Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Krugman’

Notes on Excessive Wealth Disorder

Posted by hkarner - 10. Juli 2019

Date: 09-07-2019
Source: The New York Times By Paul Krugman

How not to repeat the mistakes of 2011.

People waiting in line at a job fair in Bloomington, Minn., in 2011.

In a couple of days I’m going to be participating in an Economic Policy Institute conference on “excessive wealth disorder” — the problems and dangers created by extreme concentration of income and wealth at the top. I’ve been asked to give a short talk at the beginning of the conference, focusing on the political and policy distortions high inequality creates, and I’ve been trying to put my thoughts in order. So I thought I might as well write up those thoughts for broader dissemination.

While popular discourse has concentrated on the “1 percent,” what’s really at issue here is the role of the 0.1 percent, or maybe the 0.01 percent — the truly wealthy, not the “$400,000 a year working Wall Street stiff” memorably ridiculed in the movie Wall Street. This is a really tiny group of people, but one that exerts huge influence over policy. Den Rest des Beitrags lesen »

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Is modern monetary theory nutty or essential?

Posted by hkarner - 14. März 2019

Date: 13-03-2019
Source: The Economist: Free exchange

Some eminent economists think the former

“MODERN MONETARY THEORY” sounds like the subject of a lecture destined to put undergraduates to sleep. But among macroeconomists MMT is far from soporific. Stephanie Kelton, a leading MMT scholar at Stony Brook University, has advised Bernie Sanders, a senator and presidential candidate. Congresswoman Alexandria Ocasio-Cortez, a young flag-bearer of the American left, cites MMT when asked how she plans to pay for a Green New Deal. As MMT’s political stock has risen, so has the temperature of debate about it. Paul Krugman, a Nobel prizewinner and newspaper columnist, recently complained that its devotees engage in “Calvinball” (a game in the comic strip “Calvin and Hobbes” in which players may change the rules on a whim). Larry Summers, a former treasury secretary now at Harvard University, recently called MMT the new “voodoo economics”, an insult formerly reserved for the notion that tax cuts pay for themselves. These arguments are loud, sprawling and difficult to weigh up. They also speak volumes about macroeconomics.

MMT has its roots in deep doctrinal fissures. In the decades after the Depression economists argued, sometimes bitterly, over how to build on the ideas of John Maynard Keynes, macroeconomics’ founding intellect. In the end, a mathematised, American strain of Keynesianism became dominant, while other variants were lumped into the category of “post-Keynesianism”: an eclectic mix of ideas consigned to the heterodox fringe. In the 1990s a number of like-minded thinkers drew on post-Keynesian ideas in fleshing out the perspective embodied in MMT. Den Rest des Beitrags lesen »

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How Economics Survived the Economic Crisis

Posted by hkarner - 19. Januar 2018

Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

Unlike the Great Depression of the 1930s, which produced Keynesian economics, and the stagflation of the 1970s, which gave rise to Milton Friedman’s monetarism, the Great Recession has elicited no such response from the economics profession. Why?

LONDON – The tenth anniversary of the start of the Great Recession was the occasion for an elegant essay by the Nobel laureate economist Paul Krugman, who noted how little the debate about the causes and consequences of the crisis have changed over the last decade. Whereas the Great Depression of the 1930s produced Keynesian economics, and the stagflation of the 1970s produced Milton Friedman’s monetarism, the Great Recession has produced no similar intellectual shift.

This is deeply depressing to young students of economics, who hoped for a suitably challenging response from the profession. Why has there been none? Den Rest des Beitrags lesen »

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Year of the Octopus, Part 1

Posted by hkarner - 8. Januar 2018

In last week’s letter, “Economy on a Roll,” I gave you my own fairly upbeat 2018 forecast. I think the US economy and markets will probably hold up well, thanks to tax cuts and deregulation – assuming the Federal Reserve gets no more hawkish than it already has. That assumption may be a stretch, given the Fed’s changing composition, but I’m feeling optimistic anyway.

The one real potential wrench in the works that I did not mention last week was Trump’s actually enacting significant tariffs or tearing up NAFTA, which would cost millions of jobs and cause significant backlash. I am hopeful that mistake won’t be made.

This week and next we’ll look at forecasts from some of my most trusted friends and colleagues. I have so many that our project may even stretch into a third week. Some disagree with my own views – and that’s perfectly fine. I want you to see all sides so you can make good decisions for your own family and portfolio. I’ll let these forecasters speak for themselves in longer quotes than I usually allow, then add my own comments. Den Rest des Beitrags lesen »

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Rationality and Rabbit Holes

Posted by hkarner - 11. Oktober 2017

October 10, 2017 9:50 am NYT Blog

Like the vast majority of economists, I was delighted to see Richard Thaler get the Nobel. Anyone with a bit of sense – a group that, believe it or not, includes many economists – knows that people aren’t perfectly rational. But the assumption of hyperrationality still plays far too large a role in the field. And Thaler didn’t just document deviations from rationality, he showed that there are consistent, usable patterns in those deviations.

