The Slack Wire – Page 13

Corporate cashflows, 1960-2016

Here is some background on the investment question from the previous post, and related topics.

I’ve been fooling around recently with assembling a comprehensive account of sources and uses of funds for the US corporate sector from the Integrated Macroeconomic Accounts (IMA). (It’s much easier to do this with the IMAs than by combining the NIPAs with the financial accounts from the Fed.) The goal is a comprehensive account of flows of money into and out of the corporate sector, grouped in a sensible way.

My goal here is not to make any specific argument, but to provide context for a bunch of different arguments about the finances of US businesses. I think this an important thing to do – both mainstream and heterodox people tend to make claims about specific sets of flows in specific periods, but it’s important to start from the overall picture. Otherwise you don’t know what questions it makes sense to ask. It’s also important to give a complete set of flows, for the same reasons and also to check that one’s claims are logically coherent. Needless to say, you also have to measure everything consistently.

Some people do do this, of course — the social accounting matrices of Lance Taylor and company are the best versions I know of. But it’s relatively rare.

The IMAs are a fairly new set of national accounts, motivated by two goals. First, to combine the “real” flows tracked by the BEA with the financial flows and balance-sheet positions tracked by the Fed into a single, consistent set of accounts; and second, to produce a set of US accounts that conform to the System of National Accounts (SNA) followed by most of the rest of the world. (The SNAs are sort of the metric system of national accounts.) The first goal is more completely realized than the second – there are some important differences between the IMAs and SNAs. For our purposes, the most important one is the definition of the corporate sector. In the SNAs corporate businesses include, broadly, any enterprise staffed mainly by wage workers that produces goods and services for sale; this includes closely-held firms, government-owned enterprises, and many nonprofits. In the IMAs, the corporate sector is based on tax status, and so excludes partnerships and small family businesses, nonprofits, and government enterprises.

The nonfinancial corporate sector on the IMA definition accounts for roughly 50 percent of US value-added. [1] I think there are good reasons to focus on this 50 percent. This is where most important productive activity takes place, and where essentially all the profit that economic life is organized around is generated. It’s also the sector where the conceptual categories of economics best correspond to observables. We don’t directly see output in public sector or nonprofits, don’t directly see wages and profits in noncorporate sector, we don’t see either in the household sector. Finance of course has its own issues.

In any case! Figure 1 shows the corporate sector’s share of value added since 1960.

I am not sure what substantive significance, if any, most of the movements in this figure have. Some large part, perhaps most, of them reflect definitional or measurement factors rather than any change in concrete economic activity. That said, the secular rise in finance as well as government does, I think, reflect changes in what people do all day. The only one of these lines that definitely means what it seems, is the long-run rise in government – given the way the accounts are constructed, there must be a corresponding rise in the share of public sector employment. The household sector line basically reflects changes in the weight of spending associated with owner-occupied housing – the nonprofit piece of this is fairly stable over time. The fall and rise in the noncorporate business sector may also reflect the changing weight of real estate – where noncorporate forms are common – and independent-contractor arrangements. But it may also reflect shifts in legal forms and/or BEA imputations, that don’t involve any substantive change in productive activity.

Nonetheless this figure is important — less for what it tells us about economic substance than for what it tells us about economic data. Any series that exclusively or disproportionately draws from the corporate sector (nonresidential investment is an obvious and important case) will be scaled by that top line. And any discussion of factor shares needs to take into account the change in the shares of sectors where wages and/or profits are not directly observed.

Figure 2 is the real point of this post. It’s my broadest summary of sources and uses of funds in the corporate sector. All are measured as a share of total corporate value added. The same data is shown in the table at the end.

I’ve organized this in a somewhat nonstandard way, but which I think is appropriate for the questions we are most interested in. The vertical scale is fraction of corporate value-added, or output. The heavy black line shows the share of output available to corporate managers. Above the line are three deductions from value-added: first, wages and other compensation of labor; second, in gray, taxes, including both taxes on production and corporate income taxes; and third, the narrow white band, net payments to the financial system. This last is interest and other property payments, less interest, dividends and other property payments received. These are the three categories of payments that are effectively imposed on corporations from outside. [2] The area below this line is the internal funds at the disposal of management – what’s often referred to as corporate cashflow.

In red are two main uses of funds by corporate managers. The bottom red area is investment. Above this is payouts — first dividends, and then the top red area, net share repurchases. This latter includes both repurchases in the strict sense and shares retired through cash mergers and acquisitions – aggregate data combines them. The difference between the black line and the red line is net financial saving by the corporate sector. Where the heavy black line is above the top red line, the corporate sector is a net lender in financial markets – its acquisitions of financial assets are greater than the new debt it is incurring. Where the red line is above the black line, as it usually is, the corporate sector is a net borrower – its new debt is greater than its acquisition of financial assets.

Finally, the dotted black line shows reported depreciation. (Consumption of fixed capital in the jargon of the accounts.) This is not actually a source or use of funds. And there are serious conceptual and measurement issues with defining it – so much so that, in my view, it’s probably not a usable category for describing real world economies. Nonetheless, it is necessary to define some other terms that play a big part in these discussions. Most importantly, profits can be regarded as the difference between cashflow and depreciation. [3] And net investment is the difference between investment and depreciation.

The same items are presented in the table at the end of the post, for three periods and for the most recent full year available.

As I discuss below, some terms are grouped here differently from the way they are presented in the IMAs. Obviously, how exactly we aggregate is open to debate, and the pros and cons of different choices will depend on the questions we are trying to answer. But I think some picture like this has to be the starting point for any kind of historical discussion of the US economy.

So what do we see?

First, the labor share (i.e. labor costs as a percent of value added) is quite stable around 63-64 percent of value added between 1960 and 2000. It only begins falling in 2002 or so, dropping about 4 points in the early 2000s and another 3 points in the wake of the Great Recession, with a modest recovery in the past couple years. This timing is quite different from the impression most people have — what you’d get from straightforwardly looking at the wage share of GDP — of a steady long-term decline from the 1970s.

There are two reasons for this difference. First, during the 1970s and 1980s, the non-wage share of labor costs (mainly health benefits) rose quite a bit, from around 5 percent to around 10 percent of total compensation. This explains why labor cost growth did not slow during this period, even though wage growth did slow. Since healthcare prices were rising quite a bit faster than overall prices during this period, the rising share of health benefits in compensation also meant that the cost of labor to employers was also rising faster than the value of compensation to workers. [4] This factor becomes less important after the early 1990s, when the non-wage share of labor compensation flatted out.

