, the entry would be "Debit (increase) cash $20, credit (decrease) sales, $20".

So, your double-entry book plus my double-entry books would be quadruple-entry accounting.

JCC , October 2, 2018 at 9:40 am

#7 was my immediate stopper, too. It drives me nuts when people introduce 2-3-4 letter acronyms with no explanation (I work for the DoD and I'm surrounded by these "code words". I rarely know what people are talking about and when I ask, the people talking rarely know what these TLAs – T hree L etter A cronyms – stand for either!).

Next question regarding #7: What is ELR?

Other than #7, I really appreciate this article. NC teaches and/or clarifies on a daily basis.

Mel , October 2, 2018 at 10:11 am

Employer of Last Resort? (Wikipedia)

Matthew Platte , October 2, 2018 at 11:29 am

DoD?

JCC , October 2, 2018 at 2:45 pm

Guilty as charged :-)

For non-US readers, DoD is D epartment o f D efense, the undisputed-by-many home of TLAs.

lyman alpha blob , October 2, 2018 at 3:10 pm

Ha! I really love this blog.

somecallmetim , October 2, 2018 at 12:51 pm

NC?

;)

Bill C , October 2, 2018 at 3:02 am

Thank you for this post!

This quick, entertaining read is IMHO nothing less than a "Rosetta Stone" that can bring non-specialists to understand MMT: not just how , but why it differs from now-conventional neoliberal economics. I hope it finds a wide readership and that its many references to MMT's antecedents inspire serious study by the unconvinced (and I hope they don't take Wray's invitation to skip the 10 bullet points).

This piece is a fine demonstration of why I've missed Wray as he seemed to withdraw from public discourse for the last few years.

HotFlash , October 2, 2018 at 12:14 pm

No no! He said "Many readers might want to skip to the bullet points near the end, which summarize what I include in MMT."

el_tel , October 2, 2018 at 4:55 am

Thank you! The (broad) analogies with my own experience are there. I had a decidedly "mainstream" macro education at Cambridge (UK); though many of the "old school" professors/college Fellows who, although not MMT people as we'd currently understand (or weren't at *that* stage – Godley lectured a module I took but this was in the early 1990s) were still around, in hindsight the "university syllabus" (i.e. what you needed to regurgitate to pass exams) had already steered towards neoliberalism. I never really understood why I never "got" macro and it was consistently my weakest subject.

It was later, having worked in the City of London, learned accountancy in my actuarial training, and then most crucially starting reading blogs from people who went on to become MMT leading lights, that I realised the problem wasn't ME, it was the subject matter. So I had to painfully unlearn much of what I was taught and begin the difficult process of getting my head around a profoundly different paradigm. I still hesitate to argue the MMT case to friends, since I don't usually have to hand the "quick snappy one liners" that would torpedo their old discredited understanding.

I'm still profoundly grateful for the "old school" Cambridge College Fellows who were obviously being sidelined by the University and who taught me stuff like the Marxist/Lerner critiques, British economic history, political economy of the system etc. Indeed whilst I had "official" tutorials with a finance guy who practically came whenever Black-Scholes etc was being discussed, an old schooler was simultaneously predicting that it would blow the world economy up at some point (and of course he was in the main , correct). I still had to fill in some gaps in my knowledge (anthropology was not a module, though Marxist economics was), with hindsight I appreciate so much more of what the "old schoolers" said on the sly during quiet points in tutorials – Godley being one, although he wasn't ready at that time to release the work he subsequently published and was so revolutionary. Having peers educated elsewhere during my Masters and PhD who knew nothing of the subjects that – whilst certainly not the "key guide" to "proper macro" described in the article – began to horrify me later in my career.

skippy , October 2, 2018 at 5:07 am

Thanks for your efforts Mr Wray, your provide a rich resource to familiarize most and in some cases refute doctrinaire attitudes. Kudos.

BTW completely agree with the perspective against PR marketing of the topic or individuals wrt MMT or PK.

Lambert Strether , October 2, 2018 at 5:23 am

This is really great. Thanks a ton, as Yves would say.

I know I have used to "rock star" metaphor on occasion, so let me explain that to me what is important in excellent (i.e., live) rock and roll is improvisational interplay among the group members -- the dozen or so who understood MMT in the beginning, in this case -- who know the tune, know each other, and yet manage to make the song a little different each time. It's really spectacular to see in action. Nothing to do with spotlights, or celebrity worship, or fandom!

DavidEG , October 2, 2018 at 5:54 am

I'm no MMT expert, but I think this article does a good job of juxtaposing MMT with classic (non-advanced) macroeconomics. I quote:

In the language of Tinbergen (1952), the debate between MMT and mainstream macro can be thought of as a debate over which instrument should be assigned to which target. The consensus assignment is that the interest rate, under the control of an independent central bank, should be assigned to the output gap target, while the fiscal position, under control of the elected budget authorities, should be assigned to the debt sustainability target. [ ] The functional finance assignment is the reverse -- the fiscal balance under the budget authorities is assigned to the output target, while any concerns about debt sustainability are the responsibility of the monetary authority.

What about interest rate fixing? The central bank would remain in charge of that, but in an MMT context this instrument would lose most of its relevance:

[W]hile a simple swapping of instruments and targets is one way to think about functional finance, this does not describe the usual MMT view of how the policy interest rate should be set. What is generally called for, rather, is that the interest rate be permanently kept at a very low level, perhaps zero. In an orthodox policy framework, of course, this would create the risk of runaway inflation; but keep in mind that in the functional framework, the fiscal balance is set to whatever level is consistent with price stability.

It may be a partial reconstruction of MMT, but to me this seems to be a neat way to present MMT to most people. Saying that taxes are there just to remove money from the economy or to provide incentives is a rather extreme statement that is bound to elicit some fierce opposition.

Having said that, I've never seen anyone address what I think are two issues to MMT: how to make sure that the power to create money is not exploited by a political body in order to achieve consensus, and how to assure that the idea of unlimited monetary resources do not lead to misallocation and inefficiencies (the bloated, awash-with-money US military industry would probably be a good example).

larry , October 2, 2018 at 6:14 am

The best comparison of MMT with neoliberal neoclassical economics, in my view, is Bill Mitchell's blog post, "How to Discuss Modern Monetary Theory" ( http://bilbo.economicoutlook.net/blog/?p=25961 ). I especially recommend the table near the end as a terrific summary of the differences between the mainstream narrative and MMT.

el_tel , October 2, 2018 at 8:53 am

Thanks! I have enormous respect for Mitchell, given the quantity and quality of his blogging. However, my only nitpick is that a lot of his blog entries are quite long and "not easily digestible". I have long thought that one of those clever people who can do those 3 minute rapid animation vids we see on youtube is needed to "do a Lakoff" and change the metaphors/language. But this post of Mitchell (which I missed, since I don't read all his stuff) is, IMHO, his best at "re-orienting us".

kgw , October 2, 2018 at 11:15 am

I get this "http's server IP address could not be found." I'll try, gasp, googling it

el_tel , October 2, 2018 at 11:24 am

FWIW I mucked around with the link in Firefox (although I typically use Opera, which gave me that same error) and could read it.

Epistrophy , October 2, 2018 at 6:34 am

Saying that taxes are there just to remove money from the economy or to provide incentives is a rather extreme statement that is bound to elicit some fierce opposition.

Yes this is a frightening statement. The power to tax is the power to destroy. If this is a foundation point of the proposal then

Having said that, I've never seen anyone address what I think are two issues to MMT: how to make sure that the power to create money is not exploited by a political body in order to achieve consensus, and how to assure that the idea of unlimited monetary resources do not lead to misallocation and inefficiencies (the bloated, awash-with-money US military industry would probably be a good example).

Bingo. My thoughts exactly. Too much power in the hands of the few. Easy to slide into Orwell's Animal Farm – where some people are more equal than others.

MMT is based upon very good intentions but, in my view, there is a moral rot at the root of the US of A's problems, not sure this can be solved by monetary policy and more centralized control.

And the JG? Once the government starts to permanently guarantee jobs

skippy , October 2, 2018 at 7:12 am

I suggest you delve into what is proposed by the MMT – PK camp wrt a JG because its not centralized in the manner you suggest. It would be more regional and hopefully administrated via social democratic means e.g. the totalitarian aspect is moot.

I think its incumbent on commenters to do at least a cursory examination before heading off on some deductive rationalizations, which might have undertones of some book they read e.g. environmental bias.

Epistrophy , October 2, 2018 at 7:38 am

Skippy, I read the article, plus the links, including those links of the comments. I will admit that I am a little more right of center in my views than many on the website.

The idea is interesting, but the administration of such a system would require rewriting the US Constitution, or an Amendment to it if one thinks the process through, would it not? I think of the Amendment required to create the Federal Reserve System when I say this.

skippy , October 2, 2018 at 7:45 am

I think WWII is instructive here.

Clive , October 2, 2018 at 7:58 am

One thing I really don't like at all -- and I've crossed swords with many over this -- is that we do tend to take (not just in the US, this is prevalent in far too many places) things like the constitution, or cultural norms, or traditions or other variants of "that's the way we've always done this" and elevate them to a level of sacrosanctity.

Not for one moment am I suggesting that we should ever rush into tweaking such devices lightly nor without a great deal of analysis and introspective consultations.

Constitutions get amended all the time. The Republic of Ireland changed its to renounce a territorial claim on Northern Ireland. The U.K. created a right for Scotland to secede from the Union. There's even a country in Europe voting whether to formally change its name right now. Britain "gave up" its empire territories (not, I would add speedily, without a lot of prodding, but still, we got there in the end). All of which were, at one time or another, "unthinkable". Even the US, perhaps the most inherently resistant to change country when it thinks it's being "forced" to do so, begrudgingly acknowledged Cuba.

If something is necessary, it should be done.

vlade , October 2, 2018 at 8:06 am

Human laws (any and all, for simplicity I include culture, customs etc.. here) are not laws of nature.

They change over time to survive. The easy way, or the hard way.

Or they don't survive at all, that's an option too.

witters , October 2, 2018 at 9:09 am

"Human laws (any and all, for simplicity I include culture, customs etc.. here) are not laws of nature."

Wave Function Collapse?

voteforno6 , October 2, 2018 at 8:14 am

Why would a jobs guarantee require a constitutional amendment? The federal government creates jobs all the time, with certain defined benefits. This would merely expand upon that, to potentially include anyone who wants a job.

Epistrophy , October 2, 2018 at 8:26 am

I was thinking of implementing the whole concept of MMT, of which the JG is but one part, with this statement. Perhaps I did not make that clear.

voteforno6 , October 2, 2018 at 8:36 am

There are a couple different aspects of this that people are getting mixed together, I think. The core of MMT is not a proposal for government to implement. Rather, it is simply a description of how sovereign currencies actually operate, as opposed by mainstream economics, which has failed in this regard. In other words, we don't need any new laws to implement MMT – we need a paradigm shift.

The Jobs Guarantee is a policy proposal that flows from this different paradigm.

skippy , October 2, 2018 at 3:16 pm

It has been stated many times that it is to inform policy wrt to potential and not some booming voice from above dictating from some ridged ideology.

Persoanly as a capitalist I can't phantom why anyone would want structural under – unemployment. Seems like driving around with the hand brake on and then wondering why performance is restricted or parts wear out early.

todde , October 2, 2018 at 4:37 pm

Power.

I want 12 people lined up at the door to take your job, and then you will know where the power lies

Carla , October 2, 2018 at 11:18 am

Re-writing the U.S. Constitution is something people think about and talk about all the time, FYI.

todde , October 2, 2018 at 1:08 pm

the Amendment required to create the Federal Reserve System

What Amendment was that?

And since the Constitution gives Congress the power to coin money I am unaware of any reason an amendment would be necessary.

Epistrophy , October 2, 2018 at 3:43 pm

Thinking of the Federal Reserve Act being enabled by the Federal Income Tax of the 16th Amendment.

Using Federal taxes to fund the JG; I do not think that this aspect of it (and others) would survive a Constitutional challenge. Therefore ultimately an Amendment might be needed.

Then again I may be wrong. Technically Obamacare should have been implemented by an Amendment were strict Constitutional law applied.

Rights to health care and jobs are not enumerated in either the Constitution or Bill of Rights, as far as I am aware.

todde , October 2, 2018 at 4:05 pm

16th Amendment had nothing to do with the Federal Reserve.

And I think you are confusing 'you must buy health insurance or face a tax", with "You have a right to have healthcare".

If the government forced you to work, you may have a case.

There are 3 things the feds can spend federal funds on, pay debt, provide for the common defense, and the general welfare clause.

The General Welfare clause has been interpreted very widely in regards to Government spending.

New Deal, Social Security, Medicare/aid all survived court challenges, or if they lost, they lost on regulatory issues, and not 'spending' issues

Epistrophy , October 2, 2018 at 7:28 am

Not opposed to some of the principles of MMT, just don't understand, in this modern age where effectively all currency is electronic digits in a banking computer system, the issue of a currency must be tied to taxes. In years past, where currency was printed and in one's pocket, or stuffed under a mattress, or couriered by stagecoach, then yes – taxes would be needed. But today can we not just print (electronically) the cash needed for government operations each year based upon a fixed percentage of private sector GDP? Why therefore do we need government debt? Why do we need an income tax?

skippy , October 2, 2018 at 7:37 am

A. GDP is non distributional.

B. Had taxation not been promoted as theft in some camps Volcker would have not had to jack IR to such a upper bound during the Vietnam war.

C. Government Debt allocated to socially productive activities is a long term asset with distributional income vectors.

D. Ask the Greeks.

Epistrophy , October 2, 2018 at 7:48 am

Skippy, I have lived and worked in countries without income tax (but instead indirect tax) and where government operating revenue was based upon a percentage of projected national revenue. I have been involved in the administration of such budgets.

I am in favor of government spending, or perhaps more accurately termed investing, public money on long-term, economically beneficial projects. But this is not happening. The reality is that government priorities can easily be hijacked by political interests, as we currently witness.

larry , October 2, 2018 at 7:58 am

While I agree that political highjacking is possible and must be dealt with, this is not strictly speaking part of an economic theory, which is what MMT is. While MMT authors may take political positions, the theory itself is politically neutral.

Income taxes, tithes, or any other kind of driver is what drives the monetary circuit. Consider it from first principles. You have just set up a new government with a new currency where this government is the monopoly issuer. No one else has any money yet. So, the government must be the first spender. However, how is this nascent government going to motivate anyone to use this new currency? Via taxation, or like means, that can only be met by using the national currency, whatever form that currency may take, marks on a stick, paper, an entry in a ledger, or the like.

Epistrophy , October 2, 2018 at 8:34 am

Thank you for this explanation. I understand that, for example, this is why the Federal Reserve Act of 1913, I believe, created the Federal Reserve and Federal Income Tax at the same time.

But the US economy functioned adequately, survived a civil war, numerous banking crises, experienced industrialization, national railways, etc without a central bank or federal income tax from the 1790's to 1913.

To me, the US's state of perpetual war is enabled by Federal Income Tax. Without it the MIC would collapse, I am certain.

John k , October 2, 2018 at 10:31 am

Functioned adequately
During the 150 yr hard money period we had recessions/depressions that we're both far more frequent (every three years) and on avg far deeper than what we have had since fdr copied the brits and took us off the gold standard. Great deprecession was neither the longest or deepest.
Two reasons
Banks used to fail frequently, a run on one bank typically leading to runs on other banks, spreading across regions like prairie fires if your bank failed you lost all your money. Consequences were serious.
During GR so many banks failed in the Midwest, leading to farm foreclosures, the region was near armed insurrection in 1932. Fiat meant that the fed can supply unlimited liquidity. Since then banks have failed but immediately taken over by another. Critically, no depositor has lost a penny, even those with far more exposed than the deposit insurance limit. No runs on us banks since 1933.
Second, we now have auto stabilizers, spending continues during downturns because gov has no spending limit. Note previously in an emergency gov borrowed. 10 mil from J.P. Morgan.

Brian , October 2, 2018 at 11:30 am

But at what cost? no depositor loses money, yet huge amounts are required to be printed, thus devaluing the "currency". So is the answer inflation that must by necessity become hyperinflation?
I don't understand why it is important to protect a bank vs. making it perform its function without risking collapse. This is magical thinking as we have found very few banks in this world not ready and willing to pillage their clients, be it nations or just the little folk.
Why would anyone trust a government to do the right thing by its population? When has that ever worked out in favor of the people?
I can not understand the trust being demanded by this concept. It wants trust for the users, but in no way can it expect trust or virtue from the issuer of the "currency"

also, I can't help but think MMT is for growth at all costs. Hasn't the growth shown that it is pernicious in itself? Destroy the planet for the purpose of stabilizing "currency".

Our federal reserve gave banks trillions of dollars, and then demanded they keep much of it with the Fed and are paid interest not to use it. It inflated the "currency" in circulation yet again and now it is becoming clear a great percentage of people in our country can no longer eat, no longer purchase medications, a home, a business

If being on a hard money system as we were causes recessions and depressions, would we find that it was a natural function to cut off the speculators at their knees?

How does MMT promote and retain value for the actual working and producing people that have no recourse with their government? I would like to read about what is left out of this monumental equation.

TroyMcClure , October 2, 2018 at 12:10 pm

Money is not a commodity and does not "lose value" the more of it there is.

todde , October 2, 2018 at 12:57 pm

we used to protect the banks depositors and the government put the the bank in receivership.

That went away in the 21st century for some reason.

Now we protect the bank and put the Government in receivership (Greece).

todde , October 2, 2018 at 12:08 pm

Some points:

US had a federal income tax during the civil war and for a decade or so after.

I have always assumed that mass conscription and the Dreadnought arms race led to the implementation of the modern taxing/monetary system. (gov't needed both warfare and welfare)

Taxes, just as debt, create an artificial demand for currency as one must pay back their taxes in {currency}, and one must pay back debt in {currency}. It doesn't have to be an income tax, and I think a sales tax would be a better driver of demand than an income tax.

The US had land sales that helped fund government expenditures in the 1800s.

HotFlash , October 2, 2018 at 12:32 pm

Not all taxes are income taxes. Back in the day (20's/30's/40's),my grandfather could pay off the (county) property taxes on his farm by plowing snow for the county in the winter -- and he was damned careful to make sure that the county commissioners' driveways were plowed out as early as possible after a storm.

In the 30's/40's the property tax laws were changed to be payable only in dollars.

So Grandpa had to make cash crops. Things changed and money became necessary.

Benjamin Wolf , October 2, 2018 at 7:44 am

But today can we not just print (electronically) the cash needed for government operations each year based upon a fixed percentage of private sector GDP?

The élites could, but it would be totally undemocratic and the economics profession's track record of forecasting growth is no better than letting a cat choose a number written on an index card.

Why therefore do we need government debt?

There is no government debt. It's just a record of interest payments Congress has agreed to make because the wealthy wanted another welfare program.

Why do we need an income tax?

The only logically consistent purpose is because people have too much income.

voteforno6 , October 2, 2018 at 8:19 am

I think the point they're driving at, is that by requiring the payment of taxes in a particular currency, a government creates demand for that currency. There are other uses for federal taxes, not the least of which is to keep inflation in check.

Government debt is not needed, at least not at the federal level. My understanding of it is that it's a relic from the days of the gold standard. It's also very useful to some rather large financial institutions, so eliminating it would be politically difficult.

WobblyTelomeres , October 2, 2018 at 9:23 am

Wray has said in interviews that the debt (and associated treasury bonds), while not strictly necessary in a fiat currency, is of use in that it provides a safe base for investment, for pensioners and retirees, etc.

Sure, it could be eliminated by (a) trillion dollar platinum coins deposited at the Federal Reserve followed by (b) slowly paying off the existing debt when the bonds mature or (c) simply decreeing that the Fed must go to a terminal and type in 21500000000000 as the US Gov account balance (hope I got the number of zeroes correct!).

It could be argued that the US doesn't strictly need taxes to drive currency demand as long as our status as the world reserve currency is maintained (see oft-discussed petrodollar, Libya, etc). If that status is imperiled, say by an push by a coalition of nations to establish a different currency as the "world reserve currency") taxes would be needed to drive currency demand.

I think most of this is covered in one way or another here:

http://neweconomicperspectives.org/modern-monetary-theory-primer.html

HotFlash , October 2, 2018 at 12:39 pm

Government debt is not actually a 'real thing'. It is a residue of double-entry bookkeeping, as is net income (income minus expenses, that's a credit in the double-entry system). It could as well be called 'retained earnings (also a 'book' credit in the double-entry system). If everybody had to take bookkeeping in high school there would be far few knickers in knots!

Todde , October 2, 2018 at 3:10 pm

Its real if you pay an interest rate on it

Grebo , October 2, 2018 at 3:48 pm

There are two kinds of government 'debt': the accumulated deficit which is the money in circulation not a real debt, and outstanding bonds which is real in the sense that it must be repaid with interest.

However, the government can choose the interest rate and pay it (or buy back the bonds at any time) with newly minted money at no cost to itself, cf. QE.

Neither kind warrant bunched panties.

todde , October 2, 2018 at 4:39 pm

no panties bunched.

horostam , October 2, 2018 at 8:51 am

seems to me that the guaranteed jobs would be stigmatized, and make it harder for people to get private sector jobs. "once youre in the JG industry, its hard to get out" etc.

how much of a guarantee is the job guarantee supposed to be? ie. at what point can you get fired from a guaranteed job?

Epistrophy , October 2, 2018 at 9:31 am

Yes, my mind wandered into the same territory. While I agree that something needs to be done, it also has the potential to strike at the heart of a lean, merit-based system by introducing another layer of bureaucracy. In principle, I am not against the idea, but as they say, "God (or the Devil – take your pick) is in the details ".

The Rev Kev , October 2, 2018 at 9:48 am

Is there any point in working for a jobs guarantee when the only sort of jobs that would probably be guaranteed would be MacJobs and Amazon workers?

Newton Finn , October 2, 2018 at 11:23 am

If you haven't already read it, "Reclaiming the State" by Mitchell and Fazi (Pluto Press 2017) provides a detailed and cogent analysis of how neoliberalism came into ascendency, and how the principles of MMT can be used to pave the way to a more humane and sustainable economic system. A new political agenda for the left, drawing in a different way upon the nationalism that has energized the right, is laid out for those progressives who understand the necessity of broadening their appeal. And the jobs guarantee that MMT proposes has NOTHING to do with MacJobs and Amazon workers. It has to do with meeting essential human and environmental needs which are not profitable to meet in today's private sector.

HotFlash , October 2, 2018 at 12:51 pm

Job guarantee, or govt as employer of last resort -- now there is a social challenge/opportunity if there ever was one.

Well managed, it would guarantee a living wage to anyone who wants to work, thereby setting a floor on minimum wages and benefits that private employers would have to meet or exceed. These minima would also redound to the benefit of self-employed persons by setting standards re income and care (health, vacations, days off, etc) *and* putting money in the pockets of potential customers.

Poorly managed it could create the 'digging holes, filling them in' programs of the Irish Potato Famine ore worse (hard to imagine, but still ). It has often been remarked that the potato blight was endemic across Europe, it was only a famine in Ireland -- through policy choices.

So, MMT aside (as being descriptive, rather than prescriptive), we are down to who controls policy. And that is *really* scary.

Todde , October 2, 2018 at 3:11 pm

Government job guarantees is an idea as old as the pyramids.

Frankly so is mmt

Mel , October 2, 2018 at 11:34 am

In terms of power, the government has the power to shoot your house to splinters, or blow it up, with or without you in it. We say they're not supposed to, but they have the ability, and it has been done.
The question of how to hold your government to the things it's supposed to do applies to issues beyond money. We'd best deal with government power as an issue in itself. I should buckle down and get Mitchell's next-to-newest book Reclaiming the State .

HotFlash , October 2, 2018 at 12:56 pm

Ding ding ding!

Grebo , October 2, 2018 at 3:23 pm

Bill Mitchell was not too impressed with the INET paper: Part 1 .
There's three parts! Mitchell rarely has the time to be brief.

Tinky , October 2, 2018 at 6:02 am

I don't claim to fully understand MMT yet, but I find Wray's use of the derogatory term "gold bugs" to be both disappointing and revealing. To lump those, some of whom are quite sophisticated, who believe that currencies should be backed by something of tangible value (and no, "the military" misses the point), or those who hold physical gold as an insurance policy against political incompetence, and the inexorable degradation of fiat currencies, in with those who promote or hold gold in the hopes of hitting some type of lottery, is disingenuous at best.

Wukchumni , October 2, 2018 at 7:06 am

OMT seemingly has no reason to exist being old school, but for what it's worth, the almighty dollar has lost over 95% of it's value when measured against something that matters, since the divorce in 1971.

I found this passage funny, as in flipping the dates around to 1791, is when George Washington set an exchange rate of 1000-1 for old debauched Continental Currency, in exchange for newly issued specie. (there was no Federal currency issued until 1861)

So yeah, they burned all of their tax revenue, because the money wasn't worth jack.

Farley Grubb -- the foremost authority on Colonial currency -- proved that the American colonists understood perfectly well that taxes drive money. Every Act that authorized the issue of paper money imposed a Redemption Tax. The colonies burned all their tax revenue.

skippy , October 2, 2018 at 7:30 am

Gold bug is akin to money crank e.g. money = morals. That's not to mention all the evidence to date does not support the monetarist view nor how one gets the value into the inanimate object or how one can make it moral.

Benjamin Wolf , October 2, 2018 at 8:01 am

Gold doesn't historically perform as a hedge but as a speculative trade. Those who think it can protect them from political events typically don't realize that a gold standard means public control of the gold industry, thereby cutting any separation from the political process off at the knees.

When a government declares that $20 is equal in value to one ounce of gold, it also declares an ounce of gold is equal to $20 dollars. It is therefore fixing, through a political decision subject to political changes, the price of the commodity.

Tinky , October 2, 2018 at 9:44 am

Nonsense. When fiat currencies invariably degrade, and especially at a fast rate, gold has proven to be a relative store of value for millennia . All one need do is to look at Venezuela, Argentina, Turkey, etc., to see that ancient dynamic in action today.

You, and others who have replied to my comment, are using the classical gold standard as a straw man, as well. Neither I, nor many other gold "bugs" propose such a simple solution to the obviously failed current economy, which is increasingly based on mountains of debt that can never be repaid.

WobblyTelomeres , October 2, 2018 at 9:48 am

gold has proven to be a relative store of value for millennia.

As long as one is mindful that gold is just another commodity, subject to the same speculative distortions as any other commodity (see Hunt brothers and silver).

Tinky , October 2, 2018 at 9:54 am

But that is obviously false, given that no other commodity has remotely performed with such stability over such a long period of time.

It is true that over short periods distortions can appear, and the *true* value of gold has been suppressed in recent years through the use of fraudulent paper derivatives. But again, I'm not arguing for the return of a classical gold standard.

Wukchumni , October 2, 2018 at 10:13 am

The only way the gold standard returns, is if it's forced on the world on account of massive fraud in terms of fiat money, but that'll never happen.

WobblyTelomeres , October 2, 2018 at 10:56 am

Tinky:

I'm curious as to what you consider the "*true* value of gold". Could you elaborate?

I'm dense/obtuse and thus not an economist!

Tinky , October 2, 2018 at 11:18 am

Don't worry, I'm likely to be at least equally dense!

I didn't mean to suggest that there is some formula from which a *true* value of precious metals might be derived. I simply meant that gold has clearly been the object of price suppression in recent years through the use of paper derivatives (i.e. future contracts). The reason for such suppression, aside from short-term profits to be made, is that gold has historically acted as a barometer relating to political and economic stability, and those in power have a particular interest in suppressing such warning signals when the system becomes unstable.

So, while the Central Banks created previously unimaginable mountains of debt, it was important not to alarm the commoners.

The suppression schemes have become less effective of late, and will ultimately fail when the impending crisis unfolds in earnest.

Wukchumni , October 2, 2018 at 10:00 am

As long as one is mindful that gold is just another commodity, subject to the same speculative distortions as any other commodity

It sounds good in theory, but history says otherwise.

The value remained more or less the same for well over 500 years as far as an English Pound was concerned, the weight and value of a Sovereign hardly varied, and the exact weight and fineness of one struck today or any time since 1817, is the same, no variance whatsoever.

Thus there was no speculative distortions in terms of value, the only variance being the value of the Pound (= 1 Sovereign) itself.

https://en.wikipedia.org/wiki/Sovereign_(British_coin)

Benjamin Wolf , October 2, 2018 at 12:23 pm

When fiat currencies invariably degrade, and especially at a fast rate, gold has proven to be a relative store of value for millennia.

Currencies do not degrade. Political systems degrade.

Bridget , October 2, 2018 at 8:25 am

" who believe that currencies should be backed by something of tangible value"

As I understand it, MMT also requires that currency be backed by something of tangible value: a well managed and productive economy. It doesn't matter in the least if your debt is denominated in your own currency if you have the economy of Zimbabwe.

Tinky , October 2, 2018 at 9:48 am

Sounds reasonable in theory, but that was supposed to be the case with the current economic system, as well, and we can all see where that has led.

I'm not arguing that there isn't a theoretically better way to create and use "modern" money, but rather doubt that those empowered to create it out of thin air will ever do so without abusing such power.

Bridget , October 2, 2018 at 10:10 am

Oh, I agree with you. In no universe that I am aware of would the temptation to create money beyond the productive capacity of the economy to back it up be resisted. I think Zimbabwe is a pretty good example of where the theory goes in practice.

TroyMcClure , October 2, 2018 at 12:20 pm

That's exactly wrong. Zimbabwe had a production collapse. Same amount of money to buy a much smaller amount of goods. The gov responded not by increasing goods, but increasing money supply.

Bridget , October 2, 2018 at 1:30 pm

Maybe because the economy did not have the productive capacity to increase goods? It takes more than a magic wand and wishful thinking.

voteforno6 , October 2, 2018 at 8:29 am

Mark Blyth has a good discussion of the gold standard in his book Austerity: The History of a Dangerous Idea . He makes the point that, in imposing the adjustments necessary to keep the balance of payments flowing, the measures imposed by a government would be so politically toxic, that no elected official in his or her right mind would implement them, and expect to remain in office. In short, you can have either democracy, or a gold standard, but you can't have both.

Also, MMT does recognize that there are real world constraints on a currency, and that is represented by employment, not some artificially-imposed commodity such as gold (or bitcoin, or seashells, etc). The Jobs Guarantee flows out of this.

Tinky , October 2, 2018 at 9:50 am

As mentioned above, you, among others who have replied to my original comment, are using the classical gold standard as a straw manl. Neither I, nor many other gold "bugs", propose such a simple solution for the failed current economic system, which is increasingly based on mountains of debt that can never be repaid.

WobblyTelomeres , October 2, 2018 at 11:35 am

increasingly based on mountains of debt that can never be repaid.

Huh? I listed two ways they could be repaid above. In the US, the national debt is denominated in dollars, of which we have an infinite supply (fiat). In addition, the Federal Reserve could buy all the existing debt by [defer to quad-entry accounting stuff from Wray's primer] and then figuratively burn it. Sure, the rest of the world would be pissed and inflation *may* run amok, but "can never" is just flat out wrong.

Tinky , October 2, 2018 at 1:59 pm

Of course it can be extinguished through hyperinflation. I didn't think that it would be necessary to point that out. No "may" about it, though, as if the U.S. prints tens of trillions of dollars to extinguish the debt, hyperinflation will be assured.

todde , October 2, 2018 at 2:14 pm

not if it would be done over time, as the debt comes due.

We could also tax the excess dollars from the system with a large capital gains tax rate.

todde , October 2, 2018 at 3:04 pm

so I don't believe there will be a hyper-inflation of goods, but in asset prices. That is why I would raise the capital gains rate.

The failure of MMT is when the hyper-inflation occurs in goods and services.

Taxing a middle class person while his cost of living is rising will be a tough political act to do.

WobblyTelomeres , October 2, 2018 at 2:19 pm

I didn't think that it would be necessary to point that out.

Sorry, but I'm an old programmer; logic rules the roost. When one's software is expected to execute billions of times a day without fail for years (and this post is very likely routed through a device running an instance of something I've written). Always means every time, no exceptions; never means not ever, no matter what.

You said never.

Tinky , October 2, 2018 at 3:30 pm

Yes I did. I was simply being lazy, as I typically do add "except via hyperflation", when discussing debts that can only be repaid in that manner.

That "solution" is obviously no solution at all, as it would lead to chaos.

Interpret it any way that you wish.

todde , October 2, 2018 at 11:37 am

So what is the new solution proposed by 'gold bugs'?

Tinky , October 2, 2018 at 2:06 pm

I'm sure that there is no one solution proposed, though an alternative to the current system which seems plausible would be a currency backed by a basket of commodities, including gold.

todde , October 2, 2018 at 2:26 pm

and when commodity prices fluctuate you will still have government printing and eliminating money to maintain the price.

I would say, if that was the argument, stick to gold as it is one of the more stable commodities.

AlexHache , October 2, 2018 at 11:43 am

Can I ask what your solution would be? I don't think you've mentioned it.

HotFlash , October 2, 2018 at 1:08 pm

Hi Tinky, much late but still. Gold will have value as long as people believe it has value. But what will they trade it for? The bottom line is your life.

I don't have any gold, too expensive, and it really has no use. But I remember Dimitri Orlov's advice : I am long in needles, pins, thread, nails and screws, drill bits, saws, files, knives, seeds, manual tools of many sorts, mechanical skills and beer recipes. Plus I can sing.

Bridget , October 2, 2018 at 1:31 pm

Don't forget a nice supply of 30 year old single malt scotch!

Tinky , October 2, 2018 at 2:04 pm

The vast majority of people who hold physical gold are well aware of the value of having skills and supplies, etc., in case of a serious meltdown. But it's not a zero-sum game, as you suggest. Gold will inexorably rise sharply in value when today's fraudulent markets crash, and there will be plenty of opportunities for those who own it to trade it for other assets.

Furthermore, as previously mentioned, gold's utility is already on full display, to those who are paying attention, and not looking myopically through a USD lens.

Wukchumni , October 2, 2018 at 2:19 pm

Why not the GOILD standard?, one mineral moves everything, while the other just sits around gathering dust, after being extracted.

David Swan , October 2, 2018 at 2:28 pm

"Mountains of debt that can never be repaid" is a propaganda statement with no reference to any economic fact. Why do you feel that this "debt" needs to be "repaid"? It is simply an accounting artifact. The "debt" is all of the dollars that have been spent *into* the economy without having been taxed back *out*. The word "debt" activates your feels, but has no intrinsic meaning in this context. Please step back from your indoctrinated emotional reaction and understand that the so-called national "debt" is nothing more than money that has been created via public spending, and "repaying" it would be an act of destruction.

WobblyTelomeres , October 2, 2018 at 3:27 pm

THIS!!!

I keep telling (boring, annoying, infuriating) people that, in the simplest terms, the national debt is the money supply and they won't grasp that simple declaration. When I said it to my Freedom Caucus congress critter (we were seated next to each other on an exit aisle) his head started spinning, reminding me of Linda Blair in The Exorcist.

Tinky , October 2, 2018 at 3:44 pm

The debt may not have to be repaid, but the interest does have to be serviced. Good luck with that in the long run.

WobblyTelomeres , October 2, 2018 at 4:18 pm

As I said to my congress critter, if the debt bother's y'all so much, why not just pay it off, dust off your hands, and be done with it?

Personally, if I were President for a day, I'd have the mint stamp out 40 or so trillion dollar platinum coins just to fill the top right drawer of the Resolute desk. Would give me warm fuzzy feelings all day long.

p.s. I also told him that the man with nothing cares not about inflation. He didn't like that either.

MisterMr , October 2, 2018 at 8:46 am

"those, some of whom are quite sophisticated, who believe that currencies should be backed by something of tangible value (and no, "the military" misses the point), or those who hold physical gold as an insurance policy against political incompetence, and the inexorable degradation of fiat currencies"

I suspect that Wray exactly means that these people are the goldbugs, not the ones who speculate on gold.

The whole point that currencies should be backed by something of tangible value IMO is wrong, and I think the MMTers agree with me on this.

Tinky , October 2, 2018 at 9:56 am

If so, then he should clarify his position, as again, lumping the billions – literally – of people who consider gold to be economically important, together as one, is disingenuous.

skippy , October 2, 2018 at 3:55 pm

I think people that consider gold to be a risk hedge understand its anthro, per se an early example of its use was a fleck of golds equal weight to a few grains of wheat e.g. the gold did not store value, but was a marker – token of the wheat's value – labour inputs and utility. Not to mention its early use wrt religious iconography or vis-à-vis the former as a status symbol. Hence many of the proponents of a gold standard are really arguing for immutable labour tokens, problem here is scalability wrt high worth individuals and resulting distribution distortions, unless one forwards trickle down sorts of theory's.

Not to mention in times of nascent socioeconomic storms many that forward the idea of gold safety are the ones selling it. I think as such the entire thing is more a social psychology question than one of factual natural history e.g. the need to feel safe i.e. like commercials about "peace of mind". I think a reasonably stable society would provide more "peace of mind" than some notion that an inanimate object could lend too – in an atomistic individualistic paradigm.

WobblyTelomeres , October 2, 2018 at 4:26 pm

I once had an co-worker that was a devout Christian. When he realized I wasn't religious, he asked me, incredulously, how I was able to get out of bed in the morning. Meaning, he couldn't face a world without meaning.

I think a lot of people feel that same way about money. They fight over it, lie for it, steal it, kill for it, go to war over it, and most importantly, slave for it. Therefore, it must have intrinsic value. I think gold bugs are in this camp.

Fried , October 2, 2018 at 6:06 am

Talking about Warren's blog ( http://moslereconomics.com/ ), everytime I try to go there, Cloudflare asks me to prove that I am human. Anyone know what's up with that? It's the only website I've ever seen do that.

Tinky , October 2, 2018 at 6:13 am

No such prompt for me (using Mac desktop computer, OS 10.11.6 and Safari browser.

Fried , October 2, 2018 at 7:35 am

Thanks. It seems to be blocking my IP address, no idea why. Not sure why I have to be human to look at a website.

Epistrophy , October 2, 2018 at 8:46 am

Try running your IP address through a blacklist checker maybe it's been flagged

Fried , October 2, 2018 at 10:03 am

Hm, I can't find anything that would explain it. Maybe the website just generally blocks Austrians. ;-)

el_tel , October 2, 2018 at 10:10 am

That's a good suggestion. Unfortunately, as I sometimes find, you can pass ALL the major test-sites but something (a minor, less-used site using out-of-date info?) can give you grief. NC site managers once (kindly) took the time to explain to me why I might have problems that they had no ability to address at their end. I had to muck around with a link given earlier to Bill Mitchell's blog before my browser would load it.
I think there can be quirks that are beyond our control (unfortunately) – for instance I think a whole block of IP addresses (including mine) used by my ISP have been flagged *somewhere* – no doubt due to another customer doing stuff that the checker(s) don't like. (The issue I mentioned above was more likely due to a strict security protocol in my browser, however.)

kgw , October 2, 2018 at 11:57 am

I ended up physically typing in the url to Bill Mitchell's blog: that worked.

el_tel , October 2, 2018 at 12:43 pm

yeah think that's what I did

larry , October 2, 2018 at 6:45 am

Monetary policy in terms of interest rates is not just weak, it also tends to treat all targets the same. Fiscal policy can be targetted to where it is felt it can do the most good.

William Beyer , October 2, 2018 at 7:00 am

Christine Desan's book, "Making Money," exhaustively documents the history of money as a creature of the state. Recall as well that creating money and regulating its value are among the enumerated POWERS granted to our government by we, the people. Money, indeed, is power.

Grumpy Engineer , October 2, 2018 at 8:26 am

Hmmm Randy Wray states that " permanent Zirp (zero interest rate policy) is probably a better policy since it reduces the compounding of debt and the tendency for the rentier class to take over more of the economy. "

But just last week, Yves stated that " that one of the consequences of the protracted super-low interest rate regime of the post crisis era was to create a world of hurt for savers, particularly long-term savers like pension funds, life insurers and retirees. " [ https://www.nakedcapitalism.com/2018/09/crisis-caused-pension-train-wreck.html ]

So are interest rates today too high, or too low? We're getting mixed messages here.

IMO, interest rates are too low . Beyond the harmful effect to savers, it also drives income inequality . How? When interest rates are less than inflation, it is trivial to borrow money, buy some assets, wait for the assets to appreciate, sell the assets, repay the debt, and still have profit left over even after paying interest . Well, it's trivial if you're already rich and have a line of credit that is both large and low-interest. If you're poor with a bad FICO score, you don't get to play the asset appreciation game at all.

I can't think of another reason inequality skyrocketed so badly during the Obama years: https://www.newsweek.com/2013/12/13/two-numbers-rich-are-getting-richer-faster-244922.html . Other than interest rates, his policies weren't all that different from Clinton or Bush.

Tinky , October 2, 2018 at 10:38 am

Not to mention that interest rates are designed to reflect risk . Artificially suppressed rates mask risk, and inevitably lead to gross malinvestment.

todde , October 2, 2018 at 12:31 pm

The rates between riskier and less risky borrowers will still be reflected in the different rates given to each.

The low rates encourage greater risk taking to increase the reward(a higher rate of return). This is what leads to the gross malinvestment.

Case in point: the low rates led to more investments into the stock market, where the returns are unlimited. This is what led to the income inequality of Obama's term, as mentioned above.

todde , October 2, 2018 at 3:07 pm

if government creates money to lend to borrowers it should be at a zero interest rate.

The loans would be based on public policy decisions, and not business decisions.

HotFlash , October 2, 2018 at 1:36 pm

I cannot speak for Yves, nor or Randy, but IMO, interest rates are too low for people who depend on interest for their living -- as an old person, I have seen my expected income drop to about zilch when I had expected 7 to 10% on my savings. Haha! So yeah, too low for us who saved for 'retirement'.

Too high for people financing on credit, since a decent mortgage on a modestly-priced house will cost you almost the same as the house . And that doesn't even begin to look at unsecured consumer credit (ie, credit card debt), which is used in the US and other barbaric countries for medical expenses, not to mention student debt. The banks can create the principal with their keystrokes, but they don't create the interest. Where do you suppose that comes from? Hint: nowhere, as in foreclosures and bankruptcies.

Adam1 , October 2, 2018 at 3:12 pm

Wray's statement reflects his preferences from an operational policy perspective. Sovereign government debt cares no risk and therefore should not pay interest. The income earned from that interest is basically a subsidy and all income when spent caries a risk of inflation induced excess demand. Therefore who unnecessarily add the risk to the economy and potential risk needing to reduce other policy objectives to accommodate unnecessary interest income subsidies to mostly rich people?

Yves comment reflects the reality of prior decades of economic history. Even if Wray's policy perspective is optimal, there are decades of people with pensions and retirement savings designed around the assumption of income from risk-free government debt. It's this legacy that Yves is commenting on and is a real problem that current policy makers are just ignoring.

As for your comments on how low cost credit can be abused, I believe you'll find most MMT practitioners would recommend far more regulation on the extension of credit for non-productive purposes.

michael hudson , October 2, 2018 at 8:38 am

I just wrote a note to Randy:
The origin of money is not merely for accounting, but specifically for accounting for DEBT -- debt owed to the palatial economy and temples.
I make that clear in my Springer dictionary of money that will come out later this year: Origins of Money and Interest: Palatial Credit, not Barter

horostam , October 2, 2018 at 8:57 am

The Babylonian Madness is contagious thanks prof hudson

gramsci , October 2, 2018 at 9:22 am

Can somebody help me out here? It seems to me that the US macroeconomic policy has been operating under MMT at least since FDR (see for example Beardsley Ruml from 1945).

Since then, insofar as I understand MMT, fiat has been printed and distributed to flow primarily through the MIC and certain other periodically favored sectors (e.g. the Interstate Highway System). Then, rather than destroying this fiat through taxation, the sectoral balances have been kept deliberately out of balance: Taxes on unearned income have been almost eliminated with an eye to not destroying fiat, but to sequestering as much as possible in the private hands of the 1%. This accumulating fiat cannot be productively invested because that would cause overproduction, inflation, and reduce the debt burden by which the 1% retains power over the 99%. So the new royalists, as FDR would have styled them, keep their hoard as a war chest against "socialists".

I get all this, more or less, and I appreciate that it is well and good and important that MMTers insistently point out that the emperor has no clothes. This is a necessary first step in educating the 99%.

But I don't see MMT types discussing the fact that US (and NATO) macroeconomic policy already has a Job Guarantee: if you don't want to work alongside undocumented immigrants on a roof or in a slaughterhouse or suffer the humiliation of US welfare, such as it is, you can always get a job with the army, or the TSA, or the police, or as a prison guard, or if you have some education, with a health unsurance company or pushing drone buttons. You only have to be willing to follow orders to kill–or at least help to kill–strangers.

(Okay, perhaps I overstate. If you're a medical doctor or an "educator" with university debt you don't have to actively kill. You can decline scant Medicaid payments and open a concierge practice, or you can teach to the test in order that nobody learns anything moral.)

It is difficult to get a man to understand something, when his salary depends on his not understanding it. Wouldn't it be clarified matters if MMTers acknowledged that we already have a JG?

Wukchumni , October 2, 2018 at 12:50 pm

We have been operating on MMT since the end of WW2, with 2 exceptions in 1968 when Silver Certificate banknotes no longer were redeemable for silver, and in 1971 when foreign central banks (not individuals!) weren't allowed to exchange FRN's for gold @ $35 an ounce anymore.

It's been full on fiat accompli since then and to an outsider looks absurd in that money is entirely a faith-based agenda, but it's worked for the majority of all of lives, so nobody squawks.

It's an economic "the emperor has no clothes" gig.

HotFlash , October 2, 2018 at 1:54 pm

It seems to me that the US macroeconomic policy has been operating under MMT at least since FDR (see for example Beardsley Ruml from 1945).

Yup, you are correct, IMO. And about the jobs guarantee, too. The point of MMT is not that we have to adopt, believe in, or implement it, but that *this is how things work* and we need to get a %&*^* handle on it *STAT* or they will ride it and us to the graveyard. The conservatives and neo-cons are already on to this, long-time.

I believe the chant is:

We can have anything we want that is available in our (sovereign) currency and for which there are resources

What we get depends on what we want and how well we convince/coerce our 'leaders' to make it so.

David Swan , October 2, 2018 at 2:43 pm

JG is geared toward community involvement to create an open-ended collection of potential work assignments, not top-down provision of a limited number of job slots determined by bureaucrats on a 1% leash.

Wukchumni , October 2, 2018 at 9:31 am

About every 80 years, there has been a great turning in terms of money in these United States

Might as well start with 1793 and the first Federal coins, followed in 1861 by the first Federal paper money, and then the abandonment of the gold standard (a misnomer, as it was one of many money standards @ era, most of them fiat) in 1933.

We're a little past our use-by date for the next incarnation of manna, or is it already here in the guise of the great giveaway orchestrated since 2008 to a selected few?

Adam1 , October 2, 2018 at 9:40 am

After learning MMT I've occasionally thought I should get a refund for the two economics degree's I originally received. One of the primary mainstream teachings that I now readily see as false is the concept of money being a vale over a barter economy. It's lazy, self-serving analysis. It doesn't even pass a basic logical analysis let alone archeological history. Even in a very primitive economy it would be virtually impossible for barter to be the main form of transaction. The strawberry farmer can't barter with the apple farmer. His strawberries will be rotten before the apples are ripe. He could give the apple farmer strawberries in June on the promise of receiving apples in October, but that's not barter that's credit. The apple farmer could default of his own free will or by happenstance (he dies, his apple harvest is destroyed by an act of god, etc ). How does the iron miner get his horse shoed if the blacksmith needs iron before he can make the horse show? Credit has to have always been a key component of any economy and therefore barter could never have been the original core.

HotFlash , October 2, 2018 at 2:00 pm

After learning MMT I've occasionally thought I should get a refund for the two economics degree's I originally received.

Agreed. Richard Wolff notes that in most Impressive Universities there are two schools, one for Economics (theory) and another for Business (practice). Heh. I say, go for the refund, you was robbed.

Wukchumni , October 2, 2018 at 10:11 am

Take Indians for instance

All the Rupee* has done over time is go down in value against other currencies, and up in the spot price measured in Rupees even as gold is trending down now, and that whole stupid demonetization of bank notes gig, anybody on the outside of the fiat curtain looking in, had to be laughing, and ownership there is no laughing matter, as it's almost a state financial religion, never seen anything like it.

* A silver coin larger than a U.S. half dollar pre-post WW2, now worth a princely 1.4 cents U.S.

Chauncey Gardiner , October 2, 2018 at 12:34 pm

Not an economist, but I appreciate both the applicability of MMT and the fierce, but often subtle resistance its proponents have encountered academically, institutionally and politically. However, I have questioned to what extent MMT is uniquely applicable to a nation with either a current account surplus or that controls access to a global reserve currency.

How does a nation that is sovereign in its own currency, say Argentina for example (there are many such examples), lose 60 percent of its value in global foreign exchange markets in a very short time period?

Is this due primarily to private sector debts denominated in a foreign currency (and if so, what sectors of the Argentine economy undertook those debts, for what purposes, and to whom are they owed?), foreign exchange market manipulation by external third parties, the effective imposition of sanctions by those who control the global reserve currency and international payments system, or some combination of those or other factors?

Mel , October 2, 2018 at 12:53 pm

Michael Hudson described some of it earlier this year:
https://www.nakedcapitalism.com/2018/07/michael-hudson-argentina-gets-biggest-imf-loan-history.html

Rodger Malcolm Mitchell , October 2, 2018 at 3:48 pm

All hyperinflations are caused by shortages, usually shortages of food. See: https://mythfighter.com/2018/08/27/ten-answers-that-are-contrary-to-popular-wisdom/

There is no avoiding bad government.

PKMKII , October 2, 2018 at 1:57 pm

MMT makes more sense than orthodox neoliberal accounts of currency and sovereign spending to me, as it does a better job of acknowledging reality. MMT recognizes that currency is an artifice and that imagined limitations on it are just that, and real resources are the things which are limited. Neoliberal economics acts as if all sorts of byzantine factors mean currency must be limited, but we can think of resources, and the growth machine they feed, as being infinite.

Rodger Malcolm Mitchell , October 2, 2018 at 3:41 pm

"Taxes or other obligations (fees, fines, tribute, tithes) drive the currency."

Specifically, what does "drive" mean? Does it mean:
1. When taxes are reduced, the value of money falls?
2. If taxes were zero, the value of money would be zero?
3. Cryptocurrencies, which are not supported by taxes, have no value?

"JG is a critical component of MMT. It anchors the currency and ensures that achieving full employment will enhance both price and financial stability."

Specifically, what do "anchors" and "critical component" mean? Do they mean:
1. Since JG does not exist, the U.S. dollar is unanchored and MMT does not exist?
2. Providing college graduates with ditch-digging jobs enhances price and financial stability?
3. Forcing people to work is both morally and economically superior to giving them money and benefits?

Grebo , October 2, 2018 at 4:20 pm

"Drive" means "creates initial demand for":
1. No, not for an established currency.
2. See 1.
3. Crypto is worth what you can buy with it.

"Anchors" means it acts against inflation and deflation. "Critical component" means the economy works better if it has it.
1. Yes and no.
2. Yes, if no-one else will hire them.
3. No element of force is implied.

[Sep 29, 2018] Steve Keen How Economics Became a Cult

Highly recommended!
Notable quotes:
"... I still find it incredible that this video by Samuelson essentially acknowledging that a key part of his multi-decade "core" textbook is religion, not science, is not more widely shared. ..."
Sep 29, 2018 | www.nakedcapitalism.com

Steve Keen of Kingston University, London gives an important high-level talk on the considerable shortcomings of mainstream economics. Keen argues that a major objective of the discipline is to justify the virtues of markets, which in turn leads them to adopt a strongly ideological posture along with highly simplified models and narrow mathematical approaches to reach conclusions that they find acceptable.

Keen has many informative asides, like the introductory level texts he used in the 1970s were more advanced than many graduate level guides.

https://www.youtube.com/embed/JeplRmADW3E


el_tel , September 29, 2018 at 7:09 am

I still find it incredible that this video by Samuelson essentially acknowledging that a key part of his multi-decade "core" textbook is religion, not science, is not more widely shared.

OK the person who constructed the complete youtube vid has typos etc and editing probably didn't help the cause. but still

[Sep 22, 2018] Transphobic Swedish Professor May Lose Job After Noting Biological Differences Between Sexes

Looks like Lysenkoism got a second life in the West...
Sep 22, 2018 | theduran.com

A university professor in Sweden is under investigation after he said that there are fundamental differences between men and women which are "biologically founded" Published

1 day ago

on

September 21, 2018 By

Tyler Durden 1,539 Views ,

[Sep 07, 2018] Neomodernism - Wikipedia

Highly recommended!
Sep 07, 2018 | en.wikipedia.org

Ágnes Heller

Ágnes Heller's work is associated with Moral Anthropology and "probing modernity's destiny for a non-predatory humanism that combines the existential wisdom of ancient theory with modern values." [1]

Neomodernism accepts some aspects of postmodernism's critique of modernism, notably that modernism elevated the world view of dominant groups to the status of objective fact, thereby failing to express the viewpoint of " subaltern groups," such as women and ethnic minorities. However, in her view, neomodernism rejects postmodernism as:

Victor Grauer

In 1982, Victor Grauer attacked "the cult of the new," and proposed that there had arisen a "neo-modern" movement in the arts which was based on deep formal rigor, rather than on "the explosion of pluralism." [2] His argument was that post-modernism was exclusively a negative attack on modernism, and had no future separate from modernism proper, a point of view which is held by many scholars of modernism. [2]

Carlos Escudé

In "Natural Law at War", a review essay published on 31 May 2002 in The Times Literary Supplement (London, TLS No. 5174), Carlos Escudé wrote: "Postmodern humanity faces a major challenge. It must solve a dilemma it does not want to face. If all cultures are morally equivalent, then all human individuals are not endowed with the same human rights, because some cultures award some men more rights than are allotted to other men and women. If, on the other hand, all men and women are endowed with the same human rights, then all cultures are not morally equivalent, because cultures that acknowledge that 'all men are created equal' are to be regarded as 'superior,' or 'more advanced' in terms of their civil ethics than those that do not." Escudé's brand of neomodernism contends with "politically-correct intellectuals who prefer to opt for the easy way out, asserting both that we all have the same human rights and that all cultures are equal."

