Wednesday, December 30, 2015

Bartlett: Supply-Side Keynes?

The two faces of Janus. [A]

"As final proof of Keynes's 'supply-side' tendencies, one might also point out that he understood the existence of the Laffer Curve long before Arthur Laffer was born. In 'The Means to Prosperity,' written in 1933, Keynes said: 
'Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more-and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss'."

Friday, December 25, 2015

Tuesday, December 22, 2015

Bridgman, Elephants, and the Judges of Science.

The name Percy Williams Bridgman (1882-1961) will hardly ring a bell among econosophers. Physicists may remember him as the 1946 Nobel Prize in Physics
"For the invention of an apparatus to produce extremely high pressures, and for the discoveries he made therewith in the field of high pressure physics".
More of an experimentalist than a theoretician, Bridgman, however, was interested in the philosophy of physics. His ideas, under the label "operationalism", when applied to other fields, met with less than spectacular results.

Many of his observations (like those below, from his 1950 book "Reflections of a Physicist"), however, seem as valid today as they were 60 years ago and their application could go beyond physics:

Sunday, December 20, 2015

Joan Robinson and the Elephant.


Joan Robinson knows one when she sees one:
"I cannot define an elephant but I know one when I see it. An ideology is much more like an elephant than like a point." (Robinson 1962:8)
"Scientific method is another kind of elephant -- something which exists and can be described, not defined." (p. 25)

Monday, December 14, 2015

Eugenics: Did Fisher Shoot Keynes?

"If you shoot at a king you must kill him." (Ralph Waldo Emerson)
Sir Ronald A. Fisher (1890-1962) is considered one of the 20th century's greatest statisticians. Together with his work in biology ("the greatest biologist since Darwin" in Richard Dawkins' opinion) Fisher's contributions earned him among other honours and awards, "three medals of the Royal Statistical Society, the Darwin Medal (1948) and the Copley Medal (1956). He received honorary degrees from numerous Universities, and was a member in over 20 academies, societies, and institutes".

Saturday, December 12, 2015

The Party!

Believe it or not, I used to be a Party guy.

Anyway, the opening scene from the 1998 film "Blade":

I've been to darker parties in my time. But I suspect there weren't many vampires there and then. If there were, at least in my recollection, they weren't as good-looking. I can't recall any tomato sauce sprinklers, either. :-)

I do remember two things, though: for one, I didn't like killjoys.

And the dance music was really cool. And -- even if I say so myself -- I probably still dance better than those guys.

Thursday, December 10, 2015

Open Letter to British Labour.

Dear British Labour Party supporters,

So, your MP, elected during the last general elections with your vote, does not accept the Labour Party leader elected by Labour Party supporters.

He/she is happy with your vote, but is unhappy with the vote you gave Jeremy Corbyn. This is how things work in a liberal democracy: your vote gave him/her gainful employment in Parliament; within your own party, your democratic vote isn't so profitable.

Monday, December 7, 2015

Cogito Ergo Sum (ii)

Let's try something different. Show that

            1       1         1
(1)       ----- - ----- < ---------
          1,000   1,001   1,000,000

Sunday, November 29, 2015

Quo Vadis, Labour/Labor?

Due to the backlash (intra-party and in the media) Jeremy Corbyn is confronting, thoughtful people in Britain are wondering about the future of the British Labour Party. Given that the Australian Labor Party shares many similarities with its British counterpart (and it's facing its own problems) perhaps Aussies should pay more attention to those wonderings, which may have something to say to lefties in general.

A quick and dirty summary of the proceedings, as I know of them:
  1. Colin Talbot ("Whither Labour?", Nov. 19) makes a compelling case for an upcoming Labour "civil war" between a centrist "social democratic" Labour Party faction, and a more leftist "reformist socialist" faction (which would include Corbyn); he doesn't, however, provide evidence in support of his claims.
  2. Simon Wren-Lewis ("Is this really social democracy versus socialism?", Nov. 22) finds Talbot's views "depressing" and tries to build a rosier scenario. Was he successful? You be the judge.
  3. Chris Dillow ("Two realities of Labour politics", Nov. 24) is "inclined to agree with Simon", and offers his own scenario. Is it plausible? That is not clear, to me. You tell me.
Me, I can't tell you what's going to happen: my crystal ball is in the repair shop.


I can tell you something, though. The way Talbot identifies misconceptions plaguing the "reformist socialists" faction of the UK Labour Party applies to much of the Left worldwide:
"New Labour and 'Blairism' was not, as many on Labour's socialist left now want to claim, an historical aberration in which the traditionally socialist Labour party was captured by neo-liberal infected right-wing social democrats. New Labour was merely a tilting back towards traditional social democracy, slightly revised, after the surge in reformist socialist support within Labour of the 80s (which did it so much electoral damage)."
I'd add two things to that. Firstly, that neo-liberalism isn't an "historical aberration" of capitalism, either. Shitty-capitalism (as I sometimes call "neo-liberalism") and New-Deal-capitalism are species within the same "capitalism" genus: what's different is the adjective, not the noun. Chances are the "historical aberration" was New-Deal-capitalism.

And, secondly, neo-liberal social-democrats are only "slightly revised" versions of New-Deal social-democrats. They aren't historical aberrations, either.

Like me mates say: "Both are shit, only from different piles". "Same shit; different piles".

30/11/2015. The dilemma of what Talbot calls social democrats, represented locally by the Labor Party, is that their sales pitch is that they are neither right, nor left. That worked fairly well for Bill Shorten, while the alternative was Tony Abbott. But since Malcolm Turnbull's coup, that's no longer the case. The result?

Thursday, November 26, 2015

The Paradoxical Kalecki (and part iii)

(From part ii)

The tables below may help in this discussion.

In principle, capitalists hold the frying pan by the handle: they decide (i) the payroll cut magnitude (D) and (ii), from what they get, capitalists decide how much to consume and invest (without loss of generality, in the examples following they consume as much as they invest).

Tuesday, November 24, 2015

The Paradoxical Kalecki (part ii)

(From part i)

For convenience, let's repeat the argument presented last, adding some emphasis:
"Answering the question 'Where do profits come from?' requires a macroeconomic perspective. Profits are produced by specific macroeconomic flows of funds. Unfortunately, the macro perspective necessary to investigate these flows can be elusive because of a logical trap: the tendency to assume wrongly that circumstances that apply to the familiar case of the single firm also apply to the entire business sector.
"To illustrate the problem of applying a microeconomic perspective to a macro situation, consider the following. As every entrepreneur knows, employee costs are a major influence on a firm's profits. Cutting payroll expenses means a more robust bottom line. Accordingly, it is commonly believed that when firms throughout the economy hold down wages, they improve aggregate profits. However, for the whole business sector, cutting employee compensation reduces revenue as well as expenses. Less worker pay means less personal income and, therefore, less personal spending on the goods and services sold by businesses. Therefore, cutting payrolls will not directly increase corporate profits".

