This week, I have been mostly reading:

• Imagining a New Bretton Woods — Yanis Varoufakis in Project Syndicate: Above all, the new system would reflect Keynes’s view that global stability is undermined by capitalism’s innate tendency to drive a wedge between surplus and deficit economies. The surpluses and deficits grow larger during the upturn, and the burden of adjustment falls disproportionately on debtors during the downturn, leading to a debt-deflationary process that takes root in the deficit regions before dampening demand everywhere. To counter this tendency, Keynes advocated replacing any system in which “the process of adjustment is compulsory for the debtor and voluntary for the creditor” with one in which the force of adjustment falls symmetrically upon debtors and creditors.
• Yes, the Economy Is Rigged, Contrary to What Some Economists Try to Tell You — Dean Baker summarises the things that have been occupying his mind lately, including: In Europe and Japan, CEOs are also well-paid, but they tend to get a third or a quarter of what our CEOs earn. This matters not only because of the pay the CEOs get, but also because of its impact on pay structures throughout the economy. It is now common to see top executives of non-profit hospitals, universities, or private charities get salaries of more than $1 million a year. They argue that they would get much more working for a corporation of the same size. And, this money comes out of the pockets of the rest of us.
• Inflation Targeting and Neoliberalism — Gerald Epstein interviewed at TripleCrisis: I see this as part of a whole neoliberal approach to central banking. That is, the idea that the economy is inherently stable, it will inherently reach full employment and stable economic growth on its own, and so the only thing that the macro policymakers have to worry about is keeping a low inflation rate and everything else will take care of itself. Of course, as we’ve seen, this whole neoliberal approach to macroeconomic policy is badly mistaken. […] This approach, I think, really has contributed to enormous financial instability. Notice that this inflation targeting targets commodity inflation. But what about asset bubbles, that is, asset inflation? There’s no attempt to reduce asset bubbles like we had in subprime or in real estate bubbles in various countries. That is another kind of inflation that could have been targeted.
• Robert Mundell, evil genius of the euro — Greg Palast in the Guardian: Mundell explained to me that, in fact, the euro is of a piece with Reaganomics: "Monetary discipline forces fiscal discipline on the politicians as well." And when crises arise, economically disarmed nations have little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the European welfare state down the drain.
• Facebook Reactions and the Happiness Paradigm — Jenny Davis at the Society Pages: These emoji express sadness and anger as a little bit silly, not too threatening, not too real. “Like” might not be the appropriate response to the passing of a loved one, but bulbous tears streaming down a banana yellow face feels downright disrespectful. Imagine posting a brow-furrowed Angry emoji in response to a friend’s personal story of sexual assault. It’s the symbolic equivalent of “that rascal!!” and woefully inadequate for anything that provokes real anger.
• Sheffield is on a quest to be the fairest city of them all – here’s how it’s doing — Rowland Atkinson and Alan Walker in the Conversation: Led by the city council, several large employers have introduced a higher living wage based on calculations by the Living Wage Foundation, and the Sheffield Chamber of Commerce has also encouraged small and medium-sized organisations to do so. Another recommendation, on fair access to credit, resulted in the creation of Sheffield Money, to compete with the unscrupulous and usurious payday lenders. More recently, a fair employer charter was introduced, designed to ensure fair conditions of work as well as pay. Several large public and private organisations have already signed up to the charter, which focuses on promoting fair and flexible employment contracts.
• Eurozone’s So-Called Recovery Masks A Dark Secret: Mercantilism — John Weeks in Social Europe: In the 18th century governments used direct restrictions on imports and other market interventions in an attempt to achieve permanent trade surpluses. Governments implement the 21st century version of mercantilism with different policy instruments. In the place of direct restrictions on trade we now see real wage reductions, manipulation of business taxes, and currency depreciation through loose monetary policy (so-called quantitative easing and negative interest rates). This “market friendly” version of mercantilism allows the ideologues to maintain the fiction of “free trade” while pursuing the mercantilist goal of persistent trade surpluses. This perverse inversion of rhetoric seeks to justify recovery in Europe based on beggar-thy-neighbour policies.
• Dean Rusk Also Missing, Feared Dead — for the Intercept, Barrett Brown reviews Niall Ferguson's fawning biography of Kissinger from his (Brown's) prison cell. Hilarity ensues: […] he noted that Kissinger had been described in disparaging terms by Hunter S. Thompson, who wrote about pretty much every major political figure in disparaging terms, and that he’d been denounced as a practicing Satanist by David Icke, who’s denounced pretty much every major political figure as a practicing Satanist; rather inexplicably, Ferguson himself even provided an incomplete list of over a dozen other prominent men and entire family dynasties against whom Icke has made this exact charge. It’s the first time I can recall having seen someone actually screw up anecdotal evidence […] Having returned from his cherry picking expedition with a basket full of rocks[…]

