Re: Re: Re: Fiscal Crisis of the State
Max, I think you might very helpful the discussion of O'Connor in John Bellamy Foster's chapter on the state in The Theory of Monopoly Capitalism: An Elaboration of Marxian Political Economy and his chapter Marxian Economics and the State in his edited book The Faltering Economy: The Problem of Accumulation Under Monopoly Capitalism. Foster wants to free the Sweezy monopoly capital/overexploitation theory from any charge of reformism. While emphasizing the growth in the potential surplus and thus need for a Keynesian programme to maintain full employment, he attempts to show that in the face of the power of monopoly capital both the regime of taxation and the composition of social spending cannot be optimal towards the end of full employment. Taxes weigh heavily on the working class (Foster criticizes O Connor's treatment here) and military spending is large though it contributes to the long term stagnation of the economy. Moreover, monopoly firms may respond to the Keynesian stimulus through price, rather than output, increases. I am being very sketchy. Foster thus attempts to lay out a theory of the state for a monopolized already mechanized capitalist economy. He argues that there is a need to go beyond Marx whose theory of the falling rate of profit fit for a competitive, mechanizing (i.e, labor rather than capital saving) early capitalism. Now the potential surplus is massive while the inducement to invest has been weakened by the monopolization of the economy. Foster thus subjects Mattick, Cogoy and Yaffe to criticism. At this point, I would like to point out that I think Foster misunderstands the provisional acceptance of Say's Law by Grossmann and Mattick for a commitment to its actual validity. That is, Marx himself in fact provisionally accepted Say's Law at times in order to develop a theory of crises and cycles that is based on inadequate profits *independent* of any shortage of demand, a consequence of more fundamental contradictions than those arising from the non fufillment of Say's Law. David Yaffe whom Foster criticizes in detail for example handles Say's Law in just this way. Yaffe relies heavily here on Bernice Shoul, Karl Marx and Say's Law Quaterly Journal of Economics (Nov 1957), and Foster does not grapple with her argument. So the debates in marxist crisis theory seem not to have been resolved. We still have monopoly capital/overexploitation theory, disproportionality theories, now Brenner's vertical overcompetition theory (which in essence may be a neo schumpeterian theory of insufficient exit of inefficient capital, i think), simple underconsumption theories, falling rate and mass of profit theories. Max, we are all counting on you to resolve these debates once and for all in your review of O Connor. thanks, rakesh
FW: [Arg_Solid]Fidel supports the direction adopted by interim Argentgine President
--- Original Message --- From: sf_adam.rm [EMAIL PROTECTED] To: [EMAIL PROTECTED] Date: 12/26/01 10:16:51 AM Editor's Note: Below Mr. Castro defends Mr. Rodriguez Saa in his partial resistance to imperialist pressure to pay the debt. In my opinion, this statement is dangerous. What is needed is a decisive an d aggressive critique by Castro, not a political defense of Rodriguez Saa, a crass rightist, an unelected phony president, selected by the political e lite of Argentina, whose sole interest is to deflect the just popular rage against economic degradation. Castro should assist the masses who are figh ting tooth and nail against the regime of the IMF, who are pointing the way for every indebted country, chained to poverty. Simultaneously with the postponement of debt repayment, and with rumors of charging de la Rua and Cavallo with treason, Rodriguez Saa is forced by the bourgeoisie to pay government workers in a new phony currency (the so-call ed Argentino). This plan is the same rotten agenda for the people of Argen tina. It is simply a new version of the same plan to make the workers of Ar gentina pay for the government's debt. No where does Fidel Castro denounc e this situation or the fact that Rodriguez Saa are completely incapable of resisting the IMF, that only a socialist revolution can ensure resistance to poverty and enslavement to world capital. No where does Castro, Radio H avana, or the Granma or the Cuban Communist Party do this. Cuba's Communist Party, Granma, and every Cuban Embassy, consulate and misi on should be working tirelessly to assist the struggle in Argentina succeed and to clarify the political situation for the masses of Cuba, the struggl ing masses of Central and South America and the world-wide mvoement of resi stance to the IMF, WTO and the Free Trade Agreement of the the Americas--no t explaining how brave Mr. Rodrigues Saa is.