Saturday, November 21, 2015

The Paradoxical Kalecki (part i)

(Motivated by a side discussion at Peter Cooper's)

Following Keynes and the paradox of thrift he popularised, Keynesian economists have developed a taste for paradoxes. In most cases I'm sure there is something to those paradoxes; in a few cases, they may be meaningless, but otherwise harmless.

In one case, however, this reliance on paradoxes seems detrimental. Paradoxically it involves misinterpreting Polish economist Michał Kalecki's price equation:

(1)          P = Cp + I.

Thursday, November 19, 2015

Bernie Sanders and Social Democracy?

This film tells the story of the campaign to turn a normal family, decent Americans, your next door neighbours -- maybe even democratic socialists -- into true-blue social democrats.

They were travelling to San Diego, in family holidays. On their way, they met the social democratic family (played by the PASOK crew, Tony Blair, Bill Clinton, and Paul Keating).

Now, is your turn, Bernie. Join the family. You can't go wrong.

Tuesday, November 17, 2015

3D-Printed Rocket in Canberra.

Year 11 students from Gungahlin College -- a public school in Canberra -- designed, built (using a 3D printer), and fired a test rocket (the ABC Online page includes sound recording and photos) as part of their project to launch a high-altitude balloon, next year.

And it was a fairly sophisticated gadget, too, including (apart from their own engine): "accelerometer, magnetometer, altimeter and GPS, as well as temperature and humidity sensors". The use of a 3D printer, say the students, adds flexibility to the project: it's a matter of hours to design and get a new component, if required.

The launch -- yesterday -- was generally successful, apart from a glitch in the the memory card set to record the flight data. Apparently, the electronic components, coming from different manufacturers, are difficult to integrate.

The kids are going to repeat the launch next week. Congratulations to the students and their teachers and good luck to them!

Sunday, November 15, 2015

Keynes' Gesellist Infection.

William A. Darity (Samuel DuBois Cook Professor of Public Policy, Sanford School of Public Policy, Duke University) argues "that in substantial portions of The General Theory, J.M. Keynes was a mere Gesellist, particularly but not uniquely, in his expressions of political philosophy vis-a-vis the relationship between state and economy".

Keynes' debt to the German Silvio Gesell (one of his beloved monetary "cranks" and "heretics") is no secret, although the technical details are often forgotten. In a nutshell, Keynes adopted Gesell's idea of precautionary money demand as explanation for economic slumps. As financial assets are not produced by labour, this demand invalidates Say's Law.

Friday, November 13, 2015

Cooper on Marx and MMT.

Peter Cooper, a very promising Marxist/MMT Australian economist, has started a series of articles on the relationship between Marxist economics and MMT.

Cooper himself has written about Marx and MMT before and builds upon insights obtained from both pre-eminent Marxist scholars (he mentions Duncan Folley, co-winner -- with Lance Taylor -- of this year's Leontief Prize) and leading MMT exponents William Mitchell, L. Randall Wray, and Mathew Forstater (all of which have been mentioned before in this blog).

For those of us of some age, the Internet has been a bit of a mixed blessing. For one, it has delivered valuable content; for another, whatever good present in the Internet, it's mixed with all sorts of rubbish and the general public is left to separate the wheat from the chaff.

Judging by his first post, Cooper's series is wheat of the best quality and fulfills one's hopes and expectations of what the Internet could be. I cannot urge you enough to read and learn from him.

To Peter, my congratulations and thanks for this magnificent effort.

Wednesday, November 11, 2015

Cogito Ergo Sum.

Two persons are credited with the quotes below. One is very well-known among economists -- amateurs and professionals, alike -- the other is better-known among philosophers and logicians.

Person A is quoted variously as saying:
"I don't need algebra, I can think."
or, in an alternative version:
"I never learned math, so I had to think."
Person B:
"Few persons care to study logic, because everybody conceives himself to be proficient enough in the art of reasoning already. But I observe that this satisfaction is limited to one's own ratiocination, and does not extend to that of other men."

Sunday, November 8, 2015

A Favourite of Mine.

Doppler effect of water flow around a swan. [A]

Let's hypothesise.

Suppose I tell you "Joe is a man". We can -- hopefully readers will agree -- abbreviate that sentence: M. (Think of stenography.)

Now, we may say: if Joe is a man, then he must have testicles and penis. Yes? This longer sentence is formed by "Joe is a man" and "Joe has testes and willy", joined by a connective ("then").

Friday, November 6, 2015

Varoufakis: Talking the Talk.

Yanis Varoufakis certainly talks the talk. Above (h/t Charlie Tan) is him "in conversation with Aaron Bastani".

Around 6:00 minutes into the interview, Varoufakis says:
"One of my convictions is that the Left lost the battle in the early part of the 20th century by abandoning Marx's commitment to the concept of emancipation and liberty."
Not bad. Not bad at all. [*]

Wednesday, November 4, 2015

Be an Astronaut!

NASA is searching for the next generation of astronauts (from ABC News online, and NASA)!

  • US citizen.
  • "bachelor's degree in a science, technology, engineering or mathematics field" (minimum).
  • "be followed by at least three years of related, progressively responsible experience".
  • "pass a long-duration spaceflight physical test".
  • "Distant visual acuity: 20/20 or better uncorrected, correctable to 20/20; Blood pressure: 140/90 measured in a sitting position; Height between 58.5 [148.59 cm] and 76 inches [193.04 cm]."
Really cool. I envy you boys and girls. Good luck!


Unfortunately, Aussie kids won't be running in that space race.

But, never mind, young Australians: You can always have a life full of meaning, achievement, adventure, and excitement on Earth. You study economics/law, work for free as an intern for a free-market "non-partisan" (wink, wink) "think" tank; next, you become an apparatchik for a "conservative, right-of-centre, libertarian" party.

After that, you go into Parliament, to "squeeze" parliamentary allowances and to suck up "network" like crazy with your future business partners. You may even win a legal coup d'etat leadership challenge!

Worse comes to worse, you can always join the Labor Party.

Wouldn't that make you feel proud?

Tuesday, November 3, 2015

Corbin vs Pommy Bullies.

Personally, I don't know a great deal about Jeremy Corbin.

But I do know something relating to him: I don't like bullies. And I especially dislike cowardly pommy bullies. I mean, when all that arrogant, pale-faced mediocrity manages to find the balls to have a go against a single person -- as they are doing against Corbin -- it's a sure sign there must be something valuable about him/her.

Saturday, October 31, 2015

Eugenics: Plato’s Farm.

