Objective : A socially necessary work ....based.... transfer system

Socially necessary work SNW gets spelled JOB

The grave strategic horror of the 20th century welfare state
The transfer system was from domestic producers as producers to citizens as consumers

The real progressive system would keep it all
Intra domestic producers as producers

Nouse of magical place of origin or other
Partitionings into haves and have nots
No
barrier borders

Produce here and to that extent
you are in the transfer system

The ratio of job hours to age becomes the basis for the provisioning rate

The social contract requires full employment at all times
And well designed jobs for all ages and abilities

Bandh in amerika ?

the occ might think of building to one
the closest fore runner the immigrant jobster demo-strike

 April 10, 2006

 

build a milo reno cult ?

general strike !!!!!

Securitization is progress toward fully socialized capital

The argument runs like this if you can sell your equity why bother to intervene
in that firms decider stream?

Big publicly held firms are near sighted

And top management tempted by fraud and looting

Okay I get the incentive package reform for top management

But why worry about anything more ?

Managerial myopia .... private closely held and public corporations...studies suggest a difference in behavior

Closely held outfits invest more
And look further ahead

Public firms exposed to open markets in their equity
Tend to look only one quarter ahead

Cliche ?

That bit about investing more sounds in my ear
like a stone falling thru a bottomless well

Where's the plunk ?

Is there some sense in which a system of corporations all of which
Were public would in aggregate invest less then system of private firms ?

Invest here means not in securities or buying other firms up out right

But investing in real new production facilities


The whole game of social design of corporations seems pruned


Of systemic functions

Firms morph over time
Take on new forms

The whole system may require all the different forms to function sustainably
as it does

Too much reform seems to recommend running the broader evolution of the corporate form
In reverse


Why should it be a systemic virtue to isolate parts of the social capital ?

If private closely held firms seem to pounce faster on opportunity
Is that locally good but perhaps globally inferior
Surely the social capital needs to flow where it finds highest use

Or is that not about equity capital but credit funds
And is the law of equity capital to control with the smallest share of invested capital possible

Once founders cash in why out equity share in that corporations assets rise ?

Concentrating the gain from a well chosen path seems preferable

Given the top management class takes de facto ten percent of earnings
Why not the rest all be debt
Other then the need to easily transfer control over " the residual"

Equity is the handle on the suit case



Securitization of ownership capital
surely is that much closer to full socialization

Anarcho solitarists and the categorical imperative

What if everyone wanted to be like stirner

Thesis: in the absence of exploitation and antagonistic classes the civic sector might not fail in it's attempts to find non state solutions to various market failures

Think about a complex of memes derived from say
Stiglitz and Shelling
What market failures those two unearthed
Might require nothing less then states to resolve ?

Simply Suggesting we locate the boundaries of effective free individual choice
Misses all the voluntary hierarchies of civic society
Rules are not state laws
Coercion is far broader then police and court action

Libertarians and civic failure

We here lots about market and state failure
And the symbiotic not just the predation and parasitism of that interaction

What about a broader failure then mere marketplace failures
What about general failure of The civic sector ?


We may consider the state as the civic sector operating by different means

Failure of the civic sector might explain the states necessity

Given rampant market failure
Let's look at other non commercial civic failures

Example close to the bone:
Many market failures might be resolved by civic action
But this fails

turing's simple morphogenetic model verified

".. an activator and an inhibitor work together, a pencil and eraser."

" The activator’s expression would do something—say, make a stripe—

and the inhibitor would shut off the activator.

This repeats, and voilà, stripe after stripe after stripe."

profits soar but where's the revenue ??

"Over the last few decades, U.S. corporate tax revenue plunged to historic lows, falling from about 6 percent of GDP in the 1950s to barely more than 1 percent of GDP today."

 "....while corporate profits have rebounded to their pre-recession heights, setting a record in the third quarter of 2011, corporate tax revenue..."

 

"..., corporate taxes measured on a 12-month basis were still under $200 billion in November. That is well below a precrisis peak of about $380 billion and still far below the government’s fiscal 2012 target of $332 billion."

"Corporate tax revenue has plummeted for several reasons, but one of the big ones is the growth of deductions, loopholes, and outright tax evasion .... 30 major corporations, in fact,paid no corporate income taxes over the last three years, while making $160 billion in profits."

 

profits are now in full recovery.....handsomely so !

thiasos

"It is actual or potential balance of payments crises which have been decisive in breaking the habit of Keynesian demand management at the national level"

a cripps-o-gram circa early 80's

throwing in the towel here

a bad moment indeed
yes eng-soc labor was checked when in power
thru the 60's
by forex " idiocy "

and yet once broken free in the 70's
with the burst of class struggle  thru wage risings

this ! ...this ...is the pwog sum up ?? thatcherism uber alles ... indeed

ungodley ness is just behind cleanliness

US politics).

the godley break out

the private sector balance  revealed

gross to net move in canada flips share dynamic

"... labour share as labour compensation divided by NDP"

( GDP less CCA*, taxes less subsidies, inventory valuation adjustment, and statistical discrepancy)

 "the labour share rose between 1980 and 2005 from 70.0 per cent of NDP to 71.1 per cent

 while the capital share fell from 30.0 per cent to 28.9 per cent of NDP. "


accounting trick warning

be ready for this pinkos

* CCA =>  capital consumption allowance

why the median wage average productivity divergence ?

measurement issues

rising earnings inequality

 falling terms of trade of labour
(the relationship between the prices workers receive for output and the cost of living)

 falling labour share


"In the U.S. non-farm business sector, real median hourly wages rose at an average annual rate of 0.33 per cent between 1980 and 2005, while labour productivity increased at an average annual rate of 1.73 per cent over the same period."


 The gap was therefore 1.40 percentage points per year."

" Rising inequality, captured by the difference between median and average real hourly compensation, was the most important explanation for the gap, explaining 45 per cent. "


"Labour‘s terms of trade, defined as the difference between the rate of growth of the price of output and the rate of growth of the price of consumption goods, contributed 23 per cent of the gap as the GDP deflator rose 2.99 per cent per year, while the CPI showed price inflation of 3.31 per cent. ....most (85 per cent) of the deterioration in labour‘s terms of trade  stemmed from the quality-adjusted prices of private investment rising much less quickly than the CPI. The slow growth in the quality-adjusted prices of investment goods resulted  from very slow growth in the prices of non-residential structures and real declines in the prices of equipment and software "

"The increasing importance of supplementary labour income explained 12 per cent of the gap between the growth rates of median wages and labour productivity."