--Adam * * * * La Habana, 24 de diciembre del 2001. EXCMO. SR. ADOLFO RODRÍGUEZ SAÁ PRESIDENTE REPÚBLICA ARGENTINA Al asumir sus funciones como Presidente de la República Argentina, me complace hacerle llegar, en nombre del pueblo y gobierno cubanos, sinceras felicitaciones y deseos de éxito en el desempeño de tan alta responsabilidad. Ante los dramáticos sucesos vividos por la Argentina, que han conmocionado a todos, el desafío que Usted y su gobierno han asumido, merece el respaldo decidido de los pueblos y gobiernos de América Latina y el Caribe y del mundo. Al reiterarle nuestra solidaridad, expresamos también el apoyo al programa de medidas anunciado por su gobierno, que busca superar la actual situación de crisis con acciones tales como la de invertir en lo inmediato los onerosos e insoportables gastos que una colosal deuda externa impone al pueblo argentino en la promoción de programas sociales y en la reconstrucción económica del país. Reciba, Excelencia, el testimonio de mi más alta consideración. Fidel Castro Ruz Presidente del Consejo de Estado y del Gobierno de la República de Cuba December 26, 2001 Fidel sends message to Argentine president City of Havana, December 24, 2001 YOUR HIGHEST EXCELLENCY, MR. ADOLFO RODRIGUEZ SAA, PRESIDENT OF THE ARGENTINE REPUBLIC On assuming your functions as president of the Argentine Republic, it gives me great pleasure to transmit sincere congratulations and all good wishes on behalf of the Cuban people and government, for an undertaking of such gr eat responsibility. In the face of the dramatic events experienced in Argentina, which have sho cked everyone, the challenge assumed by yourself and your government merits the decisive backing of the peoples and governments of Latin America, the Caribbean and the world. On reiterating our solidarity, we would also like to express support for th e package of measures announced by your government, which seeks to overcome the current crisis situation with actions such as immediately utilizing th e funds that had been designated for the onerous and untenable payments on the colossal external debt imposed on the Argentine people, investing instead in the promotion of social programs and the countrys economic re construction. Your Excellency, please accept my highest regards. Fidel Castro Ruz President of the Council of State and the Government of the Republic of Cuba Yahoo! Groups Sponsor -~-- Send FREE Holiday eCards from Yahoo! Greetings. http://us.click.yahoo.com/IgTaHA/ZQdDAA/ySSFAA/1bSolB/TM -~- To unsubscribe from this group, send an email to: [EMAIL PROTECTED] Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
Fiscal Crisis of the State
Jim O'C writes that the introduction to Fiscal Crisis is published in CNS, 12, 1, March 2001 issue. It's pretty good and clarifies a few things. All best wishes, Jim -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Enron's Success Story
December 26, 2001 Commentary Enron's Success Story By SUSAN LEE The collapse of Enron was many things -- a gratifying slap in the face to corporate hubris and an exposure of the Alfred E. Neuman club of stock analysts, rating agencies and the SEC. It may even prove to be a fascinating look into criminal minds. But there is one thing, for sure, it wasn't -- a market failure. To the contrary, Enron's implosion was confirmation of the principles that govern competitive markets. Enron's success and failure ran along the lines set down in any microeconomics text. The company discovered a new product -- mostly ways of trading energy in the derivatives market -- that allowed producers and users to lay off risk. This new product was wildly popular and, as the innovator, Enron made lovely above-market returns. But those abnormal returns attracted other firms into the business and Enron's advantage was gradually competed away. Each new market entrant put the squeeze on Enron's margins. What happened next is still a matter of speculation, but there are several theories that seem reasonable. Bad hedging. Although Enron started out as a plain vanilla energy company, it shed those hard assets that could have underpinned its financial business and morphed into a trading company and then, quickly, into a hedge fund. A trading company can make money no matter which direction the market goes by simply trading and taking its money from creating a market. If prices are falling, then suppliers rush into the market to get contracts that nail down prices; if prices are rising, then users rush in to get contracts. Traders can make money either way. Indeed, in this model, a volatile market is the best of all possible worlds. But with its margins -- and cash -- getting squeezed, Enron started borrowing money and pretty soon it was running with remarkable leverage, thus becoming a giant hedge fund. When things started to go wrong, Enron's traders quite possibly were panicked into trying to hit a home run. That is, they started taking big bets on the direction of the market, perhaps taking aggressively long positions in energy. A successful hedge fund, however, depends on adequately hedging bets, especially leveraged