Andre Durand and Armando Alemdar

Published their own Neomodernist Manifesto in 2001. The Neomodern Manifesto posits criteria for a revitalised approach to works of art founded on history, traditional artistic disciplines, theology and philosophy. Durand's and Alemdar's Neomodernism views art as an act of expression of the sublime; in Neomodern painting as a representation of the visual appearance of things with correspondence to the physical world understood as a model for beauty, truth, and good. Neomodern works of art via mimesis interpret and present the universe and man's existence, in line with the belief that the reality we live is but a mirror of another universe that can only be accessed through inspiration and imagination.

Gabriel Omowaye

Gabriel Lolu Omowaye, in his speech 'A new challenging time' to a group of college students in Nigeria, in 2005, took a different approach to neomodernism. He viewed neomodernism as a political philosophy that became more prominent in the early 21st century. To him, it involves common goal and joint global effort - universalism - to address arising global challenges such as population growth, natural resources, climate change and environmental factors, natural causes and effects, and health issues. Omowaye posited that political will is the major driver of economic necessities. As a result, he added that neomodernism involves limited government-regulated liberalism along with high drive innovation and entrepreneurship, high literacy rate, progressive taxation for social equity, philanthropism, technological advancement, economic development and individual growth. He perceived the quest for equal representation of men and women in the neomodern era as a strong signal for advent of postmodernism. So also, the quest for youths engagement in resourceful and rewarding ways especially in governance, peace building and self-productivity has not taken a formidable shape than it is at this time. As far as he was concerned, he believed most of these challenges were not adequately tackled in preceding eras and the arising challenges thus stated were not prepared for and that cause for change in mentality and thinking which the neomodern era is providing for solutions to the era's challenges, with a prospective view to global stability and social inclusion. His philosophical thought premised on a fact that new times require new approaches from new reasonings, even if some applicable ideas or methologies could be borrowed from the past, an acute form of paradigm-shift.

Omowaye believed in idealism as guiding realism and in turn, realism as defining idealism. Moral concepts cannot be wished away from social norms, but evolving social trends dissipate morality in form of religion and logical standards and adheres to current norms in form of 'what should be'. Consequently, the manner at which 'what should be' is driven at in the modern and postmodern eras, being widely accepted became 'what is'. The manner at which the damage of the new 'what is' is hampering development process in the form of higher mortality rate and decadence of cultural good, calls to question the ideology behind the norms that are less beneficial to a wider society in form of globalization. The world as a whole through technological advancement became a global community particularly, in the 21st century. Former Secretary General of the United Nations, Kofi Annan then stated that the "suffering anywhere concerns people everywhere". Champions of neomodern age such as Bill Gates and Richard Branson in the field of philanthropy expounded their vision to encompass the global community in social good such as alleviating poverty, eradicating diseases, enhancing literacy rates and addressing climate changes.

Technological advancement of the neomodern era however has its downturns in that it added to the decadence in cultural good such that people everywhere, especially high number of youths follow the trends in the new 'what is', which include social celebrities in the form of dressing, sexual activities, extravagancies, and less interest in learning and even, working but more interest in making money. Money became a value-determinant than utility. This brought about frauds in various sectors. This latter aspect is not limited to youths but even company executives, and politicians of many societies. Technological advancement has made privacy less safer for intrusion and people more safer for protection. The supposedly good of technological advancement in the neomodern era has included whistle blow such as Wikileaks' Julian Assange. The more good has been in the level of innovations and innovators it has sprung up such as Facebook's Mark Zuckerberg and easier business models and broader social connectivity. This latter part has lessened more amity in immediate environment and many people tend to live more in the virtual world neomodern technological advancements have created.

Neomodernism checks more into the current relative way of living of people and the society to correct necessary abnormalities and to encourage virtues and values within the global community in the 21st century.

In furtherance, Gabriel Omowaye's view of neomodernism was that knowledge comes from learning and experience, and wisdom primarily from intuition. Knowledge is a variable of set occurrences of that which happens to a man and that which a man seeks to know. Knowledge is vital and good for discretion but a minor part of discernment wherein what is known might not be applicable. Intuition is a function of the mind and the mind, not seen, and yet unknown to the carrier, is a function of what put the thoughts, ideas and discretion in it. Wisdom without knowledge is vague, and knowledge without wisdom, unworthy. Wisdom perfects knowledge, and in the absence of either, the sole is delusory.

[Aug 28, 2018] South Africa is cursed with neo-liberal trickle-down baloney stifling radical economic change by Kevin Humphrey

Notable quotes:
"... There is consensus between commentators who have studied the effects of neo-liberalism that it has become all pervasive and is the key to ensuring that the rich remain rich, while the poor and the merely well to do continue on a perpetual hamster's wheel, going nowhere and never improving their lot in life while they serve their masters. ..."
"... Monbiot says of this largely anonymous scourge: "Attempts to limit competition are treated as inimical to liberty. Tax and regulations should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous, a reward for utility and a genera-tor of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve." ..."
"... Senior cadres co-opted Unfortunately, history shows that some key senior cadres of the ANC were all too keen to be coopted into the neo-liberal fold and any attempts to put forward radical measures that would bring something fresh to the table to address the massive inequalities of the past were and continue to be kept off the table and we are still endlessly fed the neo-liberal trickle-down baloney. ..."
medium.com

SA is cursed with neo-liberal trickle-down baloney stifling radical economic change Kevin Humphrey, The New Age, Johannesburg, 1 December 2016

South Africa's massive inequalities are abundantly obvious to even the most casual observer. When the ANC won the elections in 1994, it came armed with a left-wing pedigree second to none, having fought a protracted liberation war in alliance with progressive forces which drew in organised labour and civic groupings.

At the dawn of democracy the tight knit tripartite alliance also carried in its wake a patchwork of disparate groupings who, while clearly supportive of efforts to rid the country of apartheid, could best be described as liberal. It was these groupings that first began the clamour of opposition to all left-wing, radical or revolutionary ideas that has by now become the constant backdrop to all conversations about the state of our country, the economy, the education system, the health services, everything. Thus was the new South Africa introduced to its own version of a curse that had befallen all countries that gained independence from oppressors, neo-colonialism.

By the time South Africa was liberated, neo-colonialism, which as always sought to buy off the libera-tors with the political kingdom while keep-ing control of the economic kingdom, had perfected itself into what has become an era where neo-liberalism reigns supreme. But what exactly is neo-liberalism? George Monbiot says: "Neo-liberalism sees competi-tion as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that 'the market' delivers benefits that could never be achieved by planning."

Never improving

There is consensus between commentators who have studied the effects of neo-liberalism that it has become all pervasive and is the key to ensuring that the rich remain rich, while the poor and the merely well to do continue on a perpetual hamster's wheel, going nowhere and never improving their lot in life while they serve their masters.

Monbiot says of this largely anonymous scourge: "Attempts to limit competition are treated as inimical to liberty. Tax and regulations should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous, a reward for utility and a genera-tor of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve."

Nelson Mandela

South Africa's sad slide into neo-liberalism was given impetus at Davos in 1992 where Nelson Mandela had this to say to the assembled super rich: "We visualise a mixed economy, in which the private sector would play a central and critical role to ensure the creation of wealth and jobs. Future economic policy will also have to address such questions as security of investments and the right to repatriate earnings, realistic exchange rates, the rate of inflation and the fiscus."

Further insight into this pivotal moment was provided by Anthony Sampson, Mandela's official biographer who wrote: "It was not until February 1992, when Mandela went to the World Economic Forum in Davos, Switzerland, that he finally turned against nationalisation. He was lionised by the world's bankers and industrialists at lunches and dinners."

This is not to cast any aspersions on Mandela, he had to make these decisions at the time to protect our democratic transition. But these utterances should have been accom-panied by a behind the scenes interrogation of all the ANC's thoughts on how to proceed in terms of the economy delivering socialist orientated solutions without falling into the minefield of neo-liberal traps that lay in wait for our emerging country.

Senior cadres co-opted Unfortunately, history shows that some key senior cadres of the ANC were all too keen to be coopted into the neo-liberal fold and any attempts to put forward radical measures that would bring something fresh to the table to address the massive inequalities of the past were and continue to be kept off the table and we are still endlessly fed the neo-liberal trickle-down baloney.

Now no one dares to express any type of radical approach to our economic woes unless it is some loony populist. Debate around these important issues is largely missing and the level of commentary on all important national questions is shockingly shallow.

Anti-labour, anti-socialist, anti-poor, anti-black The status quo as set by the largely white-owned media revolves around key neo-liberal slogans mas-querading as commentary that is anti-labour, anti-socialist and anti-poor, which sadly translates within our own context as anti-black and therefore repugnantly racist.

We live in a country where the black, over-whelmingly poor majority of our citizens have voted for a much revered liberation movement that is constantly under attack from within and without by people who do not have their best interests at heart and are brilliant at manipulating outcomes to suit themselves on a global scale.

Kevin Humphrey is associate executive editor of The New Age

[Aug 27, 2018] Chemically induced fanaticism. We have no idea which of our 'opinion leaders' have undergone such antidepressant induced change

Notable quotes:
"... Further to my idea, what distinguishes the person on antidepressants is the complete self assurance with which they say the most ridiculous things. ..."
"... If one in ten people use the drugs, and more than one in ten higher up the social ladder, then each of us deals every day with someone who looks normal but displays chemically induced fanaticism. ..."
Aug 27, 2018 | www.unz.com

Gordon Pratt , says: July 23, 2018 at 6:23 pm GMT

@AnonFromTN

Thank you for replying to my post.

And you may be right. Scam artists know how easy it is to convince a mark of something silly once the mark has dollar signs in his eyes.

Further to my idea, what distinguishes the person on antidepressants is the complete self assurance with which they say the most ridiculous things. It is that inability to say "I could be wrong, but " which is the giveaway plus of course the unquestioning belief they are right.

If one in ten people use the drugs, and more than one in ten higher up the social ladder, then each of us deals every day with someone who looks normal but displays chemically induced fanaticism.

A chap I have known for forty years used to be shy, sensitive, well-read and funny. Now he is spending his retirement playing World of Warcraft and has nothing to say. Big Pharma says antidepressants turn introverts like him into extroverts. In fact the drugs have turned him into a jerk.

We have no idea which of our 'opinion leaders' have undergone a similar change.

[Jul 19, 2018] Axiom of Uncertainty by Dan Corjescu

Notable quotes:
"... secular hubris. ..."
"... axiom of uncertainty ..."
"... explanations about everything ..."
"... axiom of uncertainty ..."
"... Indeed, although knowledge is power,; true, absolute knowledge may be unattainable and thus call forth, even demand an attitude of deep humility with respect to the true nature of the universe as a whole and a sharply critical stance towards all publicly held theories, beliefs, and viewpoints. ..."
Jul 10, 2018 | www.counterpunch.org

It's simple. Given that there might well be an absolute nature/structure of the universe and our perhaps fundamentally limited cognitive position/abilities within it can we be certain that we can be sure about the true nature of anything? Can there be fundamental forces, matter, and material relationships of which we will never know?

While unanswerable in principle, the mere possibility of such an epistemological situation has many consequences.

Firstly, it considerably lets out the air out of our current secular hubris.

Science and technology have given us what is perhaps a false impression of our own cognitive and technical omnipotence. While we rightly marvel at what we have achieved during the last five centuries, it does not necessarily give us the right to think that we can, even theoretically, master and understand all that there is.

Would it be so far fetched to think that the human mind, both as it is now and will be in the future, will always be limited in what it can know?

Although we cannot even judge the actual probability of such a proposition it should nevertheless give us pause while constructing brash anthropocentric scenarios which inflate our own importance within the universe.

If we stop to consider the possible theoretical implications of this axiom of uncertainty we will quickly realize that we may never know more than a part, even just a small part of existence past, present, and future.

Of course that does not mean we should stop trying to know all we can.

On the other hand, it does mean that we should be far more circumspect when offering explanations about everything whether scientific, political, or religious.

In each of these domains, we may, it might turn out, be far off the mark.

Yet, the deeper point is that according to the above axiom we can never know for sure.

Do such thoughts open the door then to superstition and fantastical ideas of all kinds?

Yes and no.

Privately, one can believe in whatever one wants to.

However, publicly, the commonly accepted standards of reason, logic, and evidence would still apply.

In order for a proposition such as "Three-eyed pink giraffes eat hamburgers on Titan" to be even remotely true there would have to be substantial scientific research to back it up.

Yet, even if there is credible evidence for totalistic viewpoints of any kind the axiom of uncertainty can always, potentially, call them into question. For if there are indeed fundamental aspects of existence that are forever closed off to us; then it follows that no comprehensive theory of everything could be completely and forever considered true. Such an axiom will always allow for some doubt, however small, to remain.

Indeed, although knowledge is power,; true, absolute knowledge may be unattainable and thus call forth, even demand an attitude of deep humility with respect to the true nature of the universe as a whole and a sharply critical stance towards all publicly held theories, beliefs, and viewpoints.

[Jul 06, 2018] Are there certain things that can't be questioned in a given society, without the risk of destruction of this society?

Sergey Krueger is wrong about questioning of gender roles. That comes from the necessity to to have an identity wedge during neoliberal period of the USA society.
Jul 06, 2018 | www.unz.com

Sergey Krieger , June 16, 2018 at 9:42 am GMT

@Rurik

Well, you put it yourself. Liberalism as is it was during the Enlightenment was questioning all dogmas and everything that is considered normal here we have a double aged sword. When and what you stop questioning and reasoning about logic of certain things.

Logically they started with kings and after all things were questioned they came now to roles of males and females, sex, gender and god forbids where this can takes us.

There are certain things that cannot be questioned for society to have a back bone. A moral and cultural one. Otherwise things turn the way they are now. There is nothing sacred and everything can be questioned and reasoned about.

[Jun 28, 2018] Koch Money and the Unflappable Economist naked capitalism

Notable quotes:
"... By Philip E. Mirowski, Carl Koch Chair of Economics and the History and Philosophy of Science, University of Notre Dame. Originally published at the Institute for New Economic Thinking website ..."
"... Inside Job ..."
"... Philosophy. The neoliberal PR campaign of 'the market is the ultimate and true arbiter of all' has all the appearance of a regression to what I can only call inverted marxist dialectical-materialism as espoused by the old soviets; where anything, even scientific findings, that threatened the supremacy of the doctrine's claim of economic inevitability, was suppressed. ( No wonder the old soviet finally collapsed. ) The neoliberals substitutes a sort of libertarian dialectical-materialism that requires suppression of any theory that contradicts their claim of 'market infallibility' and inevitability. This is dogma, not science or even economics. ..."
Jun 27, 2018 | www.nakedcapitalism.com

Koch Money and the Unflappable Economist Posted on June 27, 2018 by Yves Smith By Philip E. Mirowski, Carl Koch Chair of Economics and the History and Philosophy of Science, University of Notre Dame. Originally published at the Institute for New Economic Thinking website

At the beginning of May 2018, there was a brief furor over donations from Koch family-affiliated philanthropies to fund the Mercatus Institute and the newly-named Antonin Scalia School of Law at George Mason University (GMU). Although articles concerning the admirable efforts of the GMU student organization UnKoch My Campus appeared in many of the prominent news outlets, the attention span of journalists seemed to barely outpace that of interest in one of Donald Trump's tweets, with even less consequence. But more to the point, the silence of the economics profession concerning the revelations was pretty deafening. Briefly, I would like to revisit why this was so and why it matters.

The details of the controversy can be briefly summarized: the assortment of Koch family foundations and allied charitable cutouts (which some libertarians have dubbed the "Kochtopus," but will henceforth here be shortened to 'the Kochs') have been making targeted donations to more than 300 schools since 2005, predominantly to economics departments. But George Mason University has been the most lavishly favored, garnering more than a third of the estimated $150 million bequeathed to universities from 2005-2015. The event that stirred campus resistance at GMU was a massive donation of $10 million from the Kochs tied to a $20 million donation from an anonymous benefactor to rename the Law School after Antonin Scalia, "formally" earmarked for "student scholarships." The first thing one notices was the budgetary legerdemain which obscured the relationship between faculty selection and line items in budgetary terms. Thus, the GMU Provost S. David Wu could tell his Faculty Senate in April 2016 that the bequest came with "no strings attached The entire $30M is for scholarships for students and nothing else." This narrative might have prevailed, if not for the document dump by UnKoch My Campus at the end of April, [1] a result of a FOIA suit by Transparency GMU , which detailed the series of negotiations with the Kochs (including the overwhelming role of figures from the Federalist Society as intermediaries: another Koch funded arm), including stipulations of how designated representatives would have input into GMU hiring decisions. This forced GMU President Angel Cabrera to reverse earlier statements that existing donor arrangements had not been allowed to influence internal academic matters. This, in turn, was the trigger which attracted the national press. As Inside Higher Ed put it: "academic values have long held that donors don't get to pick who holds chairs, or evaluate them."

"It's now abundantly clear that the administration of Mason, in partnership with the Mercatus Center and private donors, violated principles of academic freedom, academic control and ceded faculty governance to private donors," said Bethany Letiecq, President of GMU's chapter of the AAUP. But this reaction might underestimate the scope of the problem, reducing it to a mere matter of moral integrity. I shall argue instead that this event has more structural underpinnings, touching upon the very conception of education in relation to markets, and involve some crucial aspects of economic theory.

Broadly speaking, economists greeted this controversy with a big yawn: this sort of thing happens all the time, so don't get your panties in a twist. Indeed, the Kochs have been making similar grants to many universities for more than a decade, as have other philanthropies. The attitude was that the GMU case was nothing special.

How do economists justify the unflappable lightness of their nonchalance?

First off, many opine that the donors don't really interfere in academic matters; it is just the optics that are less than optimal. There are some crucial details which mitigate this pronouncement when it comes to the GMU case, which are dealt with in a footnote. [2] Nevertheless, in general, most economists are quick to denounce the idea that there are subtle procedural moves attached to donations that substantially alter the practices of universities, as well as the composition of what is taught and researched.

Secondly, for most economists, there are no such things as conflicts of interest, at least when it comes to economic thinking. They regularly declare with ardor that no one is compromising their pronouncements or perverting their beliefs for money. Years ago, I documented this attitude with regard to the culpability of economists for the Great Crash of 2007-8, even in the face of embarrassments such as the scathing portrayal of certain figures in the documentary Inside Job , or the prospect of a code of ethics for economists by the American Economics Association (AEA), a point to which I will return. [3] In the GMU case, the prescription for disclosure was rejected -- hence the need for FOIA requests. The economists generally argued that the people involved had long ago settled upon their personal political beliefs; they were just being selected by the donors to provide a coherent curriculum in "free market doctrine." I shall argue below that this imprecision over the criteria of which doctrines have been selected allow this sense that the ecology of knowledge persists unaltered in the face of concerted Koch intervention.

Third, the orthodox economist would be inclined point out that all potential donors, just like all fledgling academics, possess their own prior interests and convictions, which will be subject to further selection one way or another. It is not the money that makes the difference in the larger scheme of things. As the late Craufurd Goodwin of Duke University used to say, "The only tainted money is the money that t'aint [ sic ] mine." In other words, the sociology of knowledge pretty much works independently of the wishes of any funders involved, since everyone is selfishly scrambling for support. Money as such never taints the well of human inquiry, or so most economists postulate. Of course, one's appreciation for this putative conservation rule might be qualified when one learns that Goodwin had himself been a Program Officer for European and International Affairs under McGeorge Bundy at the Ford Foundation during the Cold War. [4]

Finally, although they might not say this out loud in front of journalists, many economists tend to suspect that all the complaints about the Kochs are just sour grapes, an ideological reaction deriving from the wailers' disdain for the politics of the Koch brothers and their minions. After all, what's so suspicious about wanting to "rectify the bias" of academics hostile to free markets and freedom of speech? That sounds like something most economists would voluntarily support in any event, independent of whomever was fronting the funding. But, just as in the previous cases, this ignores the actual content of the doctrines that the Koch brothers, as well as that of many of their fellow travelers and cooperating philanthropists, [5] seek to promote through their initiatives.

It will come as no surprise to realize that public education is being brutally weaned from state support across the developed world in the recent past, and that private funding has been touted as the deliverance for cash-strapped universities. In this regard, it is pivotal to realize the significance of the fact that George Mason University is a public and not a private university. Far from being a mere shifting of sources of sustenance, this trend itself constitutes one of the prime prescriptions of the political doctrine that motivates the Kochs, namely, neoliberalism. [6] Neoliberalism shouldn't be confused with actual libertarianism; it is predicated upon intervention to bring about the types of government and markets that the neoliberals believe are necessary for the success of capitalism: it just won't happen by itself. One of their central doctrines relevant to the current controversy is their belief that an efficient market is one that processes and validates information, and conveys it to the appropriate agents when and where they need it. Human knowledge is thus first and foremost a market phenomenon.

A direct consequence of this doctrine is that the state should not control public education: the purpose of education is the personal accumulation of human capital, and not the creation of the common denominator of an educated citizenry. Hence many of the major figures of the Neoliberal Thought Collective -- Milton Friedman, James Buchanan, Charles Koch -- long ago proposed that education be "privatized" in most of its various manifestations. Knowledge is paltry if not put up for sale, as they see it. This is the major consideration which dictates that the points at issue at GMU and elsewhere are not merely some symmetrical offsetting response to left wing donations to universities; rather, the whole point of the Koch brothers' intervention is to produce a different kind of university , one which renders government-run education much more responsive to market signals and market dictates. It is a world where people of means can freely buy the kinds of doctrines that they wish to be conveyed to the young, without being coy or ambagious about it. Hence the Koch's doctrines and their philanthropic behaviors are tightly bound into a single package, displaying a coherence not found in the motives of lesser philanthropists. This explains why the Kochs are willing to conduct their negotiations with universities in secret, to carry out their stipulations through cutouts and hard to trace intermediaries and foundations, to package their offers with other rich (and anonymous) donors en banc and to impose conditions upon their bequests that effectively neutralize all previous principles of academic freedom in the long run.

There is a different implication of neoliberal conceptions of knowledge, and that extends to the ideas which constitute the microeconomic orthodoxy. Once information was introduced into the standard pricing model, it was discovered there was no single correct way to formalize epistemology. Through a sequence of different models, the profession moved from the agent as capable of super-cognition, to the portrait of the agent as a flawed vessel for knowledge, offset by a neoliberal notion of the market as super-information processor. [7] Truth became a function of the skewed and arbitrary ability to pay; and consequently, economists were deemed to have possessed superior wisdom concerning whom should get to know what under which circumstances. As self-appointed Engineers of the Human Soul, this reinforced their conviction that there was no need to worry about conflicts of interest, nor indeed, about the increasing prevalence of unashamed mendacity and fake news. [8] Thus, the Koch interventions were therefore regarded as essentially harmless.

Of course, economists would be most interested in the ways this promotes the careers of other economists, but the ambitions of the neoliberal thought collective extends well beyond the social sciences, even unto the realm of the natural sciences. Neoliberalism is supremely hostile to expertise, which is the flip side of its hostility to old-school universities. Hayek denounced intellectuals as 'second-hand dealers in ideas', and modern neoliberals extrapolate that inclination to the limit. In their view, even natural scientists need to learn to subordinate their own research to "the market," and accept that tomorrow the market might devalue their own expertise in favor of the beliefs of less trained participants. "Freedom" is in this instance made manifest as the ability to insert your own 2 cents at will; let the market sort it out. This insight prompts another reconstruction of university life, this time in the direction of so-called 'open science' and 'citizen science'. [9] The literal construction of a 'marketplace of ideas' leads directly to the elevation of the market as the ultimate validator of truth in most dimensions, and the subordination of professional researchers to a less central role, surrounded by platforms that harvest the unremunerated labor of the reserve army of the undereducated. This is creative destruction with a vengeance, which further diminishes the role of the university.

Consequently, while economists tend to think they come equipped to understand all the implications of a thoroughgoing marketplace of ideas, the four conventional ideas sketched above reveal that they currently are far from having a comprehensive appreciation of the "economics of information" as it plays out in the world.

An example of this inadequate approach is a very brief code of professional conduct ratified in April 2018 by the AEA. Its actual wording is significant. It states, "Integrity demands honesty, care and transparency in conducting and presenting research; disinterested assessment of ideas; acknowledgement of the limits of expertise; and disclosure of real and perceived conflicts of interest." [10] There was nothing in the statement proposing that the AEA or any other institution should promote or enforce disclosure, nor indeed define what should be disclosed; it says absolutely nothing at all about "academic freedom." "Integrity" is apparently conceived as personal virtue, although a subsequent paragraph promotes "a professional environment with equal opportunity and fair treatment for all economists." This species of "environment" seems be more concerned with employment of economists than the preservation of academic inquiry as such.

This is why the GMU incident deserves far more scrutiny than it has received from economists, and academics in general.

[1] http://www.unkochmycampus.org/charles-koch-foundation-george-mason-mercatus-donor-influence-exposed

[2] Some sources report the document dump reveals that 'the Kochs' reserved the right of designation of members on faculty selection committees and veto rights in earlier gifts to Mercatus, but in the Scalia School case, the agreement stated that they would have no power over retention or promotion. On this, see https://www.nationalreview.com/2018/05/washington-post-koch-brothers-scoop-falls-apart/ . However, the situation at GMU was far more complex than that, because the emails independently stipulated whom among existing Koch-financed GMU faculty and the Federalist society would make such decisions for the Law School; and furthermore, the Kochs reserved the right to withdraw from the agreement without notice or just cause. Clearly, this Sword of Damocles allowed them to veto any subsequent choices, all the while asserting formally in the document that they unreservedly supported academic freedom. The Kochs, after decades of experience, have gotten good at circumventing faculty who don't understand how the takeover of universities actually works.

[3] See Philip Mirowski, Never Let a Serious Crisis Go to Waste (Verso, 2013), pp. 218-223.

[4] See, for instance, James Petras, "The Ford Foundation and the CIA," at: https://www.ratical.org/ratville/CAH/FordFandCIA.html .

[5] See, for instance, the fascinating case of BB&T: Douglas Beets, "BB&T, Atlas Shrugged, and the ethics of corporation influence on college curricula," Journal of Academic Ethics , 2015, (13):311-344.

[6] This is not the place to explicate fine points of political doctrine. However, see Mirowski, Never Let.. (op. cit.) as well as: https://www.ineteconomics.org/research/research-papers/the-political-movement-that-dared-not-speak-its-own-name-the-neoliberal-thought-collective-under-erasure .

[7] This is described in detail in: Philip Mirowski and Edward Nik-Khah, The Knowledge we Have Lost in Information , (Oxford, 2017).

[8] See, for instance, Matthew Gentzkow & Jesse Shapiro, "Competition and Truth in the Market for News," Journal of Economic Perspectives , (2008) 22:133-154. On his later work, "A reader of our study could very reasonably say, based on our set of facts, that it is unlikely that fake news swayed the election," said Gentzkow. At: https://news.stanford.edu/2017/01/18/stanford-study-examines-fake-news-2016-presidential-election .

[9] For a greater elaboration of this argument, see Philip Mirowski, "The Future(s) of Open Science," Social Studies of Science , 2018 at: http://journals.sagepub.com/doi/abs/10.1177/0306312718772086

[10] https://www.aeaweb.org/about-aea/code-of-conduct


JTMcPhee , June 27, 2018 at 10:39 am

The New Golden Rule: "Them as has the gold (or money and influence) rules." (re-cast to avoid any charge that I am a Gold Bug )

I recall other actions by many sociopathic malefactors of great wealth to control the larger narrative and school curricula through history, like "supporting" the Catholic Church in all its machinations. The Reformation opened the door, along with common understandings of Darwin's notions, to Calvinism. I was bred up in the Presbyterian church, where TULIP blossomed in the young minds of the catechism classes and was reinforced in every bit of the Westminster Fellowship youth group's activities (the Total Depravity proven by all the efforts of young hormone sufferers to get into each others; pants). A pretty sick set of doctrines, http://www.auburn.edu/~allenkc/openhse/calvinism.html , when one gets on a little bit in life, and sees how humans really interact, and how "the Calvinist economics" actually work. https://marketmonetarist.com/2011/10/20/calvinist-economics-the-sin-of-our-times/

So the ho-hum economists and the media midgets are sort of right, at least in pointing out that there's nothing new in what the Kochtopus and all the other wealthy individuals and their "philanthropies" are about. Huge amounts are spent to control the content of Texas lower-grade text books, because as those go, so goes all the curricula of most of the country. http://www.nybooks.com/articles/2012/06/21/how-texas-inflicts-bad-textbooks-on-us/

"If only the people were aware of what is being done to them, they would __________________."

allan , June 27, 2018 at 11:02 am

The fact that the evergreen Glenn Hubbard interview from Inside Job didn't make Hubbard a pariah
in the economics community tells us all we need to know about
the intersectionality of integrity and academic economics.

Patrick , June 27, 2018 at 11:22 am

How ironic that economists are arguing that monetary incentives don't matter.

Larry Motuz , June 27, 2018 at 4:17 pm

Oh, they don't argue that. They know that monetary incentives work. They just don't want to agree that money isn't neutral in terms of what it 'incentivises' any more than does how money is distributed in terms of macroeconomic 'growth'.

This allows them to pretend that money is neutral.

chuck roast , June 27, 2018 at 11:34 am

Back in day, our Economics faculty used to tell us that the study of economics was "value free." What was presented was simply a reflection of real world conditions. No value judgements were to be made. These fellows, like many of our parents, were all deeply scared products of the Great Depression and committed Keynesians (public policy anyone?) to a man. Of course, all we had to do was pick up a copy of Theory of the Leisure Class, and if Veblen's prose didn't hurt our hair to badly, we knew this was a bunch of nonsense.
The worthy successors to this faculty now offer two different Bachelor of Science in Economics degrees. Indeed, the profession has gone entirely through the looking-glass. If we see the past (economic anthropology) or the future (post-capitalism), history will be destroyed. Now we all know that the Red Queen has a cock-eyed head and the royal crown would never fit her. Moreover, the Red Queen ate the stolen tart and is beyond redemption in any case. Are we to believe the Jabberwocky? Is time itself in danger? Can we recapture the Chronosphere? Can we get back through the looking-glass? And if we do, will we all wake up in mental hospitals?

Synoia , June 27, 2018 at 11:49 am

Antonin Scalia School of Law at George Mason University

Hmm.. ASSoL at George Mason University.
Can these people be that stupid?
I'm enrolled in ASSoL at GMU, or
I'm an ASSoL Graduate

One could not have chosen a better name working for Monty Python.

Secondly, for most economists, there are no such things as conflicts of interest,

Because each item, pronouncement, thesis, or work product is to ensure the Economist's Master that their view of the universe is correct, then, obviously there is no Conflict of Interest.

Moe N. DeLawn , June 27, 2018 at 4:01 pm

The internet already got to that.

They changed it to the Antonin Scalia Law School in response .

teacup , June 27, 2018 at 2:21 pm

"The Corruption of Economics" by Mason Gaffney dives deep into this. "False Education in our Colleges and Universities" by Emil O. Jorgensen referenced within this gem gives an example – ' in the 1924 Professor Richard T. Ely was the director of the Institute for Research in Land Economics and Public Utilities at the University of Wisconsin at Madison but relocated over questions of it being entirely financed by certain corporations and economic groups seeking to have privilege and monopoly taxed less and industry and consumption taxed more Although it was denied that the removal of Prof. Ely was in any way due to compulsion, it is a curious fact that no sooner had Prof. Ely gone than the Board of Regents voted that no more money "shall in the future be accepted by or in behalf of the University of Wisconsin from any incorporated educational endowments or organizations of like character." But Prof. Ely with his old-time shrewdness and skill had dodged the descending ax. Suspecting evidently that such a resolution would sooner or later be passed, the Professor began in the early part of the year to cast about for a safe place to escape and picked out as his refuge Northwestern University in Evanston – a privately endowed institution noted for its conservatism and its close affiliation with the powers that be Having definitely laid his plans Prof. Ely then added Frank O. Lowden (former governor of Illinois) and Nathan W. MacChesney (General Counsel for the National Association of Real Estate Boards as well as a trustee of Northwestern University) to his own board of trustees Very grateful for the welcome extended to him by Northwestern University, Prof. Ely commences his activities in that institution with larger plans, wider ambitions and a harder determination than ever to build up a great national machine that will promote, under the cloak of "disinterested research," not the welfare of all, but the special interests of a few '

Left in Wisconsin , June 27, 2018 at 6:23 pm

Ely had a complicated history. Business interests tried to drive him out of the Univ of Wisconsin in the 1890s not because he was a corrupt neoclassical economist but because he was argued to be a socialist. (He wasn't.) He was responsible for bringing JR Commons, one of the great institutional economists, to Wisconsin and at least partly responsible for the quality of the economics faculty at Wisconsin that developed in the 1910s many of the state programs (unemployment insurance, workers compensation) that ultimately became models for the New Deal.

But he became more right-wing as he got older. He campaigned to have Robert LaFollette removed from the Senate because LaFollette was anti-WW1 and then went off to Northwestern as a pretty conventional rightwing economist.

Interestingly, a number of pro-labor New Deal economists followed a similar trajectory. For example, Leo Wolman.

flora , June 27, 2018 at 4:38 pm

Thanks very much for this post. This has been playing out at my uni for some time now.

2 thoughts:

Money. The Kochs certainly appear to hate taxes almost as much as regulation. Public universities and colleges require adequate funding from the public(taxes) to support the mission of education – as opposed to just training.

A good education requires good teachers; professors who are paid well enough to make a career in academia – not a king's ransom but not a church mouse salary either – and the freedom to research into all areas.

So, the neoliberals get a huge tax cut passed in states and at the federal level; then claim there's not enough state/federal money to support higher ed (please, no MMT talk here, I'm making a different point); as higher ed struggles financially, pretend to be a white knight riding in with grant money to save the day. It's cheaper than taxes for the grantors, since the "white knight" controls how much and how often they give money. And, it gives them leverage over the curriculum. There are many tricks to claim a "chaired" position isn't "really in the department", so the grants are "not changing the quality of education" they will argue. It's a vicious financial circle for higher ed .

Philosophy. The neoliberal PR campaign of 'the market is the ultimate and true arbiter of all' has all the appearance of a regression to what I can only call inverted marxist dialectical-materialism as espoused by the old soviets; where anything, even scientific findings, that threatened the supremacy of the doctrine's claim of economic inevitability, was suppressed. ( No wonder the old soviet finally collapsed. )
The neoliberals substitutes a sort of libertarian dialectical-materialism that requires suppression of any theory that contradicts their claim of 'market infallibility' and inevitability. This is dogma, not science or even economics.

Just my opinion, of course.

Summer , June 27, 2018 at 5:30 pm

We're about to get to see Koch money and the unflappable Supreme Court Judges.

greg , June 27, 2018 at 11:38 pm

People who are paid to think, think what they are paid to think.

The Kochs, and those like them, seem to labor under under the delusion that reality will conform to their beliefs. Since they are powerful, they are able to inflict this delusion on society.

The return to the real world from the world of delusion is always extremely costly. We will all pay.

[Jun 15, 2018] Creationists and George W Bush: Bush junior is the best argument against intelligent design

Jun 15, 2018 | www.unz.com

AnonFromTN ,

There are many other clear traces of evolution (constantly developing antibiotic resistance of disease-causing bacteria being one of the most obvious), but the funniest argument for evolution I know is this: "Bush junior is the best argument against intelligent design: nobody intelligent would ever design that".

[Jun 12, 2018] An article about the Krugman tweets

Jun 12, 2018 | crooksandliars.com

I am copying in the first 2 that show the economic clarity he brings to the subject and make my point

Paul Krugman
It's normal to feel that people you disagree with politically are offering bad solutions to our problems. But Trump has brought something new: his policy agenda is almost entirely directed at problems we don't have -- problems that exist only in his warped imagination 1/

Paul Krugman
These include:
- A wave of violent crime by undocumented immigrants
- Massive illegal voting by the same
- Massive Canadian tariffs against US goods
- Conspiracy by the Elders of Zion to take over the world

OK, he hasn't actually gone after point #4, but give him time 2/

End of Paul Krugman tweet quote

So why did Krugman write about the Elders of Zion (What does he know and when did he find out?..grin) and not about the proclivities of global private finance?.....that pays him nicely to be part of propaganda central

Posted by: psychohistorian | Jun 10, 2018 10:40:00 PM | 17

[Jun 06, 2018] Neoliberal Economics has a lot of similarities with Theology

Jun 06, 2018 | discussion.theguardian.com

Carlosthepossum -> innercity leftie , 3 Jun 2018 19:10

Economics has a lot of similarities with Theology.
People can believe whatever interpretation fits with their own indoctrination.
The difference being there is a truth to economics that seems to be invisible to most people, major economists included.
Your post highlights some of the stark realities that people just refuse to accept for some inexplicable reason.
Maybe the better economic managers will come to the rescue or maybe there will be a collective awakening when in a moment of clarity we start to realise how badly we have been conned.

[Jun 03, 2018] Economist's View Is GDP Overstating Economic Activity

Notable quotes:
"... Economic Letter ..."
"... Economic Letter ..."
"... Journal of Econometrics ..."
"... Brookings Papers on Economic Activity ..."
"... FRBSF Economic Letter ..."
"... Brookings Papers on Economic Activity ..."
"... Journal of Money, Credit, and Banking ..."
"... Opinions expressed in FRBSF Economic Letter do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System. ..."
Jun 03, 2018 | economistsview.typepad.com

Is GDP Overstating Economic Activity? From an Economic Letter at the FRBSF:

Is GDP Overstating Economic Activity?, by Zheng Liu, Mark M. Spiegel, and Eric B. Tallman : Two common measures of overall economic output are gross domestic product (GDP) and gross domestic income (GDI). GDP is based on aggregate expenditures, while GDI is based on aggregate income. In principle, the two measures should be identical. However, in practice, they are not. The differences between these two series can arise from differences in source data, errors in measuring their components, and the seasonal adjustment process.
In this Economic Letter , we evaluate the reliability of GDP relative to two alternatives, GDI and a combination of the two known as GDPplus, for measuring economic output. We test the ability of each to forecast a benchmark measure of economic activity over the past two years. We find that GDP consistently outperforms the other two as a more accurate predictor of aggregate economic activity over this period. This suggests that the relative weakness of GDI growth in recent years does not necessarily indicate weakness in overall economic growth.
Discrepancies between GDP and GDI
What drives the discrepancies between GDP and GDI is not well understood. The source data for the components that go into GDP and GDI are measured with errors, which may lead to discrepancies between the two. Further discrepancies can arise because those different components are adjusted for seasonality at different points in time (see, for example, Grimm 2007).
The differences between these two series can be large. For example, in the last two quarters of 2007, inflation-adjusted or "real" GDI was declining whereas real GDP was still growing. The year-over-year growth rate of GDP exceeded that of GDI by almost 2.6 percentage points. Over long periods, however, final measures of growth in GDP and GDI tend to yield roughly equivalent assessments of economic activity. Since 1985, real GDP grew at an average annual rate of about 3.98%, while real GDI grew at a similar average rate of 4.02%.
Since late 2015, the two series have diverged, with real GDP growth consistently exceeding real GDI growth (Figure 1). The differences in growth are significant in this period. For example, if we used GDI growth to assess overall economic activity since July 2015, then the size of real aggregate output by the end of 2017 would be $230 billion smaller than if GDP growth were used. This divergence between the two sends mixed signals regarding the strength of recent economic activity.

Figure 1
Mixed signals from GDP and GDI growth

2018-14-1

Source: Bureau of Economic Analysis.

Evaluating GDP, GDI, combination
Researchers often debate which of these series measures economic activity more accurately. Nalewaik (2012) argues that GDI outperforms GDP in forecasting recessions. GDI does appear to exhibit more cyclical volatility than GDP. One reason may be that GDI is more highly correlated with a number of business cycle indicators, including movements in both employment and unemployment (Nalewaik 2010). On the other hand, the Bureau of Economic Analysis has resisted this conclusion, arguing that GDP is in general based on more reliable source data than GDI is (Landefeld 2010).
To evaluate the relative reliability of GDP versus GDI for measuring economic output, we compare their abilities to forecast a benchmark measure of economic activity. We focus on the Chicago Fed National Activity Index (CFNAI) as the benchmark, since it is publicly available. The CFNAI is a monthly index of national economic activity, generated as the common component of 85 monthly series in the U.S. economy. These underlying series include a wide variety of data covering production and income, employment and unemployment, personal consumption and housing, and sales and orders. The CFNAI has been shown to help forecast real GDP (Lang and Lansing 2010). We use the CFNAI as a benchmark activity indicator to evaluate the relative forecasting performances of GDP and GDI and their combinations. Since the discrepancy between these two series has persisted for several years, we focus on the final releases of the GDP and GDI series.
Some have argued that, because the GDP and GDI series contain independent information, it may be preferable to combine the two series into a single more informative activity indicator. One series that uses such a combination is the Philadelphia Fed's GDPplus series, which is a weighted average of GDP and GDI, with the weights based on the approach described by Aruoba et al. (2016). As a weighted average, GDPplus indicates activity levels between the two individual series. We therefore also consider the forecasting performance of the GDPplus series over this period of extended discrepancy between reported GDP and GDI growth.
To confirm the accuracy of our approach, we repeated our investigation with two alternative series constructed using methodologies similar to the CFNAI. The first alternative is an aggregate economic activity index (EAI) we constructed by extracting the common components of 90 underlying monthly time series. The EAI covers a broader set of monthly indicators than the CFNAI, since we also include information from goods prices and asset prices.
The second alternative indicator we considered is an activity index constructed by Barigozzi and Luciani (2018), which we call the BL index. Like our index, the BL index includes price indexes and other measures of labor costs. The authors base their estimates on the portions of GDP and GDI that are driven by common macroeconomic shocks under the assumption that they have equivalent effects on GDP and GDI. This restriction implies that deviations between GDP and GDI are transitory, and that the two series follow each other over time.
The EAI and the BL index are both highly correlated with the CFNAI and thus yielded similar conclusions. We describe the source data and our methodology for constructing the EAI as well as the analysis using both it and the BL index in an online appendix .
Empirical results
To examine the relative performances of GDP, GDI, and GDPplus for forecasting the CFNAI, we first estimate an empirical model in which the CFNAI is related to four lagged values of one of these measures of aggregate output. Ideally, we would have used the full sample of postwar data in our model, but there are some structural breaks in the data related to factors such as changes in the monetary policy regime since the mid-1980s and the Great Moderation that make this challenging. We therefore choose to focus on the sample starting from the first quarter of 1985 in this discussion; our results using the full sample are similar, as we report in the online appendix .
To examine how well each of the measures of aggregate output are able to forecast the CFNAI, we estimate the model using the sample observations up to the end of 2015, the period before GDP and GDI diverged. Once we determine the estimated coefficients that describe each relationship, we use those values to estimate forecasts for the period when discrepancies developed, from the first quarter of 2016 to the end of 2017. We then calculate the prediction errors, measured by the root mean-squared errors, for each measure of aggregate output. The smaller the prediction error, the better the forecasting performance.
In addition to examining the forecasting performance of GDP, GDI, and GDPplus for predicting the CFNAI economic activity indicator, we also examined their forecasting performance for the unemployment rate as reported by the Bureau of Labor Statistics.
Figure 2 displays the prediction errors from 2016 to 2017 for each of the alternative output measures -- GDP, GDI, and GDPplus -- estimated from our model for CFNAI and unemployment. For ease of comparison, we normalize the prediction errors from the model with GDP to one. The figure shows that the prediction errors over this period based on the GDP series are substantively lower than those based on GDI or GDPplus. This finding holds true not just for these proxies for economic activity but also for our EAI and the BL index (see the online appendix ). Moreover, formal statistical tests of forecasting performance indicate that the forecasts based on GDP are significantly better than those based on GDI or GDPplus at the 95% confidence level. This result suggests that, in recent periods, GDP has been a more reliable independent indicator of economic activity than either GDI or GDPplus.

Figure 2
GDP outperforms GDI, GDPplus in predicting activity

2018-14-2

Note: Figure shows prediction errors with GDP indexed to 1.

Conclusion
While GDP and GDI are theoretically identical measures of economic output, they can differ significantly in practice over some periods. The differences between the two series have been particularly pronounced in the past two years, when GDP growth has been consistently stronger than GDI growth. Based on this observation, some analysts have claimed that GDP might be overstating the pace of growth and that GDI, or some combination of GDP and GDI, should be used to evaluate the levels and growth rate of economic activity.
To evaluate the validity of this claim, we compared the relative performances of GDP, GDI, and a combined measure, GDPplus, for forecasting the CFNAI, which we use as a benchmark measure of economic activity over the past two years. We find that GDP consistently outperforms both GDI and combinations of the two, such as GDPplus, in forecasting aggregate economic activity during the past two years. In this sense, GDP is a more accurate predictor of aggregate economic activity than GDI over this period. Therefore, the relative weakness of GDI growth observed in recent years does not necessarily indicate weakness in overall economic growth.
Zheng Liu is a senior research advisor in the Economic Research Department of the Federal Reserve Bank of San Francisco.
Mark M. Spiegel is a vice president in the Economic Research Department of the Federal Reserve Bank of San Francisco.
Eric B. Tallman is a research associate in the Economic Research Department of the Federal Reserve Bank of San Francisco.
References
Aruoba, S. Boragan, Francis X. Diebold, Jeremy Nalewaik, Frank Schorfheide, and Dongho Song. 2016. "Improving GDP Measurement: A Measurement-Error Perspective." Journal of Econometrics 191(2), pp. 384–397.
Barigozzi, Matteo, and Matteo Luciani. 2018. "Do National Account Statistics Underestimate U.S. Real Output Growth?" Board of Governors FEDS Notes , January 9.
Grimm, Bruce T. 2007. "The Statistical Discrepancy." Bureau of Economic Analysis Working Paper 2007-01, March 2.
Landefeld, J. Steven. 2010. "Comments and Discussion: The Income- and Expenditure-Side Estimates of U.S. Output Growth." Brookings Papers on Economic Activity , Spring, pp. 112–123.
Lang, David, and Kevin J. Lansing. 2010. "Forecasting Growth Over the Next Year with a Business Cycle Index." FRBSF Economic Letter 2010-29 (September 27).
Nalewaik, Jeremy J. 2010. "The Income- and Expenditure-Side Estimates of U.S. Output Growth." Brookings Papers on Economic Activity , Spring, pp. 71–106.
Nalewaik, Jeremy J. 2012. "Estimating Probabilities of Recession in Real Time Using GDP and GDI." Journal of Money, Credit, and Banking 44, pp. 235–253.

Opinions expressed in FRBSF Economic Letter do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.


Paine , May 29, 2018 at 06:32 PM

Love to read stuff like this


Refining methods of data collection and aggregation

Why ?

Irony

Paine -> Paine ... , May 29, 2018 at 06:34 PM
Vickrey macro ...NOW.
anne -> Paine ... , May 29, 2018 at 06:44 PM
Fine, "Vickrey macro," but every time that is asserted there needs to be a reference to a clear summary statement of what that means. A Wikipedia reference would do, but the assertion has almost no influence unless made immediately, simply meaningful.

Just one simple reference summary will do, continually repeated.

Gibbon1 -> anne... , May 30, 2018 at 01:18 AM
Read this. Fifteen Fatal Fallacies of Financial Fundamentalism. A Disquisition on Demand Side Economics

http://www.columbia.edu/dlc/wp/econ/vickrey.html

anne -> Gibbon1... , May 30, 2018 at 08:17 AM
http://www.columbia.edu/dlc/wp/econ/vickrey.html

October 5, 1996

Fifteen Fatal Fallacies of Financial Fundamentalism
A Disquisition on Demand Side Economics
By William Vickrey

[ I appreciate this reference, which I will read carefully. ]

anne -> Gibbon1... , May 30, 2018 at 11:16 AM
Summary:

http://www.columbia.edu/dlc/wp/econ/vickrey.html

October 15, 1996

Fifteen Fatal Fallacies of Financial Fundamentalism
A Disquisition on Demand Side Economics
By William Vickrey

Much of the conventional economic wisdom prevailing in financial circles, largely subscribed to as a basis for governmental policy, and widely accepted by the media and the public, is based on incomplete analysis, contrafactual assumptions, and false analogy. For instance, encouragement to saving is advocated without attention to the fact that for most people encouraging saving is equivalent to discouraging consumption and reducing market demand, and a purchase by a consumer or a government is also income to vendors and suppliers, and government debt is also an asset. Equally fallacious are implications that what is possible or desirable for individuals one at a time will be equally possible or desirable for all who might wish to do so or for the economy as a whole.

And often analysis seems to be based on the assumption that future economic output is almost entirely determined by inexorable economic forces independently of government policy so that devoting more resources to one use inevitably detracts from availability for another. This might be justifiable in an economy at chock-full employment, or it might be validated in a sense by postulating that the Federal Reserve Board will pursue and succeed in a policy of holding unemployment strictly to a fixed "non-inflation-accelerating" or "natural" rate. But under current conditions such success is neither likely nor desirable.

Some of the fallacies that result from such modes of thought are as follows. Taken together their acceptance is leading to policies that at best are keeping us in the economic doldrums with overall unemployment rates stuck in the 5 to 6 percent range. This is bad enough merely in terms of the loss of 10 to 15 percent of our potential production, even if shared equitably, but when it translates into unemployment of 10, 20, and 40 percent among disadvantaged groups, the further damages in terms of poverty, family breakup, school truancy and dropout, illegitimacy, drug use, and crime become serious indeed. And should the implied policies be fully carried out in terms of a "balanced budget," we could well be in for a serious depression.

Fallacy 1

Deficits are considered to represent sinful profligate spending at the expense of future generations who will be left with a smaller endowment of invested capital. This fallacy seems to stem from a false analogy to borrowing by individuals.

Fallacy 2

Urging or providing incentives for individuals to try to save more is said to stimulate investment and economic growth. This seems to derive from an assumption of an unchanged aggregate output so that what is not used for consumption will necessarily and automatically be devoted to capital formation.

Fallacy 3

Government borrowing is supposed to "crowd out" private investment.

Fallacy 4

Inflation is called the "cruelest tax." The perception seems to be that if only prices would stop rising, one's income would go further, disregarding the consequences for income.

Fallacy 5

"A chronic trend towards inflation is a reflection of living beyond our means." Alfred Kahn, quoted in Cornell '93, summer issue.

Fallacy 6

Fallacy 7

Many profess a faith that if only governments would stop meddling, and balance their budgets, free capital markets would in their own good time bring about prosperity, possibly with the aid of "sound" monetary policy. It is assumed that there is a market mechanism by which interest rates adjust promptly and automatically to equate planned saving and investment in a manner analogous to the market by which the price of potatoes balances supply and demand. In reality no such market mechanism exists; if a prosperous equilibrium is to be achieved it will require deliberate intervention on the part of monetary authorities.

Fallacy 8

If deficits continue, the debt service would eventually swamp the fisc.

Fallacy 9

The negative effect of considering the overhanging burden of the increased debt would, it is claimed, cancel the stimulative effect of the deficit. This sweeping claim depends on a failure to analyze the situation in detail.

Fallacy 10

The value of the national currency in terms of foreign exchange (or gold) is held to be a measure of economic health, and steps to maintain that value are thought to contribute to this health. In some quarters a kind of jingoistic pride is taken in the value of one's currency, or satisfaction may be derived from the greater purchasing power of the domestic currency in terms of foreign travel.

Fallacy 11

It is claimed that exemption of capital gains from income tax will promote investment and growth.

Fallacy 12

Debt would, it is held, eventually reach levels that cause lenders to balk with taxpayers threatening rebellion and default.

Fallacy 13

Authorizing income-generating budget deficits results in larger and possibly more extravagant, wasteful and oppressive government expenditures.

Fallacy 14

Government debt is thought of as a burden handed on from one generation to its children and grandchildren.

Fallacy 15

Unemployment is not due to lack of effective demand, reducible by demand-increasing deficits, but is either "structural," resulting from a mismatch between the skills of the unemployed and the requirements of jobs, or "regulatory", resulting from minimum wage laws, restrictions on the employment of classes of individuals in certain occupations, requirements for medical coverage, or burdensome dismissal constraints, or is "voluntary," in part the result of excessively generous and poorly designed social insurance and relief provisions.

anne -> anne... , May 30, 2018 at 11:17 AM
Correcting omission:

Fallacy 6

It is thought necessary to keep unemployment at a "non-inflation-accelerating" level ("NIARU") in the range of 4% to 6% if inflation is to be kept from increasing unacceptably.

point -> anne... , May 30, 2018 at 01:02 PM
Very nice. Once again, it turns out a number of my great new ideas are someone else's previously solved problems.
anne -> point... , May 30, 2018 at 02:00 PM
Once again, it turns out a number of my great new ideas are someone else's previously solved problems.

[ I like this. ]

mulp said in reply to anne... , May 30, 2018 at 03:33 PM
"Deficits are considered to represent sinful profligate spending at the expense of future generations who will be left with a smaller endowment of invested capital. This fallacy seems to stem from a false analogy to borrowing by individuals."

Except, we do not say a worker with $1000 a week income buying a $100,000 home first week in May ran a $99,200 deficit (still needed food and gas) that week.

But government might run a $10 billion per week deficit from paying workers to build infrastructure that will last a century plus with maintenance which will be repaid with higher taxes over the next 50 years plus higher taxes for operations,....

