Re: What went right
No need to speculate, Bill, here are the facts (we were discussing Dennis's views about the unimportance of the UK vis a vis Japan and Germany). Net Foreign Purchases of U.S. Bonds (In millions of U.S. dollars) Government Corporate Total Bonds Bonds 199358,980 30,572 89,552 1994 100,481 37,992 138,473 1995 162,844 57,853 220,697 1996 293,685 77,978 371,663 Of which: Europe137,148 56,194 193,342 Germany19,297 3,514 22,811 United Kingdom 76,323 43,702 120,025 Spain 18,421 462 18,883 Asia 112,597 9,806122,403 Japan 48,985 6,099 55,084 China 17,209 25717,466 Hong Kong, China 15,2811,73717,018 1997:Q1 17,048 20,82697,874 Source: U.S. Department of Treasury, Treasury Bulletin. William S. Lear wrote: > Mark's claim that "the major purchaser of US govt. and commercial > bonds was not Germany or Japan - but the United Kingdom" is not only > wrong by his criteria (Mark probably meant to say "relative to Japan > and Germany"), but it also seems a dubious leap. If I were given a > table as Mark provided and asked to draw conclusions from it, I would > not, in my ignorance, conclude anything about the relative size of > purchases (holdings?) of US govt/commercial paper. > > Enlightenment welcomed. > > Bill
Re: trivia quiz - 2 (a bit harder!)
>>Trivia question number two. This may be one of those "urban myths" but back >>in the distant past when I was in graduate school, I was told about a study >>that found that there was a correlation between the lengths of women's skirts >>and the business cycle. > >Two possible explanations: > >1. Probability theory. I vaguely recall an article I read for my stats >class in which the author calculated the probability of finding a >statistically significant correlation between two sets of random numbers >(i.e. where no relationship exist by definition). To my best recollection >(but I would not bet much on that) that probability was in the vicinity of >1/600. > >2. Chicken and egg fallacy. As with most other things, economists got the >causal order wrong again. It's the business cycle that affects the length >of women's skirts, not the other way around. Economic growth affects >attitudes in various ways, my preferred one is Machiavellian manipulation >of fashion. Miniskirt is an expression of adventurism, hedonism and what >not -- associated with "good times" (growth) - so the fashion moguls >promote them during the period of growth to sent the message out to >encourage people to take advantage of the good times. However, the boost >inevitably follows, so when this miniskirt fashion finally takes a hold >(lag in popular response to signals sent by the 'markets'), recession sets >in. In respsonse, the fashion moguls sent the signal of being more modest >and conservative (long skirts). Again due to the lag in response, that >fashion takes a hold only shortly before another period of growth occurs. 3. It's the women's skirts length that affects the minds of economists, then they label periodas as "good times" or "bad times". :-) Juan Grigera
Re: What went right?
In a message dated 98-03-09 17:23:04 EST, you write: << Well? By what standards? Unless you mean relatively low unemployment. Not hard to understand, given the 1.2 million employeable Americans in prison. Or do you mean the sheer length of the current US business cycle, now wheezing along in its seventh year? Let's not forget the beneficience of >> Even if you did throw the prison population into the stats, how much would effect the official unemployment rate? 1 or 2 per cent?
Globalization or Global Hegemony (Part 2 of 2)
A trigger-happy U.S. populace and mainstream press revealed their inclinations in 1997 when seven out of 10 Americans favored U.S. military action against Iraq. Editorialists and Op-ed writers exercised no restraint when calling for the use of American force. Meanwhile, the ongoing debate seems to be limited to policy- oriented intellectuals, strategists, and governmental as well as corporate elites, leaving the wider public at the periphery in a society which professes to be pluralistic and democratic, which prides itself on free discussion. That debate clearly favors the militaristic approach and the arrogance of power. - The rationale for U.S. military intervention after the Cold War A number of infractions are cited by Washington officials and policy-oriented intellectuals as grounds to justify the use of American military force in the world. None of them, of course, is placed in the context of hegemony, but they are all disguised in humanist wrappings. They include human rights (Iraq 1991), democracy (Haiti 1994), starvation (Somalia 1992-1993), and drug trafficking (Panama 1989). The proliferation of pretexts for intervention yields a rather diffuse rationale and a disjointed national security doctrine in the place of anti-communism. President Clinton said during the formative stage of his administration that "we will always be engaged," and "we will lead... we want to enlarge the space for economic well-being." Engagement and leadership are therefore seen as the necessary preconditions for economic progress. For America's exercise of power and leadership are seen as facilitating the enlargement of space for economic well- being. America is thus endowed with a mission not far from that of the white man's burden. The new circumstances which propel the U.S. engine on that mission are: 1) The failure of the national bourgeoisie and state capitalism in the 1980s and the corresponding ascendancy of the parasitic and compradore strata had enhanced liberalism and paved the way for globalization. 2) Resurgence of ethnic and national conflicts has been effectively used to invoke the need to protect human rights. Military intervention, therefore, was rationalized as a measure to protect these rights and to advance stability and democracy. Market democracy The mission of U.S. foreign policy in the 1990s was described by Anthony Lake, Clinton's former National Security advisor as the export of "market democracy." It was undoubtedly regarded as representing a triumph of the U.S. business model of foreign policy, which depicts a fusion of economic and political liberalism -- free enterprise and free expression. For Lake, Secretary of State Madeleine Albright and Clinton, an adjective such as "market," describing the democracy they promote, would provide the economic rationale for the possible use of force. For neither the human rights of the Bosnian Moslems, nor those of the Kuwaiti people provided sufficient U.S. public backing for military intervention. Previously, George Bush and James Baker had to switch from human rights as rationale for intervention to "jobs," "standard of living," and oil. In Bosnia, where these tangible elements do not exist, U.S. public opinion exhibited earnest misgivings about any U.S. intervention. "Market democracy" is a code phrase for colonized markets, free to U.S. business interests to exploit, with little governmental interference from the local authorities. The humans whose rights are really being promoted and protected are executives of large corporations slated to reap the main benefit of trade legislation and the new foreign policy emphasis on the market, as well as the rights of their wealthy overseas partners who facilitate the marketing of their products. - Globalization as a source of a new National Security doctrine For the Clinton administration, globalization and the global trading system represent a catch-all phrase, which could draw the line between when to make war, and when not to: war against "protectionism" to advance American economic interests; war against terrorism, to counter aggression, to defend democracy, to combat famine, drug trafficking and "gross abuses of human rights." The place of globalization in U.S. foreign policy is not restricted to the economic dimension, as the term implies; it is a comprehensive concept which defines the boundaries between "integration," and "fragmentation." To the extent that the U.S. defines its global responsibilities in terms of the satisfaction of economic needs, breaking the trade barriers is viewed as an "integrative" task which promotes prosperity and greater homogeneity and universalization. Opponents of hegemony and the emerging new brand of international despotism under U.S. auspices are seen as being on the wrong side of history, and they are lumped together in the negative camp of "fragmentation." Thus the dichotomy -- integration v. fragmentation -- is the new intellectual i
