What are you currently reading?

[Fëanor]

I recently finished this book and consider it essential reading for anybody interested in understanding the current economic situation, especially as it pertains to the U.S. ...

Thomas I. Palley: Plenty of Nothing: Downsizing the American Dream and the Case for Structural Keynesianism

The book was published in 1995 so it's a bit dated in a couple of respects, specifically Palley didn't anticipate the Iraq and Afghanistan wars, nor the decade of low interest rates that we have experienced.  However in my opinion, (I'm a layman, not an economist), his basic theses remain very sound.  His basic premises also remain perfectly correct:
 

   
• The overall level of economic activity is demand driven by demand, not "supply"
• The distribution of incomes between wages and profits is Dependant on the relative powers of labor and business which in turn depend on laws and treaties as well as fundamental economic factors
• The there are a great many "prisoner's dilemmas", as he calls them, i.e. many situations what seems to be in the best short-term interest of the individual enterprise, labor union, or country is not not necessarily what is best in the longer term for everyone.

As I construe, Palley's term "structural Keynesianism" is basic Keynesianism extend to take account of factors like globalization and the changed labor/business balance of power.

To mention a few, Palley's remedies include:

   
• Abandoning the current laissez-faire or "natural", neoclassical economic bias
• Greater government intervention in both fiscal and monetary policy; (as regards the latter, letting go the notion that the central bank ought to totally independent of elected officials).
• Firming up laws and policies the support organized and non-organized labor
• Renegotiating free trade agreements to include working conditions, consumer protections, and the environment.

For further reading, I recommend a couple of more recent books by Robert B. Reich, Supercapitalism (2005) and Aftershock (2008).  I regard Palley's book as a "prequel" to these.

... Amazon.com

[DavidRoss]

And to get a solid lesson in how government intervention in the marketplace actually works in the real world (instead of the fantasy world of theory), see Gretchen Morgenson and Joshua Rosner's Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon

[Fëanor]

And to get a solid lesson in how government intervention in the marketplace actually works in the real world (instead of the fantasy world of theory), see Gretchen Morgenson and Joshua Rosner's Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon

That looks like it might be a worthwhile read.

I don't need to be pursuaded of the negative effects of "oversized ambition, greed, and corruption", or of the inefficacy of government regulation in recent years.  I am will to get a more nuanced understanding though.

I suspect the the problem recently vis-a-vis government regulation has been having "the foxes in charge of the hen house".  That is, regulation per se isn't necessarily bad, but having bad, counterproductive, or even counterintentional regulation under Bush appointees was very bad indeed.  Let's agree, though, that Obama has done much to improve things.

[Daverz]

And to get a solid lesson in how government intervention in the marketplace actually works in the real world (instead of the fantasy world of theory), see Gretchen Morgenson and Joshua Rosner's Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon

So what's the market solution to the outsized ambition, greed, and corruption that lead to economic armageddon?

[eyeresist]

   

• Greater government intervention in both fiscal and monetary policy; (as regards the latter, letting go the notion that the central bank ought to totally independent of elected officials).

Not necessarily this, but at least more independent from business.

[DavidRoss]

I suspect the the problem recently vis-a-vis government regulation has been having "the foxes in charge of the hen house".  That is, regulation per se isn't necessarily bad, but having bad, counterproductive, or even counterintentional regulation under Bush appointees was very bad indeed.  Let's agree, though, that Obama has done much to improve things.

Yes, the foxes in charge of the hen house is precisely the problem.  In the case of our housing bubble and mortgage meltdown, the foxes took over during the Clinton administration with his policies leading the way.

Obama has done nothing productive in this matter.  He is a creation of Goldman Sachs, his high level appointments were damned near all fellows who brought us the mortgage disaster, and the most corrupt Congress in history turned out the Dodd-Franks Bill, named for its co-sponsors, two of the biggest crooks in government and both of whom were on the take from the mortgage industry and helped enormously to screw the public.  And the reform bill will benefit no one so much as the biggest financiers--like Goldman Sachs--to help stifle competition from smaller and less powerful, politically connected firms.

[DavidRoss]

So what's the market solution to the outsized ambition, greed, and corruption that lead to economic armageddon?

I would say that the market solution is transparency, complete disclosure, and an even playing field--with government regulation to punish the crooks and prevent their depredations, rather than to reward them and make their crimes possible.