ones. But as Enron started to lose money on its big bets, observers guess that the insufficiency of its hedges began to look lethal. There are also more complicated theories that argue Enron was hiding its slowing growth in earnings with various accounting strategies. Bad trading. Enron's main technique to pump up earnings probably revolved around a loose-as-a-goose process for the accounting of energy derivatives. Called mark-to-market, the technique involves evaluating contracts at fair value prices. Since some of these contracts stretched out for 20 years, the futures market provides no firm prices. And, absent a liquid market with clear prices, fair value becomes a mug's game in which companies can vastly inflate value. These overstated gains, of course, were also unrealized, noncash gains. In September 2000, Jonathan Weil, a reporter for the Journal, took a look at Enron's second quarter and found that absent noncash earnings, Enron would have had a loss. Mr. Weil later found that for the year as a whole, unrealized trading gains accounted for more than half of the company's originally reported pretax profits. Hardly a confidence-builder in the quality of Enron's earnings. When their derivative strategies started to go sour, this theory runs, Enron removed the contracts from its financial statements and hid them in special entities created for just that purpose. Bad Assets. Another theory locates Enron's earning problems in their hard assets. Enron had a bunch of huge and underperforming assets, like its broadband company, water company and power plants in India and Brazil. In order to hustle those assets and associated debts off its financial reports, the company created some limited partnerships to buy these dogs -- either with bank loans or money provided by Enron itself. These partnerships (allegedly) transferred enough control to third parties to get them off Enron's balance sheet. Enron guaranteed these deals with make good provisions backed by Enron stock -- a promise that Enron would make good any losses in the value of the partnerships. When the value of the assets tanked, the make-good provisions kicked in, resulting, for example, in the enormous write-down in shareholder equity in November. Depending on which theory one accepts, there are two bottom lines. The first holds that the sagging earnings problem was fatal and that it is entirely possible Enron was in the process of liquidating itself. Jim Chanos of Kynikos Associates hypothesizes that Enron's cost of capital was higher than its returns on invested capital. A second argues that if
Argentina and globalisation
n°5, 27-12-01___http://www.edu-irep.org___ 24-12-2001 Nouvel article théorique sur l'Argentine: Le tournant argentin révèle les limites qui s'opposent àla "mondialisation" New theoretical paper on Argentina: Argentinian turning point shows the limits that stand in the way of "globalization" 27-12-01 L'irép souhaite à tous ses visiteurs de tenir une année de plus. irép wishes all its visitors to hold out one year more. 4, bd Jean JaurèsBP 2694267 Fresnes CedexFrance_tél/fax: 33 1 4091 9997[EMAIL PROTECTED]
RE: Enron's Success Story
nonsense!! see comments below -- Jim D. December 26, 2001 Enron's Success Story By SUSAN LEE The collapse of Enron was many things -- a gratifying slap in the face to corporate hubris and an exposure of the Alfred E. Neuman club of stock analysts, rating agencies and the SEC. It may even prove to be a fascinating look into criminal minds. But there is one thing, for sure, it wasn't -- a market failure. To the contrary, Enron's implosion was confirmation of the principles that govern competitive markets. Enron's success and failure ran along the lines set down in any microeconomics text. The company discovered a new product -- mostly ways of trading energy in the derivatives market -- that allowed producers and users to lay off risk. This new product was wildly popular and, as the innovator, Enron made lovely above-market returns. But those abnormal returns attracted other firms into the business and Enron's advantage was gradually competed away. Each new market entrant put the squeeze on Enron's margins. JD: this Schumpeterian story, by the way, is not prominently displayed in micro books. Rather, the emphasis is on NC static equilibrium. What happened next is still a matter of speculation, but there are several theories that seem reasonable. Bad hedging. Although Enron started out as a plain vanilla energy company, it shed those hard assets that could have underpinned its financial business and morphed into a trading company and then, quickly, into a hedge fund. JD: It's amazing how economists forget the difference between hedging and speculation. A true fund that hedges -- not speculative outfits like Enron or Long-Term Capital Management -- seeks to minimize risk by diversifying, locking in long-term prices (or interest rates) to avoid risks due to price (rate) fluctuations. But