Second, the labor share in the corporate sector is quite a bit higher than the labor share in finance and noncorporate businesses — the two sectors whose share of GDP has increased in recent decades. This means that even if there were no change in factor shares within each sector, the labor share for the economy as a whole would fall. Again, I don’t know how much of the difference in factor shares between sectors is a measurement issue, how much it reflects shifting legal forms of organization of the same kinds of activities, and how much it reflects real differences in how claims on the social product are exercised. But either way, it’s important to understand that a large part of the observed fall in the labor share over the past generation is explained, at least in an accounting sense, by this shift between sectors.

Moving on to taxes, there is also a substantial fall in this claim on corporate value-added, from 16 percent in 1960 to around 11 percent today. But here, the decrease comes earlier, in the 1960s and 1970s – the tax share has hardly changed since 1980. (I suspect that if this figure were extended to earlier dates, there would be a large fall in the tax share in the 1950s as well.) This means that after-tax profits show a more steady long-term rise than do pre-tax profits.

I should note that “taxes” here combines two items from the IMAs — taxes on production, and taxes on profits. In the national accounts, there are good reasons to separate these — taxes on production enter into the cost of output and so have to be treated as a factor payment, while taxes on profits are not part of costs and so are treated as a transfer. This distinction is critical if we are going to calculate GDP in a consistent way, but for substantive questions it’s not so important. To government, managers and other economic actors, taxes are all mandatory payments from the corporation to the state, however they are assessed.

After taxes comes net financial payments. As defined here, this is interest, rent and net current transfers, less interest, rent and dividends received. In other words, it is net payments on the corporate sector’s existing financial assets and liabilities. It’s represented on the figure by the white space between the thin black line and the thick black line. The first thing to notice about these net payments by corporations is that they are almost always positive and never significantly negative. In other words, over the past 56 years the corporate sector as a whole has never received more income from its financial assets than it has paid on its financial liabilities. You can see that the largest share of corporate value-added going to financial payments came in the high-interest 1980s; in most other periods the balance has been close to zero.

I’ll come back to this in a later post – a next step in this project should be precisely to unpack that white section. But the fact that the net financial income of the corporate sector is small, never positive, and shows no significant trend over time, is already enough to reject one popular story about financialization, at least in its most straightforward form. It is simply not the case that nonfinancial corporations in the aggregate have turned themselves into hedge funds – have replaced profits from operations with income from financial assets. The Greta Krippner article that seems to be the most influential version of this claim is a perfect example of the dangers of focusing on one piece of the cashflow picture in isolation. [5] She looks at financial income received by corporations but ignores financial payments made by corporations (mostly interest in both cases). So as shown in Figure 3, she mistakes a general rise in interest rates for a change in the activities of nonfinancial businesses.

Figure 3. Because she focuses on the heavy black segment in isolation, Krippner mistakes a period of high interest rates for a reorientation of nonfinancial corporations to financial profits.

Returning to Figure 2: After subtracting labor costs, taxes and interest and other financial claims, we are left with the heavy red line — the share of value added available as cashflow to corporate managers. This rises from 20 percent in the 1960s to as high as 25 percent in the 1990s, to around 30 percent today. This increase in the corporate profit share (gross of depreciation, net of taxes) is one of the central facts of modern US macroeconomic history.

In the broadest terms, corporations can use cashflow in three ways. They can invest it in order to maintain or grow the business; they can distribute it to shareholders; or they can retain it for later use in some financial form. This last use can be, and often is, negative, if investment and payouts are together greater than cashflow.

Investment here includes gross capital formation, defined in the national accounts as spending on durable equipment, structures, software, research and development, and the creation of intellectual property. (The last two items have been included in the national-accounts measure of investment only since 2013.) It also includes the change in private inventories and spending on nonproduced durable assets, which I assume is almost all land. This item is listed separately in the IMAs, and it’s not obvious how to handle it: Corporate purchases of land have different macroeconomic implications than spending on new means of production, but from the point of view of the people making the investment decision there’s no major difference between money spent on a building and money spent for the land it sits on. This item is generally very small — well below 1 percent of total investment — but, like inventories, it’s highly cyclical and so plays a disproportionate role in short-run fluctuations. About a tenth of the fall in investment between 2008 and 2010, for example, was in nonproduced assets.

Somewhat surprisingly, there is no downward trend in the investment share. It was 17 percent of value added in the 1960s and 1970s, versus over 18 percent in this decade, and 19 percent in the third quarter of 2017 (the most recent available).

If investment today is, if anything, historically high as a share of corporate output, why have so many people (including me!) been arguing that weak investment is a problem? There are several reasons, though perhaps none are entirely convincing.

First, as I pointed out in the previous post, in recent years there has been an unusual divergence between investment in the corporate sector and investment in the economy as a whole. Residential investment by households remains very low by historical standards; nonresidential investment by noncorporate businesses is also low. At the same time, financial and especially noncoporate businesses always invest at lower rates than nonfinancial corporations, so the rising share of these sectors leads to lower overall investment. Second, the recovery in corporate investment is relatively recent – things looked different a few years ago. Nonfinancial corporations’ investment share fell extremely sharply in 2009, to its lowest level in 45 years, and took several years to bounce back. So when we were discussing this stuff three or four years ago, the picture looked more like a secular decline. Third — and probably most relevant for my work — while investment is relatively high as a share of corporate value added, it is quite low as a share of profits or cashflow. There is a genuine puzzle of weak investment, as long as we don’t ask “why are corporations investing less?”, but instead ask “why haven’t high profits led corporations to invest more?” Fourth, there has been a large increase in reported depreciation — from around 10 percent of value added in the 1960s to around 15 percent today. While I think for a number of reasons that this number is not really meaningful, if you take it seriously, it means that while gross investment has risen slightly, net investment has fallen a lot, to about half its level in the 1960s and 70s. Finally, if you take a strong Keynesian or Kaleckian view that it’s business investment that drives shifts in demand, then the ratios shown here are not informative about the strength or weakness of investment. The ratio of investment to output, in this view, only tells us about the size of the multiplier. To assess the strength or weakness of investment, we should instead look at the absolute increase in investment over the business cycle, which — while it’s picked up a bit in the past year — is still quite low by historical standards. I’ve made this argument myself, but I wouldn’t want to push it too far — investment is not the only source of autonomous demand.

