Bye Bye, August — Bye Bye, Very Hot Summer

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Enjoy and practice your French:

Bridges to Nowhere?

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The age of "austeritarian" neoliberalism is necessarily one tainted by a tremendous sacrifice of advancement. 

But as ever, I hasten to add that the utilisation of idle fiscal space is not guaranteed to be applied to the right kind of projects. 

The modern state derives its exceptional power to vouchsafe progress from being heavily restrained. 

The left have unlearned this lesson that historically they had been the first to comprehend. The right opportunistically overlooks the capacity of the state to do good — unless it suits their interests. For more see here.

Ultimately, responsible economic policies can be expected only from a state pushed to do good and held back from doing bad by the effective political competition exerted by a vibrant democracy.  This ensures that gigantic projects will not be colossal white elephants or worse: roads to hell.

(4) Why Isn't Inflation Higher?

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Further to Why Isn't Inflation Higher? Bill Mitchell explains the government's ability (and duty) to balance the economy, i.e. to ensure full employment, or — put differently — the absence of underutilised and fully idle resources that could be mobilised to increase output, and the absence of the kind of inflation that is created when nominal demand exceeds the capacities available in the economy.

So a low level of inflation may well be indicative of insufficient government spending — insufficient in so far as the economy is left languishing below the level of full employment (of all resources human and non-human), with the non-government sector being unable to generate enough effective demand to move the economy back to the point of full employment equilibrium.

Writes Bil Mitchell:

In this blog post – The full employment fiscal deficit condition (April 13, 2011) – which I consider to be core MMT, I showed the conditions that determine the fiscal deficit, once the government assumes its responsibility to achieve and sustain full employment. 

The lessons, in summary are  

1. A macroeconomy is in a steady-state (that is, at rest or in equilibrium) when the sum of the injections equals the sum of the leakages. The point is that whenever this relationship is disturbed (by a change in the level of injections, however sourced), national income adjusts and brings the income-sensitive spending drains into line with the new level of injections. At that point the system is at rest. 

2. The injections come from export spending, investment spending (capital formation) and government spending. 

3. The leakages are household saving, taxation and import spending. 

4. An economy at rest is not necessarily one that coincides with full employment. 

5. When an economy is ‘at rest’ and there is high unemployment, there must be a spending gap given that mass unemployment is the result of deficient demand (in relation to the spending required to provide enough jobs overall). 

6. If there is no dynamic which would lead to an increase in private (or non-government) spending then the only way the economy will increase its level of activity is if there is increased net government spending – this means that the injection via increasing government spending (G) has to more than offset the increased drain (leakage) coming from taxation revenue (T). 

So in sectoral balance parlance, the following rule hold. 

To sustain full employment the condition for stable national income defines what I named the [f]ull-employment fiscal deficit condition: 

(G – T) = S(Yf) + M(Yf) – I(Yf) – X 

The sum of the terms S(Yf) and M(Yf) represent drains on aggregate demand when the economy is at full employment and the sum of the terms I(Yf) and X represents spending injections at full employment. 

If the drains outweigh the injections then for national income to remain stable, there has to be a fiscal deficit (G – T) sufficient to offset that gap in aggregate demand. 

If the fiscal deficit is not sufficient, then national income will fall and full employment will be lost. If the government tries to expand the fiscal deficit beyond the full employment limit (G – T)(Yf) then nominal spending will outstrip the capacity of the economy to respond by increasing real output and while income will rise it will be all due to price effects (that is, inflation would occur). 

What that means in relation to the issues I identified above is that there is a difficulty in defining pro-cyclicality in terms of a given fiscal balance. 

It is nonsensical to say a fiscal surplus is always pro-cyclical and a deficit is always counter-cyclical. It all depends on the spending and saving patterns of the non-government sector. 

We can only really appraise the impact of the fiscal balance in terms of changes at specific points in the cycle. 

So if an economy was at full employment and the fiscal deficit was, say 2 per cent of GDP and that satisfied the condition specified above. 

That is not a pro-cyclical position even if the economy is growing – it is maintaining a steady-state growth path. 

Should the government, with no other changes evident, increase its net spending to say 3 per cent of GDP, under those circumstances, we might consider that a pro-cyclical policy change because it is pushing the cycle beyond its full employment steady-state growth path. 

So the fact there is a fiscal deficit coinciding with strong GDP growth should not be taken as a case of irresponsible and dangerous policy. 

What about running surpluses when recovery is apparent? 

The same logic holds. It might be that the non-government spending and saving decisions drive overall spending so fast that total spending then starts to outstrip capacity.
Then, to restore the full employment steady-state (and this also requires stable inflation), the fiscal stance has to [be] contractionary – which might require a fiscal surplus. 

For example, nations such as Norway will typically solve the [f]ull-employment fiscal deficit condition with a fiscal surplus given how strong their external sector is (energy resources).

(3) Why Isn't Inflation Higher?

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For an English discussion see here and here.

Verfügen die Menschen über wenig Geld, geben sie auch dementsprechend wenig aus. 

Die Hauptauslöser für die anhaltend niedrige Inflation im Euroraum sind niedrige Löhne, unsichere Arbeitsplätze und der EU-Kult der rigorosen Sparmassnahmen (namentlich fiscal austerity). 

Es ist ein offenes Geheimnis, dass die unpopulären angebotspolitischen Patentrezepte der im Euroraum vorherrschenden neoliberalen Agenda angesichts einer strikten Haushaltskonsolidierung zu Lohnkürzungen und zum Rückbau von Sozialleistungen führen. 

