very important stuff
two comments heard on Garrison Keeler's "Prairie Home Companion" radio show: -- they invented astrology to make economic forecasts look scientific. -- how can you tell an old geezer with Alzheimer's from an economist? the economist is the one with the calculator. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
WTO illegal you ask?
http://www.nytimes.com/2001/03/19/national/19MILI.html March 19, 2001 Air Force Proposes Plan to Help Boeing With Sale of Planes By JAMES DAO WASHINGTON, March 18 In a twist to the Pentagon's growing efforts to bolster the defense industry, the Air Force has devised an ambitious plan to help Boeing, the world's biggest commercial jet producer, sell a version of its latest jumbo military transport plane to private cargo companies. The plan calls for the Air Force to provide an unusual array of financial incentives to encourage private carriers to buy the transport plane, the C-17 Globemaster, including guaranteed government transport business, a Pentagon promise to buy back C- 17's from firms that go bankrupt, and even subsidies up front. In exchange, the private haulers would be required to make their C- 17's available to the Air Force for war and other emergencies. The plan is subject to the approval of Secretary of Defense Donald H. Rumsfeld, who has yet to review it, and Congress, where the C-17 program will be pitted against other big- ticket programs facing cuts. But for Boeing, the plan could help create a market in oversized commercial cargo planes potentially worth billions of dollars, more than enough to keep its C-17 line in Long Beach, Calif., humming into the next decade. Without new orders, the 8,500-worker plant there is expected to close within five years. The plan would begin with the sale of 10 of the planes to commercial cargo companies at a total cost of $1.6 billion. "We see this as win, win, win, for the Air Force, for Boeing and the air cargo industry," said George P. Sillia, a Boeing spokesman in Long Beach. But Pentagon watchdog groups say the proposal underscores an alarming trend toward government- business partnerships that weaken Pentagon oversight of the defense industry and raise questions of favoritism. The partnership may diminish the Air Force's desire to hold a contractor to the strictest accountability, these critics warn, and may result in the buying of weapons that are not necessary. "These cozy relationships have always existed," said Danielle Brian, executive director of the Project on Government Oversight, a nonprofit watchdog group that has studied the C-17 program. "But this is more overt than in the past. And that's a disaster for taxpayers." Industry experts say the C-17 proposal is groundbreaking in its foray by the military into the private sector. Although the Pentagon has in the past authorized contractors to sell commercial versions of military equipment, this would be the first time in memory that it would help do the selling by offering such broad financial incentives, the experts said. And with many defense contractors asserting that they have been dangerously weakened by shrinking military budgets, such forays could become more common, the experts said. "It's a sign of the times," said Richard Aboulafia, an expert in military aircraft with the Teal Group, a consulting firm. "A fiscally weakened Department of Defense, declining markets and an industrial base that has over-capacity are potent recipes to encourage a more interventionist approach," Mr. Aboulafia said. "There is no question we'll see more of this."
Re: WTO illegal you ask?
BTW, why aren't US bans of European beef illegal under the WTO rules? Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Wall Street's future?
World deflation - led by Japan By Michael Roberts The complacent optimism of capitalist consensus is fast disappearing. At the beginning of this year, the general view about the world economy was that US growth would slow gradually to about 3% from 5%, Japan would pick up a little to about 2% and Europe would trundle along at about 2.5%. The US central bank, the Federal Reserve, would cut interest rates to ensure that any slowdown would not mean a loss of investor confidence or consumer demand. Harold Wilson once said that a week was a long time in politics. Well, January seems like eons ago in global economics. After a non-stop spate of warnings about lower profits from the main US corporations and the release of economic data each day that showed a weakening economy, US stock prices have plummeted. And it's not just been the so-called hi-tech stocks, but also all the mainstream company stocks as well. The 60% drop in the value of share prices in the last year has meant that American households have lost $3trn in financial wealth from their peak at the beginning of 2000. At that time, nearly one-third of all household assets (including property) were held in shares. Americans still have a lot more in the value of shares than they had five years ago, but the shock on the psychology of middle-class households is palpable. They are going to save more and spend less. As a result, the US economy is going to slide even further. And US companies are also suffering. According to the latest figures provided by the Federal Reserve, corporate profits are now falling at annualised rate of 26%. Although they are cutting back on investment spending, the drop in profits means that companies have less profit to reinvest. So they are borrowing even more. US companies have never been more in debt and have never spent so much more than they can raise in revenues. Their cash deficit has now reached over 5% of GDP. Companies are going to have to cut back even more on investment and production in order to narrow that borrowing gap and many will go bust. That means lower investment and economic recession on the way. The coming slump in the US is already mirrored across the Pacific in Japan, which has been stagnating since its stock market collapsed at the end of 1980s. The bursting of that bubble has continued taking out Japan's stockbrokers and banks by the dozen and bringing down the likes of Barings in the infamous 'Nick Leeson' rogue trader scandal. Now the Tokyo stock market is at a 16-year low. It's the future for Wall Street. Full article: http://www.marxist.com/Economy/world_deflation301.html Louis Proyect Marxism mailing list: http://www.marxmail.org
Dean Baker on the bear market
Economics Reporting Review MAKING SENSE OF THE MARKET'S NOSE DIVE Week of March 10 - March 16 By Dean Baker The stock market plunge was the major economic story of the week, and the newspapers struggled to make sense of it. While some of the reporting provided helpful insights into the thinking of investors, there was a remarkable reluctance to seriously evaluate the evidence of a bubble, and to assess the proper valuation of the market. While no one can say exactly what the proper price for the stock market should be, given a projected path for profit growth, it is fairly easy to set some range of reasonable values. Policy-makers routinely use projections of profit growth in other areas. Most importantly, the budget projections include a forecast of profit growth to provide a basis for projections of corporate income tax receipts. Reporters frequently use these budget projections in their stories, regarding them as serious numbers. This implies that they are using the profit projections from Congressional Budget Office (CBO) that form the basis of a significant portion of the revenue projections. The CBO currently projects that real (inflation adjusted) profits will rise by an average of approximately 1.0 percent annually over the next decade. Since over the long-term stocks cannot consistently rise more rapidly than corporate profits, the CBO profit numbers imply that real stock prices will rise by approximately 1.0 percent annually. The current dividend yield on stocks is approximately 2.0 percent, which implies a total return of 3 percent (1 percent capital gains plus 2 percent dividend yield). Since a completely safe inflation-indexed government bond pays a 3.3 percent real return, unless investors are willing to hold stock that pays them a lower return than a government bond, stocks remain significantly over-valued. The only way for stocks to provide a reasonable premium over government bonds (historically it has been 4.0 percentage points) is for stock prices to fall so that the dividend yield rises. If stock prices fell by 50 percent, then the dividend yield would double from 2.0 to 4.0 percent (the dollar value of dividend payments would not change), restoring some of the historic premium of stocks compared to bonds. This sort of simple analysis was altogether absent from the discussion of the market in the paper this week. In fact, one Washington Post article justified current stock prices by reporting that profits should rise by 10-15 percent annually over the next decade (7-12 percent in real terms). This would imply the largest redistribution from wages to profits that the nation has ever experienced. If it proved true, real wages would be far lower in 2011 than they are today. (From www.tompaine.com) Louis Proyect Marxism mailing list: http://www.marxmail.org
Will the Euro Roar? Will We Go to War?
