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November 18, 2020

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marku52

"some researchers have found that wage-led growth is less likely in open economies for this reason."

Another reason why the benefits of free trade are much oversold.....

aragon

What is the obsession with work?

Especially when we don't produce anything!

How do you measure the productivity of a bullshit job?

https://en.wikipedia.org/wiki/Bullshit_Jobs

"David Graeber that argues for the existence and societal harm of meaningless jobs." (Negatively)

https://theconversation.com/jobseekers-are-being-gaslighted-all-too-often-being-told-unemployment-is-their-fault-149787

"But these understandings of unemployment as due to some sort of deficit within job-seekers ignore the larger, structural reality within which unemployment and job-searching take place. This is an economic reality where good jobs are few and getting scarcer, where the employer-worker contract is frayed, and where risks have been offloaded onto individuals and their families. Even relatively credentialed and affluent workers, such as those I spoke to in my research, are not immune to these broader trends."


Of course outsourcing to China and paying middle men for PPE won't boost the economy, and the Germans might be

nice enough to build ourselves some German designed tanks. But such is neo-liberalism.

A Fifteen hour week.
https://www.forbes.com/sites/billconerly/2020/02/19/the-15-hour-work-week-keynes-and-aoc-disagree/

Apparently only if you accept a 1930's standard of living, or perhaps not not

https://www.commondreams.org/views/2020/01/21/if-worker-pay-had-kept-pace-productivity-gains-1968-todays-minimum-wage-would-be-24

"It is worth considering what the world would look like if this were the case. A minimum wage of $24 an hour would mean that a full-time full year minimum wage worker would be earning $48,000 a year. A two minimum wage earning

couple would have a family income of $96,000 a year, enough to put them in the top quintile of the current income istribution."


But we can do much better, and there are several policies to achieve this.

But how about the less ambitious, doubling of Keynes target.

Yes, a four day week.

https://www.independent.co.uk/news/uk/politics/four-day-working-week-covid-economy-crisis-eu-b1723549.html

“For the advancement of civilisation and the good society, now is the moment to seize the opportunity and move towards shorter working hours with no loss of pay.”


Of course this would require a 20% uplift for the non-working poor (fair is fair).

Alternatively there's the ghost of George Osbourne - More Austerity.

https://www.theguardian.com/world/2020/nov/18/gypsyville-hull-most-deprived-and-covid-infected-suburbs-in-england

"But we’re prepared. We’ve got all the PPE, we’ve got the coffins. We’re ready.”"

Ralph Musgrave

First, it’s odd to attribute the “government is needed to give us full employment” idea to Beveridge given the Keynes put the same idea 15 years earlier.

Second, if there was a big backlog of demand after WWII, how come unemployment shot up, and stayed relatively high for 20 years after WWI?

Third, the fact that wage led growth might not work is not evidence whatever that a good old Keynsian / Beveridge rise in demand won’t work. The fact that one drug won’t cure a disease is not evidence that another drug wont.

rsm

"by the mid-70s, full employment was causing inflation, industrial unrest and a squeeze on profit margins"

Oil cartels had more to do with 1970s inflation than government employment policy.

"What’s more, a big section of capital would be ill-served by wage-led growth. Finance capital does well from weak aggregate demand because this cuts the interest rates on which leveraged strategies depend: Ford might have needed full employment; Goldman Sachs does not."

Goldman Sachs did well when Volcker jacked up rates, too. Finance will sell you inflation swaps and use TIPS to make plenty of profit in inflationary times.

"What is the obsession with work?"

Yes, this is the key question: economists are uniformly control freaks who want to force others to do things they are too high and mighty to do, by artificially restricting money and enclosing all other resources so you are dependent on money for survival.

Paulc156

"Second, if there was a big backlog of demand after WWII, how come unemployment shot up, and stayed relatively high for 20 years after WWI?"
Gold standard. Monetary and fiscal tightening to maintain exchange rate.

