Tue Sep 30th, 2014 at 08:18:16 AM EST
When the expanding transcontinental railroads completed the conquest of Native American lands in the Western USA from the 1860s, the owners of these exclusively private companies weren't exactly popular. The public's view was that they are selfish money-men seeking to cash out fast while they provide a crap service on shoddily-built infrastructure, seek monopolistic power and blackmail farmers, and buy politicians: the perfect example of the excesses of unfettered capitalism. The public backlash against the railroad Robber Barons led to anti-trust laws (Sherman Act, 1890).
More than half a century later, philosopher and cult leader Ayn Rand sought to re-interpret the Robber Baron era of US railroads by blaming those excesses of capitalism on state meddling, in the form of land grants. Her counter-example was one of the most successful railroad barons in the West: James J. Hill, nicknamed "The Empire Builder", who built his empire without any land grants.
Reading up on the history of the transcontinental railroads another half a century after, I drew the conclusion that neither of the two views was entirely correct, and see the importance of a different key factor: a general shortage of capital of these private companies. In this respect, the railroad baron I see as most noteworthy and significant is one of the last: E. H. Harriman, nicknamed the "The Railroad Czar", whose legacy lasts to this day.
by Crazy Horse
Mon Sep 29th, 2014 at 02:13:21 PM EST
I haven't read through (or listened to) a story Michael Lewis is pushing regarding the NY Fed's "Regulation" of Big Banks ; with a transaction between Goldman and Santander as a highlight.
I don't know if this story appears elsewhere on ET in the past days, but immediately felt I should post it here.
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by Frank Schnittger
Mon Sep 29th, 2014 at 10:48:55 AM EST
In Booman's continuing absence through illness, I have written another diary primarily for a US audience at the Frog Pond. However it deals with a complex subject which I really need help in elucidating. I would appreciate if readers here would point out any errors of fact, or needlessly contentious interpretations, in the comments, as I do not wish to mislead our US readers.
Having written a piece on American Exceptionalism I thought it might be appropriate to turn my attention to the EU, and to try to define what makes it a unique constellation of notionally independent states today. There are many misconceptions about what the EU is and is not, so perhaps some clarification from a citizen of a relatively enthusiastic member state (Ireland) may be helpful in understanding the phenomenon.
The first thing to be said about the EU is that it is in a state of continuous evolution, with different member states pushing that process along at somewhat different speeds and in sometimes quite different directions. That it hasn't all fallen apart (yet) may be regarded as quite an achievement in itself, especially given the the European propensity for fractious nationalism leading to regional and world wars.
But what, positively does the EU stand for?
by Frank Schnittger
Sat Sep 27th, 2014 at 08:45:00 AM EST
Crossposted from the Booman Tribune
Given Steven D's impassioned pleas for content in Booman's continued absence through illness I thought I'd break my vow of Omertà on all things USA which normally applies between Presidential election cycles. You see I have a certain resistance to writing about things I know little about and also have a strong sense that a countries own citizens have the primary right and responsibility to determine its policies free of interference from outsiders - well meaning or otherwise.
I make the exception of Presidential elections and some global issues like human rights and climate change because the election of "the leader of the free world" effects us all dramatically and often traumatically and because the USA state, whatever about its own citizenry, makes no bones about the fact that it regards the whole world as its back yard when it comes to dumping its externalities on others.
I also want to pay tribute to the extent to which Booman has informed my thinking on all matters of US politics. He's up there with Paul Krugman as perhaps the most influential blogger and thinker shaping my world view on key issues of economics (Krugman) and US politics (Booman). Just as I sometimes take issue with Krugman's politics (his recent ham-fisted interventions on Ukraine and Scotland in particular), I sometimes take issue with Booman's take on economics which sometimes seems more influenced by the Chicago School of economics than by Keynes, Krugman, Stiglitz or Piketty.
Wed Sep 24th, 2014 at 02:11:24 AM EST
In his New York Times column, Paul Krugman reports on two new studies, both of which indicate that limiting carbon emissions would be much cheaper than initially thought, and may actually increase economic growth. This would be in part because fossil fuels have negative side effects over and above global warming, in particular health effects that "drive up medical costs and reduce productivity".