" the decline in the labour share of GDP from 65.0 per cent in 1980 to 61.3 per cent in 2005, accounted for 17 per cent of the gap between the growth rates of median real wages and labour productivity. "

graphs that make my gut wrench

 





so where does this take a wage class advocate !

the chains of value added are so indeterminate
so much edgeworth slack in the various barter  boxes

not to mention what in hell is a "return to capital"

ya ya

the gros surplus value has a certain meaning
err in a closed system
like market earth

at any level lower then that

nope !!!!

----------------------

now a refined prufrockian scepticism is a mere luxury

 and the goal of the wage class is  get a  macro wage
that is at the feasible "rate max"


share max ?

might be an accounting trick

so on the national  macro level
 just push push push  higher rates less hours
 till aggregate surplus vanishes

forecasting as tele-o-logic make believe

and yet the distribution of the  impact is all too clear

once again "the real rotten core".... fuggled with a lousy graphic

IMF):

 

 

this is of course dumb without the size of the economy too

 

that modest  % of gdp  CAB surplus germany  ran over the measured interval

 

big bucks

 

but

luxembourg  ???

comes the owl at dusk...

just as the trend of 40 years begins to  reverse we get a flood of insight


"..A new  --NBER--  study ....shows that the rapid rise in low-wage manufacturing industries overseas has indeed had a significant impact on the United States. "

"The disappearance of U.S. manufacturing jobs frequently leaves former manufacturing workers unemployed for years, if not permanently, "

".... creating a drag on local economies
and raising the amount of taxpayer-borne social insurance
necessary to keep workers and their families afloat "

file this  under

"put  some numbers to  it ":

"A city at the 75th percentile of exposure to Chinese manufacturing,
 compared to one at the 25th percentile,
 will have roughly a 5 percent decrease in the number of manufacturing jobs
 and an increase of about $65 per capita in the amount of social insurance needed"

 ".. $65 per capita wipes out one-third of the per-capita gains
 realized by trade with China, in the form of cheaper goods"
-----------------------------------------------
what's  obvious thru the front windshield
becomes conventional wisdom
 only in the rear view mirror

menzie flies high

Markups, Competitiveness, and the Bush Tax Cuts and Deficits
The Administration released the annual Economic Report of the President on Friday. Many topics were covered, but here I’ll remark upon a few issues, motivated by several graphs.

First is price markup over unit labor cost. The interesting trend since 2001 has been the rise in this variable.

" From this graph, one would be hard pressed to find American business in terrible shape. Productivity has increased, labor compensation growth has been modest, so that it’s obvious where profits have come from. "


"This also means (to me) that there is substantial space for rising wages to be absorbed without a commensurate wage-price spiral.....rapid productivity growth combined with slow compensation growth has improved American competitiveness. Nominal dollar depreciation over that period emphasized that improvement."

see the eye pop in recent profit bling

"During the recession of 2007-2009, the real aggregate annualized value of wages and salaries declined steeply, falling from $6,760 billion in the fourth quarter of 2007 to $6,424 billion in the second quarter of 2009, a decline of $336 billion or 5%.


 Further reductions in these wage and salary accruals took place through the first quarter of 2010 before reversing course and rising by $124 billion or about 2% by the end of the year.

  This implies that aggregate wages and salaries in real 2010 dollars failed to grow over the first seven quarters of the recovery, declining by $22 billion or .3%, the first ever such decline in any post-World War II recovery."


corporate profits (before tax and including capital consumption allowances and inventory change)

 Annualized corporate profits in constant 2010 dollars rose very strongly in the first six quarters of the recovery, rising from $1,203 billion in the second quarter of 2009 to $1,667 billion in 2010 IV.

". Between the second quarter of 2009 and the fourth quarter of 2010, real national income in the U.S. increased by $528 billion. Pre-tax corporate profits by themselves had increased by $464 billion while aggregate real wages and salaries rose by only $7 billion or only .1%. Over this six quarter period, corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income."

"the first six quarters following the end of the 2001 recession corporate profits captured 53% of the growth in real national income

. In the first six quarters of recovery from the 1990-91 recession, corporate profits experienced no growth

 on average corporate profits generated  30 per cent of national income growth during the recoveries from the 1981-82 and 1973-75 recessions.


.
"The absence of any positive share of national income growth due to wages and salaries received by American workers during the current economic recovery is historically unprecedented. The lack of any net job growth in the current recovery combined with stagnant real hourly and weekly wages is responsible for this unique, devastating outcome."

Why the eurozone is not a united states of Europe

When the uncle 's transfer system on balance
Takes from one state and gives to another it's just the stabilizing equalizing compensating
That makes the whole in the long run more then the some of it's states

In the euro zone such a transfer is from nation to nation
is discretionary and gets called aide

The US gets a bum rap from the euros about our meager transfer system
They like to base this on white racism etc

it's Just the conflicts between nationalisms
as the wanna be united states of Europe is finding out

Equalization versus liberation

There's a critical path here how wide may vary over any one course and between
Different national courses

But the split Germany experiment suggests neither is as basic
as material improvement in particular relative material improvement

Modern class self- consciousness is in part a product of material stagnation
Of the job class and ...and it's relative falling behind the upper rungs
Of it's own exploiter class

National consciousness obviously comes from cross national comparisons of peer nations

Germany nicely intensified the national consciousness of east Germans by making their national rival the other " 3/4's " of their own nation

Even elites stampede

The notion deeply embedded in the Madisonian design of our government
Among other hog ties
Contrived to retard swings of opinion and preference by scattering terms of elective office

No one election mandates for simple majority
The Brit system produced the post war labor government with a single election

This essay in formalism is meant to reveal a slightly divided mind

in GDR"teachers generally were staunch supporters of the GDR, but the author does not explain what was cause and what effect"

schooling as a sort of pre emptive  version of a "re education kamp "


were teachers screened
or " did they choose this profession, in part at least, as a type of political act"

snipperts from a short retell of the account in vic grossmann's memoir

.

