Monthly Archives: January 2021

Economic Update: The Economics Lesson Taught by the Pandemic

Democracy At Work has the last episode of Economic Update: The Economics Lesson Taught by the Pandemic

On this week’s show, Professor Wolff explains where the government is respected and empowered, nations have effectively contained the Covid-19 pandemic. He gives examples including New Zealand, Taiwan, South Korea, Cuba, Vietnam, and China. Alternately, where the government is demonized, disrespected, distrusted, the pandemic has been devastating. Examples of this include the UK and the US. Wolff argues that a rational economy includes both less and more government-regulated private enterprises plus state-owned and operated enterprises according to which performs best to meet society’s needs. No fundamentalist “either/or” arguments are justified. Finally, he says how private and government enterprises are internally organized – hierarchical or alternatively democratic worker-co-op – is equally important.

My goodness, I think Richard Wolff is a closet “what worksist”. This is the closest I have seen him come to admitting that a mixed economy is probably best. Of course that doesn’t stop him from promoting his latest book “The Sickness is the System: When Capitalism Fails to Save Us from Pandemics or Itself” where he demonizes capitalism. He also has to end by touting his panacea of democracy at work. I like it best when he talks about “what worksism”. That gives you the freedom to think about what will actually work and how a system should evolve and adapt to circumstances.

When we were facing WW II, we needed to get strictly organized to fight a war. After the war, it wasn’t useful to maintain those strict organizing controls. When facing a pandemic there are some drastic actions we need to take that are not appropriate when we are not facing a pandemic.

When we are ideologically wedded to one “ism” or another, it hinders our ability to adapt to changing circumstances.

Michael Hudson: Finance Capitalism vs. Industrial Capitalism – The Rentier Resurgence and Takeover

Naked Capitalism has posted the article Michael Hudson: Finance Capitalism vs. Industrial Capitalism – The Rentier Resurgence and Takeover.

This explains so much of what I have been trying to explain by this whole blog that I have been writing for 15 years. It goes way beyond the mechanics of Modern Money Theory. This is a long article, so I have tried to extract some of key points. Even that makes a long post.

The economy as a whole has suffered. Debt-fueled housing costs in the United States are so high that if all Americans were given their physical consumer goods for free – their food, clothing and so forth – they still could not compete with workers in China or most other countries. That is a major reason why the U.S. economy is de-industrializing. So this policy of “creating wealth” by financialization undercuts the logic of industrial capitalism.
Another reason for deindustrialization is the rising cost of living stemming from conversion of public infrastructure into privatized monopolies. As the United States and Germany overtook British industrial capitalism, a major key to industrial advantage was recognized to be public investment in roads, railroads and other transportation, education, public health, communications and other basic infrastructure. Simon Patten, the first professor of economics at America’s first business school, the Wharton School at the University of Pennsylvania, defined public infrastructure as a “fourth factor of production,” in addition to labor, capital and land. But unlike capital, Patten explained, its aim was not to make a profit. It was to minimize the cost of living and doing business by providing low-price basic services to make the private sector more competitive.
Under a regime of “burdenless taxation” the return on public investment does not take the form of profit but aims at lowering the economy’s overall price structure to “promote general prosperity.” This means that governments should operate natural monopolies directly, or at least regulate them. “Parks, sewers and schools improve the health and intelligence of all classes of producers, and thus enable them to produce more cheaply, and to compete more successfully in other markets.”Patten concluded: “If the courts, post office, parks, gas and water works, street, river and harbor improvements, and other public works do not increase the prosperity of society they should not be conducted by the State.” But this prosperity for the overall economy was not obtained by treating public enterprises as what today is called a profit center.
For a century, public investment helped the United States pursue an Economy of High Wages policy, providing education, food and health standards to make its labor more productive and thus able to undersell low-wage “pauper” labor. The aim was to create a positive feedback between rising wages and increasing labor productivity.

That is in sharp contrast to today’s business plan of finance capitalism – to cut wages, and also cut back long-term capital investment, research and development while privatizing public infrastructure. The neoliberal onslaught by Ronald Reagan in the United States and Margaret Thatcher in Britain in the 1980s was backed by IMF demands that debtor economies balance their budgets by selling off such public enterprises and cutting back social spending. Infrastructure services were privatized as natural monopolies, sharply raising the cost structure of such economies, but creating enormous financial underwriting commissions and stock-market gains for Wall Street and London.
Even if China and other Asian countries didn’t exist, there is no way that America can regain its export markets or even its internal market with its current debt overhead and its privatized and financialized education, health care, transportation and other basic infrastructure.