“I see that you have in your house hunting-dogs and a number of pedigree cocks. Have you ever considered something about their unions and procreations?”
“What?” he said.
“In the first place,” I said, “among these themselves, although they are a select breed, do not some prove better than the rest?”
“They do,” [he said.]
“Do you then breed from all indiscriminately, or are you careful to breed from the best?”
“From the best,” [he replied.]
“And, again, do you breed from the youngest or the oldest, or, so far as may be, from those in their prime?”
“From those in their prime,” [he replied.]
“And if they are not thus bred, you expect, do you not, that your birds and hounds will greatly degenerate?”
“I do,” he said.
“And what of horses and other animals?” I said; “is it otherwise with them?”
“It would be strange if it were,” said he.
“Gracious,” said I, “dear friend, how imperative, then, is our need of the highest skill in our rulers, if the principle holds also for mankind.”

Sunday, October 25, 2015

Eugenics: Scientific Reproduction.

Wir stehen nicht allein: we do not stand alone. 1936. [A]

Guess who wrote this:
"If we were right in supposing that the scientific society will have different social grades according to the kind of work to be performed, we may assume also that it will have uses for human beings who are not of the highest grade of intelligence. It is probable that there will be certain kinds of labour mainly performed by negroes, and that manual workers in general will be bred for patience and muscle rather than for brains. The governors and experts, on the contrary, will be bred chiefly for their intellectual powers and their strength of character. Assuming that both kinds of breeding are scientifically carried out, there will come to be an increasing divergence between the two types, making them in the end almost different species.
"Scientific breeding, in any truly scientific form, would at present encounter insuperable obstacles both from religion and from sentiment. To carry it out scientifically it would be necessary, as among domestic animals, to employ only a small percentage of males for purposes of breeding. It may be thought that religion and sentiment will always succeed in opposing an immovable veto to such a system. I wish I could think so. But I believe that sentiment is quite extraordinarily plastic, and that the individualistic religion to which we have been accustomed is likely to be increasingly replaced by a religion of devotion to the State. Among Russian Communists this has already happened."

Thursday, October 22, 2015

Union Power and Inequality: Australia.

Florence Jaumotte and Carolina Osorio Buitron (both from the Research Department, IMF) consider the influence of declining union density (union membership) on income inequality in the 20 top economies (here).

For Jaumotte and Osorio Buitron (J/OB, in what follows), research on the increase in economic inequality has traditionally neglected the relationship between labour market institutions and inequality.

In contrast, in a recent research paper, the authors find that:
"The most novel aspect of our paper is the discovery of a strong negative relationship between unionisation and top earners’ income shares (Figure 2). Although causality is always difficult to establish, the influence of union density on top income shares appears to be largely causal, as evidenced by our instrumental variable estimates."

From their Vox summary:

(right-click for a larger version in a separate tab)


What is the causal relationship between a declining union membership and an increasing incomes share for the top 10%?

For one, J/OB find that "the decline in union density has been strongly associated with less income redistribution, likely through unions’ reduced influence on public policy."

But there's another link, one for which J/OB lack a specific technical term, but which Marxists call exploitation:
"Our finding of a strong negative relationship between union density and top earners’ income share challenges preconceptions about the channels through which union density affects the distribution of incomes. Indeed, the widely held view is that changes in labour market institutions affect low- and middle-wage workers but are unlikely to have a direct impact on top income earners. Our finding highlights the interconnectedness between what happens to the middle class and top income shares. If de-unionisation weakens earnings of middle- and low-income workers, the income share of corporate managers and shareholders necessarily increases.
"There are several channels through which weaker unions could lead to higher top income shares. In the workplace, the weakening of unions reduces the bargaining power of average wage earners relative to capital owners and top executives. Channels include the positive effect of weaker unions on the share of capital income – which tends to be more concentrated than labour income – and the fact that lower union density may reduce workers’ influence on corporate decisions, including those related to top executive compensation".
In other words, weaker unions are less able to reclaim a higher proportion of the surplus workers produced, which high executives and capitalists expropriate, exactly as Marx (and others) explained.


This research comes barely a month after the 7-Eleven Australia wages scam was exposed (here) and at a time when Australians are witnessing an unprecedented effort to lower wages and destroy unions, and union organisers are bullied and persecuted by the Australian police for the crime of bargaining wages for union affiliates: see here.

Sunday, October 18, 2015

Forstater on MMT and Labour Theory of Value.

Peter Cooper found a 2012 radio interview on the relationship between Marx's labour theory of value (or law of value, as some prefer) and MMT: here.

The interview is conducted by Tom O'Brien from Alpha to Omega, and the interviewee is Prof. Mathew Forstater, from the University of Missouri-Kansas City.

Cooper has written about this subject before (relevant links in his post, above) and I've mentioned in this blog the views of two leading MMT proponents -- L. Randall Wray (here) and Bill Mitchell (here) -- on the subject of the LTV.

Friday, October 9, 2015

We Get Knocked Down … but We Get up Again!

"The only kinds of fights worth fighting are those you are going to lose, because somebody has to fight them and lose and lose and lose until someday, somebody who believes as you do wins. In order for somebody to win an important, major fight 100 years hence, a lot of other people have got to be willing -- for the sheer fun and joy of it -- to go right ahead and fight, knowing they’re going to lose.
"You mustn’t feel like a martyr. You’ve got to enjoy it." (I.F. Stone)

It's not easy being a socialist. You won't make money in the process, or win powerful friends and influence people (it would be great, wouldn't it?). In fact, many will hate and despise you gratuitously. You will be slandered. Every little success will cost you dearly.

But you already know that, don't you?


There is something, however, you may not already know: There are two ways to look at that.

This is one way:

This -- ask Chumbawamba -- is the other way:

No way is better than the other, in general. But one way might be better for you, in particular.

Whatever way life -- and you -- choose, I wish you good luck. May (the) God(s) -- if He/She/It/They actually exist(s) -- give  you strength comrade.

Always remember this:

"I was. I am. I shall be!" (here)

Thursday, October 8, 2015

Replicability in Economics?

The latest scandal in economics? After considering 67 recent empirical papers published in 13 prestigious journals, Andrew C. Chang and Phillip Li found that "[b]ecause we are able to replicate less than half of the papers in our sample even with help from the authors [more precisely: 1/3 totally independently, less than 1/2 with the author's help], we assert that economics research is usually not replicable." (PDF)

Sounds bad, doesn't it? Don't worry about it, because it gets worse. Like, a lot worse.

Wednesday, October 7, 2015

Keynes on Trotsky.

1919 Russian Civil War White propaganda poster. Source: MIA.
Appearing originally on March 27, 1926 in The Nation and Athenaeum, John Maynard Keynes' "Trotsky on England" found its way -- rather strangely, as it's anything but a biography -- into "Essays in Biography", Keynes' anthology of biographical essays published six years later.