"...seemingly inherent in the system, was the nature of the GDR’s political life, which the Communist Party monopolized. ....individuals’ political differences with the regime—in thinking as well as in action—potentially entailed the withholding of advancement, privileges and rewards. The result was, of course, a virulent brew of dissembling and resentment......As a politically active Communist during the McCarthy Era, Grossman knew that ..."

".....the benefits of American-style democracy were largely limited to those who accepted the basic premises of the capitalist system.....and yet the curtailment of American civil liberties in this period did not seem to damage the capitalist system.

 " However, the unraveling of the socialist system in the GDR and its ultimate dénouement was organically tied to the absence of democracy."

" Ultimately, the lack of genuine mass participation in its political life led to almost universal acquiescence in the demise of the GDR, and consequently of socialism, by those for whom it was intended—and whom it frequently did in fact benefit. Over time, most of its citizens had withdrwn into a private world of family and immediate community.....

there is a great nostalgia among former East Germans, including Grossman, for what many now describe as immensely satisfying society..."

 "the largest group of people in the GDR, albeit somewhat grudgingly, had become accepting of a system that had become familiar and which provided definite advantages."
 

"However, the nature of the system promoted a mindset where a specific setback or disappointment—a fight with a supervisor or the inability to obtain a better apartment—led to renunciation of the entire system. After all, the point that the GDR was socialist was constantly put before people, whereas in the West, similar experiences rarely caused individuals to question capitalism."

".. there was no apparent class struggle in East Germany, so that the endless anti-capitalist appeals sounded hollow and unconvincing."

"...this denial of democratic rights... in turn alienated and pacified the general population and corrupted those who held or sought power, thereby creating the conditions for a massive implosion."

" Yet, the establishment of democracy within a socialist society seems to depend on a number of unlikely occurrences."

" Among these is the acquiescing to this system by those (such as managers and professionals) who could gain more under capitalism"

" and the acceptance by highly skilled groups of workers (such as electricians and master craftsmen) of less remuneration so that overall levels of income become more or less equalized"

a guy i can love

but its still mostly about automation

"During our sample period, offshoring still was not a primary driver of aggregate employment changes in U.S. manufacturing. "



surprise surprise
its an NBER op :

at any rate might as well see the damn statistics
as in there are lies damn lies statistic and damn statistic

"..After decomposing the 17-percentage-point decline in U.S. manufacturing employment at home and assigning different causal factors to the decline, we find that the usual suspects account for only a tiny fraction of the observed decline. Greater import penetration accounts for 2 percentage points; lower and falling real wages in low-income countries where U.S. companies expanded their offshore operations only account for 2.4 percentage points of the reduction in U.S. manufacturing employment. We show that 12 percentage points out of the 17-percentage-point decline in U.S. employment can be attributed to the falling cost of capital. As the price of investment goods fell relative to wages, companies replaced people with machines. "

notes:

as  above
  please focus here
this was a NBER paper

translation
it is tilted pro MNC
and not about to indict the sponsoring "elements "
till the deed is done

--------------------

i think clear papers like this btw suggest we are entering a new era when de industrializing the north american continent will taper off
and re industrialization slowly crawl up
these are multi decade trends here
and places like NBER managed to keep these long trends obscure through out the goden years of MNC led deindustrialization
------------------
so why the reversal ?
one its time to expand markets inside east asia
and
the 30 year clobbering of industrial job forces has produced
a brand new wage environment
or at least is well past worrying about
the realizationn of that "happy " outcome
the treaty of detraoit is effectively abrogated
so lets re up the roduction system
slowly of course ever so slowly

aggy quant estimation attempt ;" a 10 percentage point reduction in wages in low-income countries is associated with a 1 percent reduction in U.S. parent employment"

now summon a properly calibrated forex fiddle and ....
you can generate the last 30 years of hirky jerky ziggy zaggy
 de industrialization of the north economy

" In 1982, only one out of four employees of U.S. multinationals was located offshore, and over 90 percent of those employees were in industrial countries. By 2007, the share of offshore employment had reached 44 percent, and the majority of those jobs were in low-income countries"

and to think
the cosmo corporate elite
play on this spherical game board
with pieces
 that have largely
self made "moving rules "

meaning ??


the last 30 years

" workers in low income countries appear to be substitutes for U.S. workers in several highly visible industries, including computers, electronics, and transportation.
 following up with this trend

"... over the past two decades imports from low-wage countries have more than doubled
......different incentives for foreign investment lead to different organizational structures, which should produce different degrees of substitution between employment at home and abroad. Horizontal multinationals (H-FDI), defined as firms that produce the same products in different locations, are primarily motivated to locate abroad by trade costs. For H-FDI, investment abroad substitutes for parent exports, and foreign-affiliate employment should substitute for home employment. Vertically integrated enterprises (V-FDI) are motivated to locate different components of production in different locations by factor price differences. For V-FDI, sourcing different stages of production elsewhere can be complementary to employment growth at home."

btw
 there you have a specimen of the perfect analytic result

utter ambiguity as to aggragate impact

but lets hustle ast that debating point....

to a forecast:

 i suspect we will see
--- after the yellow track here in the low wage product
  catchers mitt couintries--

a signifigant reversal of structural flows
to follow the change in MNC target output markets
and  platform locations

faster  internal sector expansion down under
out of existing and augmented  MNC "holdings"

plus
a slow re industrialization "at the extensive margin "
here in the economic north

what might we produce if had a go at full throttle macro injections

model choice here
strikes me as about justifying pre existing policy positions
positions based on objectives themselves
rooted in "positional allegiances"
call them bald rationalizations or attempted trumping moves
reality i suspect is
we have a fantasticaly elastic production system here
proved best by the interval 1939 to 1944
just look at germany and the US  during that evil war

elastic because the ultimate factors of production
people and raw commodities
are easily repurposed
and chronically under utilized
and bottle necks transient
because specialized intermediate fixed inputs
are in the end
once targeted
easily augmented or substituted

...

btw
in this context today
talk of large wide spread output bottle necks
 right out there up ahead over the demand horizon
is a disgrace to reason

if our purpose is mass RE employment
and for the job class what else ought it to be ?

then
generate the demand and the system will find
the products the machines
 and
the labor to produce them
or ...and here is the or
that kicks in .....we simply will import them !!!