Globalization or Global Hegemony (Part 1 of 2)
Globalization or global hegemony? The United States versus the world Mideast Mirror Thu, Mar 12 1998 By Naseer Aruri, Jerusalem-born professor of Political Science at UMASS Dartmouth (University of Massachusetts at Dartmouth), writing for pan-Arab al-Hayat American foreign policy elites are being challenged to embrace a new vision of a world order and determine the U.S. role in that order now and beyond, into the new millennium. A search has been under way since 1989 for an intellectual rationale for a new American global role in post-Cold War conditions. A national security doctrine based on anti-communism would have to be replaced, now that the pretext for the unprecedented level of a militarized U.S. foreign policy has disappeared. This has been going on despite a decided shift in public opinion towards things domestic. If there is a consensus emerging from the raging arguments, it is that the phenomenon of globalization is setting the pace, not only for America's global role, but for the entire world as well. The globalization thesis is being promoted as a new, inclusive and integrative force. It is becoming a powerful ideological tool to contain and suppress nationalist and oppositional movements around the world, in much the same way as these forces were kept under pressure during the Cold War. Today, however, the anti-Soviet, anti-nationalist weapon is being replaced by the seemingly benign tool of "free trade." Today's penetration targets not only the natural resources of what was called the Third World, but also the markets, human resources and the ever- growing newly-created consumers. The term ascribed to this new phase of capitalist accumulation and colonization is the non-threatening and rather benign "globalization." In reality, globalization has never ceased to be integral to the process of capitalist development. As a process, it represents mobility of investment capital in pursuit of cheap, docile labor in stable environments. The state, in fact, has to some degree been reduced to the role of finding and assuring favorable business opportunities for its corporations. The proponents of globalization posit that the most important post-Cold War dichotomy is that of integration versus fragmentation. Thus again, the world is seen through the prism of the good versus the evil, with globalization representing the satisfaction of economic needs, removal of trade barriers in pursuit of upward movement and freedom from want. The forces of integration are presumed to be those global institutions of management of the economy, environment and politics. Although these institutions have been in existence throughout most of the Cold War period, their functions have been revised and their missions broadened. They are the de facto tools of global governance in this unipolar world. They include GATT, the World Trade Organization (WTO), the UN Security Council, the World Bank and the IMF, among others. NAFTA, APEC, the European Union (EU), and the G-7 are among the regional instruments which perform their duties in synchronization with the global institutions. Together, they are touted as the instruments of "integration" and homogenization which can be counted upon to counter the global forces of "fragmentation." The latter are invariably defined as populist nationalists, Islamic fundamentalism, terrorism and ethnic rivalries. Management of the economy and keeping the peace to assure stability are said to be entrusted to these global and regional institutions, depending on what is at stake. And herein lay our central question: How does the United States, as the lone surviving superpower, define its new role in this process of globalization? How does it allocate its economic, diplomatic and military resources on behalf of this overarching goal of "integration?" By the same token, how does it allocate the same resources to combat the forces of "fragmentation?" When does it step into the quagmire and when does it overlook the infractions? - Business leads the way, again Just as in post-1945, when the U.S. was in a position of military and economic ascendancy, today, after the collapse of the USSR, the U.S. is in a similar position, while Japan and Europe are struggling to come out of recession. The new hegemony is anchored in the world's largest economy which keeps growing in an unprecedented military superiority and leadership in global information technology. The United States' present hegemony is therefore based on military and economic power. Economic power derives from the acceleration of globalization, in which the U.S. provides key leadership in: a) promoting free trade, b) setting standards for delivery of information. The dominant role in that process has been carried out by business, which has been undergoing restructuring since the 1980s -- consolidation through mergers and acquisitions, and downsizing in the name of efficiency, as efficiency is being
re: What went right ~XXI
> You're making the classic rentier mistake of confusing short-term > profitability (the accumulation of finance capital) versus long-term > profitability (market share). The whole point of my argument is that > the banking system of the Central European and East Asian metropoles . > Wasn't it Adam Smith who first noted that excessive profits were a sign of > economic decadence, whereas rising economies showed lower profits but > grew faster . Right you are, Dennis, and I'd be even more impressed than I am were it not for the almost orgasmic delight you appear to take in showing that the American financial system is utterly fucked in comparison with those of Germany and Japan. What's the point if in the end there will be imperialist rivalry, global chaos and war regardless of all this. (8^[ Yes, the German and Japanese systems, truth told, reflect a) surviving elements of monarchic mercantilism, and b) genuine _nationhood_, in the anthropological sense of the term. The American system, OTOH, reflects Wild West freebooting at its most anarchic post-Civil War heights. Your immense admiration for the German and Japanese systems suggests to me that their judicious compromise between stalemated capitalist and SD forces is the best we can hope for, there or here. Is that so? valis (no rentier)
Re: What went right?