Trying to read that intensely exasperating essay (apparently conceived as a review of Leon Trotsky's 1925 book "Where is Britain Going?"), I found "Keynes on Trotsky", an old post by Larry Hamelin (who goes by the colourful moniker of "The Barefoot Bum", here).

Saturday, October 3, 2015

Keynes or Marx? Ask Hardcastle.

"[I]t was Keynes, not Marx, who cracked the code of crisis economics and explained how recessions and depressions can happen." (Paul Krugman)
Edgar Hardcastle. Source: MIA

Although Whack-a-Krugman (with or without reason) has become a popular past-time among the Internet experts, I'm not reproducing the quote above (from "Why Aren't We All Keynesians Yet"; Fortune, August 17, 1998: link) to pick on Paul Krugman, or any other notable in particular.

Instead, my intention is to give a clear example of an unjustified triumphalism common not only among the multitude of commentators of unknown and/or questionable credentials (to say nothing of intellectual honesty and ability to read) populating comment threads and the Twittersphere, but even among mainstream bona fide Keynesian scholars (like Krugman). [*]

In both cases, I suspect, the comment is nothing more than an uncritical/confused endorsement of some previous authority's pronouncements (btw, I could give at least one good example, as good as the quote above, including a high-profile academic's candid admission, but I rather avoid hurting feelings).


Edgar Hardcastle (1900-1995) -- and many others after him -- have abundantly written about the largely unacknowledged debt Keynesian economics owes Marx. From his June 1971 article "Marx and Keynes on Unemployment" for the Socialist Standard:
"Keynes was given the credit of having demolished the theories of 19th century economists who had taught that, if left to its own devices, capitalism would always and of its own accord tend towards full employment. What was little noticed was that most of the ground covered by him had been treated in detail by Marx three-quarters of a century earlier. Keynes was quite contemptuous of Marx, describing Capital as "an obsolete textbook which I know to be not only scientifically erroneous but without interest or application to the modern world" (A Short View of Russia, 1925) and he never seems to have appreciated that his own criticisms of earlier economists were much like those of Marx."
Read the rest here.


That's not to say that Marxism and Keynesianism are fully compatible. For my own critique of a particular aspect of Keynesianism, start here.

[*] Incidentally, at the drop of a hat, many of the feral commentators do not hesitate in turning their tantrum from Marx to -- ironically enough -- people like Krugman.

Wednesday, September 30, 2015

Revealed: How 7-Eleven is Ripping Off its Workers.

This post's title borrows from an interactive report -- made public today -- summarising the Fairfax Media's journalists Adele Ferguson and Sarah Danckert and the ABC's Four Corners investigation on the underpayment of wages to staff (largely foreign students) working for the convenience store chain 7-Eleven Australia.

The screen capture above are the words of one of the 7-Eleven workers.

From the interactive report:
"The lot of the average 7-Eleven worker in Australia is as simple as it is bleak: you get paid half the $24.50 an hour award rate -- or less -- and if you complain your boss threatens you with deportation." (here)

Today, 7-Eleven chairman Russ Withers and CEO Warren Wilmot resigned to their positions. Chairman Withers admitted the "abhorrent behaviour", and last Thursday, before a Senate Committee meeting held in Melbourne, vowed to refund all exploited workers (here).

Michael Smith (former iiNet chairman) and Bob Baily will replace Withers and Wilmot, with the mandate to solve the situation of workers and franchisees.

It was also revealed that -- apart from the wages underpayment issue -- some franchisees extorted the foreign students between $30,000 and $70,000 to sponsor their visas. (here)


As a Marxist socialist and -- above all -- a worker, I must express my gratitude and admiration to the ABC's Four Corners and very especially to Adele Ferguson, Sarah Danckert, Klaus Toft and all the team from Fairfax Media, for their work. Michael Fraser, consumer rights advocate, should not be forgotten: his friendship -- as a middle-class man -- for a 7-Eleven worker, a proletarian, made a difference.


The truth of exploitation -- revealed here only in its most evident aspect: when labour laws are breached -- cannot be ignored, in spite of all the lies concocted to deceive us workers. I've been following the case -- extensively reported by Fairfax Media, the ABC and other media -- and shall have more to write about it.

Further Information:

Original Four Corners' report by Adele Ferguson and Klaus Toft (broadcast Sep. 2), with video, transcript and background information, including 7-Eleven Australia statements.
7-Eleven: The Price of Convenience

From The Washington Post's Daniel J. Galvin (Sep. 6), a related story from the U.S. here (h/t Corey Robin)

Monday, September 28, 2015

NASA vs Econosophers: Inference in Science.

"There is something there. But just because your theory is good does not mean that the entities in your theory are 'really there', whatever that might mean ..." (here)

(source, Image Credit: NASA/JPL/University of Arizona)

British Elite's Peccadilloes: Truth or Legend?

The latest? The very British "Piggate".


Friday, September 25, 2015

Only in Australia.

There's something really weird happening to the good and mighty of English-speaking countries …

First, in the U.S. of A. the kid arrested for carrying a clock


Now, Down Under, the Minister Assisting the Prime Minister on Terrorism Michael Keenan launched the Radicalisation Awareness Kit, in an effort to match his Yank counterparts. 

The RAK, to be distributed among school teachers, is based on hypothetical "case studies". In one of them, the protagonist -- "Karen" -- becomes radicalised after listening to "alternative music" (thankfully, she didn't go Goth, or the school principal would have had to call for an exorcist, Abraham van Helsing, and the S.A.S. combined). And from there, "Karen" went all the way downhill.


Dear "right-of-centre, conservative, libertarian" fellow countrymen in power, you obviously don't mind the ridicule. Fine. That's your prerogative.

But please, for the love of God, don't make the rest of Australia a laughing stock, I beg of you.

Give us a break. 

Further Reading:

#freekaren: Government's anti-radicalisation kit sparks ridicule on social media, by Yasmin Parry.

Anti-radicalisation kit never meant for use in schools, says key author, by Michael Safi

Wednesday, September 23, 2015

Capitalism Finds a Way.

Hi. He's Jeff Goldblum. You may remember him from such films like "Jurassic Park", where he played the consistently obnoxious Dr. Ian Malcolm, who was very negative about the whole dino-theme park thing.

In spite of all the safety assurances given by the very confident theme park experts, Dr. Malcolm was the killjoy spoiling everyone's fun. Chill -- was the experts' reaction -- they have everything under control.

"Life", Dr. Malcolm explains rather unsuccessfully, "finds a way".


In spite of all the legal and presumably well-meaning controls imposed on nitrous oxides emissions, we have this:

"With the so-called 'defeat device' deactivated, the car can spew pollutant gases into the air, including nitrogen oxide in amounts as much as 40 times higher than emissions standards, said the US Environmental Protection Agency, which announced the allegations on Friday along with California authorities."
After that, you would have thought well-meaning liberal/progressives' faith on market regulation would -- at the very least -- be shaken. Yes?