Further in his column, he takes a swipe at those on the left who claim that "saving the planet requires an end to growth" (a position he calls "climate despair", such as groups like the degrowth movement and the Post-Carbon Institute. This, he reckons, is in large part due to a misunderstanding of what growth is, where those making such claims probably see it as a "crude, physical thing, a matter simply of producing more stuff, [not taking] into account the many choices -- about what to consume, about which technologies to use -- that go into producing a dollar's worth of G.D.P."
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Mon Sep 22nd, 2014 at 10:00:34 AM EST
Robin Fransman has a post on Pieria that neatly sums up a lot of what has been said here over the last few years (and that continues to prove depressingly accurate). Citing approvingly Mario Draghi's recent speech at Jackson Hole for its mention of a lack of an EU budget and of a lender of last resort as problems for the euro, he goes on to what Draghi didn't talk about:
Mr Draghi, is it really that difficult to see?
Using the EIP, the Commission can force countries into austerity when deficits and sovereign debts are too high, but can't force them into stimulus or tax cuts when surpluses are high. It can force countries into wage moderation and real wage declines when Unit Labour Costs rise too rapidly, but is powerless when wages rise too slowly. EIP will kick in when a country has a negative international investment position greater than -35%, but a high positive position goes unnoticed. It kicks in when inflation is too high, it does nothing when inflation is too low. Every indicator in the EIP is biased this way. The only indicator that has some balance is the current account indicator: deficit of more than -4% will sound the alarm bells, as will a surplus greater than +6%. But even this is simply another glaring asymmetry.
This is not a system that works towards a benign equilibrium. This is not an Excessive Imbalance Procedure. It's a deflation machine. It works towards an economy with perpetual current account surpluses and suppressed domestic demand, leaving exports as the only possible growth engine, under conditions that put constant upward pressure on the exchange rate of the Euro.
As has been pointed out many times here, all the partners in a single currency can't simultaneously run current account surpluses with each other; and, if Europe's sole vocation is to export, that calls for a big world (or Mars) with a growing appetite for Europe's goods and services. Fransman points out that projecting Eurozone export growth to the rest of the world in line with international trade and economic growth only adds 0.5% to GDP growth. Before one counts the effect of the shortfall in investment due to export gearing via demand depression.
Sun Sep 21st, 2014 at 03:47:43 AM EST
Now that Scotland voted 'no' in its independence referendum, the focus should shift to Catalonia and its campaign to hold an independence referendum on November 9. The referendum is opposed by the Spanish government. The Catalan regional parliament petitioned the Spanish parliament for the right to hold an independence referendum but was rejected. The Catalan parliament has just passed a "consultation law" intended to legalize the vote, which will be challenged shortly by the Spanish government in the Constitutional Court, which is expected to strike it down, at which point all bets are off.
It is my opinion that Catalan Premier Artus Mas of CiU jumped on the independence bandwagon two years ago only because his government was on the verge of collapse from the independentist challenge from the street and the looming insolvency of his government brougth about by the crisis and his own austerity policies. The Spanish government took the chance to bail out the Catalan government with austerian strings attached.
Below the fold, an enumeration of possible scenarios for the coming autumn of discontent.
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by Frank Schnittger
Fri Sep 19th, 2014 at 09:39:52 PM EST
Ireland has been producing some fairly decent economic statistics for a couple of years now - despite the general stagnation in the Eurozone and the continuing "consolidation" of the public finances as the Troika imposed austerity plan seeks to reduce the current budget deficit to below 3% by next year. But the latest figures showing 9% GNP growth and 7.7% GDP growth in the last 12 months take the breath away, and even if they prove to be something of an anomaly, would seem to indicate that the Irish economy has reached take-off velocity despite the heavy gravitational pull of public sector spending cuts, a 125% debt to GDP ratio, and stagnant external markets.
About 5% of Irish GNP and GNP can be attributed to the tax avoidance strategies of (mainly US) corporates basing themselves in Ireland for tax purposes, whilst in reality, the vast bulk of their activities take place elsewhere. The
marked divergence between GNP and GDP growth above can also be attributed in large part to the so called "Patent Cliff" which has resulted in a large fall in the value of pharmaceutical exports as blockbuster drugs like Lipator and Viagra come off-patent.
