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On November 04 2014 03:22 bookwyrm wrote:
Would the conformist economists here tend to agree that, in general, our society is overleveraged and that this is a problem? Or is this only a thing that stupid marxists who don't understand supply and demand and the genius of Paul Krugman think?
I think even Krugman would agree that our current policy making is not necessarily the most efficient. I know he spend a shitload of time to make people believe the QE was not beneficial to the banking system and such, but I'm pretty sure, if he had the option, that he would have opted for a traditionnal budgetary stimulus and a different monetary policy, less axed on the banking system and the financial sector. Yet the US' monetary policy has still been overall a better solution to the crisis than what the BCE did - lowering interests rate and giving various free loans to banks rather than buying assets and public debt itself.
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Yeah. Clearly the correct solution to the crisis within the capitalist horizon would have been massive deficit-funded expenditures in green projects - building dense, efficient cities, high-speed rail, habitat restoration, etc. Monetary stimulus is a really poor substitute for fiscal stimulus as it's basically just giving money to pigs and hoping they do the Keynesian thing for you. Which... yeah right
but i would rather have seen the entire thing collapse than do what we did. As it is, I'm just wasting my youth waiting for the next crisis. what's the point in making life plans when you know the entire system is built on lies and air castles? Let's just let the damn thing crash and get on with doing whatever comes next.
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You don't seem to like the Krugman but he is quite an impressive economist, and less ideologically far from marx than you think of (he quoted Minsky a lot at some point after the crisis). He is very mainstream in many subject, but also intelligent and subtle enough to permit modern economy to be a little more than micreconomic bullshit. His work on economic geography is a good exemple of that.
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On November 04 2014 03:07 WhiteDog wrote:
The choice of the optimal rate of inflation is a political choice : every level favor specific people. Something closer to 4% favor labor against savings, it's true. That's the reason why Germany force a low inflation target (below 2%) on the entire euro zone : because it needs it considering its population's age. The US is not in the same demographic situation, and could easily vote for some kind of fiscal transfert to help the few poor retired people who would suffer from a higher inflation target.
There's also an important difference between how countries handle social security. Some countries are not so big on state welfare as other countries. If your social security is tied to your employer and (semi)-private funds or something along those lines, it's way harder to adjust these things for inflation. Also even big parts of the population in most Western countries don't seem to be in favour of more redistribution. I don't think voting for more fiscal transfer is an easy task in any country and especially in the US.
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On November 04 2014 03:38 WhiteDog wrote:
You don't seem to like the Krugman but he is quite an impressive economist, and less ideologically far from marx than you think of (he quoted Minsky a lot at some point after the crisis). He is very mainstream in many subject, but also intelligent and subtle enough to permit modern economy to be a little more than micreconomic bullshit. His work on economic geography is a good exemple of that.
his NYT op eds make me want to gag myself with a rusty spoon. Shit-eating apologetics for quack economic nostrums, from where I'm sitting. As economists go, he's all right I guess. I don't really have a very high opinion of economists, I think they mostly have the ability for critical thought beat out of them and they are as a rule entirely unimaginative. they never stop to ask themselves questions like "what is an economy for, in the first place?"
It's because they are part of that pathetically deluded species of humans who believe that is possible to understand the world with math. They think in totally reified ways and habitually confuse the map for the territory
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On November 04 2014 03:38 Nyxisto wrote:Show nested quote +On November 04 2014 03:07 WhiteDog wrote:
The choice of the optimal rate of inflation is a political choice : every level favor specific people. Something closer to 4% favor labor against savings, it's true. That's the reason why Germany force a low inflation target (below 2%) on the entire euro zone : because it needs it considering its population's age. The US is not in the same demographic situation, and could easily vote for some kind of fiscal transfert to help the few poor retired people who would suffer from a higher inflation target. There's also an important difference between how countries handle social security. Some countries are not so big on state welfare as other countries. If your social security is tied to your employer and (semi)-private funds or something along those lines, it's way harder to adjust these things for inflation. Also even big parts of the population in most Western countries don't seem to be in favour of more redistribution. I don't think voting for more fiscal transfer is an easy task in any country and especially in the US.