This is the problem with big, excessively powerful government:  it ALWAYS gets commandeered by the crooks who use its power to their advantage.  Outsized ambition, greed, and their efforts to corrupt will be with us as long as human nature is so selfishly short-sighted.  The founders of our republic recognized that the British Parliament was the corrupt tool of powerful commercial interests more than 200 years ago, and they were smart enough to understand that great power and great corruption go hand in glove precisely because it is only the corrupt who seek such power.  Thus they took pains to severely limit the power of our national government.  The Articles of Confederation proved too weak to restrain impediments to beneficial commerce.  The Constitution remedied that by giving only the feds power to coin money and regulate trade--and by expressly limiting the authority of the federal government to the few powers specifically enumerated in the document--and by equally specifically reserving ALL other powers to the states and the people.

We're in deep doo-doo because we let the foxes take over the hen house in Washington, D.C., and they've turned the federal government into a protection racket that serves the highest bidders.

[Daverz]

I'm still not clear how smaller government will solve the problem of regulatory capture.  It strikes me as magical thinking.

[Mn Dave]

That poor, tragically mad & visionary drunk.  Revisiting that sounds sweetly nostalgic.

Now reading
[asin]B00495XRCK[/asin]
and enjoying it quite a bit.

Just saw this. Cheers. 

[Mn Dave]

Sweet. That was the run of Tarzan that I owned.

[DavidRoss]

I'm still not clear how smaller government will solve the problem of regulatory capture. 

Solve?  No.  As long as there are slimy people, slimy people will gravitate to influence peddling.  The point of limited government is to limit the scope of the problem and to contain its effects.

[ibanezmonster]

Read a couple of the dreams that I hadn't read before, though they aren't quite as good as the ones I've already read.

This is a good little book (only ~47 pages), and the inspiration to one of my favorite movies, Kurosawa's Dreams. It's a very ethereal read- some of the stories not having any sense of conclusion at all adds to this effect.

[Fëanor]

I would say that the market solution [to economic armegedon] is transparency, complete disclosure, and an even playing field--with government regulation to punish the crooks and prevent their depredations, rather than to reward them and make their crimes possible.

This is the problem with big, excessively powerful government:  it ALWAYS gets commandeered by the crooks who use its power to their advantage.  Outsized ambition, greed, and their efforts to corrupt will be with us as long as human nature is so selfishly short-sighted.  The founders of our republic recognized that the British Parliament was the corrupt tool of powerful commercial interests more than 200 years ago, and they were smart enough to understand that great power and great corruption go hand in glove precisely because it is only the corrupt who seek such power.  Thus they took pains to severely limit the power of our national government.  The Articles of Confederation proved too weak to restrain impediments to beneficial commerce.  The Constitution remedied that by giving only the feds power to coin money and regulate trade--and by expressly limiting the authority of the federal government to the few powers specifically enumerated in the document--and by equally specifically reserving ALL other powers to the states and the people.

We're in deep doo-doo because we let the foxes take over the hen house in Washington, D.C., and they've turned the federal government into a protection racket that serves the highest bidders.

When politicians become the lackeys commercial interests -- very much now the case in the US today -- that's when the foxes get put in charge of the hen houses. Bear in mind that the British Parliament of the 1770's was a far cry from being really democratic.  For a start only minority of males could vote and there was no secret ballot; people were easily bought or intimidated.  Of course there are a lot of so called democracies today where it's not a matter of who votes or for whom they vote, but who counts the votes that matters.

However when democracy is genuine, government is the protector of the people. To believe otherwise is to denigrate democracy itself and accept the powerlessness of voters to resist the duplicity and lies of the likes of Fox News and Rupert Murdoch. (Odd choice of names, "Fox", eh?) Personally I am loath to write off democracy.

Further, it's absurdly naive to believe that free play of so-call free market will ensure an equitable economic system -- in any case it would do nothing to protect the environment for instance. To further strip government's regulatory power is to throw the baby out with the bath water.  That's because reducing the powers of government won't return power to the people but instead deliver it all, finally, to the most crass of global commercial and financial interest who -- and you can believe this -- don't give a damn about the US or any other country.

[Daverz]

Solve?  No.  As long as there are slimy people, slimy people will gravitate to influence peddling.  The point of limited government is to limit the scope of the problem and to contain its effects.

I get it!  No police, no police corruption!  No doctors, no medical malpractice.   No journalists, no bad news. 

[karlhenning]

I get it!  No police, no police corruption!  No doctors, no medical malpractice.   No journalists, no bad news. 

I don't know if that's practical, but, man: how sweet it sounds!