Will the Euro Roar? Will We Go to War? When the US economy grew with less vigor in the fourth quarter of 2000, could Europe be starting to flex its muscles? Now, with the central bank of the US set to lower interest rates, a steady rise of the Euro against the dollar is possible. A fall off in the value of the dollar; a reduced US government surplus or potentially even a deficit; and a reduction in interest rates paid to lenders; all reduce the incentive to invest in the US economy. The overall economic outlook for the United States is thus poor. U.S Gross Domestic Product increased 4.2% in 1999. In the four quarters of 2000, US real GDP increased at annual rates of 4.8% (1Q); 5.6% (2Q); 2.2% (3Q); and 1.1% (4Q). Growth slackened as the year progressed. Overall, real GDP grew 5.0% in 2000. http://www.bea.doc.gov/bea/newsrel/gdp400p.htm. The fourth quarter numbers are preliminary estimates. The accumulated national debt now stands at $5.7 trillion. http://www.publicdebt.treas.gov/opd/opdpenny.htm. Japanese investors alone hold about $350 billion in US treasuries, and $150 billion in other direct investment in the US (FDI). http://www.nytimes.com/2001/03/18/opinion/18GART.html?pagewanted= (Thanks to L.P. for the link.) Lower expected returns would prompt some of these investors to liquidate and re-invest elsewhere, quite likely in other countries. Far beyond the fraction of US economic space these investments occupy, the effect of a sell-off would be felt in the US in the downward trend of the value of similar investments. For this reason and reasons analogous to it, the US central bank authority, the Federal Reserve's Open Market Committee, does not have the room to maneuver that a monetarist response would require. If "the Fed," as it is affectionately called, lowers interest rates too much, the value of the dollar will decline in relation to the euro and other world currencies. Japanese and other investors would have an incentive to take their money out of the US and put it into other countries. Thus, it is unlikely that they can budge interest rates down much more than they have already done. The Open Market Committee's next move is set for tomorrow, March 20. If a monetary policy won't work, will a fiscal policy cut it? The Bush tax cut, a fiscal stimulus plan, is unlikely to have much effect because it will go in large measure to those taxpayers who already have relatively high incomes, and thus relatively high discretionary incomes. They will be free to invest the money rather than spend it. They will also use some of it to buy imports that will not help economic growth immediately. Investments can result in economic growth eventually, but only with time. Taxpayers with lower incomes and lower discretionary incomes would spend the money they receive much faster, resulting in a boost to consumption spending, and directly translating to an increase in GDP. If any tax reduction package is passed, it will have to be weighted heavily in the favor of the rich to win the President's signature, however. The US economy will clearly grow slowly in the first quarter of 2001, or actually decline. Reduced income tax receipts will follow, resulting in a lower budget surplus, or possibly a deficit. In a similar vein, some states are already reporting dramatically lower sales tax receipts. NPR, 19 March 2001. Another impediment to a positive effect from tax cuts would be the need to phase in the cuts over time. Without front loading, no impact at all would be felt until 2002. President Bush advocates front loading (changing the withholding rates after the legislation is signed into law), but even then the plan's largest impact will take place years from now, especially of that part of Bush's tax plan which abolishes the so-called "death tax," or estate tax, which applies only to the estates of dead people with a net worth greater than $675,000. Reduced profit prospects in the US should steer capital to the other major capitalist economies: Japan and Europe. Japan, however, is in the midst of a long recession. If money was pouring out of the US, much of it should be going to Europe. The new European Union currency, the euro, should naturally benefit from this. The euro is not going anywhere, however. One euro (?) is currently worth 0.897845 US dollar. See http://www.xe.net/ucc/ for an up-to-date conversion. This represents a three-month low spot for the euro. Euro-zone consumer prices rose an unexpectedly high 2.6% annual rate in February 2001, uncomfortably high above the European Central Bank's target of 2%. http://news.ft.com/ft/gx.cgi/ftc?pagename=Viewc=Articlecid=FT3JQYKPDK Clive=trueuseoverridetemplate=IXLZHNNP94C. The UK pound was not significantly better off against the US dollar than the euro over this period. Useful Java based graphs are available at http://www.economist.com/markets/currency/graphs.cfm. The ?/$ ratio may increase, however, if American fortunes continue to decline, and European
Re: Will the Euro Roar? Will We Go to War?
Criticism of this essay is welcome. Andrew Hagen [EMAIL PROTECTED] http://clam.rutgers.edu/~ahagen/ 19 March 2001 None is needed. PEN-L needs much more of this. Louis Proyect Marxism mailing list: http://www.marxmail.org
In the Defense (Department) of the American Free Enterprise System
Apparently some people can't tell the difference between laissez-faire and a lazy fairy. Military procurement is the rock upon which the American Free Enterprise System is built. All that other crap about the "private sector", "supply and demand" and "price competition" is window dressing for the benefit of the privates. Generals -- whether of the military or corporate variety -- need not encumber themselves with such minutae. I have a couple of pamphlets from a century ago that dwell lovingly on the God-given 14th amendment right of workers in private naval shipyards to work as long and as hard as their employers see fit for the defense of the nation, the progress of industry and the pursuit of happiness (the shipyard owners' happiness, of course). The issue was government regulation of the hours of work on work performed under government contract. The principle was and still is that such contracts are the private property of those with the political clout and connections to obtain them. The one great Cold War / AFL-CIO innovation was to set aside a larger portion of the spoils for the enjoyment of the unionized defense plant workers. Anyone who says otherwise is un-American. You got a problem with that, buster? Review question: "the principle was and is that government contracts are the private property of those with the political clout and connections to obtain them" Explain how this principle differs from the concept of a government chartered monopoly. Tom Walker (604) 947-2213
BLS Daily Report
BLS DAILY REPORT, MONDAY, MARCH 19, 2001: Producer prices for finished goods rose only 0.1 percent in February as heavy discounting of automobiles and light trucks offset price hikes for energy and food products, the Labor Department's Bureau of Labor Statistics reports. The core PPI, which excludes changes in the volatile food and energy segments, fell 0.3 percent after rising 0.7 percent in the prior month. Most of the decline in the core PPI was attributable to the decline in auto prices, BLS says. Passenger car prices fell 1.5 percent in February, the largest decline for cars since a 1.6 percent decrease in July 1997. Prices for light trucks fell 3.6 percent in February, the largest decline since 1982. Generally, the PPI data showed that there is little upward price pressure for the Federal Reserve's Open Market Committee to be concerned with, says the president of Inflation Analytics, Inc., in Arlington, Va. (Daily Labor Report, page D-5). A series of government and private reports yesterday painted a picture of a U.S. economy that apparently is still growing slowly -- except for manufacturing -- against a background of continued low producer price inflation. The most surprising numbers came from the University of Michigan's survey of consumer attitudes, which found a modest improvement early this month following three consecutive significant monthly declines. Analysts had been virtually unanimous in predicting another drop; some cautioned that most of the interviews on which the index is based occurred before this week's large stock market losses (John M. Berry in The Washington Post, March 17, page E1). Prices paid to manufacturers, farmers and other producers rose a modest 0.1 percent in February, while industrial production slumped in the month, new reports showed today, suggesting that the Federal Reserve has leeway to cut interest rates deeper and quicker. But a survey on consumer sentiments showed an unexpected swing in optimism, confounding some investors (Bloomberg News in The New York Times, March 17, page B2). If the flagging economy is to regain its footing, consumers' outlook will have to improve. And one indication that might be happening came Friday with the unexpected rise in a widely followed consumer-confidence index. Meanwhile, the government's report that wholesale prices barely budged last month helps smooth the way for the most direct policy response to the slowdown: aggressive interest rate cuts by the Federal Reserve. Also industrial