Doug, Hmmm, must have missed those questions on pkt. Actually some of the newer open economy ISLM models have the main stimulus of an expansionary monetary policy, or of any policy such as reducing budget deficits without a monetary tightening that leads to lower interest rates (remember Alan Greenspan sitting between Hillary and Tipper when Bill proposed those tax increases much to Republican horror?) as operating through an export stimulus arising from a depreciation of the currency. Of course, now that the US dollar is surging, what does this mean for the export stimulus? For that matter, why is it that the stock market is so easily shaking off the lousy profit reports out of Compaq, etc.? Barkley Rosser On Thu, 12 Mar 1998 16:02:50 -0500 Doug Henwood <[EMAIL PROTECTED]> wrote: > Rosser Jr, John Barkley wrote: > > >Post Keynesians have a harder time > >explaining "why things have gone right" (probably Michael > >P. should introduce this thread over on pkt, just for > >kicks, :-)). > > I've tried that twice now, and the closest approximation of a credible > answer I've gotten was Paul Davidson's - that it's exports. To the retort > that imports have grown more rapidly than exports, Davidson rightly points > out that it doesn't necessarily matter: if exports stimulate income growth, > and income growth increases import demand, then of course M will grow along > with X. This is a point that worries me about EPI's trade work; do they > take this into account? > > By the way, does anyone know anything about the relative profitability of > exports vs. imports? > > Doug > > > -- Rosser Jr, John Barkley [EMAIL PROTECTED]
Re: What went right
Part of the answer may lie in the correlation between the Fed and the Canadian Central Bank. I remember a study by a former professor of mine at Utah indicating the CCB acted like the 13th District in the U.S. Federal Reserve System. How this may relate to wider economic experiences between Canada and the US I cannot say. Jeff -- From: Michael Perelman To: [EMAIL PROTECTED] Subject: Re: What went right Date: Thursday, March 12, 1998 10:44AM Interesting data. Why would the Canadian and U.S. banks be so much more successful in increasing their profitability? Mark Jones wrote: > Here are the figures on commercial bank profitability, from the IMF 1997 > report, International Capital Markets Developments, Prospects, and Key > Policy Issues (supplementary tables), which demonstrates the adverse > turn in the fortunes of Germany and Japan v. the Anglo-Saxon world. Not > much signs of hyperaccumulation here (and the opaque German and Japanese > figures are probably over-optimistic). In the later period it would > appear to be the case that the major purchaser of US govt. and > commercial bonds was not Germany or Japan - but the United Kingdom. > > Major Industrial Countries: Commercial Bank Profitability > Real Return on Equity 1(In percent of total assets) > 1985-89 1990-94 > Canada7.9 12.1 > France . . . -3.3 > Germany 6.5 2.7 > Italy. . .-1.2 > Japan 10.4 1.5 > United Kingdom 6.1 4.9 > United States 5.0 8.5 > > Sources: International Monetary Fund, World Economic Outlook database; > OECD (1996); and IMF staff estimates. > 1. Calculated as net income after taxes divided by capital and reserves > at the end of the previous year, minus consumer price index for the > year. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 916-898-5321 E-Mail [EMAIL PROTECTED]
Re: What went right
On Thu, 12 Mar 1998, Mark Jones wrote: > Net Foreign Purchases of U.S. Bonds > (In millions of U.S. dollars) >Government Corporate Total >Bonds Bonds > 1996 293,685 77,978 371,663 > Of which: > Europe137,148 56,194 193,342 > Germany19,297 3,514 22,811 > United Kingdom 76,323 43,702 120,025 > Asia 112,597 9,806122,403 > Japan 48,985 6,099 55,084 > China 17,209 25717,466 > Hong Kong, China 15,2811,73717,018 Interesting stats. British capital seems mighty keen to flee to US shores -- assuming that these figures are measuring British purchases of US debt, and not transshipments or resales further along the value chain to European banks merely doing business in London. But does this have anything to do with the fact that the Brits are one the biggest overseas investors in the US economy anyway? I.e. aren't these flows simply part of the merger/buyout wave being co-financed by the Wall Street bubble? (This would explain the low figure for Asian purchases of corporate bonds: T-bills are a global hedge for doing business in the Pacific Rim, whereas US bonds would imply takeovers or other direct investments in the US). If so, how do the above figures compare as a percentage of, say, total Brit/German/Japanese investments in the US, and is this percentage rising or falling over time? -- Dennis
re: What went right
On Thu, 12 Mar 1998, Mark Jones wrote: > Here are the figures on commercial bank profitability, from the IMF 1997 > report, International Capital Markets Developments, Prospects, and Key > Policy Issues (supplementary tables), which demonstrates the adverse > turn in the fortunes of Germany and Japan v. the Anglo-Saxon world. Not > much signs of hyperaccumulation here (and the opaque German and Japanese > figures are probably over-optimistic). [IMF statistics showing that Canadian banks were far more profitable from 1990-1994 than US banks, which in turn were more profitable than German or Japanese banks] You're making the classic rentier mistake of confusing short-term profitability (the accumulation of finance capital) versus long-term profitability (market share). The whole point of my argument is that the banking system of the Central European and East Asian metropoles (let's call 'em, for sake of brevity, the CEM and the EAM) is basically designed to funnel capital to industry, and not primarily to make super-profits off of stock market bubbles. The result is that CEM/EAM bank profitability is indeed lower on average, the total volume of lending is higher, because the money which would've gone into the pockets of shareholders ends up being reinvested in low-interest loans to corporations. The same is true for industrial strategy, by the way -- Japanese car companies didn't make a dime for years on many of their American transplants; rather, the point was to make a long-term investment in the global car market, regardless of profitability considerations. This is why EAM/CEM firms are, on average, far more leveraged than their American counterparts: the interest burden on the extra debt is quite low, so there's no problem paying these off, and the interest gets funneled straight back to new investments anyway. All this feeds back into the culture of finance capital -- since there are very few businesses out there which generate the 15% return on equity demanded by Wall Street these days, what you get in the US (as well as the UK and Canada) is a banking system designed to concentrate what growth there is into the portfolios of the superrich (investment, on the other hand, as Doug's excellent "Wall Street" points out in some detail, is mostly self-financed instead of bank-financed). The EAM/CEM systems are designed, however, to redistribute the social surplus back to the productive economy. So you have a situation where the German banking system has doubled in size from 1990 to 1996, precisely where the American stock market doubled in size during the same period. Both are speculative claims on future assets, of course, but only the German system has something to do with the real economy; the Wall Street bubble, on the other hand, is a stupendous disaster in the making, which will undoubtedly require a humongous Government bailout (financed by our old friend, the real economy) of some sort during the next recession. Wasn't it Adam Smith who first noted that excessive profits were a sign of economic decadence, whereas rising economies showed lower profits but grew faster, precisely because they were forced to adopt labor-saving innovations sooner? Or am I mixing up my classicists here? -- Dennis
Re: What went right?
