While reading this, it reminded me of the idea of disjunctive presidents (https://www.nytimes.com/2019/05/15/opinion/trump-history-presidents.html). It'll be a decade before we know for sure, but it strikes me that if neoliberalism really did just die, then I think it's clear that Trump was a disjunctive president, with the disjunction Trump getting his party and America across being the collapse of neoliberalism.
Another wonderful piece where you showcase your ability to apply theory to the real world.
While I can sense the jubilation by “the Left” at Trump’s removal, I wonder if the changes we are witnessing feel so good only because we are comparing them to our expectations of another Trump term.
Specifically, does allowing inflation to run at, say, 2.3% for a few years constitute a radical break with neo-liberalism? While historically rising wages have been a driver of inflation, might the current global economic structure you have described mean an erosion of real wages under mild inflation?
Further, it seems that following the 2008 crisis where the Fed printed $1T, Congress “got wise” to the Fed’s Golden Goose and was prepared to ask for a larger slice of any future bail-out. This time around $3T was printed immediately and another $1.4T/yr ad infinitum. Congress wrangled $2T over several years. Might the comparison of “capital:labor” payoffs be $7T: $2T? Or, if you consider that US market cap doubled from $25T to $50T, maybe the ratio is 25:2?
This still looks, to me, primarily like “privatize the upside / socialize the downside”, but I sincerely hope your sense in correct.
Finally, the “classic” Presidential economic cycle has been to accept a recession early in your term so that you can stimulate going into the election. Trump violated this norm with massive corporate tax cuts upon gaining office. That didn’t help him and one might imagine how a multi-trillion dollar package in 2020 might have swayed people…
Might Biden (read, Harris) be making a similar tactical mistake? In four years, COVID will (hopefully) be a memory and the $2T stimulus almost certainly will be. Slow growth, continued class divides, and labor tax hikes in 2024 for Kamala? (I don’t think Biden is proposing undoing all of Trump’s corporate cuts.) Would she consider “reclaiming” some of the government’s largesse with a one-off wealth tax on households (and elite university endowments!)? Take a piece of the tech titan market cap? Challenge Musk’s Redeemer ethos? BitCoin? The wealth is there. Will the Harris lead the state and take it? Into an election? Against her power base?
Silly article. No reason to expect a coming economic boom (computers are becoming MORE expensive these days, not less). The work-from-home revolution is real for the top ranks, but is likely to result in only modest growth gains, mostly from companies hiring cheaper talent. No break with neoliberalism, either (China's and Europe's more marketized regions are growing faster than its state-led regions, or at least, that's the perception). The theories behind the whole post are also fatally flawed -monetary policy is unimportant in the long run. The one correct part about this post is that fiscal discipline is unlikely to come back into vogue for the next decade or so.
"Only when labor markets get very tight do working-class wages start growing as fast as middle class salaries."
No; not the case. Labor markets weren't very tight in the American 1950s. Also, there is no reason to expect the Fed to begin overshooting its target (though it would probably be a good thing if it did; higher inflation results in better policy than lower inflation).
Trump's a bonafide functioning illiterate. He can't make a complete sentence or thought without his mind wandering to something that benefits him. His supporters will ride that crazy train until it derails at the end of the tracks. No sense in even attempting to have a rational conversation with any of them! #anyone but a trump #stuck on stupid #myiqdrops50ptswhen he opens his mouth
It is extraordinary--but not at all unusual--that a longish article on the current conjuncture, and the future, never ONCE mention global heating. Not unusual, but appalling.
These "green tech" investment themes are always very interesting. So, we will "lose money on every sale but make it up in volume". Losing money can't go on forever, as Dr. Stein so noted: “If something cannot go on forever, it will stop,”.
The author has obviously never done anything of significance in the real economy.
BTW, you might like "Trade Wars are Class Wars" by Michael Pettis. Also, some of the decline in middle-class living standards is to due to chronically tighter property zoning (a sort of neither here nor there proposition, but important).
Fed isn't able to get money flowing to rural areas. Congress used to do it with earmarks. When Congress banned earmarks, the Fed should've picked up the slack by purchasing municipal bonds. Would allow the Fed to pursue full employment in the rust belt, for example, without inflating stocks or a housing bubble in cities.