Moving on in Figure 2: Above investment is payouts – first dividends, then net share repurchases. Here we see what you’d expect: These flows have gone up a lot. Dividends have doubled from 4.5 percent of value added in the 1960s and 1970s to 9 percent today, while net repurchases have gone from less than nothing to 6 percent (and as high as 10 percent in the 2000s.) Measured as a share of corporate cashflow rather than value added, dividends have remained stable at around 50 percent. Retained earnings as conventionally defined — profits minus dividends — have also been roughly stable as a share of value added.

Including net share repurchases with dividends is the biggest way my presentation here departs from the format of the IMAs. There, net share issuance is classed as an addition to liabilities, just like issuance of new debt. Net repurchases are the same as negative issuance — the equivalent, in the IMA framework, of paying back loans. The difference, of course, is that share repurchases have no effect on the balance sheet. This is the fundamental reason I think it makes sense to group repurchases with dividends. The flow of dividend payments is not affected by the number of shares outstanding. [6] It’s also important that market participants clearly perceive share repurchases as equivalent to dividend payments. If you read the financial press, dividends and buybacks are always treated as two forms of shareholder payouts.

Personally, I don’t have any doubts that this is the right way to look at it — today. But this is a good example of how the relations between economic and accounting categories are always somewhat slippery and can change over time. Whether net share issuance should be classed with dividends (and interest payments, etc.) as a current transfer, as I do, or whether it should be considered a financing transaction, where the standard IMA presentation puts it, depends on the way these transactions are actually used – it can’t be answered a priori. Again, I think it’s reasonably clear that, given their use today, net stock repurchases should be grouped with dividends. But in the 1950s or 1960s, treating them as financing made more sense. Also, this adjustment needs to be made consistently. If we are going to count repurchases as dividends, we have to subtract them from the headline measures of retained earnings and corporate saving. We will probably want to make an equivalent adjustment to the accounts of other sectors as well, though this poses its own set of challenges.

Another thing to consider is that we see negative issuance not only when corporations repurchase their own shares, but when shares are purchased for cash as part of mergers and acquisitions. This is not necessarily a problem. If we are just adding up payments for the sector as a whole, the two sets of flows are equivalent. On a more concrete behavioral or policy level there are important differences, but we’ll pass over those for now.

If we look at dividends alone, 2016 saw them at their highest share of corporate value-added, of profits and of cashflow since the IMAs begin in 1960; and almost certainly since the 1920s. If we measure payouts as dividends plus net share repurchases, then 2016 levels were still a bit short of the peak in the mid-2000s. Share repurchases have been a bit lower (around 5 percent of value added) in 2017 than 2016; unfortunately, the quarterly IMAs don’t have dividend data, but the financial accounts suggest that dividends have declined somewhat as well. It seems that the 2-point decline in the profit share since its 2014 peak is now beginning to be reflected in payouts to shareholders. By comparison with any period before the mid-2000s, payouts are still very high. Still, their decline over the past year seems significant – though maybe the tax bill will give them a second wind.

The final item in Figure 2 is the space between the heavy red line and heavy black line. This shows the financing gap – the net financial borrowing (if positive, with the red line above the black line) or lending (if negative) by the corporate sector. In my opinion this is a much more relevant number than corporate saving as conventionally defined. As the figure shows, nonfinancial corporations are normally net borrowers in financial markets; the brief periods of net lending are all associated with deep recessions. As the figure also makes clear, however, this specific interpretation is quite sensitive to counting share repurchases as payouts. If net equity issuance is treated as a form of financing, then the aggregate corporate sector has been mostly close to a zero balance in financial markets and has more recently been a substantial net lender. On the other hand, if we think of this gap as showing the net credit-market borrowing by the nonfinancial corporate sector — as it more or less is — then the conclusion holds regardless of how you treat stock buybacks. Either way, by this measure the recent expansion is not exceptional: As of 2016 credit-market borrowing by the corporate sector was still smaller, as a share of value-added, than it was at the high points of the 1980s, 1990s or 2000s.

The same results are shown below for three periods and for the most recent year. I won’t recap the table, it’s the same stories as above. Just to be clear, the values are the averages for the periods shown for the flows listed in the second column. So for instance labor costs accounted for an average of 63 percent of corporate value-added during 1960-1979. The first column just shows the accounting relationships between the flows.

	Flow	1960-1979	1980-1999	2000-2015	2016
100 –	(A) Labor costs	63	64	60	59
–	(B) Taxes	15	12	12	12
–	(C) Net financial payments	1	2	1	1
=	(D) Internal funds (cashflow)	21	22	27	29
	(E) Dividends	5	5	7	9
+	(F) Net share repurchases	-1	2	4	6
=	(G) Payouts	4	7	11	15
	(H) Investment	17	18	18	18
–	(J) Depreciation	10	13	15	15
=	(K) Net investment	7	5	4	3
(G) + (H) – (D) =	(I) Financing gap	0	3	2	5
(D) – (J) =	(L) Profits	11	9	13	14

What do we take from all this? Again, my goal here was not to make any particular substantive claim, but to lay out some essential context for more specific arguments about corporate finances that I’ll make in the future. But it is interesting, isn’t it?

[1] Value-added is the difference between sales and the cost of material inputs. It’s the best way to measure the output of various sectors. For the economy as a whole, total value-added is identically equal to GDP.

[2] Of course corporations have some control over their wage, tax and debt-service payments. But these are not mainly decision variables for corporate management in the same way that investment and shareholder payouts are. Or at least I think it’s reasonable to so regard them.

[3] Whether they are exactly this value or only approximately depends on the profits concept being used. In any case, it’s important to keep in mind that the values of depreciation used by corporations for reporting profits to financial markets and to the tax authorities, may be quite different from the depreciation reported in the national accounts.

[4] The different behavior of prices of workers’ consumption basket and of output in general was the subject of the first substantive post on this blog, seven years ago. It’s an important topic!

[5] While I don’t agree with the claims in this article, I’m a big admirer of Krippner’s other work.

[6] The big exceptions, of course, are cases that involve all of a given corporation’s shares — IPOs and transactions that take a company private. These do respectively create and extinguish dividend flows. For this reason, when using micro data, it may make sense to use gross rather than net repurchases; but this isn’t possible with the IMA data. IPOs however are a quite small part of the overall net issuance/repurchase of shares, and I am pretty sure that firms going private are as well. Private equity might create some more serious issues here — this is something I’d like to understand better. On the other hand, the advantage of using net rather than gross repurchases is that it eliminates repurchases that are simply compensating for stock issued as part of compensation packages.

The Class Struggle on Wall Street: A Footnote

Remember back at the beginning of February when the stock markets were all crashing? Feels like ages ago now, I know. Anyway, Seth Ackerman and I had an interesting conversation about it over at Jacobin.

