Thursday, 30 October 2014

Self-imposed corporate regulations control workers but choke productivity

Two new industries have emerged in this neo-liberal era. The first is what I call the ‘unemployment’ industry, which operates to case manage the unemployed that poorly crafted fiscal policy has deliberately created and entrenched into our modern societies. A whole parasitic array of private providers get paid by the government to coerce and threaten the unemployed under the guise of retraining them for jobs. I wrote about this scandal in this blog – Why we should close the ‘unemployment industry’. In the last few days, a new industry has been identified which employs over a million people in Australia, making it one of the largest sectors, although no official data is published on it. This sector has been labelled in the press this week – the ‘red tape’ industry or the ‘compliance sector’. It is growing faster than any other industry in Australia and probably elsewhere, although there is no data available that can tell us that. It is largely unproductive because it undermines the productivity of other workers. Red tape, compliance, must be the public sector once again imposing its heavy hand on private endeavour, right? Wrong, the neo-liberals not only created and expanded a moribund and dysfunctional financial sector but has also created the red tape industry as it seeks to control workers down to the smallest degree. Hilarious really if it wasn’t so wasteful and hypocritical.

You can read Bill Mitchell's blog post here: http://bilbo.economicoutlook.net/blog/?p=29364
Also, I want to add Neil Wilson's reply to the aforementioned blog post:

“There hasn’t been much reaction today from the moocher class in Australia to the report.”

Isn’t it the case though that this is exactly what is to be expected when you have a system that requires the private sector to create *all* the jobs, yet the private sector only improves productivity and output if it is optimised towards *eliminating* jobs by automating them away.

I’ve spent a lot of time in the past on business systems and the inefficiency of operation isn’t a public/private sector divide at all. It is a large/long lived operations vs. young/short lived operations – with the latter having the most efficient structure.

In the former you get a build up of entropy over time that eats away at efficiency. If we want optimal output, then perversely we need to have a system where operations are destroyed and reconstructed on a regular basis.

Unfortunately that requirement bangs right up against the natural human loss aversion problem. We don’t like to see firms fail and operations change.

Wednesday, 22 October 2014

Some particulars of my characters: part 1, Drakanes

Heterochromia iridis.
Her right eye is a pale grey. Her left eye is brown.
This oddity of hers makes people uneasy. In her youth, Drakanes had endured the mockery of others. The name fiendish eyes, a name of ridicule, had been a common choice amongst the sisters of the Matriarchal order.