production is sinking twice as fast as analysts had predicted (The Wall Street Journal, page A6). The nation's industrial sector registered a 0.6 percent drop in total production during February, reflecting a sharp decline in utilities and continued weakness in manufacturing, according to the Federal Reserve. While factory output fell again last month, analysts said the latest Fed figures add another bit of evidence suggesting that the worst might be over in that key sector. Industry schedules show that automakers are preparing to boost assembly lines, an analyst said. Manufacturing output fell 0.4 percent last month, a smaller decline than in the prior three months (Daly Labor Report, page D-14). Despite defeat of Federal rules that, hopefully, would help prevent repetitive motion workplace injuries, many companies are making ergonomics a workplace priority (The Washington Post, March 18, page H1). The Wall Street Journal's feature "Tracking the Economy" (page A6) indicates that the Consumer Price Index for February, to be released by BLS Wednesday, is likely to go up 0.2 percent, according to the Thomson Global Forecast. Last month it went up 0.6 percent. The Leading Indictors figures for February, to be released by the Conference Board Thursday, are expected to go down 0.2 percent in contrast to the rise of 0.8 percent last month. When it comes to layoffs, employers have long followed the axiom of last hired, first fired. But in today's wage of layoffs, a new approach is taking hold -- and it has many employees thinking the unthinkable. "I might soon be out of a job." Companies are trying to emerge from a downsizing leaner and more competitive. So they're axing workers perceived to be the weakest members of the team. Now, employees with poor performance or fewer skills, or those who get paid more than their colleagues are more vulnerable in a downsizing than before. After decades of preserving workers with tenure, the new approach is a seismic shift that's becoming increasingly apparent as companies lay off workers at an accelerating pace. There were about 29,000 layoffs in the week ending March 12, according to International Strategy Investment, an economic research organization in New York. There have been about 476,000 layoffs since January 1. Companies are free to make layoffs in just about any manner they choose as long as
Monetary deflation
For those interested, my supply-side gurus are taking the position that the world economy is suffering a severe monetary deflation, mainly caused by errors at the Fed. If true, Lefties especially should be concerned, because monetary deflation has directly negative consequences for the ability of debtors to repay debt. http://www.polyconomics.com/searchbase/03-14-01.html http://www.nationalreview.com/comment/comment-darda031901.shtml David Shemano
Re: very important stuff
Right now I'm ducking out of the "North State Economic Summit," a confab of about 250 people being held in Chico for the alleged purpose of "taking control of our economic future." I'll return for the free lunch and later for some laughs during the question answer session. The conference is being sponsored by a collection of glad-handers and back-patters who have hood-winked the local pols to pony up for "economic development" programs, all of which of course are run by non-profit corporations (i.e. non-governmental, and therefore not with books that are not open to the public), and who contract with for-profit consulting firms owned and operated by the very same people who run the non-profits. Our local fellow called Bob Linscheid, for instance, runs something called the Butte County Economic Development Corporation, an entirely separate operation called the Chico Economic and Planning Corporation, still a third non-profit called Team Chico, each of which contracts to "Bob Linscheid Associates" for "management services." All four operations are run out of the same office. Guess who pays the rent? The ultimate purpose of the conference became evident when discussion turned toward "the top issue facing economic development." This "top issue," it turns out, is to "establish a grant program within the Trade and Commerce Agency [a California state agency]to provide an annual state subsidy to support economic development. Each county would be entitled to a maximum amount of $75,000..." Glad to say that there aren't any academics at the conference, even though it's being held at Chico State. Plenty of academic hangers-on, though: Foundation types, contractees, etc. One speaker asked for a show of hands from the audience as to why they were there. About 60 were involved in economic development agencies, maybe 40 from local governments, and 10 were from private industry. The rest were students, and of course the usual fawning media-types, and lastly, yours truly. Gotta go get some of that free grub... Tim Bousquet --- Jim Devine [EMAIL PROTECTED] wrote: two comments heard on Garrison Keeler's "Prairie Home Companion" radio show: -- they invented astrology to make economic forecasts look scientific. -- how can you tell an old geezer with Alzheimer's from an economist? the economist is the one with the calculator. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine = Subscribe to the Chico Examiner for only $30 annually or $20 for six months. Mail cash or check payabe to "Tim Bousquet" to POBox 4627, Chico CA 95927 __ Do You Yahoo!? Get email at your own domain with Yahoo! Mail. http://personal.mail.yahoo.com/
RE: Re: WTO illegal you ask?
They can use the Agreement on the Application of Sanitary and Phytosanitary Measures; articles 2,5,6 and all the stuff that's in the Annex. Ian -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Jim Devine Sent: Monday, March 19, 2001 9:23 AM To: [EMAIL PROTECTED] Subject: [PEN-L:9137] Re: WTO illegal you ask? BTW, why aren't US bans of European beef illegal under the WTO rules? Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Monetary deflation
David Shemano wrote: For those interested, my supply-side gurus are taking the position that the world economy is suffering a severe monetary deflation, mainly caused by errors at the Fed. ...because, as every supply-sider knows (and every monetarist too - this is one point they agree on), problems in capitalism only emerge from bad state policy, never from within private market relations. Doug
Economic Reporting Review by Dean Baker, 3/19/01
Economic Reporting Review By Dean Baker You can receive ERR via email every week by sending as "subscribe ERR" email to [EMAIL PROTECTED] You can find the latest ERR at http://www.tompaine.com/news/2000/10/02/index.html and archived since August at www.tompaine.com. All ERR prior to August are archived at http://www.fair.org/err/. OUTSTANDING STORIES OF THE WEEK "Ex-Convicts Seen Straining U.S. Labor Force," by Peter T. Kilborn in the New York Times, March 15, 2001, page A16. This article examines one of the problems created by the surge in incarceration during the last two decades. Each year, hundreds of thousands of people -- many with very limited skills -- will be getting out of prison and looking for jobs. "Yale Pressed to Help Cut Drug Costs in Africa," by Donald G. McNeil, Jr., in the New York Times, March 12, 2001, page A3. This article reports on efforts to force Yale University to use its power as the owner of the patent on an important AIDS drug, d4T, to try to get Bristol-Myers Squibb to lower the price of the drug in developing nations. While the research on the drug was done at Yale, it sold exclusive rights to Bristol-Myers Squibb. Bristol-Myers is currently selling d4T at a price that is more than 20 times higher than the price charged by generic competitors. The drug company is also using its political and legal power to prevent South Africa and other developing nations from buying generic versions of the d4T. "Down Goes the Market, Is the Surplus Next?" by Tom Redburn in the New York Times, March 12, 2001, Section 3, page 4. This article examines the consequences of the market's decline for the federal budget. It notes that the current surplus projections assume that the government will continue to collect large amounts of capital gains tax revenue. This will not happen if the market continues to decline or stays flat, which means these surplus projections may be seriously overstated. "Rules' Repeal Heightens Workplace Safety Battles," by Steven Greenhouse in the New York Times, March 12, 2001, page A12. This article discusses the future prospect of ergonomic regulations at the workplace. While the Congress just voted to repeal standards put into effect at the end of the Clinton Administration, the effort to establish these standards began with the first Bush Administration, and George W. Bush has committed himself to doing something to address workplace injuries. "Bankruptcy Bill Benefits Chosen Few," by Kathleen Day in the Washington Post, March 10, 2001, page A1. This article reports on a provision in a bankruptcy reform bill being debated in the Senate, which would shield a small group of wealthy investors from debts they owe to the English insurance company Lloyd's of London. MEDICARE "Medicare Becomes Critics' Weapon in Tax Cut Battle," by Amy Goldstein in the Washington Post, March 13, 2001, page A5. This article reports