Blissex

«This approach, however, has failed. Even at its low-point last year, there were 1.3 million officially unemployed, another 1.9 million out of the workforce wanting a job»

Actually that means it has succeeded: slack in the labour market was the goal and it has been achieved.

JM Keynes argued that policy could keep the political economy in a permanent state of semi-boom, but the goal of policy in the past 40 years has been to keep it in a permanent state of semi-recession, as the growth rate of GDP per capita has halved.

But this has only applied to the real economy, where most of the servant class works; in the rentier economy there has been not only full employment, but booming incomes and wealth for the affluent and rich minorities.

An obvious symptom is that central bankers always talk about stimulating demand through the "wealth effect" of rising asset prices and pretty much never of the "wage effect" of rising labour prices...

Blissex

«Two big differences between now and the immediate post-war period. Back then, capital spending and private sector hiring stayed strong because there was a backlog of innovations and a high profit rate.»

That "backlog of innovations" was almost entirely the diffusion of oil based machinery replacing coal based machinery, and even vegetable based muscles: in the 1930s and 1940 even horse drawn carriages were still fairly common in large parts of the country, and also messengers between offices, and shopping home deliveries on bicycles.

Blissex

«But if workers and capitalists are the same people, the battle lines disappear.»

I guess that the notion that the distribution of income among workers, as opposed to that between workers and employers, would not be an issue because of "kumbaya, kumbaya, kumbaya!".

It would most likely be an improvement, but it would still be a pretty interesting struggle.

Blissex

«"Second, if there was a big backlog of demand after WWII, how come unemployment shot up, and stayed relatively high for 20 years after WWI?"
Gold standard. Monetary and fiscal tightening to maintain exchange rate.x

Indeed in the UK largely the "Economic consequences of mr. Churchill".

In the USA up to 1929 the real economy was in a boom too, with fast spreading car ownership, electric appliances etc.; some political economists think that the stock market bubble was started by the real economy boom, then reached insanity, and then crashed also because the real economy had already started to go into recession.

Blissex

«Indeed in the UK largely the "Economic consequences of mr. Churchill". In the USA up to 1929 the real economy was in a boom too»

But that also implies something else: mr. Churchill's decision to maintain the gold standard at the same rate as before WW1 was just the *mechanism* for the recessionary times after WW1 in the UK, because the real cause why the exchange rate before WW1 could not be maintained was that the economy and the profits from the Empire were quite weak.
As JM Kynes pointed out the UK would have had to surrender at the beginning of 1917 because of lack of war supplies and running out of money. Only american supplies and loans prevented that (just as it would happen again in 1941).

And that was in part because the Empire was no longer that profitable, but largely because during the edwardian era the english ruling classes largely switched from investing in their businesses to what became their enduring preference, asset-stripping them to fund their lavish lifestyles.

aragon

The irony ...

"but largely because during the edwardian era the english ruling classes largely switched from investing in their businesses to what became their enduring preference, asset-stripping them to fund their lavish lifestyles."

Nothing has changed then...

aragon

It would be an act of kindness to put them out of business!

https://www.dailymail.co.uk/news/article-8963557/Ex-City-high-flyer-JAKE-MUTHANA-reveals-reality-toxic-world-portrayed-BBC-drama-Industry.html

"Other people are hollowed out by the rapacious nature of the work. I knew a man who was likeable, even decent, when he landed a job with a stellar investment firm.

They specialised in buying 'non-performing consumer loans' from lenders, and they turned spectacular profits.

In plain language, these loans were mortgages and other debts that had been foisted on poor people in developing markets. They couldn't afford the payments and they were defaulting.

This company would engage thugs (indirectly, keeping them at arm's length, of course) to extort the money owed, at crippling rates of interest.

When he realised what was going on, this man told me he was morally torn — people thousands of miles away were suffering but he was earning a fortune.

He swallowed his conscience and stayed in the job. I no longer think of him as a friend. What he does is not a good way to live your life."

Jan Wiklund

When inequality is huge, the rich can't consume their earnings, and there is no sense in investing because there is no sense in producing more.

So most of the resources go into pyramid schemes aka finance, and stays there.