My rather boring view is that short-term movements in stock markets can’t be explained by any kind of objective factors, because in the short run prices are dominated by conventional expectations — investors’ beliefs about investors’ beliefs… [1] But over longer periods, the value of shares is going to depend on the fraction of output claimed as profits and that, in general, is going to move inversely with the share claimed as wages. So if working people are getting raises — and they are, at least more than they were in 2010-2014 — then shareholders are right to worry about their own claim on the product.

One thing I say in the interview that a couple people have been surprised at, is that

there has been an upturn in business investment. In the corporate sector, at least, business investment, after being very weak for a number of years, is now near the high end of its historical range as a fraction of output.

Really, near the high end? Isn’t investment supposed to be weak?

As with a lot of things, whether investment is weak or strong depends on exactly what you measure. The figure below shows investment as a share of total output for the economy as a whole and for the nonfinancial corporate sector since 1960. The dotted lines show the 10th and 90th percentiles.

Gross capital formation as a percent of output

As you can see, while invesment for the economy as a whole is near the low end of its historic range, nonfinancial corporate investment is indeed near the high end.

What explains the difference? First, investment by households collapsed during the recession and has not significantly recovered since. This includes purchases of new houses but also improvements of owner-occupied houses, and brokers’ fees and other transactions costs of home sales (that last item accounts for as much as a quarter of residential investment historically; many people don’t realize it’s counted at all). Second, the investment rate of noncorporate businesses is about half what it was in the 1970s and 80s. This second factor is exacerbated by the increased weight of noncorporate businesses relative to corproate businesses over the past 20 years. I’m not sure what concrete developments are being described by these last two changes, but mechanically, they explain a big part of the divergence in the figure above. Finally, the secular increase in the share of output produced by the public sector obviously implies a decline in the share of private investment in GDP.

I think that for the issues Seth and I were talking about, the corporate sector is the most relevant. It’s only there that we can more or less directly observe quantities corresponding to our concepts of “the economy.” In the public (and nonprofit) sector we can’t observe output, in the noncorproate sector we can’t observe profits and wages (they’re mixed up in proprietors income), and in the household sector we can’t observe either. And financial sector has its own issues.

Anyway, you should read the interview, it’s much more interesting than this digression. I just thought it was worth explaining that one line, which otherwise might provoke doubts.

[1] While this is a truism, it’s worth thinking through under what conditions this kind of random walk behavior applies. The asset needs to be and liquid and long-lived relative to the relevant investment horizon, and price changes over the investment horizon have to be much larger than income or holding costs. An asset that is normally held to maturity is never going to have these sort of price dynamics.

V for Varoufakis

I have a long review up at Boston Review of three books by Yanis Varoufakis: The Global Minotaur, And the Weak Suffer What They Must?, and Adults in the Room. Here’s the start:

In the spring of 2015, a series of debt negotiations briefly claimed a share of the world’s attention that normally goes only to events where celebrities give each other prizes. Syriza, a scrappy left-wing party, had stormed into office in Greece on a promise to challenge the consortium of international creditors that had effectively ruled the country since its debt crisis broke out in 2010. For years, austerity, deregulation, the rolling back of labor rights and public services, the rule of money over society, had been facts of life. Now suddenly they were live political questions. It was riveting.

Syriza was represented in these negotiations by its finance minister, Yanis Varoufakis. With his shaved head, leather jacket, and motorcycle, he was not just a visual contrast to the gray-suited Eurocrats across the table. His radical but rigorous proposals for a different kind of Europe—one based on meeting human needs rather than rigid financial criteria—offered a daily rebuke to the old refrain “there is no alternative.”

The drama was clear, but the stakes were a little obscure. Why did it matter if Greece stayed in the euro? Orthodox economic theory, after all, gives little role for money or finance. What matters are real wants and real resources, for which money is just a convenient yardstick. University of Chicago economist John Cochrane probably spoke for much of the profession when he asked why it made any more sense to talk about Greece leaving the euro than about Greece leaving the metric system.

But money does indeed matter—especially in economic relations between countries, as Varoufakis himself has convincingly shown. In his three books—The Global Minotaur (2011), And the Weak Suffer What They Must (2016), and Adults in the Room (2017)—Varoufakis offers a fascinating lens on the euro system and its masters. While the first two books chart the history of the international monetary system from World War II up to the debt crisis, his last and most recent book is a reflection on his five months as Greek finance minister. Taken together, they read as if Varoufakis is the protagonist in some postmodern fable, in which he is transformed from a critic of the play to one of the main characters in it. …

Read the rest there, and then comment here if you are so inclined.

Posts in Three Lines

Seeing as I’m not teaching this semester, maybe I’ll start blogging more regularly. If so, here are some of the posts I might write.

Taxes and investment. Discussions of tax cuts’ effects on investment need to distinguish between two possible channels: changes in the expected return on investment, and changes in internal funds available to the firm. Economists tends to focus on the first, but if external funds are not a good substitute for retained earnings then the second may be more important. Tax cuts will fail to stimulate investment in the first case if they raise the opportunity cost for investment as much as expected returns, and in the second case if shareholder demands mean that internal funds are no longer available to finance investment; or in either case if monopoly power, demand constraints, etc. mean that the expected return on investment curve slopes steeply down.

The probability approach in economics. Empirical economics focuses on estimating the parameters of a data-generating process supposed to underlie some observable phenomena; this is then used to make ceteris paribus (all else equal) predictions about what will happen if something changes. Critics object that these kinds of predictions are meaningless, that the goal should be unconditional forecasts instead (“economists failed to call the crisis”). Trygve Haavelmo’s writings on empirics from the 1940s suggest third possibile goal: unconditional predictions about the joint distribution of several variables within a particular domain.

Walking the labor-market tightrope. There’s a tension in how to think about the past couple years of low unemployment and somewhat faster wage growth. On the one hand, we’re still very far from reversing the declines in employment and wages after 2008, or from any other reasonable measure of full employment; but on the other hand, it’s important that there has been some progress — it means that despite fears of robots/China/etc., there is still a reliable link from aggregate demand to employment and wages. It’s also worth noting that the faster wage growth has come without any pickup in inflation, but has translated one for one into a higher wage share (and lower profit share).

The interest rate and the interest rate. Every couple months, Martin Wolf writes something to the effect that central banks can’t change the real interest rate. The idea seems to be that the monetary interest rate influenced by central banks must fundamentally correspond to the intertemporal rate of substitution in a Walrasian world without money, set by preferences and production possibilities. It’s worth thinking through all the reasons why this doesn’t work; I think they point to some deep fissures opened up by the incongruence of economic map with social territory.