Eine „schwarze Null“ als haushaltspolitisches Ziel pflegt das Mantra „sparen über investieren“.

Quelle.

Continued here.

(2) Why Isn't Inflation Higher?

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Why isn't inflation higher? 

The answer is: inflation targeting. 

Before the age of inflation targeting, macroeconomic policy was dedicated to maintaining full employment. 

Inflation targeting, the new paradigm, which has been adhered to since the early 1990s, is based on the belief that a low but stable inflation rate is the most desirable macroeconomic objective. Under the new paradigm, governments are willing to honour the inflation target fetish at the cost of rising unemployment or levels of unemployment higher than necessary. 

We are dealing with a fetish similar to the EU's Maastricht criteria which have been plucked out of the air only to be worshipped like a totem, while costing millions of unemployed and impoverished people dearly. 

To keep inflation within the vicinity of the target, policy makers deliberately curb economic activity, subjecting the economy to an austerity bias and suppressing potential output. The control knob by which inflation is keep low and steady are the unemployed, the underemployed and everyone weakened and challenged unpleasantly by an economy made to perform worse than it could.

In the Year of the Lord 2018,  we really behave not much differently than members of a primitive tribe that believes in voodoo. 

However, we are much richer than theses tribes. 

Therefore, we are better able to afford costly blunders like the EU, inflation targeting or the primitive religious belief that man can control the earth's climate by manipulating a single knob (CO2) - when, amid a plethora of natural climate drivers (not controlled nor controllable by man), CO2 has virtually no influence on climate. 

Continued here.

(1) Why Isn't Inflation Higher?

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I.

The Coyote is wondering about the low level of inflation:

1. Is it possible that inflation exists but it shows up mainly in financial assets (stocks, bonds, perhaps real estate) that don't really factor into standard inflation metrics? Every step the Fed has taken, as well as other western central banks, appears to me to be crafted to pump money into securities markets rather than into main street. Certainly we have seen a huge inflation in the value of financial assets and real estate over the past several years. 

2. Expansion of the economy above the rate of productivity improvement should drive inflation, unless there was a lot of excess capacity to soak up. That may have been partly the case in the US since 2008, but surely that is gone. Does the still greatly underutilized Chinese and Indian labor force act as excess capacity that prevents inflation from heating up here? If so, might Trump's trade restrictions interfere with this going forward?

ad 1) I would tend to think the answer is yes. But I would have to look into that more carefully, perhaps following up with a post on financialisation at some time.

ad 2) I am confused. In my last post, I have offered a link to a Fed paper according to which production capacity in the US has fallen dramatically since the GFC and appears not to catch up with the much higher pre-GFC level. Does that mean that an "expansion of the economy" is more likely to create inflation, the production capacity being liable to be soon stretched to its limit? Or does it mean that because production capacity is so low there is more scope to increase it without triggering inflation? In the short run, I suspect, the former might be the case, in the long run the latter — until in the long run the short run will prevail again.

With a large part of production capacity being exported to China and other countries since the late 1980s, what would happen if domestic production capacity got revived?

II.

Here is a helpful outline of inflationary and non-inflationary conditions: what would happen if the central bank were to pump massive amounts of money into the economy either by dropping money from helicopeters or trasferring large sums into the bank accounts of every citizen?

First, the two examples – the helicopter drop and electronically crediting peoples’ private bank accounts with new deposits are not equivalent events. But that is a small issue. 

Second, neither will necessarily cause the price level to accelerate more quickly (that is, increase inflation). 

Why not? What if all the cash from the helicopters fell into the fields and stayed there? 

What if the bank customers, fearing future unemployment and the income uncertainty that accompanies that fear, decided to build saving deposits up further and considered the electronic crediting of their accounts to be a boost to that effort. 

In either case, there will be no price level effects of the central bank operation. 

If, the bank customers took all the increased deposits provided by this central bank operation and used the funds to purchase TVs, food, cars, holidays etc – that is, real goods and services then there is the possibility of accelerating inflation. 

If there is idle capacity in the economy and firms who supply TVs, food, cars, etc have the capacity to supply those goods and services then they will defend their market share by increasing output and sales at the current price levels on offer. Firms typically ‘quantity-adjust’ rather than ‘price-adjust’ when there is excess (idle) capacity. Otherwise, they risk losing market share. 

So in that case there will be no acceleration in inflation. The increased spending will generate a positive output and employment response and the nation will enjoy higher real incomes. 

The possibility of inflation will only become a reality, if the bank customers start liquidating the increased deposits through increased expenditure and the economy is incapable of meeting that increased growth in nominal spending through increased output. 

When firms can no longer ‘quantity-adjust’ they ‘price-adjust’. 

So it is not a self-evident truism that central banks can always increase the inflation rate.

The source. 

More here.

Fed San Francisco: Large Losses in Production Capacity Since GFC

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For English content click on the link just below.

In einer Studie konstatiert der Zweig der Federal Reserve Bank mit Sitz in San Francisco einen erheblichen und unwiederbringlichen Rückgang der Produktionskapazitäten der US-Wirtschaft seit der Weltwirtschaftskrise (GFC). Dieser entspräche 

einem lebenslangen Barwertverlust (present value) von etwa sage und schreibe 70‘000 USD für jede/n Amerikanerin/Amerikaner.

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Die Höhe der Verluste deutet darauf hin, dass das Produktionsniveau voraussichtlich nicht auf das Vorkrisenniveau zurückkehren wird, lautet das Resümee der Forschungsarbeit.
...
Fazit: anhaltende Widrigkeiten am Finanzmarkt können erhebliche soziale Kosten verursachen, da sie das BIP nachhaltig beeinträchtigen. 

