Microeconomics

Todd G. Buchholz — Bringing The Jobs Home: How The Left Created The Outsourcing Crisis — and How We Can Fix It — Videos

Posted on August 12, 2017. Filed under: Banking, Books, College, Communications, Economics, Education, Employment, Energy, Enivornment, Faith, Family, Federal Government, Fiscal Policy, Foreign Policy, Freedom, History of Economic Thought, Macroeconomics, media, Microeconomics, Monetary Policy, Natural Gas, Nuclear Power, Oil, Tax Policy, Wealth, Welfare, Wisdom, Work, Writing | Tags: , |

Image result for Todd burhholz

Image result for Todd burhholz bring the jobs back home

Todd Buchholz on Economics

Why rich nations could fall apart

Todd Buchholz

Todd Buchholz: Trump should take a hard line with China

LIVE: Todd Buchholz and “The Price of Prosperity”

Milken Institute Forum: Todd Buchholz

The Price of Prosperity: Why Rich Nations Fail and How to Renew Them – FULL Audiobook

Todd Buchholz on the New Economics

Here’s How Trump Could Start a Trade War With China

Outsourcing American Jobs Consultants Help Companies Outsource

John Stossel & Lou Dobbs – American Free Trade

John Stossel – Why Free Trade Is Better Than “Made In America”!

John Stossel – Economic Myths: Made In America, College, Overpopulation, & More 7/26/12

Exporting America: Atul Vashistha on CNN

 

Todd G. Buchholz

From Wikipedia, the free encyclopedia

Todd G. Buchholz is an economist and has served as White House director of economic policy under George H.W. Bush and a managing director of the Tiger hedge fund. He was awarded the Allyn Young Teaching Prize by the Harvard University Department of Economics and was named “One of the Top 21 Speakers of the 21st Century” by Successful Meetings magazine. Businessweek and Bloomberg have reported that Buchholz is on the short-list for a White House appointment to the Federal Reserve Board.[1]

The Wall Street Journal named Buchholz’s 2016 book The Price of Prosperity: Why Rich Nations Fail and How to Renew Them, one of eight “must-reads” for the summer of 2016.[2] Buchholz is the inventor of the Math Arrow,[3] a mathematical matrix that makes numbers more intuitive to children. He is the CEO of Sproglit, LLC,[4] which develops software and classroom materials based on the Math Arrow. Martin Cooper (inventor), widely recognized as the inventor of the cellular phone, has called the Math Arrow “ingenious.”

Life and career

A founder of the G7 Group consulting firm, Todd Buchholz holds advanced degrees in law from Harvard Law School and in economics from University of Cambridge. He has also served as a Fellow at Cambridge University.

Buchholz frequently contributes commentaries on political economy, financial markets, business and culture to the New York TimesWall Street Journal and Washington Post, as well as PBSNPR and major television networks. He hosted his own special on CNBC and is the only person to guest-host CNBC’s Squawk Box two days in a row.

His books have been translated into over 15 languages and his first book New Ideas from Dead Economists is listed as a “classic” by the American Economic Association.[5] It has been strongly endorsed by such varied thinkers as Milton Friedman and Lawrence Summers.[6]

Buchholz’s newest book, The Price of Prosperity: Why Rich Nations Fail and How to Renew Them was published by HarperCollins in June 2016. The book received endorsements from prominent Democratic and Republican economists, including Lawrence Summers, Alan Blinder, Michael Boskin and Glenn Hubbard. Former Federal Board vice chair Blinder called it a “crackling read…a tour de force.”[1] Buchholz’s 2011 book Rush: Why You Thrive in the Rat Race was named a top ten book in the social sciences by Publishers Weekly, and a book of the year by the New York Post and Los Angeles Times.[7] Rush is a “synthesis of neuroeconomics and evolutionary psychology.” In 2012, Rush was featured on the Charlie Rose television show.[8] Buchholz’s other works include New Ideas from Dead CEOsLasting Lessons from the Corner OfficeFrom Here to EconomyMarket Shock, and Bringing the Jobs Home.

Buchholz resides primarily in San Diego, California and travels the world delivering keynote presentations on economics, finance, and innovation to such companies as MicrosoftIBM and General Electric, as well as to governmental organizations.[2] He has lectured in the U.K. Parliament, as well as at the White House library and the U.S. Treasury.

He is one of the founding producers of the Broadway musical Jersey Boys; is active in entrepreneurial businesses; holds engineering and design patents; and advises investment funds on business and portfolio strategy. In 2011, he co-founded software companySproglit, LLC.

He is also the author of a mystery novel about a boxer and hedge funds, called The Castro Gene, which won a USA Best Books prize.[9] Buchholz is the coauthor of the musical, Glory Ride, which tells the true story of Italians sneaking children out of Fascist Italy on bicycles. Glory Ride was performed in New York in January 2015, starring Tony Award nominee Josh YoungAlison Luff, and Quinn VanAntwerp. [10]

Economic Theories and Policy Proposals

Buchholz has devised a number of economic theories and policy proposals, which have been presented in books, articles, and lectures:

Law of Fertility, Prosperity, and Immigration

In his book The Price of Prosperity, Buchholz shows that when a nation’s annual average GDP rate exceeds 2.5 percent for two consecutive 25-year periods (two generations), the fertility rate will drop to just over the replacement level, that is, 2.5 children per female. If GDP continues to grow for a third consecutive generation, the fertility rate will tend to drop below 2.1 percent and the population will require immigration to maintain a stable working population. As a corollary, if the fertility rate falls below the replacement rate, the nation will find it extraordinarily difficult to pay down accumulated debt.[11]

Locking in Super Low Rates

On the editorial page of the Wall Street Journal [12] in June 2012, Buchholz proposed that the U.S. Treasury lock in record low borrowing rates by issuing 100-year bonds. With the 10-year Treasury yielding just 1.62%, Buchholz called it the “best deal since Pope Julius paid a pittance to have Michelangelo paint his ceiling.” Fourteen months after the article appeared, yields had risen by 78 percent to 2.88%.[13]

Competition Breeds Cooperation

In his book Rush, Buchholz argues through neuroscience and history that competitive societies achieve longer life expectancy, less disease, and greater measures of cooperation than societies that try to quash competitiveness.[14]

Turning Unemployment Compensation into Signing Bonuses[edit]

In 2011, on the front page of the Washington Post Outlook section, Buchholz proposed turning unemployment compensation into signing bonuses.[15] Instead of collecting 99 weeks of unemployment payments, under Buchholz’s proposal, individuals would receive a signing bonus from the government if they accepted a job sooner.