An Empire Of Traitors

A Heretical Divide

Saturday, 18 October 2014

Non-orthodox views of money

Turning to the “nature” and “origins” of money, institutionalists reject the orthodox notion that money is essentially a commodity that functions primarily as a medium of exchange, invented to reduce transactions costs. Institutionalists and other heterodox economists insist that money is “social” in its nature. As Ingham puts it “money necessarily consists in social relations between economic agents and between them and a monetary ‘authority’….” (Ingham 2000, p. 19) Or, as Neale argues: “all monies are parts of larger systems of economic and social relationships.” (Neale 1976, p. 4). Further, Neale warns that “Despite the fact that many a text on money says that money originated in the inconvencies of barter, that money was invented as a medium of exchange….neither historical evidence nor argument by analogy from contemporary nonliterate societies lends support to this speculative history.” (Neale 1976, pp. 8-9) Admittedly, any story of the origins of money is necessarily speculative for two reasons. First, we must decide what “social relation” from the past qualifies as something we are willing to label “money”. Neale argues that it is best to think of “monies” rather than “money” because those social relations vary widely by society. He emphasizes that in most precapitalist societies the range of social relations associated with use of a "special purpose money". For example, we would now likely include medium of exchange, unit of account, means of debt settlement, and store of value as functions that are served today by general purpose money. However, in previous societies (and in nonliterate societies today) there have been "special purpose monies" that served only one or two of these functions but not the others. The second problem is that it is possible and even likely that the origins of money lie in a very distant past for which we have no easily interpretable records; indeed, many believe that money predates writing. (It has long been believed that writing was invented to keep track of nominal debts, although the history of writing is probably as complex as the history of money. See Schmandt-Besserat 1989.) hence we will probably never have a completely satisfying story of the origins of money.
Still, it is tempting to speculate on money's origins. There are three plausible alternatives to the orthodox story. Heinsohn and Steiger (1983) argue that money developed not out of a barter economy but when private property and loans developed. Following Keynes, they emphasize that early monetary units were based on a specific number of grains of what or barley. (Keynes 1982, pp. 233-36) Later, metals (such as iron, copper, silver, or gold) were used as money, with the value denominated in those grain units of measurement. According to their argument, the first money was created when private property (so many units of grain) was loaned with the expectation of payment of a great sum of grain in the future. Eventually, grains of wheat or barley would be used as a universal equivalent to measure value of all types of alienable private property to reduce transactions costs, acting as a unit of account in all creditor-debtor relations. Gradually, representative money, in the form of metal but still denominated in these grain weight units, could be loaned, used as a medium of exchange, and used to settle debts. Hence, Heinsohn and Steiger focus on money as a unit of account developed in these early loan agreements, and the "thing" used as money is important primarily because it represents the loan agreement that is denominated in the unit of account.
A second approach has been advanced by Hudson (2001), who has developed an alternative thesis for the origins of money of account in Babylonia. He argues that money originated within the temple and palace communities for internal accounting purposes. Like Heinsohn and Steiger, his story also emphasizes the importance of loans, however, he argues that early loans were made by the temple and palace communities to the "external" sector. Thus, rather than focusing on private property and loans between individuals that gradually become standardized in a grain unit of account, Hudson believes the unit of account was created within the early bureaucracies. Clearly, his argument focuses more on the social nature of the origins of money and hence is probably more appealing to institutionalists.
A third approach has been developed by the great numismatist, Grierson, and elaborated in Goodhart (1989, 1998) and Wray (1998). According to this view, money evolved out of the pre-civilized practice of wergeld; or to put it more simply, money originated not from a pre-money market system but rather from the penal system. (Grierson 1977, 1979; Goodhart 1998) An elaborate system of fines for transgressions was developed in tribal society. Over time, authorities transformed this system of pines paid to victims for crimes to a system that generated a variety of payments to the state. (Innes 1932) Until recently, fines made up a large part of the revenues of all states. (Maddox 1769) Gradually, fees and taxes as well as rents and interest were added to the list of payments that had to be made to authority. To be clear, this authority should be seen as a gradually evolving institution - from early temples to palace communities to feudal kings and finally to democratically elected representative governments - with varying degrees of sovereign power. All that was required was some sort of authority able to levy obligations on a population - anything from fines or tithes to fees and taxes. While wergeld payments did not require a unit of account (the fines were assessed in the form of particular items or services to be delivered to victims), payments to the authority were gradually standardized, measured in a money of account.
This approach has been called the "Chartalist" or "taxes-drive-money" approach. It is also closely related to Knapp's "state money" approach. Briefly, this view emphasizes the important role played by "government" in the origins and evolution of money. More specifically, it is believed that the state (or any other authority able to impose an obligation - whether that authority is autocratic, democratic, or divine) imposes an obligation in the form of a generalized, social unit of account - a money - used for measuring the obligation. The next important step consists of movement from a specific obligation - say, an hour of labor or a spring lamb that must be delivered - to a generalized, money, obligation. This does not require the pre-existence of markets, and, indeed, almost certainly predates them. Once the authorities can levy such an obligation, they can then name exactly what can be delivered to fulfill this obligation. They do this by denominating those things that can be delivered, in other words, by pricing them. To do this, they must first "define" or "name" the unit of account. This resolves the conundrum faced by methodological individualists and emphasizes the social nature of money and markets.
Note that the state can choose anything it likes to function as the "money thing" denominated in the money of account, and, as Knapp emphasized, can change "the thing" any time it likes: "Validity by proclamation is not bound to any material" and the material can be changed to any other so long as the state announces a convertion rate (say, so many grains of gold for so many ounces of silver). (Knapp 1924, p. 30) What Knapp called the State money stage begins when the state chooses the unit of account and names the thing that it accepts in payment of obligations to itself - at the nominal value it assigns to the thing. The final step occurs when the state actually issues the money-thing it accepts. In (almost) all modern developed nations, the state accepts the currency issued by the treasury (in the US, coins), plus notes issued by the central bank (Federal Reserves notes - green paper - in the US), plus bank reserves (again, liabilities of the central bank) - that is, the monetary base or high powered money (HPM). The material from which the money thing issued by the state is produced is not important (whether it is a gold coin, a bse metal coin, paper notes, or even numbers on a computer tape at the central bank). No matter what it is made of, the state must announce the nominal value of the money thing it has issued (that is to say, the value at which the money-thing is accepted in meeting obligations to the state).