Dies deutet darauf hin, dass die Suche nach Möglichkeiten zur Verhinderung oder Eindämmung künftiger Finanzkrisen eine wichtige Priorität für Forschung und Politik darstellen muss.

Doch es gilt nüchtern festzuhalten, dass die neoklassische Wirtschaftspolitik, die ja in den grössten Volkswirtschaften kontinuierlich den Ton angibt, weiterhin an manchen überholten doktrinären Grundsätzen festhält. 

Der Einsatz der Fiskalpolitik ist beispielsweise irgendwie immer noch ein Tabu, trotz der Tatsache, dass der Unternehmenssektor in Deutschland, Italien, Japan, Grossbritannien und den USA inzwischen zum Netto-Sparer wurde und in z.B. Europa eine nicht unerhebliche Investitionslücke besteht, was hohe Unterbeschäftigung und prekäreArbeitsverhältnisse nach sich zieht.

Quelle 

Musk: A Green Pattern — Moral Tyranny Sustaining the Spoilt Child

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Less than than three weeks have passed since Tesla's CEO Elon Musk announced — while stock trading was in full swing — that he was considering to take the company private, having secured the requisite funding, which turned out a blatant lie and a clumsy attempt to "to burn shorts" by sending the stock price soaring on the news. Today he has reversed the direction the company is to be taking by stating that HE had decided remaining public was the company's best option after all.

15 years after the company was created Elon Musk writes:

... we now need to show that we can be sustainably profitable.

Another remarkable statement by Musk:

We will not achieve our mission of advancing sustainable energy unless we are also financially sustainable.

Green dreams are always certain to be feasible and green apocalyptic threats will always turn out accurate — at yet another updated point in time in the future.

The advantage of sporting a green world view is that you are exempted from the critical checks ordinary human beings tend to subject themselves to. Once you put on the green cloak you are entitled to your own facts, to vague and ever updatable predictions, to the substitution of facts and science by politics and a wishful thinking of the kind that gets accepted by virtue of its moralising tone. The green-minded couch their visions as being morally so desirable that for a person not to be committed to them is to engage in obstruction plain and simple. In fact, this is probably the key psychopathological characteristic of the adepts of green mythology: to think that something is morally desirable from their point of view makes the issue true, realistic and feasible. By extension, an attitude prevails among the green believers whereby indefinite support, say in the form of subsidies, appears morally compelling beyond reasonable doubt and thus represents a natural entitlement. Normal scrutiny is replaced by faith, the proof is still in the pudding, but the pudding will be delivered under circumstances not under our control: sometime in the future, when this strategy of delaying deliverance can be conveniently resumed.  

To summarize: the company would like its investors - who are "extremely important" to Musk - to believe that within three weeks, it first had "secured funding", then hired advisors, then reviewed a potential transaction, then got a subpoena from the SEC, then carefully explored all potential avenues and then, as a group, arrived at the conclusion that it would be better off staying public.

While nobody in the investing will believe that, what matters now is what the regulators believe, and alternatively, what they decide is fraud.

As for Tesla, just days after the going private transaction, we predicted that "TSLA will be that one stock that sees class actions suits by both shorts and longs."

The shorts have already started suing, claiming Musk defrauded them via glaring market manipulation. Now it's time for the longs to join.

The source.

Trump? A Guess

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I find noteworthy some of the phrasing President Trump has reverted to in commenting on the prospect of his impeachment. 

“I’ll tell you what, if I ever got impeached, I think the market would crash,”

This is in a way a very subtle surmise on my part, but to me Trump sounds as if he has almost accepted the prospect of his being impeached. Why else would he accept the premise of his ouster to conclude rather lamely that in this case "the market would crash".

Well, there would be a market reaction, but a crash?

Even if a terrible crash did occur, are we to conclude that a legally deserved impeachment should not be pursued for pragmatic economic reasons?

Is Trump crumbling?

The Dismal Science

 

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... is a term occasionally used by those sceptical of economics to emphasise, well, the dismal state of the subject, though the original meaning of the phrase is different. 

At any rate, we do live in a world with vast areas of undiscovered irrationality, and the dismal science marks out not a small part of that mystic territory.

Having gone through a handful of the most frequently used textbooks of economics at the undergraduate level today, I can only conclude that the models that are presented in these modern mainstream textbooks try to describe and analyze complex and heterogeneous real economies with a single rational-expectations-robot-imitation-representative-agent.

That is, with something that has absolutely nothing to do with reality. ...

For almost forty years mainstream economics itself has lived with a theorem that shows the impossibility of extending the microanalysis of consumer behaviour to the macro level (unless making patently and admittedly insane assumptions). Still after all these years pretending in their textbooks that this theorem does not exist — none of the textbooks I investigated even mention the existence of the Sonnenschein-Mantel-Debreu theorem — is really outrageous.

The source.

(4) Neoliberal Economics and Its Rival — The Overall Picture

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Fortgesetzt von / continued from here, here, here, here, and here.

This post is based on Bill Mitchell's series Keynes and the Classics.

Wenn eine Wirtschaft selbstregulierend sein soll, müssen ihre Einzelkomponenten in einer bestimmten Weise zusammenhängen. 

Selbstregulierend ist auch ein Fluss, der über die Ufer tritt und damit großen Schaden anrichtet. 