on Democratic opposition to President Bush's tax cut. The opposition centers around Bush's decision not to reserve the Medicare surplus to pay down the debt. It is worth noting that Medicare's finances are not at all affected by whether this surplus is placed in a "lockbox" as advocated by the Democrats. It will hold the exact same number of bonds regardless of what is done with the money. This article also asserts, "It is widely accepted that [Medicare] soon will be in precarious condition, unable to withstand the medical expenses of the large baby boom generation once it retires." Ordinarily twenty-five years is not considered "soon." There has never been a twenty- five year period in Medicare's history where the program has not had a significant change in finances. If the program can actually go twenty- five years without any major changes it would be in sounder financial shape now than at any point in its prior history. THE STOCK MARKET "Stock Slide Sinks Hopes in Industrial City," by Peter T. Kilborn in the New York Times, March 15, 2001, page A1. This interesting article examines the attitudes of people towards the stock market in an industrial city in Pennsylvania. At one point, it reports an assertion of a stockbroker that, unlike Japan, the U.S. market has never had a ten year period in which it did not have an increase in value. This is not true. Twice in the last seventy-five years the market took more than ten years to recover its previous peak. The market did not reach its 1929 peak until the early 1950s, and it did not regain its 1968 peak until 1982. "Has Wall St's Bear Market Hit Bottom?" by Steven Pearlstein in the Washington Post, March 14, 2001, page A1. This article examines current assessments of the stock market's prospects. The article asserts that analysts who believe that the stock market reflects rational calculations based on future profits think that the market has hit bottom. It then reports that these analysts expect that profits will grow between 10 to 15 percent annually (in nominal terms)
RE: Re: Monetary deflation
Doug Henwood wrote: -- For those interested, my supply-side gurus are taking the position that the world economy is suffering a severe monetary deflation, mainly caused by errors at the Fed. ...because, as every supply-sider knows (and every monetarist too - this is one point they agree on), problems in capitalism only emerge from bad state policy, never from within private market relations. - If you could explain to me how monetary deflation can arise from private market relations and not the actions of a central bank(s), I would be very interested. David Shemano
Re: Re: More on the Li Jiaqing case
No, Lou, as I stated, it tells us the opposite. There are many cases of worker self-organization and workers' leaders who have been arrested that are worthy of leftist's support in China. The assumption that they are neo-liberals or dupes of neo-liberals is a simplistic way of approaching a rather complex issue. We can doubt the motivation of the source of this report, surely, as do the workers in this case. But for that to mean then that we should not support someone like Li Jiaqing, or the struggle for workers in that case (and many others, the Paper Factory, according to an article in the Workers Daily last year, is only one of scores of such cases in Zhenzhou City), is a position that is of little use to real workers involved in real struggles over privatization of SOEs in China. Steve On Mon, 19 Mar 2001, Louis Proyect wrote: Pardon me if I come across as a little thick, but doesn't this tend to reinforce what I stated originally? Despite my strong feelings of camaraderie with Henry Liu and my unabashed support for Yugoslav socialism, etc., doesn't this seem to say that we should take HRW reports on China with a grain of salt in the future? Below is the statement from Li Minqi: March 18, 2001 For Immediate Release: The True Story Behind Zhengzhou # 1 Paper Factory Workers Anti-Corruption, Anti-Privatization Struggle In recent days, the organization Human Rights Watch and Labour Watch and other Overseas Organizations as well as The New York Times and The World Journal (the largest Chinese newspaper in North America), have put out statements and reports asserting that Li Jiaqing is an "Independent Union Leader", that the Paper Factorys workers have established an "independent union organization," etc. These organizations do this as part of an effort to alter or cover up the real goals of the Paper Factory workers struggle. Louis Proyect Marxism mailing list: http://www.marxmail.org
More on the Li Jiaqing case
Below is a statement sent to me from Li Minqi(and which I translated) that he wrote in response to the Human Rights Watch and Labour Rights Watch report on the Li Jiaqing case in Zhenzhou, China. Li Minqi and I both know the people involved in helping the workers in this particular case. They also Again, this kind of statement should give pause to those who are inclined to view all reports on worker activity in the SOE sector as inspired by neo-liberal visions of markets. While some of it is motivated in that direction, much of it is also being done by leftists in China who have no desire to see more privatiztion. I should note that the friends of these workers in Zhenzhou also sent out a short statement expressing displeasure with the mistakes in the Human Rights Watch and other political and news organisations' reports. Perhaps I'll translate that out also and send it on... Below is the statement from Li Minqi: March 18, 2001 For Immediate Release: The True Story Behind Zhengzhou # 1 Paper Factory Workers Anti-Corruption, Anti-Privatization Struggle In recent days, the organization Human Rights Watch and Labour Watch and other Overseas Organizations as well as The New York Times and The World Journal (the largest Chinese newspaper in North America), have put out statements and reports asserting that Li Jiaqing is an "Independent Union Leader", that the Paper Factorys workers have established an "independent union organization," etc. These organizations do this as part of an effort to alter or cover up the real goals of the Paper Factory workers struggle. Based on my own first hand knowledge of this case I join with persons in Zhengzhou who have shown concern and support for the Paper Factory workers struggle in putting out the following statement of correction: 1.) This instance of workers struggle is entirely a matter of opposing corruption, the loss of State Owned Enterprise assets, and opposition to privatization. When the workers staged a takeover of the factory management last year, they placed a banner at the front factory gate exclaiming, "Reform does not equal Privatization," something that the people of Zhenzhou would all approve of. These goals are far different from the so-called "independent union movement" run by Chinese liberal intellectuals who have been co-opted by western imperialism. 2.) The Paper Factory Workers Representatives Congress is an institution that is required by "Peoples Republic of China Enterprise Law", whose function is to carry out democratic management of State Owned Enterprises. The Zhengzhou Paper Factory Workers acted through their WRC mass meetings in order to protect socialisms State Owned Assets, their own legal rights, and have little to do with "Independent Union Organizations." 3.) The So-called "Independent union movement" is a deceptive product of western imperialism, which utilizes the original goals of socialism to breed the foundation of its own fake brand of justice and facilitates the takeover of the socialist state by capitalists, corrupt officials and intellectuals. In the process, the rights of Chinas entire working class to state assets is sacrificed, with nothing to show for in return, as the door is opened to foreign capital to enslave China's workers. The end result is corruption and the complete appropriation of state assets, now in its most fully transparent and thorough form. For socialist countries that have gone this route, this has spelled the end of their political and economic self-rule. Can it be that workers in the former Soviet Union and Eastern Europe have suffered less than such a criminal fate? History proves that the backward step to privatization and capitalism is a dead end for workers. China is not Poland, the Chinese working class will not be deceived. Li Minqi University of Massachusetts at Amherst Dept. of Economics PhD Candidate Stephen Philion Lecturer/PhD Candidate Department of Sociology 2424 Maile Way Social Sciences Bldg. # 247 Honolulu, HI 96822
Re: More on the Li Jiaqing case
Pardon me if I come across as a little thick, but doesn't this tend to reinforce what I stated originally? Despite my strong feelings of camaraderie with Henry Liu and my unabashed support for Yugoslav socialism, etc., doesn't this seem to say that we should take HRW reports on China with a grain of salt in the future? Below is the statement from Li Minqi: March 18, 2001 For Immediate Release: The True Story Behind Zhengzhou # 1 Paper Factory Workers Anti-Corruption, Anti-Privatization Struggle In recent days, the organization Human Rights Watch and Labour Watch and other Overseas Organizations as well as The New York Times and The World Journal (the largest Chinese newspaper in North America), have put out statements and reports asserting that Li Jiaqing is an "Independent Union Leader", that the Paper Factorys workers have established an "independent union organization," etc. These organizations do this as part of an effort to alter or cover up the real goals of the Paper Factory workers struggle. Louis Proyect Marxism mailing list: http://www.marxmail.org
