In December 1974, Arthur Laffer scribbled a supply-side economic model on a cloth napkin at the Two Continents restaurant in Washington. His dining companions, Donald Rumsfeld and Dick Cheney, took the idea to their boss, President Gerald Ford. And by the time Ronald Reagan was elected president, the first major challenge to Keynesian economics had gained a foothold in the White House. [more inside]
The Age of Uncertainty, A Personal View by John Kenneth Galbraith was a 12 (or 15) part documentary mini-series about the fickle art of economics, co-produced by the BBC, CBC, KCET & OECA, and broadcast on television in 1977. Galbraith’s dry Scottish Canadian wit, and the 70’s-style art-direction, are worth viewing for those who like this sort of thing. The parody corporate videos for the Conglomerate UGE anticipated some of the ideas explored later in the 2003 documentary The Corporation. Some parts will seem dated, considering that this series was produced in the thick of The Cold War, before the rise of Reaganomics, Thatcherism, The Fall of the Berlin Wall, the rise of the EU, yuan, electronic transfers, etc. The basic insights about the instability of financial markets are still real, as always. [more inside]
"In the year 1930, John Maynard Keynes predicted that, by century’s end, technology would have advanced sufficiently that countries like Great Britain or the United States would have achieved a 15-hour work week. There’s every reason to believe he was right. In technological terms, we are quite capable of this. And yet it didn’t happen."
Philip Pilkington writes for naked capitalism: The Origins of Neoliberalism Part I: Hayek's Delusion
Hayek’s entire ideology and career had begun to come apart in the 1930s. His theories were shown to be inconsistent in the academic journals of the time and the practical implications of those theories had shown themselves to be both discredited and dangerous. A man in such a position only has two choices: he can either completely re-evaluate his ideas which, if they were held with unshakeable conviction and constituted a core component of his emotional make-up, as seems to have been the case with Hayek, would have likely resulted in a mental collapse; or, alternatively, he can engage in a massive repression, shut out reality and construct around himself a fantasy world.[more inside]
The Golden Age, an essay by prominent Australian economist John Quiggin, reflecting on the current relevance and future possibilities of Keynes 1930 essay, Economic Possibilities for our Grandchildren.
In Praise of Leisure - "Imagine a world in which most people worked only 15 hours a week. They would be paid as much as, or even more than, they now are, because the fruits of their labor would be distributed more evenly across society. Leisure would occupy far more of their waking hours than work. It was exactly this prospect that John Maynard Keynes conjured up in a little essay published in 1930 called 'Economic Possibilities for Our Grandchildren.' Its thesis was simple. As technological progress made possible an increase in the output of goods per hour worked, people would have to work less and less to satisfy their needs, until in the end they would have to work hardly at all... He thought this condition might be reached in about 100 years — that is, by 2030." (via) [more inside]
Obama proposes Social Security cuts. Amid ongoing debt talks wherein the Democrats are seeking to raise the debt ceiling to prevent the default of Federal debt, "entitlement reform" has been a hot topic. This morning, Obama has taken the unusual step of proposing even larger spending cuts than Republicans have asked for, mystifying many. Has the Grand Bargain arrived?
Work Sharing - "Work-sharing schemes, in many different forms, are becoming the norm in Holland and Denmark, and have made inroads in France and Germany. The key element in any such approach is to separate work from income. [more inside]
Paul Krugman and Robin Wells have a long two-part essay in the New York Review of Books on the current economic slump. The Slump Goes On: Why? And The Way Out of the Slump.
Since around June 2009 many indicators have been pointing up: GDP has been rising in all major economies, world industrial production has been rising, and US corporate profits have recovered to pre-crisis levels. Yet unemployment has hardly fallen in either the United States or Europe--which means that the plight of the unemployed, especially in America with its minimal safety net, has grown steadily worse as benefits run out and savings are exhausted. And little relief is in sight: unemployment is still rising in the hardest-hit European economies, US economic growth is clearly slowing, and many economic forecasters expect America's unemployment rate to remain high or even to rise over the course of the next year.[more inside]
Make Work[1,2,3] or: How I Learned[4,5] to Stop Worrying and Love Deficit Spending[7,8,9] (during a general glut at the zero bound) -- When I was a kid, if I was sitting around the house and complained I didn't have anything to do, my mom would always respond the same way. "I'll find something for you to do," and she would. It was make work, she was finding something for me to do on the spot to cure my unemployment problem... [more inside]
For economics nerds: fun Keynes vs. Hayek hip hop song on PBS Newshour.
Economist Paul Samuelson - a major proponent of Keynesianism in the United States and the second Nobel Laureate in Economics - has died. [more inside]
Recently, John Michael Greer has been exploring a little known idea of the deceased economist E.F. Schumacher (a student of the oft-discussed Keynes). "Schumacher drew a hard distinction between primary goods and secondary goods. The latter of these includes everything dealt with by conventional economics: the goods and services produced by human labor and exchanged among human beings. The former includes all those things necessary for human life and economic activity that are produced not by human beings, but by nature. Schumacher pointed out that primary goods, as the phrase implies, need to come first in any economic analysis because they supply the preconditions for the production of secondary goods. Renewable resources, he proposed, form the equivalent of income in the primary economy, while nonrenewable resources are the equivalent of capital; to insist that an economic system is sound when it is burning through nonrenewable resources at a rate that will lead to rapid depletion is thus as silly as claiming that a business is breaking even if it’s covering up huge losses by drawing down its bank accounts." [more inside]
John Maynard Keynes kept two sex diaries. The second one is a bit mysterious. (via marginal revolution)
How to Reform the Global Financial System by Joseph Stiglitz. Stiglitz--a noted economist and author--takes a look at the recetn history of economic and currency crises, and suggests a novel (but not new) approach: reviving the SDR (special drawing rights) concept originally envisioned by John Maynard Keynes. [more inside]