yes that certainly reduces the efficiency of the multipliers
and adds to the potential external nominal debt
but these are matters we can deal with
in the goodness of time and by multiple means

---think recycle into a real shrink thru product and wage inflation ---

...

bill vickrey and abba lerner
zeroed in on a far more important observation
the capitalist system requires excess capacity to operate effectively
ie profitably ..at all times...throughout the cycle

 if the capitalist system is to operate   sustainably
and without a class crisis
we will always have excss capacity
and as we approach the limits at the top of the cycle
either "the state "
will pre empt  continued booming
  if  the hi fi system alone can't hault the expansion  by its own spontaneous cycling
ie  contraction will "emerge  or be contrived
thru  credit flow rate reduction

if the hi fi system doesn't spontaneously hit one of its minsky moments
and it doesn't too often these decades

i think we can see post 1945
a distinct preference here in the economic north
  for contrived contractions
over big wallys
but still ...look out
fall 08 !!

that's why the fed is indy

to cut off the booms b4
either wages go wild
or
imports cause a forex crisis

ie the bottle necks are
 "institutional"(credit availability )
not
 physical (plant and equipment )
or
mass mental (hu cap ---know how )

vintage larry keinism

If. Uncle taxes households with a high marginal propensity to save out of income
and transfer the proceeds to households with a high marginal propensity
to spend out of income
You can increase spending without changing the fiscal budget balance
And if domestic investment by firms
is in some way positively related to final household demand
You can induce higher investment
Larry Klein I think in the golden 40's was keen on some way to implement
this transfer
Much of post high 60's macro has been about destroying this simple mechanism
At the theoretical level
But its never failed empirically because it has never been tested

Of. Course one can well imagine. Both the target of the tax and the various claimants to the payments could create a very complex and
well blocked passage way

Just how much could the compensation structure be altered...

And still produce the equivalent of today's social output

Of course equivalent would have to be carefully defined and since production and distribution can't really be separated without significant alterations to both ...


But too often the market value of an "earned " income is tacitly assumed
to be justified
By some higher wisdom vested in the radically free play of markets
These theoretical pure merit outcomes have long since vaporized
Under the scrutiny of micronomical analysts
Failure to optimize and justify outcomes is everywhere
That being Amazing enough in itself

Imagine vesting this authority in our real market outcomes



Just comparing relative hourly compensations for various activities across borders and bodies of water shows the range in the edgeworth hyper box
The open arc of the n contract curves to be ... if not huge then certainly
Well beyond ignorable
And hardly the bed rock for some socially contrived
tax and transfer based system of redistribution

moving from one rep agent to n

is that so hard to prefer ?

nk and them moronic mentalisms

when building models
  implanting simplifying mentalisms
may be  far  worse
  then building in a few  simple mechanisms

decoupling wages and value added

 "First, Figure 1—‘net decoupling’—is based on an average measure.  As a result, it captures the total compensation going to workers in the economy divided by the number of hours worked. By contrast, Figure 2 is based on a median, specifically the hourly wage of the middle worker. The two therefore diverge when the average is pulled up (and the median isn’t) when pay grows very strongly at the top, as it has in the past ten years.

Second, Figure 1 looks at total compensation rather than just wages. This means it includes things like employer pension contributions and employer National Insurance Contributions (NICs), which Figure 2 doesn’t. As such, there’s a reasonable argument that Figure 1 is a better gauge of the complete rewards derived by workers. Again, recent years have seen a widening gap between these two measures. As non-wage aspects of compensation have grown significantly, compensation has grown faster than wages.

The third difference, and the most technical, is that the two measures are calculated using different inflation indices. The first, used for net decoupling, is calculated using the GDP deflator, while the second uses the Retail Prices Index (RPI).  What’s the difference and which one is right?  The answer is that it depends what you’re analysing.  If you want to compare productivity and pay fairly, you should use the same deflator for both—that is, the GDP deflator. But if you want to know how the purchasing power of pay is changing over time, you want to use the RPI. These two measures have moved apart very slightly in recent years. As the paper acknowledges, this trend is hard to interpret."

quick plan v slow think

learning is slow thinka grope and a crawl

central plans  can pull off a leap

so comparative dynamics
 that looks at one system
that requires  emergent learning
ie trial and error  n steps

versus another that can leap to the conclusion in one step

well that's not quick think versus slow think

its  core  path is toward the rational either way
but one is fast and trick or treat ish
the other slow and burkeanly reassuring

give me the leap

austerity expansion is the price we pay for these NK models .......

.....with their expectation based
mental mechanics

if firms had deciders that thought a certain way
all at once
some really kool things become possible

and if you want to fool people
these hopes get brightly lit up

so more sordid real aims can slip thru
like pruning the social transfer system
and reducing the popular capacity to resist corporate dictates


the squeezing down of the social transfer system
the reduction of social payments
makes the job class nearly helpless
when fighting the private job and credit rationers
there is no income or credit
except thru your jobholding

occupy represents a symbolic rejection
of wall street dictat
real rejection would require a material base to exist for long spells
without a full time job
living room for the non corporate exploited

origins of the yellow flag moment

how can we explain the  collective  global certification
of oecd "go slow"

sometime during '09 ??

or how can a striking emergent outcome
look like and feel like a conspiracy

doctor ben's way is not the way

doc ben's way
was great
if all you want is to preserve and protect the existing wall street octopussy

notes on romer and moneatry policy at the zero bound

an inspiration to class founded thinking



some points on romer:


she makes a big fuss
about quantitaive easing and the use of monetary policy at the zero bound
the so called liquidity trap
better and more explicitly called

the for profit credit trap

she suggest by implication
these important distinctions

the austerian expansionists 
fail to account for a stubborn reality resistent to their clavinist bromides
because they over look if not fail  to  consider
the impact of policy on the value of  existing debt loads

lowering  the expected nominal interest  rate by squeezing
down uncle's expected  borrow path
actually increases the real burden of existing debt
off setting  reduced expected  future costs  of carrying addition debt
ie new deb used to finance  spending on additional plant and equipment

 there is a negative wealth effect/credit constraint effect
 on all  debtors that use existing balance sheets to collateralize loans


chrsity wants to use a price level target
 to anchor higher inflation expectations
great ..if its effective
ie if the mentalism posited  exists
it oughta work she claims
much as going off gold did in the mid 30's
--more prperly devaluing after pledges never to devalue ---
a regime change
that would among other things lower the expected debt burden of existing debt
ie
a postive wealth effect on existing debtors
as their real assets ie produced assets have a higher expeted replacement value
thru higher expected price paths for output
i higher product  inflation and of course possibly higher wage  rates
that increases the households expected income and the credit worthiness of lending against that households human capitals'
 "expected lease rates"

i hate these sky high abstractions'
but you must get the gist


increased spending comes with a romer move

not so with a rubin  move
ie an austerian move

the key is to think about product price moves
in conjunction with interest rate moves ie  nominal rate moves

to determine the real rate on new debt
and the real and nominal value of existing debt
the real value is  itself  just the ration of two nominals

the numerator the interest  rate
the denominator is the nominal "product price level "

the direct approach is to do what will move the expected trend
in that denominator  price level
relative to the expected trend in the numerator
 nominal rates of interest