I would guess that if you could tax surplus fortunes away, the machine would work again. As it did in the postwar years when for example inheritance was taxed to about 80 %.

Blissex

«Nothing has changed then...»

One important things has changed: the asset strippers of the edwardian era still reckoned that they could protect their own rule and fortunes with their own largely mercenary armed forces. But the shocks of WW1 and WW2, where in both they had to give arms to the servant classes, and anyhow after 1-2 years they had run out of money and were on the verge of surrender, persuaded them that they needed to put their rule and fortunes under USA protection, just as in previous centuries several third world dynasties and aristocracies has put their rule and fortunes under english protection (most switched to USA protection after WW2, including all dominions, I think the only ones remaining under direct english protection are Oman and Brunei).

the other jim

Apropos higher wages/spending. Most of us are lucky if we accumulate a full set of clogs and a hovel let alone any surplus. But rather than a new Beemer and 72" telly, a wise and capable worker might seek a way out of the 'clogs to clogs in three generations' trap. Invest in fewer children, sent them to private school and a family trust. Plan for a dynasty, one needs to be able to ride through the 'stupid child' problem - like our Royal Family.

Ownership by the workers really means nationalisation or state ownership. Our continental neighbours seem to manage this fairly well but we seem brilliantly able to replicate an adversarial capitalist/ba*^ard worker model aided and abetted by shiny shoe consultants with crackpot charts and complex but defective models. Otherwise I think the railways and power utilities probably would be better run by some sane form of state enterprise, if only we could find one.

But looking at our Parliament and class setup I feel that nothing but a full lamp post/piano wire revolution would do any good.

Blissex

«"Nobody but the government can take responsibility for maintaining the total level of spending in the economy at a level that keeps the country as close to full employment as possible."»

As to this claim by "The Guardian" editorial there is a rather important technicality (or two) here that usually gets "lost in translation":

* "as close to full employment" excludes the case of a "special glut" (unused resources of some types), government spending to increase effective demand works well only inasmuch there is a "general glut" (unused resources of all types).

* "employment" means the usage of any type productive resource, not just labour: it can well happen that labour is fully employed but some other type of resource is not.

When there is a "special glut" extra spending to increase effective demand will inevitably create inflation in those resource markets where there is no glut.
The "supply side policies" cannot fix "general gluts" and the "demand side policies" cannot fix "special gluts".

Both technicalities have been largely lost in the propaganda wars between noddy-keynesians (where the possibility of "special gluts" is simply ignored) and noddy-neoliberals (where the possibility of "general gluts" is delusionally denied).

Blissex

«Most of us are lucky if we accumulate a full set of clogs and a hovel let alone any surplus.»

Bernard de Mandeville, the author of the best manual for tories, wrote appositely already in the 18th century:

«It would be easier, where property is well secured, to live without money than without poor; for who would do the work? [...] As they ought to be kept from starving, so they should receive nothing worth saving.
If here and there one of the lowest class by uncommon industry, and pinching his belly, lifts himself above the condition he was brought up in, nobody ought to hinder him; nay, it is undeniably the wisest course for every person in the society, and for every private family to be frugal;
but it is the interest of all rich nations, that the greatest part of the poor should almost never be idle, and yet continually spend what they get. [...]

Those that get their living by their daily labour [...] have nothing to stir them up to be serviceable but their wants which it is prudence to relieve, but folly to cure. The only thing then that can render the labouring man industrious, is a moderate quantity of money, for as too little will, according as his temper is, either dispirit or make him desperate, so too much will make him insolent and lazy»

In those countries where property is well secured by the 82nd Airborne and there is a liberal immigration policy from 3rd world countries that cautionary "too little will, according as his temper is, either dispirit or make him desperate" is no longer an issue.

ltr

November 19, 2020

Coronavirus

UK

Cases   ( 1,453,256)
Deaths   ( 53,775)

Deaths per million   ( 791)

Germany

Cases   ( 878,209)
Deaths   ( 13,788)

Deaths per million   ( 164)

georgesdelatour

Does the Stumbling and Mumbling blog constitute “private property in the means of production”?