Crime and Interest Rates

The Buchholz Hypothesis holds that crime is strongly correlated with interest rates.[16] This hypothesis helps solve the puzzle of why crime fell during the Great Depression, even though conventional wisdom suggests that a bad economy leads people to commit more crime.

Free-Rider Effect on National GDP

In his book New Ideas from Dead Economists, Buchholz argues that small countries with large social welfare programs may achieve strong GDP gains because they are able to ride on the gains generated by countries that promote a more competitive structure with less governmental intervention.

Economic Forecasting

In his media and speaking appearances, Buchholz frequently makes forecasts about major economic turns and developments, sometimes with surprising accuracy.

Farmland Price Drop 2014-2015

In January 2014, in an essay entitled “Green Acres Turning Red,” Buchholz forecast a sharp decline in farmland prices, following a sharp multi-year rally. Buchholz stated that prices were “teetering on the slope of something ugly and parabolic.”[3] Over the next two years, farmland rental rates dropped by almost 20 percent.[17]

Oil Price Collapse 2014-2015

In April 2014, with the price of oil at approximately $100 per barrel, Buchholz appeared on Fox Business Channel with Maria Bartiromo and forecast (correctly) that the price of oil would plunge to $50 per barrel.[18]

U.S. Debt Downgrade 2011

In 2011, in keynote speeches and in television and radio interviews, Buchholz forecast that the Standard and Poor’s rating agency (S&P) would downgrade U.S. Treasury debt. On August 5, S&P announced the downgrade of U.S. debt from AAA to AA+[19]

Economic Recovery Forecast 2009

In February 2009, Buchholz was among the first well-known U.S. economists to forecast an economic recovery from the “Great Recession.” In a speech to the Americas Lodging Investment Summit, Buchholz forecast that “we’re going to have an economic recovery just in time for back-to-school sales in September” and that “lodging and hospitality is going to benefit from this upswing as well.” In fact, GDP did turn positive in the third quarter of 2009.[20]

April 2008 Commodities Forecast

In April 2008, on the PBS Nightly Business Report, Buchholz forecast that commodity prices, including oil, would climb higher in the short-term but then tumble during the summer of 2008. On July 13, 2008, addressing the Southern Legislative Conference, when oil prices were $137 per barrel and leading Wall Street analysts were forecasting a move to $200, Buchholz predicted that prices would fall by half over the next six months. His comments were met with criticism from other leading economic analysts, but within the next eight weeks, prices of commodities such as oil, grain, and industrial metals started to crumble, and the price of oil fell significantly.

June 2008 Economic Forecast

In an opening keynote speech at Everything Channel’s 2008 VARBusiness 300 Conference in June 2008, Buchholz said he believed that the U.S. economy, while undoubtedly in a slowdown, would avoid two consecutive quarters of negative GDP, the classic definition of a recession. “I’m convinced we’re not going to have any quarters of negative GDP”, he added. Buchholz cited high employment, lean inventories at manufacturers, and strong exports, spurred by the weaker dollar, as reasons for his beliefs.[21]

Instability of the Eurozone

Buchholz’s 1999 book Market Shock warned that the Eurozone was unstable and headed toward political turmoil.[22] In a chapter subtitled “How European Unity Splinters,” Buchholz pointed out that eventually the Mediterranean nations and Ireland would stumble because those countries required a different monetary policy than the core countries of Germany and France.

References

  1. Jump up^http://www.businessweek.com/bwdaily/dnflash/jul2005/nf20050721_2381_db038.htm
  2. Jump up^ “Eight Summer Vacation Must-Reads from the Wall Street Journal”.
  3. Jump up^ https://www.theguardian.com/science/alexs-adventures-in-numberland/2013/jun/07/mathematics
  4. Jump up^ http://www.sproglit.com/
  5. Jump up^ American Economic Association books
  6. Jump up^ Todd G. Buchholz, New Ideas from Dead Economists (New York: Penguin, 2007)
  7. Jump up^ “Spring 2011 Adult Announcements”Publishers Weekly,
  8. Jump up^ Interview with Charlie Rose
  9. Jump up^ The USA Best Books 2007 Awards, USA Book News
  10. Jump up^ http://www.theatermania.com/new-york-city-theater/news/josh-young-stars-in-glory-ride-reading_71191.html
  11. Jump up^ Buchholz, Todd (2016). The Price of Prosperity. HarperCollins. p. 36. ISBN 9780062405708.
  12. Jump up^https://www.wsj.com/articles/SB10001424052702303836404577475060119430638
  13. Jump up^ https://www.bloomberg.com/news/2013-08-18/gold-holds-gains-as-asian-futures-slip-after-u-s-retreat.html
  14. Jump up^ Todd G. Buchholz (2012) Rush: Why You Thrive in the Rat Race. New York: Hudson Street/Penguin.
  15. Jump up^ http://www.washingtonpost.com/opinions/instead-of-unemployment-benefits-offer-a-signing-bonus/2011/06/08/AG46vHPH_story.html
  16. Jump up^ Todd G. Buchholz, (2007) New Ideas From Dead Economists. New York: Plume. p. 200
  17. Jump up^ “Farmland Values and Credit Conditions” (PDF). Chicagofed.org. Chicago Reserve Bank of Chicago.
  18. Jump up^ http://video.foxbusiness.com/v/3418293666001/oil-headed-for-50-a-barrel/?#sp=show-clips
  19. Jump up^ http://www.marketwatch.com/story/us-may-still-face-debt-downgrade-buchholz-2011-07-31
  20. Jump up^ http://www.hospitalitynet.org/news/4040053.html
  21. Jump up^ Whiting, Rick (June 2008). “Buchholz: U.S. Will Skirt A Recession”. VARBusiness28 (6): 18 =.
  22. Jump up^ Todd G. Buchholz, (1999) Market Shock. New York: Harper Collins. p.146.

