Sunday, July 26, 2020

"The difference is not in the policy itself..."

A fragment from Raising Keynes: A General Theory for the 21st century by Stephen A. Marglin, at ScienceDirect:
Take Jacob Viner, the great Chicago (and later Princeton) economist, who had written in 1933 (Viner, 1933, p. 130)
If the government were to employ men to dig ditches and fill them up again, there would be nothing to show afterwards. But, nevertheless, even these expenditures would be an indirect contribution to business recovery. Their major importance would not be in the public works or the unemployment relief which immediately resulted, but in the possibility of hope that a substantial expenditure would act as a priming of the business pump, would encourage business men by increased sales, make them more optimistic, lead them to increase the number of their employees, and so on.
Compare this with what Keynes wrote in the General Theory:
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it private enterprise on well tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is (General Theory, p. 129).
The difference is not in the policy itself, but in the fact that for Viner the policy relies on the imperfections and rigidities that characterized the American economy in 1933, whereas for Keynes, the policy is the logical extension of his theory of employment.
I'm not sure I see the difference Marglin points out. But I found his remark most interesting.

Saturday, July 25, 2020

Averages distort reality

The problem with averages is that averages distort reality. For example, the average household has a net worth of approximately $710,000. You and I know that this is impossible based on common sense. But simple math doesn’t lie.

Take the total household wealth in the US of $81.8 trillion (according to the Fed) and divide by 115,226,802 US households (according to the Census Bureau) and you get $710,000.
From The Average Saving Rate By Income (Wealth Class), by Financial Samurai.

Thursday, July 23, 2020


The article about coronavirus aggressive action was originally published by the
Center for Public Integrity, a nonprofit newsroom based in Washington, D.C.

From the Center for Public Integrity, Exclusive: White House privately warns 11 cities must take “aggressive” action against coronavirus
Dr. Deborah Birx, a leader of the White House Coronavirus Task Force, warned state and local leaders in a private phone call Wednesday that 11 major cities are seeing increases in the percentage of tests coming back positive for COVID-19 and should take “aggressive” steps to mitigate their outbreaks.

The cities she identified were Baltimore, Cleveland, Columbus, Indianapolis, Las Vegas, Miami, Minneapolis, Nashville, New Orleans, Pittsburgh and St. Louis.

The call was yet another private warning about the seriousness of the coronavirus outbreaks given to local officials but not the public at large. It came less than a week after the Center for Public Integrity revealed that the White House compiled a detailed report showing 18 states were in the “red zone” for coronavirus cases but did not release it publicly.
The article also notes "It’s unclear who heard the warnings and was invited to the call". That dampened my outrage. But it is good to see that the Center for Public Integrity has integrity enough to include the bad news in its report.

I wish Trump had that kind of integrity.

"Flu deaths drop in Australia"

From ABC News (Australian Broadcasting Corporation): Flu deaths drop in Australia as coronavirus restrictions save hundreds of lives
Hundreds of Australian flu deaths have been avoided because of the lockdown measures used to prevent the spread of COVID-19, experts say.

The latest national statistics, obtained by the ABC, reveal from January to June 2020, there were just 36 deaths from the flu.

That compares to 430 deaths in the same period for 2019.


"What it's telling us is that many of the measures that are working to contain the spread of COVID-19 within the community are also very effective at reducing transmission of influenza"


"Australia is in the peak of its normal influenza season, but so are other countries like South Africa, New Zealand, Chile, and Argentina," Professor Barr said.

"They've all seen marked reductions in influenza cases so far this season."

Tuesday, July 14, 2020

Warning: You can't have One Economy if you don't have One Government

Sadly, this warning comes a little late. But Bill Mitchell makes the same observation today:
All the prior studies of potential economic and monetary integration in Europe like the 1970 Werner Report and the 1977 MacDougall Report had concluded that the only viable architecture for a common currency would require a substantial ‘federal’ fiscal capacity, legitimised politically, by a properly constituted federal parliament.

Wednesday, July 8, 2020

"Trickle up"

Economic Recovery Proceeding But Virus Promises To Keep Growth Slow and Uneven, Tim Duy, 6 July 2020:
A wildcard in this whole situation is the expansiveness of the next fiscal support package. The generally positive data flow could lead to a less expensive fiscal package. Such an inclination would be a mistake. The expanded unemployment benefits in particular are providing critical support at the base of the economy and is almost certainly the reason retail sales and consumer confidence are holding up better than might be expected given the magnitude of the shock. It allows workers to cover their fixed costs, which includes paying the rent and mortgage. Think of it as “trickle up” policy.
As Tim Duy says, a less expensive, less expansive fiscal package "would be a mistake".