The question, however, is how much difference this should make to the practice of economics. And here you have a division between two camps. One says that imperfect rationality changes everything; the other that the assumption of rationality is still the best game out there, or at least sets a baseline from which departures must be justified at length.

Which camp is right? My thought: it depends on the field, for reasons not entirely clear to me. Let me talk about two fields I know reasonably well: macroeconomics, which I think I know pretty well, and finance, where I am much less well-informed in general but am pretty familiar with at least some international areas. What strikes me is that vaguely Thalerish reasoning is hugely important in one, in the other not so much. Den Rest des Beitrags lesen »

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The Day Nothing Changed

Posted by hkarner - 11. September 2017

It’s 9/11 again – and almost nobody is commemorating the anniversary. It didn’t even occur to me to use my print column space for the purpose, given all the ongoing current horrors. But since I have a bit of time before my 14-hour flight, I thought I’d take a few minutes to talk about what was supposed to happen after 9/11, but didn’t.

In the weeks and months after the atrocity, news media had a narrative about what it meant – basically, that it was a Pearl Harbor moment that brought America together with a new seriousness and resolve. This was comforting and reassuring. It was also totally false, literally from the first minutes.

The truth, as we now know, is that Bush administration officials rejoiced, even as the fires were still burning, at the opportunity they now had to fight the unrelated war they always wanted. But that wasn’t all: Republicans in Congress also saw opportunity for partisan gain from the start. Within less than two days Congressional staffers were telling me about GOP efforts to exploit the atrocity to ram through a cut in capital gains taxes. Den Rest des Beitrags lesen »

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How Bad Will It Be If We Hit The Debt Ceiling?

Posted by hkarner - 7. August 2017

The odds of a self-inflicted US debt crisis now look pretty good: hard-line Republicans are eager to hold the economy hostage, Democrats are in no mood to make concessions, and Trump is both spiteful and ignorant. So it looks fairly likely that by October or so there will come a day when the U.S. government stops paying some of its bills, including interest on debt.

How bad will that be? The truth is that we don’t know; but it may be helpful to talk about *why* we don’t know.

Until now, US debt has played a special role in the world economy, because it is — or was — the ultimate safe asset, the thing people can use to secure transactions with no questions about it retaining its value. In a way, the dollar is to other moneys as money is to other assets, and US dollar debt is the form in which dollars are held with ultimate safety.

Taking away that role could be very nasty. One prominent interpretation of the 2008 financial crisis is that it was a “safe asset shortage“: when people realized that those AAA securities engineered from subprime loans weren’t the real thing, they scrambled into an inadequate supply of trill safe stuff. Deprive them of dollar debts as safe assets, and terrible things could happen. Den Rest des Beitrags lesen »

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The Great Health Care Coverup

Posted by hkarner - 30. Juli 2017

July 25, 2017 5:22 pm July 25, 2017 Paul Krugman, NYT

Like many people, I have a sick sense of anger over what just happened in the Senate, which just voted to proceed on a health care bill without any information on what will be in the bill. There’s still hope that in the next few hours, moderates who just caved in will balk at the horrible things they’re being asked to vote for. And I do mean hours: there will be no time for reflection or serious debate.

But nobody should have any confidence that they will. And I think we can almost take it for granted that John McCain will first vote for something terrible, then give a grandstanding speech about making our politics better.

The important thing to realize is WHY the Senate is doing this — rushing to pass legislation that will have a vast impact on American lives, the economy, and more without a single hearing, without time for a proper analysis of the bill, and with crucial votes taken on behalf of legislation yet to be determined. It’s not some arbitrary failure of procedure: it’s a coverup.

The fact is that Republicans have no good ideas on health; everything they want to do will make huge numbers of people worse off, to the benefit of a wealthy few. And they know this. They know that the campaign against Obamacare was based on lies from the beginning, that all their complaints about things like high deductibles were hypocritical. They know that what they’re about to do is terrible. But they’re trying to do it anyway — and the only way they have a chance is by breaking every rule of good governance, by making the process so rushed and secretive that nobody has a chance to say “Wait a minute– what are we doing?” Den Rest des Beitrags lesen »

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Shaking Russia’s Weak Economic Hand

Posted by hkarner - 6. Juli 2017

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Pure Class Warfare, With Extra Contempt

Posted by hkarner - 26. Juni 2017

In this sense – and in only this sense – what we’re seeing now is a departure from previous Republican practice.

In the past, laws that would take from the poor and working class while giving to the rich came with excuses. Tax cuts, their sponsors declared, would unleash market dynamism and make everyone more prosperous. Deregulation would increase efficiency and lower prices. It was all voodoo; the promises never came true. But at least there was some pretense of working for the common good.

Now we have none of this. This bill does nothing to reduce health care costs. It does nothing to improve the functioning of health insurance markets – in fact, it will send them into death spirals by reducing subsidies and eliminating the individual mandate. There is nothing at all in the bill that will make health care more affordable for those currently having trouble paying for it. And it will gradually squeeze Medicaid, eventually destroying any possibility of insurance for millions. Den Rest des Beitrags lesen »

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