Manually copied by myself letter with letter from this paper by Randall Wray:
http://www.cfeps.org/pubs/wp-pdf/WP21-Wray.pdf

Friday, 17 October 2014

Atheists can be annoying too, but they're a peach compared to religious folk

Atheists can be annoying too, but they're a peach compared to religious folk... It's not just that they might be wrong; but they think that ONLY they are right - and everyone else is just condemned to perdition because they choose to believe differently or not at all. To me, religion has always been the greatest affront to God - to the idea of a Creative or Creator principle which subsumes the universe. Religion is nothing more than institutionalized faith; it's political, it receives fiscal privileges, it judges everyone and everything but doesn't like to be judged back or criticized for that matter - and it has always used falsehood and violence to impose its views upon the willing and unwilling - and to silence all dissent. Religious dogma is nothing more than endless revisioning. And since the transempirical cannot be proved nor disproved; they enjoy the profits that their uncritical followers give to the them - directly and indirectly.

John Maynard Keynes’s Private Letter to Franklin Delano Roosevelt of February 1, 1938

To Franklin Delano Roosevelt, 1 February 1938
Private and personal

Dear Mr. President,
You received me kindly when I visited you some three years ago that I make bold to send you some bird’s eye impressions which I have formed as to the business position in the United States. You will appreciate that I write from a distance, that I have not revisited the United States since you saw me, and that I have access to few more sources of information than those publicly available. But sometimes in some respects there may be advantages in these limitations! At any rate, those things which I think I see, I see very clearly.
(1) I should agree that the present recession is partly due to an ‘error of optimism’ which led to an overestimation of future demand, when orders were being placed in the first half of this year. If this were all, there would not be too much to worry about. It would only need time to effect a readjustment;—though, even so, the recovery would only be up to the point required to take care of the revised estimate of current demand, which might fall appreciably short of the prosperity reached last spring.
(2) But I am quite sure that this is not all. The recovery was mainly due to the following factors:—
(i) the solution of the credit and insolvency problems, and the establishment of easy short-term money;
(ii)the creation of an adequate system of relief for the unemployed;
(iii) the public works and other investments aided by Government funds or guarantees;
(iv) investment in the instrumental goods required to supply the increased demand for consumption goods;
(v)the momentum of the recovery thus initiated.
Now of these (i) was a prior condition of recovery, since it is no use creating a demand for credit, if there is no supply. But an increased supply will not of itself generate an adequate demand. The influence of (ii) evaporates as employment increases, so that there is a dead point beyond which this factor cannot carry the economic system. Recourse to (iii) has been greatly curtailed in the past year. (iv) and (v) are functions of the upward movement and cease—indeed (v) is reversed—as soon as the position fails to improve further. The benefit from the momentum of recovery as such is at the same time the most important and the most dangerous factor in the upward movement. It requires for its continuance, not merely the maintenance of recovery, but always further recovery. Thus it always flatters the early stages and steps from under just when support is most needed. It was largely, I think, a failure to allow for this which caused the ‘error of optimism’ last year.
Unless, therefore, the above factors were supplemented by others in due course, the present slump could have been predicted with absolute certainty. It is true that the existing policies will prevent the slump from proceeding to such a disastrous degree as last time. But they will not by themselves—at any rate, not without a large-scale recourse to (iii)—maintain prosperity at a reasonable level.
(3) Now one had hoped that the needed supplementary factors would be organized in time. It was obvious what these were—namely increased investment in durable goods such as housing, public utilities, and transport. One was optimistic about this because in the United States at the present time the opportunities, indeed the necessities, for such developments were unexampled. Can your Administration escape criticism for the failure of these factors to mature?
Take housing. When I was with you three and a half years ago the necessity for effective new measures was evident. I remember vividly my conversations with Riefler at that time. But what happened? Next to nothing. The handling of the housing problem has been really wicked. I hope that the new measures recently taken will be more successful. I have not the knowledge to say. But they will take time, and I would urge the great importance of expediting and yet further aiding them. Housing is by far the best aid to recovery because of the large and continuing scale of potential demand; because of the wide geographical distribution of this demand; and because the sources of its finance are largely independent of the stock exchanges. I should advise putting most of your eggs in this basket, caring about this more than about anything, and making absolutely sure that they are being hatched without delay. In this country we partly depended for many years on direct subsidies. There are few more proper objects for such than working-class houses. If a direct subsidy is required to get a move on (we gave our subsidies through the local authorities), it should be given without delay or hesitation.