Yeah because welfare state build itself on homogeneous societies. France has had one of the most developped welfare program because it spend a lot of effort into integrating emigrants and destroying culture diversity (something all countries did at a certain point).
One of the main reason europe is incapable of doing anything is because it is a very heterogeneous entity, and I hope it will stay that way because it's our main quality imo. Better than the germanification of europe that is happening right now 
But I believe today's US, by opposition to the US in 1970-1990 for exemple, is ready for such fiscal redistribution. Just a personnal point of view tho.
On November 04 2014 03:41 bookwyrm wrote:Show nested quote +On November 04 2014 03:38 WhiteDog wrote:
You don't seem to like the Krugman but he is quite an impressive economist, and less ideologically far from marx than you think of (he quoted Minsky a lot at some point after the crisis). He is very mainstream in many subject, but also intelligent and subtle enough to permit modern economy to be a little more than micreconomic bullshit. His work on economic geography is a good exemple of that. his NYT op eds make me want to gag myself with a rusty spoon. Shit-eating apologetics for quack economic nostrums, from where I'm sitting. As economists go, he's all right I guess. I don't really have a very high opinion of economists, I think they mostly have the ability for critical thought beat out of them and they are as a rule entirely unimaginative. they never stop to ask themselves questions like "what is an economy for, in the first place?" It's because they are part of that pathetically deluded species of humans who believe that is possible to understand the world with math. They think in totally reified ways and habitually confuse the map for the territory
Yeah but Krugman is one of the few who knows both qualities and limits of models. He likes math but knows deep inside that it's pretty useless if you want solutions out of them.
But maybe I like him because he is always defending France. Go Kruggy !
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Cayman Islands24199 Posts
bookwyrm before you go bashing people at least make sure you are kind of informed.
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On November 04 2014 03:50 oneofthem wrote:
bookwyrm before you go bashing people at least make sure you are kind of informed.
Making quick judgements on notorious figures is a good way to free yourself from peer pressure and think by yourself. You should try it oneofsanto.
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On November 04 2014 03:07 WhiteDog wrote:Show nested quote +On November 04 2014 02:03 Nyxisto wrote:On November 03 2014 23:24 aksfjh wrote:On November 03 2014 12:25 Vegetarian wrote:On November 03 2014 10:25 oneofthem wrote:
so what? pensions are inflation adjusted and that person should have invested in some form of secure asset that also grows.
by the by the government should also hand out inflation stipends to those elderly in your example. but in the larger context of the economy deflation is way way worse than moderate inflation, partly due to increasing inequality. Inflation is what increases inequality by transferring wealth to politically connected people and by transferring wealth from people who do not have much debt to people who have debt. Pensions are not inflation adjusted, they are adjusted based on a political calculation of inflation that always understates the true level of inflation. Why is deflation worse than inflation? Deflation means that purchasing power is increasing relative to the costs of products. This scenario helps everyone as the cost of living is decreasing under deflation. I don't understand why you think that increasing the cost of living and transferring wealth from savers to debtors is beneficial for an economy or how this scenario is capable of reducing inequality? Here's how it works in the real world, outside of "perfect models." The more wealth you have, the harder it is to put all of it into highly appreciating assets. Yes, that $2 million in safe stocks and federal bonds will certainly grow with inflation, but only just that because "safe" assets are also highly valued and money is cheap. In the real world the super rich guy doesn't care if he loses a few hundred thousand bucks, but the guy who has saved up 50k his whole life is going to care even if he loses half of it. Even inflation as low as 2% that nearly halves the purchasing power over twenty years. Also take a look at social transfers all over the industrialized world, they have not risen with inflation. If you're interested in talking about the "real world" then it simply false to state that wages,pensions and social services rise with inflation. In France they did, in Germany and the US they haven't for over a decade already. Because inflation has been too low in Germany for decades (and Germany used that low inflation as an indirect tool to kill its competition in the euro