The Myth of the Natural Economy

By James Kwak

“The general equilibirum view tends to lend support to those who want to make the economy more efficient in the sense of having fewer ‘distortions’—you know, all of these neutral economic words—from taxes, from labor unions, from minimum wages, and so on. Now, what has happened in the last thirty years—and this is what Hacker and Pearson note in their book [Winner-Take-All Politics]—is we have gotten ourselves into a feedback situation. As people have gotten richer, conservative people have funded organizations which generate economic research promoting their political views.”

That’s from an excellent interview with economic historian Peter Temin in The Straddler. Temin’s main point is that what he calls general equilibrium approaches to macroeconomics have a political agenda, but they hide that agenda behind an ideology of naturalness. The “natural,” perfectly clearing, perfectly efficient economy, of course, has never existed and can never exist, but it is used to justify certain political prescriptions.

Temin quotes from a book review he wrote:

“Lurking behind these presumed inefficiencies appears to be a campaign for minimal government. Minimal government would not require many taxes as it would not have large expenditures; it would not interfere in labor markets, letting individual workers deal with large business firms as ordinary people deal with the grocery store. This is not an attractive place to live for some people, and this book appears to be supporting such an arrangement by stealth, rather than by direct argument.”

The belief that economics is a neutral science that operates according to immutable laws is one of the most powerful weapons in modern conservative ideology. Economics itself is a complex discipline that tolerates great diversity of method and opinion, yet somehow the “nightly news” version of economics can be summed up as “free markets good, government bad.” This is the naturalization of ideology — but that’s the whole point of ideology.

It’s a short interview and an easy read, so I recommend taking a look yourself.

101 thoughts on “The Myth of the Natural Economy

  1. I believe it is Bill Black who coined the phrase “theoclassical economics.” Theology + economics = theoclassical (?). Interesting the term does not yet appear to have made it into Wikipedia.

    I did find an interesting discussion on theoclassical economics at Naked Capitalism.

    As if a faith and certainty in the omniscience of God has been transferred to something called the “free markets.”

  2. Although I like this post in general, I think when James uses the word “economics” I think he and the book reviewer really are using the wrong word. I think the term that is misused/abused is not economics, but the term the political right misuse/abuse most often is “free market” or “free market economy”. They (Republicans) use terms like incentives or subsidies as excuses to provide what is really welfare for the upper class. And often times tax breaks and tax loopholes are used as a type of hidden subsidy for the wealthy.

    I want to encourage James Kwak, the “lefties”, or really anyone for that matter who wants to expand their knowledge base to read a book by Stanley Fischer called “IMF Essays From A Time of Crisis”. Only about $8 (not counting shipping) on Amazon. I think James Kwak would particularly enjoy reading this book, and I think it presents some views which refute a lot of the blather we hear in the MSM from the likes of Larry Kudlow and Rick Santelli.

  3. I think a lot of regular readers of BaselineScenario have been huge fans of Tom Hoenig, Head of the Kansas City Federal Reserve. He has shown great political courage, and been a speaker/writer of truth, and said many things that most (certainly not all) of his colleagues at the Fed have neither the fortitude or the moral character to say. I am therefor very sorry to be the bearer of bad tidings.

  4. “What actually occurs in the course of modernity is thus not simply the erasure or disappearance of God but the transference of this attributes, essential powers, and capacities to other entities or realms of being. The so-called process of disenchantment is thus also a process of reenchantment in and through both man and nature are infused with a number of attributes or powers previously ascribed to God.”

    I found this fascinating comment here.

  5. I would encourage James and others to also take note of what modern computer science research is saying about some precious beliefs of economists. For example, we now know that Nash equilibria are computationally intractable — which follows on from a result of a couple years ago that pricing of certain kinds of derivatives, like CDOs, is also intractable. Many economists take it on faith that “the market” will eventually converge to a (the correct price of the security / an equilibrium state), but “the market” has no special computational power that renders it able to do so by anything other than chance. (It might compute an approximation, and there are bounds for how close that can get in at least some of these cases.)

  6. Minimal government would not require many taxes as it would not have large expenditures; it would not interfere in labor markets, letting individual workers deal with large business firms as ordinary people deal with the grocery store.

    As opposed to big government who’s so much help to the individual worker? Riiight.

  7. Not just natural, but natural like the weather– it’s inevitable and you cannot *do* anything to alter it. An “act of God,” if you will, in another framework.

    This is particularly true with regard to international trade. Even the somewhat moderate Alan Blinder does it– in the pages of the so-called “liberal” American Prospect– where, for example, his only policy response to global labor arbitrage was to indicate that American residents should educate themselves for “jobs that can’t be offshored.”

    Economists also systematically engage in that old bureaucratic trick (which I have been known to do myself)–completely hide not only *who* the actor is behind any particular (in this case economic) policy decision, but obscure the fact that there is any human agency involved at all.

  8. Temin: “A real problem is that a lot of people don’t know enough economic history. I’m an economic historian, which is a kind of endangered species.”

    Another problem I noticed in reading Blinder is that his history has no actors. It simply “was the case” that people stopped farming in the late 19th c and were re-employed doing other office or industrial work. This is, in turn, used to present offshoring today as similarly actor-less, and historically inevitable and unchallengeable, and makes the person who protests it an economic luddite who simply doesn’t understand that historical progress happens.

    There is also the implication that such a protestor is a hick or a hayseed. The knowledge economy “liberal” can then feel fully justified when he indicates that people impacted by offshoring policies should just become plumbers or start their own lawn service.

    So, recuperating just any economic history is not going to alter the “natural” meme, and the whole collection of strategies deployed to enforce it, which I agree is utterly pernicious and anti-intellectual.

    We should at least know *that* people are actively making economic decisions, including decisions that exploit the powers of the government, and we should know *who* is making those decisions.

  9. In other words, even “limited government” is *not* limited government. Every government actively makes international trade policy, including the US government. There is plenty of Big Government involved in the global “free market.”

  10. “Theoclassical economics” is a b-s term which has little to do with true theology, which in all great religions is rooted in awareness that we share, that we are one. Historically, the great religions thus enabled disparate local and tribal societies to join in forming broad empires, and continental cultures. They promote co-operation. They require charity, and disavow the goal of wealth.

    Theoclassical economics is code for socio-economic Darwinism. That is why it is so important to make the “natural” association. Social Darwinism is the secret religion of the ruling class. It is abominable that they hide behind traditional religion, and pretend their survival-of-the-fittest ideology serves the greater good.

    To look at the corruption of social relationships in a world without social safety nets, watch an old Charles Dickens DVD. He wrote at a time when Social Darwinism was openly debated, and not disguised.

  11. If you set up capital requirements for banks based on risk-avoidance, and which strongly favors the financing of houses, public debt and whatever has managed to temporarily hustle up a good credit rating, and that discriminated against all of what is officially perceived as “risky”, as the Basel Committee did, you will, NATURALLY, end up with a lot of houses but very few jobs, which to create, requires a lot of risk-taking.

    What is NOT NATURAL though is to have a generation of finance experts, economists and diverse PhDs who do not understand this.

  12. In the history of ideas there are certain contextual implications of Natural and Civilized (positive) foundations that exist as dichotomies in various disciplinary fields from philosophy, law and social constructions. Natural Laws (per se) in Economics were never really “natural” since they were based upon market and commerce dynamics is transactive arrangements and were essentially equasive within the limited fields of market exchanges and values measured.

