12 Jan 2021
Some Time Soon - things will be the same, but different.
However, we did not notice the emerging change? - or did we?
David Roberts tweet the day after the Trump-mob storm on Capitol:
Feels like we’re trapped in a script, a play,
that has been performed several times around the world recently.
And even though we know exactly how the fall-of-democracy script plays
out – every beat, every chapter – we’re just trapped, helpless,
watching it play out
In 2018 Matthew Stewart had an excellent
piece
in the Atlantic on the morphing of the upper 9.9 percent of American wealth-distribution
into a new Aristocracy.
Perhaps the best evidence for the power of an aristocracy is
the degree of resentment it provokes (Matthew Stewart)
Trump is a smart entrepreneur - first in business, then in politics.
Before other he saw the vote potential in the resentment against this new aristocracy -
The Washington Swamp.
Trump succeeded in creating a bizarre aliance between ultra-rich
and the left-behinds of the neoliberal era -
picking up enough votes to start an attack on the ruling aristocracy.
230 years have gone since the French Revolution -
and we still have not seen the return of the pitchforks.
Obama sold ‘change’ without delivering.
Trump makes ‘change’, but only for the benefit of the ultra-rich.
His attacks on the aristocracy in Washington is enough to get him going
with the resentfull.
The aristocracy managed to overturn their 2016-loss with at call
for ‘healing of the nation’.
But how should this healing occur?
Only removal of the aristocracy will satisfy the resentfull.
That will not happen witouth the pitchforks.
Some time soon there is worse to come.
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20 Feb 2020
“The Climate Crisis is Capitalism’s Waterloo” (Yanis Varoufakis)
“Black Swan” is a label for highly upredictable events with extreme impacts.
The concept was made popular by Nassim Nicholas Taleb with his 2007 book of
the same title. Some will say the Financial Crisis in 2008 was a black swan.
As Queen Elizabeth famously asked the community of Britsish Economists:
“Why did nobody see this coming?” - Although some saw it coming, but not among
the mainstream scholars. Taleb - a former options trader - has later build a
whole theory around the ‘Black Swan’ - in his five volume Opus Magnus, ‘Incerto’.
Now BIS - the Central Bank’s ‘Central Bank’ (Bank of International Settlements in Basel)
has introduced “The Green Swan” another name for the Climate Crisis as it dawns upon
the community of Central Bankers.
The alarm bells has finally started ringing in the ‘Core of Capitalism’.
2019 was the year not only Central Bankers got concerned - even Wall Street is worrying.
The OECD is trying to coordinate the worrying, talking about ‘A New Economic Approach’
‘Beyond Growth’.
Only Yanis Varoufakis uses the term ‘Capitalism’ - and speaks as if some Non-Capitalistic
System really might emerge.
Others stay away from naming ‘The System’ - and are more concerned about its ‘stability’ -
focusing on ‘resilience’ - i.e. how to make Capitalism survive the Climate Crisis.
Naomi Klein’s 2014 book ‘This Changes Everything’ concluded that Capitalism as such
really was what created the Climate Crisis. To get out of the Crisis we would have to
abandon the system itself. But the others have not yet reached such a conclusion.
Some don’t like the term ‘Capitalism’ at all.
John Kay wish we did not use it - thinking it is an obsolete label for today’s
economic system.
The ongoing debate is an entertaining exposition of sliding concepts and language -
however, on a very dark and solemn background.
The major divide is between those advocating ‘Green Growth will solve the Problem’
and those saying ‘Growth is the Problem, even if it is green’. Among the latter
are Jason Hickel and Giorgis Kallis.
This hinges on the very question of whether Capitalism is possible without Growth.
Production for Profit is the core of Capitalism and thus Growth.
‘Akkumulieren, akkumulieren, dass ist Moses und die Propheten’ as old Marx put it.
If planetary boundaries forces growth of today’s economic system to stop - it
will no longer be Capitalism.
* Yanis Varoufakis
* Wikipedia on Taleb
* BIS - “The Green Swan” (pdf)
* Wall Street embraces climate action
* OECD - Beyond Growth
* Naomi Klein - This Changes Everything - Capitalism vs The Climate
* John Kay: Moving beyond Capitalism
* Jason Hickel and Georgis Kallis: Is Green Growth Possible?
