Weisbrot: This is a Test: What Kind of Democracy Do We Have in the United States? [feedly]

OK. Oppose the TPP. So what? All the trading trends that do not need TPP will continue doing what they are doing. What changes in income for workers who vote down TPP, or vote for Brexit? Nothing.

I submit its time for a different tack on trade. PAY THE LOSERS. Pay them a lot. Stopping trade -- voting down trade agreements -- is a protest that is futile, and may backfire and make things worse.

This is a Test: What Kind of Democracy Do We Have in the United States?

Mark Weisbrot

http://cepr.net/publications/op-eds-columns/this-is-a-test-what-kind-of-democracy-do-we-have-in-the-united-states

Mark Weisbrot
The Hill, July 7, 2016

See article on original site

The insurgent candidacies of Bernie Sanders and Donald Trump — one uplifting and the other disturbing — together with the Brexit vote, have brought forth an unusual outpouring of discussion on the weaknesses of democratic governance in the high-income countries. There seems to be considerable agreement that all three of these unanticipated political earthquakes of 2016 are driven by discontent with a "democratic deficit." In the next few days and weeks, we will have a rare opportunity to see, close-up and raw, a historic effort to reduce that deficit. 

The venue is the Democratic Party platform committee and the main event is the Trans-Pacific Partnership (TPP). If that sounds like inside baseball, it could easily become the World Series of this year's presidential race. And if Hillary Clinton is smart, she will reconsider her bet.

The TPP, a commercial agreement among 12 countries with 40 percent of the world's GDP, is strongly disliked by the base of the Democratic Party, as well as by a sizable majority of Democratic voters and the general public. There's an awful lot not to like about this thing. Drafted mostly by corporations, negotiated in secret, with restricted access even for members of Congress, the deal would grant corporations the right to sue governments for all kinds of decisions, laws, or regulations that infringe on their profits or potential profits. The lawsuits would be decided by a panel of private lawyers and their decisions could overrule our Congress and Supreme Court — hence the overlapping issues of national sovereignty and democracy are once again brought to the fore. Patent-boosting rules favored by pharmaceutical companies would increase the price of prescription drugs. And the economic gains, even as estimated by pro-TPP economists, are tiny: by their estimatesthe agreement would make the US as rich on January 1, 2030 as it would otherwise be by mid-March of the same year.

Sanders campaigned against the TPP, and Hillary Clinton — who had previously praised it as"the gold standard in trade agreements" — has also come out against it. OnJune 24, at a meeting in St. Louisthatproduced a draft platform for the Democratic Party, Congressman Keith Ellison introduced language opposing the TPP. But it was defeated by a vote of 10–5, with only the five Sanders representatives supporting it.

Everyone familiar with this process knows that Hillary Clinton has enormous influence over her delegates and representatives on the platform committee. So, if the Democratic Party is unable to oppose the TPP, it will be because of her decision to keep it from doing so. 

Of course the game is not over this weekend when the committee approves the platform in Orlando; if defeated there, the Sanders team and its many allies and delegateswill take the fight to the floor of the Democratic National Convention, which begins in Philadelphia on July 25. In amuch bigger national spotlight, it will be even more difficult for Hillary to avoid responsibility for thwarting the will of the party and its activist and voter base.

Then comes the man with the orange tan: Donald Trump is trying to mobilize in his favor the white working class voters who have made up the swing vote of USpresidential elections for more than four decades. And he has been shouting that Hillary doesn't really oppose the TPP, that she has merely changed her position for this election, and will switch back as soon as it is over. Which would be pretty important if it's true, since the Obama administration's plan is to pass the agreement during the lame duck session of Congress, i.e., after the November election but before the new Congress takes office in January. Once again, that would put Hillary in the decisive position; it would be her lobbying — or not — of the Congress at that time that would most likely decide whether it is approved.

That is one reason why the Democratic platform is so crucial in this case: it will be difficult for Hillary, as president, to lobby Democrats for an agreement that the party is on the record as opposing; and there will be more pressure for Democrats in Congress to vote against it.

If Hillary's representatives on the full, 187-member platform committee in Orlando once again keep the Democratic Party from opposing the TPP, her responsibility for that outcome will be clear.It willbe seized upon by her otherwise not very credible opponent.

In 2008, Hillary Clinton lost her first bid for the presidency in large part due to her support for a deeply unpopular cause: the Iraq War. Will she risk making the same mistake for this corporate power grab called the TPP?

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Mark Weisbrot is co-director of the Center for Economic and Policy Research in Washington, DC, and the president of Just Foreign Policy. More details on the developments described here can be found in his new book Failed: What the 'Experts' Got Wrong About the Global Economy (2015, Oxford University Press).

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Charting the Impact of Federal Rental Assistance [feedly]

Charting the Impact of Federal Rental Assistance
http://www.cbpp.org/blog/charting-the-impact-of-federal-rental-assistance

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Trump Rigged [feedly]

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Trump Rigged
// Cartoons – Cagle Post



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Economics without Scarcity [feedly]

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Economics without Scarcity
// TripleCrisis

Sara Hsu

Economists have often been characterized as a dry, calculating bunch, focusing on the allocation of scarce resources with carefully drawn supply and demand curves.  The reason for this is that economics has, in Neoclassical theory and particularly within the writings of Lionel Robbins, emphasized choices and competition under conditions of scarcity.  Mainstream economic theory, rooted in Neoclassical thought, has continued in this vein, with a focus on market efficiency as the rule.  So, why do I have a problem with it?