Unter selbstregulierend versteht die neoliberale Ökonomik jedoch die Fähigkeit, ein harmonisches Gleichgewicht hervorzubringen, in dem niemand zu Schaden kommt. Mehr noch, das Gleichgewicht, das dem neoliberalen Ökonomen vorschwebt, erzeugt wirtschaftliche Ergebnisse und sogar soziale Verhältnisse, die sich auf keine andere Weise verbessern lassen. Es sind also die höchsten Ansprüche, die die neoliberale Lehre in einer freien Wirtschaft verwirklicht sieht: Schadensfreiheit und mehr noch: unübertreffliche Ergebnisse.

Wir greifen folgende Einzelkomponenten dieser Harmonielehre heraus, die gemäß neoliberaler Ökonomik jeweils für sich Gleichgewichtszustände herstellen und im Zusammenwirken untereinander ein übergreifendes Gleichgewicht bewirken.

(1) Da ist der Arbeitsmarkt, an dem die Reallöhne und das Beschäftigungsniveau bestimmt werden. Das neoliberale Modell des Arbeitsmarkts soll angeblich zeigen, dass unfreiwillige Arbeitslosigkeit unmöglich ist.

(2) Hinzukommt eine Produktionstheorie basierend auf dem "Gesetz" vom abnehmenden Ertragszuwachs. Diese Theorie soll zeigen, dass die vollständige Nutzung aller zur Verfügung stehenden Ressourcen und somit Vollbeschäftigung gewährleistet sind und zur Bereitstellung des maximalen Ausstoßes führen, und zwar auf die effizienteste Weise, zu der die Wirtschaft fähig ist.

(3) Des Weiteren wird uns eine Theorie angeboten, die nachweisen will, wie Anpassungen des Zinsniveaus zu einem Gleichgewicht zwischen Ersparnissen und Investitionen führen, sodass eine unzureichende volkswirtschaftliche Gesamtnachfrage gar nicht erst zustande kommen kann.

(4) Schließlich werden diese Komponenten noch um eine Theorie ergänzt, die das Preisniveau erklären will: die Quantitätstheorie des Geldes, wonach das allgemeine Preisniveau direkt proportional der Geldmenge ist.

Damit sind alle realen und nominellen Größen der Wirtschaft erfasst und in ihrer Funktion erklärt.

(1) Flexible Arbeitsmärkte, d. h. unbegrenzt flexible Löhne, sorgen dafür, dass jeder, der Arbeit finden will, diese auch bekommt. (2) Das Kriterium für die Nachfrage nach Arbeitskräften seitens der Unternehmen ist das Grenzprodukt der Arbeit, d. h. der positive Beitrag einer zusätzlichen Arbeitskraft zum Unternehmensgewinn. (3) Ersparnisse, die den Mittelzufluss für die Unternehmen gewährleisten und gleichzeitig das Verhältnis anzeigen, in dem derzeitiger und künftiger Konsumbedarf zueinander stehen, werden durch das variable Zinsniveau mit dem Investitionsaufkommen abgestimmt. Wenn der künftige Konsumbedarf hoch (niedrig) ist, sind die Konsumenten bereit relativ viel (wenig) Geld heute auszuleihen, sprich: heute weniger (mehr) auszugeben/zu konsumieren, um morgen über umso größere (geringere) Kaufkraft zu verfügen. Bei starker (geringer) Nachfrage nach Anlagemöglichkeiten sinken (steigen) die Zinsen, der Anreiz zu investieren steigt (lässt nach). Den Unternehmen stehen damit investive Mittel zur Verfügung, die mit der künftigen Nachfrage synchronisiert sind. Ein Nachfragedefizit ist ausgeschlossen. Es ist immer genügend (angebotskonforme) Kaufkraft vorhanden, um die produzierten Waren vollständig und zu den benötigten Preisen abzusetzen. (4) Die einzige Rolle des Staats besteht darin, die Geldmenge zu steuern, sprich das Geldangebot zu erhöhen, wenn das Preisniveau zu niedrig erscheint oder es zu senken, wenn Inflation droht.

Daran glaubt, wer an die freie Marktwirtschaft glaubt. Wer an etwas anderes glaubt, glaubt nicht an die freie Marktwirtschaft. 

Es ist leicht zu behaupten, die freie Marktwirtschaft sei selbstregulierend und führe zu optimalen Resultaten. Schwieriger wird es, wenn diese Behauptungen im einzelnen nachzuweisen sind. Dazu benötigt man Theorien. Und das, was ich oben zusammengefasst habe, besagen diese Theorien. Sie enthalten Aussagen, die leicht angegriffen werden können, indem man ihnen nachweist, dass sie von der Wirklichkeit weit entfernt sind.

Bekenntnisse zur freien Marktwirtschaft unterstellen, dass die von mir dargestellte Wirtschaftstheorie korrekt, d. h. in der Realität wiederzufinden ist. 

Wie ich aus eigener Erfahrung weiß, beruht das Bekenntnis zur freien Marktwirtschaft (als einem Idealtyp, der die Wirtschaftspolitik leiten soll) auf einem schemenhaften Sich-Erinnern, einem hoffnungsvollen Andeuten einer Theorie, die zu kompliziert für den Augenblick, aber – wie man es sich einbildet – bestens beglaubigt und ganz gewiss zutreffend sei. Idealisierende Bekräftigungen der freien Wirtschaft beruhen auf dem wohlklingenden Echo einer falschen Theorie und mithin auf Selbsttäuschung.