In the past, when I’ve discussed Karl Marx’s “abolition of private property” with Communists, they’ve always reassured me that I could keep my toothbrush, so there was really nothing to worry about. But the line between personal effects and things you can use to turn a profit has gotten even more blurred than it was in Marx's day. A Youtube channel / Twitter account / Instagram account can be used to generate income, as can a laptop or a phone.

Blissex

Bernard de Mandeville also added:

«No man would be poor and fatigue himself for a livelihood if he could help it: the absolute necessity all stand in for victuals and drink, and in cold climates for clothes and lodging, makes them submit to any thing that can be bore with. [...]
From what has been said, it is manifest, that, in a free nation, where slaves are not allowed of, the surest wealth consists in a multitude of laborious poor.»

That "where slaves are not allowed for" made me think of the difference between a slave or a serf and an employee or a temp ("laborious poor") that there is a big one: previously people were commodities as such, under capitalism only their labour is a commodity. Given that according to de Mandeville theory (and whig practice) they should be made utterly dependent on it so they are constantly struggling, it is understandable that some people talk of "wage slavery", but still the improvement is pretty big.

PS My guess is that the improvement has been funded by the switch from vegetable to mineral (coal, oil) food/fuel, and certainly not because of greater humanitarianism of the whigs.

Blissex

«government spending to increase effective demand works well only inasmuch there is a "general glut" (unused resources of all types).»

A further technicality that also matters: the great debate about "the so-called Say's law" (that is about "unemployment" or "overproduction") is not even about *all* "general gluts", but only those that are persistent, that is happen at "equilibrium".

The standard "neoclassical" claim is not that "general gluts" cannot happen, but that even if they happen (because for example of "exogenous shocks" as in RBC theory), they would in the long term disappear as equilibrium is restored.

John

"As JM Kynes pointed out the UK would have had to surrender at the beginning of 1917 because of lack of war supplies and running out of money. Only american supplies and loans prevented that (just as it would happen again in 1941).

And that was in part because the Empire was no longer that profitable, but largely because during the edwardian era the english ruling classes largely switched from investing in their businesses to what became their enduring preference, asset-stripping them to fund their lavish lifestyles."

A question: how can the above be true and MMT be true?

the other jim

Thanks Blissex, I will add Mandeville to my bookshelf. At least these old writers are open about their society.

Blissex

«Communists, they’ve always reassured me that I could keep my toothbrush, so there was really nothing to worry about. But the line between personal effects and things you can use to turn a profit has gotten even more blurred than it was in Marx's day»

That to me seems a considerable misunderstanding, and there are many details about that, mostly agreeable, in "Bloffy"'s summary of marxian arguments in his blog.

My understanding is that (simplifying):

* The main marxian argument is about the means of production, rather than "personal property" narrowly.
* The big deal is "exploitation", that is the owners of means of production extracting "labour" from the employees. Note that in the marxian view "exploitation" happens not because capitalists are evil, but is an intrinsic consequence of the private property of the means of production turning labour into a commodity (more precisely "labour power").
* Private property of the means of production for the sole use of the owner cannot lead to "exploitation" as the owner employs himself, so it is fine.
* Cooperatives, where the employees own as a group the means of production, and employ themselves, are also fine (which to me as per previous comment seems a bit optimistic).
* Eventually because "exploitation" grows without bounds, and so does capital intensity, collective ownership of the means of production is inevitable, first as private collective ownership (joint stock companies), then everything turns into cooperatives (not necessarily owned by the state, and our blogger I think is a non-statist marxist).

Blissex

"because of lack of war supplies and running out of money. Only american supplies and loans prevented that"

«how can the above be true and MMT be true?»

As I keep repeating, MMT says that printing money to fund the purchase of unused resources in the case of a "general glut" is fine, and that is nothing new.

So the critical point is that MMT cannot fund unlimited imports, because they are not "unused resources", and because nobody can make foreigners accept domestic currency. Try to persuade the Saudi princes to send you tankerloads of oil by paying with cambodian riels or venezuelan bolivars.