Well, no. The first and more natural liberal/progressive reaction is denial that any regulations were ever put in place:
"The free market at work". (23 Sep 2015 6:36:55pm, here)
The second reaction -- mark my words -- will be to impose tougher, more elaborate, more costly, controls which will make cheating ever more profitable.


Sorry to play the killjoy, dear well-meaning liberal/progressives, but you can have clean air (or good wages, or low interests, or cheap medicines, healthy food, or whatever) or you can have capitalism, but you can't impose well-meaning, liberal/progressive -- but ultimately costly -- controls on capitalist enterprise.

Capitalism finds a way to circumvent controls and screw us.


Monday, September 21, 2015

Malcolm Turnbull as Salesman.

New PM Malcolm Turnbull last night, interviewed by Leigh Sales (ABC's 7:30 Report Sep. 21):
LEIGH SALES: "(…) What are the values and core beliefs that will be the foundation for all of the policies that your government comes up with?"
MALCOLM TURNBULL: "Well, this is a Liberal National government. It is a free market government. It is committed to ensuring that Australians are free to choose their own directions, whether it's in their business or their profession or their family. So they've got to - so freedom is the - freedom is the key point. I mean, it's perhaps a bit simplistic, but one way you can say it - you can describe it is that the Liberal Party, and I could make the same point about the National Party too, our coalition partners, we believe that government's job is to enable you to do your best. Labor, which has more faith in government, believes that government's job is to tell you what is best. So - so that's a fundamental thing."
Just like I said last week.

After that, maybe to sooth viewers like yours truly:
LS: "(…) What do you say to Australians who might think, 'Well how can Malcolm understand what it is to struggle for anything 'cause Malcolm's had everything that he's ever wanted?'."
MT: "Well, the truth is I have been extraordinarily lucky. I have had to struggle in my life. I didn't - I wasn't born with a silver spoon in my mouth, by any means. (…) Look, I'll give you an example. I remember when I was a partner of Goldman Sachs in New York, very successful investment bank, everyone was earning very big money, the chairman, the chief executive of the firm gave a sort of pep talk to the partners and he said, you know, 'We're doing well. We're making lots of money 'cause we work hard and we deserve it.' And I said to him afterwards, just quietly, I said, 'You know, there are taxi drivers in this city that work much longer hours than anyone does here and they don't earn very much at all.' So, the truth is, we don't really deserve our good fortune. (…)"

Incidentally, rather disappointingly -- but ultimately predictably -- Turnbull launched the already trite salvo against the all-powerful unions and the Labor party:
"Now, you know, the Liberal Party (…) is the largest grassroots political movement in Australia. It is not run by any unions or big businesses or factions. (…) Our party room members do not come from one professional political class like most of Labor's do."
Ironically, this happened one week after opposition leader Bill Shorten threw the union movement under the bus, offering the new Turnbull government a peace deal on ChAFTA.


I won't deny the guy is charming (ask Leigh Sales: video). He speaks well, is quite personable, smiles a lot. I'm sure he may be a formidable salesman.

That doesn't mean you want to buy his wares.

Saturday, September 19, 2015

Believe it or Not: Keynes' Eight Weeks' Economic Training.

Frankly, I don't know what to say, other than I'm flabbergasted, discombobulated, utterly astonished:
"John Maynard Keynes was the most important economist of the 20th century, but he had only eight weeks’ undergraduate training in the subject and never sat an examination in it." (here)
Frankly, I am not sure I believe that. Something must be wrong; if readers can put me out of my misery in one way or the other, please do.

At the other hand, considering how closely his online fans ape the Master, that explains an awful lot.


Honestly, it's shocking to think I might know more about economics than M'Lord. I cannot help but think of the old Maestro Ciruela:


21-09-2015. In the popular imagination, Friedrich Hayek was Keynes' nemesis, its opposite and arch-enemy. It turns out the guy's assessment of Keynes may have been not only conservative, but actually unfairly positive:

Think about it.

Friday, September 18, 2015

Underground Astronauts.

The discovery of Homo naledi is the kind of story that makes me happy and vicariously proud (see here and here).

("Tiny Cavers". source)

Wednesday, September 16, 2015

Grasping at Epicycles with … Something.

"Cobbler, stick to thy last."
Prof. Brad DeLong -- who grasps at reality with all sorts of invertebrate body parts -- is a Keynesian macroeconomist of renown, as well as a history of economic thought buff, and now, it seems, he is trying his hand at the philosophy of science. And, it turns out, he is no realist, after all.

Replying to Prof. Daniel Little's "case for realism in the social realm" (Aug. 29, here), which would go against Milton Friedman's well-known dictum ("Truly important and significant hypotheses will be found to have 'assumptions' that are wildly inaccurate descriptive representations of reality, and, in general, the more significant the theory, the more unrealistic the assumptions."), DeLong takes the warpath (Aug. 30, here) and in characteristic style writes:

Monday, September 14, 2015

Turnbull Topples Tony.

"Abandon all hope, ye who enter here".
So, dear reader, if you are from Australia, you have the answer to your question: last night Malcolm Turnbull -- whom former PM Kevin Rudd sometimes called "the member for Goldman Sachs" -- ousted Tony Abbott as Prime Minister of the Commonwealth of Australia in a bloodless intra-party coup, Westminster-style, so popular among defenders of capitalist liberal democracy. (here)

Turnbull's promise: to Turn Abbott's Bull into a China-Australia Free-Trade Agreement, cut wages (oh, happiness!), and avoid a Coalition defeat in the next election.

I suppose opposition leader Bill Shorten,  whose "I'm less obnoxious than Abbott" strategy was proving successful, will have to re-think his position.


As for me, I'm with The Guardian's First Dog on the Moon:

"If Malcolm Turnbull is the answer
we might be asking the wrong question."
Or here


It didn't take long, huh? Regarding Turnbull being the answer to the wrong question:
"Cometh the moment, cometh the man. Malcolm Turnbull is the right man to lead Australia, right now. Why? Because he is committed to the right values of economic liberalism to repair the economy and second, as well as more importantly, is capable of persuading people of what it will take to do it." (here)
Told you so. We're so screwed.

In spite of the obvious signs, some Aussies want to believe Turnbull won't be so terrible. Perhaps -- those Aussies hoped -- he would at least address climate change and support same-sex marriage (see here):
"I feel he might struggle convincing the party room to address climate change. He's the right guy for the top job; it's been a long time coming."
"I'm confident this change of leadership will bring us a step closer to gay marriage in Australia. It appears Malcolm Turnbull is on our side and I just hope we see marriage equality as a result of the Liberals getting rid of Tony Abbott."
I know I'm being mean, but I can't help laughing at those short-lived hopes:


Friday, September 11, 2015

Lenin's Reply to Keynes.

