Tag Archives: Imported

Yesterday’s rate cut by the Fed

As was more-or-less expected, if not exactly at that precise moment, the Federal Reserve has cut both the “discount (interest) rate” and its target for the “federal funds (interest) rate.” Most stock markets around the world have reacted with big increases. Does this mean a rising tide for the foreseeable future and beyond? A couple of responses from outside the cheerleader squad.

Dean Baker: ‘…According to much of the coverage, the markets soared yesterday because they are now confident that Bernanke will move aggressively to try to counteract a recession. A bit of history would have been useful to include in this context…’

Jennifer Waters, MarketWatch: ‘…”It will help those who need it the least,” said Richard Hastings, an analyst at Bernard Sands LLC. “But for those who need the most help, this does nothing for them. The Fed cannot help them at all.”…’

econospeak on carbon tax / permits

Peter Dorman at Econospeak has a good conversation going on the advantages of controlling carbon emissions through auctioning off limited permits rather than using a tax on consumption of carbon fuels. Naturally, this reminds me of my implied plug for permits in my review of Peter Barnes’ Capitalism 3.0 [parts 1 and 2]. Regardless, Dorman is on the money when he concludes

Folks, this is a very important issue at a very important time. In the next year the contours of the national debate over climate change policy will be set. Huge ecological consequences — and gobs of cash — are on the line. It is essential to start off in the right direction. I’d like to see enough clarity and truculence in the activist community that journalists are forced to take notice.

On Freeman Dyson’s “Our Biotech Future”

In last month’s New York Review of Books, Freeman Dyson leads off with an essay on “Our Biotech Future“. He predicts that biotechnology will, in this new century, become relatively cheap and widespread in a similar way to the cheapening and spreading of physics-based and computer technology over the past several decades.

It has become part of the accepted wisdom to say that the twentieth century was the century of physics and the twenty-first century will be the century of biology. Two facts about the coming century are agreed on by almost everyone. Biology is now bigger than physics, as measured by the size of budgets, by the size of the workforce, or by the output of major discoveries; and biology is likely to remain the biggest part of science through the twenty-first century. Biology is also more important than physics, as measured by its economic consequences, by its ethical implications, or by its effects on human welfare.

Read more

On the one hand… on the other hand… on both together

Heterodox Economist reminds us of a useful point: Wall Street types might deserve to eat a bear market in some sense of getting their just deserts, but the connections between the financial world and the rest of the economy (including millions of working stiff jobs, etc) mean that the bear is likely to be shared around with plenty of people who don’t deserve the downside. The system as we know it is rigged in favor of the owners. Because they own, they cannot be allowed to suffer for their suffering trickles down much faster than any of their advantages. He also talks about Rosa Luxemburg, which is cool.

Uneconomic: marriage and civil union stuff

A couple weeks ago, the NYTimes had an article about weddings that turn out to be legally invalid, perhaps. (“Great Wedding! But Was It Legal?”, first SundayStyles page, 8/5/07; reposted here.) I’m a “minister” in the Universal Life Church myself, and have performed four weddings and have been asked to perform another next summer. My wife (ceremony performed by her cousin empowered by the ULC) also clicked the “make me a minister” button on the ULC website so she could perform a wedding for a friend of hers. So we take our possibly invalid weddings very seriously here in the Teller-Elsberg clan.

I know it’s got little to do with economics, exactly, but nonetheless, this article has got me thinking: all the recent debates over same-sex marriage (and/or civil unions) have served to make it clear that states should not approve or disapprove of any marriages whatsoever, regardless of who officiates. When the state’s acknowledgment of the legality of a marriage depends on the opinion of government officials regarding what is and is not a legitimate religion, or who is and who is not a legitimate minister within an otherwise legitimated religion, it is clear that the separation of church and state has been breached. Religious groups and organizations are the appropriate bodies to establish marriages, as marriage is clearly a union formed within a spiritual tradition, with all the benefits and burdens that that entails. The state, on the other hand, should only perform civil unions, whatever the sexual mix of those joining in blissful union.

Now all we need is a constitutional amendment.

Afraid to ask or not, all you really wanted to know about the recent Fed liquidity injection…

Check out former FRBoNY Director of Research Stephen Cecchetti’s F.A.Q. on the Fed’s emergency injection of liquidity in early August using mortgage-security backed repurchase agreements (repos). The explanation is really clear, complete with illustration. I am a bit skeptical of the claim

The Fed isn’t spending the money on bailing out banks, hedge funds, or helping rich people.

but it’s otherwise an excellent piece that describes the mechanism, the scale, and the reasons.

NPR: “Stuck and Suicidal in a Post-Katrina Trailer Park”

I try to follow the rule that blog posts should be more than just a “hey, check this out,” and a link. But I guess some rules are made to be broken. I don’t have much to say about this, but it is definitely worth listening to.

NPR.org, August 8, 2007 · The first morning of my visit to Scenic Trails, I was walking the path between some trailers when I bumped into a man named Tim Szepek. He was young, tall, and solidly good-looking. I asked if I could speak to him for a moment and he agreed. We found a spot of shade beneath a tree, and I started with what I considered a casual warm-up.

“What’s it like to live around here?” I asked.

“Well,” he replied, “I’ll be honest.”

“Ain’t a day goes by when I don’t think about killing myself.”

And so began my time in Scenic Trails, a FEMA trailer park deep in the Mississippi woods where 100 families have lived in near isolation for close to two years.

[cont’d and audio versions]

Announcing the launch of the U.S. Solidarity Economy Network (SEN-US)

July 27, 2007

Announcing the launch of the U.S. Solidarity Economy Network (SEN-US)

We are excited to announce the launch of the U.S. Solidarity Economy Network. The decision to launch was taken at the end of a series of meetings that were held at the U.S. Social Forum. The time is ripe for this initiative, given the explosive growth of the solidarity economy and representative networks virtually everywhere else in the world. In the U.S., not only is there no such network to support existing solidarity economy practices and policies, but the term and framework is practically unknown.

What, then, is the solidarity economy?

· The Solidarity Economy offers an alternative economic framework to that of neoliberal globalization – one that is grounded in solidarity and cooperation, rather than the pursuit of narrow, individual self-interest.

· It promotes social and economic democracy, equity in all dimensions (e.g. race, class, gender…) and sustainability.

· It is pluralist and organic in its approach, allowing for different forms and strategies in different contexts, and is open to continual change driven from the bottom up whether in civil society or the marketplace.

What does a solidarity economy look like? Here are just a few examples:

· cooperatives — worker, producer, consumer, housing, financial
· local exchange systems, complementary currencies
· fair trade & solidarity finance
· social enterprises
·: high road’ locally owned businesses
· reclaim the commons movement
· social investment funds, worker controlled pension funds and credit unions
· land trusts
· co-housing, eco-villages
· consumer supported agriculture
· green technology and ecological production
· open source movement (e.g. Linux, wikipedia, YouTube)
· unpaid care labor & volunteer labor
· participatory budgeting
· collective kitchens in Latin America, tontines — collective health programs in Africa

· community-based services in France, social cooperatives in Italy

Why a solidarity economy network?

There are serious cracks in the dominant neoliberal economic model and there is a historic opening to create and push for a new framework for social and economic development. The solidarity economy builds on the grassroots innovations of people, moved by desperation, practicality, values, or vision, who are building economic alternatives to provide jobs, food, housing, social services, healthier communities and money, as well as advancing economic democracy and more just economic policies. Taken together, they offer stepping stones toward a new way of organizing our economy. Creating a network to foster a common sense of identity and purpose has been powerful in other countries. To take one example, in Canada, the social solidarity economy network has forged a comprehensive national policy framework and has leveraged $132 million in government funding for investment, capacity building, research and training.

What are the aims of the SEN?

We have yet to hammer out a mission statement, but here are some preliminary ideas:

· To develop a structure and vision that can promote a common identity and agenda among the currently isolated elements of the solidarity economy.

· To contribute to new theories of economic development informed by the dynamism and innovative practices within the solidarity economy.

· To raise the visibility, legitimacy and public support for solidarity economy practices,

· To link up with regional and international solidarity economy networks such as NANSE and RIPESS.

· To promote public policies and leverage resources for the support of the solidarity economy.

· To facilitate research on the benefits of the solidarity economy, best practices, opportunities for synergistic cooperation, and the development of training and technical support resources.

· To build the movement for transformative social and economic justice.

Next steps

The SEN Coordinating Committee is in the process of:

1) Mission statement and structure: we are developing a provisional mission statement and structure proposal which will be circulated for wider discussion.

2) Membership: We anticipate putting out an invitation to organizations and individuals to join in approximately a month’s time.

3) Development: We are exploring funding opportunities. The Center for Popular Economics will provide fiscal sponsorship as well as staffing, provisional upon funding in the start-up stage of the network formation.

4) Action plan and timeline: as we build a broad representative coordinating committee and membership we will prioritize our objectives and seek resources to achieve them.

5) Resource development: collect and publish a book of the presentations in the Economic Alternatives & the Social/Solidarity Economy track at the U.S. Social Forum. Develop a SEN-US website.

We hope that you find this initiative as exciting and inspiring as we do. Join us in building the Solidarity Economy Network. Spread the word, and sign on to the SEN listserve to keep up with developments. Send a message to: ssecaucus-subscribe@lists.riseup.net

On behalf of the SEN Coordinating Committee,

Emily Kawano, Center for Popular Economics
Phone: (413) 545-0743 e-mail: emily@populareconomics.org

SEN Coordinating Committee
Jessica Gordon-Nembhard, Grassroots Economic Organizing
Melissa Hoover, U.S. Federation of Worker Cooperatives
Emily Kawano, Center for Popular Economics
Julie Matthaei, Guramylay
Ethan Miller, Grassroots Economic Organizing (GEO)
Michael Menser, Amer. Fed. of Teachers, CUNY
Heather Schoonover, Institute for Agriculture and Trade Policy
Dan Swinney, Center for Labor and Community Research

Nancy in the Nation… and a Nobel pet peeve

I forgot to blog this previously, so sorry for the delay. Anyhow, our own Nancy Folbre had a letter to the editor in the July 16, 2007, issue of The Nation. It’s a response to Christopher Hayes’ “Hip Heterodoxy.” As usual, she’s witty and wise.

The letters section is for subscribers only, so I hope The Nation won’t mind my taking just a minor liberty to quote Nancy’s letter.

Let me add one flourish to Christopher Hayes’s thoughtful and endearing description of hip heterodox economists [“Hip Heterodoxy,” June 11] and introduce one complaint. A mainstream economist who had downed too many free drinks once asked me what my department was like. When I described it as heterodox he was confused, and informed me rather soberly that there were no homosexual departments. Of course, neither the orthodox nor the heterodox are orthosex. But sessions organized by the International Association for Feminist Economics have enlivened economics conferences for many years now. I’m disappointed by Hayes’s failure to mention this, or to interview even one feminist economist for his story. Does he consider us unhet or just unhip?

Following Nancy’s letter was another that pushes one of my pet peeve buttons:

Christopher Hayes deftly spells out confusion in the field of economics. He avoids, however, two critical questions. First, is the “dismal science” science at all? Many find it nothing more than fancy (if not fanciful) statistics, not much different from actuarial studies. Insurance underwriters recognize that a person with a life expectancy of 74.5 years may live to be 100 or die at 50. Yet neoclassical economists seem surprised when the real world doesn’t perform according to their theories. Witness the 2004 election and how many people voted against their own economic self-interest, violating neoclassical theories.

Second and more disturbing, Hayes uses the term “Nobel laureate” to identify various prominent economists. The so-called “Nobel Prize in Economics” is not one of the five awards stipulated in Alfred Nobel’s 1896 will. It arrived nearly seventy years later, first awarded in 1969. It was instituted by the Riksbank (Sweden’s central bank) “in memory of Alfred Nobel” as an effort to legitimize economics. Many physicists and mathematicians bristle at this award, claiming economics is not a science at all but uses mathematics to camouflage unproven and unprovable theories. Even Nobel’s great-great-grandson Peter criticizes the prize as “illegitimate–a PR coup.”


I’m no great fan of neoclassical economics, and I probably agree with Boyle on most political issues. Even so, I feel I must point out that Boyle is off the mark in more ways than one. To begin with, neoclassical theories do not posit that people will or should vote in favor of politicians who will promote the voters’ economic self interest. Economic well-being is only one of many dimensions of life. So, even accepting neoclassical assumptions of rational persons making choices for their own benefit, such rational persons will have to weigh the pros and cons of all the aspects of their lives that they value–including such things as cultural values. If there are people who hate gay marriage more than they like a middle-class economic standard, then it is rational for them to vote for politicians who are homophobic and simultaneously pro-business/anti-union, etc. Neoclassical economic theory does not claim to be able to judge which desires and preferences will be stronger in any individual or group of people–in fact it is famously agnostic about preferences: one of the main complaints against it is that it ignores the ways that power structures, especially power structures built into the economy itself, can mold and shape the preferences of the people who then act rationally or otherwise in response. That is, in technospeak, neoclassical theory generally ignores the fact that economic preference formation is endogenous–internal to–the economy, and not something “given” from outside the realm of economics.

But that’s not my actual pet peeve. What gets under my skin is this non-issue of the Nobel Prize for Economics being somehow illegitimate. True: Alfred Nobel did not establish a prize in his name for economics. Also true: Alfred Nobel did not establish a prize in his name for biology. As I’ve read (though I’m sorry that I can’t recall where), his express reasoning was that he did not think biology was a real science. Biologists of his day were not in a position to do experiments in a convincing manner like the chemists and physicists that he did choose to honor. So does that mean that Alfred’s opinion of the status of sciences should be the final word for all time? Should administration of biology at universities be transferred to the Dean of Humanities? Does Boyle doubt the scientific bona fides of evolutionary theory any more than she does of economic theory? (Oh, and while neoclassicists do tend to win most of the economic Nobel prizes, not all the winners are beholden to that approach. Some, like Sen, are versed in alternative approaches including Marxian political economy. And folks like Stiglitz and Kahneman won the prize largely for their work in debunking the notion of rational actors in economic life.)

And the notion that the existence of a so-called Nobel Prize in Economics makes pretty much any difference in the world, beyond the lives of the individual winners and the reputations of the schools where they work, is hard to believe. Walk down the street and ask random people to name a single winner of the economics prize (or ANY Nobel prize for that matter). I’d be shocked if even 1% could do so. Survey Congress and the President and see what they answer: again, I’d bet that less than 20% of this elite, policy-making crowd could do so.

So the physicists and mathematicians bristle at the existence of a Nobel Prize in Economics? Big whoop. (And why would the math geeks care… they don’t have a Nobel Prize, so maybe it’s just jealousy.)

Much of economic policy deriving from economic theory has had as much or more negative results as positive, of that there’s no doubt. But Nobel’s prizes were supposed to be awarded “to those who, during the preceding year, shall have conferred the greatest benefit on mankind.” I think it’d be hard to claim that all the winners of physics or chemistry (or peace) Nobel prizes have actually conferred much real benefit on mankind. Take, for example, the 2006 award “for [the] discovery of the blackbody form and anisotropy of the cosmic microwave background radiation” which supports the Big Bang theory. Ummm, I think the Big Bang theory is really cool, and I like phyics (I grew up worshiping Isaac Asimov’s essays), but how exactly does mankind significantly benefit from the discovery of blackbody form and anisotropy of the cosmic microwave background radiation? If humanity never enjoyed the existence of a Big Bang theory, the quality of our lives would be changed hardly a bit. We’d still have poor people and rich people and powerless people and powerful people and racism and sexism and wars and malnutrition and loving neighbors and beautiful sunsets. Intellectual discoveries are wonderful and inspiring, but they rarely actually matter THAT much.

Oh, and one of Nobel’s descendants doesn’t like the economics prize? Since when do readers of The Nation endorse nepotism? What makes one great-great-grandson’s criticisms so impressive? According to the Nobel Prize website, many of Alfred Nobel’s family members have failed to endorse Alfred’s desires w/r/t the prizes. “His family opposed the establishment of the Nobel Prize, and the prize awarders he named refused to do what he had requested in his will. It was five years before the first Nobel Prize could be awarded in 1901.” Since Alfred isn’t here to answer directly, who’s to say that this particular great-great-grandson represents the true ideals of Alfred any better than others of Alfred’s progeny who think the Economics prize is a-ok?

My conclusion: the Nobel Prize in Economics is as legitimate as any other memorial prize and anyway doesn’t much matter regardless of its legitimacy. It just doesn’t do much of anything that really matters in the grand scheme of things.

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