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18 Jan 2019
The Bruegel blog of September 4, 2018 reports from the annual Jackson Hole gathering of central
bankers.
This year the focus was on implications for central banks of the rise of superstar firms and
changing market structure.
Of particular interest I found the contribution of Antoinette Schoar (MIT Sloan) -
as refered by Bruegel:
Antoinette Schoar looks at the financial market, argues that the rapid growth of new digital technologies has created a market dynamic, where many institutions outside the central bank system might soon have much more comprehensive, more accurate and also more timely information than the regulators. Companies like Google or Amazon can use their data to predict regional sales growth or job losses. Google Trends is just one example of the power of aggregation from individual search information. This poses a challenge going forward that is structural and intellectual. On the one hand we need to think about how central banks can get visibility of the types of data that private-sector institutions are collecting as part of their core business. On the intellectual side the availability of this hyper-granular data asks for a new way of building economic models based on individual purchase or borrowing decisions. This is a challenge to the whole field of (macro)economics.
Bruegel on monetary policy and superstar firms
Antoinette Schoar (pdf)
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25 Jan 2018
Mainstream economics failure to ‘see the crisis coming’ in 2008
is broadly regarded as a deficiency of the theory.
However, Paul Krugman now argues that the theory was - and is - ‘good
enough for government’. The failure of 2008 was not in the theory,
but rather in deficient data collection. Macroeconomists “overlooked”
the institutional changes in the financial sector
and did not record appropriate data.
The “New Keynesians” - i.e. Krugman’s ‘Saltwater School’ based at
MIT and Harvard - took up the challenge by dust[ing] off their old sticky-price models from the 1950s and 1960s, which told them three things:
- Very large budget deficits would not drive up near-zero interest rates.
- Even large increases in the monetary base would not lead to high inflation, or even to corresponding increases in broader monetary aggregates.
- There would be a positive national income multiplier, almost surely greater than one, from changes in government spending and taxation.
Krugman argues that these propositions made the case for budget deficits in the aftermath of the collapse of 2008 which worked “remarkably well.”
This New Keynesian policy was a succes - in contrast to the more inflexible
responses promoted by the ‘Freshwater - Chicago School’.
However, fiscal expansion was soon replaced by austerity.
Krugman’s version is not taken at face value by Robert Skidelsky who
argues that when Keynes was briefly exhumed for six months in 2008-2009, it was for political, not intellectual, reasons. Because the New Keynesian models did not offer a sufficient basis for maintaining Keynesian policies once the economic emergency had been overcome, they were quickly abandoned.
The problem for New Keynesian macroeconomists is that they fail to acknowledge radical uncertainty in their models, leaving them without any theory of what to do in good times in order to avoid the bad times. Their focus on nominal wage and price rigidities implies that if these factors were absent, equilibrium would readily be achieved. They regard the financial sector as neutral, not as fundamental.
Without acknowledgement of uncertainty, saltwater economics is bound to collapse into its freshwater counterpart. New Keynesian “tweaking” will create limited political space for intervention, but not nearly enough to do a proper job. So Krugman’s argument, while provocative, is certainly not conclusive. Macroeconomics still needs to come up with a big new idea.
Skidelsky
Krugman
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16 Nov 2017
The Thai districts on the Myanmar border have very mixed ethnic groups
and a rough history:
The Shan are not the only ethnic group living here.
Ban Mae Aeb is a small village comprising five ethnic groups living togetger.
Besides the Shan, the village is home to Chinese, Lahu, Akha and Lua.
The “Lost Army” - the republic of China’s 93rd Division - fled into Burma
after their defeat to the communist.
The Chinese Nationalist troop tried to attack Yunnan province in China,
but were pushed into Burma.
Then they were pressured by the Burmese army to move out.
Whereever the Lost Army passed, people from ethnic villages were forced to
join them.
Men were recruited as porters or soldiers while women were cooks and nurses.
The Lost Army swept villages and left no one behind.
The remnants of the Lost Army sought asylum and settled along the
Chiang Rai border, particularily in the mountainous areas.
In exchange for asylum, they fought for Thailand against communists
along the northern border.
Today, descendants of the Lost Army can be found in Doi Mae Salong and
other places along the Chiang Rai border.
Though the villages grew with different ethnic groups, Chinese remains
the village’s official language.
Thai Hilltribes
Santikhiri
Kuomintang Villages
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