.........

where romer falls away into abstraction
where precisely
the increase in interest rate sensitive spending comes from

to get the kick up in spending requires more then just a reduced
market real borrowing rate
there must be an increase in  profits and or wages not just to increase income

and expected perminent firm or household income

but also  firm and household credit worthiness

in a credit basec economy

  margin spending is always credit based spending

-----------

obviously

the expected return on  spending out of income

 in future periods versus now

may or may not be borrowing versus lending rate sensitive

 but may also --in credit constrained cases --

be impacted by changes in an independent shock like change

  in  risk sensitive delinquency  and default noticing credit worthiness  

------------------------------------

human capital is the real wealth of job class folks

no the value of their house lot

lot value is of course collateral borrowing

but the credit constraint bites when lot values are lowered

by a convulsion in the credit markets

only pre existing or coincident expectations
of a heating up  in the  job market

can set off the lending to job households

that funds their increased  spending

most basically

RE EMPLOYMENT

the mentalism of decider expectations

needs a real out there  mechanism running along side

enter fiscal policy
or  in theory

a sudden loosening of credit constraints

a loosening
NOT based on a rise in expected rates of return
or reduced expected rates of delinquency and default

if you want to only use monetary ie credit policy
then you have to make  uncle do massive counter cyclical lending

ie use a crazy loan qualification mechanism

the fed can't  simply liquify and solventize
the existing "private"
credit institutions
ala gentle ben's way  

............

since firms that are credit constrained exist
firms ready to spend out of  new loans if they could qualify

as would ...of course... millions of credit constrained households

there is credit demand out there lots of it

but only uncle can sensibly take the risk involved in loaning to them


in fact uncle oughta be the ultimate risk taker at all times
the risk taker not just of last resort
nor the final holder of risk
but the initiator the originator  of risk itself
in certain social  improving sectors

nationalizing risk
was not the folly of the recent debacle

the folly was not clawing back  form private hands
what was looted and thrown away
mostly thru that sublest of frauds
care less negligent gambling

nra was a very cloudy indistinct attempt to use a mark up mechanism to lift the price level without altering the inflation trend line long term

a series of one time lifters

obviously a compulsory  mark up market could accomplish this
simply directly accurately and without  uneven bargained prices
 and thus without that system's far worse micro distortions

 operating with a rising  floor not the spontaneous motion
  that operated like a lowering ceiling

chris on her "big paper"

" the changes in fiscal policy were pretty small in the Great Depression. So in terms of accounting for what helped to end the Great Depression, the fiscal response mattered but was not very important because it was so small."

she means the recovery interval '33 to '37 of course
not the real full recovery triggred by the arsenal of democracy post sept '39

"What I showed in the paper was that there was a very aggressive monetary response – not only going off the gold standard, as Temin and Wigmore discuss, but following up with a big monetary expansion."
okay
the Temin expectational move was going off gold ie liberating the monetary base


" It was probably the one time in US history when we had a monetary expansion that was orchestrated by the executive branch rather than by the Federal Reserve."

no we had one  from 43-51 as well

" In the mid-1930s a lot of gold was flowing to the US because of political tensions in Europe. Because we were back on the gold standard (but at a lower price for the dollar), the Treasury Department had the ability to turn the gold inflow into increases in the money supply."
okay now it was a devaluation not going off gold and an exogeneous safe haven flow
combining to allow easier credit
here called expanding the money supply
as if that were accomplished by a simple switch throw


as in 
" As a result, the money supply grew rapidly after 1934."

but that today hasn't led to aggressive spending just ballooning real cash balances

" You can think of this as a very early version of quantitative easing – which economists describe as increasing the money supply even when interest rates are already at zero."

but chrissy what did the executive branch do


"I showed that this monetary expansion affected real interest rates by ending expectations of deflation."
note we're talking expectations of future real interest rates here

" In the data, interest-sensitive spending – such as business investment and consumer purchases of durable goods – responds to this fall in real interest rates. Interest-sensitive spending was a major engine leading us out of the Great Depression."

chrissy is relying on the same formal errr ..."mechanism" ..no mentalism
 as the austerian expansionists ..no ?

the austerians argue fiscal budget tightening moves lead to lower expected or anticipated reral  rates
ala bondage bobbly rubin
--though bondage boy was talking lower real because of lower nominal
where as chrissy is talking lower real because of higher inflation

i hate to say this but
maybe here is the rub

if we look at  the  re value of the existing debt jacket
there's a  difference  here

existing bonds in bobby  R's  regime change go up in nominal and real value

but
   down in nominal and real value  in chrissy's regime change

revaluation of the existing bond stock or devaluation ??

part of the recovery is lifting the burden of existing debt




"My study was one of the earlier papers to talk about whether monetary policy can be useful at the zero lower bound."

" I argued that absolutely it could be. "

"I think the Great Depression provides the best evidence we have that more aggressive monetary policy can help us to recover faster, even in a world of very low nominal interest rates"

wjhat are CR's parallels in todays driving
  for devaluation
in particular
removing the pledge to stay as good as gold
 and an nra policy of lifting prices ie administered  inflation

" I firmly believe that the stresses on the US economy in 2008 were much larger than those in 1929 and 1930. So why has this recession, as bad as it has been, not been a second Great Depression or even worse? I think the answer is a much better policy response."