[DavidRoss]

However when democracy is genuine, government is the protector of the people.

Huh?  This strikes me as naïve beyond belief.

To believe otherwise is to denigrate democracy itself and accept the powerlessness of voters to resist the duplicity and lies of the likes of Fox News and Rupert Murdoch. (Odd choice of names, "Fox", eh?) Personally I am loath to write off democracy.

Democracy is tyranny of the majority.  Fox and Murdoch are a strange lot to cite, as they are relatively recent arrivals on the scene and provide a much-needed but still insufficient counterbalance to a mainstream press that tilts far to the left.  Partisan Democrats sneer, but based on the little I've seen of Fox News its claim to be "Fair & Balanced" holds water--certainly in comparison with its lefty counterparts.  Interesting also that in a short period of time it has come to dominate its market segment--an indication of public hunger for a source of news, information, and commentary that's comparatively unbiased and reflects the values of mainstream America, rather than the values self-appointed elites try to force upon the public against its own best interests.

Further, it's absurdly naive to believe that free play of so-call free market will ensure an equitable economic system -- in any case it would do nothing to protect the environment for instance. To further strip government's regulatory power is to throw the baby out with the bath water.  That's because reducing the powers of government won't return power to the people but instead deliver it all, finally, to the most crass of global commercial and financial interest who -- and you can believe this -- don't give a damn about the US or any other country.

Who said anything about equitable?  The point of the market is simply that it works better than any other system of economic distribution yet devised.  Like Democracy, its far from perfect ... but the alternatives are all much worse.  If people don't properly value the environment, that's not the market's fault, but their own short-sighted stupidity.  As far as "delivering power to the most crass of global commercial and financial interests" -- that's exactly what the system we now have does.  It was bad enough when the cynical bastards in our government offered their services to whichever Americans paid the most, but ever since Al Gore started political fundraising from the Communist Chinese, political whores have been selling themselves without regard for national loyalties.

[DavidRoss]

I get it!  No police, no police corruption!  No doctors, no medical malpractice.   No journalists, no bad news.

Y'all love the strawmen.  It's not a binary proposition.  But then, you really knew that, didn't you?

[Coco]

Read a couple of the dreams that I hadn't read before, though they aren't quite as good as the ones I've already read.

This is a good little book (only ~47 pages), and the inspiration to one of my favorite movies, Kurosawa's Dreams. It's a very ethereal read- some of the stories not having any sense of conclusion at all adds to this effect.

Ooh, that looks great.

[Fëanor]

...
Who said anything about equitable?  The point of the market is simply that it works better than any other system of economic distribution yet devised.  Like Democracy, its far from perfect ... but the alternatives are all much worse. ...

In fact I do believe in the free market and also private enterprise as the main engine of the economy.  I that respect I'm like John Maynard Keynes himself whose aim it was to preserve calpitalism by compensating its weaknesses.

...
  If people don't properly value the environment, that's not the market's fault, but their own short-sighted stupidity. ...

In fact it is the market's fault.  The market values things for which the consumer is willing to pay.  It isn't overly simplistic to say that because we don't pay to breath, the market doesn't value the atmosphere.

...
As far as "delivering power to the most crass of global commercial and financial interests" -- that's exactly what the system we now have does.  ...

Indeed -- and you can see where it's got us.

[Fëanor]

...
Democracy is tyranny of the majority.  Fox and Murdoch are a strange lot to cite, as they are relatively recent arrivals on the scene and provide a much-needed but still insufficient counterbalance to a mainstream press that tilts far to the left.  Partisan Democrats sneer, but based on the little I've seen of Fox News its claim to be "Fair & Balanced" holds water--certainly in comparison with its lefty counterparts.  Interesting also that in a short period of time it has come to dominate its market segment--an indication of public hunger for a source of news, information, and commentary that's comparatively unbiased and reflects the values of mainstream America, rather than the values self-appointed elites try to force upon the public against its own best interests.
...

"Fair & Balanced", Fox News?  If you believe that you have a perverted vision of reality, David.  "Comparatively unbiased" -- give me a break. There is not need to balance fairness with bigotry; no need to balance public generosity with personal greed, no need to balance science with superstition; no need to balance truth with lies.  I have more faith in typical Americans than to believe that Fox News actually reflects their values,

In fact there is no better example of a "self-appointed elite" trying to thrust a set of values on people, Americans, Brits, Australians, and Canadians, than Murdoch's News Corporation.