This week, I have been mostly reading:

• Ramen is displacing tobacco as most popular US prison currency, study finds — Mazin Sidahmed, in the Guardian Holy cow; the one place where you can find a genuine commodity currency. But how do they buy noodles? With noodles?: Ramen noodles are overtaking tobacco as the most popular currency in US prisons, according a new study released on Monday. A new report by Michael Gibson-Light, a doctoral candidate in the University of Arizona’s school of sociology, found the decline in quality and quantity of food available in prisons due to cost-cutting has made ramen noodles a valuable commodity.
• Caitlyn Jenner and Our Cognitive Dissonance — Robert Sapolsky in Nautilus: Then there’s spotted hyenas, gender-bending pseudo-hermaphrodites. It’s nearly impossible to determine the sex of a hyena by just looking, as females are big and muscular (due to higher levels than males of some androgenic hormones), have fake scrotal sacs, and enlarged clitorises that can become as erect as the male’s penis. None of which was covered in The Lion King.
• Ideas for Australia: Welfare reform needs to be about improving well-being, not punishing the poor — Peter Whiteford in the Conversation: The OECD report suggests the job-search requirements in Australia are more onerous than those in the other countries studied. In 2007, a jobseeker in Australia could be required to report between eight and 20 job-search activities each month, compared to four to ten each month in Switzerland, ten in the UK and only two in Japan. The OECD also notes that since 2000 there have been “vast swings” in sanction rates (penalties for non-compliance), with sanctions ranging in this period from 25,000 a year to 300,000.
• When Bitcoin Grows Up: What is Money? — John Lanchester in the London Review of Books: Yap has no metal. There’s nothing to make into coins. What the Yapese do instead is sail 250 miles to an island called Palau, where there’s a particular kind of limestone not available on their home island. They quarry the limestone, and then shape it into circular wheel-like forms with a hole in the middle, called fei. Some of these fei stones are absolutely huge, fully 12 feet across. Then they sail the fei back to Yap, where they’re used as money. […] It has sometimes happened to the Yapese that their boats are hit by stormy weather on the way back from Palau, and to save their own lives, the men have to chuck the big stones overboard. But when they get back to Palau they report what happened, and everyone accepts it, and the ownership of the stone is assigned to whoever quarried it, and the stone can still be used as a valid form of money because ownership can be exchanged even though the actual stone is five miles down at the bottom of the Pacific.
• The era of predatory bureaucratization – An interview with David Graeber — Arthur De Grave in OuiShare: Many expected Occupy to take a formal political form. True, it did not happen, but look at where we are 3.5 years later: in most countries where substantial popular movements happened, left parties are now switching to embrace these movements’ sensibilities (Greece, Spain, United States, etc.). Maybe it will take another 3.5 years for them to have an actual impact on policy making, but it seems to me like the natural path of things. […] Right now, the most important thing for anti-authoritarian and horizontal movements is to learn how to enter an alliance with those who are willing to work within the political system without compromising their own integrity.
• Fix our debt addiction to fix our economy — Michael Hudson: As the “One Percent” of banks puts the “99 Percent” deeper into debt, financialization has become the major cause of increasing inequality of wealth and income. In due course, the amount of debt will exceed the economy’s ability to produce a large enough surplus to pay it back. This makes a financial breakdown inevitable.
• Krugman discovers the obvious — Alexander X. Douglas: Here it is. There is no operational difference between: (a) the state spending, selling bonds to ‘fund’ its spending, and then buying back the bonds, and (b) the state spending and not issuing the bonds in the first place. This is a point economists outside the mainstream have been making for years […] It’s obvious when you think about it. Suppose I give you $100. Then I ‘borrow’ back the $100. Then I buy back the debt from you, for $100. Or suppose I just give you the $100.
• Branko Milanovic advocates reinventing apartheid — Chris Bertram at Crooked Timber: Part of what’s going on here is the economist’s perspective on policy, which just focuses on net improvements in well-being or utility, with income serving as a proxy, and which doesn’t, therefore, see human beings as possessed of basic rights which it is impermissible to violate. Rather, all and any rights can be sacrificed on the altar of income improvement, just in case someone is poor and desperate enough to make a deal (who are we, paternalistically, to stop them?). The road to hell is paved with Pareto improvements.
• You May Hate Donald Trump. But Do You Want Facebook to Rig the Election Against Him? — Trevor Timm at the Guardian at Common Dreams: As Gizmodo reported on Friday, “Last month, some Facebook employees used a company poll to ask [Facebook founder Mark] Zuckerberg whether the company should try ‘to help prevent President Trump in 2017’.” Facebook employees are probably just expressing the fear that millions of Americans have of the Republican demagogue. But while there’s no evidence that the company plans on taking anti-Trump action, the extraordinary ability that the social network has to manipulate millions of people with just a tweak to its algorithm is a serious cause for concern.