these so-called hedge funds were speculative and _highly leveraged_, as Lee notes below. The latter helps explain the high returns: it is very easy to show that the more leveraged a speculator is, the higher the return. A trading company can make money no matter which direction the market goes by simply trading and taking its money from creating a market. If prices are falling, then suppliers rush into the market to get contracts that nail down prices; if prices are rising, then users rush in to get contracts. Traders can make money either way. Indeed, in this model, a volatile market is the best of all possible worlds. But with its margins -- and cash -- getting squeezed, Enron started borrowing money and pretty soon it was running with remarkable leverage, thus becoming a giant hedge fund. When things started to go wrong, Enron's traders quite possibly were panicked into trying to hit a home run. That is, they started taking big bets on the direction of the market, perhaps taking aggressively long positions in energy. A successful hedge fund, however, depends on adequately hedging bets, especially leveraged ones. But as Enron started to lose money on its big bets, observers guess that the insufficiency of its hedges began to look lethal. JD: This seems okay (given the misuse of the word hedging), but ignores the _fraudulent_ nature of Enron's enterprise. Marx pointed out that speculative booms involve a tremedous amount of fraud and that this cheating is typically revealed when the boom ends. There are also more complicated theories that argue Enron was hiding its slowing growth in earnings with various accounting strategies. JD: strategies? that's like calling the 1970 US invasion of Cambodia an incursion. Enron spun off a lot of its debt to parterships, to make its balance sheets look good. Bad trading. Enron's main technique to pump up earnings probably revolved around a loose-as-a-goose process for the accounting of energy derivatives. Called mark-to-market, the technique involves evaluating contracts at fair value prices. Since some of these contracts stretched out for 20 years, the futures market provides no firm prices. And, absent a liquid market with clear prices, fair value becomes a mug's game in which companies can vastly inflate value. These overstated gains, of course, were also unrealized, noncash gains. In September 2000, Jonathan Weil, a reporter for the Journal, took a look at Enron's second quarter and found that absent noncash earnings, Enron would have had a loss. Mr. Weil later found that for the year as a whole, unrealized trading gains accounted for more than half of the company's originally reported pretax profits. Hardly a confidence-builder in the quality of Enron's earnings. When their derivative strategies started to go sour, this theory runs, Enron removed the contracts from its financial statements and hid them in special entities created for just that purpose. JD: here's the deliberate effort to save Enron's ass by cheating. Bad Assets. Another theory locates Enron's earning problems in their hard assets. Enron had a bunch of huge and underperforming assets, like its
Re: RE: Enron's Success Story
Is it ever possible to the disprove market efficiency to the satisfaction of a conservative economist? -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: RE: Enron's Success Story
- Original Message - From: Michael Perelman [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Wednesday, December 26, 2001 4:02 PM Subject: [PEN-L:20935] Re: RE: Enron's Success Story Is it ever possible to the disprove market efficiency to the satisfaction of a conservative economist? === Nope. What I find interesting about the Journal ed. and JD's reply is the 'ounce of prevention is worth a pound of cure' approach is missing from the former and hinted at by the latter, yet not taken too far in the direction of the ex ante perspective I thought lefties were supposed to be pretty good at identifying. Stronger supply side constraints on the capacity to defraud other market players would cede territory to ethicists, which, it seems, many economists are loathe to do. If I remember right Daniel Hausman's essay 'Are Markets Morally Free Zones?' goes into some of the problems of that 'nature'. The refusal to criminalize such white collar behavior exhibits not only the usual class bias, but something a little more disconcerting to those who would be desirous of dumping the current system; we have no substantive capacity to predict that agents would be more honest if we can't come up with something better than a bunch of 'thou shalt not misinform' penalties. Ian
RE: Re: RE: Enron's Success Story
Michael Perelman asks: Is it ever possible to the disprove market efficiency to the satisfaction of a conservative economist? no. They follow Hegel to see what's real as rational and what's rational as real. (This seems to be a false unfair presentation of Hegel, but what the hell...) Jim D.