In both WW1 and WW2 the american suppliers wanted to be paid only in dollars or gold. So once all english holdings of USA assets had been sold for dollars, there were convoys across the Atlantic shipping all the BoE gold to the USA in the holds of warships (and because of ancient and wise RN rules the captain and crews of those warships got a percentage of the gold they carried).
Once the BoE gold had run out (and there are "conspiracy theories" that the BoE shipped to the USA also the gold of other central banks it held on deposit), the americans accepted payment in kind: all the countries of the Empire, all the nuclear and technological secrets of the UK, bases everywhere they wished, control of the UK military, security and foreign services.

Here is a relevant quote from Malcolm Muggeridge in his youth in 1942-03-19:

“Here in Lisbon is the last vestige in Europe of our old way of life now precariously existing. [...] Here are cafes, neon signs, money haggling, petit dejuner with fat pats of butter brought in on a tray, jangling trams and taxi cabs and newspapers of all the nations.
One deep and significant change may, however, be noted, the pound sterling has lost its magical qualities: rub rub at the lamp and no all-powerful djinn appears, at best only a reluctant slut who must be coaxed for any service at all”

georgesdelatour

@Blissex

I’m familiar with that sketch of Marxian thinking. As I remember, Communists also want to abolish the commodity form. That’s why an economy consisting solely of worker cooperatives operating in a capitalist free market isn’t acceptable to most Marxists. Commoditisation would still persist.

I guess Marx’s theory needs updating for the modern attention economy, which is all about the commoditisation of the self.

A personal blog, a Facebook page, Instagram account, Twitter account, or YouTube channel always has the effect of turning the account holder into a brand, and the audience of followers or subscribers into a product which can be sold (actually, even a Google search turns the searcher into a sellable commodity). Obviously the scale of this commoditisation will be tiny with Chris’s blog and huge with Kim Kardashian’s instagram account or PewDiePie’s Youtube account. A successful YouTube account generates lots of ad revenue. Some YouTubers sell merch which they won’t have made themselves (e.g. mugs, t-shirts).

Personally I don’t want anyone to expropriate my laptop or my phone. But I’m not as sure as you that they’d be safe from it under a revolutionary dispensation fired up by the slogan “abolish private property”.

Blissex

«familiar with that sketch of Marxian thinking»

But then why did you write "the line between personal effects and things you can use to turn a profit has gotten even more blurred"? For Marx "capital" is a "social relationship" (one of the most stupidly worded lines ever, second only to "labour law of value"), that is the very same piece of equipment is "capital" when used by an employee to generate profit for the owner, and not "capital" when used by someone self-employed or member of a cooperative.

«A successful YouTube account generates lots of ad revenue.»

If it is fruit of your own work, K Marx will make guest appearances for you :-)

«Some YouTubers sell merch which they won’t have made themselves»

If the merch w made by workers working for themselves or for a cooperative, K Marx will sign them for you :-).

«As I remember, Communists also want to abolish the commodity form.»

That's very far indeed from my understanding of it: only the commodity form of *labour*. K Marx understood very well that commodification of goods is a necessary step. Some marxists (and K Marx denied explicitly being a marxist, as our blogger occasionally reminds us) especially those of the "ecowarrior" variant, want to replace money with "allocation cards", which is of course almost just changing names.

ltr

I suppose the problem is me, but I find the talk about the supposed ideas of Marx comically inane when the rulers of Labour and British media just ruined the social-democrat work of an entire career of Jeremy Corbyn. Labour and the media can no longer even understand or tolerate social-democracy, but no one notices.

ltr

No matter to many, I suppose. But, it matters to me:

November 20, 2020

Coronavirus

UK

Cases   ( 1,473,508)
Deaths   ( 54,286)

Deaths per million   ( 798)

Germany

Cases   ( 901,659)
Deaths   ( 14,076)

Deaths per million   ( 168)

Blissex


«Personally I don’t want anyone to expropriate my laptop or my phone.»