RE: RE: Re: Monetary deflation
If you could explain to me how monetary deflation can arise from private market relations and not the actions of a central bank(s), I would be very interested. David Shemano *** http://www.csu.edu.au/ci/vol06/keen/keen.html Ian
Re: Re: Re: More on the Li Jiaqing case
No, Lou, as I stated, it tells us the opposite. There are many cases of worker self-organization and workers' leaders who have been arrested that are worthy of leftist's support in China. The assumption that they are neo-liberals or dupes of neo-liberals is a simplistic way of approaching a rather complex issue. We can doubt the motivation of the source of this report, surely, as do the workers in this case. Steve You have me totally confused. You posted a report from HRW that I questioned because of the source. Then, today, you post something from the workers on the spot who disavow the HRW report. I am not questioning whether leftists should support workers struggle in China or elsewhere, just urging caution about sources. Human Rights was the outfit that said that the Iraqis were detaching babies from Kuwait life-support systems. If you had provided something direct from the horse's mouth to begin with, this exchange never would have taken place. I am also making a point of this is that some people hailed the "workers revolt" in the Serb republic uncritically several months ago. They relied on dubious sources. The left has to develop its own information sources and stay away from poisoned wells. Louis Proyect Marxism mailing list: http://www.marxmail.org
Re: RE: Re: Monetary deflation
David Shemano wrote: Doug Henwood wrote: -- For those interested, my supply-side gurus are taking the position that the world economy is suffering a severe monetary deflation, mainly caused by errors at the Fed. ...because, as every supply-sider knows (and every monetarist too - this is one point they agree on), problems in capitalism only emerge from bad state policy, never from within private market relations. - If you could explain to me how monetary deflation can arise from private market relations and not the actions of a central bank(s), I would be very interested. Well, just to take one convenient example, in recent years the U.S. enjoyed one of the great speculative manias in human history, with wild stock valuations leading to the squandering of billions on ludicrous IPOs, innocent civilians trusting their retirement portfolios to utterly inappropriate mutual funds, corps and households borrowing recklessly (partly emboldened by the vigorous stock market and the ludicrous New Economy discourse), etc. You could argue that the "Greenspan put" laid a public sector foundation under the bubble, but generally, blaming the central bankers conveniently gets the private actors off the hook. Doug
Re: Re: Re: Re: More on the Li Jiaqing case
On Mon, 19 Mar 2001, Louis Proyect wrote: No, Lou, as I stated, it tells us the opposite. There are many cases of worker self-organization and workers' leaders who have been arrested that are worthy of leftist's support in China. The assumption that they are neo-liberals or dupes of neo-liberals is a simplistic way of approaching a rather complex issue. We can doubt the motivation of the source of this report, surely, as do the workers in this case. Steve You have me totally confused. You posted a report from HRW that I questioned because of the source. Then, today, you post something from the workers on the spot who disavow the HRW report. I am not questioning whether leftists should support workers struggle in China or elsewhere, just urging caution about sources. I don't think I'm confusing you with anyone else. In the past when I've brought up first hand knowledge of cases like Li Jiaqing in China, they've always met with suspicion that they are neo-liberals or dupes of some agency of the US state. Human Rights was the outfit that said that the Iraqis were detaching babies from Kuwait life-support systems. If Sure, and the NYT is the outfit that told us that the Pope was nearly assasintated by Bulgarians. They are also the source that reported to the public the case of Zhou Wei in Shenyang Province, the elderly cadre who helped farmers and cadres fight corruption until it threatened the Mayor of Shenyang City...I visited his wife in Shenyang last October..and guess what? The NYT Times, except for a few very minor mistakes, got their story pretty damn correct...So, what position should we take toward Zhou Wei who remains in jail for the crime of taking the Party seriously about fighting corruption? If we assume that the story is in the NYT and not worth supporting...I think that's a dead end approach. I agree with you we have to develop our own sources. However ,even when they are developed, like China and the World, they still get accused of being infiltrated by the CIA, as the post you sent on from Henry argued a month or so ago... Steve Louis Proyect Marxism mailing list: http://www.marxmail.org
Re: RE: Re: Monetary deflation
David, I tried to give an explanation in a book, The Natural Instability of Markets. David Shemano wrote: If you could explain to me how monetary deflation can arise from private market relations and not the actions of a central bank(s), I would be very interested. David Shemano -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Will the Euro Roar? Will We Go to War?
A fall in the dollar could make investment in the US more attractive. A fear of a future fall will make it less attraactive. Andrew Hagen wrote: A fall off in the value of the dollar [will snip reduce the incentive to invest in the US economy. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Will the Euro Roar? Will We Go to War?
Andrew wrote: If a monetary policy won't work, will a fiscal policy cut it? The Bush tax cut, a fiscal stimulus plan, is unlikely to have much effect because it will go in large measure to those taxpayers who already have relatively high incomes, and thus relatively high discretionary incomes. They will be free to invest [i.e, save] the money rather than spend it. I think that a Bush cut could have the effect of cancelling out the effect of the stock-market collapse on rich folks' spending. When the markets were rising, it encouraged them to spend, because they interpreted its rise as a real increase in their wealth. Now that's reversed, so that the "wealth effect" (falling net worth in 2000) leads to falling luxury spending. The Bush cuts -- if implemented -- would promise a steady diet of tax cuts for several years, which would be akin to an increase in the rich folks' wealth. This could cancel out the fall in luxury spending due to the markets' collapse. However, if this worked, it would simply delay the solving of the US economy's problems (excessive consumer indebtedness, for example) and thus make it worse in the long run. They will also use some of it to buy imports that will not help economic growth immediately. working-class consumption involves lots of imports, too. Where do you think all those products at Target or Wal-Mart are made? Investments can result in economic growth eventually, but only with time. financial investments don't do this (one of the major points of Doug Henwood's WALL STREET). It's real investment in factories, machinery, etc., that encourage economic growth, both on the supply-side and the demand-side. But the Bush cuts don't encourage that, as far as I can tell. Taxpayers with lower incomes and lower discretionary incomes would spend the money they receive much faster, resulting in a boost to consumption spending, and directly translating to an increase in GDP. that's true. If any tax reduction package is passed, it will have to be weighted heavily in the favor of the rich to win the President's signature, however. that too. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Monetary deflation
At 11:08 AM 3/19/01 -0800, you wrote: For those interested, my supply-side gurus are taking the position that the world economy is suffering a severe monetary deflation, mainly caused by errors at the Fed. ... Jamie Galbraith, a Keynesian, has also blamed international stagnation on the Fed's high rates. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Re: Monetary deflation
At 02:53 PM 3/19/01 -0500, you wrote: David Shemano wrote: For those interested, my supply-side gurus are taking the position that the world economy is suffering a severe monetary deflation, mainly caused by errors at the Fed. ...because, as every supply-sider knows (and every monetarist too - this is one point they agree on), problems in capitalism only emerge from bad state policy, never from within private market relations. isn't it self-evident and thus axiomatic that all evil comes from the government? The only reason why we associate human disasters with capitalism is that it hasn't been perfected yet. Capitalism is, after all, the "unknown ideal," to quote Ayn Rand. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: RE: Re: Monetary deflation