    Without getting too excessive, the “Natural” subsistence economies of this domestic and international matrix is never measured as the full playing field…and if it were, then “Natural Economy” would be a balance of poverty, ecology and the distributive factors of political stakeholdings vs. shareholding. Far from some formula of market merchantilism wriiten to micromanagement levels.

    The question arises as to why two fields of “ECONOMIX”
    (…nice term…) never emerged…one as natural theory and one as “positive theory.”

    I think the answer is at why the “myth” exists in the first place…and you can use your imagination as to “Why”

    I like that term! “ECONOMIX”

  13. @ Bruce — In the rise of the relatively new concept of human rights, mainly in the last century, there were political and philosophical debates as to wherein such rights are grounded. Do they rest in the State or are they “natural,” ie endowed by the Creator and –for the agnostic– by Nature ? I think this is the context in which the concept of “natural” economics arises. I believe it does not refer to aboriginal economics, but rather to how we find economics modelled in nature.

  14. What works for a developing nation may not work for a developed nation, and even less for an “overdeveloped” nation. Government action can be immensely beneficial in unifying and organizing a developing economy, as we can see historically in the US in recording of land titles, surveying, mapping, and construction of roads and railroads — all of immense economic benefit. If we in North America have entered an overdeveloped phase, we can deal with that directly. We do not need to construct overarching economic theories about less-government-is-better as a fundamental truth. Nor do we need to publish books which cite historical failures of government intervention, and do not cite the interventions which were successful. When a book is not objectively balanced, one must question not only the scholarship, but also the underlying agenda.

  15. @tippygolden — Failed state = weak,and/or corrupt government.

    Minimal government could be wise and honest, and even (what Marx envisioned) consenting to wither away. Wonder how we could make that happen some day . . ?? . . somehow we need to make the laws of Darwin work for us instead of against us. How can we keep the self-serving people from running things?

    hmmm — I get it — you were making a JOKE.

  16. Re “Theoclassical economics:” I always preferred “Market fundamentalist,” which I thought I coined circa 1993 but which, probably, someone smarter and older than me came up with before that. “Milton Friedmaniacal” seems less likely to catch on but, if it does, I’ll take the blame for it.

  17. Temin’s main point is that what he calls general equilibrium approaches to macroeconomics have a political agenda, but they hide that agenda behind an ideology of naturalness.

    This is the Status Quo Lie. The status quo, however radical and unnatural and politically chosen, is fraudulently represented as the normal, natural, moderate, apolitical, non-ideological baseline.

    From there any dissent, any proposed change, no matter how much it heads in a truly more moderate, rational, common-sensical direction, is slandered as extremism, radicalism, “ideology”, wanting to “politicize” things.

    Economic, political, and media elites all collaborate in this systematic lie.

    But the fact is that the radically irrational, immoral status quo is nothing but an artificial political choice. We the people, the victims of these infinite crimes, can make a different political choice at will.

    “Lurking behind these presumed inefficiencies appears to be a campaign for minimal government. Minimal government…”

    Are we ever going to get rid of this pernicious way of speaking? For the nth time, conservatives do NOT want small government, they want BIG, AGGRESSIVE government. They just want big, aggressive government on behalf of the rich and big corporations.

    Conservatives are NOT against welfare states. They just want big government which is a welfare state for the rich and big corporations.

    Corporations themselves, of course, are nothing more or less than extensions of the government. They do not exist except by big government fiat. The same goes for concentrated wealth and property. These are inextricably bound up with big government and its aggressive power.

    Only advocates of true democracy, who oppose all coercive structures, government and corporate, have any integrity at all. And we’re the only ones who have an answer to civilization’s terminal bottleneck.

  18. General equilibrium model = the asymmetrical information system existing between the politics of disinformation and the economics of misinformation to maintain the leveraged advantage of marketed force under institutional control fraud.

    The rhetoric of historical political-economic terms is a large part of the capture of “inefficiency” as a class structured necessity.

  19. From ECONOMIX:

    “The United States added 244,000 nonfarm payroll jobs on net in April, the Labor Department reported today, up from a gain of 221,000 jobs in March. The April employment number showed the fastest growth since last spring, when the federal government was adding hundreds of thousands of temporary jobs for the decennial census.

    Nearly every sector added jobs last month. Some of the biggest gains were in retail, professional and business services, leisure and hospitality, and manufacturing. The losers were state and local governments, which have been struggling with budget issues. They are expected to continue shedding workers in months to come.

    Even most of the winners, though, have a long way to go before returning to their prerecession levels, if they ever do.

    The chart above shows economy-wide job changes in this last recession and recovery compared with other recent ones, with the black line representing the current downturn. Since the downturn began in December 2007, the economy has shed, on net, about 5 percent of its nonfarm payroll jobs. And that does not even account for the fact that the working-age population has continued to grow, meaning that if the economy were healthy we should have more jobs today than we had before the recession.” more…PLUS THE ACTUAL “BLACK LINE: CHART” MENTIONED @


  20. Now compare this to:,0

    How Goldman Sachs Created the Food Crisis
    Don’t blame American appetites, rising oil prices, or genetically modified crops for rising food prices. Wall Street’s at fault for the spiraling cost of food.

    “Demand and supply certainly matter. But there’s another reason why food across the world has become so expensive: Wall Street greed.” read all @,0

    What part of “NATURAL” do we have here?

    Moreover: the ideology of efficiency is blasted to dust when you posit TBTF as essential reality.

  21. The refusal of conservative politicians to consider supporting any legislation that increases transparency which would, according to the general equilibrium theory produce more omniscient consumers, exposes these policitians for the liars that they are. They no more believe in this garbage any more than most readers of this blog.

  22. Efficiency is contradicted by the very existence of speculators — a class of people who consume, but perform no useful labor.

  23. ‘ECONOMIX” is good…


    BETTER…after all!

  24. @ Russ: I think you are confusing your own definition.

    Here is an example, Reagonomics trickle down was sold as a family sibling affair. When in fact the tricke down was mostly to their own others, and then upon ones death the majority of wealth would funnel to the system (ie: lawyers, advisors, administrators, ect). Very little in fact is trickled down to the actual family members… And this statement is simply not true. [Corporations themselves, of course, are nothing more or less than extensions of the government. They do not exist except by big government fiat.]+++ Some corporations were self funded, until the govt forced it to be otherwise, and then sent out a ton of expensive accountants and watchdogs for 40 years to gather any small thing to be used against the corporation. By laws, by hook or by crook, the govt itself, funded and denighed whom ever they saw fit, by any method they saw fit.

    Now the problem I found with this was in keeping track of all the lies, it can’t done. And eventually catches up with itself in the form of chaos of the masses who no longer believe in the system they were brought up to trust so dearly.

  25. e =electonic transactions
    con= well…we know what this part means…
    O = essentially what we are left with…
    tricks…well I suppose there are two sides to that
    portion of business service pleasures. bUT

    all together = ECONOMETRICKS

    CEO pay exceeds pre-recession level

    Posted: May 06, 2011, 5:26 am
    By Rachel Beck
    Associated Press

    “NEW YORK — In the boardroom, it’s as if the Great Recession never happened.

    CEOs at the nation’s largest companies were paid better last year than they were in 2007, when the economy was booming, the stock market set a record high and unemployment was roughly half what it is today.

    The typical pay package for the head of a company in the Standard & Poor’s 500 was $9 million in 2010, according to an analysis by The Associated Press using data provided by Equilar, an executive compensation research firm. That was 24 percent higher than a year earlier, reversing two years of declines.” more details …


    High Deficits were the Objective of Right Economics

    James Crotty: High deficits deliberately created to justify return to 1920’s capitalism.

