37 thoughts on “Weekend reflections

  1. Ah. Now I see what is going on. Mike Beggs has deleted what I regard as the key paragraph from the version of his paper published in the JoAPE. The earlier version published in Jacobin has:

    >[O]n the point at issue, [whether boosting government spending would boost employment, DeLong] was right – it is a question of interest rates, not of the number of bonds that can be sold. When Harvey went on to clarify his argument, it was only with some casual empiricism of his own. He noted that he was hardly the only one to be making the argument that East Asian central banks could stop collecting US Treasuries, so that “the track of long-term treasury interest rates may go the way of the housing market data in just a couple of years (if not months).” This was an argument you could read in mainstream business pages; there was nothing particularly Marxist about it. Now that we are more than a couple of years down the track, DeLong still looks right: the yields on long-term Treasury bonds are, as I write in July 2011, about the same as they were in February 2009, when the exchange took place. The limits to stimulus have been political, not financial.

    With that paragraph missing, Beggs’s article for why people should abandon not just Frankenstein Marx but Harvey’s Zombie Marx has much less force–as seen by Warner’s taking Beggs to be not endorsing my critique of Harvey but “criticizing” it.

    If you are turned around by ? radians, it is hard to march forward…

    Brad DeLong

  2. @Brad DeLong

    This does not explain anything.

    The very idea that there are no financial limits to stimulus (just political), whether Beggs or DeLong, needs basic substantiation. This may make a great epitaph on the tombstone of capitalist economics.

    Political limitations may be necessary so that financial limitations are never reached – a hopeless expectation I might add.

    So the invitation, as above earlier, remains.

  3. @Chris Warren Marx bet the whole box and dice on the downtrodden proletariat rising up in revolution. How is the immiserisation of the proletariat going these days?

    Joan Robinson’s in her Essay on Marxian Economics first published in 1942 noted that when the communist manifesto was published in 1848, its battle cry ‘Rise up ye workers for you have nothing to lose but your chains’ would have had some currency.

    Alas 90 years later, Robinson suggested that this battle cry would have to be ‘Rise up ye workers for you have nothing to lose but your suburban home and your motor car.’

    these days, the call to the barricades would be ‘Rise up ye workers, rise up, for you have nothing to lose but your suburban home, Ipad and air points.’

  4. @Jim Rose

    Yes, plenty of people in USA and throughout Europe are loosing:

    jobs,
    savings,
    houses,
    cars, and
    future.

    Marius Kloppers may not loose his though.

    Score 1 for Joan Robinson.

  5. @Chris Warren Why is it that the further to the Left people go, the more cheerful they get about the misery of others in recessions? They are miserable when times are good.

    Most of all, they supported the discretionary fiscal, monetary and other polices that caused the recession and then support crisis management polices that deepen the recession. They want to tax and regulate their way out of recessions!

    Crisis management policies distort the incentives to hire and invest and reduce competition and efficiency. The outcome is low employment and low income for years.

    Bad government policies are responsible for depressions. While different sorts of shocks lead to ordinary downturns, it is overreactions by governments to stem the crisis that prolong and deepen downturns, turning them into depressions.

    One in three EU unemployed are Spanish because of employment protection laws.

    Cahuc et al. 2012 estimated that Spanish unemployment would be 45% lower if Spain adopted the less strict French laws! Differences in their employment protection laws accounted for nearly half of the dramatic rise in Spanish unemployment since 2007.

  6. Why is it the further Right people go the more joy they gain from destroying the livelihoods of fellow citizens and other nations? They cheer when neighborhoods are laid to waste.

    Capitalist fiscal, monetary, and political policies cause recession and anti-social, rightwing subversion of public policies based on their previous expropriation (eg Berlusconi, Rinehardt), then deepens and spreads the recession, into a global financial crisis. These rightwingers then try to cut taxes and avoid laws and social morality.

    Capitalist policies corrupt the rights for workers to earn a livelihood, misdirect investment and eliminate competition and efficiency. The outcome is ratcheting, inflation, debt, unemployment, and trade imbalances.

    Capitalist government policies have always caused cycles independently of shocks and capitalist reactions mean that following cycles are worse than the previous and operate at higher levels and damage greater numbers and worsen inequality.

    There would be no unemployed in Spain if capitalists were allowed to conscript the jobless into factories and pay them by bags of rice and flour.

    Spanish involuntary unemployment would be abolished if the Spanish economy was based on not-for-capitalist profit enterprises. And we all know this by now.

    Except for rightwing slow learners.

  7. @nottrampis

    If there was no money or debt there would be no GFC.

    It is obvious that contradictions here broke out in the form of a GFC but only because they built on previous problems with unemployment, inflation, stagflation, and rising debt.

    The intermediate stages include recessions aplenty, anti-social subversion by corporates, monopolisation and etc.

    Noone is saying the relationship monetary and fiscal policy is a direct cause. But this is how you have corrupted the position.