Financialization. One critical response to my conversation about financialization with Seth Ackerman was that a focus on finance as a device for disciplining nonfinancial firms ignores the ways those firms themselves have become major players in financial markets. Several very smart comrades in heterodoxy have made this same argument, that nonfinancial firms are increasingly seeking to profit from ownership of financial assets rather than of means of production. I’m not convinced — I think that most or all of the apparent rise in financial assets on the balance sheets of nonfinancial firms is really goodwill from mergers, interests in unconsolidated subsidiaries, and similar accounting devices, rather than the sort of financial assets that you can purchase and collect an income from.

The European central bank is not the central bank of Europe. I finally finished my review of Yanis Varoufakis’ three books, months past the deadline (hopefully they’ll still take it). One important issue I couldn’t address in the review, is whether he is right to dismiss as politically inconsequential the question of who runs the Bank of Greece. Personally, I’m not convinced — I still think the national central banks are important strategic terrain that any future left government in the euro zone needs to get control of.

The boss’s brain is under the worker’s cap. Business Insider has been doing some great reporting on the chaos created by Whole Foods’ new inventory management system. One of the key points that comes out is the heroic effort and emotional energy that employees, including line managers, put in to keep the machinery running, no matter how hard top management tries to wreck it. I feel like much of corporate America is run by mad kings who sit around burning their tribute while insisting they deserve credit for everything the peasants do to produce it.

Evolution ≠ natural selection. My recent reading has included two books on evolutionary biology — Peter Godrey-Smith’s Darwinian Populations and Natural Selection, a high-level, philosophical restatement of the logic of natural selection; and Olivier Rieppel’s Turtles as Hopeful Monsters, a ground-level narrative of some particular debates within evolutionary biology. Reading these two books together really highlights the distinction between evolution (the concrete development of living creatures over time) and natural selection (a mechanism postulated to account for that development). One way of thinking about the evo-devo revolution is that it’s saying the former is not reducible to the latter — the capacity to produce large-scale, complex structures is not a generic implication of natural selection but a specific trait that itself has evolved.

2017 Books

I didn’t read very many books this past year. Can’t claim this guy as an excuse, he was only present the last month of it.

Here are some I did read; I might be forgetting one or two.

Przeworski – Capitalism and Social Democracy. I’m not sure what the author’s political trajectory has been; nothing encouraging, I’m guessing. But I got a lot out of this history of European social democracy as a concrete political phenomenon. He’s asking the right questions: how is it that wage-earners, “workers” in the broader or narrower sense, constitute a constituency for the purposes of electoral politics, and how in practice do avowed socialists govern a capitalist economy? One insight of the book was the importance of Keynesian demand management as an answer to the latter question. For the first generation of electorally successful socialists, there was a seemingly unbridgeable gap between managing an economy based on private ownership, in which maintaining business confidence was critical; and using the state as scaffolding for the construction of the cooperative commonwealth. Until “aggregate demand” became a way of talking about public spending, every step toward the latter tended to undermine the former, so that — it seemed — the gap had to be crossed in one big leap or not at all.

Rothermund – The Great Depression in Global Perspective. One of several books I read because I assigned it. (Teaching economic history is great for this purpose.) It does what it says on the tin: describes the depression of the 1930s as a global phenomenon, with as many pages devoted to Latin America or South Asia as to the United States or Western Europe. It’s a short book and readable — worked fine for my undergrads — but a dense and systematic one. Rothermund is particularly attentive to the ways in which the 1930s collapse in agricultural prices played out differently in countries specializing in different kinds of commodities – staples versus luxuries, small farm products versus plantations. He also has some interesting things to say about the way in which the impact of the Depression in the colonial world — most of humanity at the time — was shaped by the specific institutions of imperial rule, with for instance regimes based on land taxes, head taxes and excise taxes responding to global deflation in different ways.

Grandin – Fordlandia. Did you know that in the early 20th century, Henry Ford bought up a tract of the Amazon bigger than Delaware, built a substantial city there on American lines, and hoped to source all the rubber for his cars from it? This is the book about that. It’s a great piece of history, artfully crafted and readable, on an episode that I (certainly) and you (probably) had never encountered before. I have to say, though, that the whole is a bit less than the sum of the parts. Grandin himself has serious left politics but this book presents itself as almost explicitly anti-Marxist. It insists that we think about Ford’s rainforest outpost not in terms of any objective need for a reliable source of industrial inputs, but some deep-seated desire to recreate an idealized American small town out of virgin material.

I have to say, I’m not happy with this thesis. Economic imperialism in the late 19th and early 20th centuries, as I understand it, generally involved control of the upstream parts of commodity chains – efforts by both states and firms to substitute direct control over input production for sourcing in open markets. And it involved efforts to gain more direct control over labor – to replace direct producers with control over their own labor time and recognized rights to the land and the its products, with forms of labor somewhere on the wage work-slavery continuum that could be more directly managed. Fordlandia fits both of these patterns perfectly. It’s true, of course, that the effort to create an American-style small town from scratch was not a typical imperial project, which normally would rely more on the coercive powers of local political authorities. (It’s also true that the project failed to generate any significant rubber for Ford’s factories.) But I think Grandin’s preferred story should be seen as overlaying the basic economic logic, rather than an alternative to it.

On the other hand, the book itself does not really support the thesis. It provides plenty of evidence that however sincerely Ford and his lieutenants may have believed in their vision of Normal Rockwell on the Amazon, Fordlandia was fundamentally about managing labor and assuring a stable supply rubber. Perhaps these two criticisms cancel out. In any case, it’s a fascinating story, and the book itself reads like a novel.

O’Malley – On Another Man’s Wound. I read this after watching The Wind that Shakes the Barley – a great movie on the Irish war of independence and civil war – and realizing I knew almost nothing about this history. When I was first becoming politically aware, in the 1980s, northern Ireland was still sometimes mentioned alongside South Africa, Palestine and Central America as a frontline in the war against Empire, but in general Irish politics has never been something that one needed to know much about. Anyway, someone online (in a Crooked Timber thread, I think, years ago) had suggested O’Malley as the thing to read on the Irish independence struggle. As it turns out, it’s a wonderful book – from a literary standpoint, the best thing I read this year.

