Crow posted:
lmao is he already pushing military threats? i avoid him, i probably shouldnt, but i do.

who, china?

not exactly China, he's just doing the WWII eternal return thing combined with military Keynesianism:

http://nation.foxnews.com/economy/2011/08/15/new-york-times-krugman-us-economy-needs-space-aliens

PAUL KRUGMAN: Think about World War II, right? That was actually negative social product spending, and yet it brought us out.

I mean, probably because you want to put these things together, if we say, "Look, we could use some inflation." Ken and I are both saying that, which is, of course, anathema to a lot of people in Washington but is, in fact, what fhe basic logic says.

It's very hard to get inflation in a depressed economy. But if you had a program of government spending plus an expansionary policy by the Fed, you could get that. So, if you think about using all of these things together, you could accomplish, you know, a great deal.

If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better –

ROGOFF: And we need Orson Welles, is what you're saying.

KRUGMAN: No, there was a "Twilight Zone" episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time, we don't need it, we need it in order to get some fiscal stimulus.

which he claims is innocent and being used against him unfairly by "right-wingers" (anyone who calls him on anything).

http://marxists.org/reference/subject/economics/keynes/general-theory/ch10.htm

Keynes posted:
With normal psychological suppositions, an increase in employment will only be associated with a decline in consumption if there is at the same time a change in the propensity to consume — as the result, for instance, of propaganda in time of war in favour of restricting individual consumption ; and it is only in this event that the increased employment in investment will be associated with an unfavourable repercussion on employment in the industries producing for consumption.

Keynes posted:
Just as wars have been the only form of large-scale loan expenditure which statesmen have thought justifiable, so gold-mining is the only pretext for digging holes in the ground which has recommended itself to bankers as sound finance; and each of these activities has played its part in progress-failing something better.

http://mrzine.monthlyreview.org/2010/kalecki220510.html

Kalecki posted:
1. One of the important functions of fascism, as typified by the Nazi system, was to remove capitalist objections to full employment.

The dislike of government spending policy as such is overcome under fascism by the fact that the state machinery is under the direct control of a partnership of big business with fascism. The necessity for the myth of 'sound finance', which served to prevent the government from offsetting a confidence crisis by spending, is removed. In a democracy, one does not know what the next government will be like. Under fascism there is no next government.

The dislike of government spending, whether on public investment or consumption, is overcome by concentrating government expenditure on armaments. Finally, 'discipline in the factories' and 'political stability' under full employment are maintained by the 'new order', which ranges from suppression of the trade unions to the concentration camp. Political pressure replaces the economic pressure of unemployment.

2. The fact that armaments are the backbone of the policy of fascist full employment has a profound influence upon that policy's economic character. Large-scale armaments are inseparable from the expansion of the armed forces and the preparation of plans for a war of conquest. They also induce competitive rearmament of other countries. This causes the main aim of spending to shift gradually from full employment to securing the maximum effect of rearmament. As a result, employment becomes 'over-full'. Not only is unemployment abolished, but an acute scarcity of labour prevails. Bottlenecks arise in every sphere, and these must be dealt with by the creation of a number of controls. Such an economy has many features of a planned economy, and is sometimes compared, rather ignorantly, with socialism. However, this type of planning is bound to appear whenever an economy sets itself a certain high target of production in a particular sphere, when it becomes a target economy of which the armament economy is a special case. An armament economy involves in particular the curtailment of consumption as compared with that which it could have been under full employment.

The fascist system starts from the overcoming of unemployment, develops into an armament economy of scarcity, and ends inevitably in war.

so that claim is pretty hard to sustain, esp. after you admit it:

First things first: Military spending does create jobs when the economy is depressed. Indeed, much of the evidence that Keynesian economics works comes from tracking the effects of past military buildups. Some liberals dislike this conclusion, but economics isn’t a morality play: spending on things you don’t like is still spending, and more spending would create more jobs.

....