    And of course monetary and fiscal levers were jerked like crazy to attempt to mitigate the catastrophe as a reaction. But this does not exclude these as causes originally.

    If they were not associated as a cause – then playing with them now would have no impact and would be a waste of time.

  8. Jim Rose :
    @Chris Warren Why is it that the further to the Left people go, the more cheerful they get about the misery of others in recessions? They are miserable when times are good.
    Most of all, they supported the discretionary fiscal, monetary and other polices that caused the recession and then support crisis management polices that deepen the recession. They want to tax and regulate their way out of recessions!
    Crisis management policies distort the incentives to hire and invest and reduce competition and efficiency. The outcome is low employment and low income for years.
    Bad government policies are responsible for depressions. While different sorts of shocks lead to ordinary downturns, it is overreactions by governments to stem the crisis that prolong and deepen downturns, turning them into depressions.
    One in three EU unemployed are Spanish because of employment protection laws.
    Cahuc et al. 2012 estimated that Spanish unemployment would be 45% lower if Spain adopted the less strict French laws! Differences in their employment protection laws accounted for nearly half of the dramatic rise in Spanish unemployment since 2007.

    Have you been living in a cave for the past decade? You apparently missed the hateful, spite-filled streak to which a large proportion of the right-wingers subscribe. I have witnessed far too many of them take joy in the suffering of their neighbours and countrymen. In the US, the Republican opposition only care about opposing Obama and have directly caused a US debt downgrade, a prolonging of their GFC and a slew of terrifying regressive economic policy, you know, how those too poor to pay income tax are “lucky duckies”, and 47% are the “takers”, and prolonged unemployment is a “nice vacation” and “clearing out the dead wood”. A good chunk also want the global economy to collapse so they can live out their nutbar violent survivalist fantasies; the welfare of everyone else in the rest of the world be damned. There is simply NO PARALLEL in this kind of thinking on the “left”.

    I used to think that John was too harsh on you for limiting you to one comment per thread per day, but given your mind-boggling propensity to spew such partisan nonsense, I have changed my original position and now regretfully concede that the need for information quality trumps your privilege to post unhindered.

  9. @Will the great recession is the product of Obama’s policies: combination of negative productivity shocks.

    The majority of macroeconomists are New Keynesians. Not surprisingly, they have trouble understanding economic crises because they attribute it to demand issues. New Keynesians have a great deal of trouble understanding the prolongation of recessions because all that have to hang their hat on is sticky wages and prices.

    In Great Depressions of the Twentieth Century, Kehoe and Prescott (2007) in a team of 24 economists concluded that bad government policies are responsible for causing depressions. While different sorts of shocks can lead to ordinary downturns, overreaction by governments can prolong and deepen the downturn, turning it into a depression.

    Good long-run pro-growth polices quicken recoveries from recessions. crisis management policies prolong the depressing effects of these crises by impeding the normal forces of supply, demand, and competition that create jobs, investment and innovation.

    Two polar models of bank crises and what government lender-of-last-resort and deposit insurance do to arrest them or promote them were used to understand the GFC.

    They are polar models because:
    • in the Diamond-Dybvig and Bryant model, deposit insurance and other bailouts are purely a good thing stopping panic induced bank runs; and
    • In the Kareken and Wallace model, deposit insurance and lender-of-last-resorts are purely bad because moral hazard encourages risk taking unless there is regulation or there is proper surveillance and pricing of the insurance.

    Tom Sargent considers the Bryant-Diamond-Dybvig model had been very influential generally, and in 2008 among policymakers. Governments saw Bryant-Diamond-Dybvig bank runs everywhere.

    In the Diamond-Dybvig and Bryant model, if you put in government-supplied deposit insurance, people do not initiate bank runs because they trust their deposits to be safe.

    The logic of the Bryant-Diamond-Dybvig panic model of bank runs persuaded many governments that if they could arrest the actual or potential runs by convincing creditors that their loans were insured, that could be done at little or no eventual cost to the taxpayers.

    As for central banking, as Greg Mankiw noted:
    • Autobiographies and other hands-on sources show that recent developments in business cycle theory by new classical and new Keynesians have had close to zero impact on practical monetary policymaking.
    • Central banker’s analysis of economic fluctuations and monetary policy are intelligent and nuanced, but show no traces of modern macroeconomic theory, and would seem almost completely familiar to someone who was schooled in the neoclassical-Keynesian synthesis that prevailed in around 1970 and has ignored the scholarly literature ever since.

    When a list was drawn up of the ten economic papers that incoming Reagan administration should read, Kareken and Wallace’s 1978 paper on banking crises was at the top. The idea that deposit insurance leads to more crisis even troubled FDR before he signed the 1934 U.S. bill.

  10. I always relished checking out this web-site once
    per week or more as you do generally have a number of excellent content articles so well done through one of
    the supporters! ? !

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s