Tag Archives: Capital

Failure of ideas and not failure of political Establishment

By Harilla Goga – It is well known that the free individual with his thoughts and his actions, certainly in the frame of the legal system being in his service, is in the center of the democratic system. But, this individual, in fact, looks like “a consumer” of the democratic system goods. As such, he can keep his position as receiver, rejecter or protester depending on the “quality and quantity” of these goods.

Furthermore, this attitude is manifested towards elites/political establishment of the country concerned, but he generally cares a little or not at all about theories/ideas that politics are based on.

In economic terms, this lack of new ideas and theories is the “consumer’s” most sensitive subject, for example: The current economic and financial system is set based on very old theories which stress the maximum profit for business through tight competition and bankruptcy; The trade and free movement of capital system, that have unified markets and removed barriers, bringing benefits, common developments and new technologies throughout the world, but causing economic and social damages and environmental challenges in all regions of the world. States, governments and International organizations are addressing these challenges, but their programs and politics (leftists and rightists, or independents/new movements), are still fed by theories and ideas over than 100 or 200 years earlier. more>

Free Money: The Surprising Effects of a Basic Income Supplied by Government

By Issie Lapowsky – A legislated basic income is in the realm of fantasy at the moment. Even among its proponents there is almost no agreement about the fundamentals, starting with how much money would be an optimal basic income.

Ioana Marinescu, a professor at the University of Pennsylvania’s School of Social Policy and Practice, who researches basic income, says that research on the Alaska fund is enlightening, but not dispositive. “We know $2,000 a year makes a real difference to many people,” Marinescu says. “But would something lower still make a difference? We don’t know.”

As with any program, there are infinite opportunities for abuse and bad decisionmaking.

One illuminating New York Times article illustrated how the men and women who scrub toilets and do other low-skilled work for companies like Apple are hired from contracting companies which set the terms of their employment. Those workers are cut off from the benefits and upward mobility that the company’s engineers and marketers enjoy. Because the workers are contractors, the big tech companies feel no pressure to raise their wages, and aren’t responsible for offering health-care coverage.

Looked at in this light, the tech-led efforts to push a basic income can appear hypocritical. more>

Do Corporations Make Any Sense?

BOOK REVIEW

The Vanishing American Corporation: Navigating the Hazards of a New Economy, Author: Gerald F. Davis.

By Rick Paulas – On the last day of the year of 1600, the East India Company was created. It was the precursor to the modern corporation, an organizational idea that’s lasted more than 400 years. But will the corporation continue to be dominant forever?

To Gerald F. Davis, signs of the corporation’s futility began in the 1980s and ’90s, as the rise of financialization—in which financial services account for a higher share of national income than other sectors—transformed the American economy.

The transformation came through a dismantling of New Deal-era protections, including decades of court decisions that chipped away at the Glass-Steagall Act, the 1933 legislation separating investment and commercial banking. As Suzanne Burger, a political science professor at the Massachusetts Institute of Technology, put it in a 2014 piece: “[S]ince the 1980s, financial market pressures have transformed U.S. corporate structure itself.” Instead of manufacturing or services, Wall Street became the economy’s driving force.

Davis says the future of the economy can go in two directions, depending on how quickly and powerfully masses organize. The first is the nightmare scenario: A few chief executive officers from a handful of companies (Davis suggests technology giants Google, Facebook, and Amazon as the likely trio) wielding unchecked power.

“If Mark Zuckerberg wanted to sell Facebook to Vladimir Putin for one trillion dollars, he has the power to do so,” Davis says. “It’s a concentration of control we haven’t seen in American history before.” more>

How Americans became vulnerable to Russian disinformation

By Kent Harrington – Last week, Congress unveiled legislation that http://blogs.strategygroup.net/wp2/economy/?p=63300&preview=truewould force Facebook, Google, and other social media giants to disclose who buys online advertising, thereby closing a loophole that Russia exploited during the election.