Rosser Jr, John Barkley wrote: >Post Keynesians have a harder time >explaining "why things have gone right" (probably Michael >P. should introduce this thread over on pkt, just for >kicks, :-)). I've tried that twice now, and the closest approximation of a credible answer I've gotten was Paul Davidson's - that it's exports. To the retort that imports have grown more rapidly than exports, Davidson rightly points out that it doesn't necessarily matter: if exports stimulate income growth, and income growth increases import demand, then of course M will grow along with X. This is a point that worries me about EPI's trade work; do they take this into account? By the way, does anyone know anything about the relative profitability of exports vs. imports? Doug
Re: social liberalism
Max, I had not realized that "Old Democrats" were calling "New Democrats" "social liberals." I think your point about the racial question falling between the cracks is of some interest. At least with respect to established African-American groups there seems to be a tendency to line up with the "Old Democrats," more protectionist, more focused on economic issues, less interest in environmental issues, at least until recently, some tendency to "conservatism" on some "social" issues, etc. OTOH, a strong focus on race per se rather than worker identity becomes de facto another brand of "identity politics." Barkley Rosser On Wed, 11 Mar 1998 22:10:04 + maxsaw <[EMAIL PROTECTED]> wrote: > Whatever liberalism came out of FDR's time has > now split between a quasi-social democratic view > which is oriented to labor and living standard > issues on one side, and a more middle-class > focus on 'the poor,' ecology, reproductive > rights, civil liberties, and at its worst, > 'identity politics'. Race gets lost somewhere > between the two. > > To confuse things even more, the latter is often > called social liberalism by partisans of the > former. Partisans of the latter, in contrast, > think of partisans of the former as either labor > hacks or unrealistically radical. > > The poster-boy for social liberalism in this way > of thinking is Robert Rubin--favors taxation of > the rich, but using the money for deficit > reduction; favors free trade; favors social > spending to programs narrowly targeted to the > poor (sic). > > Robert Reich is mostly the other kind, though he > founders on the rock of free trade and, to some > extent, privatization. > > An article by EPI denizens Ruy Texeira and David > Kusnets referred to the labor-oriented type as > "worker liberalism," though I favor the more > bombastic terminology, "proletarian liberalism." > PL is a logical reaction to the failure of PS, > but I fear it doesn't go far enough in reckoning > with the culture and values of the working class. > For that, we need to reinvent American populism. > > > > From: "Rosser Jr, John Barkley" <[EMAIL PROTECTED]> > > > This message is going to several lists simultaneously. > > Some time ago on several lists there was a discussion > > regarding how it came to be that in the US "liberal" came > > to mean someone who favored government intervention in the > > economy, in contrast to "classical liberalism" and how the > > word "liberal" is viewed in most non-English speaking > > societies, and even in Britain to some degree. Without > > doubt it had come to mean this in the US by the time of > > Franklin D. Roosevelt, a view that might be called "social > > liberalism." > > About a month ago there was an essay in _The > > Economist_ by Harvard's Samuel Beer on the roots of "New > > Labour" that argued that the key turning point was the > > British Liberal Party Convention of 1906. Prior to then > > British liberalism had been "Gladstonian," that is > > "classical." Lloyd George dominated the 1906 convention, > > which was in part responding to the formal founding of the > > British Labour Party that year, and supported a variety of > > proposals including a minimum wage, protection of union > > funds, eight-hour working day for miners, health and > > unemployment insurance, and old age pensions, among other > > familiar items. He also supported removing the veto of the > > House of Lords that was implemented in 1911. Keynes was a > > supporter of Lloyd George and along with Beveridge became > > an acolyte of this new "social liberalism" that would > > eventually spread into the US, especially after WW I, such > > views prior to then being labeled "progressive." That > > Hayek and Keynes debated over a variety of issues in the > > 1930s thus can be seen as a debate between these two kinds > > of "liberalism." > > Barkley Rosser > > James Madison University > > > > -- > > Rosser Jr, John Barkley > > [EMAIL PROTECTED] > > > > > > > > > == > Max B. Sawicky Economic Policy Institute > [EMAIL PROTECTED] Suite 1200 > 202-775-8810 (voice) 1660 L Street, NW > 202-775-0819 (fax) Washington, DC 20036 > > Opinions here do not necessarily represent the > views of anyone associated with the Economic > Policy Institute. > === -- Rosser Jr, John Barkley [EMAIL PROTECTED]
Re: What went right?
Jeffrey, PKs don't subscribe to ISLM and I did not imply that they do. That's why Doug's jibe would be at PKs, not "garden variety Keynesians". The outcome is indeed explicable by an ISLM model with a reduced budget deficit shifting back LM substantially and higher taxes on the rich not shifting back IS much. Not all policymakers or models buy ISLM, but it is very deeply entrenched, so much so that Robert Lucas was led to remark when he received the Nobel Prize that, "there still is no alternative to the Keynesian model" (despite he and many others having declared it dead many times over). Post Keynesians have a harder time explaining "why things have gone right" (probably Michael P. should introduce this thread over on pkt, just for kicks, :-)). Barkley Rosser On Thu, 12 Mar 1998 09:15:00 -0500 "Fellows, Jeffrey" <[EMAIL PROTECTED]> wrote: > Since when do Post-Keynesians subscribe to the ISLM model? > -- > From: Rosser Jr, John Barkley > To: [EMAIL PROTECTED] > Cc: [EMAIL PROTECTED] > Subject: Re: What went right? > Date: Wednesday, March 11, 1998 5:41PM > > Doug, > You should have said "take that, Post Keynesians!" > Most garden variety Keynesians who believe in the ISLM > model (supposedly nobody does, but all policymakers and all > macroeconometric forecasting models do) would and did > predict that taxing the rich to reduce the deficit would > lower interest rates and stimulate investment in a > situation with a high budget deficit to begin with, as we > had. The rich have lower mpc's than the poor, so raising > their taxes does not reduce consumer spending as much as > raising taxes on the poor, again, a garden variety > Keynesian viewpoint. > Barkley Rosser (now all the PKs will get on my case) > On Tue, 10 Mar 1998 19:58:35 -0500 Doug Henwood > <[EMAIL PROTECTED]> wrote: > > > Michael Perelman wrote: > > > > >I would like to start a dialogue on why the (U.S.) economy has been > > >doing as well as it has over the past few years. We know about the > > >problems, inequities , but why has the house of cards stayed up > as > > >long as it has. > > > > Hey, how about this - taxing the rich reduced the budget deficit, > allowing > > interest rates to fall (take that, Keynesians!), but without > compromising > > aggregate demand. The reduction in interest rates explains a lot of > the > > rise in corp profits, which has sustained investment. > > > > I've been away for a few days, so I don't know what anyone else said > yet. > > > > Doug > > > > > > > > -- > Rosser Jr, John Barkley > [EMAIL PROTECTED] > -- Rosser Jr, John Barkley [EMAIL PROTECTED]