But why not? What does it matter as long as you have possession? The only case where property as opposed to possession matters is to buy low, sell high, that is worker-exploiting speculation. That's pretty much the only reason why property is the central aspect of UK politics, otherwise everybody with some sense would rent.

«But I’m not as sure as you that they’d be safe from it under a revolutionary dispensation fired up by the slogan “abolish private property”»

That would not be a marxian revolution, and there are some "kumbaya, kumbaya" sects that preach that.

Now some pragmatic comments on your fear of expropriation of your personal belonging and the abolition of all forms of private property:

* Only the stupider marxists have been living for 150 years in the "one last heave, next year the revolution happens" mindset. In practice it is just paranoia.

* The marxian prediction, which to me seems reliable, as nothing lasts forever, is that the commodification of labour by a few ("private capitalism") will be replaced one day by a different organization of production, has little to do with personal belongings and productive equipment.

* Regardless, even looking at non-marxist "actually existing" soviet political economies, for most people the comparison is interesting: most workers in the USSR had lives and living standards pretty much the same and often rather better than those of capitalist countries at similar stages of development (e.g. Spain or Ireland or Argentina).
To the point that many older russians (or even east Germans) today still reckon that life and living standards under soviet dictatorship were better for most workers (and that's fairly plausible).

For most workers whoever owns the means of production the problems are making the rent, paying the bills, being able to occasionally afford go out to socialize, buying food and clothes, buying healthcare and dental work, being able to save for a pension; many of them don't even their own cars and TVs and fridges, if they have them they are on a lease. Cellphones today are almost essential and fairly cheap but and laptops and YouTube channels are nice-to-have, and they don't obsess about who exactly owns them, that's a big intellectual problem only for the petty bourgeois.

Blissex

«Marx’s theory needs updating for the modern attention economy, which is all about the commoditisation of the self»

That's just a special case, and nothing new under the sun as to that. The road I think to improving on the work of K Marx is quite different...

As I have often written Marx hugely misnamed "labour law of value" is an approach to cost accounting using commodity-"labour" (that is only that of free workers) as the metric, because; that is interesting when the goal is to account for the use of commodity-labour in the production and distribution processes of an employment-based ("capitalist") political system.

But to me that should be generalized to "labour" in general (including slaves and animals), and even more importantly to other sources of power than muscle power; in other words to consider the critical resource to account for "food"/"fuel", or what they contain, which is energy.

Because for me three big thinks have happened in political economies in the past 200-300 years:

#1 The switch to an industrial system of production.
#2 The switch from people as commodities to labour as commodity.
#3 The switch from muscle power fuelled by vegetables to machine power fuelled by coal and oil (and a little else).

Note: bankruptcy and double-entry, multi-year accounting would be #4 and #5, but arguably they are consequences of the other three. But that I consider them that important shows how weird I am :-).

For me it is #3 that is *overwhelmingly* responsible for our current state of development, and the most interesting subject of a cost-accounting (which I think is a very underestimated topic) approach to the political economy.

Blissex

«bankruptcy and double-entry, multi-year accounting would be #4 and #5»

Very much related to that: one of the most amazed moments of my study of the political economy was reading JM Keynes entirely obvious (in retrospect) point that almost all capital is long term. That is a point of enormous importance, and yet it has been completely ignored by propaganda Economics, which inanely models the political economy as a system of buy-sell transactions.

ltr

Boris Johnson and Keir Starmer would be incapable of such an address:

https://news.cgtn.com/news/2020-11-21/An-agenda-of-cooperation-where-possible--VBqWc2tSOk/index.html

November 21, 2020

An agenda of 'cooperation where possible'
By Gordon Brown

It was in 2008 that to deal with another crisis, I was involved as its chairman in creating the leaders G20, the G20 taking over from the G7 as the premier organization for international economic cooperation, all of us benefiting from the participation of China alongside Europe and America. And now, 10 years on, we and the G20 meet at a new moment of change, with a presidential inauguration in America on January 20, and with important epoch making international commitments recently announced by China and now also America, South Korea and Japan alongside Europe for carbon neutrality – net carbon zero in the decade 2050 to 2060 – and so this is the right time to consider what we can achieve as countries and continents by working together....

ltr

...one of the most amazed moments of my study of the political economy was reading JM Keynes entirely obvious (in retrospect) point that almost all capital is long term....