    Austerity Hawks Want a Return to 1920’s Capitalism

    James Crotty: Objective of austerity campaign is a return to unregulated capitalism and weak unions May 5, 2011

  27. @Bruce: This newfangled derivative product was “long only,” which meant the product was constructed to buy commodities, and only buy. At the bottom of this “long-only” strategy lay an intent to transform an investment in commodities (previously the purview of specialists) into something that looked a great deal like an investment in a stock.

    Now I don’t if you read that part but there is a significant flaw with their calculations. A long view assumes a mulit year plan. Where as the actual investment has less than a years ability (ie; storage)to cover itself in case of a bad year. Once that occurs the speculators should take the largest haircut when in fact they would be more concerned with a bailout of some sort. This has already occured in Asia where food riots are the norm, (the arabs could care less about a bin laden death when they can’t even find food on a daily basis.) So now should the same occur here to any degree, there are no reserves for animals, leading to their demise and shortly after that feast, the humans begin to starve. This is what we are currently seeing in Asia and the Middle East but our crazy politicians want to make a play of the entire scene and its gonna be a hugh problem.

  28. Economics isn’t simply more complex than a ‘natural’ economy/market, it ultimately attempts to describe human behavior, which in fact is as complex and unpredictable as people themselves.

    Economics is simply human behavior and that depends on cultural ideas. More, the culture evolves and so the economic choices/activity evolve, ever changing.

    Generalizations, economic theories, tend to be relative and temporary, by force.

    So all our economics is political, by nature, necessarily. And cultural. It’s a discussion, among ourselves.

  29. @ Owen Owens (LONG VIEW sustained, spiraled & bubbled)

    This is an essential twist in what price speculation does and the metrics of speculation capital in risk shifting and indexed investment capital lends itself to moral hazard and market disconnect from profiteering.

    Check here for a fabulous review of how this distortion emerges:

    May 5, 2010
    Global food bubble on the way?
    May 5, 2010 … Our guest believes we’re at the start of another surge in global food prices,
    and has little to do with supply and demand and much more to …
    Global food bubble on the way?
    Jayati Ghosh: Food prices set to surge due to Wall Street speculation

    Food and the Domination of Finance
    Jomo (UN Chief Economist): Speculation and lack of global cooperation are factors in creating global food crisis
    [excerpt from transcript ] “…when you had a small number of buyers, and who are buying futures and options, for example, that worked out. But when you have this inordinate amount of money going into this sector for the purposes of speculative gain, you–that exacerbates the kind of volatility which you’ve seen in the food markets, with tremendous consequences.”

    May 13, 2008
    Making a killing from the food crisis
    Devlin Kuyek: “Right now Cargill is making approximately $471 000 an hour in profits” h

  30. But just where or how can this bubble exist, when we don’t even have a one year surplus of grains to feed the animals and subsequently people. It used to be part of the budget, but the big boys took over and now the growing area is concentrated, and they sell all they grows in one year. Until storage is provided the belief in a food bubble is simply a myth like most govt statistics.

  31. Now if its price inflation you are refering to, then yes, I concur, that that will occur.

  32. @ mollyrose — (responding above to Bruce) “In the rise of the relatively new concept of human rights, mainly in the last century, there were political and philosophical debates as to wherein such rights are grounded. Do they rest in the State or are they “natural,” ie endowed by the Creator and –for the agnostic– by Nature ? I think this is the context in which the concept of “natural” economics arises. I believe it does not refer to aboriginal economics, but rather to how we find economics modelled in nature.”

    While the scope of what you are addressing is far greater than the scale that you choose to frame, the basic notion of Natural is much more complex than you are perceiving.

    1. “Aboriginal” was never referenced but I understand what you mean. What we would call “primitive” economics are truly subsistence based, but there is a great expanse beyond hunting and foraging that human economy and human ecology encompasses in the meantime.

    2. Natural in that regard is precisely what you conclude; in that, we look to nature for our economic models.

    3. Human Rights and Natural Law simply cannot be squeezed into the distortions they have experienced in this 20th century polemical arena.

    4. The notion that only equations that format a bottom line accounting is pure economics is a culture bound blindness…statics & dynamics meant to measure social demographics for work, defenses and taxes. The only thing natural here is the presupposition that Nature itself will always be reduced to some quantifiable equation.

    5. The idea of balance, however, is a notion derived more from the cosmos and the clockwork; the rigging and shipping technologies as well as the rise of industrial wheels and leverages to manipulate and exploit natural force.

    6. Somewhere in here between equations and balances we end up with measures of abstract values and standards of exchange…very unnatural. In addition, economics as we know it is born, meaning precisely that through production and this abstract medium of exchanges we “TRANSCEND” nature (small case lettering after this point). Economics does not look to nature and that is a great part of the problem!

    7. The right to the pursuit of happiness is where the class action suit comes about along with the equivocation of all precise measure. This is where the “political economy” begins to argue natural law and natural rights.

    8. I am sure I have missed something, just as sure as I know I also went passed the norm…but while I am at it let me state for the record here that a Natural Economy would necessarily follow from a counterbalance of poverty and wealth in a context of ecological scarcity and competitive surplus/ cost and production regulated by a fair systemic cooperative accumulation, distribution and redistribution of losses and gains. That to me would be natural and balanced sociopolitical economy of true human accomplishment. Instead…we get CIVILIZATION!

  33. 9> Defining my terms:

    Civilization = The great Chain of Being, sustained by a class system that refuses to share its step on the ladder.

    Nature (in economics): The food chain or baseline class system.

  34. @Bruce — I agree that the word “Nature” is a complex term — and if one thinks for long about it, one finds it to be sort of baseless, an odd construct of our modern mentality. Kind of an artifact of blind empiricism. It is defined by what it is NOT, which is pretty weird. Most likely future ages will find it an arcane term, grasped only by those who study our era. I don’t use the word in my personal contemplation, just to communicate with those around me.

  35. Indeed, once again McGraw-Hill rears its ugly “Scylla” head? We’re all fully aware that the publisher [?] wholly owns the S & P Credit Rating (#1 World Authority) Agency and is the sole provider of America’s High School’s, and College Texts! They edit, and produce what they think America should swallow…through their paid and bought “Texas Board of Higher Education” that recommends [?] what is fair and balanced for America’s Youth, pathetic!
    Back to the past? Harvard was bankrolled by an Englishman…no big surprise there. Shortly after the Cambridge (higher-education) Institution became well established this Englishman bankrolled a lesser known school called “Yale”…they met in Killingworth,Ct (this consortium of privileged “Old Money”) to consummate the deal. The “KingMaker” that bankrolled the wealthy Englishman was your “Rothschild’s Family”, who years later would be instrumental in funding Princeton University, They “Pick and Choose” the “Noble Prize Winners in all Categories” and they don’t straddle, period! Thus, the “Myth of a Natural Economy” is just that, a fabricated “Myth” straight from the “Devils’ Yarn”! (JMHO)
    Thankyou James and Simon

    God Bless You, Ms. Elizabeth Warren…for being a courageous crusader against the “White Sepulchers” :-)

  36. @ earle: As a youth, there was a campground called Devils hopyard near your Killington. My friends and I would bring the girls there (or maybe they brought us) to spend the weekend after a concert in the nearby city. I totally agree that something needs to be done about the old english ways, they get confused and take revenge sometimes when they really should’nt.

    The weak grow strong, and the strong carry on.

