Tag Archives: Krugman

Transcendence instead of reform: taking a fresh look at money and its function

Here is  my comment on a recent article titled Krugman’s Craziness that appeared in the New York Sun. –t.h.g.

Very few people today, including prize-winning economists, possess a deep knowledge of the fundamental principles of reciprocal exchange, and most of those who do are committed to maintaining the global interest-based, debt-money regime that enables an elite few to control economies and governments worldwide.

In the wake of the 2008 financial meltdown and the ongoing economic crisis, more and more people are waking up to the fact that there is something seriously wrong with our systems of money, banking, and finance, but remain mystified by it and have no idea what to do about it.

Many are calling for reform of the system via the political process, and most reformers want a return to the gold standard and favor a government monopoly over the issuance of money. Clearly, new legislation is needed to reverse the trend toward ever greater centralization of power and concentration of wealth, but such measures have no hope of passing into law so long as the “money power” is able to buy politicians wholesale. Further, since money is a human contrivance that is supposed to facilitate the exchange of value (like goods, services, and various financial claims), people should be free to use whatever payment media they find mutually agreeable. Rather than monopoly of money, either bank-controlled or government-controlled, we need competition in currency. Let us have more freedom, not less.

There are solid precedents that prove the effectiveness of private and community currencies, as well as direct clearing of credits among buyers and sellers, a process that has the potential to make money as we’ve known it obsolete. Private initiative is presently bringing to market new and creative mechanisms of exchange and finance that have the power to bring about economic and financial stability, social harmony and a dignified life for all.

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Income (and wealth) inequality becoming a political issue

At long last, income inequality is becoming a mainstream political issue, thanks in large part to New York Times columnist Paul Krugman and Thomas Piketty, an obscure professor at the Paris School of Economics.

The English translation of Picketty’s new book Capital in the Twenty-First Centuryhas become a political bombshell especially since Krugman’s review of it appeared in New York Review of Books. Titled, Why We’re in a New Gilded Age, the review highlights Picketty’s research findings and political agenda.

As Krugman describes it, “The big idea of Capital in the Twenty-First Century is that we haven’t just gone back to nineteenth-century levels of income inequality, we’re also on a path back to ‘patrimonial capitalism,’ in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties.” And in assessing the book, he calls it “a tour de force of economic modeling, an approach that integrates the analysis of economic growth with that of the distribution of income and wealth. This is a book that will change both the way we think about society and the way we do economics.”

Krugman concludes his review with this statement: “Piketty ends Capital in the Twenty-First Century with a call to arms—a call, in particular, for wealth taxes, global if possible, to restrain the growing power of inherited wealth. It’s easy to be cynical about the prospects for anything of the kind. But surely Piketty’s masterly diagnosis of where we are and where we’re heading makes such a thing considerably more likely. So Capital in the Twenty-First Century is an extremely important book on all fronts. Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to.”

Now, Krugman has upped the ante with his April 24 editorial The Pikkety Panic, arguing that “..what’s really new about “Capital” is the way it demolishes that most cherished of conservative myths, the insistence that we’re living in a meritocracy in which great wealth is earned and deserved.” Krugman presents evidence to suggest that “conservatives are terrified” and in a panic to try to refute Pikkety’s inevitable conclusions, but failing to find substantive arguments, they have fallen back on name calling. If you can’t refute the facts, then try to discredit the source.

Summing up, Krugman says,

“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.”

If that isn’t enough to make the political pot boil over, another newly published academic study, Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens finds that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of Economic Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism.”

Of course, most activists and even ordinary people have known all that, but now that academia has taken notice and begun to present solid scientific evidence, the pressure on politicians to acknowledge these conditions and act on them will build more quickly.

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