Or the $10 billion per week deficit might be from ending all infrastructure building and slashing spending on operations so a $11 billion per week tax cut could be implemented ($1 billion in taxes to repay and operate the infrastructure being built at $10 billion per week).

Households and businesses maintain four ledgers, one pair is income and expense, and the other is assets and liabilities. Buying a car, house, factory or car is not an expense, but an addition to assets with offsetting liability. They are expensed over time as depreciation. Excess income over expense is added to assets, in a cash account. Paying cash for an asset moves the value from one part of the asset ledger, unless you have a separate fund for emergency or retire and you borrow from it to pay for the car creating two new entries, a liability for borrowing your money offset by the asset car.

I did this in the 60s and 70s with a ledger I then punched on IBM cards so I could create multiple reports from one set of transactions, like a business. In the 90s, I did this for a year or two with Quicken. It was not part of the "quick" entry and report which was more like a check register, but it had all the options for asset and liability ledgers, with tied entries between ledgers, mostly focused on investment accounts. It lacked a comprehensive asset ledger function to tally house, car, truck, boat, home theater, cabin, and then depreciate them, but I'm guessing QuickBooks has these functions.

For the Federal government, and State governments, many assets are on the books of local government or government subunits, but finance by a bigger government. For example, NH State government funds building most of new schools out of a cash account, while half a century ago, a local government would hike a tax to fund issuing a bond, which means the State mandated school was easy to fund for the rich towns, but almost impossible for poor towns with very low tax base. Once moved to the conservative State level, issuing tax backed bonds became politically difficult.

In the 60s, government debt was for building assets and bonds had tax revenue streams to repay them. But conservatives hated the investment part of government because while it meant jobs, it also required taxes.

For example, the highway trust fund was based on taxes to fill it to pay States to pay workers. If a bunch of States wanted more jobs, that led to higher taxes.

Social Security Trust funds are based on an investment asset and liability model. The assets are the current and future workers plus trust funds and the liabilities are current and future beneficiaries being paid and to be paid. The Trustees report on these two ledgers annually, along with income and expense. For a number of years, they have reported the liabilities are growing slightly faster than assets.

But the rise of free lunch economics that basically rejects capitalism and it's accounting, simply call liabilities the FICA revenue and the expenses and claim there are no SS assets.

Progressives seem to live hand to mouth, rejecting capitalist principles.

pgl -> anne... , May 30, 2018 at 05:53 AM
Here you go Anne:

http://www.columbia.edu/dlc/wp/econ/vickrey.html

Of course Paine is either too lazy or too arrogant to provide a link to what William Vickrey wrote.

Or maybe he enjoys misrepresenting what his own guru had to say. He does seem to just babble on.

Teapot -> pgl... , May 30, 2018 at 06:49 AM
Who hurt you pgl?
RC AKA Darryl, Ron said in reply to Teapot... , May 30, 2018 at 08:15 AM
:<)
Christopher H. said in reply to pgl... , May 30, 2018 at 08:04 AM
Misrepresenting everything is what you do. You sure do project a lot. You're a whole bundle of neuroses.
kurt -> Christopher H.... , May 30, 2018 at 03:08 PM
You make claims like this all the time. Without a shred of evidence. Why don't you SPECIFICALLY point to a time when you think pgl misrepresented something.

You did this for me once, and it became instantly clear that you cannot read - or at least read things into comments that are not there. What did pgl misrepresent. Waiting.

Paine -> anne... , May 30, 2018 at 06:51 AM
Anne. You are absolutely right

I've stopped linking to his work

Wild Bill
Is best viewed thru his presidential address to the economists of the AEA

Paine -> Paine... , May 30, 2018 at 06:53 AM
However willful misreading
And misconstruing
is never useful commentary

Not that attaching a firecracker
To a goat's or a cows or a pigs tail
isn't good old farm yard fun

RC AKA Darryl, Ron said in reply to Paine... , May 30, 2018 at 08:16 AM
:<)
anne -> Paine... , May 30, 2018 at 08:22 AM
Vickrey
Is best viewed thru his presidential address to the economists of the AEA

[ Having looked unsuccessfully, I need a precise reference. ]

anne -> anne... , May 30, 2018 at 08:24 AM
This essay is about the Vickrey AEA address, but does not serve as a summary of the macroeconomics:

http://works.bepress.com/cgi/viewcontent.cgi?article=1027&context=timothy_canova

March, 1997

The Macroeconomics of William Vickrey
By Timothy A. Canova

anne -> anne... , May 30, 2018 at 08:25 AM
Another possibility, but a summary is still needed:

http://community.middlebury.edu/~colander/articles/Vickrey-latest%20latest.pdf

January 4, 1998

Was Vickrey 10 Years Ahead of the Profession in Macro?
By David Colander (Middlebury College)

Paine -> anne... , May 30, 2018 at 08:33 AM
Anne

My daughter is planning a web site
To present in integrated form
Kalecki Lerner and Vickrey

KLV MACRO

I'M MERELY A CONSULTANT OF COURSE
PART ONE WILL BE VICKREY CHOCK.FULL EMPLOYMENT
AND THE END TO CONTRIVED JOB SCARCITY

pgl -> Paine... , May 30, 2018 at 11:06 AM
Give us the cite when she does. Maybe she will be a lot clearer than her old man. Let's hope so.
Paine -> anne... , May 30, 2018 at 09:15 AM
This is a good introduction to wild Bill


anne -> Paine... , May 30, 2018 at 10:07 AM
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.172.5394&rep=rep1&type=pdf

July, 1999

Saving-Recycling Public Employment: An Assets-Based Approach To Full Employment and Price Stability
By Mathew Forstater

William Vickrey's single-minded commitment to full employment is evident in a series of papers written in the last years of his life....

[ All I wish is a clear summary that takes me to the essence and relevance of Vickrey's ideas, but this paper also seems wanting. ]

pgl -> anne... , May 30, 2018 at 11:05 AM
Vickrey wrote on a wide range of topics besides macroeconomics. Now he also had certain progressive Keynesian views, which I share. Of course I'm not into the mindless name dropping that Paine is into. I would rather actually read what economists wrote. A couple of us provided the 1996 Fifteen Fallacies paper he wrote which is an excellent read.

I do wonder if Paine himself ever bothered to read it as he sure has never bothered to explain what it said.

Christopher H. said in reply to pgl... , May 30, 2018 at 06:58 PM
"Of course I'm not into the mindless name dropping that Paine is into."

LOL all you do is name drop and kiss up and kick down!

You're the worst of that type of person!

anne -> Paine... , May 30, 2018 at 10:13 AM
Vickrey
Is best viewed thru his presidential address to the economists of the AEA

[ I have again looked but cannot find the address. I am saddened at my inability, but will pass on. ]

Paine -> anne... , May 30, 2018 at 11:02 AM
Anne do you agree with what you have read about Vickrey macro
Do you have any questions
Paine -> Paine... , May 30, 2018 at 11:06 AM
Note these key goals.

A Beveridge ratio :

(Job openings to job seekers )

Greater then one to one

Ie where firms
are looking
For more hires
then there are
potential hires looking for jobs

Paine -> Paine... , May 30, 2018 at 11:08 AM
Vickrey called
getting immediately
to this beveridge ratio
on Job markets
And remaining there

a social imperative

Paine -> Paine... , May 30, 2018 at 11:10 AM
Inflation is no excuse
If inflation accelerates

Impose price control mechanism
a la Lerner map
Make it work
No return to high unemployment
Like volckerism demands

Paine -> Paine... , May 30, 2018 at 11:12 AM
Key distinction between
Vickrey
and the job guarantee program
These are market mediated non government jobs

Not a works project administration
rebirth

Paine -> Paine... , May 30, 2018 at 11:14 AM
Vickrey macro ises fiscal deficits
not interest rate and credit flow
As thr demand injector instrument
anne -> Paine... , May 30, 2018 at 11:54 AM
Yes, I agree with the ideas of Vickrey and can use my abstract of the 15 fallacies as a guide. I am pleased. The post below can then be linked to in future...
pgl -> Paine ... , May 30, 2018 at 05:49 AM
Leave it to you to confuse a measurement issue with a modeling issue. Babble on!
Gibbon1 -> pgl... , May 30, 2018 at 06:55 PM
Last night found and read the Vickrey reference. Made a bet with myself that the toxic troika's response would be to hurl low quality insults and disrupt.

I owe myself a beer.

Christopher H. said in reply to Gibbon1... , May 30, 2018 at 06:59 PM
"the toxic troika's response would be to hurl low quality insults and disrupt."

It's like clockwork.

point , May 30, 2018 at 05:55 AM
Would be interesting for feminist economists to weigh in on measurement and modeling error.
pgl -> point... , May 30, 2018 at 11:08 AM
I'm sure there is some humor here but be careful as some gals might take offense at this!
Paine -> point... , May 30, 2018 at 11:16 AM
Housework is not included

We need to pay a domestic wage

Women on average do 20 hours of domestic work men about 8 as I recall surveys indicate

anne -> Paine... , May 30, 2018 at 12:03 PM
Looking to housework in China, and how it has been radically changed with development, I realize to my surprise that per capita GDP growth and distribution of income surely measures housework. A house with electricity alone allows for a revolution in housework. Detergent (non-phosphate) works wonders...
point -> Paine... , May 30, 2018 at 01:10 PM
Housework, especially as embodied as capital in the young, which then yields for employers.
anne -> point... , May 30, 2018 at 03:32 PM
Housework, especially as embodied as capital in the young, which then yields for employers.

[ Do explain further, this seems interesting but is not entirely clear to me. ]

Gibbon1 -> anne... , May 30, 2018 at 07:03 PM
Neoliberal Economics being the creation of middle aged upper middle class men during the 1940's through the 1990's places value of zero on 'women's work'

Despite that much of it involves supporting current workers, birthing and raising next gen workers.

The Socialist/Communist Critique is families require some amount of resources in order to effectively perform that work. As such if you're going to have paid work then the state should require that the level of pay is adequate.

The neoliberal response is to get the vapors and engage in gate keeping behavior.

point -> anne... , May 31, 2018 at 04:36 AM
Yes, this is huge.

As a child grows up and receives all forms of social training and other preparation to participate in society ("get a job"), it is generally a quantity of "women's' work" that is "spent" to do this. But it's not "spent" so much as "invested", as the product of the work is a much improved human being. The young person embodies the investment. I guess we now call this "human capital". In any event, it's an investment of women's work that creates it.

Now, one would think that someone possessing such capital might face better prospects than one who does not, and that seems to be true. But it seems you can look at how competitive the asset is by looking at how it faires in the market. In recent decades, look at the gain in starting salaries. I have not seen a good series, but it seems they have lagged inflation, let alone GDP per capita. Thus the real yield on the asset has been negative, or one could say the yield has been on average entirely captured by employers. Others might make statements using "exploitation".

The job market for young people has been a cruel game of musical chairs: make a lifetime of investment just to join a circle for which there are too few chairs, and the employer gets all the yield.

anne , May 30, 2018 at 11:55 AM
http://www.columbia.edu/dlc/wp/econ/vickrey.html

October 15, 1996

Fifteen Fatal Fallacies of Financial Fundamentalism
A Disquisition on Demand Side Economics
By William Vickrey

Much of the conventional economic wisdom prevailing in financial circles, largely subscribed to as a basis for governmental policy, and widely accepted by the media and the public, is based on incomplete analysis, contrafactual assumptions, and false analogy. For instance, encouragement to saving is advocated without attention to the fact that for most people encouraging saving is equivalent to discouraging consumption and reducing market demand, and a purchase by a consumer or a government is also income to vendors and suppliers, and government debt is also an asset. Equally fallacious are implications that what is possible or desirable for individuals one at a time will be equally possible or desirable for all who might wish to do so or for the economy as a whole.

And often analysis seems to be based on the assumption that future economic output is almost entirely determined by inexorable economic forces independently of government policy so that devoting more resources to one use inevitably detracts from availability for another. This might be justifiable in an economy at chock-full employment, or it might be validated in a sense by postulating that the Federal Reserve Board will pursue and succeed in a policy of holding unemployment strictly to a fixed "non-inflation-accelerating" or "natural" rate. But under current conditions such success is neither likely nor desirable.

Some of the fallacies that result from such modes of thought are as follows.

Fallacy 1

Deficits are considered to represent sinful profligate spending at the expense of future generations who will be left with a smaller endowment of invested capital. This fallacy seems to stem from a false analogy to borrowing by individuals.

Fallacy 2

Urging or providing incentives for individuals to try to save more is said to stimulate investment and economic growth. This seems to derive from an assumption of an unchanged aggregate output so that what is not used for consumption will necessarily and automatically be devoted to capital formation.

Fallacy 3

Government borrowing is supposed to "crowd out" private investment.

Fallacy 4

Inflation is called the "cruelest tax." The perception seems to be that if only prices would stop rising, one's income would go further, disregarding the consequences for income.

Fallacy 5

"A chronic trend towards inflation is a reflection of living beyond our means." Alfred Kahn, quoted in Cornell '93, summer issue.

Fallacy 6

It is thought necessary to keep unemployment at a "non-inflation-accelerating" level ("NIARU") in the range of 4% to 6% if inflation is to be kept from increasing unacceptably.

Fallacy 7

Many profess a faith that if only governments would stop meddling, and balance their budgets, free capital markets would in their own good time bring about prosperity, possibly with the aid of "sound" monetary policy. It is assumed that there is a market mechanism by which interest rates adjust promptly and automatically to equate planned saving and investment in a manner analogous to the market by which the price of potatoes balances supply and demand. In reality no such market mechanism exists; if a prosperous equilibrium is to be achieved it will require deliberate intervention on the part of monetary authorities.

Fallacy 8

If deficits continue, the debt service would eventually swamp the fisc.

Fallacy 9

The negative effect of considering the overhanging burden of the increased debt would, it is claimed, cancel the stimulative effect of the deficit. This sweeping claim depends on a failure to analyze the situation in detail.

Fallacy 10

The value of the national currency in terms of foreign exchange (or gold) is held to be a measure of economic health, and steps to maintain that value are thought to contribute to this health. In some quarters a kind of jingoistic pride is taken in the value of one's currency, or satisfaction may be derived from the greater purchasing power of the domestic currency in terms of foreign travel.

Fallacy 11

It is claimed that exemption of capital gains from income tax will promote investment and growth.

Fallacy 12

Debt would, it is held, eventually reach levels that cause lenders to balk with taxpayers threatening rebellion and default.

Fallacy 13

Authorizing income-generating budget deficits results in larger and possibly more extravagant, wasteful and oppressive government expenditures.

Fallacy 14

Government debt is thought of as a burden handed on from one generation to its children and grandchildren.

Fallacy 15

Unemployment is not due to lack of effective demand, reducible by demand-increasing deficits, but is either "structural," resulting from a mismatch between the skills of the unemployed and the requirements of jobs, or "regulatory", resulting from minimum wage laws, restrictions on the employment of classes of individuals in certain occupations, requirements for medical coverage, or burdensome dismissal constraints, or is "voluntary," in part the result of excessively generous and poorly designed social insurance and relief provisions.

anne -> anne... , May 30, 2018 at 11:56 AM
This post can be used to abstract Vickrey...
mulp said in reply to anne... , May 31, 2018 at 01:07 PM
"Fallacy 14

Government debt is thought of as a burden handed on from one generation to its children and grandchildren."

So, Trump, and the GOP starting with Reagan, but especially in the 21st century, have created great fantastic wealth to lift away all burden from future generations!

Huge lifting of burden!

The future is life of ease in a huge hammock of debt!

ken melvin , May 30, 2018 at 06:50 PM
Branko was panelist on the Debate, France 24 last night

http://www.france24.com/en/20180530-debate-italy-populism-elections-sergio-mattarella

anne -> ken melvin... , May 30, 2018 at 07:08 PM
Nicely done.
Christopher H. , May 30, 2018 at 07:35 PM
I think Trump's victory broke the brains of the toxic trio (PGL, EMichael, kurt). They say it's pure racism. America is racist. We knew that, but Obama won twice. Oh it was a "backlash." Nah, Ben Rhodes knows.

https://www.nytimes.com/2018/05/30/us/politics/obama-reaction-trump-election-benjamin-rhodes.html

How Trump's Election Shook Obama: 'What if We Were Wrong?'

By Peter Baker
May 30, 2018

WASHINGTON -- Riding in a motorcade in Lima, Peru, shortly after the 2016 election, President Barack Obama was struggling to understand Donald J. Trump's victory.

"What if we were wrong?" he asked aides riding with him in the armored presidential limousine.

He had read a column asserting that liberals had forgotten how important identity was to people and had promoted an empty cosmopolitan globalism that made many feel left behind. "Maybe we pushed too far," Mr. Obama said. "Maybe people just want to fall back into their tribe."

His aides reassured him that he still would have won had he been able to run for another term and that the next generation had more in common with him than with Mr. Trump. Mr. Obama, the first black man elected president, did not seem convinced. "Sometimes I wonder whether I was 10 or 20 years too early," he said.

In the weeks after Mr. Trump's election, Mr. Obama went through multiple emotional stages, according to a new book by his longtime adviser Benjamin J. Rhodes. At times, the departing president took the long view, at other points, he flashed anger. He called Mr. Trump a "cartoon" figure who cared more about his crowd sizes than any particular policy. And he expressed rare self-doubt, wondering whether he had misjudged his own influence on American history.

[Obama's painfully slow recovery influenced history. Read Benjamin Friedman and Chris Dillow]

...

Mr. Obama and his team were confident that Mrs. Clinton would win and, like much of the country, were shocked when she did not. "I couldn't shake the feeling that I should have seen it coming," Mr. Rhodes writes. "Because when you distilled it, stripped out the racism and misogyny, we'd run against Hillary eight years ago with the same message Trump had used: She's part of a corrupt establishment that can't be trusted to bring change."

...

kurt -> Christopher H.... , May 31, 2018 at 09:07 AM
Funny you call me toxic when you just posted a smear and a lie. I have NEVER said it was all racism or only racism and you know it. What I have said is that 1. economic insecurity does not appear - due to study as opposed to your feelings - to have been a primary factor in the decision of Trump voters, and 2. that the studies show that the primary motivators were racism, fear of cultural change, sexism, and fear of immigrants. Economic insecurity fell several orders of magnitude below the primary motivators. In fact, you missed the "fall back into tribalism" part of your own post. Then again, you have never displayed even the slightest modicum of reading comprehension ability.
RC AKA Darryl, Ron said in reply to kurt... , May 31, 2018 at 09:47 AM
[What a difference a year makes at times. At other times not so much.]

https://www.attomdata.com/news/foreclosure-trends/2017-year-end-u-s-foreclosure-market-report/

U.S. Foreclosure Activity Drops to 12-Year Low in 2017

But New York Foreclosure Auctions, New Jersey REOs Both at 11-Year High;
Biggest Backlogs of Legacy Foreclosures in New York, New Jersey, Florida

IRVINE, Calif. – Jan. 18, 2018 – ATTOM Data Solutions, curator of the nation's largest multi-sourced property database, today released its Year-End 2017 U.S. Foreclosure Market Report, which shows foreclosure filings -- default notices, scheduled auctions and bank repossessions -- were reported on 676,535 U.S. properties in 2017, down 27 percent from 2016 and down 76 percent from a peak of nearly 2.9 million in 2010 to the lowest level since 2005...

*

[When people that voted for Trump answer the question "Why" would it be too much to expect that their answer might change over time with their perception of both the economy and Donald Trump? There has always been a shortage of real world ceteris paribus in economics going back before Adam Smith.]

Christopher H. said in reply to kurt... , May 31, 2018 at 09:57 AM
You're being obtuse again. The effect of the center left liberal (see the Toxic Troika) campaign to mock economic anxiety's explanatory power is to deny it had anything to with Trump winning. They (you) deny he was populist when his rhetoric was very anti-elite and he's a new kind of Republican whose dog whistles are out in the open. THAT's why Obama was alarmed you obtuse moron!!!!

Benjamin Friedman and Chris Dillow are not hard to understand. A stagnating economy causes people to retreat to tribalism and become susceptible to demagogues. Of course a lot of people were already racist, but if the recovery had been good, had the last 40 years been prosperous for your average voter Hillary would have won instead of Trump.

Yet just yesterday the Toxic Troika's hero Krugman tweeted this straw man:

https://twitter.com/paulkrugman/status/1001566129456910340

Paul Krugman
Verified account
@paulkrugman

Hey, Roseanne Barr is only worth $80 million, and was being paid only 250K per episode. So her tweets were clearly driven by economic anxiety

1:49 PM - 29 May 2018

----------------------------------------

Does Krugman understand how dislike he is by the Left? I think he does. This kind of thing is him lashing back at the Left.

-----------------------------

As Krugman blogged about Bernie Sanders's policies during the primary, he said they didn't combat populism in Europe which is clearly wrong.

You can keep going about your stupid meaningless studies/paid propaganda but Krugman went on to contradict himself by saying populism in Italy WAS CAUSED by economic anxiety!!!

If the European Central Bank hadn't forced slow growth on Italy maybe the new government wouldn't be made up of populist parties who blame immigrants and the EU.

Not hard to understand but no doubt the Italian center left party Democrats (who nobody voted for) sad it was all about anti-immigrant racism nothing more.

The studies show it!!!

kurt -> Christopher H.... , May 31, 2018 at 10:31 AM
Wow you are thick. You are completely unable to understand the nuance of reality. You continue to claim things that are not true - about what I posted and about what Krugman posted. You cannot understand that what motivated Americans was different - substantively - than what motivated Italians. You claim that Krugman was wrong, yet provide zero evidence. Krugman provided evidence. Where is yours. Why do you deny study. Why do you deny rigor? I think I know - it is because your entire world view comes crashing down in the face of evidence. The world is not binary no matter how much you want it to be. It is complicated and messy.
Christopher H. , May 31, 2018 at 10:18 AM
I think the Toxic Troika would agree on the bad effects of Fox news and conservative UK tabloid media. This helps translate economic stagnation into conservative majorities.

[I always thought Thoma did the website as a way to combat this with free discussion among experts and hobbyists. Banning people as the Troika wants isn't going to help.]

https://mainlymacro
blogspot.com/2017/12/if-we-treat-plutocracy-as-democracy.html

Saturday, 2 December 2017
If we treat plutocracy as democracy, democracy dies
by Simon Wren-Lewis

The snake-oil salesmen

There are many similarities between Brexit and Trump. They are both authoritarian movements, where authority either lies with a single individual or a single vote: the vote that bindsthem all. This authority expresses the movement's identity. They are irrational movements, by which I mean that they cast aside expertise where that conflicts with the movements wishes. As a result, you will find their base of supporters among the less well educated, and that universities are seen as an enemy. Both groups are intensely nationalistic: both want to make America or England great again.

It is easy to relate each group to familiar concepts: class, race or whatever. But I think this classification misses something important. It misses what sustains these groups in their beliefs, allows them to maintain their world view which is so often contradicted by reality. Both groups get their information about the world from a section of the media that has turned news into propaganda. In the US this is Fox, and in the UK the right wing tabloids and the Telegraph.

A profound mistake is to see this media as a symptom rather than a cause. As the study I spoke about here clearly demonstrates, the output of Fox news is not designed to maximise its readership, but to maximise the impact of its propaganda on its readership. I think you could say exactly the same about the Sun and the Mail in the UK. Fox and the Sun are owned by the same man.

Even those who manage to cast off the idea that this unregulated media just reflects the attitude of its readers, generally think of this media as supportive of political parties. There is the Conservative and Labour supporting press in the UK, and similarly for the US. In my view that idea is ten or twenty years out of date, and even then it underestimates the independence of the media organisations. (The Sun famously supported Blair in 1997). More and more it is the media that calls the shots, and the political parties follow.

Brexit would not have happened if it had remained the wish of a minority of Conservative MPs. It happened because of the right wing UK press. Brexit happened because this right wing press recognised a large section of their readership were disaffected from conventional politics, and began grooming them with stories of EU immigrants taking jobs, lowering wages and taking benefits (and sometimes much worse). These stories were not (always) false, but like all good propaganda they elevated a half-truth into a firm belief. Of course this grooming played on age old insecurities, but it magnified them into a political movement. Nationalism does the same. It did not just reflect readers existing views, but rather played on their doubts and fears and hopes and turned this into votes.

This is not to discount some of the very real grievances that led to the Brexit vote, or the racism that led to the election of Trump. This analysis of today's populism is important, as long as it does not get sidetracked into debates over identity versus economics. Stressing economic causes of populism does not devalue identity issues (like race or immigration), but it is the economics that causes the swings that help put populists in power. It was crucial, for example, to the trick that the media played to convince many to vote for Brexit: that EU immigrants and payments were reducing access to public services, whereas in reality the opposite is true.

Yet while economic issues may have created a winning majority for both Brexit and Trump, the identity issues sustained by the media make support for both hard to diminish. Brexit and Trump are expressions of identity, and often of what has been lost, which are very difficult to break down when sustained by the group's media. In addition both Trump and Brexit maintain, because their proponents want it to be maintained, the idea that it represents the normally ignored, striking back against the government machine in the capital city with all its experts.

But to focus on what some call the 'demand' for populism is in danger of missing at least half the story. Whatever legitimate grievances Brexit and Trump supporters may have had, they were used and will be betrayed. There is nothing in leaving the EU that will help the forgotten towns of England and Wales. Although he may try, Trump will not bring many manufacturing jobs back to the rust belt, and his antics with NAFTA may make things worse. Identifying the left behind is only half the story, because it does not tell you why they fell for the remedies of snake-oil salesmen.

As I wrote immediately after the vote in my most widely read post, Brexit was first and foremost a triumph for the UK right wing press. That press first fostered a party, UKIP, that embodied the views the press pushed. The threat of that party and defections to it then forced the Prime Minister to offer the referendum the press wanted. It was a right wing press that sold a huge lie about the UK economy, a lie the broadcast media bought, to ensure the Conservatives won the next election. When the referendum came, it was this right wing press that ensured enough votes were won and thereby overturned the government.

Equally Donald Trump was first and foremost the candidate of Fox News. As Bruce Bartlett has so eloquently written, Fox may have started off as a network that just supported Republicans, but its power steadily grew. Being partisan at Fox became misinforming its viewers, such that Fox viewers are clearly less well informed than viewers of other news providers. One analysis suggested over half of the facts stated on Fox are untrue: UK readers may well remember them reporting that Birmingham was a no-go area for non-Muslims.

Fox became a machine for keeping the base angry and fired up, believing that nothing could be worse than voting for a Democrat. It was Fox News that stopped Republican voters seeing that they were voting for a demagogue, concealed that he lied openly all the time, that incites hatred against other religions and ethnic groups, and makes its viewers believe that Clinton deserves to be locked up. It is not reflecting the views of its viewers, but moulding them. As economists have shown, the output of Fox does not optimise their readership, but optimises the propaganda power of its output. Despite occasional tiffs, Trump was the candidate of Fox in the primaries.

We have a right wing media organisation that has overthrown the Republican political establishment, and a right wing press that has overthrown a right wing government. How some political scientists can continue to analyse this as if the media were simply passive, supportive or even invisible when it brings down governments or subverts political parties I do not know.

The plutocracy

Trump and Brexit are the creations of a kind of plutocracy. Politics in the US has had strong plutocratic elements for some time, because of the way that money can sway elections. That gave finance a powerful influence in the Democratic party, and made the Republicans obsessive about cutting higher tax rates. In the UK plutocracy has been almost non-existent by comparison, and operated mainly through party funding and seats in the House of Lords, although we are still finding out where the money behind the Brexit campaign came from.

By focusing on what some call the demand side of populism rather than the supply side, we fail to see both Trump and Brexit as primarily expressions of plutocratic power. Trump's administration is plutocracy personified, and as Paul Pierson argues, its substantive agenda constitutes a full-throated endorsement of the GOP economic elite's long-standing agenda. The Brexiteers want to turn the UK into Singapore, a kind of neoliberalism that stresses markets should be free from government interference, rather than free to work for everyone, and that trade should be free from regulations, rather than regulations being harmonised so that business is free to trade.

It is also a mistake to see this plutocracy as designed to support capital. This should again be obvious from Brexit and Trump. It is in capital's interest to have borders open to goods and people rather than creating barriers and erecting walls. What a plutocracy will do is ensure that high inequality, in terms of the 1% or 0.1% etc, is maintained or even increased. Indeed many plutocrats amassed their wealth by extracting large sums from the firms for which they worked, wealth that might otherwise have gone to investors in the form of dividends. In this sense they are parasitic to capital. And this plutocracy will also ensure that social mobility is kept low so the membership of the plutocracy is sustained: social mobility goes with equality, as Pickett and Wilkinson show.

It is also a mistake to see what is happening as somehow the result of some kind of invisible committee of the 1% (or 0.1% and so on). The interests of the Koch brothers are not necessarily the interests of Trump (it is no accident the former want to help buy Time magazine). The interests of Arron Banks are not those of Lloyd Blankfein. Instead we are finding individual media moguls forming partnerships with particular politicians to press not only their business interests, but their individual political views as well. And in this partnership it is often clear who is dependent on whom. After all, media competition is slim while there are plenty of politicians.

What has this got to do with neoliberalism? which is supposed to be the dominant culture of the political right. As I argued here, it is a mistake to see neoliberalism as some kind of unified ideology. It may have a common core in terms of the primacy of the market, but how that is interpreted is not uniform. Are neoliberals in favour of free trade, or against? It appears that they can be both. Instead neoliberalism is a set of ideas based around a common belief in the market that different groups have used and interpreted to their advantage, while at the same time also being influenced by the ideology. Both interests and ideas matter. While some neoliberals see competition as the most valuable feature of capitalism, others will seek to stifle competition to preserve monopoly power. Brexiters and their press backers are neoliberals, just as the Cameron government they brought down were neoliberals.

I think there is some truth in the argument, made by Philip Mirowski among others, that a belief in neoliberalism can easily involve an anti-enlightenment belief that people need to be persuaded to subject themselves fully to the market. Certainly those on the neoliberal right are more easily persuaded to invest time and effort in the dark arts of spin than those on the left. But it would be going too far to suggest that all neoliberals are anti-democratic: as I have said, neoliberalism is diverse and divided. What I argued in my neoliberal overreach post was that neoliberalism as formulated in the UK and US had made it possible for the plutocracy we now see to become dominant.

....

kurt -> Christopher H.... , May 31, 2018 at 10:33 AM
Nobody wants you banned because you provide alternative opinions. I actually enjoy having a well considered argument with people who have differing opinions. We want you banned because you lie - constantly - about other peoples positions and you constantly gaslight. You are an expert propagandist, but not an expert in much else. In fact, you get most things wrong. Also - you are obnoxiously rude all the time. And you are always on the side of the Alex Jones/Rush Limbaugh types.
mulp said in reply to kurt... , May 31, 2018 at 12:28 PM
It's not so much that he lies but that he never defends his arguments when countered with facts and logic, basically doubling down like Trump in attacks on liberals arguing with facts and logic.

But most important, he never explains why an African economy or Cuba economy or Chavez-Maduro economy would be so much better. If they have such great economies, why hasn't he moved there?

Hey Cuba is close by. And the fact trade is been cut off by the US embargo should be a big plus given global trade is horrible for workers. The US government trade embargoes on Cuba are providing great benefits to Cuban workers who never lose their job from evil imports from the US.

And workers in Cuba benefit from lack of competition.

[May 31, 2018] Meet the Economist Behind the One Percent's Stealth Takeover of America by Lynn Parramore

Highly recommended!
This looks like Ann Rand philosophy: "The people who needed protection were property owners, and their rights could only be secured though constitutional limits to prevent the majority of voters from encroaching on them, an idea Buchanan lays out in works like Property as a Guarantor of Liberty (1993). MacLean observes that Buchanan saw society as a cutthroat realm of makers (entrepreneurs) constantly under siege by takers (everybody else) His own language was often more stark, warning the alleged "prey" of "parasites" and "predators" out to fleece them."
Notable quotes:
"... By Lynn Parramore, Senior Research Analyst, Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website ..."
"... The Limits of Liberty ..."
"... Property as a Guarantor of Liberty ..."
"... Brown v. Board of Education ..."
"... Calhoun, called the "Marx of the Master Class" by historian Richard Hofstadter, saw himself and his fellow southern oligarchs as victims of the majority. Therefore, as MacLean explains, he sought to create "constitutional gadgets" to constrict the operations of government ..."
"... She argues out that unlike even the most property-friendly founders Alexander Hamilton and James Madison, Buchanan wanted a private governing elite of corporate power that was wholly released from public accountability. ..."
"... Suppressing voting, changing legislative processes so that a normal majority could no longer prevail, sowing public distrust of government institutions -- all these were tactics toward the goal. But the Holy Grail was the Constitution: alter it and you could increase and secure the power of the wealthy in a way that no politician could ever challenge. ..."
"... MacLean observes that the Virginia school, as Buchanan's brand of economic and political thinking is known, is a kind of cousin to the better-known, market-oriented Chicago and Austrian schools -- proponents of all three were members of the Mont Pelerin Society, an international neoliberal organization which included Milton Friedman and Friedrich Hayek. But the Virginia school's focus and career missions were distinct. In an interview with the Institute for New Economic Thinking (INET), MacLean described Friedman and Buchanan as yin and yang: "Friedman was this genial, personable character who loved to be in the limelight and made a sunny case for the free market and the freedom to choose and so forth. Buchanan was the dark side of this: he thought, ok, fine, they can make a case for the free market, but everybody knows that free markets have externalities and other problems. So he wanted to keep people from believing that government could be the alternative to those problems." ..."
"... Buchanan's school focused on public choice theory, later adding constitutional economics and the new field of law and economics to its core research and advocacy. The economist saw that his vision would never come to fruition by focusing on who rules. It was much better to focus on the rules themselves , and that required a "constitutional revolution." ..."
"... MacLean describes how the economist developed a grand project to train operatives to staff institutions funded by like-minded tycoons, most significantly Charles Koch, who became interested in his work in the '70s and sought the economist's input in promoting "Austrian economics" in the U.S. and in advising the Cato Institute, a libertarian think tank. ..."
"... With Koch's money and enthusiasm, Buchanan's academic school evolved into something much bigger. By the 1990s, Koch realized that Buchanan's ideas -- transmitted through stealth and deliberate deception, as MacLean amply documents -- could help take government down through incremental assaults that the media would hardly notice. The tycoon knew that the project was extremely radical, even a "revolution" in governance, but he talked like a conservative to make his plans sound more palatable. ..."
"... At the 1997 fiftieth anniversary of the Mont Pelerin Society, MacLean recounts that Buchanan and his associate Henry Manne, a founding theorist of libertarian economic approaches to law, focused on such affronts to capitalists as environmentalism and public health and welfare, expressing eagerness to dismantle Social Security, Medicaid, and Medicare as well as kill public education because it tended to foster community values. Feminism had to go, too: the scholars considered it a socialist project. ..."
"... To put the success into perspective, MacLean points to the fact that Henry Manne, whom Buchanan was instrumental in hiring, created legal programs for law professors and federal judges which could boast that by 1990 two of every five sitting federal judges had participated. "40 percent of the U.S. federal judiciary," writes MacLean, "had been treated to a Koch-backed curriculum." ..."
"... Buchanan's role in the disastrous Pinochet government of Chile has been underestimated partly because unlike Milton Friedman, who advertised his activities, Buchanan had the shrewdness to keep his involvement quiet. With his guidance, the military junta deployed public choice economics in the creation of a new constitution, which required balanced budgets and thereby prevented the government from spending to meet public needs. Supermajorities would be required for any changes of substance, leaving the public little recourse to challenge programs like the privatization of social security. ..."
"... The Limits of Liberty ..."
"... MacLean is not the only scholar to sound the alarm that the country is experiencing a hostile takeover that is well on its way to radically, and perhaps permanently, altering the society. Peter Temin, former head of the MIT economics department, INET grantee, and author of The Vanishing Middle Class ..."
"... The One Percent Solution ..."
"... She observes, for example, that many liberals have missed the point of strategies like privatization. Efforts to "reform" public education and Social Security are not just about a preference for the private sector over the public sector, she argues. You can wrap your head around, even if you don't agree. Instead, MacLean contents, the goal of these strategies is to radically alter power relations, weakening pro-public forces and enhancing the lobbying power and commitment of the corporations that take over public services and resources, thus advancing the plans to dismantle democracy and make way for a return to oligarchy. The majority will be held captive so that the wealthy can finally be free to do as they please, no matter how destructive. ..."
"... MacLean argues that despite the rhetoric of Virginia school acolytes, shrinking big government is not really the point. The oligarchs require a government with tremendous new powers so that they can bypass the will of the people. This, as MacLean points out, requires greatly expanding police powers "to control the resultant popular anger." The spreading use of pre-emption by GOP-controlled state legislatures to suppress local progressive victories such as living wage ordinances is another example of the right's aggressive use of state power. ..."
"... They could, and have ..."
"... Getting it done ..."
"... Why I, Too, Am Not a Conservative ..."
May 31, 2018 | www.nakedcapitalism.com
May 31, 2018 By Lynn Parramore, Senior Research Analyst, Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website

Nobel laureate James Buchanan is the intellectual lynchpin of the Koch-funded attack on democratic institutions, argues Duke historian Nancy MacLean

Ask people to name the key minds that have shaped America's burst of radical right-wing attacks on working conditions, consumer rights and public services, and they will typically mention figures like free market-champion Milton Friedman, libertarian guru Ayn Rand, and laissez-faire economists Friedrich Hayek and Ludwig von Mises.

James McGill Buchanan is a name you will rarely hear unless you've taken several classes in economics. And if the Tennessee-born Nobel laureate were alive today, it would suit him just fine that most well-informed journalists, liberal politicians, and even many economics students have little understanding of his work.

The reason? Duke historian Nancy MacLean contends that his philosophy is so stark that even young libertarian acolytes are only introduced to it after they have accepted the relatively sunny perspective of Ayn Rand. (Yes, you read that correctly). If Americans really knew what Buchanan thought and promoted, and how destructively his vision is manifesting under their noses, it would dawn on them how close the country is to a transformation most would not even want to imagine, much less accept.

That is a dangerous blind spot, MacLean argues in a meticulously researched book, Democracy in Chains , a finalist for the National Book Award in Nonfiction. While Americans grapple with Donald Trump's chaotic presidency, we may be missing the key to changes that are taking place far beyond the level of mere politics. Once these changes are locked into place, there may be no going back.

An Unlocked Door in Virginia

MacLean's book reads like an intellectual detective story. In 2010, she moved to North Carolina, where a Tea Party-dominated Republican Party got control of both houses of the state legislature and began pushing through a radical program to suppress voter rights, decimate public services, and slash taxes on the wealthy that shocked a state long a beacon of southern moderation. Up to this point, the figure of James Buchanan flickered in her peripheral vision, but as she began to study his work closely, the events in North Carolina and also Wisconsin, where Governor Scott Walker was leading assaults on collective bargaining rights, shifted her focus.

Could it be that this relatively obscure economist's distinctive thought was being put forcefully into action in real time?

MacLean could not gain access to Buchanan's papers to test her hypothesis until after his death in January 2013. That year, just as the government was being shut down by Ted Cruz & Co., she traveled to George Mason University in Virginia, where the economist's papers lay willy-nilly across the offices of a building now abandoned by the Koch-funded faculty to a new, fancier center in Arlington.

MacLean was stunned. The archive of the man who had sought to stay under the radar had been left totally unsorted and unguarded. The historian plunged in, and she read through boxes and drawers full of papers that included personal correspondence between Buchanan and billionaire industrialist Charles Koch. That's when she had an amazing realization: here was the intellectual lynchpin of a stealth revolution currently in progress.

A Theory of Property Supremacy

Buchanan, a 1940 graduate of Middle Tennessee State University who later attended the University of Chicago for graduate study, started out as a conventional public finance economist. But he grew frustrated by the way in which economic theorists ignored the political process.

Buchanan began working on a description of power that started out as a critique of how institutions functioned in the relatively liberal 1950s and '60s, a time when economist John Maynard Keynes's ideas about the need for government intervention in markets to protect people from flaws so clearly demonstrated in the Great Depression held sway. Buchanan, MacLean notes, was incensed at what he saw as a move toward socialism and deeply suspicious of any form of state action that channels resources to the public. Why should the increasingly powerful federal government be able to force the wealthy to pay for goods and programs that served ordinary citizens and the poor?

In thinking about how people make political decisions and choices, Buchanan concluded that you could only understand them as individuals seeking personal advantage. In interview cited by MacLean, the economist observed that in the 1950s Americans commonly assumed that elected officials wanted to act in the public interest. Buchanan vehemently disagreed -- that was a belief he wanted, as he put it, to "tear down." His ideas developed into a theory that came to be known as "public choice."

Buchanan's view of human nature was distinctly dismal. Adam Smith saw human beings as self-interested and hungry for personal power and material comfort, but he also acknowledged social instincts like compassion and fairness. Buchanan, in contrast, insisted that people were primarily driven by venal self-interest. Crediting people with altruism or a desire to serve others was "romantic" fantasy: politicians and government workers were out for themselves, and so, for that matter, were teachers, doctors, and civil rights activists. They wanted to control others and wrest away their resources: "Each person seeks mastery over a world of slaves," he wrote in his 1975 book, The Limits of Liberty .

Does that sound like your kindergarten teacher? It did to Buchanan.

The people who needed protection were property owners, and their rights could only be secured though constitutional limits to prevent the majority of voters from encroaching on them, an idea Buchanan lays out in works like Property as a Guarantor of Liberty (1993). MacLean observes that Buchanan saw society as a cutthroat realm of makers (entrepreneurs) constantly under siege by takers (everybody else) His own language was often more stark, warning the alleged "prey" of "parasites" and "predators" out to fleece them.

In 1965 the economist launched a center dedicated to his theories at the University of Virginia, which later relocated to George Mason University. MacLean describes how he trained thinkers to push back against the Brown v. Board of Education decision to desegregate America's public schools and to challenge the constitutional perspectives and federal policy that enabled it. She notes that he took care to use economic and political precepts, rather than overtly racial arguments, to make his case, which nonetheless gave cover to racists who knew that spelling out their prejudices would alienate the country.

All the while, a ghost hovered in the background -- that of John C. Calhoun of South Carolina, senator and seventh vice president of the United States.

Calhoun was an intellectual and political powerhouse in the South from the 1820s until his death in 1850, expending his formidable energy to defend slavery. Calhoun, called the "Marx of the Master Class" by historian Richard Hofstadter, saw himself and his fellow southern oligarchs as victims of the majority. Therefore, as MacLean explains, he sought to create "constitutional gadgets" to constrict the operations of government.

Economists Tyler Cowen and Alexander Tabarrok, both of George Mason University, have noted the two men's affinities, heralding Calhoun "a precursor of modern public choice theory" who "anticipates" Buchanan's thinking. MacLean observes that both focused on how democracy constrains property owners and aimed for ways to restrict the latitude of voters. She argues out that unlike even the most property-friendly founders Alexander Hamilton and James Madison, Buchanan wanted a private governing elite of corporate power that was wholly released from public accountability.

Suppressing voting, changing legislative processes so that a normal majority could no longer prevail, sowing public distrust of government institutions -- all these were tactics toward the goal. But the Holy Grail was the Constitution: alter it and you could increase and secure the power of the wealthy in a way that no politician could ever challenge.

Gravy Train to Oligarchy

MacLean explains that Virginia's white elite and the pro-corporate president of the University of Virginia, Colgate Darden, who had married into the DuPont family, found Buchanan's ideas to be spot on. In nurturing a new intelligentsia to commit to his values, Buchanan stated that he needed a "gravy train," and with backers like Charles Koch and conservative foundations like the Scaife Family Charitable Trusts, others hopped aboard. Money, Buchanan knew, can be a persuasive tool in academia. His circle of influence began to widen.

MacLean observes that the Virginia school, as Buchanan's brand of economic and political thinking is known, is a kind of cousin to the better-known, market-oriented Chicago and Austrian schools -- proponents of all three were members of the Mont Pelerin Society, an international neoliberal organization which included Milton Friedman and Friedrich Hayek. But the Virginia school's focus and career missions were distinct. In an interview with the Institute for New Economic Thinking (INET), MacLean described Friedman and Buchanan as yin and yang: "Friedman was this genial, personable character who loved to be in the limelight and made a sunny case for the free market and the freedom to choose and so forth. Buchanan was the dark side of this: he thought, ok, fine, they can make a case for the free market, but everybody knows that free markets have externalities and other problems. So he wanted to keep people from believing that government could be the alternative to those problems."

The Virginia school also differs from other economic schools in a marked reliance on abstract theory rather than mathematics or empirical evidence. That a Nobel Prize was awarded in 1986 to an economist who so determinedly bucked the academic trends of his day was nothing short of stunning, MacLean observes. But, then, it was the peak of the Reagan era, an administration several Buchanan students joined.

Buchanan's school focused on public choice theory, later adding constitutional economics and the new field of law and economics to its core research and advocacy. The economist saw that his vision would never come to fruition by focusing on who rules. It was much better to focus on the rules themselves , and that required a "constitutional revolution."

MacLean describes how the economist developed a grand project to train operatives to staff institutions funded by like-minded tycoons, most significantly Charles Koch, who became interested in his work in the '70s and sought the economist's input in promoting "Austrian economics" in the U.S. and in advising the Cato Institute, a libertarian think tank.

Koch, whose mission was to save capitalists like himself from democracy, found the ultimate theoretical tool in the work of the southern economist. The historian writes that Koch preferred Buchanan to Milton Friedman and his "Chicago boys" because, she says, quoting a libertarian insider, they wanted "to make government work more efficiently when the true libertarian should be tearing it out at the root."

With Koch's money and enthusiasm, Buchanan's academic school evolved into something much bigger. By the 1990s, Koch realized that Buchanan's ideas -- transmitted through stealth and deliberate deception, as MacLean amply documents -- could help take government down through incremental assaults that the media would hardly notice. The tycoon knew that the project was extremely radical, even a "revolution" in governance, but he talked like a conservative to make his plans sound more palatable.

MacLean details how partnered with Koch, Buchanan's outpost at George Mason University was able to connect libertarian economists with right-wing political actors and supporters of corporations like Shell Oil, Exxon, Ford, IBM, Chase Manhattan Bank, and General Motors. Together they could push economic ideas to public through media, promote new curricula for economics education, and court politicians in nearby Washington, D.C.

At the 1997 fiftieth anniversary of the Mont Pelerin Society, MacLean recounts that Buchanan and his associate Henry Manne, a founding theorist of libertarian economic approaches to law, focused on such affronts to capitalists as environmentalism and public health and welfare, expressing eagerness to dismantle Social Security, Medicaid, and Medicare as well as kill public education because it tended to foster community values. Feminism had to go, too: the scholars considered it a socialist project.

The Oligarchic Revolution Unfolds

Buchanan's ideas began to have huge impact, especially in America and in Britain. In his home country, the economist was deeply involved efforts to cut taxes on the wealthy in 1970s and 1980s and he advised proponents of Reagan Revolution in their quest to unleash markets and posit government as the "problem" rather than the "solution." The Koch-funded Virginia school coached scholars, lawyers, politicians, and business people to apply stark right-wing perspectives on everything from deficits to taxes to school privatization. In Britain, Buchanan's work helped to inspire the public sector reforms of Margaret Thatcher and her political progeny.

To put the success into perspective, MacLean points to the fact that Henry Manne, whom Buchanan was instrumental in hiring, created legal programs for law professors and federal judges which could boast that by 1990 two of every five sitting federal judges had participated. "40 percent of the U.S. federal judiciary," writes MacLean, "had been treated to a Koch-backed curriculum."

MacLean illustrates that in South America, Buchanan was able to first truly set his ideas in motion by helping a bare-knuckles dictatorship ensure the permanence of much of the radical transformation it inflicted on a country that had been a beacon of social progress. The historian emphasizes that Buchanan's role in the disastrous Pinochet government of Chile has been underestimated partly because unlike Milton Friedman, who advertised his activities, Buchanan had the shrewdness to keep his involvement quiet. With his guidance, the military junta deployed public choice economics in the creation of a new constitution, which required balanced budgets and thereby prevented the government from spending to meet public needs. Supermajorities would be required for any changes of substance, leaving the public little recourse to challenge programs like the privatization of social security.

The dictator's human rights abuses and pillage of the country's resources did not seem to bother Buchanan, MacLean argues, so long as the wealthy got their way. "Despotism may be the only organizational alternative to the political structure that we observe," the economist had written in The Limits of Liberty . If you have been wondering about the end result of the Virginia school philosophy, well, the economist helpfully spelled it out.

A World of Slaves

Most Americans haven't seen what's coming.

MacLean notes that when the Kochs' control of the GOP kicked into high gear after the financial crisis of 2007-08, many were so stunned by the "shock-and-awe" tactics of shutting down government, destroying labor unions, and rolling back services that meet citizens' basic necessities that few realized that many leading the charge had been trained in economics at Virginia institutions, especially George Mason University. Wasn't it just a new, particularly vicious wave of partisan politics?

It wasn't. MacLean convincingly illustrates that it was something far more disturbing.

MacLean is not the only scholar to sound the alarm that the country is experiencing a hostile takeover that is well on its way to radically, and perhaps permanently, altering the society. Peter Temin, former head of the MIT economics department, INET grantee, and author of The Vanishing Middle Class , as well as economist Gordon Lafer of the University of Oregon and author of The One Percent Solution , have provided eye-opening analyses of where America is headed and why. MacLean adds another dimension to this dystopian big picture, acquainting us with what has been overlooked in the capitalist right wing's playbook.

She observes, for example, that many liberals have missed the point of strategies like privatization. Efforts to "reform" public education and Social Security are not just about a preference for the private sector over the public sector, she argues. You can wrap your head around, even if you don't agree. Instead, MacLean contents, the goal of these strategies is to radically alter power relations, weakening pro-public forces and enhancing the lobbying power and commitment of the corporations that take over public services and resources, thus advancing the plans to dismantle democracy and make way for a return to oligarchy. The majority will be held captive so that the wealthy can finally be free to do as they please, no matter how destructive.

MacLean argues that despite the rhetoric of Virginia school acolytes, shrinking big government is not really the point. The oligarchs require a government with tremendous new powers so that they can bypass the will of the people. This, as MacLean points out, requires greatly expanding police powers "to control the resultant popular anger." The spreading use of pre-emption by GOP-controlled state legislatures to suppress local progressive victories such as living wage ordinances is another example of the right's aggressive use of state power.

Could these right-wing capitalists allow private companies to fill prisons with helpless citizens -- or, more profitable still, right-less undocumented immigrants? They could, and have . Might they engineer a retirement crisis by moving Americans to inadequate 401(k)s? Done . Take away the rights of consumers and workers to bring grievances to court by making them sign forced arbitration agreements? Check . Gut public education to the point where ordinary people have such bleak prospects that they have no energy to fight back? Getting it done .

Would they even refuse children clean water? Actually, yes.

MacLean notes that in Flint, Michigan, Americans got a taste of what the emerging oligarchy will look like -- it tastes like poisoned water. There, the Koch-funded Mackinac Center pushed for legislation that would allow the governor to take control of communities facing emergency and put unelected managers in charge. In Flint, one such manager switched the city's water supply to a polluted river, but the Mackinac Center's lobbyists ensured that the law was fortified by protections against lawsuits that poisoned inhabitants might bring. Tens of thousands of children were exposed to lead, a substance known to cause serious health problems including brain damage.

Tyler Cowen has provided an economic justification for this kind of brutality, stating that where it is difficult to get clean water, private companies should take over and make people pay for it. "This includes giving them the right to cut off people who don't -- or can't -- pay their bills," the economist explains.

To many this sounds grotesquely inhumane, but it is a way of thinking that has deep roots in America. In Why I, Too, Am Not a Conservative (2005), Buchanan considers the charge of heartlessness made against the kind of classic liberal that he took himself to be. MacLean interprets his discussion to mean that people who "failed to foresee and save money for their future needs" are to be treated, as Buchanan put it, "as subordinate members of the species, akin to animals who are dependent.'"

Do you have your education, health care, and retirement personally funded against all possible exigencies? Then that means you.

Buchanan was not a dystopian novelist. He was a Nobel Laureate whose sinister logic exerts vast influence over America's trajectory. It is no wonder that Cowen, on his popular blog Marginal Revolution, does not mention Buchanan on a list of underrated influential libertarian thinkers, though elsewhere on the blog, he expresses admiration for several of Buchanan's contributions and acknowledges that the southern economist "thought more consistently in terms of 'rules of the games' than perhaps any other economist."

The rules of the game are now clear.

Research like MacLean's provides hope that toxic ideas like Buchanan's may finally begin to face public scrutiny. Yet at this very moment, the Kochs' State Policy Network and the American Legislative Exchange Council (ALEC), a group that connects corporate agents to conservative lawmakers to produce legislation, are involved in projects that the Trump-obsessed media hardly notices, like pumping money into state judicial races. Their aim is to stack the legal deck against Americans in ways that MacLean argues may have even bigger effects than Citizens United, the 2010 Supreme Court ruling which unleashed unlimited corporate spending on American politics. The goal is to create a judiciary that will interpret the Constitution in favor of corporations and the wealthy in ways that Buchanan would have heartily approved.

"The United States is now at one of those historic forks in the road whose outcome will prove as fateful as those of the 1860s, the 1930s, and the 1960s," writes MacLean. "To value liberty for the wealthy minority above all else and enshrine it in the nation's governing rules, as Calhoun and Buchanan both called for and the Koch network is achieving, play by play, is to consent to an oligarchy in all but the outer husk of representative form."

Nobody can say we weren't warned.