Das soll kein Abgesang sein auf eine gemischte Wirtschaft weit entfernt vom Sozialismus (der durch die Verstaatlichung der Produktionsmittel definiert ist), mit hohen Anteilen privater Dispositionsfreiheiten und umsichtigen, ständiger öffentlicher Kontrolle ausgesetzten Wirtschaftseingriffen des Staats.

Im Gegenteil, sollen eine vom Sozialismus klar abgegrenzte Wirtschaft und das Freie an ihr besser verstanden werden, ist es unumgänglich, von der Gewohnheit Abschied zu nehmen, sie mittels einer pauschalen Freiheitsthese heiligzusprechen.

Neoliberalism — Believing To Believe in Something While Believing in Something Else

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Ironically, it is quite possible that a person dedicates her entire life to Catholicism yet never was a Catholic. A Catholic, say Susi, who is unaware of the full set of the central tenets of Catholic dogmatics only believes that she believes in Catholicism. By contrast, the expert of Catholic dogmatics knows that Susi does not believe in Catholicism, however strongly Susi feels that she does.

Likewise a neoliberal may consider himself a neoliberal, while he may not understand what neoliberal economics actually preaches. Hence, he too may only believe that he believes in neoliberalism. Those who take a closer look at the theory on which neoliberalism is based may discover either that the believer in neoliberalism, like Susi, (a) does not believe what she must be believing to be a neoliberal or (b) she genuinely believes in the right set of tenets, but then she is believing in something that is without consistent foundation and does not apply in any form to the world as it is. So again, she only believes to be believing in X when, in fact, she is believing in Y. She deems herself in the wrong world.

I think, (a) is pervasive, because few people who support free markets understand the elements that link up to a theory of a self-regulating economy. The way economics is taught does not encourage the student to demand a consistent presentation of the elements and links that are supposed to make for a coherent theory of a free market economy. They are distracted by the technicalities of fragments usually examined not in an order that would make it easier to corroborate whether matters coherently hang together and support compelling conclusions of the free market kind. They do not, and that is why they are not usually presented contiguously. 

Closer inspection pursued in an effort to restore the sequences of the argument reveals that the individual building blocks of the neoliberal conception of the economy are false no less than the theory that links up these elements. So, you may believe that you believe in free markets, but in fact you believe in something else — like a theory of labour markets that is not supported by the real world or a theory of how savings and investments lead to a equilibrium outcome which also is entirely contrary to what empirical evidence reveals of the economy as it actually operates.

In a subsequent post, conculding this series here, here, here, and here, I endeavour to sketch the building blocks of neoliberal economics, the way they are supposed to link up to bring about an overall equilibrium in the economy and the incoherence and untenability of both the building blocks themselves and their supposed equilibrating interaction.

Self-Censorship — How They Make You Believe What They Want You To Believe

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Available only in German.

Ein Glaubensreflex, den die Medien dem Durchschnittsbürger seit langem schon antrainiert haben, ist die "Schlussfolgerung", dass Forschungsergebnisse die entweder von Ölgesellschaften stammen oder, sich aus Studien ergeben, die von diesen beauftragt oder wenigstens zum Teil finanziert wurden, Lügen enthalten, die im Interesse dieser Firmen seien. 

(1) Allein schon, weil der Bürger erfolgreich darauf abgerichtet ist, derartigen Behauptungen unbesehen Glauben zu schenken, werden sie nicht selten ungeprüft (die Wahrheit wird in bigottem Eifer  mit einer stereotypen Verunglimpfung gleichgesetzt) oder sogar im Bewusstsein ihrer Falschheit (die Ziele heiligen die Mittel) erhoben. Eine angemessene inhaltliche Prüfung erübrigt sich, da ja gilt "the science is settled" und daher das Anliegen nicht mehr wissenschaftliche Beglaubigung ist, sondern das Einbläuen einer politisch instrumentalisierten Doktrin. 

Das Nebenher von "the science is settled" und einem gigantischen Forschungsbudget für politisch korrektes Forschen ist einer der vielen widersprüchlich funkelnden Aspekte einer vom Glauben statt von der Vernunft getriebenen Entwicklung. Wenn "the science settled" ist, kann ja ein aufwendig betriebenes Weiterforschen nur Ritus, ein glorifiziertes Wiederkäuen sein.

Hier eine typische Erfahrung mit einem Glaubenseiferer, der sich die Sachlage gar nicht erst bewusst macht, so sicher ist er in seinem ihm "offenbarten" Urteil.

Die Behauptung

(2) impliziert, dass diesen Firmen das Forschen verboten werden müsse.

(3) verkennt, dass weder die Personen, die forschen oder diejenigen, die Forschung beauftragen und finanzieren, maßgeblich sind, sondern die Inhalte der Forschung, und dass diese sorgfältig und genau beurteilt werden müssen, statt die Erledigung dieser Aufgabe durch das Abbeten stereotyper Vorurteile zu ersetzen.

(4) übersieht, dass die Ausgaben des sich offen parteiische gebenden Staats für "Forschung" in Bereichen, in denen die infrage stehenden Firmen pauschal Betrug vorgeworfen wird, weitaus höher, umfang- und einflussreicher sind als die der besagten Firmen und eine weitaus größere Anzahl von Personen existenziell betreffen (deutsche Professoren erklären im Vertrauen, dass die Veröffentlichung von Forschungsergebnissen, die mit der Staatslinie nicht übereinstimmen, existenzbedrohende Konsequenzen für sie haben würden – was logisch ist, wenn staatlich gestützter Glaubenseifer die Oberhand hat).