External links

https://en.wikipedia.org/wiki/Todd_G._Buchholz

Read Full Post | Make a Comment ( None so far )

The Pronk Pops Show — Week In Review — July 28-August 4, 2017 — Videos

Posted on August 5, 2017. Filed under: American History, Banking, Blogroll, Bunker Busters, Business, Central Intelligence Agency (CIA), College, Computers, Congress, Constitution, Corruption, Crime, Crisis, Culture, Defense Intelligence Agency (DIA), Diet, Documentary, Drones, Drug Cartels, Economics, Education, Elections, Employment, Energy, Entertainment, Faith, Family, Federal Bureau of Investigation (FBI), Federal Bureau of Investigation (FBI), Federal Government, Federal Government Budget, Fiscal Policy, Food, Foreign Policy, Fraud, Freedom, Friends, government, government spending, Health, Health Care, history, Illegal, Immigration, Inflation, Internal Revenue Service (IRS), Investments, IRS, Islam, Journalism, Language, Law, Legal, liberty, Life, Links, Literacy, Macroeconomics, media, Microeconomics, Milk, Missiles, Monetary Policy, Money, Music, National Security Agency (NSA), Natural Gas, Newspapers, Nuclear, Nuclear Power, Nuclear Proliferation, Obamacare, Oil, People, Philosophy, Photos, Pistols, Police, Political Correctness, Politics, Press, Programming, Psychology, Radio, Radio, Rants, Raves, Raymond Thomas Pronk, Religion, Rifles, Security, Spying, Strategy, Success, Talk Radio, Tax Policy, Taxation, Taxes, Technology, Television, Terrorism, The Pronk Pops Show, Trade Policiy, Video, War, Wealth, Weapons, Weapons of Mass Destruction, Welfare, Wisdom, Work, Writing | Tags: , |

Project_1

The Pronk Pops Show Podcasts

Pronk Pops Show 940, August 3, 2017

Pronk Pops Show 939,  August 2, 2017

Pronk Pops Show 938, August 1, 2017

Pronk Pops Show 937, July 31, 2017

Pronk Pops Show 936, July 27, 2017

Pronk Pops Show 935, July 26, 2017

Pronk Pops Show 934, July 25, 2017

Pronk Pops Show 934, July 25, 2017

Pronk Pops Show 933, July 24, 2017

Pronk Pops Show 932, July 20, 2017

Pronk Pops Show 931, July 19, 2017

Pronk Pops Show 930, July 18, 2017

Pronk Pops Show 929, July 17, 2017

Pronk Pops Show 928, July 13, 2017

Pronk Pops Show 927, July 12, 2017

Pronk Pops Show 926, July 11, 2017

Pronk Pops Show 925, July 10, 2017

Pronk Pops Show 924, July 6, 2017

Pronk Pops Show 923, July 5, 2017

Pronk Pops Show 922, July 3, 2017

Pronk Pops Show 921, June 29, 2017

Pronk Pops Show 920, June 28, 2017

Pronk Pops Show 919, June 27, 2017

Pronk Pops Show 918, June 26, 2017

Pronk Pops Show 917, June 22, 2017

Pronk Pops Show 916, June 21, 2017

Pronk Pops Show 915, June 20, 2017

Pronk Pops Show 914, June 19, 2017

Pronk Pops Show 913, June 16, 2017

Pronk Pops Show 912, June 15, 2017

Pronk Pops Show 911, June 14, 2017

Pronk Pops Show 910, June 13, 2017

Pronk Pops Show 909, June 12, 2017

Pronk Pops Show 908, June 9, 2017

Pronk Pops Show 907, June 8, 2017

Pronk Pops Show 906, June 7, 2017

Pronk Pops Show 905, June 6, 2017

Pronk Pops Show 904, June 5, 2017

Pronk Pops Show 903, June 1, 2017

Pronk Pops Show 902, May 31, 2017

Pronk Pops Show 901, May 30, 2017

Pronk Pops Show 900, May 25, 2017

Pronk Pops Show 899, May 24, 2017

Pronk Pops Show 898, May 23, 2017

Pronk Pops Show 897, May 22, 2017

Pronk Pops Show 896, May 18, 2017

Pronk Pops Show 895, May 17, 2017

Pronk Pops Show 894, May 16, 2017

Pronk Pops Show 893, May 15, 2017

Pronk Pops Show 892, May 12, 2017

Pronk Pops Show 891, May 11, 2017

Pronk Pops Show 890, May 10, 2017

Pronk Pops Show 889, May 9, 2017

Pronk Pops Show 888, May 8, 2017

Pronk Pops Show 887, May 5, 2017

Pronk Pops Show 886, May 4, 2017

Pronk Pops Show 885, May 3, 2017

Pronk Pops Show 884, May 1, 2017

Image result for Reforming American Immigration for a Strong Economy (RAISE) Act. charts on numbers 

 

Image result for cartoons illegal alien invasion of united states

The Pronk Pops Show 940

August 3, 2017

Breaking News — Story 1: Special Counsel Robert Mueller III Impanels Grand Jury for Russian Investigation and Alleged Russia/Trump Collusion Conspiracy Theory — Videos —

Story 2: Proposed Reforming American Immigration for Strong Employment (RAISE) Act will Expose Hypocrisy of Democrats and Republicans In Promoting Open Borders with 30-60 Million Illegal Invasion of United States Over The Last 30 Years and Rising Legal Immigration Instead of Protecting The American Worker and Middle Class — The Betrayal Of American People By The Political Elitist Establishment — Videos

For additional information and videos:

https://pronkpops.wordpress.com/2017/08/03/the-pronk-pops-show-940-august-3-2017-breaking-news-story-1-special-counsel-robert-mueller-iii-impanels-grand-jury-for-russian-investigation-and-alleged-russiatrump-collusion-conspiracy-theory/

August 04, 2017 04:57 PM PDT

The Pronk Pops Show 939

August 2, 2017

Story 1: President Trump For National Unity Furiously Signs Flawed Russia, Iran, and North Korea Sanctions Bill — Videos —

Story 2: Trump Announces New Immigration Policy — Reforming American Immigration for Strong Employment (RAISE) Act — Videos

For additional information and videos;

https://pronkpops.wordpress.com/2017/08/02/the-pronk-pops-show-939-august-2-2017-breaking-news-story-1-president-trump-for-national-unity-furiously-signs-flawed-russia-iran-and-north-korea-sanctions-bill-videos-story-2-trump-a/

August 03, 2017 12:00 PM PDT

The Pronk Pops Show 938

August 1, 2017

Story 1: Vice-President On The Trump Doctrine In Speech Delivered From Estonia, Latvia, and Lithuania — Videos —

Story 2: President Trump Will Sign Sanctions Bill For Russia, North Korea, and Islamic Republic of Iran — Videos — Story 3: Washington War Fever with Neocon Republicans and Progressive Democrats United Against Russia — Masking Incompetency — Videos

For additional information and videos:

https://pronkpops.wordpress.com/2017/08/01/the-pronk-pops-show-938-august-1-2017-story-1-vice-president-on-the-trump-doctrine-in-speech-delivered-from-estonia-latvia-and-lithuania-videos-story-2-president-trump-will-sign-sanction/