Next utilities. There seems to be a deadlock. Neither your policy nor anybody else’s is able to take effect. I think that the litigation by the utilities is senseless and ill-advised. But a great deal of what is alleged against the wickedness of holding companies is surely wide of the mark. It does not draw the right line of division between what should be kept and what discarded. It arises too much out of what is dead and gone. The real criminals have cleared out long ago. I should doubt if the controls existing today are of much personal value to anyone. No one has suggested a procedure by which the eggs can be unscrambled. Why not tackle the problem by insisting that the voting power should belong to the real owners of the equity, and leave the existing organizations undisturbed, so long as the voting power is so rearranged (e.g. by bringing in preferred stockholders) that it cannot be controlled by the holders of a minority of the equity?
Is it not for you to decide either to make a real peace or to be much more drastic the other way? Personally I think there is a great deal to be said for the ownership of all the utilities by publicly owned boards. But if public opinion is not yet ripe for this, what is the object of chasing the utilities around the lot every other week? If I was in your place, I should buy out the utilities at a fair price in every district where the situation was ripe for doing so, and announce that the ultimate ideal was to make this policy nation-wide. But elsewhere I would make peace on liberal terms, guaranteeing fair earnings on new investments and a fair basis of valuation in the event of the public taking them over hereafter. The process of evolution will take at least a generation. Meantime a policy of competing plants with losses all round is ramshackle notion.
Finally, the railroads. The position there seems to be exactly what it was three or four years ago. They remain, as they were then, potential sources of substantial demand for new capital expenditure, Whether hereafter they are publicly owned or remain in private hands, it is a matter of national importance that they should be made solvent. Nationalise them if the time is ripe. If not, take pity on the overwhelming problems of the present managements, And here too let the dead bury their dead. (To an Englishman, you Americans, like the Irish, are so terribly historically minded!)
I am afraid I am going beyond my province. But the upshot is this. A convincing policy, whatever its details may be, for promoting large-scale investment under the above heads is an urgent necessity. These things take time. Far too much precious time has passed.
(4) I must not encumber this letter with technical suggestions for reviving the capital market. This is important. But not so important as the revival of sources of demand. If demand and confidence reappear, the problems of the capital market will not seem so difficult as they do today. Moreover it is a highly technical problem.
(5) Businessmen have a different set of delusions from politicians, and need, therefore, different handling. They are, however, much milder than politicians, at the same time allured and terrified by the glare of publicity, easily persuaded to be ‘patriots’, perplexed, bemused, indeed terrified, yet only too anxious to take a cheerful view, vain perhaps but very unsure of themselves, pathetically responsive to a kind word. You cold do anything you liked with them, if you would treat them (even the big ones), not as wolves or tigers, but as domestic animals by nature, even though they have been badly brought up and not trained as you would wish. It is a mistake to think that they are more immoral than politicians. If you work them into the surly, obstinate, terrified mood, of which domestic animals, wrongly handled, are so capable, the nation’s burdens will not get carried to market; and in the end public opinion will veer their way. Perhaps you will rejoin that I have got quite a wrong idea of what all the back-chat amounts to. Nevertheless I record accurately how it strikes observers here.
(6) Forgive the candour of these remarks. They come from an enthusiastic well-wisher of you and your policies. I accept the view that durable investment must come increasingly under state direction. I sympathise with Mr Wallace’s agricultural policies. I believe that the SEC is doing splendid work. I regard the growth of collective bargaining as essential. I approve minimum wage and hours regulation. I was altogether on your side the other day, when you deprecated a policy of general wage reductions as useless in present circumstances. But I am terrified lest progressive causes in all the democratic countries should suffer injury, because you have taken too lightly the risk to their prestige which would result from a failure measured in terms of immediate prosperity. There need be no failure. But the maintenance of prosperity in the modern world is extremely difficult; and it is so easy to lose precious time
I am, Mr President
Yours with great respect and faithfulness,
J.M. Keynes
References
John Maynard Keynes (1938), “Letter of February 1 to Franklin Delano Roosevelt,” in Collected Works XXI: Activities 1931-1939 (London: Macmillan).