Weisbrot on Argentina, IMF
The International Herald Tribune | www.iht.com How the IMF Messed Up Argentina Mark Weisbrot IHT Wednesday, December 26, 2001 WASHINGTON Argentina's implosion has the fingerprints of the International Monetary Fund all over it. The first and overwhelmingly most important cause of the country's economic troubles was the government's decision to maintain its fixed rate of exchange: one peso for one U.S. dollar. Adopted in 1991, this policy worked for a while. But during the past few years the dollar has been overvalued, which made the peso overvalued as well. Contrary to popular belief, a strong currency is not like a strong body. It is very easy to have too much of a good thing. An overvalued currency makes exports too expensive and imports artificially cheap. Just look at the United States, where a strong dollar has brought a record $400 billion trade deficit. But it gets catastrophically worse for a country that has committed itself to a fixed exchange rate. When investors start to believe that the peso is going to fall, they demand ever higher interest rates. These exorbitant interest rates are crippling to the economy. That is the main reason why Argentina has not been able to recover from four years of recession. To maintain an overvalued currency, a country needs large reserves of dollars; the government has to guarantee that everyone who wants to exchange a peso for a dollar can get one. The IMF's role here was crucial. It arranged large loans, including $40 billion a year ago, to support the peso. This was the IMF's second fatal error. To appreciate its severity, imagine Washington borrowing $1.4 trillion - 70 percent of the federal budget - just to prop up an overvalued dollar. It didn't take long for Argentina to pile up a foreign debt that was impossible to pay back. As if all that were not enough, the IMF made its loans conditional on a zero-deficit policy in Buenos Aires. But it is neither necessary nor desirable for a government to balance its budget during a recession, when tax revenues typically fall and social spending rises. The zero-deficit target may make little economic sense, but it has great public relations value. By focusing on government spending, the IMF has managed to convince most of the press that Argentina's profligate spending habits are the source of its troubles. But Argentina has run only modest budget deficits, much smaller than U.S. deficits during recessions. The IMF now claims that it was against the fixed exchange rate, and the large loans to support it, all along. Officials say they went along with these policies to please the Argentine government. So now Argentina tells the U.S. government what to do! This is not a very credible story, but of course verifying who made what decision is a little like tracking Qaida's chain of command. IMF board meetings, consultations with government ministers and other deliberations are secret. But they do have a track record. In 1998 the IMF supported overvalued currencies in Russia and Brazil, with large loans and sky-high interest rates. In both cases the currencies collapsed anyway, and both countries were better off for the devaluation. Russia's growth in 2000 was its highest in two decades. Argentina will undoubtedly recover, too, after it devalues its currency and defaults on its unpayable foreign debt. But the people will need a government that is willing to break with the IMF and pursue policies which put their own national interests first. Washington has other ideas. It's important for Argentina to continue to work through the International Monetary Fund on sound policies, said White House spokesman Ari Fleischer on Friday. For the IMF, failure is impossible. The writer is co-director of the Center for Economic and Policy Research. He contributed this comment to The Washington Post.
Argentina
http://groups.yahoo.com/group/Argentina_Solidarity/messages/ 222 Background: WWP's article on General Strike sf_adam.rm Sun 12/23/2001 223 NYTimes: New Argentine President Stops Debt Payme sf_adam.rm Sun 12/23/2001 224 Patience wears thin (The Economist) sf_adam.rm Sun 12/23/2001 225 Message from OSL Argentina sf_adam.rm Mon 12/24/2001 226 Re: Important Declaration of the PO [EMAIL PROTECTED] Mon 12/24/2001 227 Revolutionary Crisis in Argentina ASt-LRCI Mon 12/24/2001 228 Interim Argentine President Suspends Debt Payment sf_adam.rm Mon 12/24/2001 229 Argentina: Government Collapses sf_adam.rm Mon 12/24/2001 230 Re: Important Declaration of the PO Vicente Balvanera Mon 12/24/2001 231 BBC: Argentina default impact limited sf_adam.rm Mon 12/24/2001 232 Miami Herald on Argentina sf_adam.rm Mon 12/24/2001 233 29 DIE IN SOCIAL EXPLOSION sf_adam.rm Mon 12/24/2001 234 FT: Argentina defaults on repayment of $155bn deb sf_adam.rm Mon 12/24/2001 235 FT: 'Third currency' plan to stave off devaluatio sf_adam.rm Mon 12/24/2001 236 FT: Spanish companies fear they will be scapegoat sf_adam.rm Mon 12/24/2001 237 CWI Statement on Argentina sf_adam.rm Mon 12/24/2001 238 Argentina - Resolutions passed at one of hundreds Vicente Balvanera Mon 12/24/2001 239 BBC's Timeline on Argentina Crisis sf_adam.rm Mon 12/24/2001 240 The Militant: Argentine workers rebel sf_adam.rm Mon 12/24/2001 241 Eyewitness Account of Congress Square and Plaza d sf_adam.rm Mon 12/24/2001 242 Revolutionary crisis rocks Argentina sf_adam.rm Mon 12/24/2001 243 Job Creation Plan sf_adam.rm 10:32 am 244 Argentine Jewish Immigration to Israel sf_adam.rm 10:32 am 245 Argentines Fear Devaluation From Currency Moves sf_adam.rm 10:33 am 246 Mr. Castro supports the direction adopted by Rodr sf_adam.rm 11:18 am 247 NY Times: Consequences for the US in Argentina's sf_adam.rm 11:18 am 248 NYTimes: American Investors in Argentina Mostly T sf_adam.rm 11:19 am 249 BBC:Argentina prepares for talks with US sf_adam.rm 11:19 am 250 Russian Translation of December 22, 2001 Unity St sf_adam.rm 3:22 pm 251 New Argentine currency may plunge against US doll sf_adam.rm 5:07 pm