Ireland is the fifth biggest exporter of drugs in the world, and Irish chemical and pharmaceutical exports surged by more than a quarter in the five years to 2011 when they peaked at 56bn, a figure equivalent to almost a third of gross domestic product. But the employment content of those exports is relatively small, and what is clear from these recent figures is that there is a much more broadly based recovery taking place in the Irish economy which is now even making up for the fall in drug export revenues.
by Democrats Ramshield
Thu Sep 18th, 2014 at 07:18:53 PM EST
(Cross posted by author from the Daily Kos)
Written by an American expat living in the European Union on the eve of the election referendum on the independence of Scotland and the birth of a new nation. The American media has portrayed the vote for Scottish independence (on the "Yes" side led by Alex Salmond and on the "No" side led by Alistair Darling) in little more than sound bites to match the bumper sticker attention span that matters too often are given in the plutocratic owned American corporatist media. The truth and simple matter is that the conservative government of British Prime Minister David Cameron has pushed austerity measures onto Scotland that are so severe that Scottish progressives along with a broad blanket coalition of patriotic minded citizens have organized through the ballot box a lawful election, the point of which is to secede from Great Britain so that oil rich Scotland, which has the greatest known oil reserves in the European Union can finally be in control of its own future.
(Below is a short (on the lighter side) entertaining 5 minute video made for non-British people that explains the history and background of what has led to Scotland's independence referendum today)
BBC - Scottish independence: Post-Yes Scotland 'to end austerity'
The Scottish government believes increasing public spending will help encourage economic growth after independence. Scotland would borrow billions of pounds in the first few years of independence in a bid to kick start the economy and end austerity, the Scottish government has confirmed.
So it is historically that we are witnessing nothing less than the peaceful lawful birth of a nation by democratic means through the ballot box, whereupon it must be asked, can we in America learn from Scotland into our pushed-to-the-wall fight to the finish with evermore draconian GOP austerity measures.
Ask yourself if an referendum for independence was available in the blue state that you're living in, how would your state vote? In asking yourself this question we start to understand the somber reality that Scottish voters are facing today on the eve of the birth of the independent nation known as Scotland.
(I've made a collage posted as a graphic below as a service to the DKOS community. To access these election day newspaper headlines in full text please simply click on the graphic below which will take you to the UK BBC website and then simply click on the right arrow below the graphic to cycle through them. You can decide for yourself what Scottish newspapers are saying on election day wherein we are witnessing the birth of a new nation called Scotland.)
Please click on the link below to see what the Scottish headlines say
Like Scotland, we in America have been lied into wars for oil. Like Scotland, the power elite in America are living well at the expense of the poor and working class. American progressives are seeing so-called austerity measures always ever only aimed at them, their children and their communities. These things are never aimed at the 1% who are never made to pay their fair share of taxes. Week after week, month after month, year after year, the earning power of American working class people continues to shrink. Less money is made available for health care, welfare, education at the hands of conservative tyrants, it must therefore be said that American progressives share the same values, aspirations, hopes and dreams of the supporters of the Yes campaign in Scotland. Surely therefore we can say today that we are all Scottish and we stand with you on the eve of the birth of a new nation called Scotland and that our hopes and dreams and best wishes and those of us who are religious, prayers go with you this day and always in support of what William Wallace called "freedom" which is the bedrock of the American working class dream.
The power elite ignored for many years the cries of anguished of the people who live in Scotland, as did the power elite in the banking sector who seem to own everything but build nothing who followed policies to give more to those who have more at the expense of those who have less and in the case of too many, those who have nothing at all. So when the people living in Scotland could see the political corruption they were faced with, they turned to the only support they could find and indeed have ever known which is each other to form the Yes campaign in support of Scottish independence in the hope for a better tomorrow. Though underfunded they have now created a referendum vote that is too close to call and for the first time the power elite and the big powerful bankers who own everything and build nothing are left in white knuckled fear because of the power and sheer strength of one person, one vote at the ballot box, wherein working class people in a democracy still have a voice and power.
This despite the worst scare mongering campaign imaginable by the "No" side of the referendum on Scottish independence wherein they lied to people telling them they would no longer be able to use the British pound when in fact the British pound is an internationally traded currency and therefore the Scottish people rightly may view it as their pound and they don't need London's permission to use it anymore then the people of Panama need the permission of the US Congress to use the US dollar as their currency.
