Lynn Stuart Parramore

Chomsky: 'The Republican Party Is the Most Dangerous Organization in Human History'

* This interview originally appeared on the blog of the Institute for New Economic Thinking.

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5 Sensible Things To Do Instead of Obsessing About, and Enabling Trump's Narcissism

It took a while to fully manifest, but what many social critics, most notably Christopher Lasch (author of The Culture of Narcissism), noticed bubbling up from the painful social and economic conditions of the last third of the 20th century has finally burst into full Technicolor glory in the image of America’s president. In the form of Donald Trump we have a bloated ball of toxic energy whose name, pasted on gaudy skyscrapers the world over, has become a byword for pathological narcissism.

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America Is Regressing into a Developing Nation for Most People

This post originally appeared on the blog of the Institute for New Economic Thinking.

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Capitalism in the Time of Trump?

Mariana Mazzucato, professor of the economics of innovation at the Science Policy Research Unit of the University of Sussex and author of The Entrepreneurial State: Debunking Public vs. Private Sector Myths, has made a passionate case for the government’s active role in the economy, sending the old laissez faire notion that markets can run themselves into the dustbin where it belongs. In a new book co-edited with Michael Jacobs, Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth, she offers a bold new vision for contemporary capitalism that works for the people and the planet. What chance does this vision have in the age of Trump and Brexit? Mazzucato shares her view. This post originally appeared on the Institute for New Economic Thinking blog

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Black Lives Still Matter

This post originally appeared on the Institute for New Economic Thinking blog.

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The Hidden Reason for America's Racial Trauma, and How to Fix It

Originally posted at the Institute for New Economic Thinking. Interested in race & economics? Join the Institute for an illuminating conference in Detroit, Nov. 11-12.

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Here’s What Nobody Understands About Race in America

As an undergraduate at Brown University in the 1970s, William Darity, Jr. expected to learn the reasons behind the inequality he’d seen all around him growing up in the Middle East and North Carolina. He realized pretty quickly that economists were not going to be much help.

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3 Things to Know to Hold Wells Fargo Accountable for Big-Time Fraud

Just about everyone wants to hold Wells Fargo accountable for a scheme in which sales quotas drove employees to set up phony credit card and bank accounts without customer knowledge. A Donald Trump adviser declared the behavior “stupid” and “greedy,” while Hillary Clinton proposes to make it easier for consumers to take companies to court for such behavior. So far, Wells Fargo has fired over 5,000 regular workers and the Consumer Financial Protection Bureau has fined the bank $185 million. “Hold Wells Fargo Accountable” even has its own Facebook page.

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The Zentrepreneur: Ayn Rand in Lotus Position?

You’ve seen the entrepreneur game-changing up a Silicon Valley storm. Perhaps you’ve met more recent additions to this can-do tribe: there’s the micro-entrepreneur, eagerly hopping along Task Rabbit with dry cleaning deliveries, and the social entrepreneur, hacking world hunger with a single app.

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Stark New Evidence on How Money Shapes America’s Elections

This post originally appeared on the blog of the Institute for New Economic Thinking.

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Over $100,000: That's How Much Big Finance Rips You Off

This post originally appeared on the blog of the Institute for New Economic Thinking.

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Is the 1% Really the Problem?

“We are the 99 percent” is a great slogan, but is it distracting our attention from a sinister reality? There’s strong evidence that it’s not the 1 percent you should worry about—it’s the 0.1 percent. That decimal point makes a big difference.

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They Talk Tough, but Can Bernie or Hillary Actually Take on Wall Street and Win?

Ed Kane teaches finance at Boston College and is a grantee of the Institute for New Economic Thinking. He studies the dangerous risks posed by big banks and sees the current system as hurting taxpayers and favoring the interests of megabankers and financiers. Recently, the financial reform proposals of Bernie Sanders and Hillary Clinton have gotten a flurry of press. Will either of them make us safer? Are economic experts using their professional expertise to judge them or blowing political and philosophical smoke? Ed Kane discusses these issues and more. This interview was originally published on the Institute for New Economic Thinking’s blog.

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America's Rich May Soon Blow Past Roaring Twenties Tycoons

A  new paper  by economist Lance Taylor for the  Institute For New Economic Thinking  takes on the way economists have looked at wealth and income inequality. Taylor’s research challenges some conclusions about what’s driving inequality made by Thomas Piketty and Joseph Stiglitz. What’s really causing the startling gap between haves and have-nots? Is it mechanical market forces? Outsourcing? Real estate? As Taylor sees it, economists have gotten the answer wrong. Worker exploitation and outsized business profits are factors, but even more key are the unjustified payments to the wealthy generated by our outsized financial sector. This hasn’t just “happened.” Flawed economic theory and politicians beholden to the rich lead to policies that make it happen. We can fix the problem, but it will take bold steps.*A version of this interview originally appeared on the Institute's blog

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The Sneaky Way Austerity Was Sold to the Public Like Snake Oil

Orsola Costantini, senior economist at the Institute for New Economic Thinking, is the author of a new paper that exposes the disturbing history of how a budget approach cloaked in scientific and technical jargon became a tool to manipulate public opinion and serve the interests of the powerful. In the following conversation, she reveals how austerity has been sold to the public through a process that hurts the people, consolidates knowledge and power at the top and compromises democracy. As economic inequality reaches new heights and austerity programs are debated around the world (most recently, in Spain and Portugal), learn how a lie becomes a political and economic “truth." (This post originally appeared on the blog of the Institute for New Economic Thinking.)