(5) ignoriert, dass die sich offen parteiisch gebenden Medien weitaus präsenter, geradezu allgegenwärtig sind in der Öffentlichkeit als gelegentliche Studien der betreffenden Unternehmen  Studien, die in der Regel – durch die Medien gefiltert wiedergegeben werden.

Die Häufigkeit, in der diese stereotypen Anwürfe auftreten und die reflexartige Empörung, mit der sie vom abgerichteten politischen Konsumenten angenommen und bekräftigt werden, sollten ein grelles Indiz dafür sein, wie fragwürdig sie sind.

Leider ein weiteres Anzeichen für die ideelle Gleichschaltung des deutschen Bürgers unter dem propagandistischen Diktat einer politischen Elite, die man jener regressiven Linken zurechnen muss, die die sozialdemokratische Linke seit den 1990er Jahren abgelöst hat.

Privacy Is Being Together

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Do they have open toilets? What happens when someone develops a thundering snore? No farts all of your own?

A Japanese family of three commissioned an architectural firm to design a house in which the family members would be in touch with one another at all times. Privacy is being together. Being together is privacy.

The dichotomy of privacy and togetherness is insuperable. A person will always seek and have private moments even in the presence of other people.

I suspect, a human being can bear, even enjoy, a high degree of alien presence, if the rhythm of change between private retreat and social exposure agrees with her.

At boarding school I had very little privacy, but I was happy at the place. The said rhythm was right, I needed leadership (not so much by a person than in an abstract sense) and got it by virtue of a day full of common activities. However, moments of withdrawal and private immersion were possible.

For more see here.

A Note on Socialism and the Mixed Economy

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Talking about the mixed economy, Willis Eschenbach is right:

[L]et me clear up one extremely common and dangerous misconception. Socialism is NOT about taxpayer money providing social services like the Fire Department, or roads, or medical care, or the Post Office, or the military, or public parks, or the Police, or piped water. Those are all services, and all governments of all types provide a greater or lesser range of services. That’s the basic reason that we have governments.

Socialism, on the other hand, has nothing to do with the provision of services. It is an economic system where the government owns the means of production of wealth—in Socialism the government owns the farms, fishing boats, and factories.

So please, don’t be claiming that the northern European countries are socialist. They are not, because those European governments do NOT own the farms, fishing boats, and factories. Those countries may provide a wider range of taxpayer-paid services than the US or other countries provide … but that does NOT magically make their capitalist economies into socialist economies. Quite the opposite. Their successful capitalist economies are the reason that they can afford to provide those services …

The source. 

The "right" do not have a theory of the mixed economy. They do not, because they believe in rather an unfounded and nebulous vision of a pure market economy, which exists only in bad theory.  Their idea of a pure market economy has little place for government, for they think what government can do, if it is at all likely to do something good, the pure market economy can do it still better. In a kind of pars pro toto reverse deduction, they see contained in every act of economy-stifling market intervention/market-substituting the full organism of socialism. Hence government participation in the socio-economic dimension is quickly equated with socialism. 

The "left" are eager to instrumentalise the exceptional powers of the state to implement their objectives. Therefore they tend to idealise the state and are willing to let it assume extensive  unchecked powers. 

Of course, strictly speaking, every economy is a mixed economy in that  the economic activities of any community do comprise free-wheeling individual initiative and discretion as well as actions  imposed upon the collective by political coercion.

However, I think it fair to argue that socialism — state ownership of the means of production — marks the border beyond which lays the realm where a colourful mix in which individual freedom and political constraint are both strongly represented becomes a monotonous landscape, where the political constraints set by the state totally dominate and individual freedom languishes as a distrusted residual figuring like cracks in a picture meant to be perfect. 

The "left" find it hard to appreciate that the state becomes intolerable when it goes socialist. 

The "right" do not understand that there is a lot of mixed economy left before social interventions become so pervasive as to amount to socialism.

(4) Free Trade? — The Three Globalisations — The Neoliberal Era

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Fortgesetzt von hier / Continued from here (English version)

Thomas Palley discerns three globalisations, the Victorian (1870-1914), the Keynesian (1945-1990), and the Neoliberal (1990 until today). Ooops, wrong language.

Thomas Palley unterscheidet drei Zeitalter der Globalisierung, das viktorianische (1870-1914), das keynesianische (1945-1990), und das neoliberale (1990 bis heute).

Die viktorianische Phase der Globalisierung hat eine weltweite Arbeitsteilung zwischen landwirtschaftlicher und industrieller Produktion auf Basis des absoluten Vorteils der betreffenden Länder und Regionen durchgesetzt. Unterm Strich hat der Westen davon am stärksten profitiert, einschließlich der arbeitenden Bevölkerung dort. Die agrarisch orientierten Länder haben auf lange Sicht geringere wirtschaftliche Vorteil erzielen können und insbesondere den Sprung ins industrielle Zeitalter verpasst. Die große Ausnahme: die protektionistischen USA.

Die keynesianische Phase der Globalisierung erlebte eine intensivierte Ausdehnung und gegenseitige Durchdringung der Märkte für industrielle Erzeugnisse und verstärkten Wettbewerb – Faktoren, die dazu führten, dass kräftige Kostenreduktionen darstellbar wurden und/oder eine größere Angebotsvielfalt.

Die Unternehmen sind produktiver und profitabler, die Arbeitnehmer haben Teil an Produktivitäts- und Gewinnzuwachs, ihre höheren Einkommen begünstigen eine hohe und wachsende Nachfrage, von der die Unternehmen wiederum profitieren und so weiter.

