Economist Richard Wolff discusses in the video below Trump’s budget proposal, which aims to dramatically slash various benefits for many of the poorest Americans, cut taxes for the richest and ramp up military spending. It is unlikely to pass through Congress unaltered, and it is apparently somewhat fantastical in its economics, but it remains disgraceful.
I am not a socialist. In my view, social democracy, the mixed economy and a reformed capitalism which deliver widespread prosperity is surely an effective bulwark against revolutionary socialism. Indeed, in the early decades after World War II, this was more widely accepted in the West as part of the ‘soft’ fight against communism. If capitalism does not deliver the goods to the majority, it will lose legitimacy.
In a number of European countries, relatively strong unions which act as social partners with government and business, rather than as shock troops of the revolution, have helped to achieve both prosperity and a degree of social justice alongside individual liberty. There may sometimes be trade-offs between these goals, but they are worth shooting for together.
Supply-side economics sums up the economic theories that came of age in the 1980s under Margaret Thatcher and Ronald Reagan. They were a reaction against the ‘Keynesian’ consensus that the state should intervene in the economy to promote full employment, and prevent excessive inequality. Taken together, it was thought that these would help to create widespread prosperity.
The policies that SSE promoted were a response to the economic crisis of the 1970s that brought an end to the ‘Golden Age of Capitalism‘ and the Keynesian consensus. Growth in output and productivity were slowing, and inflation and unemployment rose at the same time, an outcome that discredited the Phillips curve which posited an inverse relationship between the two variables.
Although Thatcher and Reagan attacked ‘big government’ as the problem, their policies involved substantial intervention in the economy to weaken labour and restore the profitability of the private sector. So there was still plenty of government ‘meddling’, but the interests it supported changed. The power of trade unions was much reduced and deregulation and privatisation became fashionable. Continue reading →
An interesting recent paper here from the Levy Economics Institute of Bard College on the prospects for the US economy in the coming years. The authors use their model, which was developed with the late post-Keynesian economist Wynne Godley (one of the few to have predicted the Great Recession), to take stock of the current situation and to discuss alternative future scenarios.
Nikiforos and Zezza argue that the US economy has performed relatively poorly since the Great Recession, and growth outcomes continue to disappoint. Although headline unemployment is relatively low, there remains substantial labour underutilization in the form of ‘marginally attached workers’ and involuntary part-time workers, which when added to the headline rate is known as the U6 measure. The latter is nearly double the headline rate, and helps to explain the continued weakness in wage growth.
The US economy faces three headwinds which continue to constrain growth: income inequality, fiscal conservatism, and the weak performance of net exports (exports minus imports). Continue reading →
William Lazonick, professor at University of Massachusetts Lowell, explains how rationalization, marketization, and globalization characterize the U.S. economy during the past 50 years, and how the behavior of companies and fate of American workers have changed during this process.
In this 12 minute interview, economist Richard Wolff discusses a range of current issues, including Amazon’s threat to jobs, the stock market under Trump, and the repeal of Obamacare. He is definitely informative, as well as somewhat entertaining in his (what I might term) ‘vigorous’ delivery.
A great interview with Professor Michael Hudson, who is very much in the heterodox, non-mainstream camp of economists. The title says it all: how our economies are going in the wrong direction and some thoughts on how to put things right. Well worth a read.