[May 30, 2018] How Media Amnesia Has Trapped Us in a Neoliberal Groundhog Day

Highly recommended!
Notable quotes:
"... By Laura Basu, a Marie Curie Research Fellow at Cardiff School of Journalism, Media and Culture. Originally published at openDemocracy ..."
"... This ideology spread through the media from the 1980s ..."
"... Fast-forward to April 2009, barely 6 months after the announcement of a £500 billion bank bailout. A media hysteria was nowraging around Britain's deficit . While greedy bankers were still taking some of the blame, the systemic problems in finance and the problems with the free-market model had been forgotten. Instead, public profligacy had become the dominant explanation for the deficit. The timeline of the crisis was being erased and rewritten. ..."
"... These measures were a ramped-up version of the kinds of reforms that had produced the crisis in the first place. This fact, however, was forgotten. These 'pro-business' moves were enthusiastically embraced by the media, far more so than austerity. Of the 5 outlets analysed (The BBC, Telegraph, Sun, Guardian and Mirror), only the Guardian rejected them more frequently than endorsing them. ..."
"... "One of the saddest lessons of history is this: If we've been bamboozled long enough, we tend to reject any evidence of the bamboozle. We're no longer interested in finding out the truth. The bamboozle has captured us. It's simply too painful to acknowledge, even to ourselves, that we've been taken. Once you give a charlatan power over you, you almost never get it back." ..."
"... This post is disheartening in so many ways. Start with "media hysteria" -- adding yet another glib coinage to hide a lack of explanation behind a simple but innapt analogy like the endless "addictions" from which personifications of various abstract entities suffer. ..."
"... This coinage presupposes a media sufficiently free to be possessed by hysteria. Dancing puppets might with some art appear "hysterical". And the strange non-death of Neoliberalsm isn't so strange or poorly understood in 2018 though the detailed explanation hasn't reached as many as one might have hoped, including the authors of this brief post. Consider their unhappy mashup of thoughts in a key sentence of the first paragraph: "This power has been maintained with the help of a robust ideology centred on free markets (though in reality markets are captured by corporations and are maintained by the state) and the superiority of the private sector over the public sector." The tail of this sentence obviates the rest of the post. And we ought not ignore the detail that Neoliberalism believes in the Market as a solution to all problems -- NOT the 'free market' of neoclassical economics or libertarian ideology. ..."
"... From "media hysteria" the post postulates "amnesia" of a public convinced of "greedy bankers" who need regulation. In the U.S. the propaganda was more subtle -- at least in my opinion. We were fed the "bad apples" theory mocked in a brief series of media clips presented in the documentary film "Inside Job". Those clips suggest a better explanation for the swift media transitions from banking reform to balanced budgets and austerity with more tax cuts for the wealthy than "amnesia" or "hyper-amnesia". The media Corporations are tightly controlled by the same forces that captured Corporations and -- taking the phrase "the superiority of the private sector over the public sector" in the sense that a superior directs an inferior [rather than the intended(?) sense] -- direct and essentially own our governments. ..."
"... The remarkable thing about public discourse and political and economic news reporting is how superficial it has become, so devoid of a foundation of any kind in history or theory. You can not have an effective critique of society or the economy or anything, if you do not see a system with a history and think it matters. Neoliberalism has become what people say when they think none of it really matters; it is all just noise. ..."
"... "Neoliberalism has become what people say when they think none of it really matters; it is all just noise." ..."
"... I also think that the crisis of neoliberalism echos a problem caused by capitalism, itself. I think David Harvey stated that "capitalism doesn't solve problems, it often just moves them around". ..."
"... Matt Stoller tweet from August 2017, as germane now as ever: "The political crisis we are facing is simple. American commerce, law, finance, and politics is organized around cheating people." ..."
"... George Orwell noted that the middle class Left couldn't handle dealing with real working class people, although there isn't the same huge gulf these days, I believe there is still a vestige of it due to the British class system. The Fabians set up shop in the East End around the turn of the last century & directly rubbed shoulders with the likes of Coster Mongers – a combination that led to a strike that was one of the first success stories in the attempt to get a few more crumbs than what was usually allowed to fall from the top table. ..."
"... If Neoliberalism is now being noticed I imagine that it is because of it's success in working it's way up the food chain. After all these same Middle classes for the most part did not care much for the plight of the poor during those Victorian values. Many could not wait to employ maids of all work who slaved for up to fourteen hours a day with only Sunday afternoon's off. The Suffragettes had a real problem with this as their relatively comfortable lives would soon descend into drudgery without their servants. ..."
"... Coincidentally, the NYT article on Austerity Britain is the closest I have read to an accurate picture that I have seen for a good while. ..."
"... It's also not a new thing. British media worship of neoliberalism has been growing since the 1980s, at the same time as newspapers have been closing and media sources of all kinds laying off their staff. 2008 was a temporary blip, and since the average journalist has the attention span of a hamster, it was back to usual a few months later. Once the crash stopped being "news" old patterns reasserted themselves. I wonder, incidentally, how many economics journalists in the UK actually remember the time before neoliberalism? ..."
"... Consuming corporate media is increasingly a bizarro-world experience. Even something like the Trump scandal/constitutional crisis/investigation seems like the arrogant internecine warfare of corrupt factions of the establishment. Meanwhile, Americans are increasingly living out of their cars. ..."
"... 1. Oligarchs having captured thoroughly the media, the legislatures and the judiciary, (as well as large parts of what might be construed as "liberal" political organisations e.g. the Democratic Party of the USA) ..."
May 30, 2018 | www.nakedcapitalism.com

Posted on May 29, 2018 by Yves Smith Yves here. I'm sure readers could write a US version of this timeline despite the fact that we had a second crisis and bailout, that of way more foreclosures than were warranted, thanks to lousy incentives to mortgage servicers and lack of political will to intervene, and foreclosure fraud to cover up for chain of title failures.

By Laura Basu, a Marie Curie Research Fellow at Cardiff School of Journalism, Media and Culture. Originally published at openDemocracy

It hasn't escaped many people's attention that, a decade after the biggest economic crash of a generation, the economic model producing that meltdown has not exactly been laid to rest. The crisis in the NHS and the Carillion and Capital scandals are testament to that. Sociologist Colin Crouch wrote a book in 2011 about the 'strange non-death of neoliberalism', arguing that the neoliberal model is centred on the needs of corporations and that corporate power actually intensified after the 2008 financial meltdown. This power has been maintained with the help of a robust ideology centred on free markets (though in reality markets are captured by corporations and are maintained by the state) and the superiority of the private sector over the public sector. It advocates privatisation, cuts in public spending, deregulation and tax cuts for businesses and high earners.

This ideology spread through the media from the 1980s , and the media have continued to play a key role in its persistence through a decade of political and economic turmoil since the 2008 crash. They have done this largely via an acute amnesia about the causes of the crisis, an amnesia that helped make policies like austerity, privatisation and corporate tax breaks appear as common sense responses to the problems.

This amnesia struck at dizzying speed. My research carried out at Cardiff University shows that in 2008 at the time of the banking collapse, the main explanations given for the problems were financial misconduct ('greedy bankers'), systemic problems with the financial sector, and the faulty free-market model. These explanations were given across the media spectrum, with even the Telegraph and Sun complaining about a lack of regulation . Banking reform was advocated across the board.

Fast-forward to April 2009, barely 6 months after the announcement of a £500 billion bank bailout. A media hysteria was nowraging around Britain's deficit . While greedy bankers were still taking some of the blame, the systemic problems in finance and the problems with the free-market model had been forgotten. Instead, public profligacy had become the dominant explanation for the deficit. The timeline of the crisis was being erased and rewritten.

Correspondingly, financial and corporate regulation were forgotten. Instead, austerity became the star of the show, eclipsing all other possible solutions to the crisis. As a response to the deficit, austerity was mentioned 2.5 as many times as the next most covered policy-response option, which was raising taxes on the wealthy. Austerity was mentioned 18 times more frequently than tackling tax avoidance and evasion. Although coverage of austerity was polarized, no media outlet rejected it outright, and even the left-leaning press implicitly (and sometimes explicitly) backed 'austerity lite'.

In 2010, the Conservative-Lib Dem government announced £99 billion in spending cuts and £29 billion in tax increases per year by 2014-15. Having made these 'tough choices', from 2011 the coalition wanted to focus attention away from austerity and towards growth (which was, oops, being stalled by austerity). To do this, they pursued a zealously 'pro-business' agenda, including privatisation, deregulation, cutting taxes for the highest earners, and cutting corporation tax in 2011, 2012, 2013, and in 2015 and 2016 under a Conservative government.

These measures were a ramped-up version of the kinds of reforms that had produced the crisis in the first place. This fact, however, was forgotten. These 'pro-business' moves were enthusiastically embraced by the media, far more so than austerity. Of the 5 outlets analysed (The BBC, Telegraph, Sun, Guardian and Mirror), only the Guardian rejected them more frequently than endorsing them.

The idea behind these policies is that what's good for business is good for everyone. If businesses are handed more resources, freed from regulation and handed tax breaks, they will be encouraged to invest in the economy, creating jobs and growth. The rich are therefore 'job creators' and 'wealth creators'.

This is despite the fact that these policies have an impressive fail rate. Business investment and productivity growth remain low, as corporations spend the savings not on training and innovation but on share buy-backs and shareholder dividends. According to the Financial Times, in 2014, the top 500 US companies returned 95 per cent of their profits to shareholders in dividends and buybacks. Meanwhile, inequality is spiralling and in the UK more than a million people are using food banks .

Poverty and inequality, meanwhile, attracted surprising little media attention. Of my sample of 1,133 media items, only 53 had a primary focus on living standards, poverty or inequality. This confirms other researchshowing a lack of media attention to these issues . Of these 53 items, the large majority were from the Guardian and Mirror. The coverage correctly identified austerity as a primary cause of these problems. However, deeper explanations were rare. Yet again, the link back to the 2008 bank meltdown wasn't made, let alone the long-term causes of that meltdown. Not only that, the coverage failed even to identify the role of most of the policies pursued since the onset of the crisis in producing inequality – such as the bank bailouts, quantitative easing, and those 'pro-business' measures like corporation tax cuts and privatisation.

And so it seems we are living with a hyper-amnesia , in which it is increasingly difficult to reconstruct timelines and distinguish causes from effects. This amnesia has helped trap us in a neoliberal groundhog day. The political consensus around the free market model finally seems to be breaking. If we are to find a way out, we will need to have a lot more conversations about how to organise both our media systems and our economies.


Summer , May 29, 2018 at 10:31 am

Tick-Tock.
It depends. Do you believe the worst can be avoided or do you believe the world is already knee deep in all the things we're told to be afraid will happen? There is a big difference between organizing for reform and organizing to break capture.

makedoanmend , May 29, 2018 at 10:42 am

" Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

Surely some revelation is at hand;
Surely the Second Coming is at hand "

W.B. Yeats

I suppose we can take some succour from the fact that WWI (and the Spanish flu) seemed to be a harbinger of worse to come but we're still here

Doug , May 29, 2018 at 11:21 am

The hyper-amnesia ground hog problem described in the post happens, in part, because the 'centre continues to hold'. It demonstrates the center can, and does, hold. We don't want the centre to hold. We want it to disappear and get replaced by policies and perspectives keen on an economy (and society) that works for all, not just some

makedoanmend , May 29, 2018 at 11:33 am

I know what you're saying and I tend to agree. But the centre to Yeats (my interpretation, anyway) is that there is a cultural centre both apart from but also part of the social centre, and when that centre goes all hell breaks loose. Meaning of events becomes very confused or impossible to understand on many levels.

Then, it's often the little people (and don't go making jokes about leprechauns) that get crushed in the confusion.

Pam of Nantucket , May 29, 2018 at 10:32 am

We should reflect about the root causes of why our information is not informing us. How can decades go by with the meme "smoking has not been conclusively proven to cause cancer" or now "the science of climate change is inconclusive", not to mention countless similar horror stories in pharma. Bullshit about the effectiveness of supply side economics is no different.

Somehow we collectively need to expect and demand more objectivity from our information sources. We fall for the fox guarding hen houses scam over and over, from TARP bailouts, to FDA approvals to WMD claims. Not sure of the answer, but I know from talking with my boomer parents, skepticism about information sources is not in the DNA of many information consumers.

Isotope_C14 , May 29, 2018 at 11:52 am

"One of the saddest lessons of history is this: If we've been bamboozled long enough, we tend to reject any evidence of the bamboozle. We're no longer interested in finding out the truth. The bamboozle has captured us. It's simply too painful to acknowledge, even to ourselves, that we've been taken. Once you give a charlatan power over you, you almost never get it back."

― Carl Sagan, The Demon-Haunted World: Science as a Candle in the Dark

One of Sagan's best, I loaned this out to a not terribly thoughtful acquaintance and I was told it was "too preachy".

I guess Sagan proves himself correct time and time again.

Off The Street , May 29, 2018 at 2:56 pm

Bamboozlers often look to bezzle. That should give anyone pause.

steelhead23 , May 29, 2018 at 12:43 pm

It is also worth noting that a number of newspapers lauded Hitler's rise to power – they overlooked violence against Jews because the trains ran on time. Nor should we ignore disinformation campaigns, led by newspapers (e.g. Hearst and cannabis). In general, each media outlet is a reflection of its owners, most of whom are rich and adverse to any suggestion that we "tax the rich."

sharonsj , May 29, 2018 at 1:59 pm

I've come to the conclusion that we don't have a media anymore. I was watching MSNBC this AM discuss the "missing" 1500 immigrant children. The agency responsible says it calls the people who now have the kids, but most of the people don't call back within the 30-day requirement period.

Now the next logical questions to ask the rep would be: What happens after 30 days? Do you keep calling them? Do send out investigators?" But are these questions asked? No. Instead we get speculation or non-answers. It's the same with every issue.

The internet is not any better. Many articles are just repeating what appears elsewhere with no one checking the facts, even on respected sites. I also got a chain email today regarding petition for a Constitutional Convention. The impetus is a list of grievances ranging from "a congressman can retire after just one term with a full pension" to "children of congressmen don't have to pay back college loans." I already knew most of the claims weren't true but the 131 recipients of the organization I belong to didn't. I did find out that this chain email has been circulating on the internet for five years and it is the work of a conservative groups whose real aim is to stop abortion and make Christianity the law of the land. I was not surprised.

I have said for years that there is no news on the news. And I have repeated this meme for just as long: There is a reason why America is called Planet Stupid.

lewis e , May 29, 2018 at 2:43 pm

On the 1500

https://twitter.com/jduffyrice/status/1000927903759110144

JBird , May 29, 2018 at 3:38 pm

Now the next logical questions to ask the rep would be: What happens after 30 days? Do you keep calling them? Do send out investigators?" But are these questions asked? No. Instead we get speculation or non-answers. It's the same with every issue.

Even competent reporting takes practice, time, and effort, even money sometimes. The same with even half way competent governing. Neither is rewarded, and are often punished, for doing nowadays; asking as a follow-up question "did you call the local police or send over a pair of ICE officers just to politely knock on the door?" Police do people checks all the time. "I haven't see so and so for a week", or "my relative hasn't returned my calls for a month, can you?" It is possible that the paperwork just got lost and asking the guardians/family some questions personally would solve.

But all that is boring bovine excrement, which is just not done.

Jeremy Grimm , May 29, 2018 at 2:41 pm

This post is disheartening in so many ways. Start with "media hysteria" -- adding yet another glib coinage to hide a lack of explanation behind a simple but innapt analogy like the endless "addictions" from which personifications of various abstract entities suffer.

This coinage presupposes a media sufficiently free to be possessed by hysteria. Dancing puppets might with some art appear "hysterical". And the strange non-death of Neoliberalsm isn't so strange or poorly understood in 2018 though the detailed explanation hasn't reached as many as one might have hoped, including the authors of this brief post. Consider their unhappy mashup of thoughts in a key sentence of the first paragraph: "This power has been maintained with the help of a robust ideology centred on free markets (though in reality markets are captured by corporations and are maintained by the state) and the superiority of the private sector over the public sector." The tail of this sentence obviates the rest of the post. And we ought not ignore the detail that Neoliberalism believes in the Market as a solution to all problems -- NOT the 'free market' of neoclassical economics or libertarian ideology.

From "media hysteria" the post postulates "amnesia" of a public convinced of "greedy bankers" who need regulation. In the U.S. the propaganda was more subtle -- at least in my opinion. We were fed the "bad apples" theory mocked in a brief series of media clips presented in the documentary film "Inside Job". Those clips suggest a better explanation for the swift media transitions from banking reform to balanced budgets and austerity with more tax cuts for the wealthy than "amnesia" or "hyper-amnesia". The media Corporations are tightly controlled by the same forces that captured Corporations and -- taking the phrase "the superiority of the private sector over the public sector" in the sense that a superior directs an inferior [rather than the intended(?) sense] -- direct and essentially own our governments.

orangecats , May 29, 2018 at 10:09 pm

"skepticism about information sources is not in the DNA of many information consumers"

This.

bruce wilder , May 29, 2018 at 11:37 am

The essayist complains that poverty and the manifest failures of neoliberalism get little critical attention, but she leads off, "It hasn't escaped many people's attention . . ."

The remarkable thing about public discourse and political and economic news reporting is how superficial it has become, so devoid of a foundation of any kind in history or theory. You can not have an effective critique of society or the economy or anything, if you do not see a system with a history and think it matters. Neoliberalism has become what people say when they think none of it really matters; it is all just noise.

Summer , May 29, 2018 at 4:48 pm

"Neoliberalism has become what people say when they think none of it really matters; it is all just noise."

There is a connection there with movies like Deadpool 2.

JohnnyGL , May 29, 2018 at 1:35 pm

Another thing to recall was how quickly talk of nationalizing banks evaporated. Even Paul Krugman, among others were supporting the idea that "real capitalists nationalize".

Once LIBOR came down, and the lending channels began to reopen, the happy talk ensued and the amnesia kicked in strongly.

I also think that the crisis of neoliberalism echos a problem caused by capitalism, itself. I think David Harvey stated that "capitalism doesn't solve problems, it often just moves them around".

The financial crisis and austerity have now manifested themselves into a media crisis of elites and elite legitimacy (BREXIT, Trump's election, etc). The ability to manufacture consent is running into increased difficulty. I don't think the financial crisis narrative shift helped very much at all. A massive crime requires an equally massive cover-up, naturally.

WheresOurTeddy , May 29, 2018 at 1:41 pm

Why, it's almost as if 90% of all media outlets are owned by 5 multibillion dollar conglomerates, controlled by the top 0.1%, for the purposes of protecting their unearned parasitic power, and the employees making six-to-low-seven figures are on the Upton Sinclair "paycheck demands I not understand it" model.

Or it's amnesia.

Matt Stoller tweet from August 2017, as germane now as ever: "The political crisis we are facing is simple. American commerce, law, finance, and politics is organized around cheating people."

maria gostrey , May 29, 2018 at 2:13 pm

this is why frank sobotka got my vote in the 2016 election:

https://m.youtube.com/watch?v=T-j5XWo1fPI#

KLG , May 29, 2018 at 9:56 pm

A big thumbs up for that! Sobotka was a hero in very dark times.

As my brother-in-law puts it: The American Dream used to be "work hard in a useful job, raise a family of citizens, retire with dignity, and hand the controls to the next generation." Now? It's just "Win the lottery."

Problem is, "The Lottery" is right out of Shirley Jackson.

hemeantwell , May 29, 2018 at 3:12 pm

Or it's amnesia.

Agreed. The author is inclined to interpret at the level of cumulative effect -- apparent forgetting -- and to ignore how fear -- of editors, of owners -- plays any role. Her proposed unveiling of a coercive process becomes yet another veiling of it.

precariat , May 29, 2018 at 3:16 pm

There is not a writer or thinker I agree with more than Matt Stoller.

Avalon Sparks , May 29, 2018 at 5:33 pm

He's one I agree with too. His writings on monopoly activity are excellent.

Pamela More , May 29, 2018 at 9:57 pm

This.

It's a feature, not a bug.

Alex morfesis , May 29, 2018 at 1:54 pm

Sadly the narrative of details is lost to history The German landesbanks who had guaranteed payments in loan pools in the USA were allowed to skirt thru crash and burn by the agencies (moody s&p and your little fitch too) fake and shake ratings process But all things German are magical Having lived thru NYC Mac Corp effective bankruptcy of man hat tan..

it was amusing watching the hand wave given when the city of Berlin actually defaulted .

Ah reality I remember it welll

Eustache De Saint Pierre , May 29, 2018 at 2:23 pm

My own view for what it is worth is that the Guardian pays some lip service to the plight of the UK's " Deplorables ", but like most of it's readership does not really give a damn. A state of being exacerbated by Brexit similar to the situation in the US with Trump. It's much easier to imagine hordes of racist morons who inhabit places that you have no direct experience of, than to actually go & take a look. It's also very easy to be in favour of mass immigration if it does not effect your employment, housing & never likely to spoil your early morning dawn chorus with a call to prayer.

Unfortunately it has been left to the Right to complain about such things as the Rotherham abuse scandal, which involved a couple of thousand young girls, who I suspect are worth less to some than perhaps being mistaken as a racist. There are also various groups made up of Muslim women who protest about Sharia councils behaviour to their sex, but nobody in the media is at all interested.

George Orwell noted that the middle class Left couldn't handle dealing with real working class people, although there isn't the same huge gulf these days, I believe there is still a vestige of it due to the British class system. The Fabians set up shop in the East End around the turn of the last century & directly rubbed shoulders with the likes of Coster Mongers – a combination that led to a strike that was one of the first success stories in the attempt to get a few more crumbs than what was usually allowed to fall from the top table.

As for Mirror readers, I suspect that the majority are either the voiceless or are too busy fighting to avoid the fate of those who find themselves availing of food banks, while being labelled as lazy scroungers all having expensive holidays, twenty kids, about thirty grand a year, while being subjected to a now updated more vicious regime of that which was illustrated by " I, Daniel Blake ".

If Neoliberalism is now being noticed I imagine that it is because of it's success in working it's way up the food chain. After all these same Middle classes for the most part did not care much for the plight of the poor during those Victorian values. Many could not wait to employ maids of all work who slaved for up to fourteen hours a day with only Sunday afternoon's off. The Suffragettes had a real problem with this as their relatively comfortable lives would soon descend into drudgery without their servants.

Coincidentally, the NYT article on Austerity Britain is the closest I have read to an accurate picture that I have seen for a good while.

David , May 29, 2018 at 2:39 pm

It's also not a new thing. British media worship of neoliberalism has been growing since the 1980s, at the same time as newspapers have been closing and media sources of all kinds laying off their staff. 2008 was a temporary blip, and since the average journalist has the attention span of a hamster, it was back to usual a few months later. Once the crash stopped being "news" old patterns reasserted themselves. I wonder, incidentally, how many economics journalists in the UK actually remember the time before neoliberalism?

precariat , May 29, 2018 at 2:54 pm

"And so it seems we are living with a hyper-amnesia"

Consuming corporate media is increasingly a bizarro-world experience. Even something like the Trump scandal/constitutional crisis/investigation seems like the arrogant internecine warfare of corrupt factions of the establishment. Meanwhile, Americans are increasingly living out of their cars.

The corporate media forgets the causes of the worst economic crisis since the Depression, and it put Trump in a position to be elected. Trump was the Republican nominee because he was relentlessly promoted by the media -- because ratings, because neoliberal rigged markets.

Break up the media monopolies, roll back Citizens United, enforce the fairness doctrine.

Pamela More , May 29, 2018 at 9:55 pm

Agree.

Slight edit

" Consuming corporate media is increasingly a bizarro-world experience the Trump scandal/constitutional crisis/investigation is nothing other than internecine warfare between corrupt factions of the establishment."

JBird , May 29, 2018 at 3:24 pm

I think there are several issues here for Americans, which can partially be applied to the Europeans.

First, the American nation as whole only has short term memory. It is our curse.

Second, those with the money spend a lot of money, time and effort the late 19th century covering up, massaging, or sometimes just creating lies about the past. American and British businesses, governments, and even private organizations are masters at advertising and propaganda. Perhaps the best on Earth.

Third, the people and the institutions that would counter this somewhat, independent unions, multiple independent media, tenured professors at functioning schools, even non-neoliberalized churches, and social organizations like bowling, crocheting, or heck, the Masons would all maintain a separate continuing body of memory and knowledge.

Lastly, we are all freaking terrified somewhere inside us. Those relative few who are not are fools, and most people, whatever their faults, truly are not fools. Even if they act like one. Whatever your beliefs, position, or knowledge, the knowing of the oncoming storm is in you. Money or poverty may not save you. The current set of lies, while they are lies, gives everyone a comfortable known position of supporting or opposing in the same old, same old while avoiding thinking about whatever catastrophe(s) and radical changes we all know are coming. The lies are more relaxing than the truth.

Even if you are one of society's homeless losers, who would welcome some changes, would you be comfortable thinking about just how likely it is to be very traumatic? Hiding behind begging for change might be more comfortable.

precariat , May 29, 2018 at 4:25 pm

"Even if you are one of society's homeless losers, who would welcome some changes, would you be comfortable thinking about just how likely it is to be very traumatic? Hiding behind begging for change might be more comfortable."

On the contrary, the upheaval the "losers" have been subjected to will be turned around and used as a just cause for rectification. Trumatic consequences can be unpredictable and this is why society should have socio-economic checks and balances to prevent an economic system running amok. Commonsense that necessitates amnesia for neoliberalism to seem viable.

Peter Phillips , May 29, 2018 at 4:54 pm

Facing the current scenario in which we have:

1. Oligarchs having captured thoroughly the media, the legislatures and the judiciary, (as well as large parts of what might be construed as "liberal" political organisations e.g. the Democratic Party of the USA)

2. the seemingly inexorable trend to wealth concentration in the hands of said oligarchs

..one asks oneself.."What is one to do?"

My own response, (and I acknowledge straight off its limited impact), is to do the following:

1. support financially in the limited ways possible media channels such as Naked Capitalism that do their level best to debunk the lies and deceptions perpetrated by the oligarchs

2. support financially social organisations and structures that are genuinely citizen based and focused on a sustainable future for all

3. Do very very limited monitoring of the oligarch's "lies and deceptions" (one needs to understand one's enemies to have a chance to counter them) and try on a personal level, in one's day to day interactions, to present counter arguments

We cannot throw in the towel. We must direct our limited financial resources and personal efforts to constructive change, as, for the 99%..there are no "bunker" to run to when the "proverbial" hits the fan..as it must in the fullness of time.

Spring Texan , May 29, 2018 at 8:21 pm

Yep. One has to go ahead and do what one can. It all makes a difference. Thanks for your strategy, Peter Phillips. Limited impact is not no impact, and we don't have the luxury of despairing because there is only a bit we can do.

sgt_doom , May 29, 2018 at 8:10 pm

Yet this has been going on forever – – this past Sunday, for the first time I recall, I finally heard an accurate Real News story filed on the Bobby Kennedy assassination (50th anniversary coming this June 6, 2018) by the BBC World Service.
They actually noted that there were multiple shooters, that Sen. Kennedy was shot from behind, not the front where Sirhan was located, etc., etc.
I guess we do occasionally witness Real News – – – just that it takes 50 years or so to be reported . . .

[May 27, 2018] How Institutional Dysfunction Has Enabled Poor Economic Policy Thinking by Rob Johnson

Notable quotes:
"... Democracy in America ..."
"... American Economic Review ..."
"... Journal of Political Economy ..."
"... Quarterly Journal of Economics ..."
"... Review of Economic Studies ..."
"... There is in the US a concerted effort to praise capitalism as some sort of god-given system and to defame all other systems. ..."
"... "Stocks have reached what looks like a permanently high plateau." ..."
"... "The problem this essay addresses can be framed in terms of two quotations from Alexis de Tocqueville. The first comes from his famous speech in the French Chamber of Deputies just prior to the outbreak of the Revolution of 1848: "We are sleeping on a volcano .do you not see that the earth is beginning to tremble. The wind of revolt rises; the tempest is on the horizon." The second is from Democracy in America: "When the past no longer illuminates the future, the spirit walks in darkness." ..."
"... "These fools in Wall Street think they can go on forever! They can't!" ..."
"... "a giant suction pump had by 1929 to 1930 drawn into a few hands an increasing proportion of currently produced wealth. This served then as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied themselves the kind of effective demand for their products which would justify reinvestment of the capital accumulation in new plants. In consequence as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When the credit ran out, the game stopped" ..."
May 27, 2018 | www.nakedcapitalism.com

... ... ...

By Rob Johnson, Institute for New Economic Thinking President,
Senior Fellow and Director, Franklin and Eleanor Roosevelt Institute and Thomas Ferguson, Director of Research, Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website

...

The problem this essay addresses can be framed in terms of two quotations from Alexis de Tocqueville. The first comes from his famous speech in the French Chamber of Deputies just prior to the outbreak of the Revolution of 1848: "We are sleeping on a volcano .do you not see that the earth is beginning to tremble. The wind of revolt rises; the tempest is on the horizon." The second is from Democracy in America : "When the past no longer illuminates the future, the spirit walks in darkness."

In 2018, the darkness is all too palpable: A chain of economic reverses that no prominent economists, central bankers, or policymakers anticipated has combined with other shocks from technology, wars, and migrations to produce the political equivalent of the perfect storm. The world financial meltdown of 2008 set the cyclone spinning. As citizens watched helplessly while their livelihoods, savings, and hopes shriveled, states and central banks stepped in to rescue the big financial institutions most responsible for the disaster. But recovery for average citizens arrived only slowly and in some places barely at all, despite a wide variety of policy experiments, especially from central banks.

The cycle of austerity and policy failure has now reached a critical point. Dramatic changes in public opinion and voting behavior are battering long entrenched political parties in many countries. In many of the world's richest countries, more and more citizens are losing faith in the very ideas of science, expertise, and dispassionate judgment -- even in medicine, as witness the battles over vaccines in Italy, the US, and elsewhere. The failure of widely heralded predictions of immediate economic disaster when the UK voted to leave the European Union and Donald Trump became President of the United States has only fanned the skepticism.

Placing entire responsibility for this set of plagues on bad economic theory or deficient policy evaluation does not make sense. Power politics, contending interests, ideologies, and other influences all shaped events. But from the earliest days of the financial collapse, reflective economists and policymakers nourished some of the same suspicions as the general public. Like the Queen of England, they asked plaintively, "Why did no one see it coming?"

Answers were not long in arriving. Critics, including more than a few Nobel laureates in economics, pointed to a series of propositions and attitudes that had crystallized in economic theory in the years before the crisis hit. [1] Economists had closed ranks as though in a phalanx, but the crisis showed how fragile these tenets were. They included:

A resolute unwillingness to recognize that fundamental uncertainty shadows economic life in the real world. Neglect of the roles played by money, credit, and financial systems in actual economies and the inherent potential for instability they create. A fixation on economic models emphasizing full or nearly complete information and tendencies for economies either to be always in equilibrium or heading there, not just in the present but far into the indefinite future. A focus on supply as the key to economic growth and, increasingly after 1980, denials that economies could even in theory suffer from a deficiency of aggregate demand. Supreme confidence in the price system as the critical ordering device in economies and the conviction that getting governments and artificial barriers to their working out of the way was the royal road to economic success both domestically and internationally.

Initially, debates over this interlocking system of beliefs mostly sparked arguments about the usefulness of particular tools and analytical simplifications that embodied the conventional wisdom: Dynamic stochastic general equilibrium models; notions of a "representative agent" in macroeconomics and the long run neutrality of money; icy silence about interactions between monetary rates of interest and ruling rates of profit, or the failure of labor markets to clear.

Increasingly, however, skeptics wondered if the real problems with economics did not run deeper than that. They began to ask if something was not radically wrong with the structure of the discipline itself that conduced to the maintenance of a narrow belief system by imposing orthodoxies and throwing up barriers to better arguments and dissenting evidence.

The empirical evidence now seems conclusive: Yes.

"Top 5" Dominance for Promotion and Tenure

Studies by James Heckman demonstrate the critical gatekeeping role of five so-called "top journals" in recruitment and promotions within economics as a field. [2] Four of the journals -- the American Economic Review , the Journal of Political Economy , the Quarterly Journal of Economics , and the Review of Economic Studies -- are Anglo-American centered and published in the US or the UK as is the fifth, Econometrica , though it is sponsored by the Econometric Society, which has long involved scholars from Scandinavia and other countries.

Heckman's research shows that the number of Top 5 (T5) articles published by candidates plays a crucial role in the evaluation of candidates for promotion and tenure. This is true not only in leading departments but more generally in the field, though the influence of the count weakens in lower ranked institutions.

The Great Disjunction

Heckman compares citations in Top 5 journals with articles frequently cited by leading specialists in various fields and with publication histories of Nobel laureates and winners of the Clark Medal. He is crystal clear that many important articles appear in non-T5 journals -- a finding supported by other studies. [3] This evidence, he argues, highlights a "fundamental contradiction" within the whole field: "Specialists who themselves publish primarily in field journals defer to generalist journals to screen quality of their colleagues in specialty fields."

Citations as Pernicious Measures of Quality in Economics

Heckman draws attention to the increase in the number of economists over time and the relative stability of the T5. He argues that his findings imply that the discipline's "reluctance to distribute gatekeeping responsibility to high quality non-T5 Journals is inefficient in the face of increasing growth of numbers of people in the profession and the stagnant number of T5 publications."

Other scholars who have scrutinized what citations actually measure underscore this conclusion. Like Heckman, they know that citation indices originated from efforts by libraries to decide what journals to buy. They agree that transforming " journal impact factors" into measures of the quality of individual articles is a grotesque mistake, if only because of quality variation within journals and overlaps in average quality among them. Counts of journal articles also typically miss or undercount books and monographs, with likely serious effects on both individual promotion cases and overall publication trends in the discipline. As Heckman observes, the notion that books are not important vehicles for communication in economics is seriously mistaken.

Analytical efforts to explain who gets cited and why are especially thought provoking. All serious studies converge on the conclusion that raw counts can hardly be taken at face value. [4] They distort because they are hopelessly affected by the size of fields (articles in bigger fields get more citations) and bounced around by self-citations, varying numbers of co-authors, "halo effects" leading to over-citation of well-known scholars, and simple failures to distinguish between approving and critical references, etc. One inventory of such problems, not surprisingly by accounting professors, tabulates more than thirty such flaws. [5]

But cleaning up raw counts only scratches the surface. Heckman's study raised pointed questions about editorial control at top journals and related cronyism issues. Editorial control of many journals turns over only very slowly and those sponsored by major university departments accept disproportionately more papers from their own graduates. [6] Interlocking boards are also fairly common, especially among leading journals. [7] Carlo D'Ippoliti's study of empirical citation patterns in Italy also indicates that social factors within academia figure importantly: economists are prone to cite other economists who are their colleagues in the same institutions, independently of the contents of their work, but they are even more likely to cite economists closer to their ideological and political positions. [8] Other research confirms that Italy is not exceptional and that, for example, the same pattern shows up in the debates over macroeconomics in the US and the UK after 1975. [9]

Other work by Jakob Kapeller, et al., and D'Ippoliti documents how counting citations triggers a broad set of pathologies that produces major distortions. [10] Investing counts with such weighty significance, for example, affects how both authors and journal editors behave. Something uncomfortably close to the blockbuster syndrome characteristic of Hollywood movies takes root: Rather than writing one major article that would be harder to assimilate, individual authors have strong incentives to slice and dice along fashionable lines. They mostly strive to produce creative variations on familiar themes. Risk-averse gatekeepers know they can safely wave these products through, while the authors run up their counts. Journal editors have equally powerful incentives: They can drive up their impact factors by snapping up guaranteed blockbusters produced by brand names and articles that embellish conventional themes. Kapeller, et al. suggest that this and several other negative feedback loops they discuss lead to a form of crowding out, which has particularly pernicious effects on potential major contributions since those are placed at a disadvantage by comparison with articles employing safer, more familiar tropes. [11] The result is a strong impetus to conformism, producing a marked convergence of views and methods.

These papers, and George Akerlof in several presentations, also show that counting schemes acutely disadvantage out-of-favor fields, heterodox scholars, and anyone interested in issues and questions that the dominant Anglo-Saxon journals are not. [12] This holds true even though, as Kapeller et al. observe, articles that reference some contrary viewpoints actually attract more attention, conditioning on appearance in the same journal -- an indication that policing the field, not simply quality control, is an important consideration in editorial judgment. One consequence of this narrowing is its weirdly skewed international impact. Reliance on the current citations system originated in the US and UK, but has now spread to the rest of Europe and even parts of Asia, including China. But T5 journals concentrate on articles that deal with problems that economists in advanced Anglo-Saxon lands perceive to be important; studies of smaller countries or those at different stages of development face higher publication hurdles. The result is a special case of the colonial mind in action: economics departments outside the US and UK that rely on "international" standards advantage scholars who focus their work on issues relevant to other countries rather than their own.


Ed Walker , , May 26, 2018 at 6:20 am

I'm just stunned that this paper doesn't mention the seminal work on the problem, Marion Fourcade's paper The Superiority of Economists. https://www.aeaweb.org/articles?id=10.1257/jep.29.1.89

Oh wait, Fourcade and her colleagues are sociologists, not economists, so no reason to consider their research and thinking. Also, and not for nothing, she and they are French, and read Pierre Bourdieu who has done a lot of work on the sociology of academics, focused on France but widely applicable.

And here's something interesting; there is no mention of the funding of economics at universities and colleges. So, no mention of the hundreds of millions the filthy rich have poured into the field. Of course, they heatedly deny that matters. A recent tweet from a Geroge Mason/Mercatus prof was livid at the very suggestion that Koch money influenced hiring decisions.

And that's before we get into the gendered nature of economics, or it's political usage by ideologically-driven politicians looking for "experts" to support their preconceptions.

There is a lot more and someone needs to say it out loud in clear, uncoded language.

The Rev Kev , May 26, 2018 at 6:42 am

Just a thought line here. I have heard and read conservatives say that "Politics is downstream from culture" and I get what they are saying. You change the culture and that predetermines the politics that you get. In reading this article, the thought struck me that perhaps the reason that economics as a profession has been corrupted so badly is that maybe conservatives consider government to be downstream of economics. Thus you control what economics theories are permitted to be discussed and that gives them the governments that they want.

Steve Ruis , May 26, 2018 at 9:27 am

I support your contention. There is in the US a concerted effort to praise capitalism as some sort of god-given system and to defame all other systems. Venezuela's current problems are due to socialism, not bad management, of course. Of course, since the wealthy are doing oh so well under the status quo, they are bound to favor it, but they are not just favoring it, they are nailing it down onto our culture.

Andrew Watts , May 26, 2018 at 9:40 am

There is in the US a concerted effort to praise capitalism as some sort of god-given system and to defame all other systems.

The Marxist economist Richard Wolff made the claim that economists are simply cheerleaders for capitalism in an interview on Chapo Trap House, He elaborated and substantiated this claim by saying that business schools had to be founded because economics departments were useless as a method of educating a cohort of business specialists.

Norb , May 26, 2018 at 9:46 am

Very succinct and thoughtful indeed. Remember Ronald Reagan's now infamous, "Government is the Problem" mantra. The real cultural warriors were the neoliberal terrorists who are hell bent on commodifying the entire planet for their own exploitation- masked in the language of "freedom" and "democracy".

This line of thought is also important in that your framing cuts to the core of the cognitive problem attempting to deal with economics, namely, it is a religion. I would define a religion as a system of faith and worship that is driven by a particular interest. All the wordy-ness and arm waiving is just an attempt to obfuscate this simple truth. Persecution of the unfaithful is also a dead giveaway.

This whole notion that the current reigning economics profession is ready, or attempting to "see the light" is somewhat amusing, or in another sense should be insulting considering the social damage they have caused, and are continuing to inflict on the broader citizenry. Burning at the stake is more appropriate, and maybe these slight rumblings of contrition are a sign that some might be getting worried that their "economic" program has gone too far.

When what goes on in the human mind looses connection to events in the real world, changes must be made in order to remain sane. The current orthodoxy is also ultimately doomed to failure in that what is the point of creating and maintaining a deluded and demoralized citizenry? That is a recipe for internal stagnation and external conquest. It would only be a successful strategy if the elite are able to move on after the broader society falters and fails. That thought is almost too cynical to contemplate. But that might explain why the .001% remains the .001%. The current economic priests are starting to feel the pressure because their flocks are beginning to realize that their everyday experience no longer matches the sermons they receive.

Time for a new sermon.

animalogic , May 27, 2018 at 12:59 am

Time to throw out the "priests" and their vicious "gods"

mle detroit , May 26, 2018 at 9:52 am

Following Rev Kev's point and Ed Walker's third paragraph, have there been any studies of the sources of gifts, underwriting, and other purchases of academic work at the most "influential" economics and business economics departments?

John Wright , May 26, 2018 at 9:22 am

In the academic side of the economics profession, it would seem to be prudent to "go with the flow."

Even the economists who recognized problems in 2008, such as Steve Keen and Dean Baker, are not celebrated.

In our society, it seems more likely that some powerful group or individual wants to do something and then proceeds to find an economist to support that action, via an editorial or media appearance, perhaps it is "free" trade, more immigration, easy money, tight money, quantitative easing, outsourcing, insourcing, charter schools, or austerity.

I suspect there are economists who attempt to accurately anticipate economic events.

But they work for hedge funds and private wealth management firms.

And what is the incentive for a prominent public economist to warn of economic problems that may have been caused by government and well-connected interests?

If someone, such as Alan Greenspan, gave early notice of sub-prime/mortgage backed security issues how would he have been better off?

It suggests a central banker career strategy that, if one observes a large economic problem brewing, retire and publish your book before the SHTF.

If the career central banker actually warned/took actions to circumvent a financial bubble and the bubble popped anyway, they could be tagged as a goat for causing the crisis.

Maybe the economics profession is functioning as one would expect?

Michael C. , May 26, 2018 at 9:41 am

One has to wonder, if the elite economists who have defined the parochial and narrow scope of what capitalism is, how it works, and who wins and loses in the system, and maybe in particular it's late 20th Century form, neroliberalism, had maybe expanded their self-serving views to include a Marxian critique and analysis of they might not had been so stupid?

That's not to say the Marx had all the answers, but is only to say that if you presuppose the outcome you want and buttress it with only the information that supports (no matter how poorly) those outcomes, you end up with crisis and the contradictions within capitalism resulting in the failures described above.

Universities and Econ departments don't allow the wide critical view needed into their schools, and no matter what you think of Marx and his ideas, they should at least be the starting point in the discussion when approaching economic policy. The right wing shift in the governments and the people's of the world is not some unexpected outcome but is directly related to a system that builds in economic disparity, short-term planning (due to emphasis on next quarters profits and stock price), and an emphasis on winner take all rather than human needs.

It's not "the economy, stupid." It"s the stupid system.

Norb , May 26, 2018 at 10:15 am

The problem with the American system is that its founding principles, that all men are created equal, and are endowed with certain, God given, unalienable rights, runs in contradiction to the chosen economic models of building society. Slavery and Capitalism are antithetical to these sentiments. Capitalism might be workable if restrained and heavily regulated, but why bother with that because human corruption will always find a way to undermine such a system; it is inherently weak and guarantees suffering will be born by the masses- Brexit will provide the perfect example as predicted by Yves.

A heavily regulated capitalism is socialism by another name.

The same, self-serving arguments are also made about war. The thought that humans could live in peace is treated as some unrealistic and insane idea. Instead of selecting from the human population for cooporation and peace-loving sensibilities, the minority sociopathic murders are allowed to run wild.

Real human "progress" will be made when the peace faction gains supremacy. But that is impossible as long as the economic system upon which all human subsistence depends remains entrenched in competition and striving to hoard against fears of scarcity.

FDR had it right, although imperfect, society was moving in the right direction. We live in a world of abundance that is being squandered. The only way to avoid ultimate destruction is to embrace this abundance as stewards and conservators instead of fearful exploiters.

Conserve the world by embracing sustainable living. Now that is a powerful political message. So powerful, it will be met with the full force of the sociopathic murders currently in charge of human societies.

What else to say, but prepare yourself.

Ed Walker , May 26, 2018 at 5:53 pm

The equality stuff is in the Declaration of Independence, not the Constitution. The latter is specifically devoted to protecting the interests of property holders, specifically including slavers. This is not surprising. The Founders were heavily influenced by John Locke. Locke was a slaver himself https://www.jstor.org/stable/2709512?seq=1#page_scan_tab_contents . And remember that Lockean ideas are based on protecting private property from the random predation of absolute monarchs.

Chris , May 26, 2018 at 12:19 pm

OMG, Michael C.

"Neroliberalism"

That's an amazing slip of the keys. It explains a ton too. I love that it combines the term which the people discussed in this article usually deride with the name of the last Roman emperor who is renowned for extravagance and tyranny.

Brilliant!

animalogic , May 27, 2018 at 1:20 am

I agree with your comment whole heartedly.
But:"the name of the last Roman emperor who is renowned for extravagance and tyranny."(& please forgive my quibble) Nero was certainly not the last emperor to have had such characteristics.
(Elagabalus springs to mind)

J Sterling , May 27, 2018 at 6:41 am

It's been said that you can tell how dominated economics is by a particular minority of society, by the economists' word for phenomena where workers are paid more for their labor being "disease". As in Baumol's Disease for example.

R. BAIRD , May 26, 2018 at 9:58 am

Both sides of the political divide often go awry simply because they refuse to acknowledge the role of human nature. We mere mortals know this as we are the full recipients of the "free market," the good, the bad, and the extremely ugly. The likes of Alan Greenspan in the rarified air strata were shocked, shocked, shocked! I bring you a small excerpt from Mr. Greenspan's testimony before the Government Oversight Committee of the House of Representatives. Still clueless, he does acknowledge a flaw:

Pressed by Waxman, Greenspan conceded a more serious flaw in his own philosophy that unfettered free markets sit at the root of a superior economy.

"I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms," Greenspan said.

Waxman pushed the former Fed chief, who left office in 2006, to clarify his explanation.

"In other words, you found that your view of the world, your ideology, was not right, it was not working," Waxman said.

"Absolutely, precisely," Greenspan replied. "You know, that's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."

Jesper , May 26, 2018 at 10:12 am

This bit:

In many of the world's richest countries, more and more citizens are losing faith in the very ideas of science, expertise, and dispassionate judgment – even in medicine, as witness the battles over vaccines in Italy, the US, and elsewhere.

Might be believed by some, others might believe that more and more citizens are sceptical about the practioners ability to provide expertise and dispassionate judgment. From my own perspective I do believe in science, expertise and dispassionate judgment but I don't believe that many professional economists have much expertise (outside of knowledge of basic statistics and statistics software) or that they practice dispassionate judgment.

As far as being sceptical of medicine then I'll post this link again:
https://medium.com/@drjasonfung/the-corruption-of-evidence-based-medicine-killing-for-profit-41f2812b8704

Pharmaceutical companies are not in business to heal people, they are in business -> They do whatever they legally can to make money and they even put pressure on the legislative to get more opportunities to legally make more money.
The article contains this link to the Lancet relating to "the reproducibility and reliability of biomedical research":
https://www.thelancet.com/journals/lancet/article/PIIS0140-6736%2815%2960696-1/fulltext

The case against science is straightforward: much of the scientific literature, perhaps half, may simply be untrue. Afflicted by studies with small sample sizes, tiny effects, invalid exploratory analyses, and flagrant conflicts of interest, together with an obsession for pursuing fashionable trends of dubious importance, science has taken a turn towards darkness.

Ted , May 26, 2018 at 11:25 am

The problem is widespread, and now well recognized. Here, for example, from psychology (also a juggernaut of social science influence)

https://www.scientificamerican.com/article/massive-international-project-raises-questions-about-the-validity-of-psychology-research/

If we looked and any other (social) scientific discipline, we'd get the same result.

The articles from medium and The Lancet you link highlight the problems well enough, the system is corrupt from top to bottom. Another examples of where misguided emphasis on juicing "metrics" (for personal gain) rather than taking one's time to develop expertise and do things correctly is literally killing people, or simply ruining lives (as if that is some consolation).

Ed , May 26, 2018 at 10:16 am

Were really corrupt institutions and professions ever supposed to make good decisions?

Jim Haygood , May 26, 2018 at 10:26 am

Economies are inherently cyclical. Keynesianism, in its original incarnation, envisaged surpluses during economic expansions to offset the fiscal deficits provoked by recessions. But surpluses are a distant memory -- now it's pedal to the metal all the time, just to keep a becalmed, debt-choked economy treading water.

Credit is also procyclical. It was severely rationed during and after the 2008 meltdown. Now covenant-lite bonds prevail for corporate financing, while individuals can get 3 percent down FHA loans to buy houses at prices that exceed the 2006 peak, with 33 times leverage. Prudent!

What role can academics play in this endless sisyphean tragedy? None, probably. Warning of recession invites career risk for economists, so most of them just won't do it. Like the Hazmat team, economists show up after the train wreck to help with the cleanup. Federal Reserve economists are engineering that crack-up right now, with their fruitcake bond dumping campaign.

By 2020, they'll be tanned, rested and ready for their next exciting outing. :-)

Summer , May 26, 2018 at 11:40 am

As others have stated, there are economists out there who have already seen through the current dogmas.
Michael Hudson is one and another that comes to mind is Chilean economist Manfred Max-Neef. A transcript of an interview with him from 2010:

https://www.democracynow.org/2010/9/22/chilean_economist_manfred_max_neef_us

An excerpt to perk interest:

"I worked for about ten years of my life in areas of extreme poverty in the Sierras, in the jungle, in urban areas in different parts of Latin America. And at the beginning of that period, I was one day in an Indian village in the Sierra in Peru. It was an ugly day. It had been raining all the time. And I was standing in the slum. And across me, another guy also standing in the mud -- not in the slum, in the mud. And, well, we looked at each other, and this was a short guy, thin, hungry, jobless, five kids, a wife and a grandmother. And I was the fine economist from Berkeley, teaching in Berkeley, having taught in Berkeley and so on. And we were looking at each other, and then suddenly I realized that I had nothing coherent to say to that man in those circumstances, that my whole language as an economist, you know, was absolutely useless. Should I tell him that he should be happy because the GDP had grown five percent or something? Everything was absurd.

So I discovered that I had no language in that environment and that we had to invent a new language. And that's the origin of the metaphor of barefoot economics, which concretely means that is the economics that an economist who dares to step into the mud must practice. The point is, you know, that economists study and analyze poverty in their nice offices, have all the statistics, make all the models, and are convinced that they know everything that you can know about poverty. But they don't understand poverty. And that's the big problem. And that's the big problem. And that's why poverty is still there. And that changed my life as an economist completely. I invented a language that is coherent with those situations and conditions."

It's a good interview of someone developing an alternate view.
(There are critiques and studies of wealth that I think we need more of as well, only poverty is thought of as pathological – a subject which he tackles.)

JEHR , May 26, 2018 at 11:50 am

And just maybe, human goodness and human evil have a cyclical nature too and we are just in the bad part of the cycle right now. However, it may be true also that the time period of 1950 to 1970 was an anomaly that may not recur, and that the true nature of human beings is to lie, to cheat, to steal, to commit fraud and practice multifarious corruptions and violence. When you look at the widest version of history, human nature is not so benign.

Summer , May 26, 2018 at 12:25 pm

In a nutshell, the American consumer was highly important from 1950 to 1970 until the rest of the world recovered more from 2 world wars.

Summer , May 26, 2018 at 12:10 pm

1950 to 1970 the rest of the industrial world was decimated after 2 world wars.
And more countries wanted independence from colonialism (less loot spread around, however thinly, back home – though not totally disappeared).

Scott1 , May 26, 2018 at 1:57 pm

Psychology turns into sociology. Either the system is making everyone prosperous and happy or it is making everyone desperate.
Desperation is the American way. The comfort of misery seen as pathological in the individual is a more general pathology. Too much bile in the system.
"The Sticky Floor." is the phrase my cousin invented. She is a leader in Women's Studies. It may well apply more correctly that "The Glass Ceiling". Overall the turn in the article to the dearth of women economists threw me.
As science enables engineering, economics enables financial engineering. The predominant financial engineer of our times is Meyer Lansky. Organized business, the "real" economy of General Motors and Dow & Dupont & General Dynamics & Raytheon, ITT, Apple, Google, Microsoft all now have adopted Meyer Lansky Financial Engineering.
It was made legal as economic theory and practice under Clinton Unit 1's reign.
The preeminent financial engineer is David Cay Johnston. He called Dean Baker a "real" economist as opposed to Michael Hudson. I prefer Hudson to Dean myself. Nobody knows everything. This is why all you really have to know is the goal. "You cannot go wrong if your goals are correct." is what Einstein said.
The main reason for misery is poverty, which is not having enough to operate the household without debt peonage.
The United States and the EU as run by Central Banks have it so only the selected have infinite access to currency. The States don't have enough money so the System prefers they deny their people things like education and healthcare, and sell bonds.
It is okay for the Federal Government to tax or not tax but the States must tax to fill their treasuries.
Alan Greenspan's philosophy came from Ayn Rand whose world view encouraged the exclusive access and economic security to have and do whatever they, the rich, people like Elon Musk or Jeff Bezos, envisioned as ideal for them, and them only. (They live in airport land with a pond.)
It came from Russian Dystopian Objectivism and produces Dystopia.
The American Philosophy, that which made America loved is American Eclectic Pragmatism.
The wrong goal is to make only those in Finance rich. The right goal is to make everyone as much a jet setter as the jet setters.
Until the goal of Economists is blatantly aimed at relative equality of life, the discipline is simply on the wrong track and is never going to be worth doing.
Thanks.

JBird , May 26, 2018 at 3:29 pm

Approved economics has nothing to do with actually understanding or solving anything except be a useful smokescreen for wealthy special interests. I have gotten a more accurate and functional understanding of overall economics from classes, and books in anthropology, political science, and history than in any classes labeled as "economics."

That is really sad. It is also very deliberate. Those who say modern economic studies have been stripped of anything but neoliberal/libertarian economic ideas are right. Even then, it seems that it has been either further simplified, or abstracted, to further channel any thoughts away from real life.

Let's put it this way. Philosophy can be used to actual ask and study questions or it can be used to debate how many angels can fit on the head of a pin. Guess what what modern mainstream economics does?

