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BlogState Taxes Are Wildly Regressive
February 03, 2012 Some indigestible food for thought: there is not a single state in the Union—not one—in which the top 1% of income earners pay a higher rate of state taxes than the bottom 20%. For the majority of states, it’s not even close: the poorest 20% pay somewhere between double and six times the tax rate [...] Blog -
Working Paper No. 705What Do Poor Women Want? Public Employment or Cash Transfers?
February 03, 2012 The literature on public employment policies such as the job guarantee (JG) and the employer of last resort (ELR) often emphasizes their macroeconomic stabilization effects. But carefully designed and implemented...more Publication -
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Auerback on the Latest Eurodrama
February 01, 2012 Marshall Auerback appeared on the Business News Network to give his take on the latest developments in the eurozone crisis; specifically with respect to the ongoing negotiations over the proposed (now 70 percent) haircut on Greek debt. Auerback also addressed the LTRO (noting the rather dramatic increase in the ECB’s balance sheet) and the credit [...] Blog -
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Hudson: The Neo-Rentier Economy
January 31, 2012 Michael Hudson is giving a talk titled “The Road to Debt Deflation, Debt Peonage, and Neofeudalism” at the Levy Institute on Friday, February 10 at 2:00 p.m. Hudson is a research associate at the Levy Institute and a financial analyst and president of the Institute for the Study of Long Term Economic Trends. He is [...] Blog -
Working Paper No. 704
Ανισορροπίες; Ποιές ανισορροπίες;
January 27, 2012 Είναι κοινός τόπος να συνδέει κανείς τα νεοκλασικά οικονομικά με τη φυσική του 18ου ή του 19ου και την έννοια της ισορροπίας, με την ιδέα της συμπεριφοράς του εκκρεμούς, που...more Publication -
Working Paper No. 704
Imbalances? What Imbalances?
January 27, 2012 It is commonplace to link neoclassical economics to 18th- or 19th-century physics and its notion of equilibrium, of a pendulum once disturbed eventually coming to rest. Likewise, an economy subjected...more Publication -
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The Fetish for Liquidity (and Reform of the Financial System)
January 27, 2012 In his General Theory, J.M. Keynes argued that substandard growth, financial instability, and unemployment are caused by the fetish for liquidity. The desire for a liquid position is anti-social because there is no such thing as liquidity in the aggregate. The stock market makes ownership liquid for the individual “investor” but since all the equities [...] Blog -
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Is the labor market still stuck at its “new normal”?
January 26, 2012 The Bureau of Labor Statistics (BLS) noted on its website yesterday that in 2011, “annual totals for [layoff] events and initial claims were at their lowest levels since 2007.” Nonetheless, today’s report that the Fed open-market committee plans to keep short-term interest rates low until late 2014 reminds us of the obvious but unfortunate fact [...] Blog -
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Breaking Up Bank of America?
January 25, 2012 Speaking of too big to fail, a petition organized by Public Citizen has been sent to the Federal Reserve and Financial Stability Oversight Council (FSOC) calling for the break up of Bank of America. The petition identifies BofA, given its size and fragility, as a threat to the US financial system. It cites a recent [...] Blog -
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Minsky in the News
January 25, 2012 The Financial Times has been running a series for some time on “Capitalism in Crisis.” In yesterday’s paper Martin Wolf provided a summary of the discussion and proposed “Seven ways to fix the system’s flaws.” The first and most important task, he notes, is to manage macro instability. In this regard, he pays homage to [...] Blog -
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Another view on “policy pragmatism” in mainstream economics
January 24, 2012 Paul Krugman—orthodox economist? Heterodox economist? Pragmatic economist? New Keynesian economist? Michael Stephens recently commented on an article in the Economist that discussed MMT, as well as two other non-mainstream schools of macroeconomic thought. The article contrasted the three relatively unfamiliar and unorthodox approaches with “[m]ainstream figures such as Paul Krugman and Greg Mankiw[, who] have [...] Blog -
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In What Sense Does Government Debt “Burden”?
