Gar Alperovitz on the new economy movement
Just beneath the surface of traditional media attention, something vital has been gathering force and is about to explode into public consciousness.
Read about it here.
Rent-seeking in America
Nobel laureate Joe Stiglitz defines rent-seeking as “using political and economic power to get a larger share of the national pie, rather than to grow the national pie” – and he says that America today has become a rent-seeking society. Hear him interviewed here (the 7:40-8:55 interval for the rent-seeking passage), discussing on his new book, The Price of Inequality.
Too hot for TED?
Something funny happened when millionaire Nick Hanauer’s was invited to give a TED talk on income inequality in America. He advocated higher taxes on the rich – including people like himself. Then the good people at TED decided his talk was too “political.” They decided not to post it. Here’s an excerpt from Hanauer’s non-talk:
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Rather they are a consequence of an eco-systemic feedback loop animated by middle-class consumers, and when they thrive, businesses grow and hire, and owners profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.
Read the full text of Hanauer’s non-talk here.
See his powerpoint slides here.
Read the backstory here.
People’s Guide to the Federal Budget
New from the National Priorities Project:
The only thing stronger than money in politics is an informed electorate.
Find the report here.
Mainstream amnesia
Econ4 team member Gerald Epstein writes for TripleCrisis on the “Memento syndrome” in orthodox macroeconomics:
Like the protagonist in the movie Memento, who has no memory but is trying to solve the mystery of his wife’s murder, and has to remind himself every minute about what happened the minute before by writing notes and even tattooing himself , mainstream macroeconomists’ write themselves articles and books after every crisis and they then promptly forget what they wrote (no tattoos as far as I know).
I believe there is a reason for this: the mainstream never changes its underlying theory which is based on the erroneous ideas that financial markets are, by and large, perfectly self-governing and efficient and that the market economy has strong self-equilibrating forces that always bring the economy back to full employment… Since they won’t change their basic framework, they have nowhere to put the new information they get after each crisis. So, they forget it just as soon as they can… The tragedy is that it is these same economists who still control the elite economics departments, the main economics journals and hold the key policy making and research positions in our public institutions such as the Federal Reserve. Their stranglehold must be broken if we are going to break the Memento syndrome that is hindering sensible economics and economic policy.
Read his piece here.
Dividends for the people
Peter Barnes, author of Capitalism 3.0, writes for onthecommons.org:
Why don’t we pay everyone some non-labor income — you know, the kind of money that flows disproportionally to the rich? I’m not talking about redistribution here, I’m talking about paying dividends to equity owners in good old capitalist fashion. Except that the equity owners in question aren’t owners of private wealth, they’re owners of common wealth. Which is to say, all of us.
One state—Alaska—already does this. The Alaska Permanent Fund uses revenue from state oil leases to invest in stocks, bonds and similar assets, and from those investments pays equal dividends to every resident. Since 1980, these dividends have ranged from $1,000 to $2,000 per year per person, including children (meaning that they’ve reached up to $8,000 per year for households of four). It’s therefore no accident that, compared to other states, Alaska has the third highest median income and the second highest income equality.
Alaska’s model can be extended to any state or nation, whether or not they have oil. Imagine an American Permanent Fund that pays dividends to all Americans, one person, one share. A major source of revenue could be clean air, nature’s gift to us all. Polluters have been freely dumping ever-increasing amounts of gunk into our air, contributing to ill-health, acid rain and climate change. But what if we required polluters to bid for and pay for permits to pollute our air, and decreased the number of permits every year? Pollution would decrease, and as it did, pollution prices would rise. Less pollution would yield more revenue. Over time, trillions of dollars would be available for dividends.
Read his piece here.
U.S. Defense Department budget since WW2
Food for thought from the National Priorities Project:
As the chart below shows, current defense spending levels – even without funding for the wars in Iraq and Afghanistan – are higher than at any time since World War II when adjusted for inflation.
Unequal and unstable
The correlation between income inequality and financial crises raises an important question: could it be that extended periods of increased income inequality help to cause financial crises? Evidence suggests this may well be the case, through three primary mechanisms that reinforce each other:
- Sharp increases in debt-to-income ratios among lower- and middle-income households looking to maintain consumption levels as they fall behind in terms of income;
- The creation of large pools of idle wealth, which increase the demand for investment assets, fuel financial innovation, and increase the size of the financial sector;
- And disproportionate political power for elite financial interests which often yields policies that negatively affect the stability of the financial system.
Read their analysis here.
Economic fallacies: time to work more, or less?
In the models of neo-classical economics times like the present are assumed away. But when we’re actually living through them, we need to recognise that measures that result in higher hours can be counter-productive by creating more unemployment and investor pessimism. Similarly, responding to shortfalls in pension programs by asking people to stay in the labour force more years further dis-equilibrates the market by creating more demand for a limited number of jobs.
Fracking democracy
In 2010, Pittsburgh’s City Council voted unanimously to ban hydraulic fracturing for natural gas extraction within city limits. Now the Pennsylvania legislature is moving to deny local governments the right to protect the local environment:
We don’t have a fracking problem. We have a democracy problem.
Read about it here.