Re: Weisbrot on Argentina, IMF
As we learn more about Richard Reid, I highly recommend the movie My Son the Fanatic. I was lucky enough to have had dinner with Hanif Kureishi last year. While most people I know were disappointed with the movie and Kureishi's dark and immoralist vision--he's too Westernized for some--I found the movie quite compelling. In the face of his son's grotesque fundamentalism which at least to me was subtly depicted in some sense as a horrific reaction to the paternalism of his white fiance's family , the father becomes a fundamentalist liberal in some ways. He seems unaware of any reason why the liberal beliefs which he espouses would ring hollow to his son. The movie is from the father's perspective; he is sympathetically portrayed as his fanatic son assaults his liberal beliefs in ever more violent and hateful ways. Kureishi does seem to have got wrong the nature of the fundamentalists' beliefs, however. They now seem to have had bigger goals in mind than the burning down of a house of prostitution. Rakesh
Re: Re: RE: Enron's Success Story
To answer Michael's question below: No. But the reason for the Wall ST Journal story was not to work through micro theory to get the right answer. The article appeared to head off any questioning of the market in Congress or State legislatures. People were looking at Enron (and California, and Montana, and Alberta, and New Zealand, and and and) and saying Maybe the market doesn't work so well. So the Journal (and I've seen the same thing elsewhere) is putting out the line that Enron is PROOF that the market works, not the opposite. Michael Perelman wrote: Is it ever possible to the disprove market efficiency to the satisfaction of a conservative economist? -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Fw: After the Fall: Argentine Crisis and Possible Repercussions
FOREIGN POLICY IN FOCUS http://www.fpif.org/ What's in the News at FPIF? December 26, 2001 * After the Fall: Argentine Crisis and Possible Repercussions By David Felix The currency, debt, and political crisis in Argentina presents the Bush II administration with a Hobson's choice. It could hang tough on no emergency loans to Argentina, re-enforced perhaps by a hard line in the forthcoming debt renegotiations, in order to raise the probability of failure for Argentina's breakaway from neoliberalism. That would also increase the risk that the resulting economic chaos could produce political chaos and a return of the jackboots. It would also increase opposition within the IMF directorate to U.S. dominance of IMF policy toward the developing countries, which could further erode the institution's usefulness to the U.S. as a key instrument for globalizing neoliberalism. Economist David Felix examines the policy options facing the new Peronist government in Argentina, while also reviewing the possible repercussions inside the IMF and to the global economy. (David Felix [EMAIL PROTECTED] is professor emeritus at Washington University.) See this new FPIF Global Affairs Commentary at: http://www.fpif.org/commentary/0112argentine.html
Farm subsidy data base
The NY Times reports that a detailed list of all farm "subsidy" payments made over the last five years is up on a web site. The site is by the Environmental Working Group. The site is WWW.EWG.ORG. I put "subsidy" in quotation marks because I think of farm payments as covering the overhead costs, while proceeds from crop sales cover the out-of-pocket costs of getting a crop. This is not to say that the system is totally abused and unfair. The story below tells of some of that. I intent to have a look at the data as soon as I have time. You can sort by state, county, etc., so it might be useful in local fights. Gene Coyle December 27, 2001 NATIONAL Farmers Abashed, or Irate, Over Subsidy List By ELIZABETH BECKER [P]ERU, Ill., Dec. 21 With their fields resting under a thin layer of frost and their tractors put away for the winter, farmers have time to sit around coffee shops and fume over having their most private secrets spread across the newspaper for everyone to talk about. "It was like being outed," said Keith R. Bolin, a grain and hog farmer from Sheffield, who received $130,343 in farm subsidy payments from the federal government over five years. "But to be honest with you, I don't mind. It was a wake-up call, making us look like we're not all that different from the welfare mothers in Chicago." The newly published secrets fueling the farmers' talk of rage and recrimination here and across rural America come from a Web site that has made public for the first time every farm subsidy payment received by every farmer since 1996. That means everyone farmer and city dweller alike now knows exactly how dependent on the government farmers have become since the Freedom to Farm Act of 1996 and how the most dependent are the top 10 percent or 20 percent who receive a disproportionately large share of the