 

The Pronk Pops Show 938

August 2, 2017

Story 1: Vice-President On The Trump Doctrine In Speech Delivered From Estonia, Latvia, and Lithuania — Videos —

Story 2: President Trump Will Sign Sanctions Bill For Russia, North Korea, and Islamic Republic of Iran — Videos —

Story 3: Washington War Fever with Neocon Republicans and Progressive Democrats United Against Russia — Masking Incompetency — Videos

For additional information and videos:

https://wordpress.com/post/pronkpops.wordpress.com/26453

July 29, 2017 12:49 PM PDT

The Pronk Pops Show 936

July 27, 2017

Story 1surprisedbama Spy Scandal: Obama Administration Officials Including National Security Adviser Rice, CIA Director Brennan and United Nations Ambassador Power Spied On American People and Trump Campaign By Massive Unmasking Using Intelligence Community For Political Purposes — An Abuse of Power and Felonies Under U.S. Law — Videos

For additional information and videos:

https://pronkpops.wordpress.com/2017/07/28/the-pronk-pops-show-936-story-1obama-spy-scandal-obama-administration-officials-including-national-security-adviser-rice-cia-director-brennan-and-united-nations-ambassador-power-spied-on-american/

July 28, 2017 07:12 PM PDT

The Pronk Pops Show 935

July 26, 2017

Story 1: Trump Targets Transgender Troops — No More Gender Reassignment Surgeries In Military and Veterans Hospital — Cuts Spending By Millions Per Year — What is Next? — No More Free Viagra — Tranny Boys/Girls No More — Videos —

Story 2: Senate Fails To Pass Senator Rand Paul’s Total Repeal Amendment — Tea Party Revival Calling For Primary Challenge Against Rollover Republican Senators Shelley Moore Capito of West Virginia, Susan Collins of Maine, Dick Heller of Nevada, John McCain of Arizona, Rob Portman of Ohio, Lamar Alexander of Tennessee and Lisa Murkowski of Alaska — All Republicans in Name Only — Really Big Government Democrats — Videos —

Story 3: Trump Rally in Ohio — Neither A Rally Nor A Movement Is Not A Political Party That Votes in Congress — New Viable and Winning American Independence Party Is What Is Needed –Videos

For additional information and videos:

https://wordpress.com/post/pronkpops.wordpress.com/26375

July 27, 2017 02:28 PM PDT

The Pronk Pops Show 934

July 26, 2017

Story 1: Pence Breaks Tie — Senate Will Debate How To Proceed With Obamacare Repeal and Replace — Videos —

Story 2: Congress Overwhelming Passes New Sanctions on Russia, Iran and North Korea — Long Overdue — Videos —

Story 3: Trump Again Critical Of Attorney General Sessions Apparently For Not Prosecuting Leakers and Going After Clinton Foundation Crimes — What about Obama Administration’s Spying On Trump — An Abuse of Power Using Intelligence Community for Political Purposes — Will Trump Dump Sessions? If He Does Trump Will Start To Lose His Supporters in Talk Radio and Voter Base — Direct Deputy Attorney Rod Rosenstein To Fire Mueller — If He Won’t Fire Him — Fire Both Mueller and Rosenstein —  Punish Your Enemies and Reward Your Friends President Trump! — “In Your Guts You Know He is Nuts” —  Videos

For additional information and videos:

https://pronkpops.wordpress.com/2017/07/25/the-pronk-pops-show-934-july-24-2017-breaking-breaking-story-1-pence-breaks-tie-senate-will-debate-how-to-proceed-with-obamacare-repeal-and-replace-videos-story-2-congress-overwhel/

 