So I welcome the sudden upsurge in weaponized Keynesianism, which is revealing the reality behind our political debates. At a fundamental level, the opponents of any serious job-creation program know perfectly well that such a program would probably work, for the same reason that defense cuts would raise unemployment [not exactly]. But they don’t want voters to know what they know, because that would hurt their larger agenda — keeping regulation and taxes on the wealthy at bay.

dm posted:
thirdplace posted:
i don't really see the problem? once you sell someone on state-supplied inflation-fueled direct employment via war it's really easy to sell them on the same concept in furtherance of useful infrastructure spending. that's what krugman's trying to do, i've done it myself


nono he is re-selling the former by saying they are equivalent b/c economic science.

definitely not the impression i've gotten from reading him regularly, it's always been "hell it'd be good if we created demand by literally burying money, how great would it be if we did it by creating something useful"

the reason we need infrastructure is that we actually need infrastructure, esp. in forms that conserve energy in general and oil in particular

yea but there's a real elegance that comes from combining that with babbys first keynesianist argument. "oh we have lots of unemployed people and also large projects that we need to initiate, hmmm" it's the simplest thing in the world and once you ween people off their absurd aversion to the idea that the government can do anything useful (when I think of the time I've spent on facebook and blog comments arguing against the proposition that the state is literally incapable of creating wealth a single tear rolls down my cheek) it becomes extremely obvious

don't get me wrong, krugman is still a liberal and therefore scum. but he's arguing against tea-derived antistatism and that's one of the things liberals are good for

dm posted:
http://www.youtube.com/watch?v=TVMaQmDSi9Y

man the job guarantee they talk about near the end is such a powerful idea in so many ways, i wish more people would hear about it and take it seriously. if i had my druthers it would be OWS's "one demand"

thirdplace posted:
i still don't think it's fair to characterize krugman as a warmonger but the implications of his worldview and everything else you say are points well taken.

fair enough, but i disagree on the military spending on technical grounds that can't be explained in terms of aggregates (or national income for that matter).

man the job guarantee they talk about near the end is such a powerful idea in so many ways, i wish more people would hear about it and take it seriously. if i had my druthers it would be OWS's "one demand"

i think it is indeed a powerful idea because it gets across the fact that things could be organized in a very different way. that said, the fact that things could be organized in a very different way is only a starting point: http://www.youtube.com/watch?v=YYQb0fthNfI

Bernanke said the Securities and Exchange Commission similarly was "interested" in Wall Street's activities in helping Greece do derivatives deals.

He stopped short of saying an official inquiry of Goldman Sachs' activities was under way by either the Fed or SEC. The SEC had no immediate comment when contacted.

"Obviously, using these instruments in a way that potentially destabilizes a company or a country is counterproductive," Bernanke said. "We'll certainly be evaluating what we learn from the activities of the holding companies that we supervise here in the U.S."

this is why they don't want to let Greece (or any of the others) default: http://www.nytimes.com/2011/11/20/business/credit-default-swaps-as-a-scare-tactic-in-greece.html

on the one hand, the ones holding that shit get paid if they do and on the other hand, the US money market (short term borrowing and lending) blows up if they default!

they really want to do a major bailout again (as opposed to the behind the scenes stuff they've been doing) but they don't want to deal with the consequences of doing that at the same time they're pushing austerity on everyone else.

Edited by dm (Nov. 21, 2011 18:48:38)

thirdplace posted:
dm posted:
this, plus (and i know i'm being super shortsided/conventional here) it is an arrow through the heart of the discourse that casts every leftist opponent of capitalism as someone looking for a "handout"

what drawbacks would a demand like that have though?

aerdil posted:
Thanks, thats a decent article - just read it. Puts most of it together.

np, i need to catch up on California stuff sometime soon

Tsargon posted:
m. hudson has an interview on trnn about the super-committee, and claims that the super-committee was designed to fail. the mandatory cuts were scheduled to trigger in 2013 so that obama can put off doing something unpopular until the next election is over, and then once re-elected he'll cancel the triggered cuts and push through some really harsh shit against labor At This Time Of Crisis.

he also says that there is a broad American-European alliance to hollow out western economies in order to try and restart capitalism down the line, which is a much more coherent explanation for why the west has gone austeri-crazy over the past few years than Those Damn Politicians Just Dont Know What Theyre Doin. interesting stuff mr. hudson!