Sound of the Suburbs , May 26, 2018 at 4:09 pm

There are inherent flaws in neoclassical economics that have already been discovered.

The 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression. No one realised the problems that were building up in the economy as they used an economics that doesn't look at private debt, neoclassical economics.

The two elements of neoclassical economics that come together to cause financial crises.

1) It doesn't consider debt
2) It holds a set of beliefs about markets where they represent the rational decisions of market participants; they reach stable equilibriums and the valuations represent real wealth.

Everyone marvels at the wealth creation of rising asset prices, no one looks at the debt that is driving it.

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png

The "black swan" was obvious all along and it was pretty much the same as 1929.

1929 – Inflating US stock prices with debt (margin lending)
2008 – Inflating US real estate prices with debt (mortgage lending)

"Stocks have reached what looks like a permanently high plateau." Irving Fisher 1929.

An earlier neoclassical economist believed in price discovery, stable equilibriums and the rational decisions of market participants, and what the neoclassical economist believes about the markets means they can't even imagine there could be a bubble.

The amount of real wealth stored in the markets becomes apparent once the bubble has burst.

The debt overhang (ref. graph above) is dragging the US economy down and is the cause of Janet Yellen's inflation mystery, but they don't know because they don't consider debt. It's called a balance sheet recession.

The problems that led to 2008 come from private debt in the economy and the problems now come from the overhang of private debt in the economy, but they are using an economics that doesn't consider private debt.

They don't stand a chance.

Sound of the Suburbs , May 26, 2018 at 4:24 pm

"The problem this essay addresses can be framed in terms of two quotations from Alexis de Tocqueville. The first comes from his famous speech in the French Chamber of Deputies just prior to the outbreak of the Revolution of 1848: "We are sleeping on a volcano .do you not see that the earth is beginning to tremble. The wind of revolt rises; the tempest is on the horizon." The second is from Democracy in America: "When the past no longer illuminates the future, the spirit walks in darkness."

How about this quote ..

"These fools in Wall Street think they can go on forever! They can't!" President Theodore Roosevelt 1909.

The US has just forgotten its own history; this is what it was like at the end of the 19th and beginning of the 20th century. Capitalism was running wild, but the difference was there used to be a critical press.

Catch up on US history.

"PR! A Social History of Spin" Stuart Ewen

Finding out what the private sector uses PR for also helps you understand their motivations, it's worth reading.

JBird , May 26, 2018 at 10:58 pm

Our Esteemed Elites are mostly college educated which hopefully includes American history. But maybe it's become like modern college economics. Stripped of inconvenient information.

I agree that beyond the normal American nation's ultra short memory, there is a regular effort by some to eliminate any inconvenience ones. If history is a career or even a hobby you will likely know much about America history bad (and good too!) that goes zooop into the memory hole. It becomes a boring national hagiography. Sanitized. But that shouldn't be.

But STEM courses are so much more important than fluff like history.

Sound of the Suburbs , May 27, 2018 at 5:56 am

In history we study what the elites are up to, we don't pay much attention to what is going on with general population.

This does.

ObjectiveFunction , May 27, 2018 at 1:46 am

Fantastic piece, Yves.

As with a few other commenters here, the essay puts me in mind of historiography, to wit E.H. Carr whose 'before studying history, study the historians' became the fighting slogan for the radical history movement of the 1960s:

"The facts are really not at all like fish on the fishmonger's slab. They are like fish swimming about in a vast and sometimes inaccessible ocean; and what [facts] the historian catches will depend, partly on chance, but mainly on what part of the ocean he chooses to fish in and what tackle he chooses to use."

ObjectiveFunction , May 27, 2018 at 2:07 am

"Economists had closed ranks as though in a phalanx, but the crisis showed how fragile these tenets were. They included:
1. A resolute unwillingness to recognize that fundamental uncertainty shadows economic life in the real world."

. And for this one, do I even need to requote Upton Sinclair?!

Economists and central bankers are our modern day priest-astrologers. We *need* them to know! to appease Bel-Marduk and Istar, to ensure a fruitful harvest, the birth of worthy sons

.and also, for a small commission, to manage our tax collections/ debts/ alehouses/ brothels [hat tip to Prof Hudson].

Sound of the Suburbs , May 27, 2018 at 5:59 am

This is about the UK, but applies equally to the US as we are all doing the same neoliberal things.

Why isn't the economy growing?

We shouldn't get side tracked with productivity as productivity is GDP per hour worked and we need to grow GDP.

What is GDP?

The amount of money spent into the economy by consumers, businesses and the Government plus the income we receive from the trade balance with the rest of the world.

Now we know what GDP is we can immediately see why austerity is contractionary. The cut in Government spending comes straight off GDP (someone tell Macron).

The aim is to increase the amount of goods and services within the economy at the same rate as the demand for those goods and services, whilst increasing the money supply to allow those extra goods and services to be purchased.

Milton Freidman understood the money supply had to rise gradually to grow the economy with his "Monetarism". He thought that central bank reserves controlled the money supply and this is why it didn't work.

The economists focus on supply (neoclassical economics) or demand (Keynesian economics) until the balance of supply and demand gets out of step. The economy stagnates due to either insufficient supply (1970s stagflation) or insufficient demand (today's ultra low inflation).

Money needs to enter the economy to increase the supply of goods and services, while at the same time; the increased money supply enables the demand for those goods and services.

Banks and governments create money and this is now well understood outside the mainstream.

The banks have been creating money to lend into real estate and inflate financial asset prices. This is not what you want; they should be creating money to increase the supply of goods and services by lending into business and industry. Their lending hasn't been increasing GDP.

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.png

It all started going wrong when with financial liberalisation and a 1979 policy decision. The UK eliminated corset controls on banking in 1979 and the banks invaded the mortgage market. This is the start of the real estate frenzy.

You can let bankers do what they want, but they have no idea how to grow the economy with bank credit.
Supply had outstripped demand by the 1920s in the US and they used bank credit to maintain demand, but this can never work in the longer term as this money needs to be paid back. Government created money has to fill the gap as it doesn't need to be paid back.

Governments can create money, jobs and wages in the public sector, building the infrastructure for the economy and looking after the health and education of the population to provide the economic framework necessary for the private sector who can't make a profit doing these things.

The magic number is GDP, we need to focus on what increasing that number means.

Our main problem is an ideological Left who think the answer always lies on the demand side and an ideological Right who always think the answer lies on the supply side.

The Left think Government is the answer and the Right think the private sector is the answer.

You need both, due to the increased productivity of the private sector that cannot create the necessary demand for those goods and services through private sector wages alone.

Sound of the Suburbs , May 27, 2018 at 6:01 am

Understanding money is critical and this is something central bankers monitor, but they don't appear to know what it means

The flow of funds within the economy.

This helps us understand why Government surpluses precede finical crises and why balanced budgets and Government surpluses push the private sector into debt

Richard Koo shows the graph central bankers use, the flow of funds within the economy, which sums to zero (32-34 mins.).

https://www.youtube.com/watch?v=8YTyJzmiHGk

Government assets + corporate assets + household assets + transfers from/to the rest of the world = zero
They can't all be positive.

The US runs a large trade deficit and this money needs to come from somewhere.

It is the Government that should run the big deficit to fund the other three and if you clamp down on government spending your economy can't grow unless it starts running on bank debt. The corporate sector and households have to get into debt to balance this zero sum equation.

A Government surplus requires an indebted private sector unless you are Germany and run a trade surplus.

This is the US (46.30 mins.)

https://www.youtube.com/watch?v=ba8XdDqZ-Jg

Clinton was proud of the Government surplus but he didn't realise that this meant the private sector had to go into debt. The last Government surplus occurred in 1927 – 1930, it precedes crises.

Richard Koo's video shows the Japanese Government ran a surplus just before the Japanese economy blew up.

Sound of the Suburbs , May 27, 2018 at 9:21 am

Neoclassical economics doesn't focus on GDP because it predates it. It was put together before they knew how to measure economic activity.

It lets the wealthy accumulate all the money until the economy falls over though a lack of demand.
Mariner Eccles, FED chair 1934 – 48, passes comment the last time they used neoclassical economics in the US in the 1920s.

"a giant suction pump had by 1929 to 1930 drawn into a few hands an increasing proportion of currently produced wealth. This served then as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied themselves the kind of effective demand for their products which would justify reinvestment of the capital accumulation in new plants. In consequence as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When the credit ran out, the game stopped"

This time it's global.

2014 – "85 richest people as wealthy as poorest half of the world"
2016 – "Richest 62 people as wealthy as half of world's population"
2017 – World's eight richest people have same wealth as poorest 50%

impermanence , May 27, 2018 at 12:44 pm

Lying, cheating, and stealing is what we human beings seem to do best, so when the pot becomes big enough, the elite [those willing to do whatever it takes] do what the elite have done, lie, cheat and steal with reckless abandon.

Those who choose to live a noble life must always be grounded by the notion that the reward for doing such is in achieving good night's sleep, and little more. You truly can not have your cake and eat it too, not then, not now, not ever

[May 18, 2018] For Economic Truth Turn To Michael Hudson by Paul Craig Roberts

Notable quotes:
"... Another defect of neoliberal economics is the doctrine's denial that resources are finite and their exhaustion a heavy cost not born by those who exploit the resources. Many local and regional civilizations have collapsed from exhaustion of the surrounding resources. Entire books have been written about this, but it is not part of neoliberal economics. Supplement study of Hudson with study of ecological economists such as Herman Daly. ..."
May 09, 2018 | www.paulcraigroberts.org

Readers ask me how they can learn economics, what books to read, what university economics departments to trust. I receive so many requests that it is impossible to reply individually. Here is my answer.

There is only one way to learn economics, and that is to read Michael Hudson's books. It is not an easy task. You will need a glossary of terms. In some of Hudson's books, if memory serves, he provides a glossary, and his recent book "J Is for Junk Economics" defines the classical economic terms that he uses. You will also need patience, because Hudson sometimes forgets in his explanations that the rest of us don't know what he knows.

The economics taught today is known as neoliberal. This economics differs fundamentally from classical economics that Hudson represents. For example, classical economics stresses taxing economic rent instead of labor and real investment, while neo-liberal economics does the opposite.

An economic rent is unearned income that accrues to an owner from an increase in value that he did nothing to produce. For example, a new road is built at public expense that opens land to development and raises its value, or a transportation system is constructed in a city that raises the value of nearby properties. These increases in values are economic rents. Classical economists would tax away the increase in values in order to pay for the road or transportation system.

Neoliberal economists redefined all income as earned. This enables the financial system to capitalize economic rents into mortgages that pay interest. The higher property values created by the road or transportation system boost the mortgage value of the properties. The financialization of the economy is the process of drawing income away from the purchases of goods and services into interest and fees to financial entities such as banks. Indebtedness and debt accumulate, drawing more income into their service until there is no purchasing power left to drive the economy.

For example, formerly in the US lenders would provide a home mortgage whose service required up to 25% of the family's monthly income. That left 75% of the family's income for other purchases. Today lenders will provide mortgages that eat up half of the monthly income in mortgage service, leaving only 50% of family income for other purchases. In other words, a financialized economy is one that diverts purchasing power away from productive enterprise into debt service.

Hudson shows that international trade and foreign debt also comprise a financialization process, only this time a country's entire resources are capitalized into a mortgage. The West sells a country a development plan and a loan to pay for it. When the debt cannot be serviced, the country is forced to impose austerity on the population by cutbacks in education, health care, public support systems, and government employment and also to privatize public assets such as mineral rights, land, water systems and ports in order to raise the capital with which to pay off the loan. Effectively, the country passes into foreign ownership. This now happens even to European Community members such as Greece and Portugal.

Another defect of neoliberal economics is the doctrine's denial that resources are finite and their exhaustion a heavy cost not born by those who exploit the resources. Many local and regional civilizations have collapsed from exhaustion of the surrounding resources. Entire books have been written about this, but it is not part of neoliberal economics. Supplement study of Hudson with study of ecological economists such as Herman Daly.

The neglect of external costs is a crippling failure of neoliberal economics. An external cost is a cost imposed on a party that does not share in the income from the activity that creates the cost. I recently wrote about the external costs of real estate speculators. https://www.paulcraigroberts.org/2018/04/26/capitalism-works-capitalists/ Fracking, mining, oil and gas exploration, pipelines, industries, manufacturing, waste disposal, and so on have heavy external costs associated with the activities.

Neoliberal economists treat external costs as a non-problem, because they theorize that the costs can be compensated, but they seldom are. Oil spills result in companies having to pay cleanup costs and compensation to those who suffered economically from the oil spill, but most external costs go unaddressed. If external costs had to be compensated, in many cases the costs would exceed the value of the projects. How, for example, do you compensate for a polluted river? If you think that is hard, how would the short-sighted destroyers of the Amazon rain forest go about compensating the rest of the world for the destruction of species and for the destructive climate changes that they are setting in motion? Herman Daly has pointed out that as Gross Domestic Product accounting does not take account of external costs and resource exhaustion, we have no idea if the value of output is greater than all of the costs associated with its production. The Soviet economy collapsed, because the value of outputs was less than the value of inputs.

Supply-side economics, with which I am associated, is not an alternative theory to neoliberal economics. Supply-side economics is a successful correction to neoliberal macroeconomic management. Keynesian demand management resulted in stagflation and worsening Phillips Curve trade-offs between employment and inflation. Supply-side economics cured stagflation by reversing the economic policy mix. I have told this story many times. You can find a concise explanation in my short book, "The Failure of Laissez Faire Capitalsim." This book also offers insights into other failures of neoliberal economics and for that reason would serve as a background introduction to Hudson's books.

I can make some suggestions, but the order in which you read Michael Hudson is up to you. "J is for Junk Economics" is a way to get information in short passages that will make you familiar with the terms of classical economic analysis. "Killing the Host" and "The Bubble and Beyond" will explain how an economy run to maximize debt is an economy that is self-destructing. "Super Imperialism" and "Trade, Development and Foreign Debt" will show you how dominant countries concentrate world economic power in their hands. "Debt and Economic Renewal in the Ancient Near East" is the story of how ancient economies dying from excessive debt renewed their lease on life via debt forgiveness.

Once you learn Hudson, you will know real economics, not the junk economics marketed by Nobel prize winners in economics, university economic departments, and Wall Street economists. Neoliberal economics is a shield for financialization, resource exhaustion, external costs, and capitalist exploitation.

Neoliberal economics is the world's reigning economics. Russia is suffering much more from neoliberal economics than from Washington's economic sanctions. China herself is overrun with US trained neoliberal economists whose policy advice is almost certain to put China on the same path to failure as all other neoliberal economies.

It is probably impossible to change anything for two main reasons. One is that so many greed-driven private economic activities are protected by neoliberal economics. So many exploitative institutions and laws are in place that to overturn them would require a more thorough revolution than Lenin's. The other is that economists have their entire human capital invested in neoliberal economics. There is scant chance that they are going to start over with study of the classical economists.

Neoliberal economics is an essential part of The Matrix, the false reality in which Americans and Europeans live. Neoliberal economics permits an endless number of economic lies. For example, the US is said to be in a long economic recovery that began in June 2009, but the labor force participation rate has fallen continuously throughout the period of alleged recovery. In previous recoveries the participation rate has risen as people enter the work force to take advantage of the new jobs.

In April the unemployment rate is claimed to have fallen to 3.9 percent, but the participation rate fell also. Neoliberal economists explain away the contradiction by claiming that the falling participation rate is due to the retirement of the baby boom generation, but BLS jobs statistics indicate that those 55 and older account for a large percentage of the new jobs during the alleged recovery. This is the age class of people forced into the part time jobs available by the absence of interest income on their retirement savings. What is really happening is that the unemployment rate does not include discouraged workers, who have given up searching for jobs as there are none to be found. The true measure of the unemployment rate is the decline in the labor force participation rate, not a 3.9 percent rate concocted by not counting those millions of Americans who cannot find jobs. If the unemployment rate really was 3.9 percent, there would be labor shortages and rising wages, but wages are stagnant. These anomalies pass without comment from neoliberal economists.

The long expansion since June 2009 might simply be a statistical artifact due to the under-measurement of inflation, which inflates the GDP figure. Inflation is under-estimated, because goods and services that rise in price are taken out of the index and less costly substitutes are put in their place and because price increases are explained away as quality improvements. In other words, statistical manipulation produces the favorable picture required by The Matrix.

Since the financial collapse caused by the repeal of Glass-Steagall and by financial deregulation, the Federal Reserve has robbed tens of millions of American savers by driving real interest rates down to zero for the sole purpose of saving the "banks too big to fail" that financial deregulation created. A handful of banks has been provided with free money -- in addition to the money that the Federal Reserve created in order to take the banks' bad derivative investments off their hands -- to put on deposit with the Fed from which to collect interest payments and with which to speculate and to drive up stock prices.

In other words, for a decade the economic policy of the United States has been run for the benefit of a few highly concentrated financial interests at the expense of the American people. The economic policy of the United States has been used to create economic rents for the mega-rich.

Neoliberal economists point out that during the 1950s the labor force participation rate was much lower than today and, thereby, they imply that the higher rates prior to the current "recovery" are an anomaly. Neoliberal economists have no historical knowledge as the past is of no interest to them. They do not even know the history of economic thought. Whether from ignorance or intentional deception, neoliberal economists ignore that the lower labor force participation rates of the 1950s reflect a time when married women were at home, not in the work force. In those halcyon days, one earner was all it took to sustain a family. I remember the days when the function of a married woman was to provide household services for the family.

But capitalists were not content to exploit only one member of a family. They wanted more, and by using economic policy to suppress pay while fomenting inflation, they drove married women into the work force, imposing huge external costs on the family, child-raising, relations between spouses, and on the children themselves. The divorce rate has exploded to 50 percent and single-parent households are common in America.

In effect, unleashed Capitalism has destroyed America. Privatization is now eating away Europe. Russia is on the same track as a result of its neoliberal brainwashing by American economists. China's love of success and money could doom this rising Asian giant as well if the government opens China to foreign finance capital and privatizes public assets that end up in foreign hands.

[Apr 24, 2018] How neoliberal economics in universities achieve tenure

They achieve it by serving the financial oligarchy...
Few things are as dangerous as economists with physics envy [aeon.co].
Notable quotes:
"... "There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning. ..."
Apr 24, 2018 | www.nakedcapitalism.com

marku52 , April 20, 2018 at 3:57 pm

Stumbling and Mumbling has a good riff on this topic:
". Economics, for me, is not about armchair theorizing. It should begin with the facts, and especially the big ones. The facts are that share buy-backs do usually matter, so thought experiments that say otherwise are wrong from the off. Similarly, the fact that wage inflation has been low for years (pdf) is much more significant than any theorizing about Phillips curves."

The comments are good as well:
"That's a category error: you don't define "Economics", tenure committees define it, and they award tenure to people who have a long record of publishing "internally consistent" ("armchair theorizing") papers."
"I found myself sitting next to a very likable young middle-aged academic tenured at an elite British university, whom henceforth I will refer to as Doctor X and whose field is closely associated with this blog. Every year I publish papers in the top journals and they're pure shit." Doctor X, who by now had had a glass or two, felt bad about this, not least because "students these days are so idealistic and eager to learn; they're really wonderful." Furthermore Doctor X could and would like "to write serious papers but what would be the point?" "
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2018/04/facts-vs-hand-waving-in-economics.html#comments

hemeantwell , April 20, 2018 at 4:59 pm

Yeah. I'm inclined to think the author needs to curb his enthusiasms and take up dejected drinking.

The nub of his presentation was a model in which consumers, due to cognitive limitations, were unable to fully examine every single product they purchased. The result was that regulations guaranteeing a certain standard of safety, quality and the like could improve competition by giving people more time to shop around instead of having to devote so much time to investigate specific products. Thus, regulation would improve markets and competition

This is Nobel-level work? It amounts to finding a way to pitch a product to anti-regulation dogmatists. I'm sure that you could find similar arguments being made during the Progressive era regulatory push. Only they would have been framed more as "people will have more time to shop around if they're not killed by previous ingestion of the product."

Ape , April 22, 2018 at 3:32 am

Dude – they aren't actually doing fancy math. Linear regression – like it's 1850!

Most of their important proofs are irrelevant crap with wholes. The math is mostly undergraduate math! The emperor has no clothes!

The problem isn't just math trickery – it's not even proper ingenuity.

Just read a Summer or Krugman paper – it's 70 pages of words, 3 graphs of imaginary numbers and stats 2 equations. That's not mathematization.

Larry Motuz , April 22, 2018 at 4:34 pm

What I mean by 'mathemagics' is the misuse of mathematics –even simple mathematics -- to create the illusion that 'utility' or 'indifference curves' actually pertain to real concepts. In reality, they 'mathematize' gobbledygook passed off as coherent concepts. There is nothing so conceptually barren as 'utility' or 'indifference curve' analytics. The notion that one can derive any coherent 'demand' analysis for any one consumer that is individual human being (or life form of any kind) for any product, or that one can aggregate these up is mathematical junk.

Sound of the Suburbs , April 22, 2018 at 9:08 am

The Classical Economists used the broader political economy rather than today's narrow economics.

The Washington Consensus dreamed of a world run by the laws of economics.

The laws of economics worked in China's favour and the Western economies got hollowed out.

Disposable income = wages – (taxes + the cost of living)

Maximising profit required minimising wages.

The minimum wage is set when disposable income equals zero.

The minimum wage = taxes + the cost of living

China had it made and the West had tilted the playing field against itself.

The US eventually woke up the geopolitical consequences of a world governed by the laws of economics that had worked in China's favour.

Trump has just made things worse with his tax cuts.

Theory:
If we reduce taxes on the wealthy they will create more jobs and wages.

Reality:
If we reduce taxes on the wealthy they will create more jobs and wages in Asia where they can make more profit. They can then ship the stuff back here increasing Western trade deficits.

Sound of the Suburbs , April 22, 2018 at 9:09 am

"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning. " Warren Buffet, 25 May 2005

Did your class think about the geopolitics?
I don't think so.

Sound of the Suburbs , April 22, 2018 at 9:17 am

William White (BIS, OECD) is on board for the benefits of the broader political economy.

https://www.youtube.com/watch?v=g6iXBQ33pBo&t=2485s

[Apr 24, 2018] Constant and persistent nudging generally results in an angry backlash. Somewhere around when a person realizes "This is not where I wanted to be." That's now very true for neoclassic economy courses. Many students understand the game and hate it

Notable quotes:
"... cognitive infiltration ..."
Apr 24, 2018 | www.nakedcapitalism.com

Yves Smith, April 21, 2018 at 12:26 pm

Nudge was the title of a book by Richard Thaler and Cass Sunstein on how to manipulate people in their supposed best interest, like in cafeteria lines, to put whole fruit before desserts made with sugar.

See here for more detail:

blennylips , April 21, 2018 at 1:49 pm

If you liked Nudge , you'll love " cognitive infiltration ":

Conspiracy Theories
Harvard Public Law Working Paper No. 08-03

Because those who hold conspiracy theories typically suffer from a crippled epistemology, in accordance with which it is rational to hold such theories, the best response consists in cognitive infiltration of extremist groups. Various policy dilemmas, such as the question whether it is better for government to rebut conspiracy theories or to ignore them, are explored in this light.
Keywords: conspiracy theories, social networks, informational cascades, group polarization
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1084585

Is not this what discerning MIC's all do these days, via FBI FB?

Synoia , April 21, 2018 at 11:25 am

A nudge too far?

Constant and persistent nudging generally results in an angry backlash. Somewhere around when a person realizes "This is not where I wanted to be."

JTMcPhee , April 21, 2018 at 12:40 pm

And of course we mopes have been "nudged" into pretty much that blind serfdom alluded to. Back in the Cave, with not much chance of dispelling the belief in and subjection to the shadows projected on the wall we are forced to face

oaf , April 21, 2018 at 1:52 pm

manipulation is the sowing of a Karmic garden

Tom_Doak , April 21, 2018 at 6:09 pm

The classic nudge example is opting you into a 401(k) unless you opt out.

That's supposedly better for you but it is DEFINITELY better for the brokerage handling your account.

none , April 21, 2018 at 10:01 pm

I had to look it up: https://en.wikipedia.org/wiki/Nudge_theory

I hadn't heard of it before.

Tyronius , April 22, 2018 at 12:21 am

I rather detest the notion of someone or entity 'nudging' me in the direction of some behavior, especially in a paternalistic mode where the assumption is that they know better than I what I 'should' be doing or thinking.

On one level, isn't that a working definition of advertising? On another, it smacks of authoritarianism. Don't we have enough of this kind of thing already? Worse, what's the first reaction one naturally has when they realize they're being manipulated? Seems to be a strategy fraught with risk of getting exactly the wrong response.

If I'm to be encouraged to behave in a given way, show me the respect of offering a conscious, intelligent argument to do so on the merits, or kindly go (family blog) yourself!

Anti-Schmoo , April 23, 2018 at 4:18 am

In economics, the single most important thing to understand is debt.
If you understand debt; you won't have any debt.
Debt and freedom are the antithisis of each other.
Without debt; nudges have no influence.

Anti-Schmoo , April 23, 2018 at 4:24 am

A follow up:
https://www.esquire.com/lifestyle/money/a19181300/nassim-nicholas-taleb-money-advice/
A very frank discussion of debt and freedom.

[Apr 24, 2018] The term scientism generally points to the facile application of science in unwarranted situations not amenable to application of the scientific method.

Apr 24, 2018 | www.nakedcapitalism.com

skippy , April 21, 2018 at 10:28 pm

The term scientism generally points to the facile application of science in unwarranted situations not amenable to application of the scientific method.

Soddy's attempts at linking the physical world via a quasi scientific approach without doing a thorough heterodox examination of our species wrt monies is my point i.e.

"Being scientist/technologists, Fuller and Soddy felt the need to define wealth, to quantify it in an equation. They knew the components of wealth were physical resources – matter and energy – and the level of knowledge available to most effectively employ these resources. Simplistically stated:

WEALTH = (MATTER + ENERGY) x HUMAN KNOWLEDGE

Energy stored in fossil fuels – Earth's energy savings account – is, of course, unavailable after the fuels are burned. But both Fuller and Soddy understood that expanding human knowledge would eventually make it possible for humanity to operate on Earth's energy income using solar, wind, tidal, biofuels, etc. (but for lack of political will and resistance from the fossil fuel industry, we have reached this potential today). Additionally, the First Law of Thermodynamics says the total amount of matter and energy in the universe is constant and can be neither created nor destroyed, only interchanged. Since knowledge can only grow, wealth can only grow.

It is critical to understand that wealth is governed by the laws of physics and is incorruptible, whereas money is governed by the laws of man and is infinitely corruptible."

I could start with models and applications of theory between interdisciplinary modes of inquire – chalk and cheese. Was Soddy an accountant, deal with issues like sound finance vs functional, or have any depth wrt international systems – no. Worse bit in my book is it moralizes the money question without dealing with the broader social ethos and how that is forwarded via dominate ideology.

To that quandary I brought up atomistic individualism on this blog some time ago, Syll has recently mentioned it. Its in these things that proceed baked in human tool user problems like money.

drumlin woodchuckles , April 22, 2018 at 5:37 pm

Thank you skippy and the follow-on commenters for a serious genuine reply-to-and discussion-of my question.

It has been years since I read " Wealth, Virtual Wealth and Debt – – The Solution of the Economic Paradox". In light of this subthread I will have to dig it back out of my bookpile and read it again . . . and slower next time . . . to see what I end up thinking.

Why would I even bother to do that? Because it still seems to me that Soddy was at least trying to understand "economics" in terms of the biophysical world in which we all live and in which we do everything we do, including trying to understand "economics". He was at least trying to see how matter-and-energy harvesting in order to do thing-making and stuff-doing could actually be reality-based understood in terms of the best actual knowledge of matter-and-energy reality
existing in his day. If that fails to take account of all the cultural/psychomental/etc. things that humans will do within the picture frame of nature's biophysical constraints, that is a problem we will have to try taking account of in our own extremely troubled day.

But his scientism was at least an effort to ground "economic" understanding within real scientific knowledge. His scientism is still better than the cardboard replica scientism practiced by today's mainstream economists who are merely spray-painting a bunch of scientism onto the paper-mache' sewage-filled pig which is all that their mainstream discipline of mainstream economics ever even is.

Or ever even will be.

[Apr 16, 2018] The Incoherence of the Philosophers The Horror of Postmodernism by The Liberal Moonbat

Notable quotes:
"... The rundown is that a pseudo-intellectual retreat from rationalism invited its well-deserved ridicule too late, and may have been responsible for the needless and terrible demise of a great world civilization's halcyon era, for which the whole world suffers to this day. We need to learn from that. ..."
"... The Incoherence ..."
"... @Cassiodorus ..."
"... @The Liberal Moonbat ..."
"... @The Liberal Moonbat ..."
"... @Cassiodorus ..."
"... @The Liberal Moonbat ..."
"... @Cassiodorus ..."
"... it's really all just a game ..."
Apr 15, 2018 | caucus99percent.com

The Liberal Moonbat on Sun, 04/15/2018 - 7:20am

The title of this bit here refers to an 11th-Century work of Islamic theology, explained here: https://existentialcomics.com/comic/126

The rundown is that a pseudo-intellectual retreat from rationalism invited its well-deserved ridicule too late, and may have been responsible for the needless and terrible demise of a great world civilization's halcyon era, for which the whole world suffers to this day. We need to learn from that.

Everyone here needs to be aware of this, I'm afraid: The modern Western equivalent of The Incoherence . It explains so, so much. If you're wondering why you're suddenly being barraged with Orwellian jargon, charged with crimethink, seeing the issues you've been harping on for years suddenly turned against you as though you've never even heard of them, get aggressively assigned identities you've never had in your life and told that the person you've always been can't possibly exist, and that the consensus, however flawed and incomplete, of the past 50 years on many hard-fought issues is quite suddenly being treated as though it was all a nefarious lie (a la 9/11-flashback), here's the root of who and what to blame:

https://areomagazine.com/2017/03/27/how-french-intellectuals-ruined-the-...

The fact that institutions of higher learning have been coddling this for so long, despite the special treatment it could not survive without, and despite the fact that it bears the mantle and exploits the public clout of science, education, liberalism, and diversity, just to destroy all those things, is particularly shameful. They might as well allow Dianetics as a legitimate alternative to psychology.

Below is what I personally maintain is the Greatest Political Cartoon In American History. Though it refers to only one issue, it elegantly explains nearly everything wrong with American political thought.

arendt on Sun, 04/15/2018 - 9:29am
Good topic...

I'm going to post what I wrote ten years ago in a separate thread, giving you full credit for bringing up the subject.

Cassiodorus on Sun, 04/15/2018 - 1:31pm
That Helen Pluckrose piece is pretty funny.

Postmodernism presents a threat not only to liberal democracy but to modernity itself .

When in doubt, scream and shout, run around in circles, and panic! Uh-huh. Postmodernism was the solution to an academic problem which arose in the Eighties with the proliferation of Ph.D. and M.A. degrees in the humanities. Nobody wanted to read another thesis or dissertation on Shakespeare, and all of the academic work had to be strictly original and pass increasingly onerous originality tests of the type employed by turnitin.com . Meanwhile the authors had to write these damn things if they were to receive diplomas and move on to teaching jobs. Postmodernism to the rescue! Postmodernism as such was an aesthetic movement, revealing with drab uniformity the juxtaposition of everything in an era in which everything was a commodity. Postmodernism is the Hamburger Helper of the academic humanities, a solution to a purely practical matter.

But Pluckrose continues to panic. Here she is characterizing the postmodern perspective:

Therefore the author of a text is not the authority on its meaning.

So? Perhaps Pluckrose needs to read more undergraduate papers, in which their authors evoke an eternal authorial struggle. "Say what you mean!" my teacherly red ink continually shouts at these undergraduates. Of course this is a problem when one's undergraduates write run-on sentences or sentence fragments. But does anyone really say what they mean? I suppose we can at least try harder. Meanwhile original meanings get lost in the procession of history. A prima facie example of this is "originalism" in Constitutional jurisprudence, which claims ultimate reliance on an "original meaning" of the Constitution -- you know, that one and only one original meaning the Founders intended. Never mind that said Founders were walking contradictions. Take for instance Thomas Jefferson, that eloquent waxer upon the virtues of freedom. Now ask Sally Hemings about him.

Let's skip to Pluckrose's conclusion:

In order to regain credibility, the Left needs to recover a strong, coherent and reasonable liberalism.

I don't see why. How about if we figure out what sort of utopian dream would be appropriate for our world in our day and age, and then decide afterward if we want to call it "liberalism"? Isn't the point of the "science" which Pluckrose regards so highly to put the conclusion at the end of one's research, rather than at the beginning?

I could go on, but this is long enough for a comment in a diary.

The Liberal Moonbat on Sun, 04/15/2018 - 12:49pm
"Postmodernism" may not be the ideal term

@Cassiodorus

Postmodernism to the rescue! Postmodernism as such was an aesthetic movement, revealing with drab uniformity the juxtaposition of everything in an era in which everything was a commodity.

That's a different kind of "Postmodernism" altogether, the kind associated with (if I'm not mistaken) such Chaotic gems as MAD Magazine, Monty Python, The Far Side , and the vibrant, innovative weirdness of a wide array of 1990s art, literature, and pop culture. My very bones are built on such things.

There's also "postmodern architecture", best known for being boring (my mother has been known to call it "post-architecture").

This, though? This is something entirely anathema. The aesthetic we call "postmodern" is liberating and innovative (at least as long as it stays in the hands of people who "get it"); it teaches that there are no rules, that life is a strange and beautiful carnival, that we can be whatever we want to be, and the world can be whatever we want it to be.

"Postmodernism" as sociology, on the other hand, with its denial of the very existence of the individual, and obscene redefinitions of such sacred words as "Justice", is just all but explicitly totalitarian, and would have us believe that the entire 20th Century, with all its hard-fought, bitter-bought victories and miracles, was all for nothing.

Postmodernism presents a threat not only to liberal democracy but to modernity itself .

When in doubt, scream and shout, run around in circles, and panic! Uh-huh. Postmodernism was the solution to an academic problem which arose in the Eighties with the proliferation of Ph.D. and M.A. degrees in the humanities. Nobody wanted to read another thesis or dissertation on Shakespeare, and all of the academic work had to be strictly original and pass increasingly onerous originality tests of the type employed by turnitin.com . Meanwhile the authors had to write these damn things if they were to receive diplomas and move on to teaching jobs. Postmodernism to the rescue! Postmodernism as such was an aesthetic movement, revealing with drab uniformity the juxtaposition of everything in an era in which everything was a commodity. Postmodernism is the Hamburger Helper of the academic humanities, a solution to a purely practical matter.

But Pluckrose continues to panic. Here she is characterizing the postmodern perspective:

Therefore the author of a text is not the authority on its meaning.

So? Perhaps Pluckrose needs to read more undergraduate papers, in which their authors evoke an eternal authorial struggle. "Say what you mean!" my teacherly red ink continually shouts at these undergraduates. Of course this is a problem when one's undergraduates write run-on sentences or sentence fragments. But does anyone really say what they mean? I suppose we can at least try harder. Meanwhile original meanings get lost in the procession of history. A prima facie example of this is "originalism" in Constitutional jurisprudence, which claims ultimate reliance on an "original meaning" of the Constitution -- you know, that one and only one original meaning the Founders intended. Never mind that said Founders were walking contradictions. Take for instance Thomas Jefferson, that eloquent waxer upon the virtues of freedom. Now ask Sally Hemings about him.

Let's skip to Pluckrose's conclusion:

In order to regain credibility, the Left needs to recover a strong, coherent and reasonable liberalism.

I don't see why. How about if we figure out what sort of utopian dream would be appropriate for our world in our day and age, and then decide afterward if we want to call it "liberalism"? Isn't the point of the "science" which Pluckrose regards so highly to put the conclusion at the end of one's research, rather than at the beginning?

I could go on, but this is long enough for a comment in a diary.

Cassiodorus on Sun, 04/15/2018 - 6:26pm
Let me briefly suggest here --

@The Liberal Moonbat @The Liberal Moonbat that it is "liberalism" itself that has run out of gas.

At any rate, to deal with the objections to postmodernism: it's a performative contradiction to be an academic writing against the idea of the individual, for higher-level academia exists to adorn the resumes of self-proclaimed individuals. I just don't see postmodernism, of whatever kind you care to distinguish, as anything but harmless, useless, and pointless outside of its obvious role in contributing to the resume-building efforts of professors in the humanities, and I haven't seen anything here to change my mind about that.

Rather, the problem is that the liberals have run out of new mechanisms whereby the liberal utopia might bear fruit. The liberal trend peaked a long time ago. And, in the meantime, liberal objections to the neoliberal utopia, the utopia of total market existence for everyone as enforced by government diktat, have become toothless. In the US context the liberals appear either blind to or despairing of the fact that the best they had for politics was Barack Obama and Hillary Rodham Clinton, and that their hero Bernie Sanders nullified himself by endorsing Hillary Rodham Clinton. In the French contest the best they had was Macron. I suppose that there are a few islands of sanity elsewhere. But liberalism does not contribute substantially to the longevity of such islands.

#2

Postmodernism to the rescue! Postmodernism as such was an aesthetic movement, revealing with drab uniformity the juxtaposition of everything in an era in which everything was a commodity.

That's a different kind of "Postmodernism" altogether, the kind associated with (if I'm not mistaken) such Chaotic gems as MAD Magazine, Monty Python, The Far Side , and the vibrant, innovative weirdness of a wide array of 1990s art, literature, and pop culture. My very bones are built on such things.

There's also "postmodern architecture", best known for being boring (my mother has been known to call it "post-architecture").

This, though? This is something entirely anathema. The aesthetic we call "postmodern" is liberating and innovative (at least as long as it stays in the hands of people who "get it"); it teaches that there are no rules, that life is a strange and beautiful carnival, that we can be whatever we want to be, and the world can be whatever we want it to be. "Postmodernism" as sociology, on the other hand, with its denial of the very existence of the individual, and obscene redefinitions of such sacred words as "Justice", is just all but explicitly totalitarian, and would have us believe that the entire 20th Century, with all its hard-fought, bitter-bought victories and miracles, was all for nothing.

The Liberal Moonbat on Sun, 04/15/2018 - 4:42pm
That turns us to the definition of "liberalism", then

@Cassiodorus To me it just means...well, kind of just being a good, intelligent, and independent-minded person who learns from history and builds on it. If, as I've read the claim, "conservatism is the negation of ideology", I'd venture to describe liberalism as the absence of externally-derived ideology.

I don't think the establishment Democrats - spineless, capitalist, militarist, insular, and ultimately authoritarian - deserve to be let anywhere near the label "liberal".

#2.1 #2.1 that it is "liberalism" itself that has run out of gas.

At any rate, to deal with the objections to postmodernism: it's a performative contradiction to be an academic writing against the idea of the individual, for higher-level academia exists to adorn the resumes of self-proclaimed individuals. I just don't see postmodernism, of whatever kind you care to distinguish, as anything but harmless, useless, and pointless outside of its obvious role in contributing to the resume-building efforts of professors in the humanities, and I haven't seen anything here to change my mind about that.

Rather, the problem is that the liberals have run out of new mechanisms whereby the liberal utopia might bear fruit. The liberal trend peaked a long time ago. And, in the meantime, liberal objections to the neoliberal utopia, the utopia of total market existence for everyone as enforced by government diktat, have become toothless. In the US context the liberals appear either blind to or despairing of the fact that the best they had for politics was Barack Obama and Hillary Rodham Clinton, and that their hero Bernie Sanders nullified himself by endorsing Hillary Rodham Clinton. In the French contest the best they had was Macron. I suppose that there are a few islands of sanity elsewhere. But liberalism does not contribute substantially to the longevity of such islands.

Cassiodorus on Sun, 04/15/2018 - 6:57pm
Well the postcapitalists

@The Liberal Moonbat are "good, intelligent, and independent-minded" people who "learn from history and build on it." The difference, of course, is that the postcapitalists want to jettison capitalism whereas most of the liberals want to "build on it." "A well-regulated capitalism," they tell us, is the way to go, because history declares "Communism" anathema. Now perhaps not all liberals agree with this well-recited dogma, but its primary problem is that it does not touch capitalism's commodification of everything including governments. Thus liberals who believe in this dogma claim that they seek the best-possible accommodation with capitalism, and "well-regulated" means "regulated enough to look good." Politicians with the endorsement of liberals must keep the air and water clean in areas where the residents are rich enough to buy politicians.

Now of course the liberals will protest this characterization of them, proclaiming once again that they are "good, intelligent, and independent-minded." But where can they be seen imagining the world after capitalism? Kim Stanley Robinson at least tries:

https://player.vimeo.com/video/164911428?title=0&byline=0&portrait=0

Kim Stanley Robinson, Keynote from Environmental Humanities Center on Vimeo .

#2.1.1 To me it just means...well, kind of just being a good, intelligent, and independent-minded person who learns from history and builds on it. If, as I've read the claim, "conservatism is the negation of ideology", I'd venture to describe liberalism as the absence of externally-derived ideology.

I don't think the establishment Democrats - spineless, capitalist, militarist, insular, and ultimately authoritarian - deserve to be let anywhere near the label "liberal".

The Liberal Moonbat on Mon, 04/16/2018 - 11:41am
Having formally studied economics...

@Cassiodorus I've come away with the conclusion that the very concept is, at best, nothing more than a kind of subtopic of history, and at worst, outright pseudoscience, if not religion. My attitude has since spread to much of the rest of that which bills itself as "social science" - sociology's one thing, of course, and so is modern psychology, having dumped Freud, but I think the notion of "social science" is finally revealing itself to mostly be just another disastrous 19th-Century conceit. Free will is kryptonite to science. "The economy", "society", "culture", people labor under these things because they believe they're unavoidably real, but it's really all just a game , and the rules can be almost whatever we want them to be.

You can try to make anything into a "science" - but not everything can or should. Case in point: After World War II, the Soviet Union decided that military strategy and tactics were a science, and that it had natural laws or whatever that could be honed to the same degree of precision as the laws of physics; with time, they believed, they'd be able to predict the outcome of a battle before a single shot had been fired. This "science" crashed and burned when they invaded Afghanistan.

As to the question of "what do we replace capitalism with?", my honest answer is: Nothing. Stop believing in "economics", and just do what makes sense based on situational necessity and a long-term vision of what we want. A "mixed economy" like those of Norway, 1970s Britain, or (arguably) New Deal America is really just an economy that has broken free of the religion of "economics," and plays by its own, common sense/common morality rules. The best economic policy MO I've ever heard of is Finland's: "Let's do what makes our people HAPPY!" (I read a dandy article about that a while back, but I can't seem to find it now).

#2.1.1.1 are "good, intelligent, and independent-minded" people who "learn from history and build on it." The difference, of course, is that the postcapitalists want to jettison capitalism whereas most of the liberals want to "build on it." "A well-regulated capitalism," they tell us, is the way to go, because history declares "Communism" anathema. Now perhaps not all liberals agree with this well-recited dogma, but its primary problem is that it does not touch capitalism's commodification of everything including governments. Thus liberals who believe in this dogma claim that they seek the best-possible accommodation with capitalism, and "well-regulated" means "regulated enough to look good." Politicians with the endorsement of liberals must keep the air and water clean in areas where the residents are rich enough to buy politicians.

Now of course the liberals will protest this characterization of them, proclaiming once again that they are "good, intelligent, and independent-minded." But where can they be seen imagining the world after capitalism? Kim Stanley Robinson at least tries:

https://player.vimeo.com/video/164911428?title=0&byline=0&portrait=0

Kim Stanley Robinson, Keynote from Environmental Humanities Center on Vimeo .

on the cusp on Sun, 04/15/2018 - 11:32am
I recently visited UAE.

I enjoyed a museum visit in Sharza, where one section of the complex had displays of incredible scientific contributions I had never associated with this part of the world.

When I left that section, everything became examples and displays of Islam. Korans, proper clothing, a few weapons. Thinking back, the science section pre-dated this philosopher. I saw his influence, just didn't know it until today.

Very interesting essay.

Azazello on Sun, 04/15/2018 - 2:21pm
Former philosophy major here.

I never could understand Postmodernism. Is this because I am a white male or because I find Enlightenment concepts more coherent and more useful in my everyday life and politics ? Whatever, I remain happily stuck in the late 18th century. Good to see a mention of Alan Sokal in the linked article.

MrWebster on Mon, 04/16/2018 - 12:05pm
What I remember about Shakespeare in college

And other literature courses was that the classes were about the schools of literary criticism on Shakespeare, rather than about the students doing a close reading of Shakespeare. And then of course, critiques on the schools of literary criticism.

[Apr 16, 2018] >The Incoherence of the Philosophers The Horror of Postmodernism

Apr 16, 2018 | caucus99percent.com

The Liberal Moonbat on Sun, 04/15/2018 - 7:20am

[Apr 04, 2018] Elite universities are selling themselves – and look who s buying by Grif Peterson and Yarden Katz

Notable quotes:
"... Bin Salman's affair with academia isn't a fluke – it's a result of the neoliberal logic by which universities increasingly operate. As the journalist David Dickson noted in 1984, American universities and corporations have "teamed up to challenge the democratic control of knowledge" by delegating control over academic research to "the marketplace". ..."
Mar 30, 2018 | www.theguardian.com

Bin Salman's affair with academia isn't a fluke – it's a result of the neoliberal logic by which universities increasingly operate. As the journalist David Dickson noted in 1984, American universities and corporations have "teamed up to challenge the democratic control of knowledge" by delegating control over academic research to "the marketplace".

This market rationality extends even to the way research is evaluated – which the Saudi government has been gaming. To give one example, it paid highly cited mathematicians at universities around the world to list King Abdulaziz University as an affiliation, thereby making it the seventh "best" mathematics department worldwide in the 2014 US News and World Report university rankings .

Here, the Saudi government is only playing by the rules of a game designed by western elites. This is the same logic that has been used to allow corporations, nonprofits and the military to steadily buy out chunks of academia to the point where it makes little sense to presume clear boundaries exist between these entities. As a result, numerous partnerships entangle MIT researchers with Bin Salman. On his Boston tour, he also visited IBM's Cambridge research facility, which recently partnered with MIT to form an artificial intelligence research laboratory in exchange for a $240m commitment to the university. Boston Dynamics , an MIT partner that builds robots for the US military, also offered a demonstration. Such alliances ought to cast doubt on MIT's promise to understand the "societal and ethical" implications of AI and build socially beneficial technologies.

The terms of all of these partnerships are essentially opaque, while the secrecy that surrounds them denies the community the chance to deliberate and take action. The growth of unaccountable university partnerships, like other crises facing educational institutions, stems from the absence of democratic engagement. When universities decide to sell themselves to the highest bidder, they become deaf to the interests of their students and the wider societies in which they operate. Subservience to war criminals and corporate overlords tends to follow.

[Apr 04, 2018] Elite universities are selling themselves and look who's buying

Apr 04, 2018 | www.theguardian.com

Bin Salman's affair with academia isn't a fluke – it's a result of the neoliberal logic by which universities increasingly operate. As the journalist David Dickson noted in 1984, American universities and corporations have "teamed up to challenge the democratic control of knowledge" by delegating control over academic research to "the marketplace".

This market rationality extends even to the way research is evaluated – which the Saudi government has been gaming. To give one example, it paid highly cited mathematicians at universities around the world to list King Abdulaziz University as an affiliation, thereby making it the seventh "best" mathematics department worldwide in the 2014 US News and World Report university rankings .

Here, the Saudi government is only playing by the rules of a game designed by western elites. This is the same logic that has been used to allow corporations, nonprofits and the military to steadily buy out chunks of academia to the point where it makes little sense to presume clear boundaries exist between these entities. As a result, numerous partnerships entangle MIT researchers with Bin Salman. On his Boston tour, he also visited IBM's Cambridge research facility, which recently partnered with MIT to form an artificial intelligence research laboratory in exchange for a $240m commitment to the university. Boston Dynamics , an MIT partner that builds robots for the US military, also offered a demonstration. Such alliances ought to cast doubt on MIT's promise to understand the "societal and ethical" implications of AI and build socially beneficial technologies.

The terms of all of these partnerships are essentially opaque, while the secrecy that surrounds them denies the community the chance to deliberate and take action. The growth of unaccountable university partnerships, like other crises facing educational institutions, stems from the absence of democratic engagement. When universities decide to sell themselves to the highest bidder, they become deaf to the interests of their students and the wider societies in which they operate. Subservience to war criminals and corporate overlords tends to follow.

[Mar 25, 2018] Surveillance is the DNA of the Platform Economy

Creating a malware application which masks itself as some kind of pseudo scientific test and serves as the backdoor to your personal data is a very dirty trick...
Especially dirty it it used by academic researchers, who in reality are academic scum... An additional type of academic gangsters, in addition to Harvard Mafia
Notable quotes:
"... By Ivan Manokha, a departmental lecturer in the Oxford Department of International Development. He is currently working on power and obedience in the late-modern political economy, particularly in the context of the development of new technologies of surveillance. Originally published at openDemocracy ..."
"... The current social mobilization against Facebook resembles the actions of activists who, in opposition to neoliberal globalization, smash a McDonald's window during a demonstration. ..."
"... But as Christopher Wylie, a twenty-eight-year-old Canadian coder and data scientist and a former employee of Cambridge Analytica, stated in a video interview , the app could also collect all kinds of personal data from users, such as the content that they consulted, the information that they liked, and even the messages that they posted. ..."
"... All this is done in order to use data to create value in some way another (to monetize it by selling to advertisers or other firms, to increase sales, or to increase productivity). Data has become 'the new oil' of global economy, a new commodity to be bought and sold at a massive scale, and with this development, as a former Harvard Business School professor Shoshana Zuboff has argued , global capitalism has become 'surveillance capitalism'. ..."
"... What this means is that platform economy is a model of value creation which is completely dependant on continuous privacy invasions and, what is alarming is that we are gradually becoming used to this. ..."
"... In other instances, as in the case of Kogan's app, the extent of the data collected exceeds what was stated in the agreement. ..."
"... What we need is a total redefinition of the right to privacy (which was codified as a universal human right in 1948, long before the Internet), to guarantee its respect, both offline and online. ..."
"... I saw this video back in 2007. It was originally put together by a Sarah Lawrence student who was working on her paper on social media. The ties of all the original investors to IN-Q-Tel scared me off and I decided to stay away from Facebook. ..."
"... But it isn't just FB. Amazon, Twitter, Google, LinkedIn, Apple, Microsoft and many others do the same, and we are all caught up in it whether we agree to participate or not. ..."
"... Platform Capitalism is a mild description, it is manipulation based on Surveillance Capitalism, pure and simple. The Macro pattern of Corporate Power subsuming the State across every area is fascinating to watch, but a little scary. ..."
"... For his part, Aleksandr Kogan established a company, Global Science Research, that contracted with SCL, using Facebook data to map personality traits for its work in elections (Kosinski claims that Kogan essentially reverse-engineered the app that he and Stillwell had developed). Kogan's app harvested data on Facebook users who agreed to take a personality test for the purposes of academic research (though it was, in fact, to be used by SCL for non-academic ends). But according to Wylie, the app also collected data on their entire -- and nonconsenting -- network of friends. Once Cambridge Analytica and SCL had won contracts with the State Department and were pitching to the Pentagon, Wylie became alarmed that this illegally-obtained data had ended up at the heart of government, along with the contractors who might abuse it. ..."
"... This apparently bizarre intersection of research on topics like love and kindness with defense and intelligence interests is not, in fact, particularly unusual. It is typical of the kind of dual-use research that has shaped the field of social psychology in the US since World War II. ..."
"... Much of the classic, foundational research on personality, conformity, obedience, group polarization, and other such determinants of social dynamics -- while ostensibly civilian -- was funded during the cold war by the military and the CIA. ..."
"... The pioneering figures from this era -- for example, Gordon Allport on personality and Solomon Asch on belief conformity -- are still cited in NATO psy-ops literature to this day ..."
"... This is an issue which has frustrated me greatly. In spite of the fact that the country's leading psychologist (at the very least one of them -- ex-APA president Seligman) has been documented taking consulting fees from Guantanamo and Black Sites goon squads, my social science pals refuse to recognize any corruption at the core of their so-called replicated quantitative research. ..."
Mar 24, 2018 | www.nakedcapitalism.com
Yves here. Not new to anyone who has been paying attention, but a useful recap with some good observations at the end, despite deploying the cringe-making trope of businesses having DNA. That legitimates the notion that corporations are people.

By Ivan Manokha, a departmental lecturer in the Oxford Department of International Development. He is currently working on power and obedience in the late-modern political economy, particularly in the context of the development of new technologies of surveillance. Originally published at openDemocracy

The current social mobilization against Facebook resembles the actions of activists who, in opposition to neoliberal globalization, smash a McDonald's window during a demonstration.

On March 17, The Observer of London and The New York Times announced that Cambridge Analytica, the London-based political and corporate consulting group, had harvested private data from the Facebook profiles of more than 50 million users without their consent. The data was collected through a Facebook-based quiz app called thisisyourdigitallife, created by Aleksandr Kogan, a University of Cambridge psychologist who had requested and gained access to information from 270,000 Facebook members after they had agreed to use the app to undergo a personality test, for which they were paid through Kogan's company, Global Science Research.

But as Christopher Wylie, a twenty-eight-year-old Canadian coder and data scientist and a former employee of Cambridge Analytica, stated in a video interview , the app could also collect all kinds of personal data from users, such as the content that they consulted, the information that they liked, and even the messages that they posted.

In addition, the app provided access to information on the profiles of the friends of each of those users who agreed to take the test, which enabled the collection of data from more than 50 million.

All this data was then shared by Kogan with Cambridge Analytica, which was working with Donald Trump's election team and which allegedly used this data to target US voters with personalised political messages during the presidential campaign. As Wylie, told The Observer, "we built models to exploit what we knew about them and target their inner demons."