zone, while benefitting from others' inflation) and it's absolutly false for the US, average wage have been going up, but since inequalities has risen too the effect is quite low on median wage (and real income has been decreasing for the lowest decile). ![[image loading]](http://www.ssa.gov/oact/cola/avg_median.gif) Lowflation is actually heavily discussed right now (for its effect in the economy), and yeah it does says a lot about how economists thought about inflation until now (that always assumed that any level of inflation would always lead to wage increase, as seen during the Phillips' curve debate). But an inflation that would be between 2 and 4 % (closer to 4 even, not targetted at 2, and below 2, like most of the stupid BCE technocrats wants) seems to be more efficient in terms of wage / unemployment (as known by various studies, such as Akerlof, Dickens & Perry's Near-Rational Wage and Price Setting and the Optimal Rates of Inflation and Unemployment). The choice of the optimal rate of inflation is a political choice : every level favor specific people. Something closer to 4% favor labor against savings, it's true. That's the reason why Germany force a low inflation target (below 2%) on the entire euro zone : because it needs it considering its population's age. The US is not in the same demographic situation, and could easily vote for some kind of fiscal transfert to help the few poor retired people who would suffer from a higher inflation target.
I've always wondered if there's not some technological factor in there as well, as in sticky prices can understate production efficiency gains, allowing firms to rake in disproportional rewards for extreme cost saving measures (like moving production to China or massive information system improvements). Maybe a target of 4% would have been perfect for the early 2000s in the US, which would eat up almost all production gains, while something crazy like 5-6% is needed now to make up for what was lost and aim for "overheating" and possibly eating away at creditors returns.
On November 04 2014 03:22 bookwyrm wrote:
Would the conformist economists here tend to agree that, in general, our society is overleveraged and that this is a problem?
Like I've said before, the middle class in the US has been duped into taking expanded credit over increased incomes since the 80s. Savers, which are primarily rich, see more gain from lending money out than paying workers more. In that way, we are overleveraged.
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On November 04 2014 03:41 bookwyrm wrote:Show nested quote +On November 04 2014 03:38 WhiteDog wrote:
You don't seem to like the Krugman but he is quite an impressive economist, and less ideologically far from marx than you think of (he quoted Minsky a lot at some point after the crisis). He is very mainstream in many subject, but also intelligent and subtle enough to permit modern economy to be a little more than micreconomic bullshit. His work on economic geography is a good exemple of that. It's because they are part of that pathetically deluded species of humans who believe that is possible to understand the world with math. They think in totally reified ways and habitually confuse the map for the territory
This warrants some elaboration.
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Cayman Islands24199 Posts
On November 04 2014 03:54 WhiteDog wrote:Show nested quote +On November 04 2014 03:50 oneofthem wrote:
bookwyrm before you go bashing people at least make sure you are kind of informed. Making quick judgements on notorious figures is a good way to free yourself from peer pressure and think by yourself. You should try it oneofsanto.
lol why are you still so mad about GMO whitedoge? pls
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On November 04 2014 04:11 oneofthem wrote:Show nested quote +On November 04 2014 03:54 WhiteDog wrote:On November 04 2014 03:50 oneofthem wrote:
bookwyrm before you go bashing people at least make sure you are kind of informed. Making quick judgements on notorious figures is a good way to free yourself from peer pressure and think by yourself. You should try it oneofsanto. lol why are you still so mad about GMO whitedoge? pls
Haha i'm not mate.
On November 04 2014 04:05 xDaunt wrote:Show nested quote +On November 04 2014 03:41 bookwyrm wrote:On November 04 2014 03:38 WhiteDog wrote:
You don't seem to like the Krugman but he is quite an impressive economist, and less ideologically far from marx than you think of (he quoted Minsky a lot at some point after the crisis). He is very mainstream in many subject, but also intelligent and subtle enough to permit modern economy to be a little more than micreconomic bullshit. His work on economic geography is a good exemple of that. It's because they are part of that pathetically deluded species of humans who believe that is possible to understand the world with math. They think in totally reified ways and habitually confuse the map for the territory This warrants some elaboration.