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=7622

well i thought the use of the recession on labor was pretty obvious. you can't push for anything and can actually be made to take concessions on pay, benefits, etc. because it's not like you can just go find another job if you lose the one you have

he's right about the public sector, especially teachers.

e: m. krugman is upset about the usage of the word technocrat: http://www.nytimes.com/2011/11/21/opinion/boring-cruel-euro-romantics.html

There’s a word I keep hearing lately: “technocrat.” Sometimes it’s used as a term of scorn — the creators of the euro, we’re told, were technocrats who failed to take human and cultural factors into account. Sometimes it’s a term of praise: the newly installed prime ministers of Greece and Italy are described as technocrats who will rise above politics and do what needs to be done.

I call foul. I know from technocrats; sometimes I even play one myself. And these people — the people who bullied Europe into adopting a common currency, the people who are bullying both Europe and the United States into austerity — aren’t technocrats. They are, instead, deeply impractical romantics.

this is part of the self-image of the economist.

Let’s start with the creation of the euro. If you think that this was a project driven by careful calculation of costs and benefits, you have been misinformed.

The truth is that Europe’s march toward a common currency was, from the beginning, a dubious project on any objective economic analysis...

what we need is real technocrats

Real technocrats would have asked why this makes sense at a time when the unemployment rate is 9 percent and the interest rate on U.S. debt is only 2 percent. But like the E.C.B., our fiscal scolds have their story about what’s important, and they’re sticking to it no matter what the data say.

So am I against technocrats? Not at all. I like technocrats — technocrats are friends of mine. And we need technical expertise to deal with our economic woes.

But our discourse is being badly distorted by ideologues and wishful thinkers — boring, cruel romantics — pretending to be technocrats. And it’s time to puncture their pretensions.

because, you know, there's nothing political about any of this.

e2: former neoliberal technocrat from Mexico:

http://www.ft.com/intl/cms/s/0/f3130074-1451-11e1-b07b-00144feabdc0.html

In Greece, large debt write-offs are needed but they will not by themselves ease adjustment or restore growth. Today no one knows the size of the required “haircut”. So talk of the equivalent of a “Brady plan” for Greece is, in my view, premature and misplaced. The Brady plan – the financial programme devised by the then US Treasury secretary to rescue Latin America countries in the 1990s from their debt crisis by helping them sell US-dollar denominated bonds – worked because fiscal adjustment and structural reforms had already been put in place over the course of eight or nine years. This is certainly not the case in Greece. The magnitude of the fiscal adjustment achieved in Latin America was brutal, yet average relative debt levels were about two-fifths that of Greece.

Mexico, for example went from having a primary fiscal deficit of 8.4 per cent of gross domestic product in 1981 to a surplus of almost 5 per cent two years later. Greece, however, will not be able to accomplish the fiscal consolidation agreed for 2011 of 4 per cent of GDP. Achieving a successful adjustment in the middle of a domestic recession and a negative global environment is clearly a challenging task. However, Greece has to undergo this phase to move forward without resorting to the devaluation or inflation mechanism used in Latin America. Difficult as this may be, it is less onerous than opting out of the eurozone.

In the medium term, the challenge for Europe is reshaping its political institutions to foster fiscal integration and pushing for structural measures to enhance growth. To make that transition feasible, the ECB needs to act promptly and decisively.

Growth stimulus packages were essential in solving the Latin American debt crises of the 1990s. Mexico, for example, became a more competitive economy through extensive trade reforms, the privatisation of public-sector enterprises, and financial market liberalisation. In Europe only timid steps towards growth-enhancing policies have been taken so far. Adjustment without growth ends up being unworkable. The Brady plan for Latin America was a game changer because it was the conclusion of a phase. Greece, by contrast, is now at the beginning of a very long journey.

and here is m. krugman on this process

Enter the new generation of reformers. Over the course of the 1970s a "new class" had become increasingly influential within Mexico's ruling party and government. Well educated, often with graduate degrees from Harvard or MIT, fluent in English and internationalist in outlook, they were Mexican enough to navigate the PRI's boss-and-patronage political waters, but Americanized enough to believe that things should be different. The economic crisis left the old guard, the "dinosaurs," at a loss for answers; the "technopols," who could explain how free-market reforms had worked in Chile, how export-oriented growth had worked in Korea, how inflation stabilization had been achieved in Israel, found them­ selves the men of the hour. They were not alone: by the mid-1980s many Latin American economists had abandoned the statist views of the fifties and sixties in favor of what came to be called the Washington Consensus: growth could best be achieved via sound budgets, low inflation, deregulated markets, and free trade.