Re: what when right again
In a message dated 98-03-11 14:23:09 EST, you write: << At 12:12 PM 3/11/98 -0600, Bill wrote: >On Wed, March 11, 1998 at 09:20:07 (+0800) Anthony D'costa writes: >> ... in today's >>highly competitive world economy. > >Doesn't this imply selling at (near) marginal costs, ergo zero (low) >profits? Are today's profit levels consistent with this statement? > >> Not really. Standard neoclassical theory assumes that monopolies, monopolistic competitors, and oligopolies are making a more than "normal" profit -- ergo, an economic profit. They do this by limiting quantities. These 'less-than-perfect' markets account for the vast majority of all production in capitalist countries. By implication, then, most businesses make a more than normal profit. All of this, of course is considered short term market theory, in the long run there is not supposed to be any such thing as an economic profit. All this said, I think the theory on all of this is bull shit -- IMHO, competition leads naturally to less than perfectly competitive conditions in a search for more than average profits. So, in essence, it all boils down to how you define competition and profit. maggie coleman [EMAIL PROTECTED]
Re: Jeff Madrick on "The Computer Revolution"
>Everyone says this, but is it really true? Looking around my room here I >see: a Macintosh G3, a Sony monitor, a pile of Zip disks, an HP laser >printer, a Supra modem, a Sony boombox, another Macintosh and its Sony >monitor, a Sharp fax machine all of them produced in mass quantities. >And piles of books and periodicals, also produced in mass quantity. Has >anyone ever demonstrated this assertion rigorously, or is it just another >one of those things we "know"? As usual, Doug puts the question well. I don't agree with Madrick's fantastic claim that the mass of consumers are now demanding that goods be produced in craft-like fashion (there may be more frequent superficial design changes, producing the illusion of the end of standardized goods?); anyways, Madrick's story about the new economy only seems another version of that childish dogma that consumers, albeit more sophisticated ones, determine the nature, volume and quality of production. Perhaps however non-price competition is indeed stronger in the producer good industries, the buyers of such goods being Madrick's kind of sophisticated buyers whose concern, needless to say, is to increase profits. Again if there has been relative increase in such production within the US, perhaps this would account for some of changes to which Madrick is referring. Just a guess. Rakesh
Re: What went right
James Devine wrote: >BTW, shouldn't it be as a percent of total equity (assets - liability) >rather than as a percent of assets (loans, bond holdings, etc.)? Return on assets is the standard way to quote bank profitability. Doug
Re: Jeff Madrick on "The Computer Revolution"
James Devine wrote: >As I read Madrick, he's not saying it's a failure of the supply of >imagination but an increased demand for imagination. With a greater >emphasis on idiosyncratic products (niche markets), there's more need for >creativity of a craft-making sort. Each boutique and boutique product has >to be different. Everyone says this, but is it really true? Looking around my room here I see: a Macintosh G3, a Sony monitor, a pile of Zip disks, an HP laser printer, a Supra modem, a Sony boombox, another Macintosh and its Sony monitor, a Sharp fax machine all of them produced in mass quantities. And piles of books and periodicals, also produced in mass quantity. Has anyone ever demonstrated this assertion rigorously, or is it just another one of those things we "know"? Doug
Re: Jeff Madrick on "The Computer Revolution"
I don't think that the point was that the goods are produced craft-like, but that the product life cycle is foreshortened. Back in the 50s, Griliches, Kaysen and another person estimated the waste involved in changing automobile styles every year. Now, they are changing styles every few weeks. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: trivia quiz - 2 (a bit harder!)
At 03:53 PM 3/11/98 -0800, Doug Orr wrote: >Trivia question number two. This may be one of those "urban myths" but back >in the distant past when I was in graduate school, I was told about a study >that found that there was a correlation between the lengths of women's skirts >and the business cycle. Two possible explanations: 1. Probability theory. I vaguely recall an article I read for my stats class in which the author calculated the probability of finding a statistically significant correlation between two sets of random numbers (i.e. where no relationship exist by definition). To my best recollection (but I would not bet much on that) that probability was in the vicinity of 1/600. 2. Chicken and egg fallacy. As with most other things, economists got the causal order wrong again. It's the business cycle that affects the length of women's skirts, not the other way around. Economic growth affects attitudes in various ways, my preferred one is Machiavellian manipulation of fashion. Miniskirt is an expression of adventurism, hedonism and what not -- associated with "good times" (growth) - so the fashion moguls promote them during the period of growth to sent the message out to encourage people to take advantage of the good times. However, the boost inevitably follows, so when this miniskirt fashion finally takes a hold (lag in popular response to signals sent by the 'markets'), recession sets in. In respsonse, the fashion moguls sent the signal of being more modest and conservative (long skirts). Again due to the lag in response, that fashion takes a hold only shortly before another period of growth occurs.