"The bottom line is that the Great Recession showed us that we have effective tools to fight a terrible downturn. But we also have much to learn about how to use those tools more successfully"

gentle ben's license to intervene

that marks  a new qualitative stage in central bank activism

ben bought in all the markets he chose to buy
and bought deep..... if he so chose

his counter part in 1930 as pivot master
  of global credit flows
was good old crank monte norman
who lacked both the balls and the clout

ben does indeed look like an improvement over monte

---------------

but here's chrissy
"we learned from the Temin and Wigmore paper ... one way out of a recession
at the zero lower bound is by changing expectations"

"a regime change ...a new day "

as in ?

".. targeting a path for nominal GDP. If the Fed adopted such a nominal GDP target, they would start in some normal year before the crisis and say nominal GDP should have grown at a steady rate since then. Compared with that baseline, nominal GDP is dramatically lower today. Pledging to get back to the pre-crisis path for nominal GDP would commit the Fed to much more aggressive policy – perhaps more quantitative easing and deliberate actions to talk down the dollar. Such a strong change in the policy framework could have a dramatic effect on expectations, and hence on the behavior of consumers and businesses."


  expectations management
my my

the duchess of pop over quotes e cary brown and confirms the stag sitz krieg at the fed

 “Fiscal policy....seems to have been an unsuccessful recovery device
 in the ’thirties – not because it did not work, but because it was not tried.”
quoting  e cary brown

gentle ben's actions to save the "credit system"

"there was real strain in financial markets starting from late 2007, with the meltdown in subprime mortgages. The Fed worked very hard throughout 2008 to mitigate the consequences of falling house prices and credit contraction. They were very proactive. Then when the crisis hit in the fall of 2008, the Fed was essential in helping to prevent a much more catastrophic meltdown. They kept the financial crisis from being much worse than it otherwise would have been. It's hard to second-guess them on that part of their response."


okay in other words all hands on deck all out to save our  credit system
from siezing up here and there and by pre empting such siezures preventing serious dislocations ie disrupted  systemic  counter party interflows
 ie keep  the internal moving parts from grinding each other to powder


but now she turns on gentle ben:

"Where I think you can second-guess them is once we got through the immediate crisis. By the fall of 2009, the financial system had stabilised but the rest of the economy was still reeling from the fallout and unemployment was heading up to 10%."
 wait  ..the fall of 09 ..
try the spring of 09
at any rate


" Instead of further aggressive moves to encourage faster recovery, such as more quantitative easing or a bold communications policy, the Fed essentially took a breather. That was a mistake."

the why is of course left as  a mistake

when we all know by now
stop the contraction was a mission that had to be  completed swiftly
...once the convulsions began  ..and proved quite unexpectedly severe ...
but a recovery  ?

 that was to be kept  slow in the economic north
while the traders  of the south might zoom back
this to improve  north south  trade imbalances
and within the oecd  a second tier of double tracking
was clear policy
hence the teutonics v the piigs
and england too

uncle ?

as the global  core
uncle was allowed to remain half and half

and obviously efforts to retain the euro harness  required and continue to require
complex inner "workings" by the ECB

christie:
ohbummer  with his larry recovery act
  and ben's interventions
was better then hoover


 " this recession, as bad as it was, wasn't a second Great Depression. The policy response was much more effective and much more aggressive than it was in the early thirties."

which nicely doesn't answer the question
ya but was it better then the new deals first two terms ?

which saw as e cary brown concluded
full fiscal action

"never tried"

as pk points out

ohbummer's first term after the first 6 months of '09
macro poicy wise
looks a heel of a lot like fdr's second term

chrissy

"....what happened in 1937. Basically, monetary and fiscal policymakers got tired of all the exceptional things they were doing to help the economy, and they tightened policy too soon. The result was a “depression within a depression” – a big downturn that sent unemployment shooting back up when we were far from fully recovered."

well ohbummer did better then that too so he's like sorta better then roosevelt
but not because he faced only conditions half so severe
would he have run the  deficit needed to recovery from a  1933 economy ???

".. we learned over the first half of 2009 that the recession was much worse than almost anyone had expected, and that the recovery would likely be slow...I argued that it would be a terrible mistake to take away support for the economy too soon, and that in fact we needed to be doing more, not less, to help the economy."

she lost that debate

because the fuckers wanted a slow if fairly steady long  arching recovery
 here
in norte amigo

a recovery not led by a big fiscal deficit
but led by the MNCs and their  backers the wally boys

under de facto wall street rules
fiscal deficits are used to  stablize not  to recovery

why uncle oughta have a make good transfer system for lower levels of gubmint

revenues expending at "potential output rates " is a dynamic stablizer
obviously

budget balancing requirements oughta include a make good federal trend spending mechanism
tied to state & county & local   private sector  performance

even a bulky trigger system based on a nation wide metric would be better then the precent discretionary nonsense
'

as pk in full soap opera mode suggests

"we could put well over a million people to work... without any need to come up with new projects; just transfer enough money to state and local governments to let them return to doing the essential business of government.."
--cue string quartet --
"... like educating our children."

ah yes perseverate  perseverate   about   dah  schoolin  of  dah keeeeds

vulture funds and the piigs ..and Oblomovshchina

good topic for some one not  .....not .....more  lazy  then oblomov

is it simple ?

import what the world knows export what the world wants

the east is red .... capitalism

Ben Daniels said...

Here's my take (excerpted from page 5):
The partial privatization creates appropriate incentives for free exchange and demands efficiency gains from all enterprises, even government-owned ones, because of the impacts on share price and market capitalization that would result from mismanagement. The dual-track system of marginal privatization is utilized inthis context to create a robust market without eroding the core tenet of socialist public ownership.
http://www.scribd.com/doc/47752272/China%E2%80%99s-Social-Capitalism

Reply Thursday, February 16, 2012 at 11:17 AM

paine said in reply to Ben Daniels...

too much non precision
though capitalist at the margin has a nic set of
"possible "..."possible " meanings
---------------------
"the impacts on share price and market capitalization that would result from mismanagement"
no one has yet demonstrated equity markets provide a superior guidance system for corporate enterprise
particularly where funds can flow in by other means
law of corporate funding:
funds will be gotten if they can be gotten
by what ever means necessary
if both operate in a market system
the comparative dynamics of equity centered operations versus
flat out "state enterprise "
is at best ambiguous
----------------
the private margin of a state enterprise
can be as focused
as an efficient incentive plan
for top state enterprise
exceutive agents
on ownership forms
multi level state
and mixed state/public autonomous investment funds
strikes me as quite possibly superior
in many respects
including social welfare as broadly construed...
at least ab novo
then straight out at the extensive margin
private stock holding

Reply Friday, February 17, 2012 at 05:16 AM

paine said in reply to paine...