In 1985 President Miguel de la Madrid began to put this doc­trine into effect, most dramatically through a radical freeing up of Mexico's trade: tariffs were slashed, and the range of imports requiring government licenses drastically reduced. The government began selling off some of the enterprises it owned, and loosened the strict rules governing foreign ownership. Perhaps most remark­ able of all, de la Madrid designated as his successor not one of the usual PRI bosses but a champion of the new reformers: Planning and Budget Secretary Carlos Salinas de Gortari, himself possessed of a degree from Harvard's Kennedy School of Government, and surrounded by a staff of highly regarded economists trained mainly at MIT.

....

By 1988 this system, like Mexico as a whole, was under strain. Salinas faced a real challenger in the general election: Cuauhtemoc Cardenas, son of a popular former president, who countered Salinas's free-market reformism with a more traditional, anti-capitalist populism. It was a close election, and Cardenas won. But that was not how the official tally came out. Salinas became president, but now, more than any of his predecessors, he had to deliver the goods. For that, he turned to his Cambridge-trained economic team.

The successes of the Salinas years were built on two crucial pol­icy moves. First was a resolution of the debt crisis. In early 1989, its own presidential election safely past, the U.S. government began showing some unexpected willingness to face up to unpleasant realities. It finally admitted what everyone had long known, that many savings and loan associations had been gambling with tax­ payer money and needed to be shut down. Meanwhile, in a surprise speech, Treasury Secretary Nicholas Brady declared that Latin America's debt could not be fully repaid and that some kind of debt forgiveness would have to be worked out. The so-called Brady Plan was more a sentiment than an actual plan—Brady's speech emerged from bureaucratic intrigues worthy of Yes, Minister, during which those government officials who might have had the technical expertise to put together a workable blueprint for debt relief were kept in the dark, for fear that they might raise objections. But it gave the extremely competent Mexicans the opening they needed. Within a few months they had devised a scheme that was workable. Mexico ended up replacing much of its outstanding debt with a smaller face value of "Brady bonds."

The overall debt relief from Mexico's Brady deal was modest, but it represented a psychological turning point. Mexicans who had long agitated for debt repudiation were mollified by seeing the foreign bankers give up a pound of flesh; the debt faded as a domestic political issue. Meanwhile foreign investors, who had been afraid to put funds into Mexico for fear that they would be trapped there, saw the deal as putting a period to that phase, and became ready to put in fresh money. The interest rates that Mexico had been forced to pay to keep money from fleeing the country plunged; and because the government no longer had to pay such high interest rates on its debt, the budget deficit quickly faded away. Within a year after the Brady deal, Mexico's financial situa­tion had been transformed.

Edited by dm (Nov. 22, 2011 02:02:31)

dm posted:
It was a close election, and Cardenas won. But that was not how the official tally came out. Salinas became president, but now, more than any of his predecessors, he had to deliver the goods.

lmao even though the casual disdain for democracy shines through all over his writings this is the best ive seen. imagine that. violating the democratic process is actually the most democractic thing of all

Tsargon posted:
i hadnt previously made the connection that this was a sort of extraordinarily ruthless creative destruction, wherein any sort of potential loss to capital is diverted away and borne by labor, in order to dress the field for a new capitalist revival.

this still doesn't make a lot of sense even under standard neoclassical doctrine because it completely eviscerates the consumer base needed to resume infinite growth. they're totally aware that demand destruction and balance sheet retrenchment will prevent anything like a revival of late 20th century capitalism, so the expected model has to be something different. maybe some kind of combination of legislated markets (eg the health care mandated insurance stuff) and vastly expanded debt offerings. that's much closer to some kind of debt peonage system than it is a capitalist revival