Re: What went right
On Thu, March 12, 1998 at 07:44:34 (-0800) Michael Perelman writes: >Interesting data. Why would the Canadian and U.S. banks be so much more >successful in increasing their profitability? I have a further question: how do you make the leap from profitability to the size of the stakes purchased, as Mark does? What about the possibility that the percentage and amount of US govt/commercial bonds in the various portfolios varied wildly? If we rank the various countries by commercial bank profitability 90-94, we get Canada, US, UK, Germany, Japan, Italy, France: Canada 12.1 United States 8.5 United Kingdom 4.9 Germany 2.7 Japan 1.5 France -3.3 Italy -1.2 Is it really true therefore that US commercial banks purchased less US govt/commercial paper than Canadian banks during this period? Mark's claim that "the major purchaser of US govt. and commercial bonds was not Germany or Japan - but the United Kingdom" is not only wrong by his criteria (Mark probably meant to say "relative to Japan and Germany"), but it also seems a dubious leap. If I were given a table as Mark provided and asked to draw conclusions from it, I would not, in my ignorance, conclude anything about the relative size of purchases (holdings?) of US govt/commercial paper. Enlightenment welcomed. Bill
direction of causality
The question of the relation between short skirts and recessions prompts me to ask if anyone can comment or refer me to a discussion of 'dialectical' econometrics, e.g. that takes seriously the notion of interdependent wholes. When I ask my less econometrically challenged friends about this they mumble about Bayesian techniques. BTW, when I did an econometrics course, the example was interest rates in London England and the number of prostitutes arrested in Melbourn (sp?) Australia. We were given the data from a published paper (I remember the R squared was about .72), though I don't know from where (or if our leg was being pulled). Bill Burgess ([EMAIL PROTECTED]) Department of Geography, Tel: (604) 822-2663 University of British Columbia, B.C. Fax: (604) 822-6150
Re: What went right
At 07:44 AM 3/12/98 -0800, Michael Perelman writes: >Interesting data. Why would the Canadian and U.S. banks be so much more >successful in increasing their profitability? in response to Mark Jones' presentation of the following data for bank profitability: > Major Industrial Countries: Commercial Bank Profitability > Real Return on Equity 1(In percent of total assets) > 1985-89 1990-94 > Canada7.9 12.1 > United States 5.0 8.5 An important reason for this is the steepening of the bond yield curve between the two periods. The recession and then US Fed pushed down short term interest rates in the latter period, but long-term rates stayed high because of uncertainty about the future. This allowed the banks to save their asses by charging high loan rates (connected with the LT bond rates) while paying low rates on deposits (connected with the ST bond rates). BTW, shouldn't it be as a percent of total equity (assets - liability) rather than as a percent of assets (loans, bond holdings, etc.)? in pen-l solidarity, Jim Devine [EMAIL PROTECTED] & http://clawww.lmu.edu/1997F/ECON/jdevine.html Economic theories "have become little more than vain attempts to revive exploded superstitions, or sophisms like those of Mr. Malthus, calculated to lull the oppressors of mankind into a security fo everlasting triumph." -- adapted from Percy Bysshe Shelley.
trivia quiz - 2 (a bit harder!)
> Trivia question number two: > there was a correlation between the lengths of women's skirts > and the business cycle. > > (There is also supposedly a study linking the number of dairy cattle in > Kentucky and the business cycle. Any help here?) > Often, you will find similar examples in Econometric textbooks to explain "spurious" correlations (or sometimes "non-sense correlations", as denominated by G.Undy Yule). In particular, business cycles are very prone to misleading results in econometrics due to statistical properties of cycles (random shocks will, in average, generate cyclical patterns; it is only a question of finding the "right" random examples to associate with the cyclical data under investigation...). The best account of this is in Morgan, M.(1990) "The History of Econometric Ideas", Cambridge University Press. Chapter 3 of the book relates the pioneering works of Hooker (1901 !), Yule (1921 and 1926 !), Slutsky (1927 ! ) and others, who presented evidence of "spurious" correlations such as marriage rate and international trade, experiments with harmonic curves, lottery results and the business cycle, etc. Not only did they present the evidence or experimental results, but also managed to demonstrate their statistical flaws. To me, it is still amazing to see that for almost (already) a century, the economic literature is plagued by studies which "prove", based on "sound" or sophisticated econometric techniques, a priori hypotheses which might just be "nonsense"... Probably is to keep busy the academia... Salud, Alex PS. I recently built a "sound" econometric model, for a workshop at the ISS, in which I "explain" the Kenyan GDP as being correlated with a set of variables denoting a Keynesian expansion. The econometrics fit rather well, the only problem is that the exogenous variables were not Kenyan, but Ecuadorian... If anybody wishes it, I have no problem to send an attachment with the data and results to "reproduce" the experiment in a classroom (such things should be public property, I guess...) Alex Izurieta Institute of Social Studies The Hague - The Netherlands Email: [EMAIL PROTECTED] Tel.31-70-4260480 Fax.31-70-4260799
A New Method for Class Struggle.
>This message comes from the Jewish Labor Committee: 213-965-7600. > >COFFEE AT THE SUMMIT > >RELAX IN DECADENT LUXURY AND >SUPPORT WORKERS AT THE SUMMIT HOTEL > >Saturday, March 14, 11:30 AM to 1:00 PM > >Come and join with United L.A., the ethnic labor coalition of the Los >Angeles County Federation of Labor, AFL-CIO, in supporting workers at the >Summit Hotel Rodeo Drive, 360 N. Rodeo Drive in Beverly Hills. > >In the past two years, 37 employees out of a worldforce of 90 have been >fired. Many others have been and continue to be harassed by management, >with the apparent intention of eliminating the union's presence at the >hotel altogether. These are among the conclusions of a report released by >the Jewish Labor Committee and endorsed by the Southern California Board of >Rabbis. > >Represented by the Hotel Employees and Restaurant Employees Union >(H.E.R.E.) Local 11, AFL-CIO, the workers have demonstrated courage and >determination in standing together for more than two years under this >tremendous pressure. > >You can support the workers by going to the Summit for a coffee--just a >coffee (or tea). > >Tell themanager on duty: > >1) The owner should meet with the union and sign a fair contract! > >2) We support the workers! > >Asian Pacific American Labor Alliance > >Coalition of Labor Union Women > >Labor Council for Latin American Advancement > >Pride at 'Work > >The Summit is located 2 blocks north of Wilshire, two blocks south of Santa >Monica > >"" 2 HOURS FREE PARKING ON BEVERLY DRIVE >ONE BLOCK EAST OF RODEO in pen-l solidarity, Jim Devine [EMAIL PROTECTED] & http://clawww.lmu.edu/1997F/ECON/jdevine.html "A society is rich when material goods, including capital, are cheap, and human beings dear." -- R.H. Tawney.