Nobel Laureate Says U.K. Can't Stop Scotland Using Pound
By Rodney Jefferson and Anna Edwards Aug 21, 2014 1:
"Scottish residents will vote in an independence referendum four weeks from today. The pound has taken center stage during the campaign, with the three main U.K. political parties all saying they would refuse to grant a currency union.
Fellow Nobel laureate Stiglitz said yesterday the U.K.'s stance was a bargaining chip and will be dropped should voters back independence. Polls suggest Scots will reject going it alone, though the gap isn't wide enough to rule out a Yes vote."
As such, as American progressives, can't we learn from the Scottish example? Particularly in the states that have referendum that we can gather signatures and put measures on the ballot that can change the lives of working class people if we all stick together and work together, for the common good of this place called America in support of this thing called the American working class dream. This is something that the people of Scotland and the world over can understand because we all want good schools, clean streets, good infrastructure, access to health care and a tax system that is fair for working people and creates the ability to hold the super rich accountable in paying their fair share of taxes; in honest elections that aren't bought by the super rich, in a country where lobbyists are prevented from buying politicians just as soon as they're elected. (Please see the landmark Supreme Court's decision in Citizens United wherein the Supreme Court of the United States has declared that as corporations are people, they can dump unlimited amounts of money into buying elections with their private secret capital)
So yes, we in America can understand the drive and the hope of the people of Scotland in their drive for independence, freedom and liberty and control of their lives and their country. Many of us that are American progressives applaud you in your Yes campaign to build hope, prosperity and freedom, as we are part of the same progressive soul and as such we are with you. On this day the birth of a new nation called Scotland, may it shine bright forever from this historic moment onward right til the end of time!
(In recent years conservative Gov. Rick Perry of Texas has on several occasions threaten that Texas could vote to leave the United States, leaving many progressives tongue-in-cheek wishing he would).
Texas Governor Rick Perry Threatens Secession From The Union
Texans like to talk about independence and the fact that it's been part of six countries in its history. At the State House, they honor all Six Flags of Texas (The US, the confederacy, Mexico, Spain, France and its own flag as a once-independent state.) So it's allegiance to the US is a bit less than other states, which for the most part have only known one country.
This diary points out that the only way to elect better progressives in keeping with the site's mission and to gain power at the ballot box is to register to vote. In the Scottish election over 90% of eligible voters are expected to vote. Let's imagine what progressives could do if we had a 90% turn out in the polls and how this could change America. I think we have a lot to learn from Scotland, don't you? One of the things we can learn from Scotland is how to run a positive Yes campaign. Another thing we can learn from Scotland is that everyone in America as a human right should have full access cradle to grave universal medical coverage paid for under a single payer system through taxes, that are fair and equitable. The United States is the only major industrialized nation in the world that doesn't offer job protected paid maternity leave by right of law. Yes I think we have a lot to learn from Scotland as well as history. The only question is are we open minded enough to listen. For it is said those who don't learn from history are doomed to repeat it.
)))))) UPDATE: Here's a link to the BBC's live steam which will broadcast online the results of the referendum as of 10PM British Time.
(More info about the Scottish Referendum - These pages automatically updates)
by A swedish kind of death
Mon Sep 15th, 2014 at 09:20:30 AM EST
This did not end well.
Looked good half a year ago with the left in the lead, but now my facebook flow is filled with grief.
Sun Sep 14th, 2014 at 01:41:41 AM EST
Here from my Eagle's Nest in Linlithgow, in Scotland's Central Belt, I thought it would be rude not to chip in my thoughts as to next Thursday's referendum vote.
My first data points are historic election turnout figures in Scotland covering both UK & Scottish Parliament Elections.
Election Turnouts 1997 to 2011
Then there's the 2011 Scottish Parliament Election outright win for the SNP which the voting system had pretty much been gerrymandered to prevent. I assume that very few of those voting SNP in 2011 will either abstain or vote No.
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by Frank Schnittger
Thu Sep 11th, 2014 at 04:18:10 AM EST
Luis de Sousa's excellent diary has provoked a long comment by me saying a lot of things I've been meaning to say for some time, but which are not all a direct response to his thoughts. So I think a separate diary is merited analyzing what has changed in the Scottish Independence debate.
