Tuesday, July 31, 2012
Monday, July 30, 2012
Sunday, July 29, 2012
Thursday, July 26, 2012
With regard to theoretical weaknesses, MMT lacks a convincing theory of interest rates, over-simplifies the economy by assuming an L-shaped supply schedule that ignores the effects of sectoral bottlenecks and imbalances, lacks an adequate theory of inflation, and ignores expectations and exchange rates. These omissions lead it to overstate the powers of monetary and fiscal policy.That is, other than getting everything important wrong...
The historical problem with MMT is that it incorrectly predicts the increases in returns when the state backs currency issue, that is it's mega-economic projection is wrong, and it incorrectly estimates the cost of enforcement, which is not zero. Enforcement loses of lex monetae are not to be ignore after the break down of compliance.
If one is looking for the weakness of the Euro, it lies not in the currency union, but in the corruption of those running it. First, Greece, by its own standards, should not have been let in, second, it has allowed countries to run significantly higher budget deficits, allowing the ECB to run tighter fiscal policy, because of the US' role as designated economic loser in the world, and third when the collapse came, there was a complete and total break down of enforcement to prevent capital flight – which one could argue, as with dollarization schemes, is a feature, not a bug.
For countries under financial pressure, preventing capital flight, that is "a run on the central bank" is job one. Without this, virtually nothing good will come of the rest of the efforts, because that capital is what will form the economy that will pay off the debt. Allowing capital flight and then imposing austerity is shooting an economy through the head and then through the heart. It won't be suprising if that economy is found on a slab someplace...
One doesn't need theory to explain greed and stupidity.
Monday, July 2, 2012
That deeper myth has simple roots. If you go into almost any nerd group, any group of drop outs, people of alternate sexual identification, unusual gender expression, or fandom of any small thing, you will find that a large fraction of them have the same personal story: unpleasant dictatorial parents. Often, very often, there is physical abuse, often, very often, one of the parents is a hypocrite, often, very often participating in the behaviors that they forbid. Drugs, sexual promiscuity, etc.
Thus there is always a market for the evils of moralizing repression, because there is a large base of people who saw, traumatically, first hand, and pervasively, what their parents did to them. Thus they want a simple meta-narrative that evil parents scaled up to social forms are the problem, because it is the problem they know.
This belief, however, comes with a twist. The very people who are against moralizing parents are also programmed to be, well, moralizing dictators. An assertion that the present Republican elites are the kind that were previously kept out of power by other elites, is, well, idiotic. It is not hard to dip into the social history of the late 19th century to find moralizing elites brutalizing the working class. It's "the agony of modernization." It is the story of a variety of religious elites that settled the North Eastern US first. Many of the people at the Second Continental Congress, were members of "The Great Awakening," and participants in the slave trade. The deep problem with Robinson's assertion, is that it is racist. No one whose ancestors were brought over on the Middle Passage would say that the elites of the US were keeping the less tolerant elites out of power.
The better elite always existed, but, generally, was not in charge of the country. Instead there was a brief era when the mass mobilization society provided consumer, producer, and protector, of the capital system. Enough of the elites realized they needed workers, buyers, and soldiers, to create a democratizing moment, and technology and the networks it created, meant there was a brief technologizing moment. Intelligence was valued, because it was required.
This is the very moment that created the abused intelligent scions that I started this post chatting about. Before, they would have been touched, out of place, and a problem because they would not keep to their assigned work, and would ask embarrassing questions about where Cain's wife came from in Genesis. During the democratizing moment, when IQ became needed to run even an office in a small firm, they were sucked in, and paid well, in order to run the society.
But we now, sadly, live in the post-intelligence world. Intelligence is less and less valued, and its owners are more and more pushed back into the corners that they always were in. There is a greater and greater division between the centers where intelligence is needed, and where it is a disease. One part, as one would expect, is the Southern aristocracy, whose rise has been predicted and noted, since well before this decade. It was the root of the "Southern Strategy" and it was the root, even before that, of the creation of the anti-communism movement as a grass roots movement, in forms such as "The John Birch Society." By the 1960's it was recognized that old money funded a network of anti-communism groups that were the one hand, of what the anti-immigration groups were the other.
This social order, of a white christian capitalist America, however, is not a minority strain of American history, it is the majority of economic elite history for much of that history. It is not strange that an elite whose power comes from extracting surplus value from labor, would have an ideology of obedience and work imposed on their workers. But then, obviously, futurists don't study the past.
So what is different now?
The answer, is that concentration of wealth is a nationally strategic interest. Where as in 1945, even the dimmest elite could see that masses of manpower kept them safe, now, they think masses of money can. This goes back to the red queen's race, where money is concentrated in developed countries, to prevent the capital base from being entirely bought by the concentrations of wealth that resource extraction and now labor arbitrage bring. The cancer of the developed world, is that it cannot develop the rest of the world, and instead has created a series of societies where the mechanisms of the modern world create a small, very rich, elite.
This elite of the developed world has only passing interest in developing their own society, and instead invests back in the West. This mechanism creates the two strains of developed world elite.
One strain, let us call it the Sorosian strain, though he did not invent it, merely exemplify it. Is socially liberal, because intelligent talent (see above) alights in all kinds of people, who need to have the burdens of social judgement removed from them. Good or bad social judgment mind you. The road to freedom for the developed world, is to leverage intellectual property and absolute advantage in finance.
The other is that the way to freedom for the west, is to be as extractive as the developed world is of its base. Frack, break unions, and so on.
Both groups have many very similar intersts, not the least of which is to make sure that money flows generally upward. Obama and the Democrats, and indeed much of what looks like the left, is beholden to the first group, the right, to the second. What passes for the popular press of both, as opposed to populism, is selling the myths of personal behavior that scale to the correct social behavior, and conversely, to show how the other elites represent the horrors feared. In the case of the left, the battering or molesting or abusive parent. In the case of the right, the morally failing parent who could not provide. There will always be an endless supply of both kinds of failure, and therefore, of the myths.
And that is the other thing that is different now: before, there had to be genuinely brilliant people doing things. Now success is mainly about creating relationships, and keeping people paying money. We talk about "Emotional Intelligence" for the same reason that "IQ" became important about a century ago: it is a human gift that elites need, but do not cultivate. Elites of the 19th century did not cultivate G. Nor do elites today cultivate empathy. But they need it in their account managers, to keep the checks coming in. From those checks are built bonds, those bonds are sold to resource barons, who send back money now, in return for a promise of unending payments.
So now back to simplicity itself. It is not that there is a recent rise of a nasty moralizing elite, it is that there is a recent fall, a fall that Robinson is a minion of, of genuine brilliance, and instead a vast rental structure is created to extract money from people, and package it into instruments that can be sold abroad: health insurance, mortgages, college loan payments, royalties from copy rights.
It isn't that the bad elites rose recently, it is that the better elites have fallen very far, very fast, and they hire the worst to maintain their rental streams, in part, by pointing out there, into the dark, at some forgotten father who raped his daughters, and sent his sons away for finding it out.