Lynn Parramore: Your recent work deals with something called the “cyclically adjusted budget.” What is it and what does it mean in the lives of ordinary people?

Orsola Costantini: The Cyclically Adjusted Budget (CAB) is a statistical estimate that aids government officials when they decide what to spend money on and how much they’re going to tax you. It is mostly federal governments that use it, but also international institutions like the International Monetary Fund (IMF).

Economists will tell you this tool is imprecise. Yet national and international institutions still rely on it to justify important decisions about government spending and taxation.

But there’s something the experts aren’t telling you: the cyclically adjusted budget can be easily maneuvered depending on which way the political winds are blowing. And it appears technical and obscure enough so that regular people tend to look at it as objective and undisputable. That’s where the trouble comes in.

Politicians and government officials using the CAB can limit the range of political choices that appear viable to a community. Policymakers can avoid the hassle of taking political responsibility for these choices, too. We had to do it! The budget says so!

Look at what happened all over Europe in 2008: It’s one thing to say to students in the streets that their education and economic wellbeing are not a priority for the government while saving banks is. It’s quite another to say that politics has nothing to do with it and the economy requires taking certain actions, sometimes painful.

LP: You indicate that this approach to budgeting was invented as a way of making the New Deal acceptable to the business community. How did that work? Over time, who has benefitted from it? Who has lost?

OC: Back in the 1940s, workers were fighting for their rights, class struggle was heating up, and soldiers would soon be returning from the fronts. At that point, a new business organization, the Committee for Economic Development (CED), came together. Led by Beardsley Ruml and other influential business figures, the CED played a crucial role in developing a conservative approach to Keynesian economics that helped make policies that would help put all Americans to work acceptable to the business community. The idea was that more consumers would translate into more profits — which is good for business. After all, the economic experts and budget technicians said so, not just the politicians. And the business leaders were told that economic growth and price stability would go along with this, which they liked.

But things changed progressively over the 1970s and early 1980s. Firms went global. They became financialized. The balance of power between workers and owners started to shift more towards the owners, the capitalists. People were told they needed to sacrifice, to accept cuts to social spending and fewer rights and benefits on the job — all in the name of economic science and capitalism. The CAB was turned into a tool for preventing excessive spending — or justifying selected cuts.

Middle class folks were afraid that inflation would erode their savings, so they were more keen to approve draconian measures to cut wages and reduce public budgets. People on the lower rungs of the economic ladder felt the pain first. But eventually the middle class fell on the wrong side of the fence, too. Most of them became relatively poorer.

I suppose this shows the limits of democracy when information, knowledge, and ultimately power are unequally distributed.

LP: You’re really talking about birth of austerity and the way lies about public spending and budgets have been sold to the public. Why is austerity such a powerful idea and why do politicians still win elections promoting it?

OC: Austerity is so powerful today because it feeds off of itself. It makes people uncertain about their lives, their debts, and their jobs. They become afraid. It’s a strong disciplinary mechanism. People stop joining forces and the political status quo gets locked down.

Even the name of this tool, the “cyclically adjusted budget,” carries an aura of respect. It diverts our attention. We don’t question it. It creates a barrier between the individual and the political realm: it undermines democratic participation itself. This obscure theory validates, with its authority, a big economic mistake that sounds like common sense but is actually snake oil — the notion that the federal government budget is like a household budget. Actually, it isn’t. Your household doesn’t collect taxes. It doesn’t print money. It works very differently, yet the nonsense that it should behave exactly like a household budget gets repeated by politicians and policymakers who really just want to squeeze ordinary people.

LP: How does all this play out in the U.S. and in Europe?

OC: The European Union requires its members to comply with something called a cyclically adjusted budget constraint. Each country has to review its economic and fiscal plans with the European Commission and prove that those are compatible with the Pact. It’s a ceiling on a country’s deficit, but it’s also much more than that.

Thanks to the estimate, the governments of Italy or Spain, for example, are supposed to force the economy toward some ideal economic condition, the definition of which is obviously quite controversial and has so far rewarded those countries that have implemented labor market deregulation, cut pensions, and even changed the way elections happen. Again, it’s a control mechanism.

