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Tao Jonesing
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My chart says I am more Left and more "Libertarian" than you. I believe the authors of the test are using the term "libertarian" in its more traditional civil liberty sense as opposed to the modern "propertarian" sense that folks like Friedman and Hayek perverted it into. Left leaning libertarians exalt the individual over government and the market. Right leaning libertarians (propertarians) exalt the market over individuals and government.
Toggle Commented Jul 17, 2017 on Political Compass at Economics and Ethics
I look forward to reading your book because I have been thinking about the individual and society lately. In many ways, I don't think "respect for the individual" has declined at all. (Consider the work of Hobbes, Bentham,Hamilton, Lippmann, etc.) Rather, what it means to be an individual, politically and legally, has been degraded along with the meaning of ideas like liberty and freedom. Best regards.
Toggle Commented Jul 17, 2017 on At last, a book: A personal update at Mark D. White
"Why, then, are young people so anti-capitalist?" Many young people are anti-capitalism because they don't believe they have any real choices or control over their lives. Today, our children are forced to compete more and more for fewer and fewer opportunities. In the meantime, just to compete, many of them take on an enormous student debt load that cannot be discharged in bankruptcy should they be unable to find a well-paying job, which is not an unlikely eventuality. Of course, those who cannot otherwise fund their education and do not take on the debt cannot compete and likely will become economic losers who struggle from paycheck to paycheck throughout their lives. The situation reminds of the lyrics of an old Clash song: Should I stay or should I go now? If I go, there will be trouble And if I stay it will be double If they go (by leaving the competition), there will be trouble. If they stay, it could be substantially worse, especially if they fail to find a job/career and essentially become indentured servants to the financial industry. Capitalism as a theory claims to be about freedom, but they see capitalism in practice as the opposite.
Toggle Commented Jul 17, 2017 on Enjoy Capitalism at Economics and Ethics
@Patrick, I read Simon and James every day. I think they are both brilliant, and they complement each other very nicely. From what I can tell, though, neither has been an executive of a public company, and neither understands how accounting rules can fundamentally change the utility analysis of business decisions for public companies. I have been, and I do. Similarly, while James is in law school, he has never practiced law. I practiced law for 15 years, in firms and in-house, before abandoning law and heading up a P&L for my last public company. What I had lacked (among other things) was an understanding of economics, but I've been studying it intensively for the last nine months, and that has meant studying the history of the academic discipline in the context of the practical reality that I experienced as a public company executive (I left my last position about six months ago), which boils down to this: an economy (or public company) that isn't growing is failing. To sell a significant change to the Street, you have to be able to show that what is new more than makes up for what has been abandoned. As a result, unfortunately, nobody (let alone Obama) can sell driving a stake through the heart of the financial sector, which has been the primary engine of growth of the U.S. economy for the last 30 years. Volcker destroyed U.S. industry. Greenspan and Bernanke established the financial sector's predominance in U.S. services. As a practial matter, what does the U.S. have that can replace the fantasy finance that has propped up the economy for the last eight years (through spurious transaction fees for derivatives that add no additional value, outright fraud, and mortgage equity withdrawal, which is never even laid out thier feet)? The answer is nothing. Another way of putting all this is that the capital markets don't see or acknowledge the stagnation of which you speak. The capital markets are global while labor markets are local. If the U.S. labor market is stagnant, so what? Everybody in the global capital markets, upon the advice of Friedman and Rand, is pursuing his own self-interest. Who cares what that means to local labor markets when, globally, the lot of mankind is improved by the capital markets? The "output gap" is not even on the radar screen. FYI -- While I am describing what I've observed, I'm not advocating it. Macroeconomics arose from the ashes of the Great Depression, after the last bout of globalization was extinquished thereby. Accordingly, macroeconomics cannot understand, explain, or account for the effects of globalization on our economic reality. Indeed, the neoclassical synthesis of macroeconomics as exemplified by Friedman's Chicago School has purposefully built in severe blindspots that lead to human suffering. So long as neoclassical economics predominates economic policy discussions, there will be no hearts, let alone stakes that we can hammer on to extinguish those non-existent hearts.
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@Patrick, So, at what segement of the U.S. economy would you look to replace that substantial portion of GDP created by the "rent sucking vampire" that is the financial sector once we drive a stake through its heart? I hate the financial sector, but there's a reason it has captured the government. The financial sector can plausibly argue that, if it is regulated or curbed in any way (let alone shut down), the U.S. economy will not only not grow but decline for decades. They should know: they set up the current Ponzi scheme. Macroeconomics ain't macro enough to find a way out of their scheme. And driving a stake through their heart is not an option until there is an alternative.
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Andy's post, Mark's quick reaction, and all of the comments convince me of one thing: macroeconomics as a discipline simply is not of sufficient scope or scale to fully explain or understand a truly global economy. The next higher layer of abstraction in economics is needed to explain how "macroeconomies" (i.e., nations) interact with one another through the actors that tie them together: multinational corporations. Unfortunately, economists are incapable of doing this on their own because other professionals design the rules that govern how nations work and, therefore, the relative incentives that multinational corporations are presented. Understanding U.S. monetary and fiscal policies alone does not provide a complete picture when capital can freely cross borders but labor cannot. We need to remember that macroeconomics is something that has existed as a discipline for less than a hundred years, and many of the econometrics that we rely on to understand and explain macroeconomics are even younger (GDP, for example, was developed in the 1940s). So much has changed during that tiny slice of human experience that a lot of what we think we know about macroeconomics simply isn't true any longer (and some of it was never true).
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My answer: Yes. The wisest course of action at the moment is to keep monetary policy irrelevant by imposing a lower bound federal funds rate of zero, just as Taylor suggests. The last thing we want or need is more private debt, and overcoming the banks' refusal to lend and the consumers' refusal to borrow would likely require rates that are much lower than the Taylor rule suggests. We just don't know what ugliness such efforts might cause.