Pretty well written I believe.
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Cayman Islands24199 Posts
missing subtlety aside animus towards a general image of a discipline cannot stand in for information on actual events, such as the current policy of the boj.
reification and agency modeling has been my preoccupation for years and the issues are far more complex than is being portrayed here.
i believe whitedog declared that incentives are bunk or something to that generality. this sort of stuff is just cringeworthy and distracts from whatever critical point you were making
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On November 04 2014 04:56 oneofthem wrote:
missing subtlety aside animus towards a general image of a discipline cannot stand in for information on actual events, such as the current policy of the boj.
reification and agency modeling has been my preoccupation for years and the issues are far more complex than is being portrayed here.
i believe whitedog declared that incentives are bunk or something to that generality.
Basing any policy on incentive alone is bullshit yeah. Anybody who have study the epistemology of social science knows that, but economist don't, since epistemology is unknown to them.
On November 04 2014 03:58 aksfjh wrote:Show nested quote +On November 04 2014 03:07 WhiteDog wrote:On November 04 2014 02:03 Nyxisto wrote:On November 03 2014 23:24 aksfjh wrote:On November 03 2014 12:25 Vegetarian wrote:On November 03 2014 10:25 oneofthem wrote:
so what? pensions are inflation adjusted and that person should have invested in some form of secure asset that also grows.
by the by the government should also hand out inflation stipends to those elderly in your example. but in the larger context of the economy deflation is way way worse than moderate inflation, partly due to increasing inequality. Inflation is what increases inequality by transferring wealth to politically connected people and by transferring wealth from people who do not have much debt to people who have debt. Pensions are not inflation adjusted, they are adjusted based on a political calculation of inflation that always understates the true level of inflation. Why is deflation worse than inflation? Deflation means that purchasing power is increasing relative to the costs of products. This scenario helps everyone as the cost of living is decreasing under deflation. I don't understand why you think that increasing the cost of living and transferring wealth from savers to debtors is beneficial for an economy or how this scenario is capable of reducing inequality? Here's how it works in the real world, outside of "perfect models." The more wealth you have, the harder it is to put all of it into highly appreciating assets. Yes, that $2 million in safe stocks and federal bonds will certainly grow with inflation, but only just that because "safe" assets are also highly valued and money is cheap. In the real world the super rich guy doesn't care if he loses a few hundred thousand bucks, but the guy who has saved up 50k his whole life is going to care even if he loses half of it. Even inflation as low as 2% that nearly halves the purchasing power over twenty years. Also take a look at social transfers all over the industrialized world, they have not risen with inflation. If you're interested in talking about the "real world" then it simply false to state that wages,pensions and social services rise with inflation. In France they did, in Germany and the US they haven't for over a decade already. Because inflation has been too low in Germany for decades (and Germany used that low inflation as an indirect tool to kill its competition in the euro zone, while benefitting from others' inflation) and it's absolutly false for the US, average wage have been going up, but since inequalities has risen too the effect is quite low on median wage (and real income has been decreasing for the lowest decile). Lowflation is actually heavily discussed right now (for its effect in the economy), and yeah it does says a lot about how economists thought about inflation until now (that always assumed that any level of inflation would always lead to wage increase, as seen during the Phillips' curve debate). But an inflation that would be between 2 and 4 % (closer to 4 even, not targetted at 2, and below 2, like most of the stupid BCE technocrats wants) seems to be more efficient in terms of wage / unemployment (as known by various studies, such as Akerlof, Dickens & Perry's Near-Rational Wage and Price Setting and the Optimal Rates of Inflation and Unemployment). The choice of the optimal rate of inflation is a political choice : every level favor specific people. Something closer to 4% favor labor against savings, it's true. That's the reason why Germany force a low inflation target (below 2%) on the entire euro zone : because it needs it considering its population's age. The US is not in the same demographic situation, and could easily vote for some kind of fiscal transfert to help the few poor retired people who would suffer from a higher inflation target. I've always wondered if there's not some technological factor in there as well, as in sticky prices can understate production efficiency gains, allowing firms to rake in disproportional rewards for extreme cost saving measures (like moving production to China or massive information system improvements). Maybe a target of 4% would have been perfect for the early 2000s in the US, which would eat up almost all production gains, while something crazy like 5-6% is needed now to make up for what was lost and aim for "overheating" and possibly eating away at creditors returns.Show nested quote +On November 04 2014 03:22 bookwyrm wrote:
Would the conformist economists here tend to agree that, in general, our society is overleveraged and that this is a problem? Like I've said before, the middle class in the US has been duped into taking expanded credit over increased incomes since the 80s. Savers, which are primarily rich, see more gain from lending money out than paying workers more. In that way, we are overleveraged.