At 11:56 AM 3/19/01 -0800, you wrote: If you could explain to me how monetary deflation can arise from private market relations and not the actions of a central bank(s), I would be very interested. There is no such thing as "private market relations." Without the Fed and other government agencies, private market relations -- which encourage opportunistic greed of the worst kind -- would degenerate into a Hobbesian war of each against all. Further, though the Fed and similar government agencies clearly make mistakes, they do so under the profound influence of those engaged in "private market relations," since the latter have the most political power on issues economic unless there is a movement of labor, etc., to counteract that influence. An historical illustration: In the early 1930s, for example, the Fed allowed the U.S. money supply to fall drastically. Milton Friedman and similar MFs lambaste the Fed for this, basically saying that "if I, Milton Friedman, had been running the show, the 'great contraction' of the money supply would never have happened, so there wouldn't have been a great depression and the resultant rise in statism." But this is nonsense. At the time, those in "private market relations," i.e., business, had tremendous amounts of political power. It was a very conservative _pro-business_ position to tie the dollar to gold. In fact, many laissez-faire-oriented "supply-siders" think that the gold standard should be re-established -- even though the clinging to the gold standard was a major reason for the Fed's deflationary policies. Further, it was a _pro-business_ position to "liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate" (Treasury Secretary Andrew Mellon), i.e., to encourage recession. It was also the _pro-business_ position to push the income distribution toward greater and greater degrees of inequality during the 1920s, including big "supply-side" tax cuts which reinforced the trend toward inequality and high profits. It was also the _pro-business_ position to push the government to raise taxes in the early 1930s, since it was the pro-business position that the government should never, ever, run deficits. Those in "private market relations" were running the show, suffered from _hubris_, and blew it. Of course, they then struggled to make sure that the working people paid the cost of their blunders. Finally, the money supply and the cost of credit do not simply respond to Fed policy. When the pro-business policies led to the collapse of the US banking system, that led to a shrinkage of the money supply (and a rise in the cost of financial services) beyond what the Fed was trying to do. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Re: RE: Re: Monetary deflation
[EMAIL PROTECTED] writes: At 11:56 AM 3/19/01 -0800, you wrote: If you could explain to me how monetary deflation can arise from private market relations and not the actions of a central bank(s), I would be very interested. How could a monetary deflation not arise from "private market relations" in the absence of a central bank? What exactly would a monetary system founded on "private market relations" look like? Presumably, without a central bank or other issuer of fiat money, private bank notes would circulate as money. A few nasty bankruptcies and, bam, debt-deflation. This happened all the time in the US in the 1800s. A fundamental fallacy of neo-classical economics and its poltical corollary, libertarianism, is that in a state of nature, markets and property relations would spring up, but governments would not. In fact, any reading of history suggests the opposite. Governments of all types precede markets. Further, the expansion of markets since the 1800s has been accompanied every step of the way by the expansion of government activity. Why do you think central banks were created anyway? Ellen Frank
Re: Will the Euro Roar? Will We Go to War?
On Mon, 19 Mar 2001 14:43:20 -0800, Jim Devine wrote: I think that a Bush cut could have the effect of cancelling out the effect of the stock-market collapse on rich folks' spending. [] Almost half of American households were involved in the stock market. Even if Bush's plan is the full measure of what the richest lost, the transfer is an imperfect restoration, of course. The restoration would also take place over a period of years, and thus be less valuable than the value in equities lost, especially when opportunity cost is considered. Bush's plan was proposed before the big stock market hit of autumn 2000. Still, it seems like you have put your thumb on strange psychological need of the rich for a big tax cut. They want their candy back. Thank you, for this, and for your other useful comments. Thanks also to M. Perelman. Andrew [EMAIL PROTECTED]
Facts and figures
HARPERS INDEX, APRIL 2001 --Chances that the taxes of a low income working American family will not be reduced by the Bush tax plan : 3 in 5 --Percentage of federal returns audited last year that were filed by poor Americans seeking Earned Income Tax Credits : 44 --Percentage change between 1999 and 2000 in the number of audits of U.S. corporations : 28 --Federal income taxes paid by PepsiCo in 1999 : 0 --Amount by which federal taxes paid in states carried by Al Gore in 2000 exceeded federal spending in them, per capita : $685 --Amount by which federal taxes paid in states carried by George W. Bush fell short of federal spending in them, per capita : $645 --Hours after taking office in 1993 that Bill Clinton ordered a five-year delay on lobbying by ex-White House officials : 1 --Days before leaving office that Clinton revoked the order : 23 --Number of years ago that new energy secretary Spencer Abraham cosponsored a bill to abolish the Department of Energy : 2 --Gallons by which daily U.S. oil consumption would drop if SUVs average fuel efficiency increased by 3 mpg : 49,000,000 --Gallons per day that the proposed drilling of Alaskas Arctic National Wildlife Refuge is projected to yield : 42,000,000 Louis Proyect Marxism mailing list: http://www.marxmail.org/
maximization?
A professor of mine started class today with an interesting question: why don't ticketing companies raise prices to the level that the market will bear? Often these companies hold a monopoly in selling tickets to all events at a particular venue. Currently the event ticket market can bear higher prices, as evinced by the higher prices paid to scalpers, AKA the secondary market. It's apparent that raising prices would maximize profits in the primary ticket market. Why don't they do so? My professor's proposed answer was: companies do not want to maximize their profits; they only want what they perceive as a reasonable return on their investment. It seems to me like a plausible assertion. Could someone point me toward an article or book that questions the maximization assumption? Thanks, Andrew Hagen [EMAIL PROTECTED]
Facts and figures on airline deregulation
From the preface to Paul Stephen Dempsey Andrew R. Goetz, "Airline Dergulation Mythology" (Quorum, 1992): --Under deregulation, the airline industry lost all of the money it made since the Wright Brothers inaugural flight at Kitty Hawk in 1903, and $1.5 billion more. --After more than 200 bankruptcies and 50 mergers, we now fly the oldest and most repainted fleet of aircraft in the developed world. --Of the 176 airlines to which deregulation gave birth, only one remains and, as of 1992, it too was in bankruptcy. --In 1991, fully 30 percent of the nations fleet capacity was in bankruptcy or close to it. --All the U.S. airlines together are now worth less than Japan Airlines individually. --Despite predictions to the contrary, deregulation has produced the highest level of national and regional concentration in history. --Although more people are flying than ever before, the percentage increase in domestic airline passenger boardings was lower during the first decade of deregulation than in every decade that preceded it. --While most passengers now fly on a discounted ticket, the full fare has risen sharply under deregulation, far exceeding the rate of inflation, and the discounts are now encumbered with onerous prepurchase, nonrefundability and Saturday-night stay-over restrictions. Todays airline ticket is therefore an inferior product compared to its counterpart under regulation, which provided passengers with considerable flexibility. --Despite allegations to the contrary, average real fuel-adjusted ticket prices are higher than they would have been had the pre-deregulation trend continued. Pricing has not only increased above pre-deregulation trend levels, it has grown monstrously discriminatory. --Industry costs increased sharply under deregulation, while the long-term trend in productivity improvements fell flat. --Hubbing-and-spoking, the dominant megatrend on the deregulation landscape, has caused some air travel to regress back to the DC-3 era, robbing aviation of its inherent advantage and peoples most precious commoditytime. --Business travelers lose billions of dollars in productivity as a result of circuitous and time-consuming hub-and-spoke operations. --Service has declined under deregulation, while consumer fraud has increased. --Although fatality statistics do not reflect it, the margin of safety has also declined. --Labor-management relations have deteriorated. --Americans now rate airlines as the industry in which they have the least confidence. Louis Proyect Marxism mailing list: http://www.marxmail.org/