"Chinese economic actors had their hands tied by the liberal expectations of massive multinationals"
true and maybe sufficient reason
not to bother with private domestic equity markets

let the foreigners equity markets
scrutinize joint venture firm operations
" To seek the wealth of the world, China was forced to play by its rules"
in product quality i agree
in market adaptability providing the world's supply
might be vulnerable if itsa toys in ways
wheat wouldn't be
domestic market absorption capacity
is key to long run full output adjustments
to tradeable output
".. had to be a good global citizen "
that meant help MNCs profit max
a very qualified notion of good citizen
given the forex fiddles and other sources
of foreign de industrialization
" domestic master "
good citizen ?
are you teasing ??
"in order to continue receiving
the rewards of economic success"
- in exporet markets - exploitation max was practiced and is still practiced
relying on foreign consumers in foreign markets to regulate domestic production norms
unrelated to product quality is a joke
anti sweat shop agit prop
is finessed not substantively countered
only union action and community struggle inside china by the han majority itself
can effect real substantial job site improvements and cleaner greener production

job site assembly

the new free speech movement at the job site itself

   call one where you jobble along

join the  JLM


the job liberation movement

Commie Pinkos Endorse Obama Again

 

old news

but gotta love the cruft-agit-prop-art

happy trail to recovery

Part I: Recovery Began in June 2009

The Economy Has Been Growing, Since Mid-2009

Economic activity as measured by real (inflation-adjusted) gross domestic product (GDP) was contracting sharply when policymakers enacted the financial stabilization bill (TARP) and the American Recovery and Reinvestment Act. The economy has been growing for ten straight quarters, but the pace of recovery has been modest.

Private Payroll Employment Has Been Growing Since Early 2010

The pace of monthly job losses slowed dramatically soon after President Obama and Congress enacted the Recovery Act in February 2009. The trend in job growth in 2010 was obscured by the rapid ramp-up and subsequent decline in government hiring for the 2010 Census (which is now over), but private employers added almost 3.7 million jobs to their payrolls in the last 23 months, an average of about 160,000 jobs a month. Private employers added 257,000 jobs to their payrolls in January, while continuing losses in local government employment, led to a total payroll employment gain of 243,000 jobs.

Part II: The Recession Put the Economy in a Deep Hole

GDP Fell Far Below What the Economy Was Capable of Producing

In the fourth quarter of 2011, the demand for goods and services (actual GDP) was about $895 billion (5.5 percent) less than what the economy was capable of supplying (potential GDP). This large output gap, which is manifested in a high rate of unemployment and substantial idle productive capacity among businesses, is the legacy of the Great Recession. Congressional Budget Office projections show the gap closing slowly over the next several years as actual GDP grows only moderately faster than potential GDP.

GDP grew at a 2.8 percent annual rate in the fourth quarter.  A period of growth of 4 percent or better would be needed to propel the economy back toward full employment more rapidly.
(In its January 2012 Budget and Economic Outlook, the Congressional Budget Office introduced new estimates and projections of potential GDP that are lower than the agency’s previous estimates.)

Job Losses Were Unprecedented

Although employers began to add jobs in 2010, the economy has recovered only 3.2 million of the 8.7 million jobs lost between the start of the recession in December 2007 and early 2010.  As a result nonfarm payroll employment was 4.0 percent (5.6 million jobs) lower in January 2012 than it was at the start of the recession.
The economy still faces a long and difficult climb out of the jobs hole created by the recent recession.  The private sector created, on average, about 160,000 jobs a month in the past 23 months — a pace somewhat faster than population growth.  That has contributed to a decline in the unemployment rate, but much faster job growth will be needed to restore normal labor force participation.
The jobs deficit from this recession is much larger than those in previous recessions.  The economy would have to create an average of over 230,000 jobs each month for the next two years just to return to the December 2007 level of employment — and even more to restore full employment, since the population and potential labor force are now larger.  Economic growth will have to remain strong in the next few months to see a strong jobs recovery begin.

The Unemployment Rate Rose to Near Its Postwar High...

The unemployment rate rose far higher than in the previous two recessions and far faster than (though not quite as high as) in the deep 1981-82 recession. Technically, the recession that began in December 2007 ended in June 2009 as the economy began growing again, but unemployment remains stubbornly high.

...And Could Stay High for Some Time

Thus far, modest job growth and job creation has kept the unemployment rate high long after the end of the recession. This is similar to what happened in the previous two recessions, and does not resemble the fairly rapid decline that followed the severe 1981-82 recession.  Both the Congressional Budget Office and the Federal Reserve warn that unless the pace of economic growth and job creation picks up dramatically, it will be several years before the unemployment rate returns to normal levels.

The Share of the Population with a Job Fell to Levels Not Seen Since the Mid-1980s

The sharp rise in the unemployment rate and the increasingly discouraging prospect of finding a job caused a decline in the percentage of the population in the labor force (those either working or looking for work). As a result of rising unemployment and declining labor force participation, the percentage of the population with a job fell sharply. In January 2012, the labor force participation rate stayed near its lowest level since April 1984 and the percentage of the population with a job remained near lows that were last seen in the 1980s.

Long-Term Unemployment Rose to Historic Highs

During the recession, the share of the labor force unemployed for more than 26 weeks rose higher than at any point in the past six decades (the next highest was 2.6 percent in June 1983). Long-term unemployment remains a significant concern: over two-fifths (42.9 percent) of the 12.8 million people who were unemployed in January 2012 had been looking for work for 27 weeks or longer.

Labor Market Slack Reached a Record High

The Labor Department’s most comprehensive alternative unemployment rate measure — which includes people who want to work but are discouraged from looking and people working part time because they can’t find full-time jobs — recorded its highest reading on record in data that go back to 1994. In January 2012, this rate dropped to 15.1 percent.