Die neoliberale Phase der Globalisierung

Palley spricht hier auch von der "Frachtkahn- oder Bargen-Globalisierung" (barge economics).  Das Bestreben ist, die industrielle Produktion einschließlich zentraler Funktionen wie der Finanzierung in eine transportable Plattform zu verwandeln, die als Ganzes oder in Teilen dorthin verschoben wird, wo absolute Kostenvorteile locken. Zum Beispiel aufgrund einer unterbewerteten Währung, geringer Steuern, Subventionen, fehlender aufsichtsrechtlicher Beschränkungen oder billiger und politisch schlecht organisierter Arbeitskräfte.

Der Antriebsmotor der neoliberalen Globalisierung ist der Wunsch, die Organisationsstruktur der Industrieunternehmen umzubauen, sodass sich höhere Gewinn erwirtschaften lassen und der Arbeitgeberseite ein höherer Anteil des Profits verbleibt. Die keynesianische Haltung, die sich der Einsicht verdankt, dass eine Kopplung der Löhne an den Produktivitätsfortschritt die Nachfrage und letztlich auch die Unternehmensgewinne wachsen lässt, wird  aufgegeben. 

Handel ist sehr wohl involviert, denn Waren müssen auch in diesem Modell natürlich Grenzen überschreiten. Doch tun sie das nicht nach dem Ricardoschen Schema des komparativen Vorteils bei immobiler Produktion. Vielmehr geht es um die weltweite Verschiebung und Auslagerung (der Komponenten) des Produktionskomplexes zwecks Ausnutzung absoluter Kostenvorteile.

Die klassische Handelstheorie stellt eine Situation dar, in der Unternehmen, die heimische Produktion auszuweiten suchen, indem sie sich auch in Exportmärkte begeben. Bei der Bargen-Globalisierung erfolgt das Gegenteil. Produktion wird im heimischen Markt zurückgefahren zugunsten ausländischer Standorte, von wo die Produktion in den Heimatmarkt zurück exportiert wird.

Die herkömmliche Handelstheorie geht davon aus, dass Handel stattfindet, um gegenseitige Vorteile zwischen den am Handel beteiligten Parteien zu realisieren. Es entspricht der Logik der Bargen-Globalisierung den Vorteil einer Seite (Kapital) im Verteilungskampf um den Unternehmensgewinn mit dem anderen Faktor (Arbeit) zu vergrößern. Während das Kapital gewinnt und die Arbeit verliert, ist auch nicht auszuschließen, dass kein Netto-Gewinn übrig bleibt, der sich immerhin theoretisch pareto-optimal umverteilen ließe, sondern unterm Strich die Nachteile für die Gesellschaft die Vorteile für das Kapital übersteigen.

Bargen-Globalisierung bedeutet, dass industrialisierte Länder deindustrialisieren. Sie bedeutet nicht, wie es die herkömmliche Handelstheorie darstellt, dass der Handel die Produktion weltweit insgesamt erhöht, sodass alle Beteiligten davon profitieren. Vielmehr führt die Bargen-Globalisierung zu einem Wettrennen um das niedrigste Niveau (an Kosten und Fachtoreinkommen). Das empfindliche Gleichgewicht zwischen Kapital und Arbeit kippt zugunsten den Gewinnern dieser Form der Globalisierung. der Einfluss des Kapitals auf die Politik steigt, der der Arbeitnehmerseite geht zurück. Die organisierte Arbeit in den deindustrialisierenden Ländern wird geschwächt.

Palley ist der Meinung, dass die internationale Handelsordnung dieser Ära weniger auf niedrigere Zölle als auf Bedingungen setzt, die es Firmen leichter machen, eine profitable internationale Präsenz aufzubauen.

Phantom-Handel wird möglich, bei dem eine Verlagerung der Produktion ins Ausland nur angedroht wird, um günstigere Konditionen am heimischen Markt zu erzwingen.

Bargen-Globalisierung ist ein Haupttreiber für Haushaltsdefizite (die gerne anderen Ursachen zugeschrieben werden), denn mit der Verlagerung der Exportindustrie ins Ausland wir das Heimatland stärker abhängig von Importen.

Keine der drei Globalisierungsphasen entsprach dem Ricardoschen Handelstheorie vom komparativen Vorteil. Die ersten beiden haben genuine, also beidseitig wirksame Handelsvorteile erbracht — die viktorianische durch die Arbitrage absoluter Vorteile bei der industriellen Fertigung und absoluter klimatischer Vorteile in der landwirtschaftlichen Produktion, die keynesianische durch sich weltweit auswirkende kostendrückende Skalenerträge und ein erweitertes Produktangebot auf niedriger Kostenbasis. Die neoliberale Phase der Globalisierung hat dem Kapital einseitig Vorteile verschafft, die jedoch nicht ausreichend sein mögen, um die Nachteile der Verlierer aufzuwiegen. Ohnehin sind Zeitgeist und die politischen Machtverhältnis nicht dazu angetan, ein Gleichgewicht zwischen Kapital und Arbeit ernsthaft anzustreben.

Zu ergründen, wie sich diese Fehlentwicklung hätte verhindern lassen, vielleicht durch ein international koordiniertes Nachfragemanagement, muss künftigen Posts vorbehalten bleiben.

Dubai 1960 - 2021

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Amazing.

What Is Going On in Turkey?

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A "massively oversimplified explanation",

• Turkey wanted to spark growth and liberalized bank lending rules.
• Banks and local businesses borrowed a lot of foreign denominated debt.
• A boom ensued.
• A bust is now ensuing.