  37. mollyrose: Thank you for the exchange of ideas. I enjoy your phrase “…Kind of an artifact of blind empiricism” but I think it describes the the historicism of contemporary realists more than naturalists or the base idea of Nature in the History of Ideas. History has replaced the standard of measure for contemporary mankind, and economics is its process of transliteration. In “Deep History” you will find that Nature has been beast, burden, saint and sinner.
    But overall, Nature is what the earth is without the infestation of mankind.

  38. earle,florida (..aren’t you really the Duke of Earl?)

    all kidding aside, the social construction of reality does have its’ hub in the great walls of vested interest and tracking the money would certainly have an eternal return to those halls you have mentioned. but not to pollute the well, it is a precautionary note to say more that the devil hides in the open.

    You may want to check out UNIVERSITIES AND EMPIRE: Money and Politics in the Social Sciences During the Cold War. Edited by Christopher Simpson

    also related: Compromised Campus: the Collaboration of Universities with the Intelligence Community, 1945 – 1955. By Sigmund Diamond

    On a deeper note relating to our NATURE theme, it is important to note that while many individuals make claim (called an appeal to nature in logic) to the idea that nature is a standard measure, it is critical to note that throughout time we have created nature in our own image. That is to say that NATURE is often a reflection of our technological paradigm as much as our technology and sciences have “derived” from observing physical realities in the context of naturally occurring phenomena. The so called “Economy of Nature” therefore, becomes suspect since the perception of “Nature” has been measured by an exclusive (and systematic/ input = output) bias or what is either anthropocentric or anthropomorphic.

    The University in Exile! The University without Borders.

  39. If you truly want to know about the “MYTH OF THE NATURAL ECONOMY” than you would want to include the perspectives that the indigenous Peoples of the Americas have on that particular and peculiar notion that Western Culture has brought to these Continents.

    Of course a good many “scholars” would discount and dismiss their views as uninformed !

  40. Wow – let’s invent an uncontrollable fetish – what an *idea*


    Well, at least a recognition that the addition of imagination to a monkey brain needs careful consideration regarding unintended consequences – why did *god* do that – so that we could evolve to *godhood* while still an animal?

    @anadooda (wha’ever :-)) – you organized the big picture with simplicity – developing, developed, over-developed – of course, quidditas, forensicstats, and a few drive by conversationalists with great nuggets of info – we won’t be able to have a decent conversation when boxed in by the dark age theoclassical economy blatherers…seriously, who freekin’ cares what fetish their brain masturbates to…ick…

    Thanks to Garrett for noting why the math don’t work :-) Scheesh, guess we need to grade the paper with a big red “F” and hand it back to them before they slither off to plot revenge against the teacher…?

    And finally, an astro-physicist plugged in all the *math* that is in play upholding the cosmos and he reports that the cosmos created by *our* math looks nothing like what *IS* – and don’t work right…go figure…

  41. @Jones, the Lakoff op-ed you linked to is superb. It’s too bad that it appears to have been all but ignored. Thanks for sharing it.

  42. Here’s an example of the Republican “free market”. Or maybe it’s the Republican party’s idea of democracy, not sure which …..
    This is the grand idea of REPUBLICAN Governor Rick Snyder and the REPUBLICAN politicians of Michigan. If your state is having budget problems, this could be coming to a city near you.

  43. It seems to me general equilibrium theorists need to examine the “distortions” created by highly-organized private-sector corporations, before presenting their case on the “immutable laws of natural economy”. Otherwise, they are only presenting half of the picture.

  44. @mollyrose

    Nice to have you back.

    I was being ironic when I asked what is the difference between minimal government and a failed state. I believe “failed state” has a specific meaning. For example, Iraq and Somalia have been called failed states. This is when there is a complete failure of social institutions; ie, no hospitals, no schools or universities, no law enforcement, no judiciary, no government.

  45. So modernity meant (at least in North America) the secularization of the state. I think it might be true. There has been a transference from certainty in the omniscience of God to certainty in the omniscience of the free market. One might argue these are both mythologies.

  46. @ Bruce E. Woych

    “even until death tragedy holds fast its earthly host;
    all the while the natural world meanders along this ‘old man river’;
    caring not about the omnipresence of the very inherent nature of the beast within;
    which thou wallows innocently in the vicissitudes of mystical serendipity”
    Ref: “Old Man River” by Screaming Jay Hawkins (musical version)

    @ jones

    “Obama’s Return to His…?”
    Ref: “Journals (1952 -2000) Arthur M. Schlesinger, Jr. (2007)
    Prelude: This is a carbon copy of the Carter Administration’s Economic, Domestic, and Foreign Policy – President Obama is on center stage…in the tinsel bright lights of Bally-Who [?], the headline scenario…deja`vu?

    Nov. 5, 1980
    Quote: The long national nightmare is finally over. The Reagan landslide, which I anticipated in some of my moods, has indeed come to pass. I couldn’t care less what has happened to Carter. But I feel badly about the fine people he dragged down with him—George McGovern, John Culver, Birch Bayh, Gaylord Nelson, Frank Church, John Brademas. As Joe Rauh said this morning, “If I hated Jimmy Carter yesterday, I hate him twice as much today when I see what he has done to the Democratic Party.”
    George said, “I voted for Carter this time. Last time I voted for Ford. I told no one, not even Eleanor. Then at Thanksgiving we went around the table, and I discovered that, without any consultation, all the McGoverns—Eleanor and our children—had voted for Ford. No one would have believed that the entire McGovern family voted Republican in 1976.”
    I lunched today with Jackie, fascinating as always. We talked abpout growing old. I mentioned that I had just had my 63 birthday. She said, “You know, Ari was 63 when we married.” I was astonished at this; I recall him as seeming immeasurably old at the time. She said, “He was so filled with energy that he wore me out. Then his son was killed, he suddenly grew old.” She spoke of him with certain affection.
    End Quote (Page 506)

    Nothing loss, nothing gained…but another day deeper in debt…from some old quote, or song, whatever.

    God Bless You Julian Assange wherever you may be…stay safe

  47. @tippygolden Thanks.

    Kinda knew it was irony — just riffing on it . .

    One of my favorite books is Morris Berman’s RE-ENCHANTMENT OF THE WORLD – is that your source of the term re-enchantment?

    To re-enchant in the right way — that truly is the supreme question of our time. Good, good comment.

    I believe success is linked to 1) respect for reality, in the deepest I-Thou sense, 2)awareness of the ’emergent’ or unfolding aspect of reality, and the amazing properties of subatomic particles, 3) understanding that the world will actually communicate with us, if we consent, ie Participation is real, and 4) as Mondo says, engineering society to make the laws of survival-of-the-fittest work for us, not against us, so we do not replicate our worst traits.

  48. @tippygolden — btw the best companion book for Berman is the amazing little book Saving The Appearances, by Owen Barfield. He shows how we moved from primitive participation-consciousness (enchantment) to modern ‘objectivity’ (I-It disenchantment), and now are returning to a new, and greater, participation-consciousness (re-enchantment). Barfield was the third founding member of the Inklings, along with Tolkien and Lewis, and may be the greatest thinker of the three.

    And no, everybody, this is not off-topic. It is the way forward. We have to make things new at this level– which is why Tippy, who is much wiser than I about economic issues, is talking about re-enchantment.

  49. @mollyrose

    Here is what got me thinking about re-enchantment.

    “What actually occurs in the course of modernity is thus not simply the erasure or disappearance of God but the transference of this attributes, essential powers, and capacities to other entities or realms of being. The so-called process of disenchantment is thus also a process of reenchantment in and through both man and nature are infused with a number of attributes or powers previously ascribed to God.”