Re: Facts and figures on airline deregulation
Lou, much that you are writing about the airlines is actually a repeat of the disaster of markets for railroads in the late 19th C. I tried to discuss that in a book, The End of Economics. Louis Proyect wrote: From the preface to Paul Stephen Dempsey Andrew R. Goetz, "Airline Dergulation Mythology" (Quorum, 1992): --Under deregulation, the airline industry lost all of the money it made since the Wright Brothers inaugural flight at Kitty Hawk in 1903, and $1.5 billion more. --After more than 200 bankruptcies and 50 mergers, we now fly the oldest and most repainted fleet of aircraft in the developed world. --Of the 176 airlines to which deregulation gave birth, only one remains and, as of 1992, it too was in bankruptcy. --In 1991, fully 30 percent of the nations fleet capacity was in bankruptcy or close to it. --All the U.S. airlines together are now worth less than Japan Airlines individually. --Despite predictions to the contrary, deregulation has produced the highest level of national and regional concentration in history. --Although more people are flying than ever before, the percentage increase in domestic airline passenger boardings was lower during the first decade of deregulation than in every decade that preceded it. --While most passengers now fly on a discounted ticket, the full fare has risen sharply under deregulation, far exceeding the rate of inflation, and the discounts are now encumbered with onerous prepurchase, nonrefundability and Saturday-night stay-over restrictions. Todays airline ticket is therefore an inferior product compared to its counterpart under regulation, which provided passengers with considerable flexibility. --Despite allegations to the contrary, average real fuel-adjusted ticket prices are higher than they would have been had the pre-deregulation trend continued. Pricing has not only increased above pre-deregulation trend levels, it has grown monstrously discriminatory. --Industry costs increased sharply under deregulation, while the long-term trend in productivity improvements fell flat. --Hubbing-and-spoking, the dominant megatrend on the deregulation landscape, has caused some air travel to regress back to the DC-3 era, robbing aviation of its inherent advantage and peoples most precious commoditytime. --Business travelers lose billions of dollars in productivity as a result of circuitous and time-consuming hub-and-spoke operations. --Service has declined under deregulation, while consumer fraud has increased. --Although fatality statistics do not reflect it, the margin of safety has also declined. --Labor-management relations have deteriorated. --Americans now rate airlines as the industry in which they have the least confidence. Louis Proyect Marxism mailing list: http://www.marxmail.org/ -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Monetary deflation
I hate to be crabby but I am working late and not enjoying it. Please give me your take on my original intended question, as now reformulated, without the capitalism bad, socialism good stuff: 1. Is there an ongoing monetary deflation? Again, I am asking about a world-wide monetary illiquidity phenomena, not an economic contraction. And if not, why is the price of gold so low, relatively speaking, notwithstanding recent interest rate cuts? 2. If there is an ongoing monetary deflation, what are (will be) its consequences? 3. If there is an ongoing monetary deflation, what is causing it? The Fed or something else? What would cure it? Should it be cured? Thanks. Now I feel better. David Shemano
Re: Monetary deflation
A number of people on the list have been referring to the worldwide overcapacity crisis. Why do you think that it is necessarily monetary? On Mon, Mar 19, 2001 at 09:27:56PM -0800, David Shemano wrote: I hate to be crabby but I am working late and not enjoying it. Please give me your take on my original intended question, as now reformulated, without the capitalism bad, socialism good stuff: 1. Is there an ongoing monetary deflation? Again, I am asking about a world-wide monetary illiquidity phenomena, not an economic contraction. And if not, why is the price of gold so low, relatively speaking, notwithstanding recent interest rate cuts? 2. If there is an ongoing monetary deflation, what are (will be) its consequences? 3. If there is an ongoing monetary deflation, what is causing it? The Fed or something else? What would cure it? Should it be cured? Thanks. Now I feel better. David Shemano -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
RE: Re: Monetary deflation
I don't think anything necessarily. I am simply asking questions. The two articles I linked discuss a worldwide monetary deflation. In other words, the Fed has not created enough dollars to satisfy the world demand for dollars. As a result, commodity prices, as best evidenced by gold, have been sinking. And as a result, debtors, whether individuals or countries, now find themselves having to repay debts in dollars that are worth much more than they were when they incurred their debts, which is painful and will cause defaults and bankruptcies. The supply-siders think this is going on because the Fed has been looking for inflation that simply does not exist and not paying enough attention to the price of commodities such as gold. Now, this may be true or it may not be true. I don't know, although it makes sense to me. That is why I am asking for your general take on it. David Shemano -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Michael Perelman Sent: Monday, March 19, 2001 9:47 PM To: [EMAIL PROTECTED] Subject: [PEN-L:9171] Re: Monetary deflation A number of people on the list have been referring to the worldwide overcapacity crisis. Why do you think that it is necessarily monetary? On Mon, Mar 19, 2001 at 09:27:56PM -0800, David Shemano wrote: I hate to be crabby but I am working late and not enjoying it. Please give me your take on my original intended question, as now reformulated, without the capitalism bad, socialism good stuff: 1. Is there an ongoing monetary deflation? Again, I am asking about a world-wide monetary illiquidity phenomena, not an economic contraction. And if not, why is the price of gold so low, relatively speaking, notwithstanding recent interest rate cuts? 2. If there is an ongoing monetary deflation, what are (will be) its consequences? 3. If there is an ongoing monetary deflation, what is causing it? The Fed or something else? What would cure it? Should it be cured? Thanks. Now I feel better. David Shemano -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Monetary deflation
David, Japan has not been able to get out of its slump with a very expansionary monetary policy. Even if Greenspan, who was a god only a few months ago, pumped up the money supply and got the stock market rolling again, sooner or later the contradictions of overcapacity would bite him in the butt. On Mon, Mar 19, 2001 at 10:03:18PM -0800, David Shemano wrote: I don't think anything necessarily. I am simply asking questions. The two articles I linked discuss a worldwide monetary deflation. In other words, the Fed has not created enough dollars to satisfy the world demand for dollars. As a result, commodity prices, as best evidenced by gold, have been sinking. And as a result, debtors, whether individuals or countries, now find themselves having to repay debts in dollars that are worth much more than they were when they incurred their debts, which is painful and will cause defaults and bankruptcies. The supply-siders think this is going on because the Fed has been looking for inflation that simply does not exist and not paying enough attention to the price of commodities such as gold. Now, this may be true or it may not be true. I don't know, although it makes sense to me. That is why I am asking for your general take on it. David Shemano -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Michael Perelman Sent: Monday, March 19, 2001 9:47 PM To: [EMAIL PROTECTED] Subject: [PEN-L:9171] Re: Monetary deflation A number of people on the list have been referring to the worldwide overcapacity crisis. Why do you think that it is necessarily monetary? On Mon, Mar 19, 2001 at 09:27:56PM -0800, David Shemano wrote: I hate to be crabby but I am working late and not enjoying it. Please give me your take on my original intended question, as now reformulated, without the capitalism bad, socialism good stuff: 1. Is there an ongoing monetary deflation? Again, I am asking about a world-wide monetary illiquidity phenomena, not an economic contraction. And if not, why is the price of gold so low, relatively speaking, notwithstanding recent interest rate cuts? 2. If there is an ongoing monetary deflation, what are (will be) its consequences? 3. If there is an ongoing monetary deflation, what is causing it? The Fed or something else? What would cure it? Should it be cured? Thanks. Now I feel better. David Shemano -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED] -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: severe world monetary deflation