Apart from an opening chapter on O’Malley’s childhood, the book is limited tothe period of fighting against the British from 1917 to 1921. (A sequel, which I’m reading now, covers the Irish civil war, in which O’Malley was a leader of the Republican or anti-Treaty side.) It’s a first-person story of a mid-level leader in the countryside (and, in some late chapters, of British prisons) so it’s better for the texture and day-to-day experience of the war than the big picture questions a historical account would focus on. There are also long lyrical passages on the Irish countryside, which O’Malley travelled through on bicycle while organizing IRA units in various towns and villages. They make a striking contrast with the descriptions of fighting and brutality. One thing I especially liked about the book was how much attention it gives to the problems of building a political movement – recruiting leaders and activists, establishing reliable forms of collective decision-making; in the book O’Malley is as much an organizer as a soldier. I also appreciated the limited place of actual fighting in the book. There are a couple of brilliant set-piece battle scenes, but many more descriptions of attacks that had to be called off at the last minute, or encounters between Irish and British forces in which somehow no one ended up using their weapons. O’Malley’s last act in the war is typical: the matter-of-fact execution of two British officers who were captured by accident, without a shot fired. I have a feeling this is what most war is like.

Mark Wilson – Creative Destruction. Read my review here. My dad says: I liked your review, but I can’t say it made me want to read the book. Which, yeah.

Koistinen – Arsenal of World War II. If you’re interested in the subject matter of the Wilson book, this is the book you should read. From my point of view, it has two great virtues that Wilson’s book lacks. First, it talk about conflicts within the federal government – in particular the gradual displacement of New Deal officials by a coalition of military leaders and “dollar a year men” from industry – rather than treating the state as a unitary actor, as Wilson does. Second it gives a comprehensive account of how wartime planning actually worked – what kinds of claims on inputs were assigned, to who, by who, on what principles.

Harrison – Economics of World War II. Like the Koistinen, I read most of this in the course of reviewing the Mark Wilson book. Possibly this was overkill. It’s a useful comparative overview of economic management and performance in all the major belligerents.

Beckert – The Monied Metropolis. I read this because I was so impressed with Beckert’s magnificent Empire of Cotton. The subject here is how the American bourgeoisie constituted itself as a class, through the lens of New York. Posing this question is I think one of the distinctive strengths of Marxism: People have a variety of material interests that overlap in various criss-crossing ways: Which ones become politically salient depends on political, cultural, or more broadly ideological structures; and the existence of shared interests doesn’t by itself create the capacity to act on the collectively. In the concrete case explored by this book, it wasn’t obvious, in early 19th century New York, that ownership of capital as such defined a politically relevant category of people. Merchants and traders had little in common, socially, culturally or politically, with bankers, and even less with master manufacturers, even if they all showed up as property owners in the census. Beckert’s project is to show how by 1880 these different groups had come to constitute a coherent, self-conscious bourgeoisie. He looks at where they lived; what churches they went to; who they socialized with, who their children married; as well as the more directly political questions of what parties and politicians won their support, on what kind of basis. One striking bit, on that last point, is how much the New York elite embraced an explicitly anti-democratic program — restricting the franchise, limiting the powers of elected bodies — into the 1880s. It’s fascinating stuff, and all carefully organized around the central question.

I do have some criticisms. First, Beckert obviously has awesome files of archival material at his disposal, and understandably, he wants to use it. But in practice this means that he never gives one example when four will do. There’s a section in chapter five on how the post-Civil War New York rich, embracing a new aristocratic identity in place of their old stern republicanism, began to marry their sons and daughters to European nobility. Fine – but I swear he devotes two full pages to listing one of these marriages after another. More substantively, I’m concerned that the before-and-after frame of the book telescopes together longer processes, especially in the post-Civil War decades. Reading the book, you could get the impression that wealthy New Yorkers in 1880 mostly owned stocks and bonds rather than businesses directly; but this wouldn’t be the case for another two decades. Finally, there’s the scope or focus of the book, which is very much the American bourgeoisie in New York, as opposed to the New York bourgeoisie. It’s striking that in Beckert’s typology of capital – finance, trade, and manufacturing – real estate doesn’t appear; and real estate owners hardly make an appearance. Especially in the later section, the interests at play are almost entirely national, in which wealthy New Yorkers have the same stake as wealth-owners anywhere else in the country. There is a great deal on the political interests of capital vis-vis New York city and state government, but almost nothing on the local development and land-use issues that are the overwhelming concern of wealth-owners with respect to local government today. I suppose it’s possible that in the 19th century land was relatively abundant even in New York and real estate didn’t constitute an important category of wealth or material interests; I think it’s much more likely this just wasn’t where Beckert’s interests lay.

Still, it’s a great book. It’s not Empire of Cotton, but what else is?

Varoufakis – The Weak Suffer What They Must? I read this in order to write a review essay on Varoufakis three recent books, of which this is the second. The review is now very late but will show up eventually.

Goodwyn – The Populist Moment. Another one I read for teaching. (I’d read part of it in college.) The book is a classic and deservedly so. It is sort of the flipside of Moneyed Metropolis: It asks how a section of small farmers and laborers came to constitute themselves as a class in the late 19th century – a much more fragile and transitory development but in some ways parallel to the one Beckert describes. The central thread of the book is the growth and decline of the People’s, or Populist, party in the Plains and South. It’s worth noting in passing that this is the only historical movement that explicitly used that label – yet with its detailed and explicit program, absence of charismatic leadership, and embrace of black participation, it fits very little of what gets called populism today.

The interest of the book is, first, simply that this movement existed, with institutions, mass membership, and its detailed program for nationalization of key industries, regulation of prices, and redistribution of land, developed from the bottom up. There’s a tendency in looking back at American history to see these sorts of mass movements as either absent, or else as inchoate, reactionary explosions. Second, there’s Goodwyn’s main argument, about the conditions that made this movement possible. For him, the key thing was the concrete experience of exercising political power, the first-hand practice in collective decision-making that came from running cooperative stores, crop marketing arrangements and so on. It was this experience of democratic decisonmaking in meeting immediate needs that laid the foundation for a broader democratic politics. Where electoral programs came first, Goodwyn argues, they were soon taken over by professional politicians or demogogues.

Kelley – Hammer and Hoe. Another book about political organization by small farmers and agricultural workers, set a generation after Goodwyn’s story — in this case, the surprising success of the Communist Party among African Americans in Alabama during the 1930s. Like Goodwyn, it’s a useful complement to Beckert — the one serious weakness of Empire of Cotton, in my view, is the almost complete absence of political activity among the direct producers of cotton, except in the form of James Scott-style passive resistance. As these books make clear, there was also organized, radical mass politics in the countryside, even if its successes were limited and temporary. I don’t know anything about Kelley’s other work, but Hammer and Hoe is a magnificent piece of scholarship, about a story that should be better known. A central fact in American history is white supremacy. One group of people, one of the few, who have recognized this, and fought it even at moments when it seemed like an unchangeable fact of nature, were American communists. It’s important not to forget that.