What I think has shifted the debate in Scotland is the realization that institutions and assets which they had always been told were British, were in fact English.
Thus the Pound Sterling belongs to England (the central bank name: Bank of England should have been a giveaway). The military bases and manufacturing facilities in Scotland will be moved south - proving that the Army and associated industries belong to England not all of Britain. And the general sense that the Scots will have to develop all institutions and skills of Governance from scratch - as if Scots have had no hand act or part of the Departments of State in Whitehall.
In other words the implied blackmail of taking all these things away has only confirmed that Scotland was being ruled not just from, but by, England in the first place. Parties to a divorce normally split their joint assets and one party cannot claim virtually all the house and contents as their own: and yet this is partly what the No campaign have been claiming.
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by Luis de Sousa
Tue Sep 9th, 2014 at 04:28:55 AM EST
Thursday the 18th Scotland is going to vote what may well be the most important political decision in several centuries for itself and the UK. The reasons that prompted this process are many: the perception of a slow derision of Scottish identity and culture, the crystallisation of the UK's democracy (where non elected individuals still retain important powers), natural resources, budget sharing, NATO, just to name a few.
I am not Scottish, nor do I live in Scotland, thus I can not possibly fathom everything driving the vote. But one exercise I can make: assess the economic risks associated with the decision. And by doing so the complexity of this question becomes apparent, as so how uncertain is the outcome.
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by Crazy Horse
Sat Sep 6th, 2014 at 08:23:01 AM EST
A US judge has ruled that BP is guilty of gross negligence in the Deepwater oil catastrophe. If upheld (of course BP will appeal) it will increase the fine from $1100/barrel to $4300/barrel, totaling an estimated $18 Billion.
BP had already plead guilty to 14 felonies, with a fine of $4.5B in a plea bargain with the US Gov! (Yes, felonies.)
So how does one count the number of barrels already spilled, especially when BP publicly stated it was leaking 5000 barrels/day, while internal reports stated the leak could be between 62,000 and 146,000 barrels per day?
A colleague of mine has now reported for the first time the effects of using as "dispersant" Corexit, both on the health of some 47,000 cleanup workers, and how the amount of oil spilled was camouflaged.
Read on to discover why I continue to use the word poison in describing fossil fuels.
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Thu Sep 4th, 2014 at 08:46:17 AM EST
If you thought the ECB setting its deposit rate at negative 0.10% was the end of the road for interest-rate policy, you got another think coming:
4 September 2014 - Monetary policy decisions
At today's meeting the Governing Council of the ECB took the following monetary policy decisions:
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.
- The interest rate on the main refinancing operations of the Eurosystem will be decreased by 10 basis points to 0.05%, starting from the operation to be settled on 10 September 2014.
- The interest rate on the marginal lending facility will be decreased by 10 basis points to 0.30%, with effect from 10 September 2014.
- The interest rate on the deposit facility will be decreased by 10 basis points to -0.20%, with effect from 10 September 2014.
How deep does the rabbit hole go?
Sat Aug 30th, 2014 at 04:09:42 AM EST
Posted by Frances Coppola on Aug 27th 2014, 2 Comments
This is the first of several posts covering topics discussed at the recent Lindau Meeting for Economic Sciences.
Several economists at the Lindau meeting were severely critical of central banks' conduct of monetary policy in the light of continuing depression in the US, Japan and much of Europe, and called for greater use of fiscal policy to bring about recovery. Among the most critical was Christopher Sims, who gave a trenchant presentation on "Inflation, Fear of Inflation and Public Debt".
He started by announcing the death of the quantity theory of money, MV=PY. Due to interest on reserves and near-zero interest rates, "money" can no longer be clearly distinguished from other financial assets. This is a fundamental point which requires some explanation.
These days, nearly all forms of money bear interest, which makes them indistinguishable from interest-bearing assets. For Sims, the paying of interest on bank reserves, coupled with the decline of physical currency, all but eliminates the distinction between interest-bearing safe assets such as Treasury bills and what we traditionally call "money". All assets can be regarded as "money" to a greater or lesser extent: the extent to which assets have "moneyness" is really a matter of liquidity.