Maybe. Economists would say, I believe for microeconomic reasons, that inflation higher than 4% have no impact on employment. But personally I believe inflation is a lost cause : central banks cannot make it rise higher than 2-3 % anymore. I personally believe that the lowflation we are seeing everywhere have deep structural reasons, linked to the way the financial market behave, with the lack of protectionnism, especially in financiary movements, with the high rate of inequalities and the complete inexistance of strong social movements.
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On November 04 2014 03:35 bookwyrm wrote:
but i would rather have seen the entire thing collapse than do what we did. As it is, I'm just wasting my youth waiting for the next crisis. what's the point in making life plans when you know the entire system is built on lies and air castles? Let's just let the damn thing crash and get on with doing whatever comes next.
Arent you some English PhD or whatever? You are/have already wasting/ed your youth.
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On November 04 2014 03:22 bookwyrm wrote:
Would the conformist economists here tend to agree that, in general, our society is overleveraged and that this is a problem? Or is this only a thing that stupid marxists who don't understand supply and demand and the genius of Paul Krugman think?
I'd agree that over-leverage is an issue. I think there's a pretty strong consensus around that too. The arguments seem to be about how much leverage to reduce, where to reduce it, what time frame to go by and by what means should the reduction be done.
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On November 04 2014 04:51 WhiteDog wrote:
Pretty well written I believe.
Yes, yes, I'll be the first say that brevity is the soul of wit, but I always get excited whenever one paints with broad brushstrokes and shits on entire academic pursuits. Hence, I'm unsatisfied with such a terse response.
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On November 04 2014 03:04 bookwyrm wrote:Show nested quote +First of all, it's not about state debt at all, but about the relative preponderance of capital seeking return through financial devices vs direct productive investment, due to the fact that local opportunities for return experience falling rate of profits and drives financialization as a way to make capital more liquid over geography, which in turn is what causes the rise of the next center of the new cycle of accumulation. But its not! Prior to invention of relatively safe state debts there was still capital seeking return, except that for the most part it failed to find it. Thats why land rents -- which are the ultimate economic dead end -- were so popular with the biggest capital owners (the aristocracy). That is also why Dutch bonds were sought out by investors, and could be bought in relatively small denominations. The invention of state bonds allowed the small saver access to actual real growth in investment and it allowed the state to sweep up all the people who previously simply buried their money in the backyard and mobilize that inert savings into both productive investments and what you would basically call necessary ones -- ie protecting the country from French occupation. More broadly if Arrighi wanted to jam the Dutch Republic into his finance-->collapse theory, he needs to start marking Dutch Hegemony much earlier, maybe as early as the 1560s and its end later, around the 1780s. And again, even then it wouldnt explain the increase in public debt during the apogee of the Republic. The reality is that finance, in modern economies, is present at various random times. Sometimes its clearly very productive, and the increased financilization seems to act as fuel for further productive expansion -- ie the steady increase in the English debt during the early phases of the Industrial Revolution until a post Napoleonic consolidation -- and sometimes increased financialiation does act as a signal for a secular decline. ]quote] Some of your other points just seem like different glosses on the same thing. Saying "it's not about overindebtedness, it's because they were at war" to me is just two different ways of saying exactly the same thing. So I don't see your point. You seem to want to reduce things to single causal relationships rather than thinking conjuncturally... In fact, it seems quite intuitive to me that saturation of trade routes and continual warfare are things that go together, since those conditions make competition over trade a zero-sum game.