O’Brien – Going after Cacciato. Perhaps I’ve forgotten something, but as far as I can tell, this is the only novel I read in the past year. I wouldn’t recommend it over The Things They Carried, but there is something profound and compelling about its overarching metaphor of the war as a permanent fact, with fantasies of escape from it always eroding around the edges as reality seeps back in.

Previous editions:

What It’s About

Shortly after Syriza’s victory in January 2015, Yanis Varoufakis is traveling around Europe for his first official meetings with various and economics ministers. Here’s an interesting conversation with one of them:

Pier Carlo Padoan, Italy’s finance minister and formerly the OECD’s chief economist, is in many ways a typical European social democrat: sympathetic to the Left but not prepared to rock the boat… Our discussion was friendly and efficient. I explained my proposals, and he signalled that he understood what I was getting at, expressing not an iota of criticism but no support. To his credit, he explained why: when he had been appointed finance minister a few months earlier, Wolfgang Schäuble had made a point of having a go at him at every available opportunity…

I enquired how he had managed to curb Schäuble’s hostility. Pier Carlo said that he had asked Schäuble to tell him the one thing he could do to win his confidence. That turned out to be “labour market reform” – code for weakening workers’ rights, allowing companies to fire them more easily with little or no compensation and to hire people on lower pay with fewer protections. Once Pier Carlo had passed appropriate legislation through Italy’s parliament, at significant political cost to the Renzi government, the German finance minister went easy on him. “Why don’t you try something similar?” he suggested.

“I’ll think about it,” is Varoufakis’ diplomatic reply.

A couple days later, he has a meeting with the German finance minister himself, perhaps the most important single figure in the Euroepan establishment. Schauble brushes off Varoufakis’ suggestions for strengthening the Greek tax authorities, insisting instead on

his theory that the “overgenerous” European social model was no longer sustainable and had to be ditched. Comparing the costs to Europe of maintaining welfare states with the situation in places like India and China, where no social safety net exists at all, he argued that Europe was losing competitiveness and would stagnate unless social benefits were curtailed en masse. It was as if he was telling me that a start had to be made somewhere and that that somewhere might as well be Greece.

I’m supposed to be writing a review of Adults in the Room.That right there is the story, I think. Debates over fiscal arrangements were a pretext, the real agenda has always been restoring the rule of market over society, over labor in particular. And Greece was just a convenient place to start, or to make an example of. Despite the constant framing of Eruope’s divisions in national terms, I think it’s clear that for German conservatives like Schauble, the real target has always been their own working class.

Heterodoxy and the Fly-Bottle

(I have a review in the new Review of Keynesian Economics of a collection of essays on pluralist, or non-mainstream, economics teaching. You can the full review here. Since I doubt most readers of this blog are interested in the book, I’ve posted a shorter version of the review below – just the parts on the broader issues rather than my assessment of these particular essays.)

Wittgenstein famously described his aim in philosophy as “showing the fly the way out of the fly bottle.” The goal, he said, was not to resolve the questions posed by philosophers, but to escape them. As long as the fly is inside the bottle, understanding its contours is essential to getting it wherever it wants to go; but once the fly is outside, the shape of the bottle doesn’t matter at all.

Non-mainstream economists have a similar relationship to dominant theory. Because we’ve been inculcated for years that the best way to think about the economy is in terms of the exchange of goods by rational agents, criticisms of that framework are a necessary step on the way to thinking in other terms. But the logical and empirical shortcomings of thinking about economic life in terms of a perfectly rational representative agent optimizing utility over infinite future time don’t, in themselves, tell us how we should think instead.

The essentially negative character of economic heterodoxy is a special challenge for undergraduate teaching. You can’t teach criticisms of economic orthodoxy without first teaching the ideas to be criticized. Finding our way out of orthodoxy was, for many of us, central to our intellectual development. Naturally we want to reproduce that experience for our students. This leads to a style of teaching that amounts to putting the flies into the bottle so we can show them the way out. But how useful is it to our students to understand the defects of a logical system it would never have occurred to them to adopt in the first place? Having spent so much time looking for a way out, it sometimes seems we don’t know what do in the open air.

This dilemma is on full display in The Handbook of Pluralist Economics Education. In order to present a realistic model of the economy, Steve Keen writes in one of his two chapters, “an essential first is to demonstrate to students that the ostensibly well-developed and coherent traditional model is in fact an empty shell”. Many of the volume’s other contributors make similar claims. This is the spirit of Joan Robinson’s famous quip that the only reason to study economics is to avoid being fooled by economists. But if that is all we can offer, better to send our students to the departments of history, anthropology, engineering, or some other field that offers positive knowledge about social reality.

What then are we to do? Pluralism as such is not a useful guide; carried to an extreme it would, as Sheila Dow says here, amount to “anything goes,” which is not a viable basis for teaching a class (or for any other intellectual endeavor). This is a problem with pluralism as a positive value (and not only in economics teaching): Pluralism implies a number of distinct perspectives, but to be distinct they must be internally coherent, that is, unitary. Carried to an extreme, pluralism is self-undermining. To challenge the mainstream, at some point you must argue not just for the value of diversity in the abstract, but in favor of a particular alternative.

In practice, even economists who completely reject mainstream approaches in their own work often give them a large share of time in the classroom, in part because they feel obligated to prepare students for future academic work and in part, as Keen says, simply because of “the pressure to teach something”. Teaching is hard enough work even when you aren’t reconstructing the curriculum from the ground up. It’s much easier to teach a standard course and then add some critical material.

But pluralism in economics teaching doesn’t have to mean simply presenting orthodoxy and adding some criticisms of it. It could also mean approaching the material from a different angle that avoids — rather than attacks — the dominant formalisms in economics and gives students a useful set of tools for engaging with economic reality. For me, this means a focus on the definition and measurement of macroeconomic aggregates, and on the causal relationships between those aggregates. Concretely, it means reliance on flowcharts where the nodes are some observable variable, as opposed to the normal emphasis on diagrams representing functional relationships — ISLM, AS-AD, etc. — that can’t be directly observed.