January 26, 2020

Found this article “Creating Wealth” through Debt: The West’s Finance-Capitalist Road – Michael Hudson, Peking University, School of Marxist Studies, May 5-6, 2018. This is what can be taught in Chinese Universities by USA scholars that cannot be taught in the USA.


I just learned about a potentially world changing project that may change how we do social media. Their web page is Panquake Talk Liberation: Powerful, next generation messaging technology. Their about page is is a little too vague for me. After reading it all, and watching the video below, I started to get a better idea of what this is all about.

I still don’t know what the user interface will look like, so I have no way to judge the quality of the product. However, understanding the goals better, and looking at the stated qualifications of the software managers and designers, I have some faith that this could turn out really well.

Here is their Facebook page.



I forgot to include a link to a very important website This site is where the videos are published.

This Is No Way To Do Federal Government Budgeting

CNBC has the article Joe Biden’s business allies discuss ways to pay for infrastructure plan, including a carbon tax.

I wonder if it would be helpful for Bernie Sanders to explain to Joe Biden how USA money is created, and how that affects the way we pay for government programs. If Biden only understood this, he could determine if taxes need to be raised to keep the deficit in check or it would be economically wise to “pay for it” with some increase in the “deficit”.

If Biden is hamstrung with outmoded ideas about Federal Government spending, then we might find it hard to do all the things the government should be funding with new Federal Reserve Bank created money. The economy isn’t going to get much stimulation from new government spending if we tax money out of the private sector for every dollar the government needs to spend into the economy. Of course you can’t spend any amount you want into the economy, but it would be useful to consider what the actual limits are. Ultimately the limit is governed by the possibility of creating inflation, but the limit is way above zero.

If we can stimulate the economy, then, by definition, the economy grows larger. So the new money is chasing newly produced goods, and inflation of too much money chasing too few goods is not a problem.

How Rent Controls Cause Housing Shortages.

Democracy at Work has the video AskProfWolff: How Rent Controls Can Solve Housing Shortages.

Of course this headline makes no sense. Prof. Wolff tells you all the problems that rent control causes, and then tells you how the government can repair the damage. That’s what makes sense.

If the government built the housing that Prof. Wolff describes, there would be no need for rent controls. It is definitely not rent controls that are the solution.

Matt Taibbi: The Media’s Role In Dividing Us In Light Of Capitol Chaos

YouTube has Rising’s interview Matt Taibbi: The Media’s Role In Dividing Us In Light Of Capitol Chaos.

Journalist, Matt Taibbi, reacts to how the media both contributed to and covered the riots at the United States Capitol.

They still don’t seem to remember the beneficial effects of the fairness doctrine, and the anti-monopoly enforcement that prevented domination of a market by a single corporation.

This Substack approach is not good enough for the 21st century. The internet gives access to so many different voices, that nobody should be forced to choose a subset of voices that they want to pay a subscription for. Scroll has, maybe an imperfect, model for the 2st century. Scroll is a clearing house for as many voices as want to sign up with their service. Scroll then takes the viewers subscription money, and distributes it to the people that actually get watched. This is done by looking at the traffic to a person’s media outlet on a minute-by-minute measurement. The subscriber ends up paying for sources that she or he actually views on any given day.

Glenn Greenwald REACTS: Twitter, Facebook SUSPEND Trump Accounts

YouTube has Rising’s interview Glenn Greenwald REACTS: Twitter, Facebook SUSPEND Trump Accounts.

Journalist, Glenn Greenwald, reacts to both Twitter and Facebook suspending President Trump’s accounts and deleting two of his posts.

I agree with Glenn Greenwald. Furthermore, the problem in the USA is deeper than a President lying. Truth has been the previous antidote to lies. We have to look at why it is so hard for the truth to get out in the USA these days. The corporate media is a bigger source of lies than any social media. We used to try to prevent the media from going unchallenged with the fairness doctrine for broadcast media, and anti-monopoly laws for the print media.

Looking Forward to 2021

Naked Capitalism has the post Michael Hudson: Looking Forward to 2021

Michael Hudson focuses a bit more than usual on politics, particularly on the way the left gets the shaft in elections. But he also focuses on the grim results that are virtually baked in for the US this year: rising homelessness, deteriorating government services, more diseases and more crime. In other words, the world of neoliberalism, coming to your town ahead of schedule thanks to Covid.

Actually there are two interviewees in this featured video, Chris Williamson and Michael Hudson. Chris Williamson is from the U. K. and Michael Hudson is from the USA. The parallels in political events in the two countries is rather amazing.

However you look at it, 2020 was a train wreck. So as we look forward to 2021, we wanted to get political and economic insight from two friends of the show.

Chris Williamson and Michael Hudson share their views on what we can look out for in the new year.