Re: Jeff Madrick on "The Computer Revolution"
Rakesh writes: >... it is astonishing that Madrick would think that the productivity crisis is due to a lack of "imagination"; just consider the unimaginative use to which US scientific talent is being put...< As I read Madrick, he's not saying it's a failure of the supply of imagination but an increased demand for imagination. With a greater emphasis on idiosyncratic products (niche markets), there's more need for creativity of a craft-making sort. Each boutique and boutique product has to be different. I agree that his emphasis is totally first-world. The basics are more and more being mass-produced in what used to be called the third world, while the boutique products are made (partly using the basics) in the first. BTW, his theory of increasing idiosyncracy of products seems totally based on the ideas of futurist and Newtnik Alan Toffler, but fits with ideas of increased "flexible specialization" (cf. Piore and Sabel). (Strictly speaking, it's Newt who's a Tofflerite, but I couldn't resist.) I wonder: isn't it prosperity that causes short skirts rather than vice-versa? Or maybe we're facing a simultaneous equation problem. But we can do an experiment: global warming should encourage short skirts, which encourages prosperity. If instead we see global depression, war, the four horsepeople of the Apocalypse, etc., we should reject the theory. ;-) in pen-l solidarity, Jim Devine [EMAIL PROTECTED] & http://clawww.lmu.edu/1997F/ECON/jdevine.html "The only cause of depression is prosperity." -- Clement Juglar.
intellectual property
I agree with Ken that the current drive to establish "intellectual property rights" in more and more aspects of human and natural existence restricts competition. Capitalism involves an incessant interaction between monopolizing drives by individual capitals and competitive forces arising from those profit-seeking drives. I was emphasizing the latter because someone asked what it meant. Michael Perelman (not Pearlman) writes: >I doubt that even the greatly feared Saddam H. would dare to challenge intellectual property rights -- to do so would guarantee an all out war from the U.S.< But what if old Saddam were to declare that knowledge of the innards of his Presidential Palaces were "intellectual property" -- a trade secret -- and that the US could only get access to it by paying for it. Oh well, I guess it's too late for that in pen-l solidarity, Jim Devine [EMAIL PROTECTED] & http://clawww.lmu.edu/1997F/ECON/jdevine.html "he who is unable to live in society or has no need, because he is sufficient for himself, must be either a beast or a god." -- Aristotle
re: What went right
Here are the figures on commercial bank profitability, from the IMF 1997 report, International Capital Markets Developments, Prospects, and Key Policy Issues (supplementary tables), which demonstrates the adverse turn in the fortunes of Germany and Japan v. the Anglo-Saxon world. Not much signs of hyperaccumulation here (and the opaque German and Japanese figures are probably over-optimistic). In the later period it would appear to be the case that the major purchaser of US govt. and commercial bonds was not Germany or Japan - but the United Kingdom. Major Industrial Countries: Commercial Bank Profitability Real Return on Equity 1(In percent of total assets) 1985-89 1990-94 Canada7.9 12.1 France . . . -3.3 Germany 6.5 2.7 Italy. . .-1.2 Japan 10.4 1.5 United Kingdom 6.1 4.9 United States 5.0 8.5 Sources: International Monetary Fund, World Economic Outlook database; OECD (1996); and IMF staff estimates. 1. Calculated as net income after taxes divided by capital and reserves at the end of the previous year, minus consumer price index for the year.
Re: what when right again
If Anthony means that the U.S. has been effective in smashing organized labor and quelling resistence from workers, then I would have to agree. Our system is the envy of capitalists in Europe.-- Michael Perelman Anthony: Yes, that is part of the story. South Korea is an interesting case. Under military regimes political repression was not necessarily accompanied by fire policies. today the situation is somewhat paradoxical. With political liberalization we have greater demands by Korean capitalists to fire workers when business conditions worsens (that could be all sorts of things). But it is clear capital wants to have the upper hand and use the flexible labor market to discipline labor. This is already part of the American psyche. You fire workers when for whatever reasons, including capital's incompetence, you can't keep them. No wonder the NYT gloats over any sign of Japanese corporations laying off workers -- a real liberal newspaper. But the Korean contradiction should not go unnoticed. Political liberalization also means the hegemony of "market" economy: or economic repression if you will. On the other hand, keeping people employed without corresponding changes in quantity and quality of output (productivity in the broader sense also doesn't make much sense). india is a classic example when a small percentage of state employees holds the rest of society hostage. Cheers, Anthony
BLS Daily Report
BLS DAILY REPORT, WEDNESDAY, MARCH 11, 1998 RELEASED TODAY: More than 21 million persons did some work at home as part of their primary job in May 1997. The overall number of persons doing job-related work at home did not grow dramatically between 1991 and 1997, but the number of wage and salary workers doing paid work at home did __Productivity in the nation's nonfarm business sector grew by an annual rate of 1.6 percent in the fourth quarter and 1.7 percent for the year, BLS reports. The annual productivity figures show that output advanced 4.5 percent as hours of all wage earners increased 2.7 percent. Hourly compensation grew 3.8 percent in both 1996 and 1997 The 1997 increase in real hourly compensation was the largest since a 2.1 percent rise in 1992 (Daily Labor Report, page D-1). __U.S. business productivity grew solidly in the fourth quarter, but the gain was not as sharp as previously estimated. Productivity growth for firms outside the farm sector were revised down to 1.6 percent, on a seasonally adjusted annual basis, from the previous estimate of 2.0 percent (Washington Post, page C10). __Growth in productivity, an indicator of how quickly living standards can rise, slowed a bit as 1997 ended. Many analysts say that productivity growth has been higher than has been reported by the government recently. They say the discrepancy comes from the difficulty in measuring output gains in services, which are being helped by the rapid advance of high-technology tools (New York Times, page D2). __Productivity growth during the final quarter of 1997 was a tad slower than first estimated. Still, the revised figure didn't diminish the year's healthy productivity gain (Wall Street Journal, page A2). Despite their smaller numbers, members of the "baby bust" generation have not enjoyed the labor market success that their baby boom counterparts did two decades ago, according to an article in the February issue of the Monthly Labor Review. The article, "Comparing the Labor Market Success of Young Adults from Two Generations," by Kurt Schwammel, economist in the Office of Employment Projections, BLS, points out that, between 1979 and 1996, the largest gains in employment and earnings among adults aged 25 to 34 occurred when most members of the cohort were baby boomers. Observers had predicted that the baby bust cohort would have an easier time finding good jobs than baby boomers, but Schwammel found baby bust workers were more likely to be employed in lower-paying jobs (Daily Labor Report, page A-5, text E-3). DUE OUT TOMORROW: U.S. Import and Export Price Indexes -- February 1998 application/ms-tnef
Re: What went right?