'Unacceptable Violation'

Following these revelations the Internet has been engulfed in outrage and government officials have been quick to react. On March 19, Antonio Tajani President of the European Parliament Antonio Tajani, stated in a twitter message that misuse of Facebook user data "is an unacceptable violation of our citizens' privacy rights" and promised an EU investigation. On March 22, Wylie communicated in a tweet that he accepted an invitation to testify before the US House Intelligence Committee, the US House Judiciary Committee and UK Parliament Digital Committee. On the same day Israel's Justice Ministry informed Facebook that it was opening an investigation into possible violations of Israelis' personal information by Facebook.

While such widespread condemnation of Facebook and Cambridge Analytica is totally justified, what remains largely absent from the discussion are broader questions about the role of data collection, processing and monetization that have become central in the current phase of capitalism, which may be described as 'platform capitalism', as suggested by the Canadian writer and academic Nick Srnicek in his recent book .

Over the last decade the growth of platforms has been spectacular: today, the top 4 enterprises in Forbes's list of most valuable brands are platforms, as are eleven of the top twenty. Most recent IPOs and acquisitions have involved platforms, as have most of the major successful startups. The list includes Apple, Google, Microsoft, Facebook, Twitter, Amazon, eBay, Instagram, YouTube, Twitch, Snapchat, WhatsApp, Waze, Uber, Lyft, Handy, Airbnb, Pinterest, Square, Social Finance, Kickstarter, etc. Although most platforms are US-based, they are a really global phenomenon and in fact are now playing an even more important role in developing countries which did not have developed commercial infrastructures at the time of the rise of the Internet and seized the opportunity that it presented to structure their industries around it. Thus, in China, for example, many of the most valuable enterprises are platforms such as Tencent (owner of the WeChat and QQ messaging platforms) and Baidu (China's search engine); Alibaba controls 80 percent of China's e-commerce market through its Taobao and Tmall platforms, with its Alipay platform being the largest payments platform in China.

The importance of platforms is also attested by the range of sectors in which they are now dominant and the number of users (often numbered in millions and, in some cases, even billions) regularly connecting to their various cloud-based services. Thus, to name the key industries, platforms are now central in Internet search (Google, Yahoo, Bing); social networking (Facebook, LinkedIn, Instagram, Snapchat); Internet auctions and retail (eBay, Taobao, Amazon, Alibaba); on-line financial and human resource functions (Workday, Upwork, Elance, TaskRabbit), urban transportation (Uber, Lyft, Zipcar, BlaBlaCar), tourism (Kayak, Trivago, Airbnb), mobile payment (Square Order, PayPal, Apple Pay, Google Wallet); and software development (Apple's App Store, Google Play Store, Windows App store). Platform-based solutions are also currently being adopted in more traditional sectors, such as industrial production (GE, Siemens), agriculture (John Deere, Monsanto) and even clean energy (Sungevity, SolarCity, EnerNOC).

User Profiling -- Good-Bye to Privacy

These platforms differ significantly in terms of the services that they offer: some, like eBay or Taobao simply allow exchange of products between buyers and sellers; others, like Uber or TaskRabbit, allow independent service providers to find customers; yet others, like Apple or Google allow developers to create and market apps.

However, what is common to all these platforms is the central role played by data, and not just continuous data collection, but its ever more refined analysis in order to create detailed user profiles and rankings in order to better match customers and suppliers or increase efficiency.

All this is done in order to use data to create value in some way another (to monetize it by selling to advertisers or other firms, to increase sales, or to increase productivity). Data has become 'the new oil' of global economy, a new commodity to be bought and sold at a massive scale, and with this development, as a former Harvard Business School professor Shoshana Zuboff has argued , global capitalism has become 'surveillance capitalism'.

What this means is that platform economy is a model of value creation which is completely dependant on continuous privacy invasions and, what is alarming is that we are gradually becoming used to this.

Most of the time platform providers keep track of our purchases, travels, interest, likes, etc. and use this data for targeted advertising to which we have become accustomed. We are equally not that surprised when we find out that, for example, robotic vacuum cleaners collect data about types of furniture that we have and share it with the likes of Amazon so that they can send us advertisements for pieces of furniture that we do not yet possess.

There is little public outcry when we discover that Google's ads are racially biased as, for instance, a Harvard professor Latanya Sweeney found by accident performing a search. We are equally hardly astonished that companies such as Lenddo buy access to people's social media and browsing history in exchange for a credit score. And, at least in the US, people are becoming accustomed to the use of algorithms, developed by private contractors, by the justice system to take decisions on sentencing, which often result in equally unfair and racially biased decisions .

The outrage provoked by the Cambridge Analytica is targeting only the tip of the iceberg. The problem is infinitely larger as there are countless equally significant instances of privacy invasions and data collection performed by corporations, but they have become normalized and do not lead to much public outcry.

DNA

Today surveillance is the DNA of the platform economy; its model is simply based on the possibility of continuous privacy invasions using whatever means possible. In most cases users agree, by signing the terms and conditions of service providers, so that their data may be collected, analyzed and even shared with third parties (although it is hardly possible to see this as express consent given the size and complexity of these agreements -- for instance, it took 8 hours and 59 minutes for an actor hired by the consumer group Choice to read Amazon Kindle's terms and conditions). In other instances, as in the case of Kogan's app, the extent of the data collected exceeds what was stated in the agreement.

But what is important is to understand that to prevent such scandals in the future it is not enough to force Facebook to better monitor the use of users' data in order to prevent such leaks as in the case of Cambridge Analytica. The current social mobilization against Facebook resembles the actions of activists who, in opposition to neoliberal globalization, smash a McDonald's window during a demonstration.

What we need is a total redefinition of the right to privacy (which was codified as a universal human right in 1948, long before the Internet), to guarantee its respect, both offline and online.

What we need is a body of international law that will provide regulations and oversight for the collection and use of data.

What is required is an explicit and concise formulation of terms and conditions which, in a few sentences, will specify how users' data will be used.

It is important to seize the opportunity presented by the Cambridge Analytica scandal to push for these more fundamental changes.



Arizona Slim , , March 24, 2018 at 7:38 am

I am grateful for my spidey sense. Thanks, spidey sense, for ringing the alarm bells whenever I saw one of those personality tests on Facebook. I never took one.

Steve H. , , March 24, 2018 at 8:05 am

First they came for

The most efficient strategy is to be non-viable . They may come for you eventually, but someone else gets to be the canary, and you haven't wasted energy in the meantime. TOR users didn't get that figured out.

Annieb , , March 24, 2018 at 2:02 pm

Never took the personality test either, but now I now that all of my friends who did unknowingly gave up my personal information too. I read an article somewhere about this over a year ago so it's really old news. Sent the link to a few people who didn't care. But now that they all know that Cambridge Analytical used FB data in support of the Trump campaign it's all over the mainstream and people are upset.

ChrisPacific , , March 25, 2018 at 4:07 pm

You can disable that (i.e., prevent friends from sharing your info with third parties) in the privacy options. But the controls are not easy to find and everything is enabled by default.

HotFlash , , March 24, 2018 at 3:13 pm

I haven't FB'd in years and certainly never took any such test, but if any of my friends, real or FB, did, and my info was shared, can I sue? If not, why not?

Octopii , , March 24, 2018 at 8:06 am

Everyone thought I was paranoid as I discouraged them from moving backups to the cloud, using trackers, signing up for grocery store clubs, using real names and addresses for online anything, etc. They thought I was overreacting when I said we need European-style privacy laws in this country. People at work thought my questions about privacy for our new location-based IoT plans were not team-based thinking.

And it turns out after all this that they still think I'm extreme. I guess it will have to get worse.

Samuel Conner , , March 24, 2018 at 8:16 am

In a first for me, there are surface-mount resistors in the advert at the top of today's NC links page. That is way out of the ordinary; what I usually see are books or bicycle parts; things I have recently purchased or searched.

But a couple of days ago I had a SKYPE conversation with a sibling about a PC I was scavenging for parts, and surface mount resistors (unscavengable) came up. I suspect I have been observed without my consent and am not too happy about it. As marketing, it's a bust; in the conversation I explicitly expressed no interest in such components as I can't install them. I suppose I should be glad for this indication of something I wasn't aware was happening.

Collins , , March 24, 2018 at 9:14 am

Had you used your computer keyboard previously to search for 'surface mount resistors', or was the trail linking you & resistors entirely verbal?

Samuel Conner , , March 24, 2018 at 10:15 am

No keyboard search. I never so much as think about surface mount components; the inquiry was raised by my sibling and I responded. Maybe its coincidental, but it seems quite odd.

I decided to click through to the site to generate a few pennies for NC and at least feel like I was punishing someone for snooping on me.

Abi , , March 25, 2018 at 3:24 pm

Its been happening to me a lot recently on my Instagram, I don't like pictures or anything, but whenever I have a conversation with someone on my phone, I start seeing ads of what I spoke about

ChiGal in Carolina , , March 25, 2018 at 10:12 am

I thought it came out a while ago that Skype captures and retains all the dialogue and video of convos using it.

Eureka Springs , , March 24, 2018 at 8:44 am

What we need is a total redefinition of the right to privacy (which was codified as a universal human right in 1948, long before the Internet), to guarantee its respect, both offline and online.

Are we, readers of this post, or citizens of the USA supposed to think there is anything binding in declarations? Or anything from the UN if at all inconvenient for that matter?

https://www.un.org/en/universal-declaration-human-rights/
Article 12.

No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.

Platforms like facebook allow individuals to 'spy' on each other and people love it. When I was a kid i always marveled at how some households would leave a police scanner on 24/7. With the net we have this writ large with baby, puppy and tv dinner photos. Not to forget it's a narcissist paradise. I have friends who I've tried to gently over time inject tidbits of info like this article provides for many years and they still just refuse to try and get it. If they looked over their shoulder and saw how many people/entities are literally following them everywhere they go, they would become rabid gun owners (don't tread on me!) overnight, but the invisible hand/eye registers not at all.

Pelham , , March 24, 2018 at 9:13 am

A side note: If Facebook and other social media were to assume ANY degree of responsibility for content appearing on their platforms, they would be acknowledging their legal liability for ALL content.

Hence they would be legally responsible just as newspapers are. And major newspapers have on-staff lawyers and editors exquisitely attuned to the possibility of libelous content so they can avoid ruinous lawsuits.

If the law were applied as it should be, Facebook and its brethren wouldn't last five minutes before being sued into oblivion.

albert , , March 24, 2018 at 6:27 pm

" being sued into oblivion ." If only.

Non-liability is a product of the computer age. I remember having to agree with Microsofts policy to absolve them of -any- liability when using their software. If they had their druthers, -no- company would be liable for -anything-. It's called a 'perfect world'.

Companies that host 'social media' should not have to bear any responsibility for their users content. Newspapers employ writers and fact checkers. They are set up to monitor their staff for accuracy (Okay, in theory). So you can sue them and even their journalist employees. Being liable (and not sued) allows them to brag about how truthful they are. Reputations are a valuable commodity these days.

In the case of 'social media' providers, liability falls on the authors of their own comments, which is only fair, in my view. However, I would argue that those 'providers' should -not- be considered 'media' like newspapers, and their members should not be considered 'journalists'.

Also, those providers are private companies, and are free to edit, censor, or delete anything on their site. And of course it's automated. Some conservative Facebook members were complaining about being banned. Apparently, there a certain things you can't say on Facebook.

AFAIC, the bottom line is this: Many folks tend to believe everything they read online. They need to learn the skill of critical thinking. And realize that the Internet can be a vast wasteland; a digital garbage dump.

Why are our leaders so concerned with election meddling? Isn't our propaganda better than the Russians? We certainly pay a lot for it.
. .. . .. -- .

PlutoniumKun , , March 24, 2018 at 9:52 am

It seems even Elon Musk is now rebelling against Facebook.

Musk Takes Down the Tesla and SpaceX Facebook Pages.

Today, Musk also made fun of Sonos for not being as committed as he was to the anti-Facebook cause after the connected-speaker maker said it would pull ads from the platform -- but only for a week.

"Wow, a whole week. Risky " Musk tweeted.

saurabh , , March 24, 2018 at 11:43 am

Musk, like Trump, knows he does not need to advertise because a fawning press will dutifully report on everything he does and says, no matter how dumb.

Jim Thomson , , March 25, 2018 at 9:39 am

This is rich.

I can't resist: It takes a con to know a con.
(not the most insightful comment)

Daniel Mongan , , March 24, 2018 at 10:14 am

A thoughtful post, thanks for that. May I recommend you take a look at "All You Can Pay" (NationBooks 2015) for a more thorough treatment of the subject, together with a proposal on how to re-balance the equation. Full disclosure, I am a co-author.

JimTan , , March 24, 2018 at 11:12 am

People are starting to download copies of their Facebook data to get an understanding of how much information is being collected from them.

JCC , , March 24, 2018 at 11:29 am

A reminder: https://www.youtube.com/watch?v=iRT9On7qie8

I saw this video back in 2007. It was originally put together by a Sarah Lawrence student who was working on her paper on social media. The ties of all the original investors to IN-Q-Tel scared me off and I decided to stay away from Facebook.

But it isn't just FB. Amazon, Twitter, Google, LinkedIn, Apple, Microsoft and many others do the same, and we are all caught up in it whether we agree to participate or not.

Anyone watch the NCAA Finals and see all the ads from Google about being "The Official Cloud of the NCAA"? They were flat out bragging, more or less, about surveillance of players. for the NCAA.

Platform Capitalism is a mild description, it is manipulation based on Surveillance Capitalism, pure and simple. The Macro pattern of Corporate Power subsuming the State across every area is fascinating to watch, but a little scary.

oh , , March 24, 2018 at 1:44 pm

Caveat Emptor: If you watch YouTube, they'll only add to the information that they already have on you!

HotFlash , , March 24, 2018 at 3:27 pm

Just substitute "hook" for 'you" in the URL, you get the same video, no ads, and they claim not to track you. YMMV

Craig H. , , March 24, 2018 at 12:21 pm

Privacy no longer a social norm, says Facebook founder; Guardian; 10 January 2010

The Right to Privacy; Warren & Brandeis; Harvard Law Review; 15 December 1890

It was amusing that the top Google hit for the Brandeis article was JSTOR which requires us to surrender personal detail to access their site. To hell with that.

The part I like about the Brandeis privacy story is the motivation was some Manhattan rich dicks thought the gossip writers snooping around their wedding party should mind their own business. (Apparently whether this is actually true or just some story made up by somebody being catty at Brandeis has been the topic of gigabytes of internet flame wars but I can't ever recall seeing any of those.)

Ed , , March 24, 2018 at 2:50 pm

https://www.zerohedge.com/news/2018-03-23/digital-military-industrial-complex-exposed

" Two young psychologists are central to the Cambridge Analytica story. One is Michal Kosinski, who devised an app with a Cambridge University colleague, David Stillwell, that measures personality traits by analyzing Facebook "likes." It was then used in collaboration with the World Well-Being Project, a group at the University of Pennsylvania's Positive Psychology Center that specializes in the use of big data to measure health and happiness in order to improve well-being. The other is Aleksandr Kogan, who also works in the field of positive psychology and has written papers on happiness, kindness, and love (according to his résumé, an early paper was called "Down the Rabbit Hole: A Unified Theory of Love"). He ran the Prosociality and Well-being Laboratory, under the auspices of Cambridge University's Well-Being Institute.

Despite its prominence in research on well-being, Kosinski's work, Cadwalladr points out, drew a great deal of interest from British and American intelligence agencies and defense contractors, including overtures from the private company running an intelligence project nicknamed "Operation KitKat" because a correlation had been found between anti-Israeli sentiments and liking Nikes and KitKats. Several of Kosinski's co-authored papers list the US government's Defense Advanced Research Projects Agency, or DARPA, as a funding source. His résumé boasts of meetings with senior figures at two of the world's largest defense contractors, Boeing and Microsoft, both companies that have sponsored his research. He ran a workshop on digital footprints and psychological assessment for the Singaporean Ministry of Defense.

For his part, Aleksandr Kogan established a company, Global Science Research, that contracted with SCL, using Facebook data to map personality traits for its work in elections (Kosinski claims that Kogan essentially reverse-engineered the app that he and Stillwell had developed). Kogan's app harvested data on Facebook users who agreed to take a personality test for the purposes of academic research (though it was, in fact, to be used by SCL for non-academic ends). But according to Wylie, the app also collected data on their entire -- and nonconsenting -- network of friends. Once Cambridge Analytica and SCL had won contracts with the State Department and were pitching to the Pentagon, Wylie became alarmed that this illegally-obtained data had ended up at the heart of government, along with the contractors who might abuse it.

This apparently bizarre intersection of research on topics like love and kindness with defense and intelligence interests is not, in fact, particularly unusual. It is typical of the kind of dual-use research that has shaped the field of social psychology in the US since World War II.

Much of the classic, foundational research on personality, conformity, obedience, group polarization, and other such determinants of social dynamics -- while ostensibly civilian -- was funded during the cold war by the military and the CIA. The cold war was an ideological battle, so, naturally, research on techniques for controlling belief was considered a national security priority. This psychological research laid the groundwork for propaganda wars and for experiments in individual "mind control."

The pioneering figures from this era -- for example, Gordon Allport on personality and Solomon Asch on belief conformity -- are still cited in NATO psy-ops literature to this day .."

Craig H. , , March 24, 2018 at 3:42 pm

This is an issue which has frustrated me greatly. In spite of the fact that the country's leading psychologist (at the very least one of them -- ex-APA president Seligman) has been documented taking consulting fees from Guantanamo and Black Sites goon squads, my social science pals refuse to recognize any corruption at the core of their so-called replicated quantitative research.

I have asked more than five people to point at the best critical work on the Big 5 Personality theory and they all have told me some variant of "it is the only way to get consistent numbers". Not one has ever retreated one step or been receptive to the suggestion that this might indicate some fallacy in trying to assign numbers to these properties.

They eat their own dog food all the way and they seem to be suffering from a terrible malnutrition. At least the anthropologists have Price . (Most of that book can be read for free in installments at Counterpunch.)

[Mar 14, 2018] Washington policies as the result of a monumental unconscious group-think based on individual self interest

Individual are highly rewarded i f they "accept the party-line" that masquerades as US interests".
Rebels, individual thinkers tend to get fired, not promoted, snubbed
Notable quotes:
"... The individuals who work in our State Dept., CIA, DOD, corporate defense contractors, lobbyists, politicians, media......these individuals appear to benefit on an indivdual level (promotions, high paying jobs, social acceptance, nice neighborhoods and schools for their kids) when they "accept the party-line" that masquerades as US interests". ..."
Mar 14, 2018 | turcopolier.typepad.com

walter, March 2018 at 03:03 PM

Jack, in my opinion, there is no "US". The "US" doesn't have an interest.

There are individuals who behave in their own individual self interest.

The individuals who work in our State Dept., CIA, DOD, corporate defense contractors, lobbyists, politicians, media......these individuals appear to benefit on an indivdual level (promotions, high paying jobs, social acceptance, nice neighborhoods and schools for their kids) when they "accept the party-line" that masquerades as US interests".

Its a monumental unconscious group-think based on individual self interest.

This is my understanding of "the Borg" and "US interests", "US foreign policy goals"....they are actually individual interests shaped by what individuals who work in this realm believe they should believe and espouse to achieve their own goals. Rebels, individual thinkers tend to get fired, not promoted, snubbed

[Mar 12, 2018] There is no democracy without economic democracy by Jason Hirthler

Highly recommended!
Like many high demand cults neoliberalism is a trap, from which it is very difficult to escape...
Notable quotes:
"... A large, open-border global free market would be left, not subject to popular control but managed by a globally dispersed, transnational one percent. And the whole process of making this happen would be camouflaged beneath the altruistic stylings of a benign humanitarianism. ..."
"... Globalists, as neoliberal capitalists are often called, also understood that democracy, defined by a smattering of individual rights and a voting booth, was the ideal vehicle to usher neoliberalism into the emerging world. Namely because democracy, as commonly practiced, makes no demands in the economic sphere. Socialism does. Communism does. These models directly address ownership of the means of production. Not so democratic capitalism. This permits the globalists to continue to own the means of production while proclaiming human rights triumphant in nations where interventions are staged. ..."
"... The enduring lie is that there is no democracy without economic democracy. ..."
turcopolier.typepad.com

Part 3 - A False Promise

This 'Washington Consensus' is the false promise promoted by the West. The reality is quite different. The crux of neoliberalism is to eliminate democratic government by downsizing, privatizing, and deregulating it. Proponents of neoliberalism recognize that the state is the last bulwark of protection for the common people against the predations of capital. Remove the state and they'll be left defenseless .

Think about it. Deregulation eliminates the laws. Downsizing eliminates departments and their funding. Privatizing eliminates the very purpose of the state by having the private sector take over its traditional responsibilities.

Ultimately, nation-states would dissolve except perhaps for armies and tax systems. A large, open-border global free market would be left, not subject to popular control but managed by a globally dispersed, transnational one percent. And the whole process of making this happen would be camouflaged beneath the altruistic stylings of a benign humanitarianism.

Globalists, as neoliberal capitalists are often called, also understood that democracy, defined by a smattering of individual rights and a voting booth, was the ideal vehicle to usher neoliberalism into the emerging world. Namely because democracy, as commonly practiced, makes no demands in the economic sphere. Socialism does. Communism does. These models directly address ownership of the means of production. Not so democratic capitalism. This permits the globalists to continue to own the means of production while proclaiming human rights triumphant in nations where interventions are staged.

The enduring lie is that there is no democracy without economic democracy.

What matters to the one percent and the media conglomerates that disseminate their worldview is that the official definitions are accepted by the masses. The real effects need never be known. The neoliberal ideology (theory) thus conceals the neoliberal reality (practice). And for the masses to accept it, it must be mass produced. Then it becomes more or less invisible by virtue of its universality.

Source, links:

https://www.counterpunch.org/2018/03/02/colonizing-the-western-mind/
[ 1 ] [ 2 ]

[Mar 12, 2018] Colonizing the Western Mind using think tanks

Highly recommended!
Notable quotes:
"... In a short span of time in the 1970s, dozens of think tanks were established across the western world and billions of dollars were spent proselytizing the tenets of the Powell Memo in 1971, which galvanized a counter-revolution to the liberal upswing of the Sixties. The neoliberal economic model of deregulation, downsizing, and privatization was preached by the Reagan-Thatcher junta, liberalized by the Clinton regime, temporarily given a bad name by the unhinged Bush administration, and saved by telegenic restoration of the Obama years. ..."
"... Today think tanks like the Heritage Foundation, the Brookings Institute, Stratfor, Cato Institute, American Enterprise Institute, Council on Foreign Relations, Carnegie Endowment, the Open Society Foundation, and the Atlantic Council, among many others, funnel millions of dollars in donations into cementing neoliberal attitudes in the American mind. ..."
"... The ideological assumptions, which serve to justify what you could call neocolonial tactics, are relatively clear: the rights of the individual to be free of overreach from monolithic institutions like the state. Activist governments are inherently inefficient and lead directly to totalitarianism. Markets must be free and individuals must be free to act in those markets. People must be free to choose, both politically and commercially, in the voting booth and at the cash register. ..."
"... This conception of markets and individuals is most often formulated as "free-market democracy," a misleading conceit that conflates individual freedom with the economic freedom of capital to exploit labor. So when it comes to foreign relations, American and western aid would only be given on the condition that the borrowers accepted the tenets of an (highly manipulable) electoral system and vowed to establish the institutions and legal structures required to fully realize a western market economy. ..."
Mar 12, 2018 | www.counterpunch.org

In Christopher Nolan's captivating and visually dazzling film Inception, a practitioner of psychic corporate espionage must plant and idea inside a CEO's head. The process is called inception, and it represents the frontier of corporate influence, in which mind spies no longer just "extract" ideas from the dreams of others, but seed useful ideas in a target's subconscious.

Inception is a well-crafted piece of futuristic sci-fi drama, but some of the ideas it imparts are already deeply embedded in the American subconscious.

The notion of inception, of hatching an idea in the mind of a man or woman without his or her knowledge, is the kernel of propaganda, a black art practiced in the States since the First World War. Today we live beneath an invisible cultural hegemony, a set of ideas implanted in the mass mind by the U.S. state and its corporate media over decades. Invisibility seems to happen when something is either obscure or ubiquitous. In a propaganda system, an overarching objective is to render the messaging invisible by universalizing it within the culture. Difference is known by contrast. If there are no contrasting views in your field of vision, it's easier to accept the ubiquitous explanation. The good news is that the ideology is well-known to some who have, for one lucky reason or another, found themselves outside the hegemonic field and are thus able to contrast the dominant worldview with alternative opinions. On the left, the ruling ideology might be described as neoliberalism, a particularly vicious form of imperial capitalism that, as would be expected, is camouflaged in the lineaments of humanitarian aid and succor.

Inception 1971

In a short span of time in the 1970s, dozens of think tanks were established across the western world and billions of dollars were spent proselytizing the tenets of the Powell Memo in 1971, which galvanized a counter-revolution to the liberal upswing of the Sixties. The neoliberal economic model of deregulation, downsizing, and privatization was preached by the Reagan-Thatcher junta, liberalized by the Clinton regime, temporarily given a bad name by the unhinged Bush administration, and saved by telegenic restoration of the Obama years.

The ideology that underlay the model saturated academia, notably at the University of Chicago, and the mainstream media, principally at The New York Times. Since then it has trickled down to the general populace, to whom it now feels second nature.

Today think tanks like the Heritage Foundation, the Brookings Institute, Stratfor, Cato Institute, American Enterprise Institute, Council on Foreign Relations, Carnegie Endowment, the Open Society Foundation, and the Atlantic Council, among many others, funnel millions of dollars in donations into cementing neoliberal attitudes in the American mind.

The ideological assumptions, which serve to justify what you could call neocolonial tactics, are relatively clear: the rights of the individual to be free of overreach from monolithic institutions like the state. Activist governments are inherently inefficient and lead directly to totalitarianism. Markets must be free and individuals must be free to act in those markets. People must be free to choose, both politically and commercially, in the voting booth and at the cash register.

This conception of markets and individuals is most often formulated as "free-market democracy," a misleading conceit that conflates individual freedom with the economic freedom of capital to exploit labor. So when it comes to foreign relations, American and western aid would only be given on the condition that the borrowers accepted the tenets of an (highly manipulable) electoral system and vowed to establish the institutions and legal structures required to fully realize a western market economy.

These demands were supplemented with notions of the individual right to be free of oppression, some fine rhetoric about women and minorities, and somewhat more quietly, a judicial understanding that corporations were people, too. Together, an unshackled economy and an unfettered populace, newly equipped with individual rights, would produce the same flourishing and nourishing demos of mid-century America that had been the envy of humanity.

[Mar 03, 2018] Strange science, economics. Judging from the titles, much of it consists of neoliberal cheerleading

Neoliberal economists are a new type of clergy. As simple as this. Neoliberal God is great that's what they are preaching to students.
Notable quotes:
"... Bronze Age: Greatest Age EVAH! ..."
"... It's surprising economists feel the need to engage in happy talk, considering that markets are supposed to be natural, just, and efficient. Like clergy preaching to a perpetually backsliding laity about the one true God, Whom only a fool would doubt. If God were so great, there'd be no need to harp on it. In any case, this goes some way toward accounting for Bennet's statement. ..."
"... It takes a half-educated person to say something like that. First you get the ideas by way of a certain education, and then you don't think about them, in part because the educators discourage that kind of thing. ..."
Mar 03, 2018 | www.nakedcapitalism.com

Paul Cardan , March 2, 2018 at 3:12 pm

"[Capitalism] has been the greatest engine of, it's been the greatest anti-poverty program and engine of progress that we've seen."

I can almost smell the economics section of my local bookstore. Strange science, economics. Judging from the titles, much of it consists of cheerleading. Very different from history, anthropology, or sociology.

I never see history titles like Bronze Age: Greatest Age EVAH! It's surprising economists feel the need to engage in happy talk, considering that markets are supposed to be natural, just, and efficient. Like clergy preaching to a perpetually backsliding laity about the one true God, Whom only a fool would doubt. If God were so great, there'd be no need to harp on it. In any case, this goes some way toward accounting for Bennet's statement.

It takes a half-educated person to say something like that. First you get the ideas by way of a certain education, and then you don't think about them, in part because the educators discourage that kind of thing.

If America Wasn't America, The United States Would Be Bombing It". Posted by: john | Feb 13, 2018 6:07:37 AM | 43

[Feb 14, 2018] "The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary." - H. L. Mencken, 1880-1956. american writer

[Feb 11, 2018] Social psychologists have long talked about how emotional manipulation can work effectively to snooker a large percentage of the population, to get them, at least temporarily, to believe the exact opposite of the facts

Notable quotes:
"... These techniques are known in the intelligence community as "perception management," and have been refined since the 1980s "to keep the American people compliant and confused," as the late Robert Parry has reported . ..."
"... Population in the country was very poorly informed any how. And now, they, The Ruling Establishment which includes Media, have completely messed the people up -- making them compliant and confused. ..."
"... Does any body have idea how they are going to bring an end to this completely concocted bizarre drama? ..."
Feb 09, 2018 | consortiumnews.com

Originally from: 'This is Nuts' Liberals Launch 'Largest Mobilization in History' in Defense of Russiagate Probe – Consortiumnews By Coleen Rowley and Nat Parry

... ... ...

Social psychologists have long talked about how emotional manipulation can work effectively to snooker a large percentage of the population, to get them, at least temporarily, to believe the exact opposite of the facts.

These techniques are known in the intelligence community as "perception management," and have been refined since the 1980s "to keep the American people compliant and confused," as the late Robert Parry has reported .

We saw this in action last decade, when after months of disinformation, about 70% of Americans came to falsely believe that Saddam Hussein was behind 9/11 when the truth was the opposite – Saddam was actually an enemy of the Al Qaeda perpetrators.

... ... ...

Coleen Rowley, a retired FBI special agent and division legal counsel whose May 2002 memo to then-FBI Director Robert Mueller exposed some of the FBI's pre-9/11 failures, was named one of TIME magazine's "Persons of the Year" in 2002.

Nat Parry is co-author of Neck Deep: The Disastrous Presidency of George W. Bush . weilunion , February 9, 2018 at 5:35 pm

"Social psychologists have long talked about how emotional manipulation can work effectively to snooker a large percentage of the population, to get them, at least temporarily, to believe the exact opposite of the facts. These techniques are known in the intelligence community as "perception management," and have been refined since the 1980s "to keep the American people compliant and confused," as the late Robert Parry has reported. We saw this in action last decade, when after months of disinformation, about 70% of Americans came to falsely believe that Saddam Hussein was behind 9/11 when the truth was the opposite -- Saddam was actually an enemy of the Al Qaeda perpetrators."

Cognitive dissonance, lack of critical thinking, reliance on authority, in this case a former head of a criminal organization called the FBI.

People have no class consciousness. They have no idea who their enemies ar or how to organize.

This is the sad case of liberalism melting like warm butter while the fascists congeal.

Joe Tedesky , February 9, 2018 at 7:27 pm

Nicely put.

Dave P. , February 10, 2018 at 2:51 am

"Social psychologists have long talked about how emotional manipulation can work effectively to snooker a large percentage of the population, to get them, at least temporarily, to believe the exact opposite of the facts. . ."

Yes. On any bar counter, just start some conversation with the person sitting to you. With all this bizarre drama -- Russia-Gate, Iran, memos, dossier . . . going on TV, and in Washington being enacted knowingly by the the Powers who rule -- both, so called Liberals and Conservatives -- one can see how this emotional manipulation has worked to snooker just about most of the population. I just had the experience today during lunch at a bar counter. In our conversation, the person sitting next to me was ready to nuke Iran, N. Korea, and go after Russia; and go after Hillary too.

Population in the country was very poorly informed any how. And now, they, The Ruling Establishment which includes Media, have completely messed the people up -- making them compliant and confused.

Does any body have idea how they are going to bring an end to this completely concocted bizarre drama?

[Feb 10, 2018] The generals are not Borgists. They are something worse ...

Highly recommended!
Notable quotes:
"... The post WW2 promotion process in the armed forces has produced a group at the top with a mentality that typically thinks rigorously but not imaginatively or creatively. ..."
"... These men got to their present ranks and positions by being conformist group thinkers who do not stray outside the "box" of their guidance from on high. They actually have scheduled conference calls among themselves to make sure everyone is "on board." ..."
"... If asked at the top, where military command and political interaction intersect, what policy should be they always ask for more money and to be allowed to pursue outcomes that they can understand as victory and self fulfilling with regard to their collective self image as warrior chieftains. ..."
"... In Trump's time his essential disinterest in foreign policy has led to a massive delegation of authority to Mattis and the leadership of the empire's forces. Their reaction to that is to look at their dimwitted guidance from on high (defeat IS, depose Assad and the SAG, triumph in Afghanistan) and to seek to impose their considerable available force to seek accomplishment as they see fit of this guidance in the absence of the kind of restrictions that Obama placed on them. ..."
"... Like the brass, I, too, am a graduate of all those service schools that attend success from the Basic Course to the Army War College. I will tell you again that the people at the top are not good at "the vision thing." They are not stupid at all but they are a collective of narrow thinkers ..."
"... Academia reinforces the groupthink. The mavericks are shunned or ostracized. The only ones I have seen with some degree of going against the grain are technology entrepreneurs. ..."
"... "They are not stupid at all but they are a collective of narrow thinkers." I have found this to be the case with 80 to 90% of most professions. A good memory and able to perform meticulously what they have been taught, but little thinking outside that narrow box. Often annoying, but very dangerous in this case. ..."
"... Since Afghanistan and the brass were mentioned in the editorial statement, here is an immodest question -- Where the brass have been while the opium production has been risen dramatically in Afghanistan under the US occupation? "Heroin Addiction in America Spearheaded by the US-led War on Afghanistan" by Paul Craig Roberts: https://www.paulcraigroberts.org/2018/02/06/heroin-addiction-america-spearheaded-us-led-war-afghanistan/ ..."
"... A simple Q: What has been the role of the CENTCOM re the racket? Who has arranged the protection for the opium production and for drug dealers? Roberts suggests that the production of opium in Afghanistan "finances the black operations of the CIA and Western intelligence agencies." -- All while Awan brothers, Alperovitch and such tinker with the US national security? ..."
"... God help the poor people of Syria. ..."
"... thanks pat... it seems like the usa has had a steady group of leaders that have no interest in the world outside of the usa, or only in so far as they can exploit it for their own interest... maybe that sums up the foreign policy of the usa at this point... you say trump is disinterested.. so all the blather from trump about 'why are we even in syria?', or 'why can't we be friends with the russia?' is just smoke up everyone's ass... ..."
"... Predictably there is always someone who says that this group is not different from all others. Unfortunately the military function demands more than the level of mediocrity found in most groups ..."
"... A lot of technology entrepreneurs--especially those active today--are stuck in their own groupthink, inflated by their sense that they are born for greatness and can do no wrong. ..."
"... The kind of grand schemes that the top people at Google, Uber, and Facebook think up to remake the universe in their own idea of "good society" are frightening. That they are cleverer (but not necessarily wiser) than the academics, borgists, or generals, I think, makes them even more dangerous. ..."
"... They [the generals] seem to have deliberately completely ignored the issues and policy positions Trump ran on as President. It isn't a case of ignorance but of wilful disregard. ..."
"... So true and as others commented this is a sad feature of the human race and all human organizations. Herd mentality ties into social learning ..."
"... Our massive cultural heritages are learned by observing and taken in as a whole. This process works within organizations as well. ..."
"... I suspect a small percentage of the human race functions differently than the majority and retains creative thinking and openness along with more emphasis on cognitive thinking than social learning but generally they always face a battle when working to change the group "consensus", i.e. Fulton's folly, scepticism on whether man would ever fly, etc. ..."
"... This is an interesting discussion. The top in organisations (civil and military) are increasingly technocrats and thinking like systems managers. They are unable to innovate because they lack the ability to think out of the box. Usually there is a leader who depends on specialists. Others (including laymen) are often excluding from the decision-making-proces. John Ralston Saul's Voltaires Bastards describes this very well. ..."
"... Because of natural selection (conformist people tend to choose similar people who resemble their own values and ways-of-thinking) organizations have a tendency to become homogeneous (especially the higher management/ranks). ..."
"... In combination with the "dumbing" of people (also of people who have a so-called good education (as described in Richard Sale's Sterile Chit-Chat ) this is a disastrous mix. ..."
"... That's true not only of the US military but of US elites in general across all of the spectra. And because that reality is at odds with the group-think of those within the various elements that make up the spectra it doesn't a hearing. Anyone who tries to bring it up risks being ejected from the group. ..."
"... "The United States spent at least $12 billion in Syria-related military and civilian expenses in the four years from 2014 through 2017, according to the former U.S. ambassador to the country. This $12 billion is in addition to the billions more spent to pursue regime change in Syria in the previous three years, after war broke out in 2011." https://goo.gl/8pj5cD ..."
"... "They are not stupid at all but they are a collective of narrow thinkers." I've often pondered that concept. Notice how many of radical extremist leaders were doctors, engineers and such? Narrow and deep. ..."
"... Long ago when I was a professor, I advised my students that "the law is like a pencil sharpener, it sharpens the mind by narrowing it." I tried to encourage them to "think backwards". ..."
"... Col, I think it might help people to think of "the Borg" - as you have defined & applied it - in a broader context. It struck me particularly as you ID'd the launching of our modern military group-think / careerism behavior coming from the watershed of industrialized scale & processes that came out of WWII. ..."
"... We note parallel themes in all significant sectors of our civilization. The ever-expanding security state, the many men in Gray Flannel Suits that inhabit corporate culture, Finance & Banking & Big Health scaling ever larger - all processes aimed to slice the salami thinner & quicker, to the point where meat is moot ... and so it goes. ..."
"... I just finished reading Command & Control (about nuclear weapons policy, systems design & accidents). I am amazed we've made it this far. ..."
Feb 10, 2018 | turcopolier.typepad.com

(Editorial Statement)

The Borgist foreign policy of the administration has little to do with the generals. To comprehend the generals one must understand their collective mentality and the process that raised them on high as a collective of their own. The post WW2 promotion process in the armed forces has produced a group at the top with a mentality that typically thinks rigorously but not imaginatively or creatively.

These men got to their present ranks and positions by being conformist group thinkers who do not stray outside the "box" of their guidance from on high. They actually have scheduled conference calls among themselves to make sure everyone is "on board."

If asked at the top, where military command and political interaction intersect, what policy should be they always ask for more money and to be allowed to pursue outcomes that they can understand as victory and self fulfilling with regard to their collective self image as warrior chieftains.

In Obama's time they were asked what policy should be in Afghanistan and persuaded him to reinforce their dreams in Afghanistan no matter how unlikely it always was that a unified Western oriented nation could be made out of a collection of disparate mutually alien peoples.

In Trump's time his essential disinterest in foreign policy has led to a massive delegation of authority to Mattis and the leadership of the empire's forces. Their reaction to that is to look at their dimwitted guidance from on high (defeat IS, depose Assad and the SAG, triumph in Afghanistan) and to seek to impose their considerable available force to seek accomplishment as they see fit of this guidance in the absence of the kind of restrictions that Obama placed on them.

Like the brass, I, too, am a graduate of all those service schools that attend success from the Basic Course to the Army War College. I will tell you again that the people at the top are not good at "the vision thing." They are not stupid at all but they are a collective of narrow thinkers. pl


Jack , 09 February 2018 at 05:42 PM

Sir

IMO, this conformism pervades all institutions. I saw when I worked in banking and finance many moons ago how moving up the ranks in any large organization meant you didn't rock the boat and you conformed to the prevailing groupthink. Even nutty ideas became respectable because they were expedient.

Academia reinforces the groupthink. The mavericks are shunned or ostracized. The only ones I have seen with some degree of going against the grain are technology entrepreneurs.

Fredw , 09 February 2018 at 06:26 PM
You remind me of an old rumination by Thomas Ricks:

Take the example of General George Casey. According to David Cloud and Greg Jaffe's book Four Stars, General Casey, upon learning of his assignment to command U.S. forces in Iraq, received a book from the Army Chief of Staff. The book Counterinsurgency Lessons Learned from Malaya and Vietnam was the first book he ever read about guerilla warfare." This is a damning indictment of the degree of mental preparation for combat by a general. The Army's reward for such lack of preparation: two more four star assignments.

http://foreignpolicy.com/2012/02/07/cmon-man-meathead-generals-and-some-other-things-that-are-driving-me-crazy-about-life-in-this-mans-post-911-army/

Peter AU , 09 February 2018 at 06:37 PM
"They are not stupid at all but they are a collective of narrow thinkers." I have found this to be the case with 80 to 90% of most professions. A good memory and able to perform meticulously what they have been taught, but little thinking outside that narrow box. Often annoying, but very dangerous in this case.
Anna , 09 February 2018 at 06:48 PM
Since Afghanistan and the brass were mentioned in the editorial statement, here is an immodest question -- Where the brass have been while the opium production has been risen dramatically in Afghanistan under the US occupation? "Heroin Addiction in America Spearheaded by the US-led War on Afghanistan" by Paul Craig Roberts: https://www.paulcraigroberts.org/2018/02/06/heroin-addiction-america-spearheaded-us-led-war-afghanistan/

" in 2000-2001 the Taliban government –with the support of the United Nations (UNODC) – implemented a successful ban on poppy cultivation. Opium production which is used to produce grade 4 heroin and its derivatives declined by more than 90 per cent in 2001. The production of opium in 2001 was of the order of a meager 185 tons. It is worth noting that the UNODC congratulated the Taliban Government for its successful opium eradication program. The Taliban government had contributed to literally destabilizing the multibillion dollar Worldwide trade in heroin.

In 2017, the production of opium in Afghanistan under US military occupation reached 9000 metric tons. The production of opium in Afghanistan registered a 49 fold increase since Washington's invasion. Afghanistan under US military occupation produces approximately 90% of the World's illegal supply of opium which is used to produce heroin. Who owns the airplanes and ships that transport heroin from Afghanistan to the US? Who gets the profits?"

---A simple Q: What has been the role of the CENTCOM re the racket? Who has arranged the protection for the opium production and for drug dealers? Roberts suggests that the production of opium in Afghanistan "finances the black operations of the CIA and Western intelligence agencies." -- All while Awan brothers, Alperovitch and such tinker with the US national security?

J , 09 February 2018 at 07:05 PM
Colonel,

There needs to be a 're-education' of the top, all of them need to be required to attend Green Beret think-school, in other words they need to be forced to think outside the box, and to to think on their feet. They need to understand fluid situations where things change at the drop of a hat, be able to dance the two-step and waltz at the same time. In other words they need to be able to walk and chew gum and not trip over their shoe-laces.

By no means are they stupid, but you hit the nail on the head when you said 'narrow thinkers'. Their collective hive mentality that has developed is not a good thing.

divadab , 09 February 2018 at 07:16 PM
God help the poor people of Syria.
james , 09 February 2018 at 07:30 PM
thanks pat... it seems like the usa has had a steady group of leaders that have no interest in the world outside of the usa, or only in so far as they can exploit it for their own interest... maybe that sums up the foreign policy of the usa at this point... you say trump is disinterested.. so all the blather from trump about 'why are we even in syria?', or 'why can't we be friends with the russia?' is just smoke up everyone's ass...

i like what you said here "conformist group thinkers who do not stray outside the "box" of their guidance from on high. They actually have scheduled conference calls among themselves to make sure everyone is "on board." - that strikes me as very true - conformist group thinkers... the world needs less of these types and more actual leaders who have a vision for something out of the box and not always on board... i thought for a while trump might fill this bill, but no such luck by the looks of it now..

David E. Solomon , 09 February 2018 at 07:50 PM
Colonel Lang,

Your description of these guys sounds like what we have heard about Soviet era planners. Am I correct in my understanding, or am I missing something?

Regards,

David

DianaLC , 09 February 2018 at 07:56 PM
As a young person in eighth grade, I learned about the "domino theory" in regard to attempts to slow the spread of communism. Then my generation was, in a sense, fractured around the raging battles for and against our involvement in Vietnam.

I won't express my own opinion on that. But I mention it because it seems to be a type of "vision thing."

So, now I ask, what would be your vision for the Syrian situation?

Bill Herschel , 09 February 2018 at 09:11 PM
This has been going on for a long time has it not? Westmoreland? MacArthur?

How did this happen?

turcopolier , 09 February 2018 at 09:40 PM
Bill Herschel

Westmoreland certainly, Macarthur certainly not. This all started with the "industrialization" of the armed forces in WW2. we never recovered the sense of profession as opposed to occupation after the massive expansion and retention of so many placeholders. a whole new race of Walmart manager arose and persists. pl

turcopolier , 09 February 2018 at 09:48 PM
DianaC

The idea of the Domino Theory came from academia, not the generals of that time. They resisted the idea of a war in east Asia until simply ordered into it by LBJ. After that their instinct for acting according to guidance kicked in and they became committed to the task. Syria? Do you think I should write you an essay on that? SST has a large archive and a search machine. pl

turcopolier , 09 February 2018 at 09:55 PM
David E. Solomon

I am talking about flag officers at present, not those beneath them from the mass of whom they emerge. There are exceptions. Martin Dempsey may have been one such. The system creates such people at the top. pl

turcopolier , 09 February 2018 at 10:08 PM
elaine,

Your usual animosity for non-left wing authority is showing. A commander like the CENTCOM theater commander (look it up) operates within guidance from Washington, broad guidance. Normally this is the president's guidance as developed in the NSC process. Some presidents like Obama and LBJ intervene selectively and directly in the execution of that guidance. Obama had a "kill list" of jihadis suggested by the IC and condemned by him to die in the GWOT. He approved individual missions against them. LBJ picked individual air targets in NVN. Commanders in the field do not like that . They think that freedom of action within their guidance should be accorded them. This CinC has not been interested thus far in the details and have given the whole military chain of command wide discretion to carry out their guidance. pl

turcopolier , 09 February 2018 at 10:12 PM
J

Thank you, but it is real GBs that you like, not the Delta and SEAL door kickers. pl

turcopolier , 09 February 2018 at 10:24 PM
Gaikomainaku

"I am not sure that I understand what makes a Borgist different from a military conformist." The Borg and the military leaders are not of the same tribe. they are two different collectives who in the main dislike and distrust each other. pl

turcopolier , 09 February 2018 at 10:27 PM
Anna. Their guidance does not include a high priority for eradicating the opium trade. Their guidance has to do with defeating the jihadis and building up the central government. pl
turcopolier , 09 February 2018 at 10:30 PM
Peter AU

Predictably there is always someone who says that this group is not different from all others. Unfortunately the military function demands more than the level of mediocrity found in most groups. pl

turcopolier , 09 February 2018 at 10:44 PM
james

Trump would like to better relations with Russia but that is pretty much the limit of his attention to foreign affairs at any level more sophisticated than expecting deference. He is firmly focused on the economy and base solidifying issues like immigration. pl

Peter AU , 09 February 2018 at 11:01 PM
The medical profession comes to mind. GP's and specialists. Many of those working at the leading edge of research seem much wider thinking and are not locked into the small box of what they have been taught.
turcopolier , 09 February 2018 at 11:16 PM
Peter AU

The GPs do not rule over a hierarchy of doctors. pl

J -> turcopolier ... , 09 February 2018 at 11:22 PM
Combat Applications Group and SEALS don't even begin to compare, they're not in the same league as 'real deal' GBs. The GBs are thinkers as well as doers, whereas Combat Applications Group and SEALs all they know is breach and clear, breach and clear.

There is more to life than breach and clear. Having worked with all in one manner or another, I'll take GBs any day hands down. It makes a difference when the brain is engaged instead of just the heel.

kao_hsien_chih -> Jack... , 09 February 2018 at 11:22 PM
A lot of technology entrepreneurs--especially those active today--are stuck in their own groupthink, inflated by their sense that they are born for greatness and can do no wrong.

The kind of grand schemes that the top people at Google, Uber, and Facebook think up to remake the universe in their own idea of "good society" are frightening. That they are cleverer (but not necessarily wiser) than the academics, borgists, or generals, I think, makes them even more dangerous.

FB Ali , 09 February 2018 at 11:23 PM
Col Lang,

They are indeed "narrow thinkers", but I think the problem runs deeper. They seem to be stuck in the rut of a past era. When the US was indeed the paramount military power on the globe, and the US military reigned supreme. They can't seem to accept the reality of the world as it is now.

Of course, these policies ensure that they continue to be well-funded, even if the US is bankrupting itself in the process.

turcopolier , 10 February 2018 at 01:03 AM
dogear

He is still the Saudi Mukhtar for the US and most of the generals are still narrow minded. pl

LondonBob , 10 February 2018 at 06:59 AM
They [the generals] seem to have deliberately completely ignored the issues and policy positions Trump ran on as President. It isn't a case of ignorance but of wilful disregard.
turcopolier , 10 February 2018 at 07:55 AM
LondonBob

I think that is true but, they were able to talk him into that, thus far. pl

DianaLC said in reply to turcopolier ... , 10 February 2018 at 09:23 AM
I've been reading this blog for some time. My question was facetious and written with the understanding of your statement about the generals not having a good grasp of "the vision thing" on their own.
Terry , 10 February 2018 at 09:25 AM
So true and as others commented this is a sad feature of the human race and all human organizations. Herd mentality ties into social learning. Chimps are on average more creative and have better short term memory than humans. We gave up some short term memory in order to be able to learn quickly by mimicking. If shown how to open a puzzle box but also shown unnecessary extra steps a chimp will ignore the empty steps and open the box with only the required steps. A human will copy what they saw exactly performing the extra steps as if they have some unknown value to the process. Our massive cultural heritages are learned by observing and taken in as a whole. This process works within organizations as well.

I suspect a small percentage of the human race functions differently than the majority and retains creative thinking and openness along with more emphasis on cognitive thinking than social learning but generally they always face a battle when working to change the group "consensus", i.e. Fulton's folly, scepticism on whether man would ever fly, etc.

One nice feature of the internet allows creative thinkers to connect and watch the idiocy of the world unfold around us.

"A natural desire to be part of the 'in crowd' could damage our ability to make the right decisions, a new study has shown."

https://www.sciencedaily.com/releases/2014/12/141216212049.htm

TV , 10 February 2018 at 10:18 AM
The military by definition is a rigid hierarchical structure. It could not function as a collection of individuals. This society can only breed conforming narrow leaders as an "individual" would leave or be forced out.
Barbara Ann , 10 February 2018 at 10:22 AM
That part of our brain responsible for the desire to be part of the 'in crowd' may affect our decision-making process, but it is also the reason we keep chimps in zoos and not the other way around. Or, to put it another way; if chimps had invented Facebook, I might consider them more creative than us.
Babak Makkinejad -> Terry... , 10 February 2018 at 10:30 AM
Do you think chimps are, per the Christian Docrine, in a State of Fall or in a State of Grace?
Adrestia , 10 February 2018 at 10:32 AM
This is an interesting discussion. The top in organisations (civil and military) are increasingly technocrats and thinking like systems managers. They are unable to innovate because they lack the ability to think out of the box. Usually there is a leader who depends on specialists. Others (including laymen) are often excluding from the decision-making-proces. John Ralston Saul's Voltaires Bastards describes this very well.

Because of natural selection (conformist people tend to choose similar people who resemble their own values and ways-of-thinking) organizations have a tendency to become homogeneous (especially the higher management/ranks).

In combination with the "dumbing" of people (also of people who have a so-called good education (as described in Richard Sale's Sterile Chit-Chat ) this is a disastrous mix.

Homogeneity is the main culprit. A specialists tends to try to solve problems with the same knowledge-set that created these.

Not all (parts of) organizations and people suffer this fate. Innovations are usually done by laymen and not by specialists. The organizations are often heterogeneous and the people a-typical and/or eccentric.

(mainly the analytical parts of ) intelligence organizations and investment banks are like that if they are worth anything. Very heterogeneous with a lot of a-typical people. I think Green Berets are also like that. An open mind and genuine interest in others (cultures, way of thinking, religion etc) is essential to understand and to perform and also to prevent costly mistakes (in silver and/or blood).

It is possible to create firewalls against tunnel-vision. The Jester performed such a role. Also think of the Emperors New Clothes . The current trend of people with limited vision and creativity prevents this. Criticism is punished with a lack of promotion, job-loss or even jail (whistle-blowers)

IMO this is why up to a certain rank (colonel or middle management) a certain amount of creativity or alternative thinking is allowed, but conformity is essential to rise higher.

I was very interested in the Colonel's remark on the foreign background of the GB in Vietnam. If you would like to expand on this I would be much obliged? IMO GB are an example of a smart, learning, organization (in deed and not only in word as so many say of themselves, but who usually are at best mediocre)

Generalfeldmarschall von Hindenburg -> gaikokumaniakku... , 10 February 2018 at 11:58 AM
Isn't the "Borg" really The Atlantic Council?
ISL , 10 February 2018 at 12:58 PM
Dear Colonel,

Would you then say that a rising military officer who does have the vision thing faces career impediments? If so, would you say that the vision thing is lost (if it ever was there) at the highest ranks? In any case, the existence of even a few at the top, like Matthis or Shinseki is a blessing.

ex-PFC Chuck said in reply to FB Ali ... , 10 February 2018 at 01:08 PM
FB Ali:
"When the US was indeed the paramount military power on the globe, and the US military reigned supreme. They can't seem to accept the reality of the world as it is now."
That's true not only of the US military but of US elites in general across all of the spectra. And because that reality is at odds with the group-think of those within the various elements that make up the spectra it doesn't a hearing. Anyone who tries to bring it up risks being ejected from the group.
Adrestia , 10 February 2018 at 02:03 PM
I forget an important part. I really miss an edit-button. Comment-boxes are like looking at something through a straw. Its easy to miss the overview.