When are people going to acknowledge that more than one thing can happen at a time. The culture war is both independent and interactive with the class war and scholarship of the last several decades has long understood this. Talk about rigidity: the idea that everything but class is a superstructure chimera and nothing more is really the creakiest idea of them all.
I would not call what is happening a policy shift, or an abandonment of the neoliberal consensus, so much as events reflect a recognition that the neoliberal candidate in the United States barely squeaked out an election win against a raging incompetent.
Even though Biden had a massive advantage in campaign spending and he had the MSM and Big Tech openly working on his behalf, if a few thousand votes in AZ, GA and PA had gone the other way, Trump would still be president. For that matter, if Trump had made even a half-hearted attempt to enact his 2016 agenda, or if he had pretended to act like he cared about the effects of COVID on the average frustrated chump, he might well have won in spite of everything.
In other words, I don't think any paradigms have shifted, so much as the technocrats recognized that the masses are seething with white hot incandescent rage, so they might want to toss the great unwashed a crumb or two, lest they up and vote for another doofus like Trump.
What I don't understand is the Fed is keeping the IOER higher than the fed funds rate, so banks are making more money off interest from the fed than actually lending to businesses and private individuals...which this may be a basic question...but WHY? Everything is getting heated because small or new business can't grow because they aren't getting adequate funding from anywhere...OR the feds are forcing businesses to borrow from the gov't. The issue though is the loans for businesses are way to particular and don't ever fall in line with government regulations to even get one. If you fail with a private bank you bankrupt, if you fail with the gov't you go to prison...
Great essay. Question for you. I don't doubt that the Fed can combat inflation. However, it seems like the Fed often needs the support of the administration. For instance, lumber prices are up about 400% over the previous 18 months. The Fed can't do much about that, but the administration can. Do you anticipate cooperation?
Agreed that the Fed's belated empirical turn away from the Phillips curve is good news. At least now I know how I'm investing.
Aside: if you decide to sell merchandise, you could do this under the heading
"Policy Tensor Products."
I hope you are right!
While reading this, it reminded me of the idea of disjunctive presidents (https://www.nytimes.com/2019/05/15/opinion/trump-history-presidents.html). It'll be a decade before we know for sure, but it strikes me that if neoliberalism really did just die, then I think it's clear that Trump was a disjunctive president, with the disjunction Trump getting his party and America across being the collapse of neoliberalism.
Sounds great, assuming that we reach full employment so all the little people can feel it before the next election. So doubtful.
Another wonderful piece where you showcase your ability to apply theory to the real world.
While I can sense the jubilation by “the Left” at Trump’s removal, I wonder if the changes we are witnessing feel so good only because we are comparing them to our expectations of another Trump term.
Specifically, does allowing inflation to run at, say, 2.3% for a few years constitute a radical break with neo-liberalism? While historically rising wages have been a driver of inflation, might the current global economic structure you have described mean an erosion of real wages under mild inflation?
Further, it seems that following the 2008 crisis where the Fed printed $1T, Congress “got wise” to the Fed’s Golden Goose and was prepared to ask for a larger slice of any future bail-out. This time around $3T was printed immediately and another $1.4T/yr ad infinitum. Congress wrangled $2T over several years. Might the comparison of “capital:labor” payoffs be $7T: $2T? Or, if you consider that US market cap doubled from $25T to $50T, maybe the ratio is 25:2?
This still looks, to me, primarily like “privatize the upside / socialize the downside”, but I sincerely hope your sense in correct.
Finally, the “classic” Presidential economic cycle has been to accept a recession early in your term so that you can stimulate going into the election. Trump violated this norm with massive corporate tax cuts upon gaining office. That didn’t help him and one might imagine how a multi-trillion dollar package in 2020 might have swayed people…
Might Biden (read, Harris) be making a similar tactical mistake? In four years, COVID will (hopefully) be a memory and the $2T stimulus almost certainly will be. Slow growth, continued class divides, and labor tax hikes in 2024 for Kamala? (I don’t think Biden is proposing undoing all of Trump’s corporate cuts.) Would she consider “reclaiming” some of the government’s largesse with a one-off wealth tax on households (and elite university endowments!)? Take a piece of the tech titan market cap? Challenge Musk’s Redeemer ethos? BitCoin? The wealth is there. Will the Harris lead the state and take it? Into an election? Against her power base?