January 23, 2012 Robert Skidelsky runs through and corrects five fallacies about debt that one often hears lazily deployed in the public arena. His third correction: …the national debt is not a net burden on future generations. Even if it gives rise to future tax liabilities (and some of it will), these will be transfers from taxpayers to [...] Blog -
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Laughter: The New Financial Instability Index
January 20, 2012 Phil Izzo of the Wall Street Journal points us to the invaluable work of the people at The Daily Stag Hunt, who tallied the number of times that laughter appears in the transcripts of the Fed’s FOMC meetings. Peak laughter, as The Daily Stag points out, corresponds nicely with the height of the housing bubble: [...] Blog -
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Deficit Doves and Owls: How to Worry About Healthcare Costs
January 20, 2012 You may not agree with Alan Blinder when he writes in the Wall Street Journal that the budget deficit should be an issue in the 2012 campaign. But it certainly will be. And Blinder deserves kudos for pointing out that there are no immediate or near-term economic problems stemming from US deficit and debt levels: [...] Blog -
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Who Benefits from Failed Eurozone Policies?
January 19, 2012 As a counterpoint to the last post on the curious dominance of conservative macro policy ideas in Europe, here is Matías Vernengo getting into the political economy of who benefits from these failed policies and why there seems to be no sense of urgency around the fact that the real economy is broken: (This is [...] Blog -
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How Austerity Could Fail Its Way Into US Hearts and Minds
January 18, 2012 Marshall Auerback compares the job numbers in the US to those in Europe and asks why the US is doing so much better (or failing less miserably). One of the differences he highlights is the zealous dedication to fiscal austerity in Europe, compared to the relatively half-hearted, passive observance of doctrine in the US. For [...] Blog -
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The Orthodox Economics “Mafia”
January 13, 2012 Randall Wray passes on this piece by Chris Hayes (of The Nation and MSNBC) on the challenge mounted by heterodox economists to the neoclassical consensus. Reporting from the ASSA, Hayes gets into the ways in which the boundaries of the “mainstream” are policed in economics. It’s really worth reading the whole thing. I particularly liked [...] Blog -
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The Real Problem with the $29 Trillion Bailout of Wall Street
January 12, 2012 I previously summarized research that two of my graduate students, James Felkerson and Nicola Matthews, are conducting on the Fed’s bailout. Using data that the Fed was forced to release, they demonstrated that the cumulative total lent and spent on assets by the Fed was over $29 trillion. (See the first paper here: http://www.levyinstitute.org/publications/?docid=1462) Their [...] Blog -
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MMT as Public Policy
January 12, 2012 First The Economist, now CNBC. CNBC’s Senior Editor John Carney has put together a series of posts on Modern Monetary Theory at his blog. One of Carney’s objections to MMT is this: …my biggest point of departure with the MMTers is they display a political and economic naivete when it comes to the effects of [...] Blog -
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Heterodoxy and the Mainstream(s)
January 11, 2012 Over the break an article appeared in The Economist spotlighting three “schools of macroeconomic thought”: Scott Sumner’s market monetarism, Austrian free banking, and neo-chartalism (MMT). In addition to noting the role of the blogosphere in refining and promoting these heterodoxies, the article elects to use Paul Krugman as a stand-in for the “mainstream” opponent. If [...] Blog -
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A Third Way on Fiscal Policy
January 10, 2012 Courtesy of INET, here is Pavlina Tcherneva explaining her “bottom up” approach to fiscal policy. Notice the way she uses the term “trickle down” to apply also to conventional pump-priming fiscal policy (targeting growth and hoping for the right employment side-effects). We need to move beyond the conventional options on fiscal policy, says Tcherneva; beyond [...] Blog -
Working Paper No. 703
A Comparison of Inequality and Living Standards in Canada and the United States Using an Expanded Measure of Economic Well-Being
January 06, 2012 We use the Levy Institute Measure of Economic Well-being (LIMEW), the most comprehensive income measure available to date, to compare economic well-being in Canada and the United States in the...more Publication -
Working Paper No. 702
Οι ανισορροπίες του ευρώ και η χρηματοπιστωτική απορρύθμιση
January 06, 2012 Η συμβατική σοφία υπαγορεύει ότι η ευρωπαϊκή κρίση χρέους, η οποία έχει μέχρι στιγμής οδηγήσει σε σκληρά προγράμματα δημοσιονομικής προσαρμογής διαμορφωμένα από την Ευρωπαϊκή Ένωση και το Διεθνές Νομισματικό Ταμείο...more Publication -
Working Paper No. 702
The Euro Imbalances and Financial Deregulation
January 06, 2012 Conventional wisdom suggests that the European debt crisis, which has thus far led to severe adjustment programs crafted by the European Union and the International Monetary Fund in both Greece...more Publication