Tag: Michael Hudson

 About two months ago economists Paul Krugman and Steve Keen got in a very public, somewhat unpleasant, and very unusual, online spat.

  It is worth noting that not only did Krugman not win the debate, he was pretty convincingly defeated. Businessinsider, which didn’t have a dog in this race, explained it as thus:

 Ultimately, Krugman does not come off as persuasive in this fight, writing that continuing to respond is “wasting [his] time,”

  The points of dispute probably went over the heads of most people, and thus the debate was probably ignored by most people, but the fact the debate happened at all is very significant. Why? Because this wasn’t a left-right debate that we see in Washington. This was a debate that displays just how extreme the discussion of economics has drifted in today’s world.

 So who is Steve Keen? He’s an Austrialian economist, author and a disciple of John Keynes and Hyman Minsky.

 Nouriel Roubini appears to be the most commonly recognized by (virtually all) the main sources I’ve seen. Yet, economists chose Australian Professor Steve Keen over Roubini for the Revere Award (outvoted by more than a 2 to 1 margin – details below) for publicly warning of the Global Financial Crisis.

 If you listen to mainstream media, you will hear that there are two alternative economic theories in the world today: 1) right-wing, Chicago School, “austerians”, who believe that to get back to “growth” and get more “competitive” we need to lower our standard of living and balance our budgets (except when it comes to military spending, of course), and 2) neo-Keynsian liberals like Paul Krugman who think we need massive amounts of deficit spending in order to get the economy going (including more military spending).

  On one side you have faith in markets, in the other you have government-managed economy.

Under the first U.S. income tax law that was passed in 1913, only 1 percent of Americans were required to file income tax returns, and to be liable to file you would have had to be earning an annual income of about $120,000 in todays dollars. It was passed during a period called the Progressive Era: “a period of social activism and reform that flourished from the 1890s to the 1920s” during which there were widespread “efforts to reform local government, education, medicine, finance, insurance, industry, railroads, churches, and many other areas” of American life.

It was a period of steady economic growth in the U.S. and produced a since unparalleled level of prosperity that lasted for decades. The politics of the era included the concept of an economy of high wages and the idea that American labor could undersell foreign labor by being highly paid, well clothed, well educated, healthier labor with high productivity. The concept of “free market” during the period was an entirely different concept than it is today.

Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and is the author of “Super-Imperialism: The Economic Strategy of American Empire” (1968 & 2003), “Trade, Development and Foreign Debt” (1992 & 2009) and of “The Myth of Aid” (1971).

ISLET engages in research regarding domestic and international finance, national income and balance-sheet accounting with regard to real estate, and the economic history of the ancient Near East. Hudson acts as an economic advisor to governments worldwide, including Iceland, Latvia and China, on finance and tax law.

As an advisor to the White House, the State Department and the Department of Defense at the Hudson Institute, and subsequently to the United Nations Institute for Training and Research (UNITAR), Hudson has been one of the best known specialists in international finance. He also has consulted for the governments of Canada, Mexico and Russia, most recently for the Duma opposition to the Yeltsin regime.

Yesterday we heard Assistant Research Professor at the Political Economy Research Institute (PERI) Jeannette Wicks-Lim explain how currently most minimum wage earners in the U.S. can no longer the afford the basic necessities of life, and outline a proposal to combine minimum wage and earned income tax credit policies to guarantee a decent living wage for all.

Hudson here today talks with The Real News Networks’ Paul Jay and concludes that the the U.S economy can again outperform foreign economies with high wages, increased living standards, and with high top tier tax rates producing higher productivity – a progressive concept, like Wicks-Lim’s ideas, that is nearly the exact opposite of the free lunch economic ‘theories’ so widespread today that are behind wall street’s pillaging of the U.S. economy with the support of both major political parties.

Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and is the author of “Super-Imperialism: The Economic Strategy of American Empire” (1968 & 2003), “Trade, Development and Foreign Debt” (1992 & 2009) and of “The Myth of Aid” (1971).

ISLET engages in research regarding domestic and international finance, national income and balance-sheet accounting with regard to real estate, and the economic history of the ancient Near East. Michael acts as an economic advisor to governments worldwide including Iceland, Latvia and China on finance and tax law.

Here Hudson talks with The Real News Networks’ Paul Jay about the 800+ empire of military bases the U.S. has established around the globe, about how all of the money that the military spends abroad is spent on foreign economies and is then “siphon[ed] up into the central banks. And the central banks would have nothing to do with these dollars but to keep their currency stable by recycling the dollars into US Treasury bills.” and about how “If it weren’t for the military deficit, America would have had to finance its own domestic budget deficit. It’s been foreigners that are financing the budget deficit.”

Hudson concludes here with the observation that “Now that foreigners are essentially saying, we don’t want any more dollars, we’re not going to fund your deficit, all of a sudden they think: who’s going to fund the deficit if not foreign central banks? The answer is: American labor, the American middle class and working families are going to fund it, not the military.”

The rest of the world has had enough of financing it’s own encirclement and subjugation by the U.S. military.

From here on in it is you who is going to be paying the bill…

  Merriam-Webster named its Word of the Year for 2010 based on the number of searches. That word is the 14th century noun “austerity”.

 If you watched 60 Minutes the other night, you would have heard New Jersey’s Republican governor Chris Christie tell us how we have no choice but to slash wages and benefits and lay off thousands of school teachers, police, and firefighters in every state.

 You will also hear lots of economists use the phrase “competitive”, as in “the American economy needs to be more competitive in the world”. What they really mean is that we need to accept lower wages and a lower standard of living. If we do this then it will be “good for us”, that there is economic value in this.

 What is really going on is a set of false choices that even the world’s financial leaders don’t believe.

Original article, by Michael Hudson and headed “Trying to Revive the Bubble Economy:”, via counterpunch.com:

Martin Wolf started off his Financial Times column for February 11 with the bold question: “Has Barack Obama’s presidency already failed?” The stock market had a similar opinion, plunging 382 points. Having promised “change,” Mr. Obama is giving us more Clinton-Bush via Robert Rubin’s protégé, Tim Geithner. Tuesday’s $2.5 trillion Financial Stabilization Plan to re-inflate the Bubble Economy is basically an extension of the Bush-Paulson giveaway – yet more Rubinomics for financial insiders in the emerging Wall Street trusts. The financial system is to be concentrated into a cartel of just a few giant conglomerates to act as the economy’s central planners and resource allocators. This makes banks the big winners in the game of “chicken” they’ve been playing with Washington, a shakedown holding the economy hostage. “Give us what we want or we’ll plunge the economy into financial crisis.” Washington has given them $9 trillion so far, with promises now of another $2 trillion- and still counting.

(Crossposted at DailyKos.com)

Book review: Hudson, Michael.  Super Imperialism.

Second edition.  London: Pluto, 2003.

I thought that a discussion of Hudson’s book book would be pertinent in terms of recent discussions of indebtedness and in terms of Hudson’s role in the run-up to next year’s elections.  Michael Hudson’s site says he is “President of the Institute for the Study of Long-Term Economic Trends (ISLET), A Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Super Imperialism: The Economic Strategy of American Empire (1972 and 2003) and of The Myth of Aid (1971).

In 2007, Dr. Hudson has been appointed Chief Economic Policy Adviser for the Kucinich for President campaign and is writing a new tax policy for the United States.