    I found this fascinating comment here.

    Yep, suggests the free markets are about mythology and re-enchantment. The free markets are now the secular equivalent of God. Therefore the free markets cannot sin. Right?

    I think I need a drink.

  50. @tippygolden

    If you took it just from that, you must have a real nose for key issues. Follow it up in the books mentioned above, and I believe you will be comforted.

    We are part of an awesome historical process, and the current pseudo-religious aspect of ‘free markets’ is as silly — and temporary — as the shrines for Mao and Stalin. The real thing is being reborn in our time.


    In Search Of The Primitive

    Stanley Diamond

    (this essay is excerpted from Stanley Diamond’s book of the same title)
    In machine based societies, the machine has incorporated the demands of the civil power or of the market, and the whole life of society, of all classes and grades, must adjust to its rhythms. Time becomes lineal, secularized, “precious”; it is reduced to an extension in space that must be filled up, and sacred time disappears….

    …Primitive societies may be regarded as a system in equilibrium, spinning kaleidascopically on its axis but at a relatively fixed point. Civilization may be regarded as a system in internal dis-equilibrium; technology or ideology or social organization are always out of joint with each other – that is what propels the system along a given track. Our sense of movement, of incompleteness, contributes to the idea of progress. Hence the idea of progress is generic to civilization. And our idea of primitive society as existing in a state of dynamic equilibrium and as expressive of human and natural rhythms is a logical projection of civilized societies and is in opposition to civilization’s actual state.

  52. Hello Ladies,

    Just don’t go looking for love in all the wrong places


    From the most censored book in the USA – The Urantia Book:

    Page 26 – “In the inner experience of man, mind is joined to matter. Such material-linked minds cannot survive mortal death….Mortal mind subservient to matter is destined to become increasingly material and consequently to suffer eventual personality extinction…”.

    Since we’re all sharing what fired up our imaginations about Paradise…

    Page 21 – “…The myriads of planetary systems were all made to be eventually inhabited by many different types of intelligent creatures, beings who could know God, receive the divine affection, and love him in return…”

    God proved that we deserve a home :-) And what a HOME he built!

    I’m all for “civilization” at the end of the “zip line” we’ve strung through the trees for a giggle, but that got Tarzan jealous and plotting the thieving…ask the CRIT natives along the Colorado River in AZ if they want to go back to farming without the dams…Stalin lasted only so long because he STOLE Russia, and trashed it…

  53. @Bruce

    Very insightful comment.

    Some historians say ancient societies believed time was cyclical, and it was the Hebrews who invented linear time by envisioning the fall and the eventual redemption at the ‘end of time.’ Maybe that linear world-view with its urge toward progress (ie spiritual progress) somehow engendered science. . .

    In any case, we certainly do feel hustled along, don’t we?

    Your description of primitive societies reminds me of Mandelbot’s description of a ‘strange attractor’ — a kind of chaotic stability.

    btw, Mollyrose’s two books are not New Age stuff (ref Amazon) — Berman is writing about the history of science and philosophy, and Barfield was a highly respected philologist — an archaeologist of the roots of words.

  54. @annie

    I own and have read the Urantia book. Is it true that it was censored? I wouldn’t be surprised. I know it was distributed at no charge to libraries, many years ago. That is how I came across it in the ’70s in Kansas. There is still a copy now in my local Canadian library.

  55. @mondo

    OMG :-)

    Of course it was censored!

    Maybe all historians and anthropologists need to write a book about all those blips in the timeline when Caesar no longer separates himself from God by adopting the belief that he IS God.

    There is absolutely NO discord between science and religion – except in God Caesar’s monkey brain.

    I mention that book as a complimentary read to whatever other “ism” and “ist” is evolving as proof that Caesar IS God.

  56. Mr Kwak and Mr Johnson,
    After reading your explanations of the consequences of the financial fiasco the world has, and is still, experiencing, it seems it boils down to several things:

    1) The Fed will step in and prevent TBTF banks from failing. It has shown it will do so repeatedly. Repeated history is already proof of this.
    2) The Fed has introduced no consequences for large-scale banks, allowing them to grow larger while crowding out competition by subsidizing their risk-taking.
    3) The Fed is trying to make these TBTF banks whole at ALL costs, including myriad “programs”, the most obvious being low interest rates that rob savers and are a de-facto regressive tax, punishing the poorest for the misdeeds of the wealthiest.

    The cycle-loop appears to be thus:

    A) Fed lowers rates to 0% to “address” the crisis (punish savers with no interest on savings and poor with inflation, but allow TBTF banks to borrow cheaply) —>
    B) TBTF Banks buy Treasuries yielding 2.5% (Free money for them)—>
    C) US gov’t receives money to finance debt —->
    D) US gov’t must pay interest on Treasuries —>
    E) Tax citizenry —>
    F) Gov’t pays interest on Treasuries, which TBTF banks bought using free money from the Fed.

    This, for TBTF banks, is a virtuous cycle, and an incentive to create an unending series of larger financial crises. It is a ruinous cycle for the economy and the country.

    If this sequence is in error, please point out the flaws.

    If not, perhaps Mr Bernanke will address what he plans to do about this in his next press conference.

  57. You are on the right track… but the interest paid by the Treasury can be a lot lower since the banks are not required to hold any capital at all against Treasuries… because according to the Basel Committee agreements the risk-weight of a triple-A rated sovereign is zero… zilch… nada!

    The roundabout goes also like this: The credit rating agencies when evaluating the risk of the too big to fail banks take into consideration the willingness of the government to bail them out and so, as they come to the conclusion that the government will do so, they award the banks good ratings… and then the bank with good ratings attracts funds it can pass along to the treasury. Meanwhile, all those small businesses and entrepreneurs who need bank credits are left out in the cold, because when lending to them the regulators require banks to have a lot of real capital… even though there has never been a bank crisis that has resulted from excessive lending to “risky” small businesses and entrepreneurs.

    This is of course a topic that Simon Johnson and James Kwak steadfastly ignore… because it does not fit with their agenda that regulators could in fact be that loony.

  58. Rob: Right On! And I believe they refer to that as a “VICIOUS CYCLE” not simply virtuous, and it has all the trappings of a “FALSE ECONOMY”

    BARRIERS TO ENTRY included, succession planning is class fixed and dependency oriented and so much for any balances or claims to efficiency!
    Banking on student debt

    from David Ruccio

    Colleges and universities are certainly banking on student debt—four-year schools so that they can raise tuition, for-profit schools so that they can engage in deceptive practices and outright fraud.

    Wall Street is also banking on student debt—by first lending to students (with government guarantees) and then slices and dices into Student Loan Asset-Backed Securities.
    The only ones losing out are students—who in 2009 graduated with $24,000 in outstanding loans, and now face almost twice the rate of unemployment they did in 2007.
    (read more with comments @

  59. But perhaps these contemporaneous awakenings require a new term for economy and economics in real time:

    2. (THE Virulent Cycle)
    3. “…the Virulent Cycle”

    (I am told by my friends in advertising that the American consumer is programed and conditioned to the message given in 3s (three times) 3xs…before they accept it as institutional…go figure! Who am I to argue?)

  60. The interesting thing about the Fed/TBTF setup is that the end result is TBTF banks are basically garnishing the wages of productive workers, receiving the benefits of what they are doing while providing nothing productive themselves to the economy. Free money taken from real workers. What a deal!