You may have seen that pearl of economic wisdom extracted from Keynes' "The Economic Consequences of the Peace":
"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency." (here)
"Lenin was certainly right", Keynes added, for once agreeing with a plebe, a Marxist, and a Russian (whoever said miracles did not happen?).

Although both Keynesians and Austerians have written abundantly on this (the latter to embarrass the former), I find it instructive to go to the article where that quote's story was first told.

You see, Lord Keynes wasn't much given to document his statements or too demanding on the sources he quoted -- particularly when it comes to "Leninist Russia" -- so it was difficult to ascertain how did he learn about Lenin's thinking: "Lenin is said to have …" -- is said … by whom?

Michael V. White and Kurt Schuler ("Retrospectives: Who said 'Debauch the Currency': Keynes or Lenin?" Journal of Economic Perspectives, Vol. 23, No. 3, Spring 2009, pages 213-222) did the detective work.

To make a long story short, Keynes must have taken that from an "interview" published on April 23, 1919, by the Daily Chronicle in London (reproduced the same day in the New York Times and a few days later by other outlets).

It appears the "interview" was an anti-Bolshevik fabrication. An obvious red flag -- pun intended -- is its authors' anonymity: White and Schuler found that Lenin did give interviews at the time, but none involved anonymous reporters. Why should this particular interview require anonymity?

White and Schuler do not touch on this, but if that interview was a forgery -- as it seems -- it wasn't the only one. Similar exposés of diabolical red conspiracy theories were not unknown at the time:
"On October 27 and 28, 1919, the Philadelphia Public Ledger published excerpts of an English language translation as the 'Red Bible,' deleting all references to the purported Jewish authorship and re-casting the document as a Bolshevik manifesto. The author of the articles was the paper's correspondent at the time, Carl W. Ackerman, who later became the head of the journalism department at Columbia University."
I suppose one should be thankful Lord Keynes wasn't a reader of the Public Ledger: the original of the "Red Bible" was the "Protocols of the Elders of Zion".

White and Schuler add a detail indicative of the climate of hysterical fear then prevalent among the Western "educated bourgeoisie" (same fear which gave Hitler in Germany much to laugh: "We used to roar with laughter at these silly faint-hearted bourgeoisie"):
"That mood was vividly illustrated in a July 1919 letter from Herbert Somerton Foxwell, the Cambridge and London University economist (…) Referring to the attempts to restore real wage rates and changes in working conditions, Foxwell continued:
[the reckless British socialists, a.k.a. the Labour Party!] are out for anarchy. Possibly some of them believe they can build a better system on the ruins of the old. (…) They are a rather bad lot, from Ramsay MacDonald, the dear friend of our Premier [Prime Minister], downwards.
'If we had such a thing as a Government many of them would have been hanged as traitors long ago.
'I was at a dinner of very able City men & others on Thursday, when I never saw such profound pessimism. Keynes (junior) said 'you talk of what the position of the country will be after five years. The question is will it hold together for two years'."
Mercifully, the guests' Animal Spirits did not compel them to lynch Ramsay MacDonald, and so Keynes (junior) simply had to clutch his pearls fearfully.


White and Schuler's paper is a must read (here).

Before closing: I have to confess my ignorance on everything Lenin. But his 1920 reply to Keynes, which White and Schuler sketched, was priceless:
"He [Keynes] has arrived at conclusions which are more weighty, more striking and more instructive than any a Communist revolutionary could draw, because they are the conclusions of a well-known bourgeois and implacable enemy of Bolshevism, which he, like the British philistine he is, imagines as something monstrous, ferocious, and bestial. Keynes has reached the conclusion that after the Peace of Versailles, Europe and the whole world are heading for bankruptcy. He has resigned, and thrown his book in the government's face with the words: 'What you are doing is madness'." (here)
Incidentally, Leninist Russia's policy towards public debt could have been supported by many a modern Keynesian economist advising the Greek government. Now, that would have been a sight to behold.


The more I learn about Keynes, the more I'm reminded of his online mujahideen … You've gotta love Keynes.

Sunday, September 6, 2015

Keynesian Uncertainty: Policy Implications.

Prof. J. Barkley Rosser expounds on the diverse conceptions of uncertainty Keynesians entertain and their policy implications ("Alternative Keynesian and Post Keynesian Perspectives on Uncertainty and Expectations", Journal of Post Keynesian Economics, Summer 2001, Vol. 23, No. 4, pp. 545-566):
"Ultimately, of course, Post Keynesians must face the implications of the deep assertion of fundamental uncertainty by Keynes. Heiner's (1983, 1989) arguments are comforting that people will fall back on rules of thumb in moments of great uncertainty. But this is less useful when a la Shackle it is the crucial decisions of people themselves that are bringing about the uncertainty. There is the threat invoked by Coddington of a nihilism that cannot make any predictions even for policy. Davidson, who has excoriated so many for not properly recognizing Keynesian uncertainty, must also face this essential contradiction as he hopes for the successful implementation of beneficial policy that requires some degree of forecasting and ergodicity. His response (Davidson, 1996, p. 506) is to invoke Reinhold Neibuhr's Serenity Prayer: God grant us the grace to accept with serenity the things that cannot be changed (immutable realities), courage to change things that should be changed (mutable realities), and the wisdom to distinguish the one from the other.
"This observer suspects that Keynes himself would have found the line between these two to be uncertain." (emphasis mine)
Alan Coddington ("Deficient Foresight: A Troublesome Theme in Keynesian Economics", American Economic Review, 1982. Vol. 72, No. 3, p. 480):
"This paper has been concerned with a theme in Keynes' writing that it is convenient but -- as we have seen -- rather unsatisfactory to refer to as that of uncertainty in economic decision making. It has been my purpose here to present Keynes' foray into this area as an opportunistic but mild flirtation with subjectivism. I have argued that those who have been impressed and influenced by this strand in Keynes' work fall into two groups: (i) those who fail to see that Keynes' encounter with subjectivism is only a passing one; (ii) those who fail to see that subjectivism, once introduced, cannot be confined within the limits that would suit their [purportedly subversive of mainstream economics] analytical purposes." (emphasis mine)

My two cents: While the adjective "opportunistic" -- which Coddington used -- fits Keynes wonderfully, I doubt "Keynes' encounter with subjectivism" was "only a passing one". On that, I'm sure the man was being sincere. After all, correct me if I am wrong, but wasn't he a believer in utility, too?

Regardless, there is something delightfully ironic in having to invoke God's help in order to apply Keynes' deep insights: here.

Thursday, September 3, 2015

Abba Lerner's Job Application: Unsuccessful.