Since when do Post-Keynesians subscribe to the ISLM model? -- From: Rosser Jr, John Barkley To: [EMAIL PROTECTED] Cc: [EMAIL PROTECTED] Subject: Re: What went right? Date: Wednesday, March 11, 1998 5:41PM Doug, You should have said "take that, Post Keynesians!" Most garden variety Keynesians who believe in the ISLM model (supposedly nobody does, but all policymakers and all macroeconometric forecasting models do) would and did predict that taxing the rich to reduce the deficit would lower interest rates and stimulate investment in a situation with a high budget deficit to begin with, as we had. The rich have lower mpc's than the poor, so raising their taxes does not reduce consumer spending as much as raising taxes on the poor, again, a garden variety Keynesian viewpoint. Barkley Rosser (now all the PKs will get on my case) On Tue, 10 Mar 1998 19:58:35 -0500 Doug Henwood <[EMAIL PROTECTED]> wrote: > Michael Perelman wrote: > > >I would like to start a dialogue on why the (U.S.) economy has been > >doing as well as it has over the past few years. We know about the > >problems, inequities , but why has the house of cards stayed up as > >long as it has. > > Hey, how about this - taxing the rich reduced the budget deficit, allowing > interest rates to fall (take that, Keynesians!), but without compromising > aggregate demand. The reduction in interest rates explains a lot of the > rise in corp profits, which has sustained investment. > > I've been away for a few days, so I don't know what anyone else said yet. > > Doug > > > -- Rosser Jr, John Barkley [EMAIL PROTECTED]
Re: what when right again
On Thu, March 12, 1998 at 07:50:16 (+0800) Anthony D'costa writes: >being Competitive has little to do with the fictitious notion of zero >profits. Competition is not understood to result solely from the number of >firms (the quantity theory of competition) but also from the "mobility" of >capital point of view. Greater mobility implies competitiveness and >technology provides the basis for today's competitiveness. Thus even with >a few sellers there is oligpolistic competition with reasonably good >profits. This sounds out of whack. First, it is neoclassical economics which *defines* competition as selling at (near) marginal cost. Second, this is usually considered A Good Thing by orthodox economists, as it is supposedly evidence of, inter alia, consumer sovereignty, and is usually taken to be one of the Shining Virtues of Capitalism. Third, *I* understood competition to mean precisely that, and I'm sure others did too. Fourth, if "greater mobility [of capital] *implies* competitiveness" (my emph.), and is not simply some other definition for it, then competitiveness has either been left undefined, or retains some other unspoken definition. Fifth, "technology provides the basis for today's competitiveness" could be extended to the past, as technology has always existed, and in any case I'm not sure what this is supposed to mean (higher technology, whatever that means exactly, leads to higher competitiveness?). Sixth, from what I understand, profits, at least in the US in the 90s, have been "stunning" according to the business press, and not merely "reasonably good". Bill
Re: what when right again
being Competitive has little to do with the fictitious notion of zero profits. Competition is not understood to result solely from the number of firms (the quantity theory of competition) but also from the "mobility" of capital point of view. Greater mobility implies competitiveness and technology provides the basis for today's competitiveness. Thus even with a few sellers there is oligpolistic competition with reasonably good profits. Anthony D'Costa
Re: What went right
Interesting data. Why would the Canadian and U.S. banks be so much more successful in increasing their profitability? Mark Jones wrote: > Here are the figures on commercial bank profitability, from the IMF 1997 > report, International Capital Markets Developments, Prospects, and Key > Policy Issues (supplementary tables), which demonstrates the adverse > turn in the fortunes of Germany and Japan v. the Anglo-Saxon world. Not > much signs of hyperaccumulation here (and the opaque German and Japanese > figures are probably over-optimistic). In the later period it would > appear to be the case that the major purchaser of US govt. and > commercial bonds was not Germany or Japan - but the United Kingdom. > > Major Industrial Countries: Commercial Bank Profitability > Real Return on Equity 1(In percent of total assets) > 1985-89 1990-94 > Canada7.9 12.1 > France . . . -3.3 > Germany 6.5 2.7 > Italy. . .-1.2 > Japan 10.4 1.5 > United Kingdom 6.1 4.9 > United States 5.0 8.5 > > Sources: International Monetary Fund, World Economic Outlook database; > OECD (1996); and IMF staff estimates. > 1. Calculated as net income after taxes divided by capital and reserves > at the end of the previous year, minus consumer price index for the > year. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 916-898-5321 E-Mail [EMAIL PROTECTED]
News from Valparaiso
Dear Pen-Lers: I just talked to a friend in Valparaiso, Chile, where Pinochet took his senatorial seat for the first time today. Also where thousands took to the streets to protest. I suppose you've seen it on CNN. The Calle Pedro Montes, main throuroughfare running right in front of the congress building, was controlled by protesters at barricades most of the day. The carabineros (police) responded with tear gas and water cannons. My friend tangled with a carabinero, got beat up pretty bad in the head, and was let out of the hospital just an hour ago. But he got his licks intoo, defending himself with sticks, feet, fists. And this, he said, is the significance of the action: the protesters at the congress were beaten back, Pinochet took his seat, but a very clear signal was sent -- folks are not taking this lying down. Yesterday or the day before Pinochet was designated General Benemerito, a title that didn't exist until this week, according to my friend. Basically, the designiation is sabre rattling by the armed forces, while confering on Pinochet all the protections and support of an active General. The award may have provoked the protesters all the more. The ourpouring of spirit was extraordinary, my freind related. There have been protests all over Santiago and Valpariso, and they continue tonight as I write in many of the poorer neighborhoods of Santiago. However, they have suffered from a lack of organization. He noted that if, disorganized as they are, they were still able to make a good ruckus, imagine if they had had their act together. His voice groggy from the bruises and blows, his spirits high, he closed saying something about the worst and best of times. And a modest proposal: There are measures afoot in the Spainish parliament to not recognize the Chilean Senate as long as Pinochet has a seat there. All such actions, however symbolic, are very helpful. Any and all legislators in the US, State or Federal, whose might oppose Pinochet's seat would be welcome in the international condemantion of this tragedy of justice. Anybody feel like calling the Wellstones, etc.? Tom Tom Kruse / Casilla 5812 / Cochabamba, Bolivia Tel/Fax: (591-42) 48242 Email: [EMAIL PROTECTED]