  61. @rob – yeah thanks! Now how do we get in on it…? No wonder the *competition* for the right schools begins before conception?

    So it’s the game of the kids born with the silver spoon in their mouth – Osalami and Prince terrorizing each other…

    Still the hard on to invade Iran? Even with intelligence like this: “….But the feud has taken a metaphysical turn following the release of an Iranian documentary alleging the imminent return of the Hidden Imam Mahdi – the revered saviour of Shia Islam, whose reappearance is anticipated by believers in a manner comparable to that with which Christian fundamentalists anticipate the second coming of Jesus….”

    Ahmandinejad reportedly went off for 11 days in a hissy fit because he believes he gets “…revelations just like Ayatollah Khamenei, even though I am not a priest…”

    Now THAT is tough – referee-ing the voices-in-their-head that those two are listening to – yikes :-) Do we have a special unit in the State Department or SPecial Ops for that mission?

    And of course it is plausible that the Pakistani government didn’t know *who* needed that kidney dialysis machine – mind your own business has GOT to be the only way to stay alive in Pakistan – just look at what happened to Madame Bhutto after V.P. Biden said she better shut up or she’ll get whacked…

    Once you’re TBTF, you’re on your way to the top of the parade of sociopaths and psychotics that hear a voice int heir head guiding their *fame* and *fortune*…

    “such a life on such a planet”

    Still quite the delightful giggle to hear the apostasy of challenging the voice in Ayatollah’s head with the voice in your head…

    Can the troops come home now or is circling the wagons going to keep going on with $$$ from India…?

    BTW – the top 5 industries as Ratigan lists them – they all are doing the same thing – hence the K2 mountian of corporate cash stash…no Zorro to open up the cages of the workers who finished their piece of the job…?

    But you can’t prove what died with Bhutto, thank god…

    Spoiled brats – they could have built PARADISE in Detroit and Saudi Arabi – instead they went for the *religious* golden ring…

  62. The question will never cease. However, to defend the free market position, to a large extent the argument is largely a check to those who would forge ahead with government intervention before thinking through all the consequences. For my mind, letting individuals choose their own destiny is the best way, the fairest way, the most logical way, for society to manage itself.

    There will be market failure, and in such cases, the need arises for government intervention. But this should be a final straw, a “we give up” attitude so to speak. The thing is, too often in today’s age, government intervention is thought to be the *first* solution to any problem facing society.

  63. @ The Pensum (Mark K):

    Apparently you haven’t been around for the last several years…?

    If Society is best served by “Individuals” “choosing” their own “destiny” then it is the obligation of the government to assure that every individual “gets” to choose their destiny. Any restraints that are barriers to entry like competitive advantages from unequal market share over stakeholder interests would of course not just negate but obliterate your reasoning.

    Or are you telling us that everyone “naturally” falls into place on your pyramid of exclusion? Since today’s government is practically a product of the free market, why are the boys in Government suddenly the Gestapo of the free market? Your free market rules are protected by the military and policing power of that same government and the people in it are your own privatized service sector!

    Stop with the empty formulas and define your terms. What is a free market? There is no such thing in any coherent form. It is a term that essentially means open your bedroom door and let me have a free go at all your assets. You can’t serve two masters. The free market for some and the flea market for others, and it’s all because of the betterment of society and the fairness of the dice?

  64. This is a wee-bit abstract knowing that the subject matter by the author pertains to the, “Myth of the Natural Economy” whereas a “Delphic Oracle” would wallow in its discourse?
    What I’d like to present as a common sense approach regarding todays myriad of self-inflicted dilemma’s {all integrated as a whole body} is the past turned upside-down emphasizing only that, “mankinds-not-so-different-societies” in a homogeneous pool of equilibrium that has always been?
    I’d like to quote an excerpt from: “The Dictionary of Cultural Literacy” {1988 copyright [sub-title “What every American needs to know]}
    Authors: E.D. Hirsch, Jr.
    Joseph F. Kett
    James Trefil
    Page 27 (section II…excerpt Beginning 1st and 2nd paragraphs) — “Mythology and Folklore” by E.D.H.

    Mr. Gradgrind in Hard Times, by Charles Dickens, thought that the chief staple of education should be facts, facts, facts. We take a different view. Although we think facts are important (see the scientific sections of this dictionary), we also think educated people must know myths, myths, myths. It isn’t clear whether the myth of George Washington And The Cherry Tree belongs in a course on history or one on mythology, but from the standpoint of literacy it doesn’t matter. For purposes of communication and solidarity in a culture, myths are just as important as history. And unless history achieves the vividness and memorableness of myth, it will not be very useful to shared culture. We should indeed try to discriminate between history and myth; but true or false, the stories that we share provide us with our values, goals, and traditions. The tales we tell our children define what kind of people we shall be.

    The term `myth` itself implies community. In Greek, it means “what they say.” The origins of most myths are lost in obscurity; they belong to the community. The myths that are shared by literate Americans are worldwide in their origins, and embrace both ancient and modern culture. The Greek myth of Paris and the APPLE OF DISCORD belongs to us as much as the myth of Washington and the cherry tree. According to some modern philosophers, notably Nietzsche, all stories, even scientific theories and religions teachings, are myths. Nietzsche’s view is probably wrong, but it usefully emphasizes the importance of shared myths in forming our national community and providing us with irreplaceable common points of reference. If we did not inherit myths, we would have to invent them; since we `have` inherited them, we should learn to use those we have inherited. Our traditional myths are no more true and false, wise and foolish, than those of other cultures. They are not inherently better than those of China or India. But being ours, they are uniquely valuable to `us`.
    End quote

    Mr Hirsch has a profound message for the leadership in this country too adhere to in `these` not so different times [?].
    Thankyou Jmaes and Simon

  65. @ Earle

    Excellent quote — thank you. I certainly agree. If people do not understand what myth is, they will be manipulated and are not able to preserve their freedom.

    One of the best things to happen in recent years is the rise of the work “paradigm.” Myth and paradigm are much the same.

    Science, like religion, rests in mythical frameworks and assumptions. Read Kuhn’s groundbreaking book, The Structure of Scientific Revolutions. ( He is responsible for awakening the word “paradigm” in general discourse.) The scientific establishment is much like the religious establishment in its orthodoxy, its heresies, and its reformations.

    Myths are neither true nor not-true, they are simply the overarching templates, like maps, in which we order our proven facts and our concrete experience. And they change over time as we acquire more facts and experience, and need better maps.

    Interesting that our experience of dawn is placed in our current understanding of earth rotating on its axis, yet we still call it ‘sunrise’ — this is a relic of an older understanding/template (myth) of the sun moving around the earth, and is much more compatible with the “evidence of our eyes.”

    And there are vested interests in all human establishments, seeking to maintain the status quo and promote their advantages with little regard for Truth. Perhaps none more so than the money establishment.

    I grew up in the era of Communist witch hunts which — in the name of national defence –suppressed the socialist remedies for the suffering of the Great Depression and stifled the democratic spirit called forth by World War 2. Quite deliberately.

    Communist was a dirty word in the 1950s but Socialist was not. It is disturbing to me today to see how they have turned Socialist into a slur. This is myth, and the manipulation of myth. Anyone who thinks our economic myths are not manufactured is lost in lala land.

  66. @ James Kwak


    Efficiency Instead of Justice?: Searching for the Philosophical Foundations of the Economic Analysis of Law (Law and Philosophy Library) [Paperback]

    Klaus Mathis (Author), Deborah Shannon (Translator)

  67. Efficiency in real time: (excerpt)
    Faulty Towers: The Crisis in Higher Education
    William Deresiewicz
    May 4, 2011 | This article appeared in the May 23, 2011 edition of The Nation.