If you have applied for a job recently, you know the drill: you do your best selling yourself to some headhunter/recruitment officer; you lodge the job application, and, after a while, with luck (often you don't get even that) you get a standard reply letter saying "unfortunately in this opportunity"…

Sounds familiar, yes?

Well, how do recruitment officers decide when an applicant is a good candidate for a job?


This is how Lionel Robbins -- with John Maynard Keynes' help -- decided about Abba Lerner:
"Between 1933 and 1939 Lerner published twenty-nine articles and notes, some of which made a lasting mark on the discipline, on both its substance and folklore. In a country that was not unready to appoint to a professorship in Oxbridge on the basis of a single article, Lerner should have been professor many times over. But his achievements were counterbalanced in British eyes by religious origin, dress, and manners: Abba Lerner, Jew from Eastern Europe and then the brick and grit of the East End, bare feet in sandals (because, he said, his feet sweat), unpressed trousers hanging, shirt collar open, was a hippie before his time.
"In some things he could be difficult; in others he was too permissive. He had a disconcerting way of saying what he thought. The would-be genteel folk of academe could not see him twirling a sherry glass and making small talk in wood-paneled common rooms. The story is told, based on unpublished letters, that Professor Lionel Robbins of LSE consulted Keynes in this regard when a post opened at the London School. Lerner was an unavoidable candidate.
"Keynes Brit-wittily replied by referring to Lerner's origin as from the Continent. Maybe, he wrote, if they found a job for Lerner as a cobbler during the day, they might wear him out and have him teach in the evening. Lerner did not get the job. He probably continued to pay for his particularities when he moved to the other side of the Atlantic. At any rate, he did not receive a post at a major university until very late in his career."
At least, that is David S. Landes' account, which he included in "Abba Ptachya Lerner (1903-1982), a Biographical Memoir" (National Academy of Sciences. Washington D.C. 1994, PDF) at Paul Samuelson's suggestion.

After reading the draft version of the paper, Samuelson wrote in the margin:
"Somewhere, you [Landes] should hint why Lerner never had the job offer Lange did. Jew; socialist; bohemian; libertine; no team player; genius." (see here)
Yann Giraud (whose research on Paul Samuelson's papers led to this subject) adds some more details to the story (quoting a second reliable source):
"When Lerner was considered for a professorship at the LSE, Robbins wrote to Keynes, in order to get his opinion on Lerner. In response, Keynes wrote the following: 'He is very learned and has an acute and subtle mind. But … if there is any fault in his logic, there is nothing to prevent it from leading him to preposterous conclusions … In thinking over the problem of Lerner's future, I feel in my own mind that the really right solution would be to make him take up some manual craft of a kind which would not exhaust him and would leave him free to pursue his own studies in dialectic in the evenings. I should like to see Lerner as a printer's compositor, or as a cobbler, or grinder of lenses like Spinoza; - free from 5 or 6 o'clock onwards to discuss high subtleties with his friends and to pursue, like the Talmudist that he is, the curious aspects of truth which appeal to him'. (reproduced from Colander and Landreth 1996, pp. 113-5)."


There is a point to this -- apart from exposing Keynes' anti-Semitic mediocrity. Lerner's "faulty" logic -- according to Keynes, Lerner's opportunistic muse -- apparently led Lerner to functional finance: that, it seems, was his "preposterous conclusion".

This, as Prof. Bill Mitchell clearly understands -- even if the very idea is anathema to Keynes' online mujahideen  -- makes of Keynes a very unsuitable choice for MMT icon, just like Keynes' allegiance to the marginalist theory of value and distribution makes of him a very poor patron saint of Post Keynesianism (see here).

Now, readers are free to choose: either they stick to the Prophet and forget about the Gospel, or they pick the Gospel and kick the Prophet. But you can't have your cake and eat it.


Call me a boorish proletarian if you will, but I can't believe nobody ever had the balls to punch Keynes.

Sunday, August 30, 2015

Bits and Pieces: Changing Labour Markets Edition.

A few years ago, a visitor to any large, self-respecting law firm in Sydney would have found that most humble and welcome worker: the tea lady (see here).

Law firms are well-known for encouraging their staff to work long hours. That's where tea ladies came in handy: by providing hot drinks and sugar heights tea ladies helped made that possible. The occasional break, with a brief chat, would help relieve pressure and stress (or so it was expected).

Well, to the best of my knowledge, long hours (not to mention work pressure) are still common in large, self-respecting law firms in Sydney. Tea ladies, however, seem to be all but gone:
"Across many industries, many people have lost jobs because of the digital revolution and automation.
"But one Sydney law firm has defiantly managed to hang on to its tea lady -- until now.
"Today is Robyn Tuckwell's first day of retirement and her colleagues believe she is the last of her kind."

"All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations." (here

It's not just tea ladies facing extinction:
"Sixty per cent of Australian students are training for jobs that will not exist in the future or will be transformed by automation, according to a new report by the Foundation for Young Australians [here or here]." (here)
The thing is, nobody knows exactly how the labour market will change. The Foundation for Young Australians' estimate, however, seems to roughly follow other people's estimates:
"Up to 70 per cent of Australian jobs could be at threat as a new wave of automation sweeps the world's workplaces over the next few decades, CSIRO [here or here] researchers have warned". (here)

And that's not all.

While politicians at both sides of Parliament have been busy taking the best possible advantage of parliamentary allowances (here and here), the Abbott government has moved to reduce -- aiming in time to their total elimination -- penalty rates for some of the lowest paid occupations in the land:

Saturday, August 29, 2015

Two Views on Old Books.

Sasha Abramsky reminisces on his grandfather Chimen Abramsky, a Marxist and "Jewish intellectual, historian, book collector and bibliographer of world renown". (h/t Lounger, see also)


At the other hand, this is the view an "educated, decent, intelligent son of Western Europe", an Englishman of "polymathic intellect" has on old books:
"How can I accept a doctrine which sets up as its bible, above and beyond criticism, an obsolete economic textbook which I know to be not only scientifically erroneous but without interest or application for the modern world? How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeois and the intelligentsia who, with whatever faults, are the quality in life and surely carry the seeds of all human advancement? Even if we need a religion, how can we find it in the turbid rubbish of the Red bookshops? It is hard for an educated, decent, intelligent son of Western Europe to find his ideals here, unless he has first suffered some strange and horrid process of conversion which has changed all his values." (John Maynard Keynes, "A Short View of Russia", 1925)

You don't need to answer these questions to me, but the time may come when you will have to answer them to yourself: 
"You must decide who your comrades are going to be in life's struggles. You must decide which side you are on. Will you side with the oppressed, or with the oppressors? Will you side with the exploiters, or with the exploited? Will you side with the occupiers, or with the occupied? I cannot make that decision for you, and neither can Smith and Marx and Durkheim and Freud and Weber." (here)

Thursday, August 27, 2015

Mitchell, Colander, Keynes, and Lerner.