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by Xavier in Paris
Fri Aug 29th, 2014 at 06:49:49 AM EST
In english books:
In french books:
To follow on my comment in a previous thread: Hollande has been at economical scholl in the 70s, which corresponds in both graphs to a minimum in Keynes hype vs a maximum in Friedman's. And yes, France seems to be be much more keynesianite than the US/UK...
note: if somebody manages to insert an iframe in a comment thread, I'd be glad to transfer this "diary" to the thread it belongs.
Tue Aug 26th, 2014 at 04:38:23 PM EST
The Tricorder XPrize (http://www.qualcommtricorderxprize.org) is a $10 million contest
"to bring healthcare to the palm of your hand.
Imagine a portable, wireless device in the palm of your hand that monitors and diagnoses your health conditions. That's the technology envisioned by this competition, and it will allow unprecedented access to personal health metrics."
22 teams have paid the $5000 entry fee, 10 finalists will be chosen, up to 10 models will be tested by consumers May-October 2015, and the winning entry will be announced by December 2015.
One of the entries is Scanadu which seems to have a "$150 tricorder" already on the market
"The Scanadu SCOUT is incredibly easy to use--just raise the handheld device (connected by Bluetooth to a smartphone) to your temple, and wait 10 seconds for it to scan your vital signs, including temperature, ECG, SPO2, heart rate, breathing rate, and pulse transit time (that helps measure blood pressure). 'It lets the consumer explore all the diagnostic possibilities of an emergency room,' explains co-founder Walter De Brouwer, a Belgian futurist and entrepreneur who first prototyped a backpack-sized tricorder-like device in the late 1990s."
University of Florida's wireless and remote vital signs monitoring system may be available (for pets) as early as 2016:
Fri Aug 22nd, 2014 at 04:42:03 PM EST
For those who notice, the bad pun is intentional...
From Pieria - an alarming piece that suggests Italian is basically doomed:
Anyone with an interest in government finances and public spending must, by now, have developed a morbid fascination with Italy.
The country slid into recession again this month, wiping out not only its post-recession growth but much of its growth since it joined the Euro.
Chart via Matt O'Brien at the Washington Post.
The pattern of Italy's GDP growth has become detached from that of the rest of the G7. Since the crash, all the other major economies have grown, albeit at different rates. Italy, though, is on a severe downward slide.
Chart via Ben Chu.
Some people blame the Euro for this but Italy was in trouble before it joined the single currency. Both Italy and the UK crashed out of the ERM in 1992. For the UK, this was the start of a decade of high growth but Italy's economy stalled in the years after and grew much more slowly for the rest of the decade. Briefly, in 1991, Italy overtook Britain and France to become the world's 4th largest economy. Since then, though, it has been a tale of slow decline.
The Italian government had borrowed heavily during the boom years and the slowdown saw its debt-to-GDP levels steadily rise.
Chart via Paul Krugman
This excellent piece by Economics Help explains the story in detail. The upshot, though, was that by the start of the recession, Italy's debt was way ahead of most of the other major economies.
Source: IMF World Economic Outlook 2014
But here's the twist. Italy reduced its deficits drastically in the 1990s. For many years now, it has run a primary surplus. This means that, before debt interest, its government revenue is higher than its public spending. Unlike many other countries, including Britain and the USA, it is not borrowing to fund public services and social security.
Chart via Igor Di Giovanni
It is, however, having to borrow to fund the debt repayments on its historic borrowing which is why, despite its primary surplus, it is still running a deficit and its debt is still going up.
Thu Aug 21st, 2014 at 09:52:49 AM EST
Continuing my review of Wolfgang Streeck's Buying Time : The delayed crisis of democratic capitalism. (The first installment is here)
I want to strongly recommend reading the book. Streeck is a philosopher and sociologist, and his take on economics is a refreshing re-injection of the social element that orthodox economics so rigorously excludes and ignores. My feeling is that, in the fightback against neoliberalism, "Buying Time" is as important as, and convergent with, Thomas Piketty's "Capital".
Chapter 2 : Neoliberal reform : from tax state to debt state
Streeck documents the progressive disenfranchising of actual electors, as each nation's creditors gain the whip hand after the transformation of our "tax states" into "debt states", and aggressively counters the neo-liberal meme that the slide into debt has been the product of demagogic profligacy.
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