    “It wasn’t supposed to be like this. When I started graduate school in 1989, we were told that the disastrous job market of the previous two decades would be coming to an end because the large cohort of people who had started their careers in the 1960s, when the postwar boom and the baby boom combined to more than double college enrollments, was going to start retiring. Well, it did, but things kept getting worse. Instead of replacing retirees with new tenure-eligible hires, departments gradually shifted the teaching load to part-timers: adjuncts, postdocs, graduate students. From 1991 to 2003, the number of full-time faculty members increased by 18 percent. The number of part-timers increased by 87 percent—to almost half the entire faculty.

    But as Jack Schuster and Martin Finkelstein point out in their comprehensive study The American Faculty (2006), the move to part-time labor is already an old story. Less visible but equally important has been the advent and rapid expansion of full-time positions that are not tenure-eligible. No one talks about this transformation—the creation of yet another academic underclass—and yet as far back as 1993, such positions already constituted the majority of new appointees. As of 2003, more than a third of full-time faculty were working off the tenure track. By the same year, tenure-track professors—the “normal” kind of academic appointment—represented no more than 35 percent of the American faculty.

    The reasons for these trends can be expressed in a single word, or buzzword: efficiency. Contingent academic labor, as non-tenure-track faculty, part-time and full-time, are formally known, is cheaper to hire and easier to fire. It saves departments money and gives them greater flexibility in staffing courses. Over the past twenty years, in other words—or really, over the past forty—what has happened in academia is what has happened throughout the American economy. Good, secure, well-paid positions—tenured appointments in the academy, union jobs on the factory floor—are being replaced by temporary, low-wage employment.”

    read more:


    Debt and a Broken System (TRNN)
    Michael Hudson and Richard D. Wolff: Massive public debt incurred to bail out a broken private system

    The real News Network:

    “The banks are insolvent, especially the banks that are too big to fail. So the government’s creating money to bail out its campaign contributors, basically, and it’s bailing them out by creating keyboard credit, by giving them free loans, by cutting their taxes, and by shifting taxes onto people that are not their campaign contributors–organized labor, labor unions, voters, and consumers.”

    see and hear the entire interview:

  69. “As people have gotten richer, conservative people have funded organizations which generate economic research promoting their political views.”

    This is a PASSIVE view of what has been happening. An active view would be those in power funneling government money directly to their supporters to build future political war chests (like no-bid contracts).

    The solution for that is obviously campaign finance reform – public money only. Let your ideas speak. If they are good enough, you don’t need to shout.

  70. Economics is a branch of politics, not science, so this is hardly surprising.

    And there is natural economy–or at least, there is an economy in nature. The unit of currency is calories, the reward, progeny. An organism has to eat to live, and if it takes more energy to get food than it gets out of the food, then it dies. “Success” is finding mates and avoiding predators and other threats. Humans, by virtue of our big brains and opposable thumbs and walking around upright, have been able to leverage the energy of other organisms and physical resources in pursuit of this goal. However, we know the price of leveraged systems: always requiring more leverage to continue growth. We may soon find out what happens if the new leverage does not appear.

  71. What does “efficiency” produce?

    World Corruption Special Report
    9 May 2011.
    Iraq and Afghanistan sit near the top of a list of the world’s most corrupt nations despite years of occupation by Anglo-American forces and more than $1 trillion of US taxpayers’ money having been spent on the two nations since 2001.

    The 2010 Corruption Perceptions Index (CPI) from the Berlin-based watchdog rated Somalia, with a score of 1.1 out of 10, as the world’s most corrupt nation, closely followed by Afghanistan and Myanmar with scores of 1.4, and Iraq on 1.5. This special report on world corruption uncovers the stories behind the most corrupt capitals of the world.

    Read more… World Corruption Special Report

    And check out the Corruption Perceptions Index database, new on EconomyWatch.

  72. Tippy and Earl:
    [ From: ]

    Copied from

    Robbie Robertson: When The Night Was Young Lyrics
    We headed straight south in a sundown light
    On highway 61 through the delta night
    We shared the backroads with cardsharks and grifters
    Tent show evangelists and Luke the Drifter

    What is lost what is missing
    What’s been gone way too long

    We had dreams when the night was young
    We were believers when the night was young
    We could change the world stop the war
    Never seen nothing like this before
    But that was back when the night was young

    Sign reads God Bless America guns and ammo
    I’m not sure that’s what He means
    Sign reads repent the end is near
    I’m not sure that’s what we need

    Get your heart beating in the right direction
    That’s when you make a real connection


    We had dreams when the night was young
    We were believers when the night was young
    We could change the world stop the war
    Never seen nothing like this before
    But that was back when the night was young

    Now Andy Warhol’s in the hotel lobby
    He’s waiting for the late night muse
    But she won’t be back before morning
    She’s gone downtown to hear some blues

    Like the sun rising out of the sea
    It’s how you embrace the mystery

    We had dreams when the night was young
    We were believers when the night was young
    We could change the world stop the war
    Never seen nothing like this before
    But that was way back when the night was young

    From the new solo rlease “ROBBIE ROBERTSON: how to become Clairvoyant.”

  73. @ Moopheus

    “Killer Myths and Animal Spirits” (author unknown?)

    Quote: “There are “TWO” reasons for surplus killing: #1) the experience of prey shortage; #2) and the need to hone hunting skills. The latter is the main reason.

    “The Animal’s Morals [?] Compete Through Nature”
    If you are not close to your natural niche, the instincts you learn (or do not realize you learned) will be stunted, twisted, and of little value (like human instincts are now)?

  74. @ Moopheus: And i’ll bet you were the first one to stand up right in your family, congratulations, and keep waiting for that leverage to appear, success is gauranteed.

  75. Note: The actual report (pdf) is hyper-linked@
    commission’s report in the text of the article,
    and the very first paragraphs states that the entire crisis was “man-made” and is very much worth reading over and above the very abbreviated synopsis in this article.
    What Ever Happened to the Stiglitz Commission?

    May 11, 2011

    from Kevin Gallagher (excerpt quoted):

    “At the onset of the financial crisis the United Nations put together an all-star group of global economists and economic policy-makers, chaired by Nobel Laureate Joseph Stiglitz, to assess the causes and consequences of the financial crisis and to make a set of recommendations to make sure such a crisis never happens again.
    The commission’s report was published with great fanfare and fed into a 2009 UN conference on the financial crisis that was met with little fanfare outside the UN system. After the conference the UN focused primarily on the global climate crisis and the Copenhagen meetings in 2010. The UN is only now beginning to pick up where it left off on global finance.”

    (read more at the article link:
    What Ever Happened to the Stiglitz Commission?

    the article concludes: (excerpt quoted)

    “It seems clear that at present the UN is not weighing in with a clear voice on the reform of the global economy. This is a pity. The world’s most powerful leaders and the press that follow them have found solace in the G-20 and the IMF, which are not delivering either. The UN is among the most qualified and certainly the most legitimate bodies to deal with the truly global nature of economic crises and their development implications. It started off better than any other body with the establishment of the Stiglitz Commission. Let us hope the UN is up to the task of following through on the Commission’s recommendations. The health of the global economy depends on it.”