The Pronk Pops Show Podcasts Portfolio

Listen To Pronk Pops Podcast or Download Shows 938-940

Listen To Pronk Pops Podcast or Download Shows 926-937

Listen To Pronk Pops Podcast or Download Shows 916-925

Listen To Pronk Pops Podcast or Download Shows 906-915

Listen To Pronk Pops Podcast or Download Shows 889-896

Listen To Pronk Pops Podcast or Download Shows 884-888

Listen To Pronk Pops Podcast or Download Shows 878-883

Listen To Pronk Pops Podcast or Download Shows 870-877

Listen To Pronk Pops Podcast or Download Shows 864-869

Listen To Pronk Pops Podcast or Download Shows 857-863

Listen To Pronk Pops Podcast or Download Shows 850-856

Listen To Pronk Pops Podcast or Download Shows 845-849

Listen To Pronk Pops Podcast or Download Shows 840-844

Listen To Pronk Pops Podcast or Download Shows 833-839

Listen To Pronk Pops Podcast or Download Shows 827-832

Listen To Pronk Pops Podcast or Download Shows 821-826

Listen To Pronk Pops Podcast or Download Shows 815-820

Listen To Pronk Pops Podcast or Download Shows 806-814

Listen To Pronk Pops Podcast or Download Shows 800-805

Listen To Pronk Pops Podcast or Download Shows 793-799

Listen To Pronk Pops Podcast or Download Shows 785-792

Listen To Pronk Pops Podcast or Download Shows 777-784

Listen To Pronk Pops Podcast or Download Shows 769-776

Listen To Pronk Pops Podcast or Download Shows 759-768

Listen To Pronk Pops Podcast or Download Shows 751-758

Listen To Pronk Pops Podcast or Download Shows 745-750

Listen To Pronk Pops Podcast or Download Shows 738-744

Listen To Pronk Pops Podcast or Download Shows 732-737

Listen To Pronk Pops Podcast or Download Shows 727-731

Listen To Pronk Pops Podcast or Download Shows 720-726

Listen To Pronk Pops Podcast or DownloadShows 713-719

Listen To Pronk Pops Podcast or DownloadShows 705-712

Listen To Pronk Pops Podcast or Download Shows 695-704

Listen To Pronk Pops Podcast or Download Shows 685-694

Listen To Pronk Pops Podcast or Download Shows 675-684

Listen To Pronk Pops Podcast or Download Shows 668-674

Listen To Pronk Pops Podcast or Download Shows 660-667

Listen To Pronk Pops Podcast or Download Shows 651-659

Listen To Pronk Pops Podcast or Download Shows 644-650

Listen To Pronk Pops Podcast or Download Shows 637-643

Listen To Pronk Pops Podcast or Download Shows 629-636

Listen To Pronk Pops Podcast or Download Shows 617-628

Listen To Pronk Pops Podcast or Download Shows 608-616

Listen To Pronk Pops Podcast or Download Shows 599-607

Listen To Pronk Pops Podcast or Download Shows 590-598

Listen To Pronk Pops Podcast or Download Shows 585- 589

Listen To Pronk Pops Podcast or Download Shows 575-584

Listen To Pronk Pops Podcast or Download Shows 565-574

Listen To Pronk Pops Podcast or Download Shows 556-564

Listen To Pronk Pops Podcast or Download Shows 546-555

Listen To Pronk Pops Podcast or Download Shows 538-545

Listen To Pronk Pops Podcast or Download Shows 532-537

Listen To Pronk Pops Podcast or Download Shows 526-531

Listen To Pronk Pops Podcast or Download Shows 519-525

Listen To Pronk Pops Podcast or Download Shows 510-518

Listen To Pronk Pops Podcast or Download Shows 500-509

Listen To Pronk Pops Podcast or Download Shows 490-499

Listen To Pronk Pops Podcast or Download Shows 480-489

Listen To Pronk Pops Podcast or Download Shows 473-479

Listen To Pronk Pops Podcast or Download Shows 464-472

Listen To Pronk Pops Podcast or Download Shows 455-463

Listen To Pronk Pops Podcast or Download Shows 447-454

Listen To Pronk Pops Podcast or Download Shows 439-446

Listen To Pronk Pops Podcast or Download Shows 431-438

Listen To Pronk Pops Podcast or Download Shows 422-430

Listen To Pronk Pops Podcast or Download Shows 414-421

Listen To Pronk Pops Podcast or Download Shows 408-413

Listen To Pronk Pops Podcast or Download Shows 400-407

Listen To Pronk Pops Podcast or Download Shows 391-399

Listen To Pronk Pops Podcast or Download Shows 383-390

Listen To Pronk Pops Podcast or Download Shows 376-382

Listen To Pronk Pops Podcast or Download Shows 369-375

Listen To Pronk Pops Podcast or Download Shows 360-368

Listen To Pronk Pops Podcast or Download Shows 354-359

Listen To Pronk Pops Podcast or Download Shows 346-353

Listen To Pronk Pops Podcast or Download Shows 338-345

Listen To Pronk Pops Podcast or Download Shows 328-337

Listen To Pronk Pops Podcast or Download Shows 319-327

Listen To Pronk Pops Podcast or Download Shows 307-318

Listen To Pronk Pops Podcast or Download Shows 296-306

Listen To Pronk Pops Podcast or Download Shows 287-295

Listen To Pronk Pops Podcast or Download Shows 277-286

Listen To Pronk Pops Podcast or Download Shows 264-276

Listen To Pronk Pops Podcast or Download Shows 250-263

Listen To Pronk Pops Podcast or Download Shows 236-249

Listen To Pronk Pops Podcast or Download Shows 222-235

Listen To Pronk Pops Podcast or Download Shows 211-221

Listen To Pronk Pops Podcast or Download Shows 202-210

Listen To Pronk Pops Podcast or Download Shows 194-201

Listen To Pronk Pops Podcast or Download Shows 184-193

Listen To Pronk Pops Podcast or Download Shows 174-183

Listen To Pronk Pops Podcast or Download Shows 165-173

Listen To Pronk Pops Podcast or Download Shows 158-164

Listen To Pronk Pops Podcast or Download Shows 151-157

Listen To Pronk Pops Podcast or Download Shows 143-150

Listen To Pronk Pops Podcast or Download Shows 135-142

Listen To Pronk Pops Podcast or Download Shows 131-134

Listen To Pronk Pops Podcast or Download Shows 124-130

Listen To Pronk Pops Podcast or Download Shows 121-123

Listen To Pronk Pops Podcast or Download Shows 118-120

Listen To Pronk Pops Podcast or Download Shows 113 -117

Listen To Pronk Pops Podcast or Download Show 112

Listen To Pronk Pops Podcast or Download Shows 108-111

Listen To Pronk Pops Podcast or Download Shows 106-108

Listen To Pronk Pops Podcast or Download Shows 104-105

Listen To Pronk Pops Podcast or Download Shows 101-103

Listen To Pronk Pops Podcast or Download Shows 98-100

Listen To Pronk Pops Podcast or Download Shows 94-97

Listen To Pronk Pops Podcast or Download Show 93

Listen To Pronk Pops Podcast or Download Show 92

Listen To Pronk Pops Podcast or Download Show 91

Listen To Pronk Pops Podcast or Download Shows 88-90

Listen To Pronk Pops Podcast or Download Shows 84-87

Listen To Pronk Pops Podcast or Download Shows 79-83

Listen To Pronk Pops Podcast or Download Shows 74-78

Listen To Pronk Pops Podcast or Download Shows 71-73

Listen To Pronk Pops Podcast or Download Shows 68-70

Listen To Pronk Pops Podcast or Download Shows 65-67

Listen To Pronk Pops Podcast or Download Shows 62-64

Listen To Pronk Pops Podcast or Download Shows 58-61

Listen To Pronk Pops Podcast or Download Shows 55-57

Listen To Pronk Pops Podcast or Download Shows 52-54

Listen To Pronk Pops Podcast or Download Shows 49-51

Listen To Pronk Pops Podcast or Download Shows 45-48

Listen To Pronk Pops Podcast or Download Shows 41-44

Listen To Pronk Pops Podcast or Download Shows 38-40

Listen To Pronk Pops Podcast or Download Shows 34-37

Listen To Pronk Pops Podcast or Download Shows 30-33

Listen To Pronk Pops Podcast or Download Shows 27-29

Listen To Pronk Pops Podcast or Download Shows 17-26

Listen To Pronk Pops Podcast or Download Shows 16-22

Listen To Pronk Pops Podcast or Download Shows 10-15

Listen To Pronk Pops Podcast or Download Shows 1-9

Read Full Post | Make a Comment ( None so far )

David Stockman — Right On The Money, Economy, Trump and The Warfare and Welfare State — You Have Been Warned — Videos

Posted on April 30, 2017. Filed under: American History, Banking, Blogroll, Books, British History, Business, Communications, Congress, conservatives, Constitution, Corruption, Crisis, Cult, Culture, Economics, Education, Elections, Employment, European History, Federal Government Budget, Fiscal Policy, Foreign Policy, Freedom, government spending, history, History of Economic Thought, Illegal, Immigration, Inflation, Investments, Islam, Law, liberty, Life, Links, Macroeconomics, media, Microeconomics, Middle East, Monetary Policy, Money, Money, Non-Fiction, People, Philosophy, Photos, Politics, Rants, Raves, Raymond Thomas Pronk, Speech, Strategy, Talk Radio, Tax Policy, Taxation, Taxes, Video, Wahhabism, War, Wealth, Welfare, Wisdom, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , |

Image result for david stockman books

Image result for david stockman books

Image result for david stockman books
Image result for david stockman booksImage result for david stockman booksImage result for david stockman booksImage result for david stockman books

Image result for cartoons about david stockman

World’s Greatest Memory and Trump’s La la Land | David Stockman’s Warning

Published on Apr 29, 2017

You can also check out the following:

David Stockman’s Warning
Jim Sinclair
James Turk
Web bot
Silver News
Gold
Bix Weir
RoadToRoota
Road To Roota
Kyle Bass
Realist News
Greg Mannarino
Rob Kirby
Reluctant Preppers
The Next Newss
Info Wars
Maneco64
Mike Maloney
Gold Silver
Eric Sprott
Jim Rickards
David Morgan
Peter Schiff
Max Keiser
Robert Kiyosaki
SilverDoctors
Finance and Liberty
Nomi Prins
Jim Willie
Clif High
Martin Armstrong
Ron Paul
Pastor Williams
Bill Holter
Bo Polny
Jim Sinclair
James Turk
Clif High

Stockman on Trump’s Tax Plan: ‘Borrowing Money Is Not the Way to Prosperity’

David Stockman: National debt is ticking time bomb

David Stockman: Trump doesn’t know anything about tax policy

David Stockman: We’re wasting money on defense

David Stockman on Trump’s wall: I think it’s a stupid idea

David Stockman: Economy is on the edge of ruin

David Stockman: We’ll have a fiscal bloodbath, not fiscal stimulus

David Stockman Trumps Efforts To Drain The Swamp

David Stockman – Trump Will Create A Debt Crisis Like Never Before – 28 Feb 17 | Gazunda

David Stockman – Global Deflation As A Result Of Massive Over-investment – 9 Feb 16 | Gazunda

David Stockman Speaks on Shakeup Expected At The White House. #TheWhiteHouse

David Stockman: We are at peak debt headed for a recession

David Stockman on Trump’s infrastructure spending

RTD News: “A 20 Trillion Ticking Time Bomb…” – David Stockman

David Stockman: We have a massive bubble in the market

David Stockman -Trump Can’t Stop Market Crash Predicts Reagan’s Budget Director

Stockman: U.S. election is Brexit on steroids

[74] David Stockman | One Big Fat Ugly Bubble

David Stockman: Lester Holt was in the tank for Hillary Clinton

Stockman: Janet Yellen is a clueless economist

David Stockman: What the Fed and the Feds Have Done to Us, and How to Reverse It

David Stockman-We Are Nearing the End

[youtube-https://www.youtube.com/watch?v=5exbO-Ros2Q]

David Stockman: Why a Trump Presidency Is Very Possible

What Trump Should Do – With David Stockman

David Stockman Bubbles, Economic Collapse Coming 1

Robert Kiyosaki David Stockman discuss the biggest financial crisis in US history present,future

David Stockman: The US Is Fiscally, Morally, Intellectually Bankrupt

RTD News: “There Will Be No Rescue Out Of Washington This Time” – David Stockman

David Stockman – Conversations with Casey

How Crony Capitalism Corrupts the Free Market | David Stockman

The Forgotten Cause of Sound Money | David Stockman

Stockman: Market Will Not Be Pretty Under Trump

[Ed. Note: To see exactly what this former Reagan insider has to say about Trump and specifically what he believes must be done to drain the swamp, David Stockman is sending out a copy of his book Trumped! A Nation on the Brink of Ruin… And How to Bring It Back out to any American willing to listen. To learn how to get your free copy CLICK HERE.]

As bonds break a three day win streak and the U.S market hitting new record highs with a trifecta of records, CNBC was roaring about what to expect going forward. The Daily Reckoning contributor David Stockman joined Courtney Reagan to discuss what to expect going forward.

After the CNBC host positioned the critiques offered by David Stockman of the Trump administration she asked whether that would continue given the state of the market. Stockman did not mix words beginning the conversation with, “What’s going on today is complete insanity. The market is apparently pricing in a huge Trump stimulus package, when if you just look at the real world out there the only thing that is going to happen is a fiscal bloodbath and a White House train wreck like never before in U.S history.

How much more evidence do these so called traders need? Trump is lost in Twitter-land and he is out of control. He is turning out to be a complete jackass in the Oval Office. Co-President Bannon is off the deep end on terrorism, travel bans, Mexican walls, immigrant bashing and protectionism.”

David Stockman is a former Reagan Administration official who was the Office of Management and Budget Director. He also served as a two-term Congressman from the great state of Michigan. His latest book, Trumped! A Nation on the Brink of Ruin… And How to Bring It Back is out now. It offers his insight and exclusive analysis on exactly what the newly elected president must do in order to succeed in the White House. To get your own FREE copy, CLICK HERE to learn how.

“[They are] having nothing to do with the economic agenda and Trump has got an empty economic bench. He’s got no Secretary of the Treasury, no Office of Management and Budget, no Council of Economic Advisor Chairman. By this time, when I was there with the Reagan Administration, the plan was ready to go and he was going to Congress within a couple of days into February. We have a debt ceiling freight train coming down the road which will hit March 15 and then the cash will start running out and the system will be on edge. All of the continuing resolutions expire in April.”

“They are going to spend the year trying to repeal and replace Obamacare and it will be a fiasco. Nothing is going to happen this year. I don’t even think they can pass the budget resolution. There is going to be no tax action this year. If there is any bill next year it is going to be deficit neutral. Which means it is not going to add $15 to earnings like these crazy people expect.”

“Why would you be trading in this market, with this kind of chaos emerging everywhere at twenty six times trailing earnings? That’s where we are. It is completely crazy and it is only a question of how many more days or weeks that this kind of fantasy land can last.”

David Stockman Market In Text 2

Courtney Reagan then pressed back asking, “At what point do you give in and admit that [Trump] is atypical but maybe he could get things done? I mean, look at all of the CEO’s that Trump has met with.” The former Reagan insider remarked that, “CEO’s come and go with every president. They came in with Reagan, they tell a president what they want to hear. These guys are just selling the song and dance about how many jobs they’re going to create in the next five years. They have no clue.”

“If we have a recession in the next five years, which surely we will, because recessions have not been outlawed and we haven’t had one for ten years. None of this stuff is going to happen. This is meaningless. What is meaningful is that Trump is out of control. This tweeting and getting off track on all of this terrorism stuff. This is a sign that there is going to be no governing coalition and that all of this fiscal stimulus expected by Wall Street is a complete fantasy. It can’t happen.”