Wednesday, 15 October 2014

Warren Mosler kills some myths, as usual

I reject the belief that the economy is strong and operating anywhere near full employment. I also reject the belief that a zero-rate policy is inflationary, supports aggregate demand, or weakens the currency, or that higher rates slow the economy and reduce inflation. Additionally, I reject the mainstream view that employment is materially improving, the output gap is closing, and inflation is rising and returning to the Fed’s targets.

There is no right time for the Fed to raise rates! Click to read Warren's article in full.

Saturday, 4 October 2014

My feeble "social-media promotion" until the new year

Fact 1:
I live in Romania and my standard of living is not the average "western" standard. Compared to that yardstick, I'm poor. I don't have money to spend on 30-50 dollar 10 day promotion sites to run ads.
Fact 2:
Outside of the genre I write in (fiction, epic fantasy), my other interests revolve around domestic and foreign politics, the struggle of heterodox thought against the corrupt and entrenched orthodox establishment, ASMR vids, and watching Let's plays on youtube - (seeing who gives objective criticism and who's just being a mindless fanboy).
So outside thing related to Post-Keynesianism, Modern Monetary Theory, religion, LGBQT news, foreign conflicts, and overall things concerning human rights... I really don't write about anything else. Being self-published is a bitch because one has to tackle the marketing side of things directly and many a time without resources. Hell, if I had money to pour in advertising and what not, I wouldn't have priced my stories to begin with. If money were not a problem, I'd make An Empire Of Traitors and A Heretical Divide perma-free in a heartbeat - just like Talking Crows.



Conclusion:
I'm going to focus on what meager buzz I can create via my blog and twitter; and that's about it. Next year I don't want to waste time (and yes, that's the psychological perception) looking at the daily sales charts and tweeting stuff related to my ebooks. In 2015, I have my work cut out for me; the third installment to the Of Hate And Laughter (OHAL) series, A Dance With Fools And Devils, is going to have around 200K words; almost twice as long as book 1 and 2 combined.
I have no fantasy of becoming rich over night or ever, for that matter. As an indie writer with no financial resources, but with a love for the world I've created and for the souls I've given birth to - I take the long road.

Cameron's Conference Rap iz da truth

It's so brilliant, I'm just lost for words...