  76. @earle

    The other day, Monday, I received an automatic email notification to my email from a young MD in St.Petersburg (working with him on a project – health of the human species is truly GLOBAL) that it was May Day in Russia and a National Holiday,

    but I received a reply from him anyway within a few minutes, and I had looked up what the national holiday was all about and we got a conversation going, this is part of that conversation, “I’m really impressed why other countries do pass over in silence the facts of WWII as if this had not been at all. Even we can accept that this was not only Germany why WWII appeared – but probably communist regimen of Stalin played its role, but how people can forget and recover from this horror – right exactly what you wrote! It was possible to stop them only due to numerical superiority, not due to professionalism. You can also google “Leningrad blockade” – it is incredible to say how the people who lived in my city were tested during these 900 days and nights being without food, and winters 1941-42 and 42-43 were extremely cold.
    One small fact. You know, I have a park not far from my home here. In 1940s this part of the city was outskirts and they had here a factory to manufacture bricks. So people used kilns of this factory as incinerators – they did not have enough force to put them to the ground – so after the WWII it was decided to lay out a park here, and quite recently the Church built here a nice chapel not identifying the faith – as people of different faith were burnt here …
    1 million and 200 hundred people died during this blockade in the city in these 900 days, and only 3% of them died due to firing and bombing, but 97% died due to hunger. So we have here very special attitude to bread, you see … And so I wonder these facts are passed over in silence on purpose in some countries … Why?”

    I didn’t have the heart to tell him what we were “celebrating” and the incessant gloating by the “insiders” about how the Prez’s approval rating is up to 60% now….the hooligans are back in the fold with the dead meat thrown their way…banksters raking in the tax dollars and the homes with equity they foreclosed on after one missing payment…

    I don’t know, Earle, you’re the wordsmith, what “ism” do we have now that we’ve mated the *power* of fascism and communism with capitalism?

    You’d think we could starve the bastards with a national strike…

  77. If I may, what is that word….hmmmm…….I call it thus: werefukedism.

  78. @ Annie

    Your answer is as good as mine (not to belittle the subject[?]…but our Achilles heel in America today is ObamaCare? :-))

    Now…on a more pressing, and ‘serious’ note concerning your expertise in the medical industry field. Socialism, Communism, and Democratic Capitalism [?], all of which will have a profound, and combined influence on the entire planet’s legacy well into the 21st Century.

    My question for you, (Annie) are of three distinct criteria: MRI & CT (CAT Scans), and Diagnostic Laboratory Testing.
    Do these three criteria take up the bulk of cost regarding Hospital Care Cost & ER’s expense, and if so – can they be mitigated?
    Thankyou Annie :-)

  79. @earle

    not so fast, buster :-)

    we’re talking here about “re-enchantment” – turning “werefukedism” into a *RELIGION* – one where man becomes a god once he stops *believing* in a god…

    an elite, insider predatory force who play god based on a code of conduct handed down from – if you believe the MYTHS – from ancient metaphysicists who brought existential iniquity to the planet with their MINDS – their ME ME ME (meme?)…

    The Cult of Contempt and their “Protocols”…

    Ask Kodak about why everyone likes having their *picture* taken….and what do you think all the medical imaging is all about…?

    There is only ONE problem and I guess you know too many people in the biz to face the truth:

    For profit health insurance companies.

    In 2005, the CEO of United Health Care gave himself a 1.8 billion – yes BILLION – dollar package….that is basically a diagnostic photo of everyone’s hole if you take out the 1000 paper pushers in between the PRODUCERS, the clinician and the patient who are responsible for jacking up the price – it’s the “financial innovation” fees for the renter-seekers, it’s FRAUD on a massive, legal scale!

    Don’t get into it with me about health care in USA – it’s brutal savage hatred of each other in full view…and it’s called “for-profit health insurance”.

    What did that CEO *DO* – greatest good for the greatest number – to *earn* 1.8 BILLION.

    That’s a lot of “god’s favor” for some great act of holiness, – what was the holiness?

    Strain at gnats while you swallow the camel

    Smile! Say cheese!

    – click –

  80. @ Earle: I don’t think Annie sees the 3rd shift gettin busted. And Annie, you have start at the bottom in order to reform the ones at the top, and of course this takes time. And can be done one of about 50 ways so just hang in there and try to be patient. Your one problem is being addressed with the Vickers commission, unsuccessfully I might add.

  81. @owens

    let me see if I have your definition of “patience” understood the way you want me to shut up and listen to your wisdom…

    “….sit there, whistle, pray, twiddle your thumbs while I get a *fair* chance to reload and come in for the final kill…”

    Is that *patience*?

    On which planet? – the alternate universe one?

  82. The one where jokes are NOT allowed. Or has your spirit been broken so badly you can no longer communicate with the universe anymore? Or have your feelings been compromised to some extent, flatten, or maybe never existed and is this perhaps what drives you toward your insanity and restlessness. Or you could be suffering from Booker T syndrome, you know a his book and a her book, without both you are burned at the stake. Any one of these and more can get you Annie, but if you think you need to come after me, go right ahead, what else did you have a goin anyway??

  83. @owens

    you started stalking me first, dude…and you were NOT joking – gosh, you’re turning out to be 100% sociopath – let me guess, Homeland Insecurity background…?

    “Raking It In” – the story du jour about “health” insurance…READ IT…

    Bottom line, I’ll never *need* you for anything in this life which is why you are the predator…

    ain’t giving you time to reload…

    oh, and the other *most read* article along with health insurance profits

    was about Eric Prince in Abu Dhabi – he finally found a *home* for himself and his calling of *service* – …ala “business” – private armies for hire…

    and they hauled the *leader* of the IMF off a plane today in JFK…

    Did it slip your mind that there will always be an *army* who will choose to follow the policy of the “Mr. Y” article – oh wait, that WAS the official USA military who came up with a peace plan! go figure…

    Yup, they did work side by side with *Blackwater*….

  84. I don’t do health insurance, I don’t need it. Raking it in? Only with other peoples sins. Princes? I bury them by the ton, leader of the IMF, I could give a f_ck. Side by side with the military (ie: law), they are the ones who are destroying, and due to be wrecked along with their bosses and cohorts. No, I work alone, and let the destroyers do their thing knowing thier time is limited. And you should strive to not “need anyone” espicially me, for I have skirted death so many times, and it is useless to try and get anything from a dead man. The buzzards come and go before you can even think about it. No I think I will just spend money and enjoy the others squirm as they try to find it.

  85. I am an avid reader of this blog which I discovered via a write up by Paul Krugman.I read your book after hearing Simon Johnson on NPR with Diane Rhem but I never knew James Kwak was as steeped in the political and economic issues until I read his conversation over at The Straddler just now.
    Bravo James! I have been telling everyone that Obama should have named Simon as Treasury Secretary given his vast experience ( academic, former IMF Chief Economist etc) now I will amend that either Simon Johnson or James Kwak. If there is a second Obama admin I pray that he will recognise ,as Peter Temin notes, that Geithner was a mistake. Kwak and Johnson to Treasury!!!

  86. Curious mismatch of words–the economy, based on the old Greek meaning, the business at hand, (Managing the estate to the Greek aristocracy.) Economics–a discipline in academia. This piece flip flops the meaning. Just because much of academic economics is complex (or pseudo-complex with mathematics) says very little about the complexity or simplicity of the economy. Temin did a work on the Great Depression of the 1930’s too. I’ve read it twice, once when it was new, and a year ago. He really couldn’t explain the ’30’s (functional) economy despite using some relatively complex (academic) economics. Some of the similarities are striking with the last several years, but his tracing of causality left him scratching his head.

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