Innovations and significant new developments are usually made by laymen. IMO mainly because they have a fresh perspective without being bothered by the (mainstream) knowledge that dominates an area of expertise.

By excluding the laymen errors will continue to be repeated. This can be avoided by using development/decision-making frameworks, but these tend to become dogma (and thus become part of the problem)

Much better is allowing laymen and allowing a-typical people. Then listen to them carefully. Less rigid flexible and very valuable.

kooshy , 10 February 2018 at 02:19 PM
Apparently, according to the last US ambassador to Syria Mr. Ford, from 2014-17 US has spent 12 Billion on Regime change in Syria. IMO, combinedly Iran and Russia so far, have spent far less in Syria than 12 billion by US alone, not considering the rest of her so called coalition. This is a war of attrition, and US operations in wars, are usually far more expensive and longer than anybody else's.

"The United States spent at least $12 billion in Syria-related military and civilian expenses in the four years from 2014 through 2017, according to the former U.S. ambassador to the country. This $12 billion is in addition to the billions more spent to pursue regime change in Syria in the previous three years, after war broke out in 2011." https://goo.gl/8pj5cD

J , 10 February 2018 at 02:49 PM
Colonel, TTG, PT,

FYI regarding Syria

https://www.nbcnews.com/politics/donald-trump/sen-tim-kaine-demands-release-secret-trump-war-powers-memo-n846176

Richardstevenhack -> turcopolier ... , 10 February 2018 at 02:56 PM
It may "demand" it - but does it get it? Soldiers are just as human as everyone else.

I'm reminded of the staff sergeant with the sagging beer belly who informed me, "Stand up straight and look like a soldier..." Or the First Sergeant who was so hung over one morning at inspection that he couldn't remember which direction he was going down the hall to the next room to be inspected. I'm sure you have your own stories of less than competence.

It's a question of intelligence and imagination. And frankly, I don't see the military in any country receiving the "best and brightest" of that country's population, by definition. The fact that someone is patriotic enough to enter the military over a civilian occupation doesn't make them more intelligent or imaginative than the people who decided on the civilian occupation.

Granted, if you fail at accounting, you don't usually die. Death tends to focus the mind, as they say. Nonetheless, we're not talking about the grunts at the level who actually die, still less the relatively limited number of Special Forces. We're talking about the officers and staff at the levels who don't usually die in war - except maybe at their defeat - i.e., most officers over the level of captain.

One can hardly look at this officer crowd in the Pentagon and CENTCOM and say that their personal death concentrates their mind. They are in virtually no danger of that. Only career death faces them - with a nice transition to the board of General Dynamics at ten times the salary.

All in all, I'd have to agree that the military isn't much better at being competent - at many levels above the obvious group of hyper-trained Special Forces - any more than any other profession.

dogear said in reply to Terry... , 10 February 2018 at 02:59 PM
That is well put.most important is the grading system that is designed to fix a person to a particular slot thereby limiting his ability to think "outside the box" and consider the many variables that exist in one particular instant.

Creative thinking allows you to see beyond the storm clouds ahead and realize that the connectedness of different realities both the visible and invisible. For instance the picture of the 2 pairs of korean skaters in the news tells an interesting story on many levels. Some will judge them on their grade of proffiency, while others will see a dance of strategy between 2 foes and a few will know the results in advance and plan accordingly

https://www.google.com.au/amp/www.nbcolympics.com/news/north-south-korean-figure-skating-teams-practice-side-side%3famp?espv=1

Mark Logan said in reply to Peter AU... , 10 February 2018 at 03:30 PM
Peter AU

"They are not stupid at all but they are a collective of narrow thinkers." I've often pondered that concept. Notice how many of radical extremist leaders were doctors, engineers and such? Narrow and deep. STEM is enormously useful to us but seems to be a risky when implanted in shallow earth.

turcopolier , 10 February 2018 at 05:03 PM
Mark Logan

These narrow "but deep" thinkers were unable to grasp the nature of the Iraq War for the first couple of years. They thought of it as a rear area security problem, a combat in cities problem, anything but a popular rebellion based on xenophobia and anti-colonialism The IED problem? They spent several billion dollars on trying to find a technology fix and never succeeded. I know because they kept asking me to explain the war to them and then could not understand the answers which were outside their narrow thought. pl

turcopolier , 10 February 2018 at 05:13 PM
ISL

War College selectees, the national board selected creme de la creme test out as 50% SJs (conformists lacking vision) in Myers-Briggs terms and about 15% NTs (intellectuals). To survive and move upward in a system dominated by SJs, the NTs must pretend to be what they are not. A few succeed. I do not think Mattis is an intellectual merely because he has read a lot. pl

outthere , 10 February 2018 at 05:19 PM
Long ago when I was a professor, I advised my students that "the law is like a pencil sharpener, it sharpens the mind by narrowing it." I tried to encourage them to "think backwards".

My favorite example was a Japanese fisherman who recovered valuable ancient Chinese pottery. Everyone knew where an ancient ship had sunk, but the water was too deep to dive down to the wreck. And everyone knew the cargo included these valuable vases. And the fisherman was the first to figure out how to recover them. He attached a line to an octopus, and lowered it in the area, waited awhile, and pulled it up. Low and behold, the octopus had hidden in an ancient Chinese vase. The fisherman was familiar with trapping octopuses, by lowering a ceramic pot (called "takosubo") into the ocean, waiting awhile, then raising the vase with octopus inside. His brilliance was to think backwards, and use an octopus to catch a vase.

turcopolier , 10 February 2018 at 05:24 PM
TV

By your calculation people like Joe Stilwell and George Patton should not have existed. pl

turcopolier , 10 February 2018 at 05:31 PM
Adrestia

the original GBS were recruited in the 50s to serve in the OSS role with foreign guerrillas behind Soviet lines in th event of war in Europe. Aaron Bank, the founder, recruited several hundred experienced foreign soldiers from the likely countries who wanted to become American. By the time we were in VN these men were a small fraction of GBs but important for their expertise and professionalism. pl

ked , 10 February 2018 at 05:56 PM
Col, I think it might help people to think of "the Borg" - as you have defined & applied it - in a broader context. It struck me particularly as you ID'd the launching of our modern military group-think / careerism behavior coming from the watershed of industrialized scale & processes that came out of WWII.

We note parallel themes in all significant sectors of our civilization. The ever-expanding security state, the many men in Gray Flannel Suits that inhabit corporate culture, Finance & Banking & Big Health scaling ever larger - all processes aimed to slice the salami thinner & quicker, to the point where meat is moot ... and so it goes.

I note many Borgs... Borgism if you will. An organizational behavior that has emerged out of human nature having difficulty adapting to rapidly accelerating complexity that is just too hard to apprehend in a few generations. If (as many commenters on STT seem to...) one wishes to view this in an ideological or spiritual framework only, they may overlook an important truth - that what we are experiencing is a Battle Among Borgs for control over their own space & domination over the other Borgs. How else would we expect any competitive, powerful interest group to act?

In gov & industry these days, we observe some pretty wild outliers... attached to some wild outcomes. Thus the boring behavior of our political industries bringing forth Trump, our promethean technology sector yielding a Musk (& yes, a Zuckerberg).

I find it hard to take very seriously analysts that define their perspective based primarily upon their superior ideals & opposition to others. Isn't every person, every tribe, team or enterprise a borglet-in-becoming? Everybody Wants to Rule the World ... & Everybody Must Get Stoned... messages about how we are grappling with complexity in our times. I just finished reading Command & Control (about nuclear weapons policy, systems design & accidents). I am amazed we've made it this far.

Unfortunately, I would not be amazed if reckless, feckless leaders changed the status quo. I was particularly alarmed hearing Trump in his projection mode; "I would love to be able to bring back our country into a great form of unity, without a major event where people pull together, that's hard to do.

But I would like to do it without that major event because usually that major event is not a good thing." It strikes me that he could be exceptionally willing to risk a Major Event if he felt a form of unity, or self-preservation, was in the offing. I pray (& I do not pray often or easily) that the Generals you have described have enough heart & guts to honor their oath at its most profound level in the event of an Event.

turcopolier , 10 February 2018 at 06:00 PM
babak

As a time traveler from another age, I can only say that for me it means devotion to a set of mores peculiar to a particular profession as opposed to an occupation. pl

Barbara Ann -> outthere... , 10 February 2018 at 06:00 PM
Great example outthere.

Another springs to mind: James Lovelock (of Gaia hypothesis fame) was once part of the NASA team building the first probe to go to Mars to look for signs of life. Lovelock didn't make any friends when he told NASA they were wasting their time, there was none. When asked how he could be so sure, he explained that the composition of the Martian atmosphere made it impossible. "But Martian life may be able to survive under different conditions" was the retort. Lovelock then went on to explain his view that the evolution of microbial life determined the atmospheric composition on Earth, so should be expected to do the same if life had evolved on Mars. Brilliant backwards thinking which ought to have earned him the Nobel prize IMHO (for Gaia). Lovelock, a classic cross-disciplinary scientist, can't be rewarded with such a box-categorized honor, as his idea doesn't fit well into any one.

Another example of cross-disciplinary brilliance was Bitcoin, which has as much to do with its creator's deep knowledge of Anthropology (why people invented & use money) as his expertise in both Economics and Computer Science.

This is they key to creative thinking in my view - familiarity with different fields yields deeper insights.

[Feb 09, 2018] Economists data and models are so unreliable that they should be viewed more of a religious studies than natural science

Feb 09, 2018 | economistsview.typepad.com

llisa2u2 , February 06, 2018 at 11:01 AM

I am posting this info. to this site, as part of personal approach as a US citizen to try to get some REAL FACTS out into the supposedly professional platforms of economists. This platforms are woefully lacking in good, factual information to communicate to anyone, even amongst themselves, and especially to Joe living on an street, or hopefully any house on any street in the US.

Now, what am I posting? The information that I am posting is an example of confusing information that is extremely invalid and should NOT be posted by so-called reliable sources, of professional, or "expertise" information. The reason I am posting an article that is confusing is because this article by Krugman is also confusing, and just as unreliable as the "confusing article" that was written by Alan Harkin at INVESTOPEDIA.


http://bit.ly/2Eof6eM

If you can't believe Investopedia's information, then who can you believe? I am posting the article as an article that the reader can NOT believe. The linked article is absolutely mis-stating IRS facts. This article is one of many that confuse the message about corporate taxation.

Personally, I think it is deliberate. The title of the article: http://bit.ly/2Eof6eM
basically leads the reader "to believe" the article is about how much US corporations such as APPLE, GOOGLE etc. "actually" bottomline- deliver to IRS. BUT, wait, when the reader "really reads" the reader then notes, that the "charts" ONLY reflect the "tax rate". Now, that's a whole different story. Tax rate is not bottomline taxes paid.

So, now if my "logic" and conclusion is "faulty", please enlighten me. The IRS data and this article don't jive in the real world of statistical data. Here is link to STATISTA that is THE data base that is used by top researchers worldwide.

This link shows the REAL data and percentage of corporate TAX PAID, AND FUTURE projections for US etc. etc. I have selected the most obvious and easy to read chart.
The following link presents reliable fact VS The article from INVESTOPEDIA as garbage.

http://bit.ly/2Eof7iQ

I am writing that the article in Investopedia by Aaron Hankin is BS. The content of the article also attempts to establish correlations to S/P action that has absolutely NO plausible fact to make any correlation about anything. I am also writing that most of the media reports about "corporate tax" is BS. I also am writing that this article by Krugman is a fluff, nonsense piece that is also BS. If Krugman were an economist that had any concern about the US economy, he would have, and would be posting this link everywhere on earth.

All that I definitely am trying to do is to get "reasonable data" out there to influence the public mindset to counter BS and try to present FACTS, just like a lot of other intelligent readers are trying to do.

llisa2u2 said in reply to llisa2u2... , February 06, 2018 at 11:08 AM
Please ignore the "typos", I did not hit preview first in this posted version on economists view.
llisa2u2 said in reply to llisa2u2... , February 06, 2018 at 11:15 AM
Basically, I am saying that the political posturing, and propaganda strategies of so many different monied groups is demanding that any "serf" needs to present any comment as if the "serf" is writing some sort of thesis. Really, all the "Talking Faces" are the ones who should be doing that as they present messages to the public"serfs". Otherwise, there should be public disclaimers as to who is paying the "Talking Faces" for delivering their "propaganda". The "sponsored message" dynamics is so convoluted, that any viewer sure can't presume anything. Basically, It just looks like a lot of "Talking Faces" are just making themselves into asses, based on their assumption, and presumptions.
mulp said in reply to llisa2u2... , February 06, 2018 at 01:26 PM
Why do you think anyone associated with investors is an economist rather than a snake oil salesman in the medicine show that is extremely boring?

What to understand economics? Pay attention to Elon Musk, Jeff Bezos.

They pay US workers to build productive assets like factories, transportation products, energy harvesting products, information you want products, all of which can be matched only by competitors paying hundreds of billions to millions of US workers just to catch up in a decade.

Or you can read Keynes.

[Dec 31, 2017] Brainwashing as a key component of the US social system by Paul Craig Roberts

Highly recommended!
Notable quotes:
"... Whitehead documents how hard a not guilty verdict is to come by for an innocent defendant. Even if the falsely accused defendant and his attorney survive the prosecutor's pressure to negotiate a plea bargain and arrive at a trial, they are confronted with jurors who are unable to doubt prosecutors, police, or witnesses paid to lie against the innocent defendant. ..."
"... The question is: why do Americans not only sit silently while the lives of innocents are destroyed, but also actually support the destruction of the lives of innocents? Why do Americans believe "official sources" despite the proven fact that "official sources" lie repeatedly and never tell the truth? ..."
"... The only conclusion that one can come to is that the American people have failed. We have failed Justice. We have failed Mercy. We have failed the US Constitution. We have failed Truth. We have failed Democracy and representative government. We have failed ourselves and humanity. We have failed the confidence that our Founding Fathers put in us. We have failed God. If we ever had the character that we are told we had, we have obviously lost it. Little, if anything, remains of the "American character." ..."
"... The failure of the American character has had tremendous and disastrous consequences for ourselves and for the world. At home Americans have a police state in which all Constitutional protections have vanished. Abroad, Iraq and Libya, two formerly prosperous countries, have been destroyed. Libya no longer exists as a country. One million dead Iraqis, four million displaced abroad, hundreds of thousands of orphans and birth defects from the American ordnance, and continuing ongoing violence from factions fighting over the remains. These facts are incontestable. Yet the United States Government claims to have brought "freedom and democracy" to Iraq. "Mission accomplished," declared one of the mass murderers of the 21st century, George W. Bush. ..."
"... The question is: how can the US government make such an obviously false outrageous claim without being shouted down by the rest of the world and by its own population? Is the answer that good character has disappeared from the world? ..."
"... Or is the rest of the world too afraid to protest? Washington can force supposedly sovereign countries to acquiesce to its will or be cut off from the international payments mechanism that Washington controls, and/or be sanctioned, and/or be bombed, droned, or invaded, and/or be assassinated or overthrown in a coup. On the entire planet Earth there are only two countries capable of standing up to Washington, Russia and China, and neither wants to stand up if they can avoid it. ..."
"... For whatever the reasons, not only Americans but most of the world as well accommodate Washington's evil and are thereby complicit in the evil. Those humans with a moral conscience are gradually being positioned by Washington and London as "domestic extremists" who might have to be rounded up and placed in detention centers. Examine the recent statements by General Wesley Clark and British Prime Minister Cameron and remember Janet Napolitano's statement that the Department of Homeland Security has shifted its focus from terrorists to domestic extremists, an undefined and open-ended term. ..."
"... Americans with good character are being maneuvered into a position of helplessness. ..."
"... When Clinton's Secretary of State, Madeleine Albright, was asked if the Clinton's regime's sanctions, which had claimed the lives of 500,000 Iraqi children, were justified, she obviously expected no outrage from the American people when she replied in the affirmative. ..."
"... ... Americans are "intentionally ignorant" of other countries' rights and sovereignty while other countries had been well-informed of America's malicious intents of destroying other countries' rights and sovereignty ... ..."
"... No, I don't think Americans are intentionally ignorant, any more than other nationalities. What they are tribal. Tribal peoples don't care whether their policies are right or wrong; they are instinctively loyal to them and to those who formulate them. ..."
"... "The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. ...We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. ...In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons...who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind." -- Edward L. Bernays, Propaganda ..."
"... "Americans need to face the facts. The loss of character means the loss of liberty and the transformation of government into a criminal enterprise." ..."
"... "When a population becomes distracted by trivia, when cultural life is redefined as a perpetual round of entertainments, when serious public conversation becomes a form of baby-talk, when, in short, a people become an audience and their public business a vaudeville act, then a nation finds itself at risk; a culture-death is a clear possibility." ..."
"... Look at the demographics of the Western Hemisphere. If you have a shred of honesty you just can't hang the blame on 'whites', put it on a bumper sticker or a #shittyhashtagmeme and go back to fucking off. The disgusting fraud of Manifest Destiny was a fig leaf to hide the enormity of these crimes; but, they are most obviously European crimes....& has Europe changed since the West was settled? Did Europeans even stop their warring amongst themselves? ..."
"... "The loss of character means the loss of liberty and the transformation of government into a criminal enterprise." ..."
"... I agree with Paul Craig Roberts. He asks "Why" and "How." Well, Paul, here is my answer. Decades of Public Education and over 50 years of mass media monopoly. In an age where FOX is the top rated News station and CNN is considered liberal? Where kids in Public school are offered Chocolate milk and frozen pizza for school breakfast before going to class rooms with 30-40 kids. When Texas political appointees chose school text book content for the nation? A nation where service has ended, replaced with volunteer soldiers signing up for pay and benefits, instead of just serving as service, like we did in the 70's? ..."
"... There is a difference between IGNORANCE and STUPIDITY. As Ron White said, "YOU CAN'T FIX STUPID". In todays information age, ignorance is a choice. ..."
"... The problem is that we have no "Constitution." That is a fable. The constitution of the separation of powers has been undermined from almost day one. Witness the Alien and Sedition Acts of 1798. ..."
"... Yes sir. Globalization has failed us. The infinite growth paradigm has failed us, as we knew it would. Castro's Cuba, based in a localized agrarian economy, is looking pretty good about now. Localization is the only way back to sustainability. ..."
"... Books? Who said books? You mean reading books? Let me throw a couple out there: I read 'The Image: A Guide To Pseudo-Events In America' last year, it was published 50+ years ago by a very recommended writer and accomplished historian. Boorstin's observations are truer today and even more concerning thanks to our modern, ubiquitous "connectivity". http://www.goodreads.com/book/show/159979.The_Image ..."
"... Adorno famously pointed out in 1940 that the "Mass culture is psychoanalysis in reverse." ..."
"... He doesn't blame the masses because he simply points out the fact that Americans are completely ignorant and blindly believe anything MSM spoon-fed to them. ..."
"... Paul Craig Roberts believe that the people are capable of creating a better and more just society. Instead the people have voted against their own best interest and overwhelmingly believe the propaganda. ..."
"... "... the transformation of government into a criminal enterprise ..." ..."
"... Governments were created by the history of warfare, which was always organized crime developing on larger and larger scales. In the context, the greater problem is that people like Paul Craig Roberts are reactionary revolutionaries, who provide relatively good analysis, followed by bogus "solutions" based upon impossible ideals. ..."
"... The "American People" are the victims of the best scientific brainwashing that money could buy. As Cognitive Dissonance has previously stated on Zero Hedge: "The absolute best controlled opposition is one that doesn't know they are controlled." ..."
"... The article above was another illustration of the ways that the typical reactionary revolutionaries, Black Sheeple, or controlled opposition groups, respond to recognizing the more and more blatant degrees to which there has been an accelerating "transformation of government into a criminal enterprise." THE PROBLEM IS THAT THEY CONTINUE TO STAY WITHIN THE SAME OLD-FASHIONED BULLSHIT-BASED FRAME OF REFERENCE, INSTEAD, AROUND AND AROUND WE GO, STUCK IN THE SAME DEEPENING RUTS, since they do NOT more fully "face the facts" regarding how and why the only realistic solutions to the real problems would require developing better organized crime. INSTEAD, they continue to promote the same dualities based upon false fundamental dichotomies, and the associate bogus "solutions" based upon impossible ideals ... ..."
Jul 25, 2015 | Zero Hedge

Original title: The Eroding Character Of The American People

Paul Craig Roberts

How can the life of such a man
Be in the palm of some fool's hand?
To see him obviously framed
Couldn't help but make me feel ashamed to live in a land
Where justice is a game.-Bob Dylan, "Hurricane"

Attorney John W. Whitehead opens a recent posting on his Rutherford Institute website with these words from a song by Bob Dylan. Why don't all of us feel ashamed? Why only Bob Dylan?

I wonder how many of Bob Dylan's fans understand what he is telling them. American justice has nothing to do with innocence or guilt. It only has to do with the prosecutor's conviction rate, which builds his political career. Considering the gullibility of the American people, American jurors are the last people to whom an innocent defendant should trust his fate. The jury will betray the innocent almost every time.

As Lawrence Stratton and I show in our book (2000, 2008) there is no justice in America. We titled our book, "How the Law Was Lost." It is a description of how the protective features in law that made law a shield of the innocent was transformed over time into a weapon in the hands of the government, a weapon used against the people. The loss of law as a shield occurred prior to 9/11, which "our representative government" used to construct a police state.

The marketing department of our publisher did not appreciate our title and instead came up with "The Tyranny of Good Intentions." We asked what this title meant. The marketing department answered that we showed that the war on crime, which gave us the abuses of RICO, the war on child abusers, which gave us show trials of total innocents that bested Joseph Stalin's show trials of the heroes of the Bolshevik Revolution, and the war on drugs, which gave "Freedom and Democracy America" broken families and by far the highest incarceration rate in the world all resulted from good intentions to combat crime, to combat drugs, and to combat child abuse. The publisher's title apparently succeeded, because 15 years later the book is still in print. It has sold enough copies over these years that, had the sales occurred upon publication would have made the book a "best seller." The book, had it been a best seller, would have gained more attention, and perhaps law schools and bar associations could have used it to hold the police state at bay.

Whitehead documents how hard a not guilty verdict is to come by for an innocent defendant. Even if the falsely accused defendant and his attorney survive the prosecutor's pressure to negotiate a plea bargain and arrive at a trial, they are confronted with jurors who are unable to doubt prosecutors, police, or witnesses paid to lie against the innocent defendant. Jurors even convicted the few survivors of the Clinton regime's assault on the Branch Davidians of Waco, the few who were not gassed, shot, or burned to death by US federal forces. This religious sect was demonized by Washington and the presstitute media as child abusers who were manufacturing automatic weapons while they raped children. The charges proved to be false, like Saddam Hussein's "weapons of mass destruction," and so forth, but only after all of the innocents were dead or in prison.

The question is: why do Americans not only sit silently while the lives of innocents are destroyed, but also actually support the destruction of the lives of innocents? Why do Americans believe "official sources" despite the proven fact that "official sources" lie repeatedly and never tell the truth?

The only conclusion that one can come to is that the American people have failed. We have failed Justice. We have failed Mercy. We have failed the US Constitution. We have failed Truth. We have failed Democracy and representative government. We have failed ourselves and humanity. We have failed the confidence that our Founding Fathers put in us. We have failed God. If we ever had the character that we are told we had, we have obviously lost it. Little, if anything, remains of the "American character."

Was the American character present in the torture prisons of Abu Ghraib, Guantanamo Bay, and hidden CIA torture dungeons where US military and CIA personnel provided photographic evidence of their delight in torturing and abusing prisoners? Official reports have concluded that along with torture went rape, sodomy, and murder. All of this was presided over by American psychologists with Ph.D. degrees.

We see the same inhumanity in the American police who respond to women children, the elderly, the physically and mentally handicapped, with gratuitous violence. For no reason whatsoever, police murder, taser, beat, and abuse US citizens. Every day there are more reports, and despite the reports the violence goes on and on and on. Clearly, the police enjoy inflicting pain and death on citizens whom the police are supposed to serve and protect. There have always been bullies in the police force, but the wanton police violence of our time indicates a complete collapse of the American character.

The failure of the American character has had tremendous and disastrous consequences for ourselves and for the world. At home Americans have a police state in which all Constitutional protections have vanished. Abroad, Iraq and Libya, two formerly prosperous countries, have been destroyed. Libya no longer exists as a country. One million dead Iraqis, four million displaced abroad, hundreds of thousands of orphans and birth defects from the American ordnance, and continuing ongoing violence from factions fighting over the remains. These facts are incontestable. Yet the United States Government claims to have brought "freedom and democracy" to Iraq. "Mission accomplished," declared one of the mass murderers of the 21st century, George W. Bush.

The question is: how can the US government make such an obviously false outrageous claim without being shouted down by the rest of the world and by its own population? Is the answer that good character has disappeared from the world?

Or is the rest of the world too afraid to protest? Washington can force supposedly sovereign countries to acquiesce to its will or be cut off from the international payments mechanism that Washington controls, and/or be sanctioned, and/or be bombed, droned, or invaded, and/or be assassinated or overthrown in a coup. On the entire planet Earth there are only two countries capable of standing up to Washington, Russia and China, and neither wants to stand up if they can avoid it.

For whatever the reasons, not only Americans but most of the world as well accommodate Washington's evil and are thereby complicit in the evil. Those humans with a moral conscience are gradually being positioned by Washington and London as "domestic extremists" who might have to be rounded up and placed in detention centers. Examine the recent statements by General Wesley Clark and British Prime Minister Cameron and remember Janet Napolitano's statement that the Department of Homeland Security has shifted its focus from terrorists to domestic extremists, an undefined and open-ended term.

Americans with good character are being maneuvered into a position of helplessness. As John Whitehead makes clear, the American people cannot even prevent "their police," paid by their tax payments, from murdering 3 Americans each day, and this is only the officially reported murders. The actual account is likely higher.

What Whitehead describes and what I have noticed for many years is that the American people have lost, in addition to their own sense of truth and falsity, any sense of mercy and justice for other peoples. Americans accept no sense of responsibility for the millions of peoples that Washington has exterminated over the past two decades dating back to the second term of Clinton. Every one of the millions of deaths is based on a Washington lie.

When Clinton's Secretary of State, Madeleine Albright, was asked if the Clinton's regime's sanctions, which had claimed the lives of 500,000 Iraqi children, were justified, she obviously expected no outrage from the American people when she replied in the affirmative.

Americans need to face the facts. The loss of character means the loss of liberty and the transformation of government into a criminal enterprise.

benb

The American people have been scientifically mis-educated, propagandized, and beaten down. A disproportionate number of the under 30's are societal DOAs thanks to ... weaponized TV. But I am being too optimistic...

PrayingMantis

... Americans are "intentionally ignorant" of other countries' rights and sovereignty while other countries had been well-informed of America's malicious intents of destroying other countries' rights and sovereignty ...

BarnacleBill

No, I don't think Americans are intentionally ignorant, any more than other nationalities. What they are tribal. Tribal peoples don't care whether their policies are right or wrong; they are instinctively loyal to them and to those who formulate them.

Also, I have to say that I believe the US empire is a long, long, way from collapse. It is still expanding, for goodness sake. Empires collapse only when the shrinking process is well under way. (The recent Soviet Empire was exceptional, in this regard.) It will take several more generations before the darkness lifts, I'm afraid.

macholatte

The only conclusion that one can come to is that the American people have failed.

It's now official, PCR is a complete dipshit.

Hey Paul, how about you get your head out of the clouds and stop looking down your nose at everyone long enough to read a couple of books about brainwashing and then get back to us. Maybe you start with this: http://edward-bernays.soup.io/post/19658768/Edward-Bernays-Propaganda-19...

"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. ...We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. ...In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons...who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind."
-- Edward L. Bernays, Propaganda

OldPhart

"Americans need to face the facts. The loss of character means the loss of liberty and the transformation of government into a criminal enterprise."

I think that happened August 13, 1971, but didn't get fully organized (as in Mafia) until 2000.

PT

The majority have their nose to the grind stone and as such can not see past the grind stone. They rely on "official sources" to put the rest of the world in order for them, but have no time to audit the "official sources". Would public education suffer if mothers and fathers were monitoring what the children were learning? But who has got time for that when both parents are working? How many non-work organizations were your parents and grand-parents involved in (both the wage-earner and the housekeeper)? How many organizations are you involved in?

Do you constantly hassle your local politicians or do you just say, "I'll vote 'em out in four years time"? (Yes, I know, you just don't vote. Fair enough, this question is for the voters.)

Yes, some of us are guilty of not fighting back. We had "Shut up and do as you're told" and "Well, if you're not happy with what you've got then work harder" beaten into us. Some of us are a little awake because, despite all our efforts, the grind stone was removed from us and then we got to see the larger picture of what lies behind the grind stone. Others are still busy, nose to the wheel, and all they see is the wheel.

And that is before we even consider HypnoToad on the Idiot Box. Some "need" the idiot box to help them wind down. Some can no longer enjoy the silence. (Remember Brave New World? It's true. Many people can no longer stand to be around silence, with nothing but their own thoughts.) I tell everyone that TV is crap. Radio is crap. Newspapers are crap. Turn that shit off for six months to a year, then go back to it and see what you really think of it. But they can't handle the thought of being away from "the background noise".

Ever spoken to grandparents who remember wars and depressions? And even amongst the rations and the hardships they still find positive memories? Time to talk to them again. Or not. I guess we'll get first-hand experience soon enough.

AlaricBalth

Allow me for a moment to share a brief anecdote about the new "American Character".

Last Sunday I was at the local supermarket. I was at the bakery counter, when suddenly a nicely dressed, Sunday best, non-Caucasian woman barrels into my cart riding a fat scooter. She rudely demands from the counter person a single cinnamon bun and then wheels off towards the front. Curious, I follow her up the aisle as she scarfs down the pastry in three bites. She then proceeds to stuff the empty bag between some soda bottles and scooters through the checkout without paying for her item. In the parking lot she then disembarks from her scooter, easily lifts it into the trunk of her Cadillac and walks to the drivers side, gets in and speeds off with her kids, who were in the back seat.

Amazed at what I had just witnessed, I went back into the store, retrieved the empty bag, included it in my few items at checkout and then went to the manager to share this story with him. He laughed and said there was nothing he could do.

The new "American Character" is that of a sense of entitlement and apathy.
I weep for the future.

Headbanger

Having character is not politically correct. Plus there's no need to develop character anymore because there's no jobs requiring any!

Consumption is the ONLY value of the inDUHvidual today.

And the less character they have, the more shit they'll consume to feel fulfilled cause they can't get that from themselves.

clymer Sat, 07/25/2015 - 07:34

Macholatte, i don't think PCR is writing from a point of view that is haughty and contemptful of the American people, per se, but rather from a perspective that is hopeless and thoroughly depressed after contemplating what the American people of many generations ago has taken for themselves as natural rights from a tyrranical government, only to see the nation slowly morph into something even worse than what was rejected by the founders.

"A nation can survive its fools and even the ambitious. But it cannot survive treason from within...
He rots the soul of a nation; he works secretly and unknown in the night to undermine the pillars of a city; he infects the body politic so that it can no longer resist."

ThroxxOfVron

"The loss of character means the loss of liberty and the transformation of government into a criminal enterprise. "

"I think that happened August 13, 1971 "

The entirety of the Western Hemisphere, not just 'The United States', was seized by invaders from Europe.

It is not an 'American' disease: it is a European disease and always was.

The indiginous populations of the Western Hemisphere were suystemaically and with forethought expropriated, ensalved, and slaughtered. The indiginous persons that dwelled within the geographical domain that presently comprise the USA were still being margialized, forcibly relocated, and murdered, long after the so-called 'American Civil War' had been decided.

...& As much as it is fashionable and/or politically expedient to vilify and blame the 'white' Europeans both for this history and extenuate that history to inform the present state of affairs, the Dutch, the French, the Portuguese, and the Spanish ( most eggregiously IMHO) were brutal and savage.

Look at the demographics of the Western Hemisphere.

If you have a shred of honesty you just can't hang the blame on 'whites', put it on a bumper sticker or a #shittyhashtagmeme and go back to fucking off.

The disgusting fraud of Manifest Destiny was a fig leaf to hide the enormity of these crimes; but, they are most obviously European crimes.

...& has Europe changed since the West was settled? Did Europeans even stop their warring amonsgst themselves?

See for yourself: https://en.wikipedia.org/wiki/List_of_conflicts_in_Europe

That would be: Hell NO.

Neither in Europe itself, nor in the settled West.

The Pacific Ocean wasn't named for calm waters.

It was named thusly because it is the natural geographic boundary where the mayhem and brutality and genocide ceased, if only because the greedy and ruthless Europeans had run out of land in the Western Hemisphere with people upon it to plunder and murder...

El Vaquero

The US will collapse within the next decade if some serious new technology is not developed and the infrastructure to use it is put in. There is too much debt and not enough material resources to continue growing the ponzi scheme that is our monetary system at an exponential rate without something breaking. The question is, will it be at the end of this boom-bust cycle, or the next? And if you look at what is being done on the financial front, which is the backbone of our neo-empire, that is shrinking.

The USD is slowly falling out of favor. There will come a point where that rapidly accelerates. We've been in a state of collapse for 15 years.


Abitdodgie

ignorance is choice these days and Americans love it.

AetosAeros

Not only a choice, but the ONLY choice they are prepared to accept. Cognitive Dissonance at it's finest. And to make matters worse, in only the best American fashion, we've asked if if it can be Supersized to go along with the Freedom Lies we feed ourselves.

I've seen the enemy, and....

But only if I'm willing to look in the mirror. Today's American doesn't look for what's right there in front of him/her, we look for all the new 'Social Norms' that we aren't living up to. This article is completely on target, and I hope Roberts hasn't decided to do any remodeling, cause too many idle nails guns make for a great Evening News sidebar mention.

Damnit all to hell.

Fun Facts

Fun Facts's picture

Rubicon727

We educators began seeing this shift towards "me-ism" around 1995-6. Students from low to middle income families became either apathetic towards "education" or followed their parent's sense of "entitlement." Simultaneously, the tech age captured both population's attention. Respecting "an education" dwindled.

Fast forward to the present: following the 2007-8 crash, we noted clear divisions between low income vs middle/upper class students based on their school behavior. Low to slightly middle income students brought to school family tensions and the turmoil of parents losing their jobs. A rise in non-functioning students increase for teachers while the few well performing students decline significantly.

Significant societal, financial shifts in America can always be observed in the student population.

reader2010

Mission Accomplished.

"When a population becomes distracted by trivia, when cultural life is redefined as a perpetual round of entertainments, when serious public conversation becomes a form of baby-talk, when, in short, a people become an audience and their public business a vaudeville act, then a nation finds itself at risk; a culture-death is a clear possibility."

- Neil Postman, Amusing Ourselves to Death: Public Discourse in the Age of Show Business, 1985

Lea

"The American people have been scientifically mis-educated".

You've got the answer there. The education system is the root cause of the problem. I'm from Europe, but if I've understood correctly, the US education policy is to teach as little as possible to children, and expect them to fill in the gaps in the Universities, past a certain age.

Only, it can't work. Children WILL learn, as childhood is the time when most informations are stored. If the schools don't provide the knowledge, they will get it from the television, movies or games, with the consequences we can see: ignorance, obsession with TV and movies stars, inability to differentiate life from movies, and over-simplistic reasoning (if any).

In Europe, we knew full well children learn fast and a lot, and that was why the schools focused on teaching them as much general knowldge as possible before 18 years old, which is when - it is scientifically proved - the human brain learns best.

Recently, the EU leading countries have understood that having educated masses doesn't pay if you want to lead them like sheep, so they are perfidiously trying to lower the standards... to the dismay of parents.

My advice, if I may presume to give any, would be to you USA people: teach your children what they won't learn at school, history, geography, literature (US, European and even Asian, why not), a foreign language if you can, arts, music, etc; and keep them away from the TV, movies and games.

And please adapt what you teach them to their age.

Refuse-Resist

Bang on! One anecdotal example: insisting that all 3rd graders use calculators "to learn" their multiplication tables. If I didn't do flashcards at home with my kids they wouldn't know them. As somebody who majored in engineering and took many many advanced math courses, I always felt that knowing your 'times tables' was essential to being successful in math.

What better way to dumb down otherwise intelligent children by creating a situation where the kid can't divide 32 by 4 without a calculator. Trigonometry? Calculus? Linear Algebra? Fuggedaboudit.

doctor10

The CB's and MIC have Americans right where they want them. the consequences of 3-4 generations of force feeding Santa Claus and the Easter Bunny

ThroxxOfVron

Some of US were never fucking asleep. Some of us were born with our eyes and minds open. We were, and are: hated, and reviled, and marginalized, and disowned for it. The intellectual repression was, and is, fucking insane and brutal. Words such as ethics and logic exist for what purpose? What are these expressions of? A bygone time? Abstractions?

Those that have tried to preserve their self awareness, empathy, and rationality have been ruthlessly systematically demeaned and condemed for confronting our families, our culture and institutions. We all have a right to be angry and disgusted and distrustful of the people and institutions around us. I am very fucking angry, and disgusted, and distrustful of the people and institutions around me.

But I still have hope. Nothing lasts forever.. This self-righteous nation called The United States, this twisted fraud of a culture called America, is most dangerously overdue for receipt of chastisment and retribution. It would be best if the citizenry of the United States taught themselves a lesson in stead of inviting Other nations and cultures to educate them.

A serious self education may be tedious and imperfect; but, it would be far far cheaper than forcing someone to come all the way over those oceans to educate Americans at the price they will be demanding for those lessons...

I do not require representation. I will speak my own mind and act of my own accord.

Every time other so-called Americans take a shit on me for thinking and speaking and acting differently it is a badge of honor and a confirmation of my spiritual and intellectual liberty. They don't know it but they are all gonna run out of shit before I run out of being free.

ThroxxOfVron

"The loss of character means the loss of liberty and the transformation of government into a criminal enterprise. "

"I think that happened August 13, 1971 "

The entirety of the Western Hemisphere, not just 'The United States', was seized by invaders from Europe. It is not an 'American' disease: it is a European disease and always was.

The indiginous populations of the Western Hemisphere were suystemaically and with forethought expropriated, ensalved, and slaughtered. The indiginous persons that dwelled within the geographical domain that presently comprise the USA were still being margialized, forcibly relocated, and murdered, long after the so-called 'American Civil War' had been decided.

...& As much as it is fashionable and/or politically expedient to vilify and blame the 'white' Europeans both for this history and extenuate that history to inform the present state of affairs, the Dutch, the French, the Portuguese, and the Spanish ( most eggregiously IMHO) were brutal and savage.

Look at the demographics of the Western Hemisphere. If you have a shred of honesty you just can't hang the blame on 'whites', put it on a bumper sticker or a #shittyhashtagmeme and go back to fucking off. The disgusting fraud of Manifest Destiny was a fig leaf to hide the enormity of these crimes; but, they are most obviously European crimes....& has Europe changed since the West was settled? Did Europeans even stop their warring amongst themselves?

See for yourself: https://en.wikipedia.org/wiki/List_of_conflicts_in_Europe

That would be: Hell NO. Neither in Europe itself, nor in the settled West. The Pacific Ocean wasn't named for calm waters. It was named thusly because it is the natural geographic boundary where the mayhem and brutality and genocide ceased, if only because the greedy and ruthless Europeans had run out of land in the Western Hemisphere with people upon it to plunder and murder...

Mini-Me

"The loss of character means the loss of liberty and the transformation of government into a criminal enterprise."

I agree with the first part. As for the latter, "government," by definition, is a criminal enterprise. It doesn't start out pure as the driven snow and then change into something nefarious over time. Its very essence requires the initiation of violence or its threat. Government without the gun in the ribs is a contradiction.

The fact that those in power got more votes than the losing criminals does not magically morph these people into paragons of virtue. They are almost without exception thoroughly deranged human beings. Lying is second nature to them. Looting is part of the job description. Killing is an end to their means: the acquisition and aggrandizement of power over others, no matter how much death and destruction results.

These people are sick bastards. To expect something virtuous from them after an endless string of wanton slaughter, theft and abuse, is simply wishful thinking.

Jack Burton

I agree with Paul Craig Roberts. He asks "Why" and "How." Well, Paul, here is my answer. Decades of Public Education and over 50 years of mass media monopoly. In an age where FOX is the top rated News station and CNN is considered liberal? Where kids in Public school are offered Chocolate milk and frozen pizza for school breakfast before going to class rooms with 30-40 kids. When Texas political appointees chose school text book content for the nation? A nation where service has ended, replaced with volunteer soldiers signing up for pay and benefits, instead of just serving as service, like we did in the 70's?

Paul Craig Roberts points out the police war against the people. That comes right from the very top, orders filter down to street cops. Street Cops are recruited from groups of young men our fathers generation would have labeled mental! But now they are hired across the board, shaved heads, tatoos, and a code of silence and Cops Above Justice.

The people have allowed the elites to rule in their place, never bothering to question the two fake candidates we are allowed to vote for.

Jtrillian

There is a difference between IGNORANCE and STUPIDITY. As Ron White said, "YOU CAN'T FIX STUPID". In todays information age, ignorance is a choice.

Part of the problem that no one is talking about or addressing is the population explosion. And it's not linear. Those who are the least educated, fully dependent others for their survival (welfare), the most complacent, and often with violent criminal records are breeding the fastest.

Evolution is not guaranteed. It can be argued that the apathy we experience today is a sign of the human race de-evolving. It takes a certain amount of cognitive ability to observe and question what is going on.

Further, the society we have created where "60 is the new 40" creates very little time to pay attention to what is going on in the world. Many people rely on mainstream media which is not really news any more. When six corporations control more than 90% of the news, it's the message of the corporate elite that we are fed. This becomes painfully obvious when you start turning to other sources for information like social media and independent news. Mainstream media today is full of opinion bias - injecting opinion as though it were fact. They also appeal to the lowest commmon denominator by focusing on emotionally charged topics and words rather than boring facts. Finally, the mainstream media is extremely guilty of propaganda by omission, ignoring important events altogether or only presenting one side of the story as is being done with regard to ISIS, Syria, and Ukraine today. People who watch the mainstream media have no idea that the US played a significant role in arming ISIS and aided in their rise to power. They have no idea that it was likely ISIS that used chemical weapons in Syria. They have no idea that the US has propped up real life neo nazis in high government positions in Ukraine. And they have ignored the continuing Fukushima disaster that is STILL dumping millions of gallons of radioactive water into the ocean every single day.

To sum up, democracies only work when people pay attention and participate. People are either too stupid, too overworked, are are looking to the wrong sources for information.

Until we break up mainstream media, remove incentives for those who cannot even care for themselves to stop breeding, and make fundamental changes to our society that affords people the time to focus on what is happening in the world, it will only get worse.

Much worse.

serotonindumptruck

A dying empire is like a wounded, cornered animal.

It will lash out uncontrollably and without remorse in a futile effort to save itself from certain death.

Enough Already

The problem is that we have no "Constitution." That is a fable. The constitution of the separation of powers has been undermined from almost day one. Witness the Alien and Sedition Acts of 1798.

In the centuries since then, there has been no "separation of powers." Marbury v Madison (1803) gave the Supreme Court the right to "decide" what the "law" was. Although, only in the 20th century did the "Supreme" court really start "legislating" from the bench.

We're just peons to the Overall Federal Power; the three "separate" parts of the federal government have been in collusion from the first. But like all empires, this one is in the final stage of collapse; it has just gotten too big.

gswifty

Yes sir. Globalization has failed us. The infinite growth paradigm has failed us, as we knew it would. Castro's Cuba, based in a localized agrarian economy, is looking pretty good about now. Localization is the only way back to sustainability.

napples

Books? Who said books? You mean reading books? Let me throw a couple out there: I read 'The Image: A Guide To Pseudo-Events In America' last year, it was published 50+ years ago by a very recommended writer and accomplished historian. Boorstin's observations are truer today and even more concerning thanks to our modern, ubiquitous "connectivity". http://www.goodreads.com/book/show/159979.The_Image

Another by Boorstin, The Discoverers was my fav, like Bryson's 'Short History' on steroids:

https://en.wikipedia.org/wiki/Daniel_J._Boorstin

I'm currently trying to fathom all of the historical implications of the claims Menzies is making in his book '1434', where apparently everything I learned about history is a lie. While he's making a lot of claims(hoping some sticks?) I'm not truly convinced. It is a very good, believable thought experiment. It almost makes perfect sense given the anglo/euro history of deceit & dishonesty, but I digress:
https://en.wikipedia.org/wiki/Gavin_Menzies

This one took a long time to grok, Dr Mandelbrot tried to warn us:
http://www.goodreads.com/book/show/665134.The_Mis_Behavior_of_Markets#

Benoit's friend & protege tried to warn us too:
https://en.wikipedia.org/wiki/The_Black_Swan_%282007_book%29

Put them together and you get the financial meltdown's 'Don't say we didn't warn you' manifesto from 2006(not a book, but a compelling read):
http://www.ft.com/cms/s/2/5372968a-ba82-11da-980d-0000779e2340.html

OK, I'm tired. Time to unplug.

reader2010

Adorno famously pointed out in 1940 that the "Mass culture is psychoanalysis in reverse." It takes 75 years for someone such as PCR to reiterate. He doesn't blame the masses because he simply points out the fact that Americans are completely ignorant and blindly believe anything MSM spoon-fed to them.

George Orwell once remarked that the average person today is about as naive as was the average person in the Middle Ages. In the Middle Ages people believed in the authority of their religion, no matter what. Today, we believe in the authority of what Adorno called Culture Industry and MSM, no matter what. Today we are indeed in another Dark Age

PoasterToaster

"Americans" are not one person. Individuals are not fungible. Reasoning from the "average American" leads to false conclusions.

reader2010

Jacques Derrida says, "The individualism of technological civilization relies precisely on a misunderstanding of the unique self. It is the individualism of a role and not of a person. In other words it might be called the individualism of a masque or persona, a character [personnage] and not a person." There are many Americans but they all play the same role in the Pursuit of Happiness, aka wage slaves, career slaves, debt slaves, information junkies, and passive consumers.

Moccasin

Paul Craig Roberts believe that the people are capable of creating a better and more just society. Instead the people have voted against their own best interest and overwhelmingly believe the propaganda.

When do the people or the society take responsibility for its greater good or own the crimes of those they put into power?

Blaming the aristocracy or the oligarchs seems like a scapegoat when the people have never stood up to the corruption in a cohesive or concerted way. imho, After a few generations of abuse and corruption the people need to take responsibility for their future. I expect that most will just buy into the charade and live the lie, on that basis as a society we are doomed to live in a corporatocracy fascist state.

Aldous Huxley called it a scientific dictatorship, Edward Bernays referred to us as a herd.

Moccasin

In the USA being white, monied and having the capacity to afford a good education is privileged. To his credit he speaks to the greater population, the 'average citizen' and not the plutocratic class.

MSorciere

What we have is the result of conditioning and commoditizing a population. The country is filled with consumers, not citizens. Teach the acquisition of money and goods as the main goal and individualism as the only acceptable social unit. We end up with a nation of insatiable sociopaths, ruled by power-hungry psychopaths.

Divisive politics, jackbooted authority from the DC scumpond down to the cop on the beat, the constant preaching of the cult of the individual as a sustitute for true liberty... all of these have served to destroy a sense of community and decentness between Americans.

The ONLY thing that could threaten the ruling class is a banding together of the people - in large numbers. 'They' have purposefully and effectively quashed that.

TrulyStupid

Shifting responsibility to the usual suspects is simply a manifestation of the American moral collapse. Man up and do some self evaluation.

T-NUTZ

"what I have noticed for many years is that the American people have lost, in addition to their own sense of truth and falsity, any sense of mercy and justice for other peoples"

Unfortunately, Paul, the American people have lost any sense of mercy and justice for their own people.

https://www.youtube.com/watch?v=DXRDq9nKJ0U

Phillyguy

Painful as it may be, we need to rationally look at US history/society. The nascent US was formed by stealing land from the native population and using human capital (read African Slaves) to generate wealth (it took a civil war with circa 500K casualties to stop this- one could argue the US "civil war" never ended). More recently, the US has been almost continuously at war since 1940, we dropped atomic bombs on Japan. Currently, the US/NATO war theater extends from the Levant, to Caspian Basin, Persian Gulf, China Sea, Indian Ocean, Horn of Africa (Saudi/US war on Yemen), the Maghreb and E Europe and Russian Border.

Radical Marijuana

"... the transformation of government into a criminal enterprise ..."

Governments were created by the history of warfare, which was always organized crime developing on larger and larger scales. In the context, the greater problem is that people like Paul Craig Roberts are reactionary revolutionaries, who provide relatively good analysis, followed by bogus "solutions" based upon impossible ideals.

The "American People" are the victims of the best scientific brainwashing that money could buy. As Cognitive Dissonance has previously stated on Zero Hedge: "The absolute best controlled opposition is one that doesn't know they are controlled."

It is practically impossible to exaggerate the degree to which that is so, on such profound levels, because of the ways that most people want to continue to believe that false fundamental dichotomies and impossible ideals are valid, and should be applied to their problems, despite that those mistaken ideas cause the opposite to happen in the real world, because those who promote those kinds of false fundamental dichotomies and their related impossible ideals, ARE "controlled opposition."

Rather, the place to begin would be by recognizing that all human beings and civilizations must necessarily operate as entropic pumps of energy flows, which necessarily are systems of organized lies operating robberies. Everyone has some power to rob, and power to kill to back that up. Governments assembled and channeled those powers. There was never a time when governments were not organized crime. There could never be any time when governments were not organized crime. The only things that exist are the dynamic equilibria between different systems of organized lies operating robberies. Those dynamic equilibria have become extremely unbalanced due the degree that the best organized gangs of criminals were able to control their opposition.

Paul Craig Roberts, as well as pretty well all of the rest of the content published on Zero Hedge, are presentations of various kinds of controlled opposition groups, most of which do not recognize that they are being controlled by the language that they use, and the philosophy of science that they take for granted. THAT is the greatest failure of the American People, as well as most of the rest of the people everywhere else. They believe in false fundamental dichotomies, and the related impossible ideals, and therefore, their bogus "solutions" always necessarily backfire badly, and cause the opposite to happen in the real world.

After all, the overwhelming vast majority of the American People operate as the controlled opposition to the best organized gangs of criminals that most control the government of the USA. Therefore, the FAILURES of the American People are far more profound and problematic than what is superficially presented by guys like Paul Craig Roberts, and also, of course, his suggested bogus "solutions" are similarly superficial.

The ONLY things which can actually exist are the dynamic equilibrium between different systems of organized lies operating robberies. The degree to which the American People, as well as most of the rest of the people in the world, FAIL to understand that is the degree to which they enable the best organized gangs of criminals to control them, due to the vast majority of people being members of various controlled opposition groups. Controlled opposition always presents relatively superficial analysis of the political problems, which are superficially correct. However, they then follow that up with similarly superficial "solutions." Therefore, magical words are bandied about, that express their dualities, through false fundamental dichotomies, and the related impossible ideals.

Governments must exist because organized crime must exist. Better governments could be achieved through better organized crime. However, mostly what get presented in the public places are the utter bullshit of the biggest bullies, who dominate the society because they were the best organized gangs of criminals, who were also able to dominate their apparent opposition. Therefore, instead of more realistic, better balancing of the dynamic equilibria between different systems of organized lies operating robberies, we get runaway developments of the best organized gangs of criminals being able to control governments, whose only apparent opposition is controlled to stay within the same bullshit frame of reference regarding everything that was actually happening.

The mainline of the FAILURES of the American People have been the ways that the international bankers were able to recapture control over the American public "money" supply. After that, everything else was leveraged up, through the funding of the political processes, schools, and mass media, etc., being more and more dominated by that fundamentally fraudulent financial accounting system. Of course, that FAILURE has now become more than 99% ... Therefore, no political possible ways appear to exist to pull out of that flaming spiral nose dive, since we have already gone beyond the event horizon into that social black hole.

Most of the content on Zero Hedge which is based upon recognizing that set of problems still acts as controlled opposition in that regard too. Therefore, the bogus "solutions" here continue to deliberately ignore that money is necessarily measurement backed by murder. Instead of accepting that, the controlled opposition groups like to promote various kinds of "monetary reforms." However, meanwhile, we are actually already headed towards the established debt slavery systems having generated debt insanities, which are going to provoke death insanities.

In that context, the only realistic resolutions to the real problems would necessarily have to be monetary revolutions, that may emerge out of the future situations, after the runaway debt insanities have provoked death insanities. Indeed, the only genuine solutions to the problems are to develop different death control systems, to back up different debt control systems, which must necessarily be done within the context that governments are the biggest forms of organized crime, controlled by the best organized gangs of criminals.

The various controlled opposition groups do not want to face those social facts. Rather, they continue to want to believe in the dualities expressed as false fundamental dichotomies and the related impossible ideals, which is their greatest overall FAILURE. In my view, the article above by Roberts contained a lot of nostalgic nonsense. There was never a time when there were any governments which were not based on the applications of the principles and methods of organized crime, and there could never be any time in the future when that could be stopped from being the case.

The greatest FAILURE of the American People, as well as most of the rest of the world's people, has been to become so brainwashed to believe in the biggest bullies' bullshit world view, that there is no significant opposition that is not controlled by thinking inside of the box of that bullshit. The government did NOT transform into a criminal enterprise. The government was necessarily ALWAYS a criminal enterprise. That criminal enterprise has become more and more severely UNBALANCED due to the FAILURE of the people to understand that they were actually members of an organized crime gang, called their country. Instead, they were more and more scientifically brainwashed to believe in bullshit about everything, including their country.

The ONLY connection between human laws and the laws of nature is the ability to back up lies with violence. The development of the government of the USA has been the developed of integrated systems of legalized lies, backed by legalized violence. Those systems of ENFORCED FRAUDS have been able to become more extremely unbalanced because there is almost nothing which is publicly significant surrounding that core of organized crime but various controlled opposition groups.