In the U.S. this scenario plays out, too, although less strictly. Talk about the budget often relies on the same shifty and politically-shaded statistical tools to support one argument or the other. Usually we hear arguments that suggest we have to cut social programs and workers’ rights and benefits or face economic doom. Tune in to the presidential debates and you’ll hear this played out — and it isn’t strictly limited to one party.

LP: How do we stop powerful players from co-opting economics and budgets for their own purposes?

OC: Our education system is increasingly unequal and deprived of public resources. This is true in the U.S. but also in Europe, where the crisis accelerated a process that was already underway. When children don’t get good educations, the production of knowledge falls into private control. Power gets consolidated. The official theoretical frameworks that benefit the most powerful get locked in.

In the economic field, we need to engage different points of view and keep challenging dominant narratives and frameworks. One day, human curiosity will save us from intellectual prostitution.

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America’s Great Divide: How the U.S. Transformed Into a 'Dual Economy' and What Can Be Done to Reverse It

In the America of haves and have-nots, fewer folks are “movin’ on up” like George Jefferson of the classic sitcom. In a new paper for the Institute for New Economic Thinking, Peter Temin, MIT economist and economic historian, breaks down how it happened and where we’re headed with a powerful model first used by West Indian economist W. Arthur Lewis, the only person of African descent to win a Nobel Prize in economics. Dual economies are common in less developed countries, but Temin argues that America has now diverged into a top thirty percent, where children receive excellent educations and grow up to work in sectors like finance, technology and electronics industries (FTE)— and then there’s the rest, the low-wage folks who live paycheck to paycheck and whose kids have little hope of joining the lucky ones at the top. Temin explains what drives the dual economy, what race has to do with it, how children are hurt, and why our political system can’t seem to fix anything. *This post originally appeared on the blog for the Institute for New Economic Thinking.

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Blind Investing: Why Financial Gurus Are Often Deeply, Spectacularly Wrong

In the stock market, stuff happens you didn’t see coming. It could be something huge, like a war breaking out (some call this a “black swan” event), or relatively small, like a company using a new technology to build products. These events can cause prices to go up or down, but how do you incorporate such possibilities into your decision to buy or not to buy? That is the question.

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Why Getting Radical Might Be the Most Practical Way to Fix Inequality

Adair Turner, Chairman of the Board of the Institute for New Economic Thinking and former Chairman of Britain’s Financial Services Authority (2008-13), is the author of a new book that takes aim at economic and political orthodoxies, Between Debt and the Devil: Money, Credit, and Fixing Global Finance. As Turner sees it, policy makers and economic thinkers across the globe remain in thrall to the belief that only unfettered financial markets deliver the best for societies. The resulting bias favors fixed rules and mathematical models often wildly out of touch with real world conditions. Turner calls for a reality check — the recognition that circumstances change, that the future is uncertain, and that we need flexible approaches to shifting market circumstances at a time of inequality and instability. He warns that taboos against printing money and disproportionate fears of fiscal deficits are keeping central banks from taking crucial measures to stimulate economies. These taboos and fears also make us blind to the threat of out-of-control private debt and credit wasted on real estate and speculation rather than growth that lifts everyone. For Turner, thinking radically is the most practical way forward. *This post was originally published on the blog of the Institute for New Economic Thinking.

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Want a Better Economy? Could Be Time to Unleash the Devil

Adair Turner is chairman of the board of the Institute for New Economic Thinking, and came on as chairman of Britain’s Financial Services Authority just as the world sank into financial crisis in 2008. In this interview, he discusses his new book, Between Debt and the Devil: Money, Credit, and Fixing Global Finance and the critical questions — and radical solutions — that can lift the economy for everyone. (This post originally appeared on the blog of the Institute for New Economic Thinking.)

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Haunted by Sex Scandals, Could David Vitter Face Political Grim Reaper?

While other pols have succumbed to death by sexual misadventure, the GOP senior senator from Louisiana has stood as an astonishing example of how to cheat the political grim reaper. Often styling himself as a paragon of GOP family values, Teflon Dave not only survived a red-hot sex scandal, he actually thrived in its wake.

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What the Steve Jobs Movie Won’t Tell You About Apple’s Success

Mariana Mazzucato is a professor in the Economics of Innovation program at the Science Policy Research Unit of the University of Sussex. Her widely acclaimed book, The Entrepreneurial State: Debunking Public vs. Private Sector Myths, reveals the critical role that we, the taxpayers, play in the creation of the most exciting innovations of our time through publicly funded investment. (The new U.S. edition hits the shelves October 27.) Mazzucato debunks common myths about how innovation works and shapes a new narrative on how to grow a robust and inclusive economy. Think that iPhone in your pocket is simply a product of Silicon Valley magic? Think again! (This interview was originally posted on the blog for the Institute of New Economic Thinking.)

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