As best I can tell this “boom” has led to significantly higher inequality and housing costs. Consider me unimpressed.
Millenials need cheaper housing/college, and rising real wages. We’ve given them the opposite and let them day-trade btc and spacs as a distraction.
I’ll consider this just another upward-redistribution “boom” until I see us get serious about housing costs for starters.
Silly article. No reason to expect a coming economic boom (computers are becoming MORE expensive these days, not less). The work-from-home revolution is real for the top ranks, but is likely to result in only modest growth gains, mostly from companies hiring cheaper talent. No break with neoliberalism, either (China's and Europe's more marketized regions are growing faster than its state-led regions, or at least, that's the perception). The theories behind the whole post are also fatally flawed -monetary policy is unimportant in the long run. The one correct part about this post is that fiscal discipline is unlikely to come back into vogue for the next decade or so.
"Only when labor markets get very tight do working-class wages start growing as fast as middle class salaries."
No; not the case. Labor markets weren't very tight in the American 1950s. Also, there is no reason to expect the Fed to begin overshooting its target (though it would probably be a good thing if it did; higher inflation results in better policy than lower inflation).
Could be that the centrist consensus know just how fragile it is at the moment.
Time to toss the peasants a few crumbs.
Trump's a bonafide functioning illiterate. He can't make a complete sentence or thought without his mind wandering to something that benefits him. His supporters will ride that crazy train until it derails at the end of the tracks. No sense in even attempting to have a rational conversation with any of them! #anyone but a trump #stuck on stupid #myiqdrops50ptswhen he opens his mouth
It is extraordinary--but not at all unusual--that a longish article on the current conjuncture, and the future, never ONCE mention global heating. Not unusual, but appalling.
These "green tech" investment themes are always very interesting. So, we will "lose money on every sale but make it up in volume". Losing money can't go on forever, as Dr. Stein so noted: “If something cannot go on forever, it will stop,”.
The author has obviously never done anything of significance in the real economy.
I am glad you are writing, so I don't have to.
BTW, you might like "Trade Wars are Class Wars" by Michael Pettis. Also, some of the decline in middle-class living standards is to due to chronically tighter property zoning (a sort of neither here nor there proposition, but important).
Fed isn't able to get money flowing to rural areas. Congress used to do it with earmarks. When Congress banned earmarks, the Fed should've picked up the slack by purchasing municipal bonds. Would allow the Fed to pursue full employment in the rust belt, for example, without inflating stocks or a housing bubble in cities.
When are people going to acknowledge that more than one thing can happen at a time. The culture war is both independent and interactive with the class war and scholarship of the last several decades has long understood this. Talk about rigidity: the idea that everything but class is a superstructure chimera and nothing more is really the creakiest idea of them all.
I would not call what is happening a policy shift, or an abandonment of the neoliberal consensus, so much as events reflect a recognition that the neoliberal candidate in the United States barely squeaked out an election win against a raging incompetent.
Even though Biden had a massive advantage in campaign spending and he had the MSM and Big Tech openly working on his behalf, if a few thousand votes in AZ, GA and PA had gone the other way, Trump would still be president. For that matter, if Trump had made even a half-hearted attempt to enact his 2016 agenda, or if he had pretended to act like he cared about the effects of COVID on the average frustrated chump, he might well have won in spite of everything.
In other words, I don't think any paradigms have shifted, so much as the technocrats recognized that the masses are seething with white hot incandescent rage, so they might want to toss the great unwashed a crumb or two, lest they up and vote for another doofus like Trump.
What I don't understand is the Fed is keeping the IOER higher than the fed funds rate, so banks are making more money off interest from the fed than actually lending to businesses and private individuals...which this may be a basic question...but WHY? Everything is getting heated because small or new business can't grow because they aren't getting adequate funding from anywhere...OR the feds are forcing businesses to borrow from the gov't. The issue though is the loans for businesses are way to particular and don't ever fall in line with government regulations to even get one. If you fail with a private bank you bankrupt, if you fail with the gov't you go to prison...
Great essay. Question for you. I don't doubt that the Fed can combat inflation. However, it seems like the Fed often needs the support of the administration. For instance, lumber prices are up about 400% over the previous 18 months. The Fed can't do much about that, but the administration can. Do you anticipate cooperation?