This week, I have been mostly reading:

• Olivier Blanchard Is Worried About Inflation In Japan — Dean Baker, master of the political economy punchline, at CEPR (US): Debt is just one way in which governments obligate their public to future payments. Patent and copyright monopolies commit the public to paying rents that greatly exceed the free market price for the protected products. In the United States these payments are approaching 2.0 percent of GDP ($360 billion a year) for prescription drugs alone. It is remarkable that public finance economists seem to almost completely ignore rents for patents and copyrights when considering the financial burdens of various governments.
• Young Iraqis Overwhelmingly Consider U.S. Their Enemy, Poll Says — Murtaza Hussain at the Intercept:
  
  “For years, many have argued that Muslims and Arabs, like other humans, don’t appreciate being bombed or occupied,” says Haroon Moghul, a fellow at the Institute for Social Policy and Understanding. “Finally, we have a study to confirm this suspicion.”
• What’s so Bad about the Gold Standard? — David Glasner: The gold standard did play a major role in spreading the Depression. But the role was not just major; it was dominant. And the role of the gold standard in the Great Depression was not just to spread it; the role was, as Hawtrey and Cassel warned a decade before it happened, to cause it. The causal mechanism was that in restoring the gold standard, the various central banks linking their currencies to gold would increase their demands for gold reserves so substantially that the value of gold would rise back to its value before World War I, which was about double what it was after the war. […] The Great Depression was caused by a 50% increase in the value of gold that was the direct result of the restoration of the gold standard. […] the problem with gold is, first of all, that it does not guarantee that value of gold will be stable. The problem is exacerbated when central banks hold substantial gold reserves, which means that significant changes in the demand of central banks for gold reserves can have dramatic repercussions on the value of gold. Far from being a guarantee of price stability, the gold standard can be the source of price-level instability, depending on the policies adopted by individual central banks.
• Did Capitalism Fail? Looking Back Five Years After Lehman — Roman Frydman and Michael Goldberg at INET. As the title suggests, an oldie but a goody: Market instability is thus integral to how capitalist economies allocate their savings. Given this, policymakers should intervene not because they have superior knowledge about asset values (in fact, no one does), but because profit-seeking market participants do not internalize the huge social costs associated with excessive upswings and downswings in prices. It is such excessive fluctuations, not deviations from some fanciful “true” value – whether of assets or of the unemployment rate – that Keynes believed policymakers should seek to mitigate. Unlike their successors, Keynes and Hayek understood that imperfect knowledge and non-routine change mean that policy rules, together with the variables underlying them, gain and lose relevance at times that no one can anticipate.
• The Market Fairy Will Not Solve the Problems of Uber and Lyft — Ian Welsh nails it: These business models are ways of draining capital from the economy and putting them into the hands of a few investors and executives. They prey on desperate people who need money now, even if the money is insufficient to pay their total costs. Drivers are draining their own reserves to get cash now, but, hey, they gotta eat and pay the bills. The model generalises to any low-paid insecure work. You can't afford to say no to even the worst job. I did it for nearly ten years, working harder than I'd ever worked in my life, and am now massively in debt, for the first time in my life.
• The Zombie Doctrine — George Monbiot delivers some sublime ranting: It’s as if the people of the Soviet Union had never heard of communism. The ideology that dominates our lives has, for most of us, no name. Mention it in conversation and you’ll be rewarded with a shrug. Even if your listeners have heard the term before, they will struggle to define it. Neoliberalism: do you know what it is?
• Who do faculty “work for?” — Historiann: There’s nothing like stupid from the central administration to bring a faculty together. I told my colleagues that I have a rule when it comes to any technology or software: it works for me, I don’t work for it. End of story.
• A British Bridge for a Divided Europe — Robert Skidelsky: The eurozone has weakened the nation-states comprising it, without creating a supranational state to replace the powers its members have lost. Legitimacy thus still resides at a level of political authority that has lost those attributes of sovereignty (such as the ability to alter exchange rates) from which legitimacy derives. […] The EU has tried to achieve political union incrementally, because it was impossible to start with it. Indeed, barely hidden in the “European project” was the expectation that successive crises would push political integration forward. This was certainly Jean Monnet’s hope. The alternative – that the crises would have the opposite effect, leading to the breakup of the economic and monetary union – was never seriously confronted.
• Patently Absurd Logic On Budget Deficits and Debt — Dean Baker at the Huffington Post: As much as folks may love the private sector, it was not going to make up the demand lost when the housing bubble crashed, or at least not any time soon. If we wanted to prevent a long and severe downturn like the Great Depression, it was necessary for the government to run large deficits. These deficits were not impoverishing our kids - they were keeping their parents employed. […] The fact that the deficit hawks can scream endlessly about the horrible interest burden on our children, but don’t even seem to notice the costs being imposed by patent and copyright monopolies, suggests that they are not really concerned about our children’s well-being. Alternatively, they may have a very poor understanding of economics. Either way, their whining does not deserve the public’s attention.
• Where Hope Goes to Die — Ted Rall:
  