Strip away the technobabble about better algorithms, more transparency, and commitment to truth, and Silicon Valley’s “fixes” dodge a simple fact: its technologies are not designed to sort truth from falsehoods, check accuracy, or correct mistakes. Just the opposite: they are built to maximize clicks, shares, and “likes.”

Despite pushing to displace traditional news outlets as the world’s information platforms, social media’s moguls appear content to ignore journalism’s fundamental values, processes, and goals. It is this irresponsibility that co-sponsors of the recent advertising transparency bill are seeking to address.

Still, Russia’s success in targeting American voters with bogus news could not have succeeded were it not for the second problem: a poorly educated electorate susceptible to manipulation. The erosion of civics education in schools, the shuttering of local newspapers – and the consequent decline in the public’s understanding of issues and the political process – conspire to create fertile ground for the sowing of disinformation. more>

This world is enough

BOOK REVIEW

Zombie Economics, Author: John Quiggin.

By John Quiggin – Economic development and technological progress provide the only real hope of lifting billions of people out of poverty and destitution, just as it has done for the minority in the developed world. Yet the living standards of the developed world have been built on cheap energy from carbon-based fossil fuels. If everyone in the world used energy as Americans or even Europeans do, it would be impossible to restrict climate change to even four degrees of warming.

The question is not: ‘Can we let everyone live like prosperous residents of the First World without destroying our natural environment?’ It is: ‘Will we?’ A balance is achievable, if we want it

The first thing is to identify the right ones. Aggregates such as gross domestic product (GDP) often come up in this context, but they are of very little use. GDP is a measure of overall economic activity, produced to assist short-term macroeconomic management.

By design, it takes no account of the usefulness of what is produced or of the specific resources used up in production. Unless you are an economic planner or central banker, you are better off ignoring it altogether. more>

Related>

The Disastrous Trump Tax Plan

By John T. Harvey – Designing a tax plan that will actually increase spending and therefore employment is really not all that difficult. All you have to do is meet two criteria:

1. The tax cuts must not be offset by spending cuts (or tax increases elsewhere).

2. The tax cuts must increase the incomes of those who will actually spend the money.

That’s it, that’s the whole story. And these give very clear guidelines regarding what to do in practice. For example, if you are cutting taxes, do it for the poorest people in the economy. Any increase in their income is guaranteed to create jobs because they will absolutely spend it.

“The rich donors who are part of the base would come out quite nicely from this proposal.”

Who in God’s name thinks this is a good idea? This does absolutely nothing to address the long-term problems from which the economy is suffering and very likely makes them worse.

The reasoning, we are told, is that when we cut corporate taxes they’ll invest and hire more workers. That represents a misunderstanding of the economic factors at work. more>

Related>

If You Look Behind Neoliberal Economists, You’ll Discover the Rich: How Economic Theories Serve Big Business

The road to serfdom – sponsored by big business
By Dániel Oláh – Social classes have always embraced ideas and social philosophies. Not only to understand and interpret the real world, but most importantly to change it to their benefit. These theories (primarily in social science) have become beweaponed ideas called ideologies, as they are used to influence rather than to understand the human universe.

Of course the two are related: the nature of our understanding, i.e. what we consider important and what we leave out from our theoretical framework, is called modelling.

But what if modeling is just an euphemism for modern ideologies?

The great Austrian economist Friedrich Hayek didn’t favor mathematical modeling, but he had clear philosophical models in his head. One of his most famous statements is related to the slippery road to dictatorships: if you introduce a little bit of state involvement in the economy, you have already stepped on this messy road to serfdom. The main intention of this model was to call for action and to raise awareness against the increasing governments in an era when the battle between the West and the East hadn’t yet been decided.

Hayek’s model was working as an ideology in real life, not at all different from that of the Soviet side. At least we get this impression if we take a look at the cartoon version of Hayek’s Road to Serfdom. This was his main work on social philosophy and economics, arguing for individualism and liberalism. Hayek’s argumentation in defense of a minimal state was so powerful that General Motors decided to sponsor the production of the comic version.