Rickards’ Reaction: A Model For Predicting Financial Collapse

Jim Rickards’ reveals the only model you need to safe guard your wealth from the next financial crisis. In this 5-part exclusive framework a former Wall Street and intelligence community insider breaks down his analysis into a model to warm of impending financial collapse. The model is designed to offer the easiest and fastest way to apply hard facts, science and good sound analysis. Sign up for the Daily Reckoning e-letter today and receive your FREE report.

We will NOT share your email address

When CNBC then turned over the camera to a day trader who asked about the positive sentiment that exists within the market regarding Trump and his plan to deregulate Stockman stayed true to message. “Trump is just putting out press releases and the guise of Executive Orders. All of this stuff is going to get litigated, it goes through a rulemaking process, that takes years. So the relief on regulation will be important, but it way down the road and it won’t be that impactful.”

“The second thing, is we’re at 92 months in this expansion already. It is running out of gas. You can’t expect it to run forever. That is seemingly what is priced in by the market.”

“The third thing is, we have a giant debt and deficit problem. The debt ceiling is coming back into play it will be 20 trillion when it freezes in on March 15th. I’ll tell you this, people aren’t paying attention to the fact that Trump will never get a debt ceiling increase through the Congress without a government shutdown. When that happens it is, “bar the doors” because nobody is expecting it. We need to look at the facts, not the hopes.”

As the CNBC affirmed, it is not clear that the market is just going to drop tomorrow and history will repeat itself, Stockman repositioned. “The market it clearly factoring in a big Trump stimulus and I think anybody down there would admit if it doesn’t happen, if we get zero tax cuts, if we get a fiscal bloodbath in the Washington I am describing – the market is not going to stay where it is today at these absurd multiples of earnings.”

“This is all based on the idea that there is going to be a surge of economic growth and that profits are going to come back from about $89 a share by basis, where they were during the last twelve months, to a potential $110 or $130. My argument is there is not going to be any economic rebound. There is not going to be any profit surge. Therefore the market will be repricing dramatically downward once it is clear.”

Another CNBC analysis asked why – with the positive trends in jobless claims, manufacturing increasing, interest rates at near record lows – would the market not close out the year near record levels? “The market is assuming that profits are going to rebound. That we are not going to have any market dislocation and that nobody is going to be pushing back on Trump. It is hard to understand how people watching the day-to-day action down there could believe that.”

“Everybody is pushing back on Trump, he can’t even get his cabinet approved. He’s going to be bogged down in a Supreme Court fight, he’s going to be bogged down in a fight over a ridiculous travel ban. The idea that there is not going to be pushback is naive. What there is going to be is a train wreck. It is already clear that the people in the White House have no idea what they’re doing and it is only a matter of time before this honeymoon goodwill evaporates and the politicians get down to doing what they do best. Which is to undermine and obstruct anything that might be positive.”

When finally asked whether there is anything positive that would make him turn bullish in the near future he responded affirmably, “No, because Trump is inheriting thirty years of a disaster created by his predecessors. We have to take this $20 trillion of debt seriously. There is $10 trillion more built in under current policy, and that is without a dime of Trump tax cuts, infrastructure or stimulus. There is going to be a tremendous fiscal crisis in the years ahead which will prevent any of the kind of action that the “stimulus junkies” are looking for.

To catch the full interview with David Stockman on CNBC click here. If you would like to claim your own free copy of David Stockman’s bestseller Trumped! Click here to learn how.

Thanks for reading,

Craig Wilson, @craig_wilson7
for the Daily Reckoning

https://dailyreckoning.com/stockman-market-under-trump/

David Stockman

From Wikipedia, the free encyclopedia
David Stockman
David Stockman by Gage Skidmore.jpg
Director of the Office of Management and Budget
In office
January 21, 1981 – August 1, 1985
President Ronald Reagan
Preceded by Jim McIntyre
Succeeded by Jim Miller
Member of the U.S. House of Representatives
from Michigan‘s 4th district
In office
January 3, 1977 – January 21, 1981
Preceded by Edward Hutchinson
Succeeded by Mark Siljander
Personal details
Born David Alan Stockman
November 10, 1946 (age 70)
Fort Hood, Texas, U.S.
Political party Republican
Spouse(s) Jennifer Blei (1983–present)[1]
Education Michigan State University (BA)
Harvard University
Website Official website

David Alan Stockman (born November 10, 1946) is a former businessman and U.S. politician who served as a Republican U.S. Representative from the state of Michigan (1977–1981) and as the Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan.

Early life and education

Stockman was born in Fort Hood, Texas, the son of Allen Stockman, a fruit farmer, and Carol (née Bartz).[2] He is of German descent, and his family’s surname was originally “Stockmann”.[3] He was raised in a conservative family, and his maternal grandfather, William Bartz, was a Republican county treasurer for 30 years.[4][5] Stockman was educated at public schools in Stevensville, Michigan. He graduated from Lakeshore High School in 1964[6] and received a B.A. in History from Michigan State University in 1968. He was a graduate student at Harvard University, 1968–1970 studying theology

Political career

Stockman’s Congressional portrait

He served as special assistant to United States Representative and 1980 U.S. presidential candidate John Anderson of Illinois, 1970–1972, and was executive director, United States House of Representatives Republican Conference, 1972–1975.

Congress

Stockman was elected to the United States House of Representatives for the 95th Congress and was reelected in two subsequent elections, serving from January 3, 1977, until his resignation January 21, 1981, to accept appointment as Director of the Office of Management and Budget for U.S. President Ronald Reagan.

Office of Management and Budget

Stockman was one of the most controversial OMB directors ever appointed, also known as the “Father of Reaganomics.” He resigned in August 1985. Committed to the doctrine of supply-side economics, he assisted in the passing of the “Reagan Budget” (the Gramm-Latta Budget), which Stockman hoped would curtail the “welfare state“. He thus gained a reputation as a tough negotiator with House Speaker Tip O’Neill‘s Democratic-controlled House of Representatives and Majority Leader Howard Baker‘s Republican-controlled Senate. During this period, Stockman became well known to the public during the contentious political wrangling concerning the role of the federal government in American society.

Stockman’s influence within the Reagan Administration was weakened after the Atlantic Monthly magazine published the infamous 18,246 word article, “The Education of David Stockman”,[7] in its December 1981 issue, based on lengthy interviews Stockman gave to reporter William Greider.