subsidies. Nationally, farm subsidies total about $20 billion a year. For rural communities, the list has caused embarrassment and some jealousy. "This Web site isn't going to help us much," said Randy Michelini, a Grand Ridge corn farmer who received $28,890 over five years. "It will be used as ammunition against farmers. Now a lot of farmers feel violated, and some just feel plain jealous." The men here and at other coffee stops on Interstate 80 said it was one thing for them to know that the government checks were often the only thing keeping them from having to give up and move off the land. It was another to see the awkwardly large subsidies printed in the community newspaper. "I don't like people knowing my business, but to be a viable farmer you have to have government support especially since crop prices went so flat," said John Dollinger, a fifth-generation Minooka farmer whose family came from Germany in the early 19th century and has raised corn on the same land ever since. Mr. Dollinger, who received $362,068 over five years, said, "If you're not a farmer, you don't understand our business and how bad prices have been the last five years." After the anger comes the inevitable reflection about how farming has changed during those five years. Small family farmers are being driven out by flat grain prices, kept artificially low in part by government subsidies that encourage overproduction. The more acres of grain or cotton a farmer owns, the bigger the subsidy. The subsidy programs also help ensure that when prices are low, the government will help make up the difference. At current prices, it costs a farmer as much as 50 cents more to raise a bushel of corn than he receives on the market. The biggest winners, many farmers say, are the huge grain companies that buy inexpensive corn subsidized by the taxpayer and then process and sell it at a profit. Michael Veit of La Salle, another farmer drinking coffee with Mr. Dollinger at the RPlace restaurant outside Morris, Ill., said he felt strange talking about how much he received from the government more than $210,000 over five years. But Mr. Veit said that if he had to talk about the subsidies, he also wanted the taxpayer to know that corn prices had been so low that he had to take a second job driving a truck. "I sure wish I had that $210,000 in my bank account, but it all went to pay my bills," Mr. Veit said. "These farm programs are driving a lot of smaller farmers right out of business, pushing the crop prices down and the rents for land up." Should anyone doubt those claims, all they need do is read local newspapers like The Ottawa Daily Times, The Bureau County Republican or The Morris Daily Herald to see how their big neighbors have expanded their farms, thanks to subsidy payments that are often 10 times what they have been receiving. "It explains a lot," said Rod Thorson, a Republican candidate for the Illinois Senate and a local farm radio broadcaster. "You can see from the payment lists how the rich farmers can afford to buy up the small ones like cannibals, all subsidized by the government." Here in La Salle
Re: Fw: After the Fall: Argentine Crisis and Possible Repercussions
- Original Message - From: michael pugliese [EMAIL PROTECTED] It would also increase opposition within the IMF directorate to U.S. dominance of IMF policy toward the developing countries, === Just when do countries stop developing? Didn't Arturo Escobar write something about the uselessness of development discourse? Ian
Economics Insider Story
http://www.nytimes.com/2001/12/27/business/27RIVA.html?pagewanted=1 The story tells about the recruiting rivalry between Harvard and MIT. Also, the NYT reports that ObL looks gaunt in the new tape. At least, that is the headline for the paper that is always trying to find the positive spin on every foreign policy story. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Farm subsidy data base
The scandal of the subsidies includes the fact that many of the farmers are not farmers at all; and that many of them artifically divide their land so that they can get more subsidies than they are supposed to get. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Jeff Madrick on the CPI
http://www.nytimes.com/2001/12/27/business/27SCEN.html December 27, 2001 How Much Does Anyone Really Know About the Real Rate of Inflation By JEFF MADRICK n 1997, a commission appointed by the Senate Finance Committee concluded that the annual Consumer Price Index computed by the Bureau of Labor Statistics was probably 1.1 percent too high, and perhaps even more. The Boskin commission's findings, named after its chairman, Michael Boskin, a Stanford economist who served as President George Bush's chief economic adviser, made headlines in the financial news media, and many took its conclusions as gospel. But perhaps they shouldn't have. At the time, many members of the Senate Finance Committee were cheered by the findings. To them, it meant the federal government could justify reducing Social Security benefits, because payments are tied to increases in the price index. So are countless wage contracts, as are the federal income-tax brackets. If it was right, it also meant that both the economy and productivity were growing faster than reported, a boon to arguments on Wall Street and in Washington that the nation was embarked on a new economic revolution. But a new, comprehensive study sponsored by the National Academy of Sciences, and partly commissioned