Sunday, October 13, 2013

From Niall Ferguson and Keynes to Empire

The conventional economist Niall Ferguson was the start of an article and series of commentaries that make a nice review of the state of the world.  My post follows theirs below.
Published on Friday, October 11, 2013 by Beat the Press / CEPR

The Ravings of Niall Ferguson, the Real World, and the Needless Suffering of Tens of Millions

by Dean Baker

For reasons I cannot imagine, Niall Ferguson has achieved some standing as an intellectual with interesting things to say about the economy. Whenever I have read one of his pieces I almost always find it so confused that it would take a blogpost at least as long as the original to set it straight. This is why I generally ignore Ferguson, except when prodded by friends and readers.Niall Ferguson. (Photo: The Aspen Institute)For this reason I was struck to see that my occasional Niall Ferguson corrections got me on the list of Paul Krugman’s

“like-minded bloggers who play a sinister game of tag with him, endorsing his attacks and adding vitriol of their own. I would like to name and shame in this context Dean Baker, Josh Barro, Brad DeLong, Matthew O'Brien, Noah Smith, Matthew Yglesias and Justin Wolfers.”


In addition to all the people who are unemployed or underemployed, the weakness of the labor market has made it impossible for most workers to be able to achieve real wage gains. As a result the benefits of the growth we have seen in the United States and other wealthy countries have gone overwhelmingly to the richest 1 percent of the population.
This story is not only devastating for the current generation of workers; it is also having a devastating impact on their children. There are millions of children having impaired childhoods because their unemployed parent(s) cannot properly care for them. (Bizarrely, Ferguson and his ilk are obsessed with deficit projections for 20 and 30 years out, which are entirely due to our broken health care system, as the worst threat facing our children.)
The horrible plight facing so many people in the United States and Europe is especially infuriating because it is so preventable. We know how to get people back to work – Keynes taught us the answer almost 80 years ago. We just need to spend money. Keynes was shown right in the Great Depression and all the evidence that we have seen to date in the current downturn show that these lessons still hold. (Btw, we can also go the route of reducing work hours, while making up for most of the shortfall in wages. Reductions in work hours is the secret to Germany’s 5.4 percent unemployment.)



  • Avatar
    2 days ago•555
    Krugman and Baker are both wrong.
    The primary economic problem is the ongoing unchecked corporate crime wave.
    Until the banksters are imprisoned, the rule of law established and their victims made whole there will be no economic recovery.
    Krugman and Baker skip mentioning this primary step because their allegiance is to the Democratic party where many of the perps hide out.
    After an economic foundation has been reestablished then you can move ahead with Keynesian stimulus, not before.
    Pouring stimulus into a broken, rigged and criminal economic system will produce little or no benefits for the working class.
    Do we need further proof of this fact?
    The Fed has pumped $16 trillion into the banking system and the bottom 90% have not benefitted at all.

    • CygnusX1isaHole, you are certainly correct that while both Krugman and Baker are only part right in conventional economic terms, they are "both wrong" (dead wrong) in terms of any serious economic analysis that considers the "broken, rigged, and criminal economic system" being gamed by the 'economics of EMPIRE' --- which is, after all what we are caught in.
      Therefore, you are absolutely right in noting that "The primary economic problem is the ongoing unchecked corporate crime wave" --- to which I would only add and extend your analysis by noting that the 'corporate crime wave' is CAUSED by a very guilefully Disguised Global EMPIRE:
      Currently the singular factor driving the Global Empire to establish more overt control over the masses is
      that the Empire Economy is collapsing because it is choking on an overflow of “Negative Externality Costs” which can no longer be hidden from the masses.
      The external costs of production are dramatically rising (the costs that the corporations impose on the environment and third parties)
      But in fact, 'externality cost dumping", which
      IS the seminal problem, is not only broadly used/abused by the 'corporate sector' of the Empire in "production", but universally used in the 'financial sector' of the Empire --- ie. on Wall Street, which is correctly tagged as the "most corrupt system in world history" because it has recently perfected the
      new alchemy of turning not lead, but paper (CDO's, CDS's, and all derivative 'contracts') into gold to plunder wealth.
      It is essential to understand (and properly diagnose) both 'externality cost dumping' and its twin, EMPIRE --- because 'externality cost dumping' is the central concept of Empire itself.
      Empire always historically, by definition, plunders wealth from outside its boarders, and dumps
      'negative externality costs' (including enslaving and/or killing 'subjects', stealing resources, land, treasure, et al) from outside the boarders of the EMPIRE.
      But in today's 21st century post-nation-state globalized world THERE IS NO 'OUTSIDE'.
      Dumping negative externality costs on a global level by a Global Empire has no meaning ---- since the effects of dumping classic 'production-type' negative externality costs (like air, water, land pollution, not to mention causing a death-spiral of climate change)
      causes harm to all those who are treated as the 'others' or 'subjects' of the Global Empire.
      Likewise the deceitful and deadly wrong corporate empire's "phony economists" have been using and continue to use a model of economics which pretends
      that the now massive factor of 'negative externality costs' can be removed from the equations of the predatory and faux-profit driven corporate, financial, militarist, media, (IL)legal, and political Disguised Global Empire (DGE) which has 'captured' and now fully "Occupies" our former country as its nominal HQ (but which also includes; UK, France, Germany, NATO, WTO, IMF, EU, Israel et
      Best luck and love to the fast expanding 'Occupy the Empire' educational and non-violent revolutionary movement against this deceitful and Disguised Global EMPIRE, which can't so easily be identified as wearing Red Coats, Red Stars, nor funny looking Nazi
      helmets ---- quite yet!
      Liberty, democracy, justice, and equality
      Violent ('Vichy' disguised dual-party)
      Alan MacDonald
      We don't merely have a gun/fear problem, or an MIC problem, or an 'Austerity' problem, or an expanding wars problem, or a 'drone assassinations' problem, or a vast income & wealth inequality problem, or a Wall Street 'looting' problem, or a Global Warming and
      environmental death-spiral problem, or a domestic tyranny NSA, NDAA, and FISA spying problem, or the world's largest political prisoner problem, or, or, or .... ad nauseam --- we have a hidden EMPIRE cancerous tumor which is the prime CAUSE of all these underlying related 'symptom problems'

