Friday, 25 August 2017

Highest quality, telling the truth? A convenient truth is what you mean. Also, don't compare the hierarchy of 6 million years ago with the hierarchy from Antiquity up to the present - as those people sitting at the top are rent seekers, not "heroes".
Also, Peterson needs to read The Mothers: The Matriarchal Theory of Social Originsby, Robert Briffault, 1931.

Monday, 7 August 2017

I have a beef with the claims this paper makes regarding economic rent

"[...]The model, which is calibrated to the euro area as a whole and also to individual euro member countries for 1980–2003, performs well vis-à-vis the data.[...]For the euro area as a whole, our model suggests that some 18% of collected tax revenues are extracted as rents, which corresponds to public spending and tax privileges equal to 7% of output produced. If we assume complete rent dissipation, these values are also social costs of rent seeking.3 At the individual country level, Ireland and the Netherlands exhibit essentially zero rent extraction and rent seeking, followed by Finland. Greece, Portugal and Italy exhibit the highest rent extraction and rent seeking, followed by post-reunification Germany."

No way rent seeking in Ireland and Netherlands was/is zero or near zero. Less rent seeking compared to the other euro countries, yes. But not zero or near zero.

Rent seeking / Economic rent = rent from natural monopolies, finance & insurance, patents, and the grey economy of political favors.

Finland's basic income trial

~In February, Finland’s biggest union said the experiment was unaffordable and would encourage some people to work less while driving up wages in undesirable professions.~


~The union, which represents almost 1 million members, or a fifth of the Finnish population, said the model being tested is, “impossibly expensive, since it would increase the government deficit by about 5 per cent” of gross domestic product.~

5% is NOTHING 

Let's see it from their POV. UBI helps those sectors in which union presence is low or absent, thus increasing wages in direct employee/employer negotiations. And since a percentage of the population might drop from the regular workforce, that could potentially translate into lower union memberships.

Read the story here

Monday, 31 July 2017

My thoughts on this 'Decline of Putin's Russia'

Russian oligarchs were created by the Government. It makes no sense to continue under this system. What the Government needs to do is tax natural monopolies at or near 100%, or to simply nationalize them - while reducing taxation on labor, consumption, and man-made goods at or near 0. As for the currency, the Government needs to accept only rubles in payment of its exports. This would expand demand for the Russian ruble. The Government's monetary policy should be set at permanent zero - no more subsidizing rentiers. And furthermore, the Russian economy needs to develop its own manufacturing capabilities. There is no future in remaining a resource based economy, relying on importing net aggregate demand from abroad to fuel your economy (via the export sector).

Friday, 14 July 2017

Friedrich List, railways, and MMT

The creator of the German railways, Friedrich List, spent 12 years in the USA, where he was able to experience the American System of Political Economy. List had to face the same aversion we see today in the mainstream and collective conscious - namely, 'how are you going to fund this?' - 'where will the money come from?' In response List wrote a treatise, ``On a Railway System in Saxony as the Foundation of a General German Railway System,'' which appeared in the year 1833:

"People say that we do not have, here in our region, any such an amount of capital, not so much ready money for undertaking such a gigantic national work.... As for the financial point, we need not fear any further objection from sensible people, once it is pointed out that the capital so used bears the highest interest rate of return in the country. With that as a premise, no expense can be found that is too great. Furthermore, Saxony, if it is serious about the undertaking, will have at its disposal more than a hundred times more capital and cash than required. That North America possesses more capital and more cash is not even true; most of the settling of accounts there is done with paper money, which we can create just as well here in Saxony. Here an amount of 4 to 6 million bank-issued bills of exchange make up one-third of the currency in circulation, while in North America, there are two and three times as many of these notes in circulation than ready cash.''

Right off the bat, List nails it by saying that the object of credit is to be an instrument for settlement payments - and that the success of the USA lies in recognizing this feature. Further on he makes the distinction between commodities (gold and silver) and money/credit/ (aka debt) by saying...

"People will probably ask me, where will Bavaria get the money to complete such giant works [railways]? I answer, that I have not yet seen any silver or gold in any of the canals or railways. To build them we use only consumer goods, steel, stones, wood, manpower, the power of animals. But is there not a surplus of all this in Bavaria? To the extent that we transform this surplus into canals and railways, which are not yet in existence, we create permanent and enduring value, we create an instrument which doubles the productive power of the entire nation. The money, however, does not leave the country, it only settles accounts.''