Mainstream theory embodies decades of debate and rigorous application, but its focus on choice under scarcity has centered the study of economics on products, not people.  The assumption that people are there to either consume or produce products moves away from any requirements for basic human well-being, as emphasized by Amartya Sen in his own criticism of Neoclassical economics, supposes that consumers and producers always want to buy or sell more goods, and fails to focus on aspects of nature (such as forests or coral reefs) as more than resources, such as entities with a right to exist without subjugation to the human race.

These assumptions are flawed and not universally held.

First, with regard to the role of humans as producers or consumers, Karl Marx focused on labor not as one component in product, but as the most important component of value creation.  Marx centered on the struggle between capitalists and workers, and the exploitation by the former of the latter, as the primary economic issue.  As the Neoclassical school arose, Marx's labor theory of value was ditched in favor of marginalism, with emphasizes consumer satisfaction and producer costs, with little to no emphasis on the plight of the worker.  Later, economists like Amartya Sen focused on economic development as more than accumulation of products or wealth, but as capabilities to live, function, and enjoy life.

Second, the assumption that consumers always want to buy more goods and producers always want to sell more goods may be true sometimes, but grossly oversimplifies the nature of production in society.  It defies the mind, but not all societies are about working and shopping.  In many places, accumulating goods or wealth is a means to an end, and not an end in itself.

Third, while environmental economics and theories of public goods have sought to describe how natural and common resources should be valued, there is a failure in both aspects of Mainstream theory to recognize the rights of nonhuman living beings to exist.  This idea is not that far-fetched; the nation of Ecuador recognized Rights for Nature in its Constitution adopted in September 2008.  The city of Santa Monica, California, also recognized "natural communities and ecosystems" right to exist.  Biocentric rights theories, and some religious and ethical theories make the same assertion.

What is more, in most cases, the concept of scarcity has rarely prevented economic agents from exploiting resources.  The fact is, despite the definition of economics as the study of the allocation of scarce resources, it doesn't really work.  Labor and nature in particular have been used in many places and times as if they have no upper limit.  Workers are frequently overworked and underpaid as if labor was not scarce, and natural resources have been used up often without replenishment.

While I risk being accused of a lack of realism, I believe that the definition of economics as a study of scarcity is unethical and disingenuous in its current embodiment.  This study has helped to foster some of the ills we experience as a society, producing and consuming ever more as long as we can, without really considering our effect on humanity and nature.  After the global crisis, some economists, particularly heterodox, or non-Mainstream economists, called for a restructuring of the economics discipline.  This didn't happen.  Now, as we face a potential climate crisis, can we change our understanding of this critical field?  Reshaping economics as the study of livelihoods, relationships to other humans, institutions, and nature, and well-being may be a step in the right direction.  Perhaps the next generation will understand that economics is more than filling our storage units and bank accounts, and give credence to other, essential aspects of life.

Triple Crisis welcomes your comments. Please share your thoughts below.

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Hillary Clinton Embraces Ideas From Bernie Sanders’s College Tuition Plan [feedly]

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Hillary Clinton Embraces Ideas From Bernie Sanders's College Tuition Plan
// NYT > Business

The presumptive Democratic nominee's campaign said she plans to eliminate tuition at in-state public colleges for families with annual incomes under $125,000.
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Bond yields are just so damn low…what is that telling us? [feedly]

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Bond yields are just so damn low…what is that telling us?
// Jared Bernstein | On the Economy

I pour the morning cup of mud, schlep out to the stoop to get my paper, and open my WSJ to learn that the yield curve is awfully flat (i.e., the difference between the interest rates of bonds of different maturities is low). In fact, the yield on the 10-yr–1.367% yesterday–is the lowest on record. And the difference between the 10 and 2-yr Treasury yields, at about 0.8, is the same as it was in November, 2007.



Source: WSJ

Not good, and very much worth noticing. There are those who will tell you the yield curve is a revealing recession indicator and that a narrow 10/2 year spread is flashing red. But now isn't late 2007. Most importantly, of course, the housing bubble was imploding back then, whacking bank portfolios, wiping out trillions in wealth, and generating both a credit freeze and a demand-killing negative wealth effect. Also, the Fed funds rate has been at or near zero since around 2009, so that's also very much in the mix here, holding down Treas yields.

One must be steely-eyed in these circs and avoid unnecessary bedwetting. On the negative side, along with the flat yield curve, we have:

–the strong dollar: it hurts our trade competitiveness and puts downward pressure on inflation and thus props up the real interest rate;

–volatile markets/uncertainty: surely a bigger problem for the UK than us/US, but watch our equity markets for wealth effects; still, credit flows here seem largely untouched;

–possible weakening job growth: that's a big one of which I'll have more to say later this week.

On the plus side:

–low unemployment, a bit of wage growth, and low inflation, while a problem re propping up real interest rates, is helping paychecks go further;

–growth: kind of the bottom line here, and while it's been bumpy, we're basically posting growth rates of around 2%, yr/yr, which ain't great (and reflects a nasty downshift in productivity growth) but is actually the envy of most other advanced economies right now.

Two other things. I suspect the probability of a near-term recession remains relatively low here, well below 50%, though who knows? But what I'm absolutely certain of, as I wrote here, is that we're not ready for it, either re monetary or fiscal responses.

Finally, I couldn't be more flummoxed by this next point: these historically low Treasury rates amidst sluggish growth and an engine of job growth that could be downshifting are absolutely SCREAMING for policy makers to borrow and invest in public infrastructure. That would help on many levels now, from labor demand to productivity.

I won't make free lunch arguments, but given these yields and the potential benefits of the investments, this is lunch with a very large discount. I realize I'm screaming into the gridlocked, political void, but scream I will. And you should too, IMHO.

 

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Kindleberger and Brexit

http://ineteconomics.org/ideas-papers/blog/channeling-charles-kindleberger-on-brexit