Economist of the day

According to Salon.com,

Willem Buiter, the London School of Economics professor who has delighted in launching blog posts like grenades throughout the course of the global financial crisis, has been named Citigroup’s Chief Economist.

This is from his blog post titled “Support Markets, Not Banks”:

I cannot think of a single financial institution that is too big to fail, in the sense that it would damage some systemically important social institution. . .

I recognise the upside of bail-outs for those who arrange them: they look like movers and shakers, making and shaping events. It’s heroic, in an industry where heroism can be rarely displayed. But in all of the examples mentioned above, the bail-out did more harm than good.

Now, Buiter will be taking a fat paycheck from one of the very biggest of the too-big-to-fail banks.

 

 

Cartoon of the day

Rethinking social democracy

Tony Judt has a remarkable essay, “What Is Living and What Is Dead in Social Democracy?” in the most recent issue of the New York Review of Books.

At least he starts out well:

Why is it that here in the United States we have such difficulty even imagining a different sort of society from the one whose dysfunctions and inequalities trouble us so? We appear to have lost the capacity to question the present, much less offer alternatives to it. Why is it so beyond us to conceive of a different set of arrangements to our common advantage?

Our shortcoming—forgive the academic jargon—is discursive. We simply do not know how to talk about these things. . .

For the last thirty years, in much of the English-speaking world (though less so in continental Europe and elsewhere), when asking ourselves whether we support a proposal or initiative, we have not asked, is it good or bad? Instead we inquire: Is it efficient? Is it productive? Would it benefit gross domestic product? Will it contribute to growth? This propensity to avoid moral considerations, to restrict ourselves to issues of profit and loss—economic questions in the narrowest sense—is not an instinctive human condition. It is an acquired taste.

He also provides a valuable discussion of the revenge of the Austrians (Mises, Hayek, Schumpeter, Popper, and Drucker), the failure of the Left, and the problems of privatization.

But then, after defending notions of the common good, he proposes a “social democracy of fear”—a defense of the gains made by twentieth-century social democracy—instead of facing up to the real task: enacting a different ethics, one that takes the common seriously. To do that, he would have to engage in a critique of the way the social surplus is currently appropriated and distributed and formulate an alternative, communal approach—at both the micro and macro levels. At the micro level: not excluding the workers who produce the surplus from participating in its appropriation. And at the micro level: utilizing the surplus to meet communal needs.

Such a discourse would both reinvigorate the best in the history of social democracy and chart a path beyond the current crises of capitalism.

Somethin’s happenin’ here. . .

— all the headlines are about the rigged election in Honduras but few seem to have noticed the victory of former guerilla José Mujica, in a continuation of left-wing rule in Uruguay

— U.S. unemployment continues to rise, and all Becker and Posner can come up with by way of a solution is a cut in the minimum wage

— the take for the Vermont deer season (the second part of the rifle season, which began 2 weeks ago and ended yesterday) was down this year but there’s still a chance with muzzleloader deer season and the second part of the archery deer season coming up

 

Cartoon of the day

Smarter barter

Barter and other noncapitalist forms of exchange are on the rise—partly as a result of the crisis, partly to create intentional community economies.

Examples include:

• barter in the art world
• My Referral Network’s barter exchange
• International Monetary Systems barter
• Craigslist barter
• Freecycle

Some are geared to individuals, others to businesses (both large and small); some record transactions (for the IRS and to calculate internal currencies) and charge transaction fees, others not; and so on. The fact is, there is a diversity of noncapitalist forms of exchange in the United States and around the world.

 

 

Not stamping out hunger

Whether it’s called hunger or food insecurity, the problem is causing a rise in the use of food stamps in the United States.

According to Kevin Concannon, an under secretary of agriculture,

“This is the most urgent time for our feeding programs in our lifetime, with the exception of the Depression,” he said. “It’s time for us to face up to the fact that in this country of plenty, there are hungry people.”

Here are the current numbers:

• the number of food stamp recipients has climbed by about 10 million over the past two years, resulting in a program that now feeds 1 in 8 Americans and nearly 1 in 4 children
• 36 million people currently use food stamps
• the program is now expanding at a pace of about 20,000 people a day
• there are 239 counties in the United States where at least a quarter of the population receives food stamps

Find your county here.

Red-baiting

Clearly, two decades after the end of the Cold War, red-baiting has not disappeared.

Not in the United States, with claims of socialist healthcare reform and the Republican National Committee’s campaign to devise a set of “core principles” in opposition to Obama’s “socialist agenda.”

And not in Great Britain, with the Economist’s attempt to besmirch the reputation of Catherine Ashton, the EU’s new foreign minister, for her membership in—of all things—the Campaign for a Nuclear Disarmament.

 

Financial reform?

The Austrian view, according to Russell Roberts, is more or newer financial regulation won’t solve the crises of capitalism. It’ll just make matters worse.

advocating ‘better’ supervision or ‘more vigorous’ regulation or even something more specific such as larger capital cushions, ignores the empirical record that regulators and politicians either for venal or human reasons, seem unable to maintain these restrictions in the face of pressure from participants.

No surprise there, for a follower of Hayek.

But what is interesting is (1) the relation between the state and civil society (which Roberts addresses, and mainstream economists ignore) and (2) the way that relation currently works:

We are what we repeatedly do. Not what we say we are. Not what we’d like to be. But what we do. What we do as a body politic is rescue rich people from the consequences of their decisions. That is bad for democracy and bad for capitalism. Until we fix that, we as citizens are playing a game of “heads—Wall Street executives win a ridiculously enormous amount, tails—they just win a ridiculous amount, paid for by the rest of us.” Until we fix that, little else matters.

Roberts clearly understands that, in the midst of the current crises, the capitalist state bails out rich people and Wall Street and not the rest of us. His mistake is failing to recognize that such government interventions are not bad for capitalism, just bad for a particular—free-market or private—kind of capitalism. In fact, they’re an attempt to save capitalism, by creating a more regulated form of capitalism.

Graffiti of the day