List was the leading promoter of railways in Germany. In 1841 he summed up the advantages of that technology.

-It is a means of national defence: it facilitates the concentration, distribution and direction of the army. 
-It is a means to the improvement of the culture of the nation.... It brings talent, knowledge and skill of every kind readily to market. 
-It secures the community against dearth and famine, and against excessive fluctuation in the prices of the necessaries of life. 
-It promotes the spirit of the nation, as it has a tendency to destroy the Philistine spirit arising from isolation and provincial prejudice and vanity. It binds nations by ligaments, and promotes an interchange of food and of commodities, thus making it feel to be a unit. The iron rails become a nerve system, which, on the one hand, strengthens public opinion, and, on the other hand, strengthens the power of the state for police and governmental purposes.
If List were alive today, he would endorse MMT.

Come on, get with the century

~Communists seeking to abolish labor in the pursuit of 100% unemployment, donning the hammer and sickle (labor-intensive tools). Stupid, no?~

The Strange Capitalist Embrace of Austerity Viewed in Terms of Marx’s Falling Profit-Rate Law

"Taking the views of Marx, Kalecki and Keynes into account, it may be that revival in the rate of profit is a necessary condition of capitalist recovery, but not sufficient. It seems that recovery of private investment will require the satisfaction of two conditions: both a revival in the rate of profit (Marx) and a sustained growth in autonomous expenditure (Kalecki, Keynes). For the global economy as a whole, currency-issuing governments are the only limitless source of autonomous expenditure." ~Peter Cooper

Read the whole thing at Heteconomist

Wednesday, 12 July 2017

Basic Income experiment at national level

Since we're hearing more and more on Basic Income, either from governments who are preparing experiments at local level or from influential business men, advertising it (for obvious self-interest, in my humble opinion), a point will come (I think) in which an experiment will be required at national level, in order to assess the metrics and scheme of a Basic Income (or UBI) proper.

I propose two ways to do this:

1) A UBI experiment that takes the form of basic food stamps for all, which would be issued one day before the beginning of every month in value as to cover a month's basic food basket. Food is a regenerating commodity. There is surplus production of food globally, with so many metric tons of unsold bread being turned into fodder each year or simply being disposed off, while people still go hungry, because they are not integrated with the monetary system (with their own's country's system, let alone those of other countries). The price of food, sadly, is another story, and several factors come into play - but that's a subject for another time.

2) A UBI experiment that takes the form of Government interest-free loans to its citizens. I'd levy a 20K loan (the figure is up for the debate, I'd say it can be even higher for the purposes of this experiment) for each adult citizen, extinguishable in 3 years, without any debt payment schedule. In other words, the citizen decides how fast or slow, given the time period, he or she repays the debt. In case the debt is not repaid, it shows up as a tax bill.

I'd be very curious to see private sector consumption patterns under both of these experimental schemes. Their impact on labor force participation & on output elasticity. An impact study will have to be made (obviously) for the schemes. As always, what's important is the impact on demand and supply, not on trivial Government deficit and debt to GDP ratios - unless the countries in question are currency users, and not issuers (in the sense that the Government spends and taxes either in a foreign currency or is working under a fixed exchange rate or metal standard).

BIG/UBI tests at local level will always yield net positive results for reasons which should be fairly obvious - idle capacity being available, and the extra income afforded to the region in question is far away from putting a strain on the economy's ability to adjust to increased demand. What every supporter & doubter of BIG/UBI should be looking for is - what I call - sustainable behavior patterns. Less stress. Less crime. Smaller drop-out rates. Lower hospitalization rates. Fewer cases of domestic violence. Smaller poverty rates. Increased worker solidarity at the workplace (i.e. more bargaining power for labor). And improved labor participation, whether this occurs in a formal job, or outside of a job (voluntarism).

Feel free to comment if you agree or disagree with the above. Thanks.

Important note: This is in no way an advocacy of BIG/UBI as a "silver bullet" solution or panacea to the myriad ailments afflicting our societies.

Deficit doves are so frustrating

Paul Mason is asked: Where is the Magic Money Tree? He responds: It's in the Bahamas where Amber Rudd has 2 accounts.

Completely misses the point. Rudd's accounts are the fruit of the magic money tree, not the tree itself. The tree is UK Treasury & CB.