The initial anti-Spanish revolt was an ideological one, centered on religious freedom and taxes. The next major Dutch wars were both for trade route competition -- against the English Commonwealth --, against political dominion -- vs. the French -- The French royal state was not in a trade competition against the Dutch Republic -- at least not in the Arrighi describes it, it was in a geopolitical competition. The need to further extensive fortifications soaked up a significant amount of Dutch state's borrowing. But this wasnt the final stage of an economy that had run out of productive investments, it was a defensive mechanism against an aggressive hegemonic power.
You seem to treat geopolitical strife as an entirely exogenous thing from financial dynamics, as if wars "just happen"... I'm not so sure that's true. Wars happen for many reasons, but in the period he is writing about wars happened much more often for Religious, Dynastic or Geopolitical considerations. They happened much more rarely as a competition for trade/finance. And in large part thats because (a) the elites that dominated state institutions were aristocratic land holders who were disinterested in trade/finance in general (b) actual opportunities to compete for trade routes with warfare was so limited. The Gentians and Genoese, both trading with Constantinople did fight for trade access, as did the Dutch and the English during the Commonwealth period in England but those are exceptions.
Similarly with the thing about the Dutch conquests in SE Asia. I would have to go look at what he says, but his theory would seem to suggest that the new cycle of accumulation would begin BEFORE any such conquests, as it would require capital inflows into the new financial center to finance that conquest in the first place... so it seems very consistent.
He argues that the Dutch became a capital center because of inflows from SE Asia. Its ahistorical, the low countries were a leading financial center well before that, maybe as early as the 1500s, and the large scale colonization of SE Asia occurred after he closes the period of 'Dutch hegemony.'
Yes, I understand this. So inflation transfers wealth from the middle class who lack financial savvy to keep them ahead of inflation, both to the upper classes and to the lower classes as a way to keep the system of debt-serfdom from reaching a crisis point. If you have a debt-serf society you have to have inflation, otherwise there is going to be a revolution.
I dont understand who your define as 'middle class' because people with mortgages, which I guess are all debt serfs to you, benefit from inflation. People with retirement accounts that invest in an SP 500 index are also beneficaries. The only people who benefit from deflation are people who have investments in fixed income, which generally tend to be the upper class.
But isn't a) due in large part to the fact that companies are using free money to finance massive stock buybacks in order to push up earnings per share? i.e. the capitalist system self-cannibalizing.
If you are talking about now? Sure some are, but a lot of them are just getting better at their line of business. But more broadly, Arrighi says that 2008 is the crisis of Western capitalism that will transfer hegemony to China so we have to look at profits leading into the crisis and a good chunk of those are just productive improvements and not just exchange of debt for equity (although, even in those cases, the nature of debt in the tax code has to be examined, you cant just blankly say more debt proves capitalism is dying because at least the American tax codex favors a relatively high debt burden because it acts as a tax shield.)
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On November 04 2014 03:41 bookwyrm wrote:
It's because they are part of that pathetically deluded species of humans who believe that is possible to understand the world with math.
If it is indeed possible to understand the world, it would be through maths. Sadly, understanding the world is even less likely than students of the humanities understanding maths. And that is unlikely indeed.
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So I guess it seems reasonable that the things you say are true, but I'm not so sure that it "disproves" anything about what Arrighi is saying. You seem to treat geopolitical strife as an entirely exogenous thing from financial dynamics, as if wars "just happen"... I'm not so sure that's true.
United States involvement in Vietnam? Latin America? Middle East?
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EPT