I had in any case wanted to go back to the original question posed At 11:08 19/03/01 -0800, David Shemano wrote: For those interested, my supply-side gurus are taking the position that the world economy is suffering a severe monetary deflation, How is deflation conceptualised in this usage, since actual falls in prices are so rare? I had intended to raise this query when at the weekend I saw the report that Japan has just slid into deflation. The figures at face value look most undramatic. "Japan's consumer price index fell 0.4% in 2000 after a 0.3% fall the previous year - meeting the international definition of deflation, which is two consecutive annual declines in prices." What struck me is how even with markedly reduced inflation in the world an annual price rise of under a few percent would be considered common. So why the dread if prices dip for a couple of years in one, admittedly major economy, very slightly below the 0 line? My query is that this must imply that there is an underlying assumption in conventional economics that does not in fact regard prices as the ultimate standard of the total worth in an economy. Rather there is an assumption that year on year the amount of goods and services in an economy in price terms will rise and that in practical terms inflation is when the supply of money expands disturbingly faster than this expansion. This implies that conventional economics, without acknowledging Marx in any way, accepts that there is some fundamental limiting factor like the total exchange value in an economy, and that in modern economies year on year as production rises, the price of each individual unit represents a proprotionately smaller fraction of the total exchange value of the economy. Perhaps there are holes in this reasoning so far, or not everyone is with me. Let me go back to the stark contrast posed by David Shemano's question. How can any gurus be arguing there is severe monetary deflation in the world where according to the international definition of inflation only one economy has slipped by less than 0.5% into price falls for two consecutive years? What is the definition of deflation for such gurus? What are they actually talking about? (at their most coherent? - don't lets spend time on the idiocies) Chris Burford London
Re: Re: Re: Re: Re: RE: bankruptcy
From: [EMAIL PROTECTED] Reply-To: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: [PEN-L:9105] Re: Re: Re: Re: RE: bankruptcy Date: Sat, 17 Mar 2001 18:20:59 + bob manning writes: The slowdown in the economy is beginning to reflect in creeping loan delinquencies. What is interesting now with credit card debt is the greater use by small businesses. Are rising delinquencies due to cash flow problems of entrepreneurs or the debt crunch of American workers? I would guess the answer is "both." Still, the bottom line is that for the year 2000, consumer delinquencies and personal bankruptcies declined I bet if we studied this, it would turn out that the fall in deliquencies would be explained by the rise in real wages toward the end of the late boom. Of course, that rise will likely be reversed in the near future. After 20-25 years of neoliberal "reforms," wages are much more flexible than they used to be, so they should fall more steeply than in previous recessions, encouraging debt deflation. which shows that the banking industry desparately wants the enactment of the bankruptcy bill before the tidal wave of personal and small business bankruptcies emerge during the recession. Of course, tightening the bankrupcy laws makes a debt-deflation worse. (recession -- debt goes up relative to income -- bankrupcies cut-backs in spending -- recession made worse.) Are you the bob manning who used to be on Pacifica? Actually, a partial explanation of attenuated bankruptcy rates is the recent rash of home refinancing. For example, the number reason for home equity loans is to pay for credit card debts; number 2 is for small businesses. I have been on Pacifica several times but not on a regular basis. However, most recently I have been interviewed on a few Pacifica stations regarding my new book, CREDIT CARD NATION. Robert D. Manning Senior Fellow Institute for Higher Education Law Governance University of Houston Law Center 713.743.2075 [EMAIL PROTECTED]Get your FREE download of MSN Explorer at http://explorer.msn.com
Re: Patrick Bond on meta-globalization
From: "Lisa Ian Murray" [EMAIL PROTECTED] Date: Sat, 17 Mar 2001 19:54:47 -0800 [So, is the Aids medicine litigation being pursued in SA courts to avoid being a WTO dispute settlement body decision that would have been yet another nail in that institution's coffin?] Not so much, as far as I read it. The 40 pharmacorpos which are "suing Mandela" (as the WSJ put it a couple of weeks ago) have grounded their case in SA's own liberal/soc.dem. rights rhetoric, and in the process want to establish not only their own property rights, but also a variety of other entitlements given to human being and "juristic persons" (corpos) in the Bill of Rights. (As a trivial footnote, two SA comrades and I, supported by Nader's people, tried to block adoption of the juristic person clause, unsuccessfully, in mid-1996 when the constitution was ratified. The ever-sleazy Paul Krugman last year labeled Nader anti-democratic for his support; the NYT refused to print the clarifying letter that the three of us, including one ANC member of parliament, sent along the next day.) Anyhow, the plaintiffs' case specifically avoids all mention of HIV/AIDS, focusing instead on rights and feasible actions that can be taken by Pretoria outside the Medicines Act (e.g. patent exemptions in existing law). For tactical reasons, the activists (Treatment Action Campaign) went in with a friend-of-court brief supported by government, and the judge ruled they could join, and gave the pharmacorpos three weeks to reply to the substantive addition of the AIDS pandemic as justifying large-scale state intervention. Sadly, Pretoria is relying upon the most minimalist reading of the Act in its defense, and is in the process potentially undermining the possibility of future local generic drug production (according to the some readings). Activists say that doesn't matter, they'll force Pretoria to wratchet up the attack at a later point, but the main thing is to win the position that the pharmacorpos are killing people now, if even merely to justify parallel importation of branded drugs from sites where price discrimination doesn't generate monopoly profits. The implications for import of Brazil/Thailand/India generics remain a bit fuzzy. But I think no one disputes that the Medicines Act is WTO-compliant (given the "emergency" exemptions clause in TRIPS). Resolving the issue is still fraught by political rhetoric and positioning. Activists (including even the erratic Winnie Mandela) have claimed Pretoria is in bed with the pharmacorpos because of the genocidal lack of government action in making antiretrovirals available to date; the pharmacorpos claim that Pretoria is ignoring their good faith efforts to do some deals (e.g. yesterday's papers revealed that the Dep't of Health has rejected $50 mn worth of free AIDS tests because of -- read it and weep -- lack of refrigeration and tendering complications); and Pretoria (Thabo Mbeki specifically) claimed last year that the activists are shills for the pharmacorpos because after all, "HIV does not cause AIDS," so it is pointless to push anti-retrovirals "instead of" (hah) fighting poverty (which Mbeki still believes, judging by an appalling talk given to the Davos WEF in late January, is the "cause" of AIDS... and of course in reality poverty has skyrocketed since the ANC adopted neoliberal policies even before coming to power in 1994 ... details of which are to be found in John Saul's excellent Jan 2001 Monthly Review cover article). To give you a bit more detail, on behalf of Multinational Monitor I did an interview with the key activist, Zackie Achmat, and the January 2001 issue of MM carries part of this, plus some additional commentary by Zackie on the character of campaigning. I think the final version is on the Nader website, but here's what's handy from my hard-drive... Gates, Merck, Bristol-Myers-Squibb, Pfizer and other companies on SA activist's campaign list Zackie Achmat runs South Africa's Treatment Action Campaign (TAC), the organisation most responsible for raising issues of pharmaceutical product access, as a crucial link in the strategy to combat the HIV/AIDS pandemic. He spoke to Multinational Monitor on January 5, 2001. MM: You've led intense struggles to get better drug access for South Africa's 4.2 million HIV-positive people, yourself included. This has pitted you against both multinational corporations and the South African government, especially president Thabo Mbeki. Late last year, Mbeki reportedly called the Treatment Action Campaign a "front for the drug companies" during an internal caucus with his African National Congress (ANC) members of parliament, because of your campaign's emphasis on treatment. ZA: Let's deal with this forthrightly. Mbeki also said that TAC had infiltrated the trade unions, and that we wanted to embarrass him