The Number of People Looking for Work Swelled Compared with the Number of Job Openings

At one point at the beginning of the recovery there were 7 people looking for work for every job opening. That ratio remains high. In December 2011, 13.1 million workers were unemployed but there were only 3.4 million job openings, or about 4 unemployed workers for every available position — in other words, even if every available job were filled by an unemployed individual, 3 out of 4 unemployed workers would still be unemployed.

Part III: The Great Recession Would Have Been Even Worse without Financial Stabilization and Fiscal Stimulus Policies

GDP Would Have Been Lower Without the Recovery Act...

The Recovery Act was designed to boost the demand for goods and services above what it otherwise would be in order to preserve jobs in the recession and create them in the recovery. The Congressional Budget Office finds that the economy is still benefiting from the Recovery Act, which had its maximum impact in mid-2010; CBO estimates that GDP in the fourth quarter of 2011 was between 0.2 and 1.5 percent larger than it would have been without the Recovery Act.

...And Unemployment Would Have Been Higher

The Congressional Budget Office estimated that because of the Recovery Act, the unemployment rate in the fourth quarter of 2011 was 0.2 to 1.1 percentage points lower than it otherwise would have been and payroll employment was between 0.3 million and 2.0 million jobs greater than it otherwise would have been.

Post jobism on the rise again ?

The occ seems in part dedicated to the old counter cultural objective
Create by insistence
A post job sector
Built on social dividend programs

A form of citizen entitled social rentierism racing forward at full gallop


This challenge to the corporate exmax system
Strikes me as at best supplemental to job class direct action


Job site freedom of assembly as a constitutional right
Might just be a good step one

Declare the right as you act on it

Call an assembly

better to forgive a loan then give a grant

the transfer system grants the fully socialized credit system loans

that is all the difference
the pattern of each is a matter of integrated top down policy

after all my railing against cyclops macronauts...

under a state sponsored unitary dome " fully socialized commanding heights"  economy
could the cyclops  suffice ......why of course

the unitary dome has no default  or delinquency rate  barrier to net credit flows

in essence if the credit system simply absorbs the fluxing rate of default
and  of delinquency
ie can not and therefore will not seize up
where's the basis for a  prolonged self building contraction ?

the transfer system could continue as b4
simply now  allowing an increase of risk assumption
up to  a reckless infusion of high risk loans to maintain effective demand

  could ..is of course not..... should ....
--------------------------

this clearly  shows the liquidity trap is simply a credit tra

ie the loans that could power a return to full employment
simply will not be made given the existing institutional arrangements
ie private for profit credit provision

given a sudden partially self fulfilling jolt to the default and delinquency rates
a self building slow down  in additional aggregate outstanding loan value
...even contraction of  the value of the loans outstanding can occur
and not  self reverse because the  new higher levels of  expected default and  delinquency
themselves will not reverse
as this impacts demand  firms and households will adjust "down " current  spending
etc etc

none of this follows by a credit system designed to operate not pro cyclically
but counter cyclically and not simply that
but recognize a systemic higher default rate and growing delinquencvy rate is
precisely the  grounds for increasing the net flow of credit

" From the 1970s, there has been a significant change in the U.S. economy, as planners, private and state, shifted it toward financialization and the offshoring of production, driven in part by the declining rate of profit in domestic manufacturing"

rad-glib at its most lapidary

but where lies the truth

mired  in this
or  
  essentially outside this ??

repeat  piece by piece :


1)  " From the 1970s  ":  certainly the nixon era   marks a cataract
 an  interval of  " significant change in the U.S. economy"

2) " planners, private and state, shifted it  (the us economy )
toward financialization and the offshoring of production"

"financialization " ?

no "securitization " is the correct word

"financialization "occured in the late 19th century
nearly one hindred years earlier
with the emergence of
 the new general form of organization
the stock based limited liability corporation
and
the inter penetration of big merchant banks
and trustfied industtrial sectors

"offshoring " ?

well the use of that word can overstated the novelty and miss place
the locus of innovation

the key novelty
not multinational corporate activity
that too  has  its modern form roots in the late 19th century
with the resource companies and the trading and credit combines
the big shift came with multinational corporate (MNCs) mediate
 emerging market industrial production for export back tothe metroplitan "homes"
of these multinationals



"driven in part "

"by the declining rate of profit in domestic manufacturing"

falling manufacturing profits drove the MNCs to emerging market production ?

if so
 what accounts for tthis declining rate of profit  in manufacturing ?

rising wage shares ??

not in the numbers

nope

it was a matter of evolved opportunity

one might look at the transformation of global markets
from the relatively controled flows of the bretton woods regime to the  open flows
 of the flex exchange regime

" the persistent factors in state action are generally well concealed"

" I  find it useful to think about the fall in labor income in reverse, as the rise of capital income. "

" the Dow Jones index roughly tripled from 1980 to 1990

and then more than tripled from 1990 to 2000

While the Dow was basically flat over the decade from 2000 to 2010"


" large non-labor income was generated during the earlier part of the decade by housing prices. While many of us participate in gains in the stock market or the housing market in some ways, the bulk of those gains do tend to flow to those with higher income levels"

graphic class gothic

 

 

 

thar she spills !.....beans ahoy mates or "oops i spilt the concealed motive behind the stag party"

fed  outlet prez  dumb dumb bullhead is ox brained
no doubt about that 

but he has heard
the chimes at midnight
tolling on wall street

bully :
"one falls back on fiscal policy, which can surely do the job, but risks maintaining the current pattern of global imbalances."
let that sink in
this is about corecting glo0bal imbalance
but not the e3asy way by a forex adjustment
nope
by relative rates of growth in import absorption
and changes in relative wages
why ?
arbitrage profiteering must be preserved
until and unless relative wages gaps shrink from the top down
to where they are small enough
to drown in a bath tub
action plan?
avoid a dollar plunge against the east asian traders ?
no
so this "... concerns are overblown; after all,
so far the fears of a Dollar/current account crisis
have not emerged."
is pure misdirection
yes forex upheavels that
produce fair trade and squeeze out arbitrage gains from trade
must be avoided at all costs
but the real fear is a wave of populist driven protectionism
the fools substitute for forex adjustment
ie the fear is not a dollar plunge that no trans nat wants here or in china
but rather a exploding trade gap
just what a fast recovery here would produce
as bull head notices
i repeat
"...fiscal policy, which can surely do the job, but risks maintaining the current pattern of global imbalances"