      • Kudos to both A McD and CxH for their edifying comments. I will add the observation that, as any student of history, knows countries, like organisms have lifespans and those countries that rise to become powerful hegemonic empires pay a terrible price in terms of distortion of their societies. The U.S. (while certainly never the paragon of virtue that its sycophantic boosters would like to portray it as being), was a great society that produced a rich heritage of art, science, technological advancement, a decent life for the biggest share of its citizens of any contemporary state, among other postive attributes. Of course these were achieved while plundering the resources of the continent, poisoning every stream and lake, stripping off the forests, killing off (inadvertantly at first and soon after intentionally) the native population and consigning the remnants to small "reservations"; and in more recent years running a now nearly 70 year war on the countries of the "third world", complete with death squads, assasinations, governmental overthrows, client dictators, disinformation campaigns and so on.
        In the end though all empires fail. A small elite part of the "mother" country's society reaps all the rewards while the costs (the externality in this particular case) are laid on the victims in the target areas and the general populace at home. Paul Kennedy examined this type of development in his book "The Rise and Fall of the Great Powers" nearly 25 years ago. Also the change in the structure of hegemonic societies from productive capital regimes to finance capital regimes was examined by Immanuel Wallerstein, and Fernand Braudel even more years ago. Unable to compete successfully with domestic production in world markets U.S. capitalists invested in the countries that would supplant them and later turned almost exclusively to running various types of swindles and other financial shennanigans.
        On top of everything else the world has already exceeded its carrying capacity with 7+ billion people and in many ways, not just global warming, we are ruining the planet we live on. And to make things worse U.N. population trend predictions have now turned back up from a peak of 9 billion to 11 billion or more. It is hard to believe we will ever achieve that high of a population with the stupid, short sighted, exploitive way our elites run their business interests; the planet simply will not support such abuse and sustain us with a productive environment.
        It does not add up to a very pretty picture. The only serious future is to begin immediately reducing population and through education and confiscation of the holdings of the rich build a fairer and more humane society. Our scientific and technological tools are superb and getting better rapidly, but many of our social interactions are still in a stone-age level of awareness. That sufficed when we were few and had a minimal impact on the Earth, that is not the case now however.
    • Mark RegoM
      3 minutes ago•00
      Nice job CygnusX1, Alan MacDonald, and dmorista. The empire itself can be identified beyond nationalities in terms of corporate governance. The US is a great nest of them, the "profit-maximizers" who do so much externalizing of costs. When conservatives established the Heritage Foundation in the 1970s, they began their own "Great Leap Forward" to use the Maoist term. Milton Friedman was their AdamSmithian guru then. Reagan's election then accelerated their ascendance. While Milken, Enron, and Lehman Brothers involved some who took a fall, of course, the existing Big Corp's and their Executives achieved such evil High Points as the elimination of Glass-Steagal Act and the Citizens United decision. The solutions, then, can be best found in local initiatives and broad networking, since Hugo Chavez's kind of incredible national politicking is rare. Chavez established social priorities and development especially through initiative oriented Co-operative Enterprises. The Co-op Enterprise model is one of the foundations behind such successes as the Mondragon co-op complex, and the Solidarity Economy movement framed along with the World Social Forum movements.
      Similar bearers of hope are the certification movements which are trying to leverage consumer values against Corporations per se. I'd say Food Co-ops in the US, European co-ops that nurtured the growth of wind power beginning in Denmark, and the very origins of the co-op movement in the UK, Germany, Denmark, and elsewhere all make a strong basis for something beyond the Occupy Movements. Good luck, God Bless, and see you there.
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