by the Bureau of Labor Statistics itself, raises serious questions about just how much the Boskin commission or anyone else knows about the true rate of inflation. The study, undertaken by a panel of 13 economists from a wide variety of institutions and led by Charles Schultze of the Brookings Institution, restores one's faith in cool-headed economic analysis and measured use of economic theory. It is the report that the Boskin commission should have done, says Joel Popkin, a Washington economic consultant. The main contention of the Boskin report was that the Labor Department's statistical experts did not fully take into account the improved quality of many products. You may pay $1 for a razor, but if you get twice as many shaves as before, you are really getting more for your money. In effect, you are paying 50 cents for that razor. The same is true with automobiles. If they are more durable or have automatic window locks, say, buyers are getting a little more for their money. The labor bureau basically agrees with the theory and makes many such adjustments. But Mr. Boskin's group and many other economists contend that the adjustments are not adequate and that reported inflation has been much too high. The problem with that argument, says the Schultze panel, is that such estimates are difficult to make and easy to exaggerate. It points out many holes in the Boskin analysis. For one thing, in some cases, it is likely the Bureau of Labor Statistics over-adjusts for quality, meaning inflation is too low, not too high. For another, the Schultze panel cites evidence that the Boskin commission may have overstated quality in important areas. For example, Jack Triplett, a former bureau economist now with Brookings, says the Boskin commission's analysis of quality increases for cars was simply misinformed. Two government economists, Brent Moulton and Karen Moses, seriously criticize the work on housing and medical care. One of the striking oversights of the Boskin report, I believe, was that it paid almost no attention to areas in which product quality deteriorated, like airline service and education. And in the years since, consumer surveys consistently have found declining satisfaction for both goods and services. This Christmas season brought the point home for me. My new printer broke down within a year, my laptop within 18 months. My new answering machine garbles messages. One assumption of the Boskin commission was rejected outright by the Schultze panel. How do you take account of the benefits to consumer well-being of new products? Some ingenious economists believe you can assume the product already exists but is sold at a price so high that no one will buy it. They argue that the difference between the imagined price and the actual price of the new product, once introduced, should be included as a reduction in the price index. But such an estimate is difficult to make credibly, and including benefits from new goods as a reduction of inflation, the panel concluded, is itself theoretically questionable. The most important contribution of the panel, however, was to clarify the central assumptions about the uses of the C.P.I. and other price indexes. The simplest way to measure prices is to compute the changes for a fixed basket of goods and services. This is what probably most Americans think the consumer price index does. But in the early 1960's, a government commission urged the Bureau of Labor Statistics to adopt a broader concept: the index should reflect the cost of maintaining a given standard of living. Thus, if products improve, the standard of living improves, or it costs less to maintain the old standard of living.
Re: Economics Insider Story
http://www.nytimes.com/2001/12/27/business/27RIVA.html?pagewanted=1 "From his perch at M.I.T., Mr. Samuelson revolutionized economics. Although firmly in the Keynesian camp, his foremost achievement was to unite a century of economic insights, many of them seemingly at odds, into a single, coherent theory the neoclassical synthesis, as it was called that would dominate economic discourse for some three decades." Didn't they leave out a purportedly or two? Tom Walker
RE: Re: Re: RE: Enron's Success Story
Two different issues seem to be mixed in here. One is market failure, the other is illegal acts by Enron execs possibly linked to illegal acts by the Bushies. The mere fact of a company failing, even a large one, is not a market failure. Market failures exist because markets keep functioning in some perverse, diseconomical way. Neither is the commission of illegal acts a market failure. In this case, such acts happen to be politically sensational. That's the importance, IMO. Not market failure. Capitalism is guilty of its successes, not its failures. mbs To answer Michael's question below: No. But the reason for the Wall ST Journal story was not to work through micro theory to get the right answer. The article appeared to head off any questioning of the market in Congress or State legislatures. People . . . Michael Perelman wrote: Is it ever possible to the disprove market efficiency to the satisfaction of a conservative economist?
Re: RE: Re: Re: RE: Enron's Success Story
Max, nicely clear statement, isn't there another issue here? Enron supposedly proved that market forces were superior to government regulation. It could create low prices for consumers and lush profits for investors. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