[ Please explain this, when possible. ]

Blissex

"JM Keynes entirely obvious (in retrospect) point that almost all capital is long term."
«Please explain this, when possible.»

Several reasons a bit randomly exposed:

* Most current Economics simply ignores long term capital, and is mostly about the short term effects of credit policy.

* JM Keynes is regarded as a short-medium theorist, focused almost exclusively on short-medium term investment, but obviously that was just tactical for him. See also his comment on casino-style stockmarkets being bad for the capital development of a political economy.

* That statement can be the basis of a balance sheet based way of thinking about the political economy, in the style of H Minsky, or of M Pettis.

* If it is recognized that most capital is long term then its accumulation, maintenances, composition, evolution become very important subjects indeed, and not just to "long duree" style historians (e.g. the paper on the impact of roman roads in Germany over the past 2,000 years), but to political economists too.

* "Obviously" that most capital is long term means it is ballast that explains why political economies are fairly stable, as in oscillations around trend are painful but after all usually involve a few percent of GDP, not halvings or doublings. This is a point that probably is more relatable to by those who have attempted to do predictive econometric models.

* That most capital is long term also means that the issues of multi-year multi-project cost accounting and depreciation in particular (two of my pet peeves) are even more pervasive and complex than they appear, and in particular of critical importance to political economy studies.

Blissex

Also that most capital is long term suggests looking, as too few have done since JB Clark excised "land" from neoclassical Economics, at economic geography and natural resource endowments, including ecological issues, as central areas of political economy studies. But fortunately there have been "recently" (at least since J Diamond wrote "Guns, germs and steel") more studies on social capital and institutions as long term capital explaining different degrees of development.

rsm

"So the critical point is that MMT cannot fund unlimited imports, because they are not "unused resources", and because nobody can make foreigners accept domestic currency."

So Germany had a general glut, but England mismanaged theirs?

A far more likely story is that Hitler printed money, because he understood that psychology and motivation was more important than economics.

The US went about financing World War I in disastrous ways that led to reparations and Weimar hyperinflation and World War II. After WWII the Marshall Plan provided direct grants, showing the US learned that printing money is better policy than forcing loans to be repaid.

Since the 1960s of course central bank currency swaps have been used to stabilize sterling and keep the supply of dollars flowing to UK firms that need them. See https://ideas.repec.org/p/bis/biswps/851.html

Also, imports are funded by finance these days. See https://www.bis.org/publ/work890.htm

Supply chains are payment chains in reverse. Money comes first, supply adjusts as needed.

ltr

Blissex:

* Most current Economics simply ignores long term capital, and is mostly about the short term effects of credit policy....

[ Really fine explanation, for which I am grateful.

Thank you so much. ]

ltr

November 21, 2020

Coronavirus

UK

Cases   ( 1,493,383)
Deaths   ( 54,626)

Deaths per million   ( 803)

Germany

Cases   ( 918,271)
Deaths   ( 14,239)

Deaths per million   ( 170)

George Carty

"So Germany had a general glut, but England mismanaged theirs?"

"A far more likely story is that Hitler printed money, because he understood that psychology and motivation was more important than economics."

The standard of living in Nazi Germany was considerably lower than in Britain at the same time, in part because Nazi Germany sought to be as self-sufficient as possible. They only imported what they had to in order to build their war machine, and they only exported what they had to in order to pay for those imports.

Food prices under the Nazis (who subsidized farmers at the expense of the urban population) were considerably higher than on world markets, and one of the most common gripes that ordinary Germans had with the regime (as discovered by the Gestapo) was that they were forced to wear synthetic clothing (because Germany couldn't produce its own cotton).

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