This week, I have been mostly… I don't know what I've been doing. Meanwhile, this happened in my sharply curtailed idle reading:

• Economic Rationality Explains Everything and Nothing — Geoffrey Hodgson, Evonomics: Utility maximization can be useful as a heuristic modelling device. But strictly it does not explain any behavior. It does not identify specific causes. It cannot explain any particular behavior because it is consistent with any observable behavior. Its apparent universal power signals weakness, not strength.
• Everyone But the Media Saw Trumpism Coming — Ted Rall: “We were largely oblivious to the pain among working-class Americans and thus didn’t appreciate how much his message resonated,” [New York Times journalist Nicholas] Kristof wrote. Most Americans are working-class. In other words, Kristof and his colleagues admit they don’t cover the problems that affect most Americans. Again: why does he still have a job?
• Is an Aussie debt crisis around the corner? — Leith van Onselen, Macro Business: Admittedly, the real concern is that 40% of all mortgages are interest-only mortgages, which are more vulnerable […] Whether or not Australia is likely to experience some kind of financial crisis within the next three years is a moot point. But having one of the world’s most overvalued housing markets, combined with overly indebted households and an extreme reliance on offshore funding, is hardly a good situation to be in and the opposite of prudence. And…
• The seven countries most vulnerable to a debt crisis — Steve Keen, Real World Economics Review Blog: They are, in order of likely severity: China, Australia, Sweden, Hong Kong (though it might deserve first billing), Korea, Canada, and Norway. […] Timing precisely when these countries will have their recessions is not possible, because it depends on when the private sector’s willingness to borrow from the banks—and the banking sector’s willingness to lend—stops. This can be delayed by government policy—as it was in Australia in 2008, via a strong government stimulus, the restarting of the housing bubble by a government grant to first home buyers, and the boom in investment and exports set off by China’s own stimulus program. But the day when credit growth stops can’t be put off indefinitely. When it arrives, these countries—many of which appeared to avoid the worst of the crisis in 2008—will join the world’s long list of walking wounded economies.
• Are We Facing a Global “Lost Decade?" — Steve Keen, for the Private Debt Project [tl;dr: Yes.]: The tragedy is that although there are methods by which we could escape the global private debt trap into which we have fallen we are nonetheless prisoners of an economic orthodoxy that will prevent us from employing them... The main barrier here is simply the ignorance of the supposed experts on economics about the nature of money. While mainstream economists continue to spout naïve arguments about money and banking, the politicians who rely upon them for guidance are unlikely to attempt anything other than the poorly targeted and largely ineffective policies that Japan has persisted with for the last quarter century. A global “Lost Decade” is entirely probable.