So, Hayek’s well-written piece of social philosophy was turned into a black-and-white, stylized world, where keeping the wartime planning roles of the government deterministically leads to the planning of thinking, recreation and disciplining of all individuals. more>

Economic Growth Is No Longer Enough

By Manuel Muñiz – Macroeconomic data from the world’s advanced economies can be mystifying when viewed in isolation. But when analyzed collectively, the data reveal a troubling truth: without changes to how wealth is generated and distributed, the political convulsions that have swept the world in recent years will only intensify.

Most of the wealth created since the 2008 crisis has gone to the rich.

Employment, too, seems to be performing in anomalous ways. For example, most employment growth has been in high-skill or low-skill occupations, hollowing out the middle. Many of the people who once comprised the Western middle class are now part of the middle-lower and lower classes, and live more economically precarious lives than ever before.

The fundamental consequence of this is that wages are no longer performing the central re-distributive role they have played for decades. Simply put, gains in capital productivity are not being translated into higher median incomes, a breach of the social contract on which liberal economies rest.

The debate about solutions has only just begun. Reducing economic inequality will require reforms of education and taxation, with the tax burden shifting decisively from labor to capital. more>

Post-Capitalist Entrepreneurship: Basic Income, Blockchain Cities, and Local Currencies

BOOK REVIEW

Post-Capitalist Entrepreneurship: Startups for the 99%, Author: Boyd Cohen.

By Boyd Cohen – We are in the very early days of what blockchain can mean for cities. Obviously, the smart cities movement with a strong focus on the Internet of Things (IoTs), big and open data, and sensor technology will likely benefit from the growth of blockchain solutions. But perhaps more interesting is to reflect on how blockchain could be used to support social inclusion and a post-capitalist economy.

Aside from its potentially transformative potential in local cryptocurrencies, blockchain may also support many other important changes to life and government in cities. The blockchain may support alternative forms of sharing economy that challenge platform capitalism.

Take Arcade City as an example. Arcade City is a blockchain-enabled (with ethereum) organization aimed at taking on Uber first, and other platform capitalists later. It is a peer-to-peer app, founded in Austin, Texas, in 2016, which aids people seeking a ride with drivers of passenger vehicles. Unlike in Uber’s model, Arcadian drivers are able to charge their own fees and process transactions directly with their passengers. Since its launch, rides have been facilitated in other cities in the United States, Europe, and Africa. Arcade City has launched their own initial coin offering in 2016, to create Arcade Tokens which can be used for payments with the app.

I suspect in the future, we will witness cities embracing everything from local digital currencies, three-tiered maker communities (in the home, in the neighborhoods via fab labs, and city-level flexible manufacturing production), some form of basic income (perhaps tied to civic contributions), hopefully affordable housing for all through community land trusts and other housing innovations (e.g., Vancouver’s in-fill housing), blockchain-enabled distributed sharing platforms that compete with, or maybe even replace, platform capitalists, entrepreneurial and maker education in all schools. more>

Money And Credit: Paradigm Shift Is Overdue, Part I

By John M. Balder – All of us were taught in Economics 101 that central banks determine the money supply by using their high-powered (base) money and the multiplier. Both of these concepts should be tossed in the trash can. These notions are in error, as both the BOE and the Federal Reserve have recognized. In fact, central banks passively accommodate bank demand for reserves (as doing otherwise could prove disruptive to financial stability).

The influence central banks exert over money and credit creation is achieved via their control of short-term interest rates, and not via quantitative restrictions.

A quick aside here, I have always been curious as to why economists tend to focus so exclusively on the real economy, while choosing to ignore the financial system entirely. Similarly, my work in banking regulation in the early 1990s indicated that most regulators tended to ignore macroeconomic variables.

Is this a case of “where you stand on an issue is often a function of where you sit?” As one who participated in both endeavors, I have perpetually felt a need to connect macro with finance. This may be happening more today than it was 10 or 20 years ago, but it still has a long way to go. more>