Of course, it seems politically impossible for my recommendations to actually happen within the foreseeable future, as the current systems of debt slavery drive through debt insanities to become death insanities, but nevertheless, the only theoretically valid ideas to raise to respond to the real problems would have to based upon a series of intellectual scientific revolutions. However, since we have apparently run out of time to go through those sorts of paradigm shifts sufficiently, we are stuck in the deepening ruts of political problems which guys like Roberts correctly present to be the case

... HOWEVER, ROBERTS, LIKE ALMOST EVERYONE ELSE, CONTINUE TO PRESUME UPON DUALITIES, AND THEREFORE, HAVE THEIR MECHANISMS REGARDING "SOLUTIONS" ABSURDLY BACKWARDS.

Rather, we should start with the concept of SUBTRACTION, which then leads to robbery. We should start with the recognition that governments are necessarily, by definition, the biggest forms of organized crime. Governments did NOT transform into being that. Governments were always that. The political problems we have now are due to the best organized gangs of criminals, which currently are primarily the biggest gangsters, which can rightly be referred to as the banksters, having dominated all aspects of the funding of politics, enough to capture control over all sociopolitical institutions, so that the American People would more and more be subjected to the best scientific brainwashing that money could buy, which was built on top of thousands of years of previous history of Neolithic Civilizations being based on backing up lies with violence.

The runaway systems of ENFORCED FRAUDS, or the integrated systems of legalized lies, backed by legalized violence, that more and more dominate the lives of the American People are due to the applications of the methods of organized crime, and could not be effectively counter-balanced in any other ways. However, the standing social situation is that there is no publicly significant opposition that is not controlled to stay within the same frame of reference of the biggest bullies, which is now primarily the frame of reference of the banksters. Indeed, to the degree to which people's lives are controlled by the monetary system, they are debt slaves. Moreover, the degree to which they do not understand, and do not want to understand, that money is necessarily measurement backed by murder, then they think like controlled opposition groups, who have their mechanisms absurdly backwards, when they turn from their superficial analysis of what the political problems, to then promote their superficial solutions of those problems.

I AGREE that "Americans need to face the facts." However, those facts are that citizens are members of an organized crime gang, called their country. "Their" country is currently controlled by the best organized gangs of criminals. However, there are no genuine resolutions for those problems other than to develop better organized crime. Since the controlled opposition groups that are publicly significant do not admit any of the deeper levels of the scientific facts regarding human beings and civilizations operating as entropic pumps of energy flows, but rather, continue to perceive all of that in the most absurdly backward ways possible, the current dynamic equilibria between the different systems of organized lies operating robberies continue to become more and more extremely UNBALANCED.

In the case of the article above, Roberts does NOT "face the facts" that governments were always forms of organized crime, and must necessarily be so, because human beings must live as entropic pumps of energy flows. Rather, Roberts tends to illustrate how the controlled opposition takes for granted certain magical words and phrases, such as "Liberty" or "Constitution," that have no adequate operational definitions to connect them to the material world.

We are living inside of an oxymoronic scientific dictatorship, which has applied the progress in science primarily to become better at backing up lies with violence, while refusing to allow scientific methods to admit and address how and why that has been what has actually happened. Therefore, almost all of the language that we use to communicate, as well as almost all of the philosophy of science that we take for granted, was based on the biggest bullies' bullshit, which is now primarily manifested as the banksters' bullshit, as that bullshit developed in America to become ENFORCED FRAUDS.

ALL of the various churches, corporations, and countries are necessarily various systems of organized lies operating robberies. Those which are the biggest now were historically the ones that were the best at doing that. The INTENSE PARADOXES are due to human systems necessarily being organized lies operating robberies, wherein the greatest social successfulness has been achieved by those who were the best professional liars and immaculate hypocrites. That flows throughout ALL of the established systems, which are a core of organized crime, surrounded by controlled opposition groups.

The degree to which the American People, as well as the rest of the world's people, have been more and more scientifically brainwashed to believe in bullshit about governments in particular, and human beings and civilizations in general, is the degree to which the established systems based upon ENFORCED FRAUDS are headed towards some series of psychotic breakdowns. For all practical purposes, it is politically impossible to get enough people to stop acting like incompetent political idiots, and instead start acting more like competent citizens, because they do not understand, and moreover have been conditioned to not want to understand that governments are necessarily organized crime.

Roberts ironically illustrated the deeper nature of the political problems that he also shares, when he perceives that governments have somehow transformed into being criminal enterprise, when governments were always necessarily criminal enterprises. Similarly, with those who recognize that, but then promote the impossible solutions based upon somehow stopping that from being the case, which is as absurdly backwards as stopping human beings from operating as entropic pumps of energy flows, which then also presumes that it would be possible to stop human civilizations from being entropic pumps of energy flows.

Rather, the deeper sorts of intellectual scientific revolutions that we should go through require becoming much more critical of the language that we use to communicate with, and more critical about the philosophy of science that we presumed was correct. Actually, we were collectively brainwashed to believe in the biggest bullies' bullshit, which is as absurdly backwards as it could possibly be. However, due to the collective FAILURES of people to understand that, as reflected by the ways that the core of organized crime is surrounded by nothing which is publicly significant than layers of controlled opposition, there are no reasonable ways to doubt that the established debt slavery systems will continue to drive even worse debt insanities, which will provoke much worse death insanities. Therefore, to be more realistic about the foreseeable future, the development of new death control systems will emerge out of the context of crazy collapses into chaos, wherein the runaway death insanities provide the possible opportunities for new death controls to emerge out of that situation.

Of course, the about 99% FAILURE of the American People to want to understand anything that I have outlined above indicates that the foreseeable future for subsequent generations shall not too likely be catalyzed transformations towards enough people better understanding their political problems, in order to better resolve those problems. Rather, what I mostly expect is for the psychotic breakdowns of the previous systems of ENFORCED FRAUDS to give opportunities to some possible groups of controlled opposition to take advantage of that, to perhaps emerge as the new version of professional liars and immaculate hypocrites, who will be able to operate some new version of organized lies, operating robberies, who may mostly still get away with being some modified versions of still oxymoronic scientific dictatorship, due to social success still being based upon the best available professional liars and immaculate hypocrites, who were able to survive through those transformations, so that the new systems arise from some of the seeds of the old systems.

At the present time, it is extremely difficult to imagine how the human species could possibly reconcile progress in physical science by surpassing that with progress in political science. Rather, what mostly exists now is the core of organized crime, which gets away with spouting the bullshit about itself, such as how the banksters dominate the mass media, and the lives of everyone else who depend upon the established monetary system (which is dominated by the current ways that governments ENFORCE FRAUDS by privately controlled banks), while that core of organized crime has no publicly significant opposition that is not controlled by the ways that they think, which ways stay within the basic bullshit world view, as promoted by the biggest bullies for thousands of years, and as more and more scientifically promoted to brainwash the vast majority of people to believe in that kind of bullshit so completely that it mostly does not occur to them that they are doing that, and certainly almost never occurs to them that they are doing that in the most profoundly absurd and backward ways possible.

That is how and why it is possible for an author like Roberts to correctly point out the ways in which the government of the USA is transforming into being more blatantly based on organized crime ... HOWEVER, Roberts is not willing and able to go through deeper levels of intellectual scientific revolutions, in order to recognize how and why governments were always necessarily manifestations of organized crime. Therefore, as is typically the case, Roberts does not recognize how ironically he recommends that Americans should "face the facts," while he himself does not fully do so.

The whole history of Neolithic Civilizations was social pyramid systems based on being able to back up lies with violence, becoming more sophisticated systems of legalized lies, backed by legalized violence, which currently manifest as the globalized electronic frauds of the banksters, were are backed up by the governments (that those banksters effectively control) having atomic bombs. Those are the astronomically amplified magnitudes of the currently existing combined money/murder systems. Therefore, it appears to be politically impossible at the present time to develop better governments, due to the degree that almost everyone is either a member of the core groups of organized crime, or members of the surrounding layers of groups of controlled opposition, both of which want to stay within the same overall bullshit frame of reference, because, so far, their lives have been socially successful by being professional liars and immaculate hypocrites.

Ironically, I doubt that someone like Roberts, or pretty well everyone else whose material is published on Zero Hedge is able and willing to recognize the degree to which they are actually controlled opposition. Indeed, even more ironically, as I have repeated before, even Cognitive Dissonance, when he previously stated on Zero Hedge: "The absolute best controlled opposition is one that doesn't know they are controlled." DOES NOT "GET IT" regarding the degree to which he too is controlled opposition, even while superficially attempting to recognize and struggle with that situation. (Indeed, of course, that includes me too, since I am still communicating using the English language, which was the natural language that most developed to express the biggest bullies' bullshit world view.)

Overall, I REPEAT, the deeper problems are due to progress in physical science, NOT being surpassed by progress in political science. Instead, while there EXIST globalized electronic frauds, backed by atomic bombs, practically nothing regarding the ways of thinking that made that science and those technologies possible has found any significant expression through political science, because political science would have to go through even more profound paradigm shifts within itself in order to do that.

The INTENSE PARADOXES continue to be the manifestation of the oxymoronic scientific dictatorship, that deliberately refuses to become any more genuinely scientific about itself. Therefore, the banksters have been able to pay for the best scientific brainwashing that money could buy, for generation after generation, in order to more and more brainwash most of the American People to believe in the banksters' bullshit world view. While there exist electronic frauds, backed by atomic bombs, practically nothing regarding the physical science paradigm shifts that made that possible have even the slightest degree of public appreciation within the realms of politics today, which are almost totally dominated by the biggest bullies' bullshit world view, despite that being as absurdly backwards as possible, while the controlled opposition groups, mostly in the form of old-fashioned religions and ideologies, continue to stay within that same bullshit world view, and adamantly refuse to change their perceptual paradigms regarding political problems.

However, I REPEAT, the issues we face are NOT that governments have transformed to become criminal enterprises, but that governments were always necessarily criminal enterprises, which had the power to legalized their own lies, and then back those lies up with legalized violence. Thereby, the best organized criminals, the international bankers, as the biggest gangsters, or the banksters, were able to apply the methods of organized crime through the political processes. Meanwhile, the only "opposition" that was allowed to be publicly significant was controlled, to basically stay within the same bullshit world view, which is what Roberts has done in his series of articles, as well as what is almost always presented in the content published on Zero Hedge.

The NEXT LEVEL of "the need to face the facts" is to recognize that the political economy is based upon ENFORCED FRAUDS, or systems of debt slavery backed by wars based on deceits. However, the NEXT LEVEL "the need to face the facts" is the that the only possible changes are to change the dynamic equilibria between the different systems of organized lies operating robberies, i.e., change those ENFORCED FRAUDS, in ways which CAN NOT STOP THOSE FROM STILL BEING ENFORCED FRAUDS, because of the degree to which money is necessarily measurement backed by murder.

For the American People, as well as the rest of the world's people, to stop being such dismal FAILURES would require them to become more competent citizens. However, at the present time they appear to be totally unable to do that, because they are unwilling to go through the profound paradigm shifts that it would take them to become more competent citizens inside of world where there exist globalized electronic frauds, backed by atomic bombs. The vast majority of the American People would not like to go through the severe cognitive dissonance that would be required, to not only recognize that "their" government was a criminal enterprise, but that it also must be, and that they too must necessarily be members of that organized crime gang. However, without that degree of perceptual paradigm shifts of the political problems, then enough of the American People could not become more competent citizens.

Somehow, most people continue to count on themselves never having to think about how and why progress was achieved in physical science, by going through series of profound paradigm shifts in the ways that we perceived the world. Most people continue to presume that it is not necessary for their perception of politics to go through profound paradigm shifts, that surpass those which have already been achieved in physical science. We continue to live in an oxymoronic scientific dictatorship, that employs science and technology to become better at being dishonest and violent, but does not apply science and technology to "face the facts" about that scientific dictatorship as a whole.

At the present time, technologies which have become trillions of times more capable and powerful are primarily used as special effects within the context of repeating the same old-fashioned, stupid social stories, such as promoted by the biggest bullies, and their surrounding controlled opposition groups. Ironically, especially when it comes to politics, that tends to manifest the most atavistic throwbacks to old-fashioned religions and ideologies being relied upon to propose bogus "solutions," despite that those kinds of social stories adamantly refuse to change their paradigms in light of the profound paradigms shifts which have been achieved in physical science.

The article above was another illustration of the ways that the typical reactionary revolutionaries, Black Sheeple, or controlled opposition groups, respond to recognizing the more and more blatant degrees to which there has been an accelerating "transformation of government into a criminal enterprise." THE PROBLEM IS THAT THEY CONTINUE TO STAY WITHIN THE SAME OLD-FASHIONED BULLSHIT-BASED FRAME OF REFERENCE, INSTEAD, AROUND AND AROUND WE GO, STUCK IN THE SAME DEEPENING RUTS, since they do NOT more fully "face the facts" regarding how and why the only realistic solutions to the real problems would require developing better organized crime. INSTEAD, they continue to promote the same dualities based upon false fundamental dichotomies, and the associate bogus "solutions" based upon impossible ideals ...

Given that overall situation, that there there almost nothing which is publicly significant than the core of organized crime, surrounded by controlled opposition groups, I see no reasonable hopes for the foreseeable material future of a civilization controlled by ENFORCED FRAUDS, since there is no publicly possible ways to develop better dynamic equilibria between the different systems of organized lies operating robberies, since the biggest forms of doing that were most able to get away with pretending that they are not doing that, which was facilitated by their controlled opposition promoting the opinions that nobody should do that, while actually everyone must be doing that.

Roberts' article above, to me, was another typical example of superficially correct analysis, which implies some bogus "solutions" because those are based upon the same superficiality. It is NOT good enough to recognize "transformation of government into a criminal enterprise," unless one goes through deeper levels of analysis regarding how and why that is what actually exists, and then, one should continue to be consistent with that deeper analysis when one turns to proposing genuine solutions to those problems, namely, I REPEAT THAT the only realistic resolutions to the real political problems requires the transformation of government into a better organized criminal enterprise, which ideally should be based upon enough citizens who are competent enough to understand that they are members of an organized crime gang, which should assert themselves to make sure that their country becomes better organized crime.

[Dec 20, 2017] Bill Black DSGE Dilettantes v. ADM God Devotees

Notable quotes:
"... By Bill Black, the author of The Best Way to Rob a Bank is to Own One, an associate professor of economics and law at the University of Missouri-Kansas City, and co-founder of Bank Whistleblowers United. Originally published at New Economic Perspectives ..."
"... A dilettante is a person who cultivates an area of interest, such as the arts, without real commitment or knowledge. The Dilettante Doctrine takes modern macro's arrogance to a new pinnacle. Only their model is legitimate, and it is illegitimate to criticize their DSGE models, even though they repeatedly fail. Instead, we must all "like" their models. We cannot make any statements about macroeconomics unless we "like [DSGE] models." The Dilettante Doctrine is a sure-fire means of winning academic disputes. You demand that your critics endorse your views, or you dismiss them as dilettantes unworthy of respect. ..."
"... Readers may recall that the scientific method works in the opposite direction of the Dilettante Doctrine. Modern macro proposes a theory (DSGE) and tests its predictive ability. The DSGE models fail recurrently, on the most important macro events, and the failures are massive. The scientific method requires the theorist of the failed model to declare it falsified. Economists who "like" repeatedly falsified DSGE models are, as Paul Romer famously declared, engaged in "pseudoscience." ..."
"... BTW, one of the best takes of macroeconomics I've encountered is Steve Keen's work, which I gratefully acknowledge I first read here on NC. Keen's critique of DSGE models is utterly spot-on and mathematically sophisticated. Part of the problem with economics is that it has been afflicted with 'math envy' since its earliest days, and the ADM results were proved with Banach Space methods, so they just *had* to be right. Google the phrase "spherical cow" for more on this mindset, not to mention one of the few really funny math jokes I know. ..."
Dec 20, 2017 | www.nakedcapitalism.com

By Bill Black, the author of The Best Way to Rob a Bank is to Own One, an associate professor of economics and law at the University of Missouri-Kansas City, and co-founder of Bank Whistleblowers United. Originally published at New Economic Perspectives

The truly exceptional thing about 'modern macroeconomics' devotees is not that they are so consistently and horrifically wrong or that they persist in their errors – but their exceptional combination of arrogance and disdain for those who have dramatically better records and broader and more relevant expertise. Kartik Athreya, the Richmond Fed's Research Director, led the modern macro parade on June 17, 2010 with his blog (which he later withdrew in embarrassment) when he announced the Athreya Axiom of Absolute Arrogance.

So far, I've claimed something a bit obnoxious-sounding: that writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy. Taken literally, I am almost certainly wrong. Some of them have great ideas, for sure. But this is irrelevant. The real issue is that there is extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback effects, will offer anything new. Moreover, there is a substantial likelihood that it will instead offer something incoherent or misleading.

Modern macro devotees suffered far worse substantive embarrassment than Athreya's personal embarrassment. After Athreya (briefly) published his Axiom, a flurry of the world's top economists issued devastating critiques of modern macro's foundational myths in their dynamic stochastic general equilibrium (DSGE) models. The takedowns enraged and humiliated modern macro devotees, and because they are incapable of staying embarrassed, they doubled-down on Athreya's Axiom by announcing the Dilettante Doctrine .

People who don't like dynamic stochastic general equilibrium (DSGE) models are dilettantes. By this we mean they aren't serious about policy analysis.

Lawrence J. Christiano, Martin S. Eichenbaum, and Mathias Trabandt, authored "On DSGE Models on November 9, 2017. Christiano and Eichenbaum are freshwater modern macro devotees trained largely at the University of Minnesota, and now holding prominent positions at Northwestern. Trabandt is a German modern macro devotee.

A dilettante is a person who cultivates an area of interest, such as the arts, without real commitment or knowledge. The Dilettante Doctrine takes modern macro's arrogance to a new pinnacle. Only their model is legitimate, and it is illegitimate to criticize their DSGE models, even though they repeatedly fail. Instead, we must all "like" their models. We cannot make any statements about macroeconomics unless we "like [DSGE] models." The Dilettante Doctrine is a sure-fire means of winning academic disputes. You demand that your critics endorse your views, or you dismiss them as dilettantes unworthy of respect.

Readers may recall that the scientific method works in the opposite direction of the Dilettante Doctrine. Modern macro proposes a theory (DSGE) and tests its predictive ability. The DSGE models fail recurrently, on the most important macro events, and the failures are massive. The scientific method requires the theorist of the failed model to declare it falsified. Economists who "like" repeatedly falsified DSGE models are, as Paul Romer famously declared, engaged in "pseudoscience."

Athreya then inadvertently compounded modern macro's failures by putting in writing a bit too many of modern macro's darker secrets in his 2013 book about macroeconomics. Athreya confirmed many of the most fundamental criticisms of modern macro devotees, revealed additional failures that were even more devastating, and illustrated perfectly the blindness of modern macro's devotees to their dogmas and logic. Athreya did recognize clearly one dogma that made modern macro devotees unable to spot even the world's largest bubble – but treated that failure as if it were a virtue. Modern macro devotees train macroeconomists to be unable to identify warn against, or take action to end even the most destructive bubbles. This is like training surgeons to believe that shock cannot occur and they should ignore shock in treating patients.

I will return to these errors in subsequent columns, but in this initial column, I introduce Athreya's most embarrassing and devastating admission. Athreya goes on for over 100 pages on how wondrous his fellow modern macro devotees are. They are brilliant specialists who are the world's top practitioners of ultra-rigorous logic and ultra-sophisticated mathematics skills that make it impossible for them to be anything other than transparent and scrupulously honest. In particular, Athreya tells the reader that the paramount problem in macro and microeconomics is recognizing, understanding, and countering deceit, the defining element at law of fraud. (Actually, he does that only in an exceptionally opaque manner.) On p.103, however, Athreya admits that modern macro devotees know that their vaunted DSGE models rest on a fatal premise that is so preposterous and embarrassing that they dare not state it. "A silent assumption of the ADM model" is that "the ADM God" perfectly prevents all crimes, predation, and deceit – at no cost. Note that this means that modern macro devotees (silently) designed their DSGE models to be incapable of recognizing, understanding, measuring, or countering deceit, which they admit is their paramount and fatal failure.

It is never good to be arrogant. It is always dangerous and limiting to be (proudly) ignorant of fields that are likely to have superior understanding of issues such as deceit, fraud, and predation. Athreya's book displays his pride in both of these faults.

The authors of the Dilettante Doctrine inadvertently revealed another embarrassing modern macro failure of great importance. It is the combination of repeated, devastating failure and unfailing arrogance that defines (and dooms) modern macro as pseudoscientists. In fairness to the authors, they announced their Dilettante Doctrine in the context of an article admitting catastrophic errors in modern macro. They also unintentionally admit the non-scientific nature of their enterprise. Consider this passage:

For [IMF's leader] to take DSGE model-based recommendations seriously, the economic intuition underlying those recommendations has to be made in compelling and intuitive ways.

Yes, they actually wrote that for anyone to take DSGE models "seriously" their "economic intuition" must "be made intuitive." Wow, who knew science could be so 'intuitive?' Not satisfied with announcing their new "intuitive method" as a substitute for the scientific method, the authors double-down on the concept that 'intuition' is the secret sauce of economics declaring that the super-secret is to keep that 'intuition' "simple."

To be convincing, it is critical for a DSGE modeler to understand and convey the economic intuition behind the model's implications in simple and intuitive terms.

Notice that the authors are not stating the conditions required to make the DSGE models 'correct.' They are only interested in what practices will make the models' results "convincing" to the bosses.

The bosses decide "actual policymaking." The Dilettante Doctrine authors declare policymaking to be even less scientific than relying on 'simple' 'intuition' to convey DSGE model results. It turns out that DSGE models are the 'canvas' on which modern macro devotees "see the combined effect of the different colors" of their "art."

Inevitably, actual policymaking will always be to some extent an art. But even an artist needs a canvas to see the combined effect of the different colors. A DSGE model is that canvas.

These passages are not simply embarrassing, they are revealing. DSGE is a substantive farce that repeatedly fails because modern macro devotees shaped their models from the beginning to embrace laissez faire dogmas. The 'simple' 'intuitions' underlying DSGE models are the most destructive laissez faire dogmas. Narayana Kocherlakota's sly use of the word "almost" reveals his agreement with this point.

[A]lmost coincidentally -- in these [early DSGE] models, all government interventions (including all forms of stabilization policy) are undesirable.

The authors of the Dilettante Doctrine agree with Kocherlakota's observation about the original DSGE models.

The associated policy implications are clear: there was no need for any form of government intervention. In fact, government policies aimed at stabilizing the business cycle are welfare-reducing.

Modern macro is proud that its 'freshwater' and 'saltwater' factions have achieved a grand fusion. The saltwater types agreed to use DSGE models and the freshwater types agreed that the freshwater types could add 'frictions' to the DSGE models that would allow the models to at least purport to address some of the actual macroeconomic problems. There is a misleading view that because the 'saltwater' types often call themselves "New Keynesians" they must have views sympathetic to Keynesian thought. The Dilettante Doctrine authors make the useful point that "New Keynesian" dogma is actually Milton Friedman's core laissez faire dogmas.

Prototypical pre-crisis DSGE models built upon the chassis of the RBC model to allow for nominal frictions, both in labor and goods markets. These models are often referred to as New Keynesian (NK) DSGE models. But, it would be just as appropriate to refer to them as Friedmanite DSGE models. The reason is that they embody the fundamental world view articulated in Friedman's seminal Presidential Address .

The Dilettante Doctrine authors admit that DSGE models failed at the most fundamental level – they could not even spot that the economy was becoming progressively more dangerous and harmful.

Pre-crisis DSGE models didn't predict the increasing vulnerability of the US economy to a financial crisis.

The authors go badly wrong in multiple ways when they attempt to explain the DSGE models failures and their implications for economic theory and policy.

There is still an ongoing debate about the causes of the financial crisis. Our view, shared by Bernanke (2009) and many others, is that the financial crisis was precipitated by a rollover crisis in a very large and highly levered shadow-banking sector that relied on short-term debt to fund long-term assets.19

The trigger for the rollover crisis was developments in the housing sector. U.S. housing prices had risen rapidly in the 1990's with the S&P/Case-Shiller U.S. National Home Price Index rising by a factor of roughly 2.5 between 1991 and 2006. The precise role played by expectations, the subprime market, declining lending standards in mortgage markets, and overly-loose monetary policy is not critical for our purposes. What is critical is that housing prices began to decline in mid-2006, causing a fall in the value of the assets of shadow banks that had heavily invested in mortgage-backed securities. The Fed's willingness to provide a safety net for the shadow banking system was at best implicit, creating the conditions under which a roll-over crisis was possible. In fact a rollover crisis did occur and shadow banks had to sell their asset-backed securities at fire-sale prices, precipitating the Great Recession.

In sum, the pre-crisis mainstream DSGE models failed to forecast the financial crisis because they did not integrate the shadow banking system into their analysis.

I begin with the most fundamental failure – the failure to ask the right questions. Two prominent examples are why didn't the DSGE models warn us decades ago that the economy was systematically misallocating assets and creating the largest bubble in world history and what should we do to change the perverse incentives harming the economy and economic stability? Kocherlakota, in the same article from which I quoted above, emphasized that modern macro failed to warn about the coming financial crisis and the Great Recession and failed to provide effective policies to respond to them.

The dilettante article only uses the word 'bubble' once – to describe the tech bubble. It never labels the vastly larger housing bubble a 'bubble.' The dilettante article's authors claim it is not relevant for their purposes to know how the bubble arose, why it continued to inflate for over a decade, why it burst, or why it triggered the global financial crisis and the Great Recession. Only a dilettante could make or believe that claim.

Recall that Athreya emphasizes that deceit is the key factor that screws up economies – and that DSGE models "silently" assume "the ADM God" makes deceit impossible. I have explained in scores of columns why deceit, fraud, and predation were the central causes of the housing bubble hyper-inflating, the financial crisis, and the creation of the Great Recession. The dilettante authors refusal to call the housing bubble a bubble does not change the fact that they claim that the dramatic fall in housing values after 2005 was the paramount "trigger" of the financial crisis and the Great Recession.

The dilettante authors create a fiction about what "precipitat[ed] the Great Recession.

In fact a rollover crisis did occur and shadow banks had to sell their asset-backed securities at fire-sale prices, precipitating the Great Recession.

The dilettante authors then make their twin ' mea culpa ' on behalf of modern macro.

Against this background, we turn to the first of the two criticisms of DSGE models mentioned above, namely their failure to signal the increasing vulnerability of the U.S. economy to a financial crisis. This criticism is correct. The failure reflected a broader failure of the economics community.

The failure was to allow a small shadow-banking system to metastasize into a massive, poorly-regulated wild west-like sector that was not protected by deposit insurance or lender-of-last-resort backstops.

We now turn to the second criticism of DSGE models, namely that they did not sufficiently emphasize financial frictions. One reason why modelers did not emphasize financial frictions in DSGE models is that until the recent crisis, post-war recessions in the U.S. and Western Europe did not seem closely tied to disturbances in financial markets. The Savings and Loans crisis in the US was a localized affair that did not grow into anything like the Great Recession. Similarly, the stock market meltdown in the late 1980's and the bursting of the tech-bubble in 2001 only had minor effects on aggregate economic activity.

At the same time, the financial frictions that were included in DSGE models did not seem to have very big effects.

The dilettante authors have no idea how important their concessions are. Their premise is that it was government regulation, deposit insurance, and the central bank's 'lender of last resort' function that prevented prior epidemics of accounting control fraud from causing anything worse than "minor effects on aggregate economic activity." The obvious problem is that since its inception 30 years ago modern macro ideologues have claimed the opposite is true – that governmental action is unnecessary and harmful. They constructed their DSGE models to valorize their Friedmanite dogmas.

The less obvious problem is that freshwater modern macro has claimed that the lesson of the financial crisis is the opposite. Athreya and the Richmond Fed have preached for years that the federal safety net caused the housing problem, the financial crisis, and the Great Recession. The Richmond Fed claims that the key policy response to future financial crises is allowing the shadow sector to collapse in an orgy of "rollover cris[e]s."

The broader problem is why the dilettante authors are so wedded to their failed models, which at their core assume out of existence the institutions and events they say are most critical to explaining the catastrophic failures of their models. Why, for example, start with a general equilibrium model based on absurdly utopian assumptions (stated and unstated) that invariably produces equilibrium when the things we most need to study involve the failure of markets to function? It is nonsensical to make contradictory assumptions in different parts of your model about human behavior. Modern macro models keep failing and their devotees' response is to add (over time) dozens of fudges that posit that humans typically act in a manner that contradicts to the explicit and unstated assumptions of the DSGE model about human behavior. DSGE models increasingly resemble Borg constructs. The Borg also claim that there is no alternative to assimilation into their collective.

Aaron Layman , December 20, 2017 at 10:23 am

Excellent points. Helps to explain how you get a supposedly serious site covering real estate falling for ridiculous tripe about the root cause of the housing crisis (aka Great Recession). Take a careful look at the bombshell "working paper" and the new "narrative" cited, and you can see the groupstink of the Fed written all over it
https://betterdwelling.com/forget-subprime-canadian-real-estate-buyers-investors-crashed-the-us-market/

diptherio , December 20, 2017 at 11:07 am

Great article.

Modern mainstream macro is like a police detective whose model of the world states that people are nice and the body heals itself, and that therefore we will all live happily ever after. When confronted by a murder victim lying in a pool of their own blood, and that fact's apparent incompatibility with their model of the world, they respond, "My model is correct only, you see, it failed to account for sudden massive blood loss. How that loss of blood happened is beyond the scope of my investigation, the important thing is that I've now incorporated that knowledge in my new improved model, which proves that we will all live happily ever after -- except in cases of a sudden, massive loss of blood ."

Altandmain , December 20, 2017 at 12:01 pm

There has not been a big mea-culpa from neoliberal economists after the 2008 Financial Crisis. I don't think there will be. Many are essentially the equal of religious fundamentalists.

However, we should also remember that the very wealthy have backed the neoliberal economists against the general public. Neolibe3ralism provides a pseudoscientific economic excuse for what amounts to turning society into a plutocracy, which is precisely what the rich want.

shinola , December 20, 2017 at 2:10 pm

" essentially the equal of religious fundamentalists."

Yes – nailed it!

flora , December 20, 2017 at 3:26 pm

aka: The divine right of markets. /s

Skip Intro , December 20, 2017 at 3:12 pm

The GFC worked out very well for the neoliberal agenda. What you can't predict, you don't need to prevent or protect against. If the result happens to be a massive transfer of funds from states to speculators that eases the path to austerity and asset stripping, what's to apologize for?

Matthew G. Saroff , December 20, 2017 at 12:16 pm

What is ADM, aside from the agribusiness?

Robert Denne , December 20, 2017 at 12:50 pm

ADM is the Arrow-Debreu-McKenzie (ADM) model, as revealed in the blurb for the Athreya book on Amazon.

Jean , December 20, 2017 at 12:31 pm

Lack of higher math skills precludes citizen involvement in economics.
Blame it on the math card in PCs that makes doing it by hand and thus learning and understanding how numbers work.

voislav , December 20, 2017 at 1:28 pm

Most economists lack higher math skills too, but that doesn't seem to be obstacle for them. It's spherical chickens in a vacuum, models that are supposedly related to real world but are simplified beyond recognition because most economists are ignorant of even rudimentary statistics.

djrichard , December 20, 2017 at 1:31 pm

You don't need math to follow the money.

Amfortas the Hippie , December 20, 2017 at 3:59 pm

and you don't need math to discover that the holy Models rely on downright silly assumptions about Human Beings.
"rational actors with perfect information".
lol.
Most of the economic actors I know do not even remotely resemble that.
and whomever said that modern econ is akin to fundamentalist religion is right on.
I can't read "Money" or watch CNBC without thinking about Pat Robertson or Billy Graham.
It's just a different god they worship.
With this in mind, I think it's hilarious that the current hyperventilation about "cryptocurrency" could possibly be the bubble that, in popping, brings the whole mess down.
"Masters of the Universe", indeed.

Know Thy Farmer.

Synoia , December 20, 2017 at 12:48 pm

Personally I believe economic as practiced is an example of telling the boss (the King) what they want to hear.

Economist appear descended form a long line of Court Magicians, telling the futures from the entrails of an animal, consulting the spirits for guidance, or using a Chrystal ball.

Of more pointedly Bullshit, baffles brains.

Prof Black make the point that he DSGE models assume away fraud. They also assume people are "rational actors, driven only by logic," that is: we are all Vulcans from Star Trek.

A simple view of women's fashions (high heels) with regard to comfort or safety would demolish any theory of people as "rational actors." Or men's behavior over their "sports teams."

To assume away human behavior and emotion, and thus chaos or catastrophe theory, would put economists at odds with their masters, and cut their income, by the nearly always fatal, or career limiting "telling truth to power."

It's interesting to speculate what would be the scope or size of common ground in a dialog between anthropologists and economists. Null set perhaps?

PB , December 20, 2017 at 1:28 pm

Hi all,

Just a quick note for those who were initially confused by Bill Black's use of "modern macroeconomic theory" and thought "modern monetary theory". (I know I did, and was initially really confused by his take, and had to re-read the first three paragraphs a few times to re-set my mental pointers). As far as I know (and I did a year of Ph.D economics at Stanford, so I pass Arthreya's first test) I haven't heard of "modern" applied to DSGE macro but that probably reflects my choice of reading material more than anything else. In short, "modern macro" is bad, "modern monetary" is good.

BTW, one of the best takes of macroeconomics I've encountered is Steve Keen's work, which I gratefully acknowledge I first read here on NC. Keen's critique of DSGE models is utterly spot-on and mathematically sophisticated. Part of the problem with economics is that it has been afflicted with 'math envy' since its earliest days, and the ADM results were proved with Banach Space methods, so they just *had* to be right. Google the phrase "spherical cow" for more on this mindset, not to mention one of the few really funny math jokes I know.

Cheers,

P

[Dec 20, 2017] Diletantism: A dilettante is a person who cultivates an area of interest, such as the arts, without real commitment or knowledge

Adj. 1. dilettantish - showing frivolous or superficial interest; amateurish; "his dilettantish efforts at painting" -- superficial - concerned with or comprehending only what is apparent or obvious; not deep or penetrating emotionally or intellectually; "superficial similarities"; "a superficial mind"; "his thinking was superficial and fuzzy"; "superficial knowledge"; "the superficial report didn't give the true picture"; "only superficial differences"
Notable quotes:
"... A dilettante is a person who cultivates an area of interest, such as the arts, without real commitment or knowledge. The Dilettante Doctrine takes modern macro's arrogance to a new pinnacle. Only their model is legitimate, and it is illegitimate to criticize their DSGE models, even though they repeatedly fail. Instead, we must all "like" their models. We cannot make any statements about macroeconomics unless we "like [DSGE] models." The Dilettante Doctrine is a sure-fire means of winning academic disputes. You demand that your critics endorse your views, or you dismiss them as dilettantes unworthy of respect. ..."
"... Readers may recall that the scientific method works in the opposite direction of the Dilettante Doctrine. Modern macro proposes a theory (DSGE) and tests its predictive ability. The DSGE models fail recurrently, on the most important macro events, and the failures are massive. The scientific method requires the theorist of the failed model to declare it falsified. Economists who "like" repeatedly falsified DSGE models are, as Paul Romer famously declared, engaged in "pseudoscience." ..."
"... There has not been a big mea-culpa from neoliberal economists after the 2008 Financial Crisis. I don't think there will be. Many are essentially the equal of religious fundamentalists. ..."
"... Personally I believe economic as practiced is an example of telling the boss (the King) what they want to hear. Economist appear descended form a long line of Court Magicians, telling the futures from the entrails of an animal, consulting the spirits for guidance, or using a Chrystal ball. Of more pointedly Bullshit, baffles brains. ..."
"... A simple view of women's fashions (high heels) with regard to comfort or safety would demolish any theory of people as "rational actors." Or men's behavior over their "sports teams." ..."
Dec 20, 2017 | www.nakedcapitalism.com

A dilettante is a person who cultivates an area of interest, such as the arts, without real commitment or knowledge. The Dilettante Doctrine takes modern macro's arrogance to a new pinnacle. Only their model is legitimate, and it is illegitimate to criticize their DSGE models, even though they repeatedly fail. Instead, we must all "like" their models. We cannot make any statements about macroeconomics unless we "like [DSGE] models." The Dilettante Doctrine is a sure-fire means of winning academic disputes. You demand that your critics endorse your views, or you dismiss them as dilettantes unworthy of respect.

Readers may recall that the scientific method works in the opposite direction of the Dilettante Doctrine. Modern macro proposes a theory (DSGE) and tests its predictive ability. The DSGE models fail recurrently, on the most important macro events, and the failures are massive. The scientific method requires the theorist of the failed model to declare it falsified. Economists who "like" repeatedly falsified DSGE models are, as Paul Romer famously declared, engaged in "pseudoscience."

Athreya then inadvertently compounded modern macro's failures by putting in writing a bit too many of modern macro's darker secrets in his 2013 book about macroeconomics. Athreya confirmed many of the most fundamental criticisms of modern macro devotees, revealed additional failures that were even more devastating, and illustrated perfectly the blindness of modern macro's devotees to their dogmas and logic. Athreya did recognize clearly one dogma that made modern macro devotees unable to spot even the world's largest bubble – but treated that failure as if it were a virtue. Modern macro devotees train macroeconomists to be unable to identify warn against, or take action to end even the most destructive bubbles. This is like training surgeons to believe that shock cannot occur and they should ignore shock in treating patients.

Altandmain , December 20, 2017 at 12:01 pm

There has not been a big mea-culpa from neoliberal economists after the 2008 Financial Crisis. I don't think there will be. Many are essentially the equal of religious fundamentalists.

However, we should also remember that the very wealthy have backed the neoliberal economists against the general public. Neolibe3ralism provides a pseudoscientific economic excuse for what amounts to turning society into a plutocracy, which is precisely what the rich want.

shinola , December 20, 2017 at 2:10 pm

" essentially the equal of religious fundamentalists."

Yes – nailed it!

Synoia , December 20, 2017 at 12:48 pm

Personally I believe economic as practiced is an example of telling the boss (the King) what they want to hear. Economist appear descended form a long line of Court Magicians, telling the futures from the entrails of an animal, consulting the spirits for guidance, or using a Chrystal ball. Of more pointedly Bullshit, baffles brains.

Prof Black make the point that he DSGE models assume away fraud. They also assume people are "rational actors, driven only by logic," that is: we are all Vulcans from Star Trek.

A simple view of women's fashions (high heels) with regard to comfort or safety would demolish any theory of people as "rational actors." Or men's behavior over their "sports teams."

To assume away human behavior and emotion, and thus chaos or catastrophe theory, would put economists at odds with their masters, and cut their income, by the nearly always fatal, or career limiting "telling truth to power."

It's interesting to speculate what would be the scope or size of common ground in a dialog between anthropologists and economists. Null set perhaps?

[Dec 19, 2017] Do not Underestimate the Power of Microfoundations

Highly recommended!
Nice illustration of ideologically based ostrakism as practiced in Academia: "Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People - powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize other insiders."
Notable quotes:
"... A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment to indulge themselves in their hard money and liquidity fetishes, consequences be damned. ..."
"... The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers are willing to risk and whose interests they are willing to risk policy decisions for ..."
"... Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same role which Marxism was installed in the USSR. With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities. ..."
"... To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality be damned. Money does not smell. ..."
"... Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys. ..."
"... "Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People - powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize other insiders." ..."
Apr 04, 2015 | Economist's View

Darryl FKA Ron -> pgl...

At the risk of oversimplifying might it not be as simple as stronger leanings towards IS-LM and kind are indicative of a bias towards full employment and stronger leanings towards DSGE, microfoundations, and kind are indicative of a bias towards low inflation?

IN general I consider over-simplification a fault, if and only if, it is a rigidly adhered to final position. This is to say that over-simplification is always a good starting point and never a good ending point. If in the end your problem was simple to begin with, then the simplified answer would not be OVER-simplified anyway. It is just as bad to over-complicate a simple problem as it is to over-simplify a complex problem. It is easier to build complexity on top of a simple foundation than it is to extract simplicity from a complex foundation.

A lot of the Chicago School initiative into microfoundations and DSGE may have been motivated by a desire to bind Keynes in a NAIRU straight-jacket. Even though economic policy making is largely done just one step at a time then that is still one step too much if it might violate rentier interests.

Darryl FKA Ron -> Barry...

There are two possible (but unlikely) schools of (generously attributed to as) thought for which internal consistency might take precedence over external consistency. One such school wants to consider what would be best in a perfect world full of perfect people and then just assume that is best for the real world just to let the chips fall where they may according to the faults and imperfections of the real world. The second such school is the one whose eyes just glaze over mesmerized by how over their heads they are and remain affraid to ask any question lest they appear stupid.

A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment to indulge themselves in their hard money and liquidity fetishes, consequences be damned.

Richard H. Serlin

Consistency sounds so good, Oh, of course we want consistency, who wouldn't?! But consistent in what way? What exactly do you mean? Consistent with reality, or consistent with people all being superhumans? Which concept is usually more useful, or more useful for the task at hand?

Essentially, they want models that are consistent with only certain things, and often because this makes their preferred ideology look far better. They want models, typically, that are consistent with everyone in the world having perfect expertise in every subject there is, from finance to medicine to engineering, perfect public information, and perfect self-discipline, and usually on top, frictionless and perfectly complete markets, often perfectly competitive too.

But a big thing to note is that perfectly consistent people means a level of perfection in expertise, public information, self-discipline, and "rationality", that's extremely at odds with how people actually are. And as a result, this can make the model extremely misleading if it's interpreted very literally (as so often it is, especially by freshwater economists), or taken as The Truth, as Paul Krugman puts it.

You get things like the equity premium "puzzle", which involves why people don't invest more in stocks when the risk-adjusted return appears to usually be so abnormally good, and this "puzzle" can only be answered with "consistency", that people are all perfectly expert in finance, with perfect information, so they must have some mysterious hidden good reason. It can't be at all that it's because 65% of people answered incorrectly when asked how many reindeer would remain if Santa had to lay off 25% of his eight reindeer ( http://richardhserlin.blogspot.com/2013/12/surveys-showing-massive-ignorance-and.html ).

Yes, these perfect optimizer consistency models can give useful insights, and help to see what is best, what we can do better, and they can, in some cases, be good as approximations. But to say they should be used only, and interpreted literally, is, well, inconsistent with optimal, rational behavior -- of the economist using them.

Richard H. Serlin -> Richard H. Serlin...
Of course, unless the economist using them is doing so to mislead people into supporting his libertarian/plutocratic ideology.

dilbert dogbert

As an old broken down mech engineer, I wonder why all the pissing and moaning about micro foundations vs aggregation. In strength of materials equations that aggregate properties work quite well within the boundaries of the questions to be answered. We all know that at the level of crystals, materials have much complexity. Even within crystals there is deeper complexities down to the molecular levels. However, the addition of quantum mechanics adds no usable information about what materials to build a bridge with.

But, when working at the scale of the most advanced computer chips quantum mechanics is required. WTF! I guess in economics there is no quantum mechanics theories or even reliable aggregation theories.

Poor economists, doomed to argue, forever, over how many micro foundations can dance on the head of a pin.

RGC -> dilbert dogbert...

Endless discussions about how quantum effects aggregate to produce a material suitable for bridge building crowd out discussions about where and when to build bridges. And if plutocrats fund the endless discussions, we get the prominent economists we have today.

Darryl FKA Ron -> dilbert dogbert...

"...I guess in economics there is no quantum mechanics theories or even reliable aggregation theories..."

[I guess it depends upon what your acceptable confidence interval on reliability is. Most important difference that controls all the domain differences between physical science and economics is that underlying physical sciences there is a deterministic methodology for which probable error is merely a function of the inaccuracy in input metrics WHEREAS economics models are incomplete probabilistic estimating models with no ability to provide a complete system model in a full range of circumstances.

YOu can design and build a bridge to your load and span requirements with alternative models for various designs with confidence and highly effective accuracy repeatedly. No ecomomic theory, model, or combination of models and theories was ever intended to be used as the blueprint for building an economy from the foundation up.

With all the formal trappings of economics the only effective usage is to decide what should be done in a given set of predetermined circumstance to reach some modest desired effect. Even that modest goal is exposed to all kinds of risks inherent in assumptions, incomplete information, externalities, and so on that can produce errors of uncertain potential bounds.

Nonetheless, well done economics can greatly reduce the risks encountered in the random walk of economics policy making. So much so is this true, that the bigger questions in macro-economics policy making is what one is willing to risk and for whom.

The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers are willing to risk and whose interests they are willing to risk policy decisions for.]

Darryl FKA Ron -> Peter K....

unless you have a model which maps the real world fairly closely like quantum mechanics.

[You set a bar too high. Macro models at best will tell you what to do to move the economy in the direction that you seek to go. They do not even ocme close to the notion of a theory of everything that you have in physics, even the theory of every little thing that is provided by quantum mechanics. Physics is an empty metaphor for economics. Step one is to forgo physics envy in pursuit of understanding suitable applications and domain constraints for economics models.

THe point is to reach a decision and to understand cause and effect directions. All precision is in the past and present. The future is both imprecise and all that there is that is available to change.

For the most part an ounce of common sense and some simple narrative models are all that are essential for making those policy decisions in and of themselves. HOWEVER, nation states are not ruled by economist philosopher kings and in the process of concensus decision making by (little r)republican governments then human language is a very imprecise vehicle for communicating logic and reason with respect to the management of complex systems. OTOH, mathematics has given us a universal language for communicating logic and reason that is understood the same by everyone that really understands that language at all. Hence mathematical models were born for the economists to write down their own thinking in clear precise terms and check their own work first and then share it with others so equipped to understand the language of mathematics. Krugman has said as much many times and so has any and every economist worth their salt.]

likbez -> Syaloch...

I agree with Pgl and PeterK. Certain commenters like Darryl seem convinced that the Chicago School (if not all of econ) is driven by sinister, class-based motives to come up justifications for favoring the power elite over the masses. But based on what I've read, it seems pretty obvious that the microfoundation guys just got caught up in their fancy math and their desire to produce more elegant, internally consistent models and lost sight of the fact that their models didn't track reality.

That's completely wrong line of thinking, IMHO.

Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same role which Marxism was installed in the USSR.
With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities.

To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality be damned. Money does not smell.

Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys.

But the key problem with neoliberalism is that the cure is worse then disease. And here mathematical masturbations are very handy as a smoke screen to hide this simple fact.

likbez -> likbez...

Here is how Rubin's neoliberal boy Larry explained the situation to Elizabeth Warren:

"Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People - powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize other insiders."

Elizabeth Warren, A Fighting Chance

Syaloch -> likbez...

Yeah, case in point.

[Dec 14, 2017] In defence of the labour theory of value

Actually Marx's "labor theory of value" should be properly called the "theory of surplus value".
Notable quotes:
"... For Marx, value was socially-necessary labour time: David Harvey is good on this. From this perspective, exploitation and alienation are linked. Workers are exploited because they must work longer than necessary to get their consumption bundle. And they are alienated because this work is unsatisfying and a source of unfreedom. Now, I'll concede that many people hate the labour theory of value. One reason for this is that many discussions of it quickly become obscurantist – as if "value" is some mystical entity embodied in commodities. ..."
"... This, though, certainly was not Marx's intention. Quite the opposite. He intended his theory to be a demystification. He wanted to show how what looked like relations between things – the exchange of money for goods or labour-time – were in fact relations between people. And unequal ones at that. ..."
"... I suspect that some of the animosity to Marx's use of LTV arises because of a resistance to the inference that Marx drew from it – that workers are exploited. This issue, however, is independent of the validity of not of the LTV. For example, Roemer thinks workers are exploited without believing in the LTV, and Smith believed the LTV without arguing that workers were exploited. ..."
"... * He seems to be recovering now. The vet is also expected to make a full recovery eventually. ..."
"... Further understanding, which evolved after Marx, is that the LTV is just special case of the principle that what produces a surplus of usefulness is not labour per se, but the energy used in the transformation of a larger quantity of something into a smaller quantity of something else, and muscle power is just one way, even if it was the main one for a very long time, to obtain energy to transform a large quantity of less useful commodities into a smaller quantity of more useful commodities. ..."
"... And this follows into the impression that I have derived from various authors that our high standards of living depend not on the high "productivity" of labour, but on the high "productivity" of fossil fuels, which are the product of the fertility of land ..."
"... the complex process of differentiation in the economy (aka the division of labor) obscures the relationship between the creation of the surplus (work time above that necessary to reproduce consumption bundle) and its utilization by capitalists via investment. Investment is not possible without exploitation of workers, but that relationship is occluded by the mechanics of employment, markets, and property. ..."
"... My impression is that your bearded friend Karl does not use "alienation" in that sense at all, in an economic sense, but in a humanist sense: that by being separated from the means of production proletarians are alienated from the meaning of their work, from work as a human activity, as distinct from an economic activity ..."
"... Practically every "Dilbert" strip is about "alienation". This is my favourite ..."
"... Placing a high value on the frivolous and "useless" has always been the hallmark of those most able to decide the value of anything, because they have no use for economic use (so to speak), but rather social signaling. Broad social respect is an extremely expensive thing to buy with money alone. ..."
Dec 11, 2017 | stumblingandmumbling.typepad.com

Lucius has been poorly recently, which has required some trips to the vet and therefore a bill of a size that only David Davis could negotiate*. This has made me wonder: is there more to be said for the labour theory of value than we like to think?

For a long time, I've not really cared about this theory one way or the other. This is partly because I've not bothered much with questions of value; partly because, as John Roemer has shown, we don't need (pdf) a labour theory of value to suggest workers are exploited; and partly because the main Marxian charges against capitalism – for example that it entails relationships of domination – hold true (or not!) independently of the theory.

As I approach retirement, however, I've begun to change my mind. I think of major expenses in terms of labour-time because they mean I have to work longer. A trip to the vet is an extra fortnight of work; a good guitar an extra month, a car an extra year, and so on.

When I consider my spending, I ask: what must I give up in order to get that? And the answer is my time and freedom. My labour-time is the measure of value.

This is a reasonable basis for the claim that workers are exploited. To buy a bundle of goods and services, we must work a number of hours a week. But taking all workers together, the hours we work are greater than the hours needed to produce those bundles because we must also work to provide a profit for the capitalist. As Marx put it:

We have seen that the labourer, during one portion of the labour-process, produces only the value of his labour-power, that is, the value of his means of subsistence During the second period of the labour-process, that in which his labour is no longer necessary labour, the workman, it is true, labours, expends labour-power; but his labour, being no longer necessary labour, he creates no value for himself. He creates surplus-value which, for the capitalist, has all the charms of a creation out of nothing. This portion of the working-day, I name surplus labour-time.

For Marx, value was socially-necessary labour time: David Harvey is good on this. From this perspective, exploitation and alienation are linked. Workers are exploited because they must work longer than necessary to get their consumption bundle. And they are alienated because this work is unsatisfying and a source of unfreedom. Now, I'll concede that many people hate the labour theory of value. One reason for this is that many discussions of it quickly become obscurantist – as if "value" is some mystical entity embodied in commodities.

This, though, certainly was not Marx's intention. Quite the opposite. He intended his theory to be a demystification. He wanted to show how what looked like relations between things – the exchange of money for goods or labour-time – were in fact relations between people. And unequal ones at that.

What's more, the charge of obscurantism against Marx is an especially weak one when it comes from orthodox economics. Much of this invokes unobservable concepts such as the natural rate of unemployment, marginal productivity, utility, the marginal product of capital and natural rate of interest – ideas which, in the last two cases, might not even be theoretically coherent.

In fact, the LTV is reasonably successful by the standards of conventional economics: we have empirical evidence to suggest that it does (pdf) a decent (pdf) job of explaining (pdf) relative prices – not that this was how Marx intended it to be used.

You can of course, think of counter-examples to the theory. But so what? in the social sciences, no substantial theory is 100% true.

I suspect that some of the animosity to Marx's use of LTV arises because of a resistance to the inference that Marx drew from it – that workers are exploited. This issue, however, is independent of the validity of not of the LTV. For example, Roemer thinks workers are exploited without believing in the LTV, and Smith believed the LTV without arguing that workers were exploited.

By the (low) standards of economic theories, perhaps the LTV isn't so bad.

* He seems to be recovering now. The vet is also expected to make a full recovery eventually.

December 11, 2017 Permalink

Comments

Luis Enrique , December 11, 2017 at 02:09 PM

But the LTV says more than the output of the economy is divided between the workers and the (suppliers and) owners of capital goods, doesn't it? I mean, mainstream econ says that too. And unless ownership of capital inputs to production is distributed equally across society, then some people consume things that other's labour has produced, which means workers must produce more than they consume. But again, that's basic mainstream stuff, not LVT. You end by saying you can believe in exploitation but not LVT, and vice versa, but the main body of this blog seems to be connecting the two. I am confused.

Of course if you have the ability to vary your labour supply, and labour is how you earn your money, then you ask yourself how much you need to work to purchase whatever. But again that's mainstream not LVT.

David Friedman , December 11, 2017 at 06:14 PM

Your version of the labor theory of value is one of Adam Smith's versions. I don't think it is Marx's, but I know Smith better than Marx.

And definitely not Ricardo's.

ConfusedNeoLiberal , December 11, 2017 at 08:51 PM

What about value, in terms of risk among others, that the employers put in starting a new business?

Blissex , December 12, 2017 at 12:23 AM

"Smith believed the LTV without arguing that workers were exploited."

The Marxian approach was interested in, as other commenters have said, in the specific capitalist case, where "capitalism" for him means strictly "labour for hire" by workers alienated from the means of production by their ownership by capitalists.

But the labour theory of value, as understood by what Marx called "classicals", applies also to all labour, and he used it in that sense.

My understanding of the classicals and the LTV is reduced to a minimum this: