Philip Pilkington: Debunking Economics – An Interview with Steve Keen – Part 1
Steve Keen is an Associate Professor in economics and finance at
the University of Western Sydney. The second expanded edition of his
popular book Debunking Economics is available now.
Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.
Philip Pilkington: One cannot help but be struck by the
reaction of the economics profession to the recent financial crisis. In
the first edition of your book, Debunking Economics,
you warned that a crash was probably coming – and in this you weren’t
the only one. And yet now, post-crash, neoclassical economists have
simply buried their heads in the sand and pretended that rational
criticism of their theories simply doesn’t exist. The crash discredits
almost all these theories and yet they continue to insist that they
remain valid.
They remind me of Christian fundamentalists rabidly arguing against
evolution in face of what appears to be insurmountable evidence against
their assertions. Could you talk a little about this? How can these
people be so deluded? Why won’t they listen to reason?
Thursday, November 17, 2011
How Income Inequality Undermines Social Security's Finances
A recent study reveals how rising income inequality is jeopardizing Social Security’s finances.
It is by now common to hear Social Security advocates demand that we “scrap the cap” on earnings subject to the Social Security payroll tax.
This is an important appeal. Few Americans realize that millionaires only contribute to Social Security on the first $110,100 they earn. If they did, perhaps they’d be even more adamantly opposed to the benefit cuts many in Washington are proposing.
By Daniel Marans
November 15, 2011 - 11:39am ET
It is by now common to hear Social Security advocates demand that we “scrap the cap” on earnings subject to the Social Security payroll tax.
This is an important appeal. Few Americans realize that millionaires only contribute to Social Security on the first $110,100 they earn. If they did, perhaps they’d be even more adamantly opposed to the benefit cuts many in Washington are proposing.
Stop the Great Firewall of America
China operates the world’s most elaborate and opaque system of Internet censorship. But Congress, under pressure to take action against the theft of intellectual property, is considering misguided legislation that would strengthen China’s Great Firewall and even bring major features of it to America.
The legislation — the Protect IP Act, which has been introduced in the Senate, and a House version known as the Stop Online Piracy Act — have an impressive array of well-financed backers, including the United States Chamber of Commerce, the Motion Picture Association of America, the American Federation of Musicians, the Directors Guild of America, the International Brotherhood of Teamsters and the Screen Actors Guild. The bills aim not to censor political or religious speech as China does, but to protect American intellectual property. Alarm at the infringement of creative works through the Internet is justifiable. The solutions offered by the legislation, however, threaten to inflict collateral damage on democratic discourse and dissent both at home and around the world.
China operates the world’s most elaborate and opaque system of Internet censorship. But Congress, under pressure to take action against the theft of intellectual property, is considering misguided legislation that would strengthen China’s Great Firewall and even bring major features of it to America.
The legislation — the Protect IP Act, which has been introduced in the Senate, and a House version known as the Stop Online Piracy Act — have an impressive array of well-financed backers, including the United States Chamber of Commerce, the Motion Picture Association of America, the American Federation of Musicians, the Directors Guild of America, the International Brotherhood of Teamsters and the Screen Actors Guild. The bills aim not to censor political or religious speech as China does, but to protect American intellectual property. Alarm at the infringement of creative works through the Internet is justifiable. The solutions offered by the legislation, however, threaten to inflict collateral damage on democratic discourse and dissent both at home and around the world.
Digby: Future Shock and Awe
Listening to Newtie blather on about foreign policy last night reminded
me of his gooey, wannabe relationship with the military over the years.
I wrote about it back in March of 2003:
By Digby
November 14, 2011 - 1:36pm ET
Last week I wrote a post about the likelihood that Newt Gingrich is heavily involved in the actual war planning for the Iraq invasion. I had no proof other than some gossipy items in newspaper columns. However, I have since been informed that Newt has had almost unequalled influence in long term strategic military planning for many, many years.
And, when he introduced the Generals to his intellectual mentors in the early 1980's he began a revolution in military affairs that is playing itself out in the Iraqi desert at this very minute.
Newt Gingrich Wants to Kill the CBO Messenger
Former Speaker and current GOP presidential candidate Newt Gingrich
might well have said that he wants to kill his personal physician
because he didn’t like being told his blood pressure was too high.
But that’s the equivalent of what Gingrich did say during a recent debate, when he made it clear that the Congressional Budget Office has to be eliminated if health care reform is going to be repealed.
By Stan Collender
November 15, 2011 - 1:05pm ET
But that’s the equivalent of what Gingrich did say during a recent debate, when he made it clear that the Congressional Budget Office has to be eliminated if health care reform is going to be repealed.
4 Ways the Poor Get Screwed That Everyone Takes for Granted
By William Hogeland, AlterNet
Posted on November 11, 2011, Printed on November 17, 2011
I'm not in the 1%. At the lower end of what I think of as the upper middle class, I nevertheless take daily advantage of a raft of systems intended to ensure that people who have less money than I do pay more than I do. Since my economic advantages result from public policy, it's fair to call them taxes, levied on people least able to afford them and applied upward for the benefit of people like me. Since the glory days of feudalism are long over, and we don't like to revel in high position, matters are arranged to keep me and people like me from noticing the systemic nature of our economic advantage.
By William Hogeland, AlterNet
Posted on November 11, 2011, Printed on November 17, 2011
I'm not in the 1%. At the lower end of what I think of as the upper middle class, I nevertheless take daily advantage of a raft of systems intended to ensure that people who have less money than I do pay more than I do. Since my economic advantages result from public policy, it's fair to call them taxes, levied on people least able to afford them and applied upward for the benefit of people like me. Since the glory days of feudalism are long over, and we don't like to revel in high position, matters are arranged to keep me and people like me from noticing the systemic nature of our economic advantage.
Paul Krugman: Vouchers for Veterans
American health care is remarkably diverse. In terms of how care is paid for and delivered, many of us effectively live in Canada, some live in Switzerland, some live in Britain, and some live in the unregulated market of conservative dreams. One result of this diversity is that we have plenty of home-grown evidence about what works and what doesn’t.
Naturally, then, politicians — Republicans in particular — are determined to scrap what works and promote what doesn’t. And that brings me to Mitt Romney’s latest really bad idea, unveiled on Veterans Day: to partially privatize the Veterans Health Administration (V.H.A.).
American health care is remarkably diverse. In terms of how care is paid for and delivered, many of us effectively live in Canada, some live in Switzerland, some live in Britain, and some live in the unregulated market of conservative dreams. One result of this diversity is that we have plenty of home-grown evidence about what works and what doesn’t.
Naturally, then, politicians — Republicans in particular — are determined to scrap what works and promote what doesn’t. And that brings me to Mitt Romney’s latest really bad idea, unveiled on Veterans Day: to partially privatize the Veterans Health Administration (V.H.A.).
The Two Documents Everyone Should Read to Better Understand the Crisis
As a white-collar criminologist and former financial regulator much of my research studies what causes financial markets to become profoundly dysfunctional. The FBI has been warning of an "epidemic" of mortgage fraud since September 2004. It also reports that lenders initiated 80% of these frauds.1 When the person that controls a seemingly legitimate business or government agency uses it as a "weapon" to defraud we categorize it as a "control fraud" ("The Organization as 'Weapon' in White Collar Crime." Wheeler & Rothman 1982; The Best Way to Rob a Bank is to Own One. Black 2005). Financial control frauds' "weapon of choice" is accounting. Control frauds cause greater financial losses than all other forms of property crime -- combined. Control fraud epidemics can arise when financial deregulation and desupervision and perverse compensation systems create a "criminogenic environment" (Big Money Crime. Calavita, Pontell & Tillman 1997.)
The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence. To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.
As a white-collar criminologist and former financial regulator much of my research studies what causes financial markets to become profoundly dysfunctional. The FBI has been warning of an "epidemic" of mortgage fraud since September 2004. It also reports that lenders initiated 80% of these frauds.1 When the person that controls a seemingly legitimate business or government agency uses it as a "weapon" to defraud we categorize it as a "control fraud" ("The Organization as 'Weapon' in White Collar Crime." Wheeler & Rothman 1982; The Best Way to Rob a Bank is to Own One. Black 2005). Financial control frauds' "weapon of choice" is accounting. Control frauds cause greater financial losses than all other forms of property crime -- combined. Control fraud epidemics can arise when financial deregulation and desupervision and perverse compensation systems create a "criminogenic environment" (Big Money Crime. Calavita, Pontell & Tillman 1997.)
The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence. To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.
Scalia and Thomas dine with healthcare law challengers as court takes case
The day the Supreme Court gathered behind closed doors to consider the politically divisive question of whether it would hear a challenge to President Obama’s healthcare law, two of its justices, Antonin Scalia and Clarence Thomas, were feted at a dinner sponsored by the law firm that will argue the case before the high court.
The occasion was last Thursday, when all nine justices met for a conference to pore over the petitions for review. One of the cases at issue was a suit brought by 26 states challenging the sweeping healthcare overhaul passed by Congress last year, a law that has been a rallying cry for conservative activists nationwide.
The day the Supreme Court gathered behind closed doors to consider the politically divisive question of whether it would hear a challenge to President Obama’s healthcare law, two of its justices, Antonin Scalia and Clarence Thomas, were feted at a dinner sponsored by the law firm that will argue the case before the high court.
The occasion was last Thursday, when all nine justices met for a conference to pore over the petitions for review. One of the cases at issue was a suit brought by 26 states challenging the sweeping healthcare overhaul passed by Congress last year, a law that has been a rallying cry for conservative activists nationwide.
Study proves regulations killed practically no jobs
By David Edwards
Monday, November 14, 2011
In three straight recent weekly addresses, Republicans have asserted that “excessive government regulations” are keeping businesses from creating jobs.
On the contrary, recent government data proves that in the third quarter of 2010 only 0.4 percent of jobs were lost due to government regulations or intervention.
“With our economy struggling and red tape still piling up, these nuisances have become full-blown government barriers to job creation,” Rep. Morgan Griffith (R-VA) said in an early October video.
By David Edwards
Monday, November 14, 2011
In three straight recent weekly addresses, Republicans have asserted that “excessive government regulations” are keeping businesses from creating jobs.
On the contrary, recent government data proves that in the third quarter of 2010 only 0.4 percent of jobs were lost due to government regulations or intervention.
“With our economy struggling and red tape still piling up, these nuisances have become full-blown government barriers to job creation,” Rep. Morgan Griffith (R-VA) said in an early October video.
The edible battery that's too good for electric cars
Here's the problem with electricity: it costs 5 cents to make a kilowatt-hour, but it costs $150 worth of batteries to store a kilowatt-hour. And it's only that cheap if you use lead-acid batteries, which are (a) very heavy; and (b) made with toxic materials.
And that's the rub for electric cars, because the heavier the car is, the more batteries it needs to move. So if you use cheap lead-acid batteries for electric cars, the car weighs two tons, and needs more power, which makes it heavier, so it needs more power, which makes it heavier.
Here's the problem with electricity: it costs 5 cents to make a kilowatt-hour, but it costs $150 worth of batteries to store a kilowatt-hour. And it's only that cheap if you use lead-acid batteries, which are (a) very heavy; and (b) made with toxic materials.
And that's the rub for electric cars, because the heavier the car is, the more batteries it needs to move. So if you use cheap lead-acid batteries for electric cars, the car weighs two tons, and needs more power, which makes it heavier, so it needs more power, which makes it heavier.
Obama’s Flunking Economy: The Real Cause
Confidence Men: Wall Street, Washington, and the Education of a President
by Ron Suskind
Harper, 515 pp., $29.99
Ron Suskind’s Confidence Men is not a calm first draft of history. It is not an impartial or unbiased look at the Obama administration’s first two years. Rather, it is an investigation. The crime is homicide, and the victim is the promise of Barack Obama’s presidency. But this isn’t a suspenseful whodunit. Suskind tips his hand in the first pages.
He’s describing the press conference in September 2010 where President Obama announced that Elizabeth Warren would help set up the Consumer Financial Protection Bureau. Warren is one of Suskind’s heroes. She’s introduced as “the nation’s town crier” and “a leading voice for tough, restorative reforms.” The mystery of the initial chapter is why Obama seems to be holding her at arm’s length.
Confidence Men: Wall Street, Washington, and the Education of a President
by Ron Suskind
Harper, 515 pp., $29.99
Ron Suskind’s Confidence Men is not a calm first draft of history. It is not an impartial or unbiased look at the Obama administration’s first two years. Rather, it is an investigation. The crime is homicide, and the victim is the promise of Barack Obama’s presidency. But this isn’t a suspenseful whodunit. Suskind tips his hand in the first pages.
He’s describing the press conference in September 2010 where President Obama announced that Elizabeth Warren would help set up the Consumer Financial Protection Bureau. Warren is one of Suskind’s heroes. She’s introduced as “the nation’s town crier” and “a leading voice for tough, restorative reforms.” The mystery of the initial chapter is why Obama seems to be holding her at arm’s length.
Sunday, November 13, 2011
Oberlin, Ohio: Laboratory for a New Way of Life
An environmental-studies professor tries to reinvent his town for a future of scarcity
This northern Ohio college town is barely a blip on a map,
far away from national centers of power. And yet people here are working
on a plan that could make it a model for fundamentally reshaping the
American economy and its society.
The architect of the plan is David W. Orr, a professor of environmental studies and politics at Oberlin College. More than a decade ago, he helped inspire a "green building" trend when he dreamed up the Adam Joseph Lewis Center for Environmental Studies, which remains one of the greenest college buildings in the country.
An environmental-studies professor tries to reinvent his town for a future of scarcity
Oberlin, Ohio
The architect of the plan is David W. Orr, a professor of environmental studies and politics at Oberlin College. More than a decade ago, he helped inspire a "green building" trend when he dreamed up the Adam Joseph Lewis Center for Environmental Studies, which remains one of the greenest college buildings in the country.
Slouching toward a bananapocalypse?
by Heather Smith
11 Nov 2011 1:00 PM
For years journalists have warned of imminent banana extinction. "Get bananas while you still can," wrote New Scientist over five years ago. "The world's most popular fruit ... is in deep trouble," it went on to say, adding that the banana would probably be out of supermarkets by 2013, and would soon exist only in backyard gardens and other places the Panama Race IV, a pathogen taking out plantations in Southeast Asia, couldn't reach.
But today -- just a few years from the banana's supposed demise -- one can walk down the street and find bananas in the nearest corner store, hanging out between the cash register and the lottery tickets. What gives? Are we still heading toward bananapocalypse? Or has it been cancelled? And what can the banana tell us about the evolution of our global food supply?
by Heather Smith
11 Nov 2011 1:00 PM
For years journalists have warned of imminent banana extinction. "Get bananas while you still can," wrote New Scientist over five years ago. "The world's most popular fruit ... is in deep trouble," it went on to say, adding that the banana would probably be out of supermarkets by 2013, and would soon exist only in backyard gardens and other places the Panama Race IV, a pathogen taking out plantations in Southeast Asia, couldn't reach.
But today -- just a few years from the banana's supposed demise -- one can walk down the street and find bananas in the nearest corner store, hanging out between the cash register and the lottery tickets. What gives? Are we still heading toward bananapocalypse? Or has it been cancelled? And what can the banana tell us about the evolution of our global food supply?
Atmospheric rivers caused the UK's worst floods
YOU may not even know they are there, but their impact
is immense: huge atmospheric rivers that wind their way through the
skies have been linked to the 10 largest winter floods in the UK since
the 1970s. A study of similar systems in California suggests that such
floods could become more frequent and severe if greenhouse gas emissions
accelerate.
Atmospheric rivers (ARs) are giant
ribbons of moist air, at least 2000 kilometres long and several hundred
kilometres across, which move water across the mid-latitudes. They flow
in the lower troposphere, where winds with speeds in excess of 12.5
metres per second can carry as much water as the Amazon river. At any
given time, four or five ARs carry nearly 90 per cent of the moisture
that is moving towards the poles.
Commentary: Putting religious group's campaign against contraception into context
By Sarah Lipton-Lubet | American Civil Liberties Union
By Sarah Lipton-Lubet | American Civil Liberties Union
First marketed in 1960, the birth control pill
soon became the most popular form of contraception in the United States.
However, the pill was still not available to every woman who wanted it. Religious groups lobbied in favor of laws that banned all contraception, and it was not until 1965 that the U.S. Supreme Court ruled, in Griswold v. Connecticut, that the right to contraception was protected by the Constitution.
Today, virtually all sexually active women — no matter what their religion — have used contraception.
However, the pill was still not available to every woman who wanted it. Religious groups lobbied in favor of laws that banned all contraception, and it was not until 1965 that the U.S. Supreme Court ruled, in Griswold v. Connecticut, that the right to contraception was protected by the Constitution.
Today, virtually all sexually active women — no matter what their religion — have used contraception.
The Global Super-Rich Stash: Now $25 Trillion
In today’s astoundingly unequal global economy, banks can go either
of two routes — or both — to bag ever bigger returns. They can squeeze
the 99 percent with nuisance fees and penalties. Or they can cater to
the richest of the rich.
But both routes have bumps. The 99 percent can squeeze back, as they did earlier this month when Americans by the tens of thousands shut down their Bank of America accounts to protest the bank’s $5 debit card greed grab. And the richest of the rich? To cater to these fortunates, you have to first find them.
By Sam Pizzigati
Created 11/12/2011 - 2:58pm
Another
super-slick global financial analysis firm has just tallied how much
net worth is sloshing around in the pockets of the world’s most
spectacularly wealthy. So when will the time finally come to stop the
counting — and start the taxing?
But both routes have bumps. The 99 percent can squeeze back, as they did earlier this month when Americans by the tens of thousands shut down their Bank of America accounts to protest the bank’s $5 debit card greed grab. And the richest of the rich? To cater to these fortunates, you have to first find them.
Iceland’s New Bank Disaster
By Olafur Arnarson, an author and columnist at Pressan.is, Michael Hudson, a Professor of Economics at University of Missouri- Kansas City, and Gunnar Tomasson, a retired IMF advisor
The problem of bank loans gone bad, especially those with government-guarantees such as U.S. student loans and Fannie Mae mortgages, has thrown into question just what should be a “fair value” for these debt obligations. Should “fair value” reflect what debtors can pay – that is, pay without going bankrupt? Or is it fair for banks and even vulture funds to get whatever they can squeeze out of debtors?
The answer will depend largely on the degree to which governments back the claims of creditors. The legal definition of how much can be squeezed out is becoming a political issue pulling national governments, the IMF, ECB and other financial agencies into a conflict pitting banks, vulture funds and debt-strapped populations against each other.
By Olafur Arnarson, an author and columnist at Pressan.is, Michael Hudson, a Professor of Economics at University of Missouri- Kansas City, and Gunnar Tomasson, a retired IMF advisor
The problem of bank loans gone bad, especially those with government-guarantees such as U.S. student loans and Fannie Mae mortgages, has thrown into question just what should be a “fair value” for these debt obligations. Should “fair value” reflect what debtors can pay – that is, pay without going bankrupt? Or is it fair for banks and even vulture funds to get whatever they can squeeze out of debtors?
The answer will depend largely on the degree to which governments back the claims of creditors. The legal definition of how much can be squeezed out is becoming a political issue pulling national governments, the IMF, ECB and other financial agencies into a conflict pitting banks, vulture funds and debt-strapped populations against each other.
Regime Change in Europe: Do Greece and Italy Amount to a Bankers' Coup?
By Stephan Faris Friday, Nov. 11, 2011
The voice of the people isn't something the markets seem to want to hear these days. First there was Greece, the cradle of democracy itself, where early this month, the merest mention of a referendum offering its citizens a say in a series of severe austerity measures was enough to send the markets into a tailspin. The ultimate result: the collapse of Prime Minister George Papandreou's ruling coalition, the rejection of any notion of bringing the proposal before the people, and the installation of a caretaker government under the leadership of Lucas Papademos, a former vice president of the European Central Bank and, until earlier this week, a visiting professor at Harvard.
By Stephan Faris Friday, Nov. 11, 2011
The voice of the people isn't something the markets seem to want to hear these days. First there was Greece, the cradle of democracy itself, where early this month, the merest mention of a referendum offering its citizens a say in a series of severe austerity measures was enough to send the markets into a tailspin. The ultimate result: the collapse of Prime Minister George Papandreou's ruling coalition, the rejection of any notion of bringing the proposal before the people, and the installation of a caretaker government under the leadership of Lucas Papademos, a former vice president of the European Central Bank and, until earlier this week, a visiting professor at Harvard.
Richard Nixon’s Darkest Secret
Exclusive: In just-released Watergate grand jury testimony from 1975, ex-President Richard Nixon complained that his 1968 campaign was bugged by the Johnson administration. But there was little curiosity then – or now – as to why that surveillance was justified, reports Robert Parry.
By Robert Parry
Thirty-six years ago, as former President Richard M. Nixon dodged grand jury questions about his illegal wiretapping of political enemies, he briefly referenced a dark secret about his 1968 campaign’s sabotaging of Vietnam War peace talks, actions which President Lyndon Johnson at the time privately labeled “treason.”
Without providing that historical context, Nixon complained that he and his 1968 campaign had been victims of surveillance and wiretapping, too, as he tried to persuade Watergate prosecutors and the grand jury that bugging opponents was just part of hardball politics.
Exclusive: In just-released Watergate grand jury testimony from 1975, ex-President Richard Nixon complained that his 1968 campaign was bugged by the Johnson administration. But there was little curiosity then – or now – as to why that surveillance was justified, reports Robert Parry.
By Robert Parry
Thirty-six years ago, as former President Richard M. Nixon dodged grand jury questions about his illegal wiretapping of political enemies, he briefly referenced a dark secret about his 1968 campaign’s sabotaging of Vietnam War peace talks, actions which President Lyndon Johnson at the time privately labeled “treason.”
Without providing that historical context, Nixon complained that he and his 1968 campaign had been victims of surveillance and wiretapping, too, as he tried to persuade Watergate prosecutors and the grand jury that bugging opponents was just part of hardball politics.
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