A more specific problem in heterodox teaching — and heterodox economics in general — is the weight put on the financial crisis as an argument for alternatives to the mainstream. Many of the authors in this collection present the crisis of 2008 and its aftermath as a decisive refutation of economic orthodoxy. Edward Fullbrook declares that ‘no discipline has ever experienced systemic failure on the scale that economics has today.” David Wheat, less hyperbolically, argues that “the failure to foresee the financial epidemic in 2008” demonstrates a need to shift the focus of economics teaching away from long-run equilibrium. One might push back against this line of argument. It is true that several large financial institutions went bankrupt in 2008, and some financial assets fell steeply in value, to the dismay of their owners; but with the perspective of close to a decade, it’s less clear how much of a base these events offer for critique of either the economics profession or economic institutions. Singleminded focus on “the crisis” risks implying that the problem with our economic system is the rare occasions on which it fails to work well for owners of financial assets, while ignoring the ongoing problems of inequality, hierarchy and privilege; tedious and demeaning work; environmental degradation; and the fundamental disconnect between ever-increasing money wealth and unmet human needs – none of which has much to do with the failure of Lehman Brothers. As people used to say: capitalism is the crisis.

It is true, of course, that the economics profession failed to foresee or explain the 2008 crisis, but that’s nothing special. To make a list of phenomena unexplained by orthodox economics, just open the business pages of a newspaper. In any case, while it might have been reasonable at the time to expect some degree of self-criticism in the economics profession, and some increase in openness to alternatives, seven years later it is clear that there has not been. With a handful of exceptions – Naryana Kocherlakota is probably the most prominent in the US – mainstream economists have not revised their views in the light of the crisis; even those who were initially inclined to soul-searching have mostly decided that they were right all along. The case for heterodoxy must be made on other grounds.

Born Yesterday

Varieties of Sabotage

Today’s New York Times: DNAInfo and Gothamist Are Shut Down after Vote to Unionize

Thorstein Veblen, The Engineers and the Price System:

“Sabotage” is a derivative of “sabot,” which is French for a wooden shoe. It means going slow, with a dragging, clumsy movement, such as that manner of footgear may be expected to bring on. So it has come to describe any manoeuvre of slowing-down, inefficiency, bungling, obstruction. … Manoeuvres of restriction, delay, and hindrance have a large share in the ordinary conduct of business; but it is only lately that this ordinary line of business strategy has come to be recognized as being substantially of the same nature as the ordinary tactics of the syndicalists. …But all this strategy of delay, restriction, hindrance, and defeat is manifestly of the same character, and should conveniently be called by the same name, whether it is carried on by business men or by workmen; so that it is no longer unusual now to find workmen speaking of “capitalistic sabotage” as freely as the employers and the newspapers speak of syndicalist sabotage. As the word is now used, and as it is properly used, it describes a certain system of industrial strategy or management, whether it is employed by one or another. What it describes is a resort to peaceable or surreptitious restriction, delay, withdrawal, or obstruction.

Sabotage commonly works within the law, although it may often be within the letter rather than the spirit of the law. It is used to secure some special advantage or preference, usually of a businesslike sort. It commonly has to do with something in the nature of a vested right, which one or another of the parties in the case aims to secure or defend, or to defeat or diminish; some preferential right or special advantage in respect of income or privilege, something in the way of a vested interest. Workmen have resorted to such measures to secure improved conditions of work, or increased wages, or shorter hours, or to maintain their habitual standards, to all of which they have claimed to have some sort of a vested right. Any strike is of the nature of sabotage, of course. Indeed, a strike is a typical species of sabotage. … So also, of course, a lockout is another typical species of sabotage. That the lockout is employed by the employers against the employees does not change the fact that it is a means of defending a vested right by delay, withdrawal, defeat, and obstruction of the work to be done. …

By virtue of his ownership the owner-employer has a vested right to do as he will with his own property, to deal or not to deal with any person that offers, to withhold or withdraw any part or all of his industrial equipment and natural resources from active use for the time being, to run on half time or to shut down his plant and to lock out all those persons for whom he has no present use on his own premises. There is no question that the lockout is altogether a legitimate manoeuvre. It may even be meritorious, and it is frequently considered to be meritorious when its use helps to maintain sound conditions in business—that is to say profitable conditions—as frequently happens. … It should not be difficult to show that the common welfare in any community which is organized on the price system cannot be maintained without a salutary use of sabotage — that it to say, such habitual recourse to delay and obstruction of industry…

All this is matter of course, and notorious. But it is not a topic on which one prefers to dwell. Writers and speakers who dilate on the meritorious exploits of the nation’s business men will not commonly allude to this voluminous running administration of sabotage, this conscientious withdrawal of efficiency, that goes into their ordinary day’s work. One prefers to dwell on those exceptional, sporadic, and spectacular episodes in business where business men have now and again successfully gone out of the safe and sane highway of conservative business enterprise … by increasing the productive capacity of the industrial system …

It is for these business men to manage the country’s industry, of course, and therefore to regulate the rate and volume of output; and also of course any regulation of the output by them will be made with a view to the needs of business; that is to say, with a view to the largest obtainable net profit, not with a view to the physical needs of these peoples who have come through the war and have made the world safe for the business of the vested interests. Should the business men in charge, by any chance aberration, stray from this straight and narrow path of business integrity, and allow the community’s needs unduly to influence their management of the community’s industry, they would presently find themselves discredited and would probably face insolvency. Their only salvation is a conscientious withdrawal of efficiency.

Some Interviews

One new one, and two older ones I should have posted here a while ago.

The new one is with Seth Ackerman at Jacobin. Its starting point is a new article (co-authored with Arjun Jayadev and Enno Schroeder) I have coming out in Development and Change. But it’s also a continuation of the argument I made in my earlier Jacobin piece on the socialization of finance [*], and in my talk at this year’s Left Forum. (I still hope to get a transcript of that one at some point.)

The older two are both in response to my “What Recovery?” report for the Roosevelt Institute. This one, with David Beckworth at the Mercatus Institute, was a wide-ranging conversation that touched on a lot of topics beside the immediate question of whether we should regard the US economy as having reached full employment or potential output. This one, with Joe Weisenthal and his colleagues at “What Did You Miss” on Bloomberg, was much briefer but still managed to cover a lot of ground.

Supposedly there’s also an interview with me coming out in Der Standard, an Austrian newspaper, but I’m not sure when it will appear.

If you’re reading this blog, you’ll probably find these interviews interesting.

[*] Incidentally, my preferred title was that: The Socialization of Finance. I understand why the editors changed it to the catchier imperative form, but what I liked about my original was that it could refer both to something done to finance, and something done by finance.