In a recent post, Prof. Bill Mitchell says that "the roots of MMT do not lie in Keynes", but in Abba Lerner, father of functional finance and the "Milton Friedman of the Left" (here), with contributions from Marx and Michał Kalecki. Warren Mosler (another leading MMTer) comments: "Totally agree! Go Bill!".

Mitchell censures Keynes' idea that "the ordinary Budget should be balanced at all times. It is the capital Budget which should fluctuate with the demand for employment."

For Mitchell,
"This is the precursor to the modern concept of the 'golden rule', which limits fiscal deficits to the rate of public investment in productive capital.
"The 'golden rule' essentially means that over some defined economic cycle (from the peak of activity to the next peak) the government deficit should match its capital (infrastructure) spending".
Equivalently, over the economic cycle social spending must be balanced.


You would have thought that Mitchell's readers, self-described as "progressives" and avowed anti-Austerians, would share his concern.

You would have been mistaken. The online Keynesian Martyrs' Brigade was quick to howl in outrage before such blasphemy. But that's old news and it's not what drives me to comment here.


Amongst other things, Mitchell points to a humorous anecdote Lerner included in his 1961 article "The Burden of Debt" (The Review of Economics and Statistics, Vol. 43, No. 2, pp. 139-141):
"But look," the Rabbi's wife remonstrated, "When one party to the dispute presented their case to you, you said 'you are quite right' and then when the other party presented their case you again said 'you are quite right', surely they cannot both be right?" To which the Rabbi answered, "My dear, you are quite right!"
Mitchell also references Prof. David Colander's 1984 article "Was Keynes a Keynesian or a Lernerian?" (Journal of Economic Literature, Vol. 22, No. 4, pp. 1572-1575), which includes many interesting things, among them the same joke.

According to Colander, although "Lerner was the perfect prophet of Keynes", the relationship between "Allah" and his functional finance "Prophet" was troublesome: a credible witness relates an occasion when Keynes qualified Lerner's ideas as "humbug", scolding Lerner in Lincoln's words: "You cannot fool all of the people all of the time". (Update: for the relationship between MMT and functional finance: here)

For Colander, Keynes' attitude towards Lerner's functional finance was variable, and perhaps the adjective opportunistic would apply:
"As to the question of whether Keynes was a Lernerian, I suspect that depended on his mood, his reading of the political forces of the day, and the time he had to reflect upon the issues". 

Personally, I have three reactions to this.

For one, I think it worthwhile to explore a little more the relationship between Keynes and Lerner (a brilliant if eccentric Bessarabian Jew of lower class, in every respect contrasting with the stereotypical denizen of Oxbridge).

My second reaction is that there is irony in an anti-Semite having so much in common with a character in a Rabbi joke. (As Prof. Colander may have discovered: subtlety is a bitch)

Finally, contrary to views dear to "progressives", experience shows that "progressive" is not synonymous with "smart". In fact, at times, the opposite seems a much better fit.

09-09-2015. Oh my!
"Has Simon Wren-Lewis just become a Lernerian--a devotee of and an evangelist for MMT? It looks to me as though that is the case! Mirabile visu." (here)

Friday, August 21, 2015

Why we Work so Hard?

David Kestenbaum, Planet Money host, NPR:
"In 1930, the economist John Maynard Keynes published this famous essay called 'Economic Possibilities for our Grandchildren.' He's wondering what the future's going to be like, and he makes this bold kind of prediction. He imagines that in the time of his grandchildren - basically now - we might all be working just 15 hours a week." (Episode 641, July 24, 2015)
Robert Smith, co-host:
"Think about it - 15 hours a week. This would be like, OK, OK, go to work on Monday. Go to work on Tuesday, then, TGIT, five-day weekend. And Keynes didn't detail what we would do with all of this extra leisure time. But you can imagine. He was an aristocrat. He would want us to do poetry and dance, play the violin."
As Keynes had no grandchildren, the hosts asked his sister's grandchildren how did that prediction work out for them. Apparently, not very well:
"I probably worked about 15 a day … from breakfast 'til I went to bed at night."
"When you read Keynes's essay, you get the sense that he imagined capitalism was just this phase that humanity was going to pass through, that it was a great system for solving what he called the economic problem, for creating enough economic growth so that everybody's basic needs could be met. But he imagined that after that, people could relax. We would outgrow this habit of working all the time."
It may sound like blasphemy, but Keynes was wrong. How is that even possible?

The show offers two explanations. For one "Keynes underestimated how competitive we are": we voluntarily work hard, even if we don't need to, to have more than everybody else.

Alternatively, "Keynes probably didn't pay enough attention to the way we feel about work. Some people like their jobs," like "craftspeople who take great pride in their craft".


I know this is just anecdotal evidence, but as the son of a man who died getting ready to go to work (after working for years 16 hours a day, six days a week), I suspect those guys didn't try hard enough to understand why some work so hard, for my dad didn't love his work and he wasn't particularly competitive. Some people work really hard because  … they have no choice.

Note that both explanations the hosts advance assume -- implicitly and without a second thought -- that people choose to work harder/longer than they actually need.

Maybe Kestenbaum and Smith should try asking those working for Foxconn, Pegatron, and others: here and here.


But if those guys' explanations seem weak, restricted to their direct personal experiences, in something else they were spot on. Richard Freeman (Harvard economist and director of the NBER):
"I don't think he [i.e. Keynes] knew that many normal people."
Now, taking into account Keynes' opinions about the "common man", the "boorish proletariat", "those who do not know at all what they are talking about" it's easy to understand he didn't care to know many normal people. And relying -- just as the show hosts do -- in introspection and personal experience he wasn't in an ideal position to guess other people's motivations.

So, it's either that or, considering Keynes fixation on Animal Spirits (which he fully formed later, in time for "The General Theory"), he might have been trying to pre-empt the Great Depression, while having a go at the Webbs.

Who knows, maybe "Economic Possibilities for our Grandchildren" was Keynes' first attempt at Keynesian stimulus. Appropriately Orwellian, if you think about it.


Episode 641, Planet Money, July 24, 2015:

22-08-2015. Alfred Marshall (Keynes' mentor) and missus, Mary Paley Marshall, explain in their 1879 book "The Economics of Industry" how general slumps happen (highly evocative of Hyman Minsky's work, btw) and how the economy finally recovers:
"The chief cause of the evil is a want of confidence. The greater part of it could be removed almost in an instant if confidence could return, touch all industries with her magic wand, and make them continue their production and their demand for the wares of others." (pp. 154-155)
Maybe with "Economic Possibilities" Keynes was trying to give the Confidence Fairy a hand.