And a detailed account (of a huge and complicated balance sheet mismatch by Turkish banks, with short term liabilities financed by long-term assets).

The Left and the Right — Two Halfs of a Bad Circle

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A note jotted down in a tired state at the end of the day, on having read this post.

In order to act as economic agents, humans must enforce political decisions. Try to set up a farmer's market, you will quickly find that markets cannot exist without political action. And by politics I mean the attempts at and results of defining what is legal or socially accepted and enforceable in a community. Most economic activities and in particular the functioning of markets depend on people working out the political substratum in which economic activities are embedded. In that sense every economy is a mixed economy, if by "mix" we mean the simultaneous presence of strictly economic activity (such as trade) and politically determined constraints without which the former could not come about. 

In other words, the liberal ideal of market activities as providing an alternative to politics, a means of depoliticising society, is fundamentally ill-conceived. That is what the "right" must learn. 

The "left" should return to its roots which are closely intertwined with liberal themes — such as (a) to (d) see below — and rediscover that, in an inevitably political world, the quality of politics is significantly improved by 

• (a) genuine pluralism, 

• (b) democracy, 

• (c) the rule of law and 

• (d) constitutional provisions bolstering the former three factors.

The "right" are hypocritical in that

• (a) by insisting on "market solutions" they pretend to be abstaining from political influence (when, in fact, they are not, because markets are political creatures and therefore political lobbyism is eagerly pursued by them) and 

• (b), they gladly accept state intervention of any kind and scale when these intrusions serve their purposes.

The "left" are equally hypocritical in that they are willing to

• ignore the broader concerns of a pluralistic democracy  — (a) to (d) — and

• champion an authoritarian state as long as it enforces their agenda.

The "left" think politics is unproblematic, even ideal, when it becomes the tool of their desires.
In their rhetoric, the "right" pretend to believe that politics is naturally bad, deserving to be replaced by "the good market", failing to appreciate the good that can be done by politics. 

Enticed by the irresistible prospect of the government enforcing their goal, the "left" lose their critical distance visà-vis the state too easily.

Both deny a fundamental truth about the economy, namely its inevitably mixed nature as partly a political and partly an economic enterprise.

The "right" cannot be trusted to further and protect the state's capacity for serving socially desirable purposes. 

The "left" cannot be trusted to guard against the state's totalitarian potential. 

Desirable is a balance of the spontaneous developments and the purposeful inroads. Too much political forcing is no less detrimental than overreliance on spontaneous forces. Yet the dangers of imbalance will not be understood by those ignorant of the mixed nature of the economy. 

See also A Note on Socialism and the Mixed Economy.

Contours of a Business Model

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A business model attempts to answer four questions:

• Who are your customers?

• What can you give them?

• How can you do that?

• How much will it cost?

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Customers

Understanding who your customer are is pivotal in two ways —knowing him from the outside and knowing him from the inside:

(1) Knowing your customer from the outside

• Who will be benefiting from your services, or put differently, 

• who is seeking your product or will become a taker of it once its availability is known to that person or firm?

Identifying customers may be a concentric process, starting with large segments — say, the financial industry—and then working toward the inner, more detailed segments, say, a bank or a hedge fund down to a M&A-niche player, or a prominent individual.

It may also be both 

• a sieving process leaving candidates by the wayside and 

• an accruing process, getting to know more about an industry, an industry segment, a company, and the inner workings and needs of a client:

(2) Knowing your customer from the inside 

Read about and do personal research on your clients, call them up and visit them, and when you have secured business with them use your contacts to learn more about the way the client functions and develops and what about your (potential) services are helpful and desirable from their point of view.

All along you should strive to work out a value proposition with respect to each of your clients, i. e. find answers to these questions:

• How do your services solve customers' problems?

• Why are your services better than those of other providers? 

Channels to Reach the Client

Writes Simon Akhrameev,

You already know your customers, how to cooperate with them and what you can offer. Now the question is how you can reach your customers. There are many ways to reach customers using conventional (direct marketing: emails, calls, offline ads, etc.) or modern marketing methods (online marketing: website + SEO, online advertising, SMM, etc.). 

The Service Delivery Process

Ensure you understand in detail the operational implementation of your business — the present outline addresses translation, texting and ghostwriting services, hence the specific references: ordering and registration, signing agreements, pre-translation and translation activities, project delivery and payment arrangements. Try to be as specific as possible and write each activity pertaining to your business.

Implementational Resources 

These will include not only physical assets like PC, printer, scanner, etc. but intellectual resources as well: software, legal registration, website, membership in organizations, etc.

Value-adding Partners

Search for value-adding partners that will either complement your services or serve as multipliers to get your more and better business, like concluding a contract with a web development company to enhance the range of their services and help their clients with website translation.

Cost, Revenues, and Profit

Determine how much you need to pay for key resources and how much you will have to spend for the main activities.

Then you need to determine your pricing model. Translators and agencies use different pricing models with most common being per word, per page and per hour models. Choose what suits your needs better. You may use this translator rates calculator by Proz.

Then set up realistic annual revenue rate. Calculate how much you need to cover your living expenses and find out how much will remain as net profit. Conduct a market research to find out the prices of your competitor to avoid charging too much or too low for your services.

Now you have a customized business model ready for your freelance translation business. But remember, your business model is not a rigid framework, it is a dynamically forming and developing concept that can and should be adjusted depending on current conditions. Keep on experimenting: try to cover new markets, offer better services, use new technologies, and reach new heights!