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nice ones.  i finished that diary in a state of intoxicated despair.  but your outline miraculously threw out a thin line of hope.

supplementing / reinforcing some of your points:

  • When the rate of return on capital (r) is greater than the rate of economic growth (g) over the long term, the result is concentration of wealth, and this unequal distribution of wealth causes social and economic instability. (Piketty)

also, can we throw in anything robust with respect to

btw, MMT = Modern Monetary Theory, right?

Point n'est besoin d'espérer pour entreprendre, ni de réussir pour persévérer. - Charles le Téméraire

by marco on Wed Mar 25th, 2015 at 08:48:00 AM EST
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I wouldn't include Piketty. After doing sterling archive work he produced a supremely nonthreatening damp squib. And his solution is slight tinkering with the tax code.
by generic on Wed Mar 25th, 2015 at 09:18:34 AM EST
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I am not qualified to weigh in with my own opinion, but here is Krugman on Piketty:

"Capital in the Twenty-First Century," the new book by the French economist Thomas Piketty, is a bona fide phenomenon. Other books on economics have been best sellers, but Mr. Piketty's contribution is serious, discourse-changing scholarship in a way most best sellers aren't. And conservatives are terrified. Thus James Pethokoukis of the American Enterprise Institute warns in National Review that Mr. Piketty's work must be refuted, because otherwise it "will spread among the clerisy and reshape the political economic landscape on which all future policy battles will be waged."

<...>

Now, the fact that apologists for America's oligarchs are evidently at a loss for coherent arguments doesn't mean that they are on the run politically. Money still talks -- indeed, thanks in part to the Roberts court, it talks louder than ever. Still, ideas matter too, shaping both how we talk about society and, eventually, what we do. And the Piketty panic shows that the right has run out of ideas.

The Piketty Panic, APRIL 24, 2014

As far as I'm concerned, when Krugman and Jon Stewart take leave of the public discourse, we're effed.  Who else can I trust on matters economicsal?

Did Krugman fall for Piketty like I fell for Taylor Swift the first time I heard Shake It Off?  Besotted like a middle schooler?

Point n'est besoin d'espérer pour entreprendre, ni de réussir pour persévérer. - Charles le Téméraire

by marco on Wed Mar 25th, 2015 at 09:34:10 AM EST
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No, Krugman's economics are actually very similar to Piketty. Not to denigrate either one's contribution to public debate, but going by content Krugman tells us that except in these very special circumstances the classical theory works. The total inversion of Keynes actually. For Krugman the General Theory is the theory of liquidity traps.
by generic on Wed Mar 25th, 2015 at 09:52:02 AM EST
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To clarify: We should differentiate between theory and public discourse. Both Krugman and Piketty don't bring all that much to the first, but have a quite positive  impact on the latter.
by generic on Wed Mar 25th, 2015 at 10:08:12 AM EST
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... going by content Krugman tells us that except in these very special circumstances the classical theory works.

Ha.  That sounds a lot like how Mason characterized "the mainstream".  So you would you put Krugman among that lot?

Mainstream economics had convinced itself that capitalism tends towards equilibrium; and that any shocks must be external. It did so by reducing economic thought to the construction of abstract models, which perfectly describe the system 95% of the time, but break down during critical events.

In the aftermath of the crisis - which threatens some countries with a phase of stagnation lasting decades - Minsky's insight has been acknowledged. But his supporters face a problem. The mainstream has a model; the radicals do not. The mainstream theory is "good enough" to run a business, a finance ministry or a central bank - as long as you are prepared, in practice, to ignore that theory when faced with crises.

And here I was, believing Krugman's voice to be John the Baptist's, crying in the Wilderness.

Point n'est besoin d'espérer pour entreprendre, ni de réussir pour persévérer. - Charles le Téméraire

by marco on Wed Mar 25th, 2015 at 10:14:56 AM EST
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See: Who Are These Economists, Anyway? (By James K. Galbraith, January 2010)
This article is partly a response to Paul Krugman's piece in the Sunday New York Times of September 6, 2009, on the failures of the economists in the face of the crisis. Here, Senior Scholar James K. Galbraith takes up the challenge of identifying some of those economists--the "nobodies" of the profession--who did see it coming, and who have not gotten the credit they deserve. He also points out the urgent need to expand the academic space and the public visibility of ongoing work that is of actual value when faced with the many deep problems of economic life in our time--an imperative for university administrators, for funding agencies, for foundations, and for students.


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 25th, 2015 at 10:17:13 AM EST
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Krugman's economics are actually very similar to Piketty.Krugman's economics are actually very similar to Piketty.

There are many paths to the disruption of the reigning political-economic paradigm. I think Krugman has an excellent argument here, even while I disagree with him on money and banking. Piketty planted a minefield with Capital. That he stuck to statistics and did not veer into polemics makes it much harder to dismiss him. I have always loved polemics - to a fault. And ideological purity has long been the bane of the left.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Mar 25th, 2015 at 02:08:04 PM EST
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Who else can I trust on matters economicsal?

A lot of people. Krugman is the only one to stumble into a New York Times column. There his job was to propagate free trade. And then Bush was elected.

by IM on Wed Mar 25th, 2015 at 10:33:39 AM EST
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Who would be some others?                    

Point n'est besoin d'espérer pour entreprendre, ni de réussir pour persévérer. - Charles le Téméraire
by marco on Wed Mar 25th, 2015 at 09:57:46 PM EST
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Scott Fulwiller is a good place to start.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Mar 26th, 2015 at 02:35:54 AM EST
[ Parent ]
MMT is indeed Modern Monetary Theory.

I think Piketty does belong there, in that he charts a long-term destabilisation route. So he would belong with Keynes and Minsky.

In general, I think it is important to understand the economics of the urbanised, industrialised, consumer world we are living in and also how it differs from other economies.

I recently read a critique of Keynes analysis of the German WWI debt, based on the post-Napoleonic french states ability to pay 700 million livres over the course of a couple of years. I think a crucial difference (that was not covered) is the mainly rural characther of early 19th century France. If the state mainly extracts surplus from farmers with access to the productive resources it needs, the state does not really need to provide demand to keep the economy going, the farmer's belly does that just fine. But the economy we are in is in contrast extremly dependent on demand being there all the time in order for labour, capital and resources to form up to economic activity.

Bit of a tangent there.

by fjallstrom on Wed Mar 25th, 2015 at 10:18:11 AM EST
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I wholly agree about the need for the relevant economic history to be considered in any economic comparison. The fact that it blows up so many grand theories is likely a large part of why it and History of Economic Thought has largely been banished from Mainstream Economics. And I agree that Piketty's conclusions are both consistent with and supportive of MMT. But they are not the same thing.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Mar 27th, 2015 at 12:11:00 AM EST
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I see how my comment can be read like Piketty is part of MMT, but actually I meant he belongs on the list, at point three with Keynes and Minsky.
by fjallstrom on Mon Mar 30th, 2015 at 02:00:10 PM EST
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