Stockman was quoted as referring to Reagan’s tax act in these terms: “I mean, Kemp-Roth [Reagan’s 1981 tax cut] was always a Trojan horse to bring down the top rate…. It’s kind of hard to sell ‘trickle down.’ So the supply-side formula was the only way to get a tax policy that was really ‘trickle down.’ Supply-side is ‘trickle-down’ theory.”[7] Of the budget process during his first year on the job, Stockman was quoted as saying, “None of us really understands what’s going on with all these numbers,” which was used as the subtitle of the article.[7]

After “being taken to the woodshed by the president” because of his candor with Greider, Stockman became concerned with the projected trend of increasingly large federal deficits and the rapidly expanding national debt. On 1 August 1985, he resigned from OMB and later wrote a memoir of his experience in the Reagan Administration titled The Triumph of Politics: Why the Reagan Revolution Failed in which he specifically criticized the failure of congressional Republicans to endorse a reduction of government spending to offset large tax decreases to avoid the creation of large deficits and an increasing national debt.

Fiscal legacy

President Jimmy Carter’s last fiscal year budget ended with a $79.0 billion budget deficit (and a national debt of $907,701,000,000 [8] as of September 30, 1980), ending during the period of David Stockman’s and Ronald Reagan’s first year in office, on October 1, 1981.[9] The gross federal national debt had just increased to $1.0 trillion during October 1981 ($998 billion on 30 September 1981, up from $907.7 billion during the last full fiscal year of the Carter administration[8]).

By 30 September 1985, four and a half years into the Reagan administration and shortly after Stockman’s resignation from the OMB during August 1985, the gross federal debt was $1.8 trillion.[8] Stockman’s OMB work within the administration during 1981 until August 1985 was dedicated to negotiating with the Senate and House about the next fiscal year’s budget, executed later during the autumn of 1985, which resulted in the national debt becoming $2.1 trillion at fiscal year end 30 September 1986.[8] Reaganomics had just begun.

In 1981, Stockman received the Samuel S. Beard Award for Greatest Public Service by an Individual 35 Years or Under, an award given out annually by Jefferson Awards.[10]

Business career

After leaving government, Stockman joined the Wall St. investment bank Salomon Brothers and later became a partner of the New York–based private equity company, the Blackstone Group.[11]:125–127 His record was mixed at Blackstone, with some very good investments, such as American Axle, but also failures, including Haynes International and Republic Technologies.[11]:144–147 During 1999, after Blackstone CEO Stephen A. Schwarzman curtailed Stockman’s role in managing the investments he had developed,[11]:146 Stockman resigned from Blackstone to start his own private equity fund company, Heartland Industrial Partners, L.P., based in Greenwich, Connecticut.[12]

On the strength of his investment record at Blackstone, Stockman and his partners raised $1.3 billion of equity from institutional and other investors. With Stockman’s guidance, Heartland used a contrarian investment strategy, buying controlling interests in companies operating in sectors of the U.S. economy that were attracting the least amount of new equity: auto parts and textiles. With the help of about $9 billion in Wall Street debt financing, Heartland completed more than 20 transactions in less than 2 years to create four portfolio companies: Springs Industries, Metaldyne, Collins & Aikman, and TriMas. Several major investments performed very poorly, however. Collins & Aikman filed for bankruptcy during 2005 and when Heartland sold Metaldyne to Asahi Tec Corp. during 2006, Heartland lost most of the $340 million of equity it had invested in the business.[13]

Collins & Aikman Corp.

During August 2003, Stockman became CEO of Collins & Aikman Corporation, a Detroit-based manufacturer of automotive interior components. He was ousted from that job days before Collins & Aikman filed for bankruptcy under Chapter 11 on May 17, 2005.

Criminal and civil charges

On March 26, 2007, federal prosecutors in Manhattan indicted Stockman in “a scheme… to defraud [Collins & Aikman]’s investors, banks and creditors by manipulating C&A’s reported revenues and earnings.” The United States Securities and Exchange Commission also brought civil charges against Stockman related to actions that he performed while CEO of Collins & Aikman.[14] Stockman suffered a personal financial loss, over $13 million, along with losses suffered by as many as 15,000 Collins & Aikman employees worldwide.

Stockman said in a statement posted on his law firm’s website that the company’s end was the consequence of an industry decline, not due to fraud.[15] On January 9, 2009, the US Attorney’s Office announced that it did not intend to prosecute Stockman for this case.[16]

Web site

In March 2014 Stockman launched a web based daily periodical, David Stockman’s Contra Corner featuring both his own articles and those from leading contrarian thinkers on geopolitics, economics, and finance.

Personal life

Stockman lives in the Upper East Side of Manhattan in New York City.[12] He is married to Jennifer Blei Stockman and is the father of two children, Rachel and Victoria. Jennifer Blei Stockman is a chairwoman emerita of the Republican Majority for Choice,[17] and President of the Solomon R. Guggenheim Foundation Board of Trustees.[18] In 2013, Stockman signed an amicus brief to the Supreme Court in favor of same-sex marriage.[19]

Quotes

  • “[Social Security] has to be means-tested. And Medicare needs to be means-tested […] Let the Bush tax cuts expire. Let the capital gains go back to the same rate as ordinary income.”[20]
  • “The Republican Party has totally abdicated its job in our democracy, which is to act as the guardian of fiscal discipline and responsibility. They’re on an anti-tax jihad — one that benefits the prosperous classes.”[21]
  • “I invest in anything that Bernanke can’t destroy, including gold, canned beans, bottled water and flashlight batteries.”[22]
  • “Ninety-two percent of the wealth is owned by five percent of the people.” (Bloomberg TV 2013)
  • “[T]he Republican Party was hijacked by modern imperialists during the Reagan era. As a consequence, the conservative party cannot perform its natural function as watchdog of the public purse because it is constantly seeking legislative action to provision a vast war machine of invasion and occupation.” [23]

Bibliography

  • The Reagan Economic Plan, 1981
  • The Triumph of Politics: Why the Reagan Revolution Failed, Harper & Row, 1986, ISBN 9780060155605
  • The Great Deformation: The Corruption of Capitalism in America, PublicAffairs, 2013, ISBN 9781586489120
  • Trumped!: A Nation on the Brink of Ruin, and How to Bring it Back, 2016

References

  1. Jump up^ “LOSING THE BATTLES AND WINNING THE WAR”. Lexington Herald-Leader. April 7, 1985.
  2. Jump up^ Hunter, Marjorie (December 12, 1980). “Office of Management and Budget David Alan Stockman; Strong Support From Kemp Chosen by House Republicans Views on Economy”. The New York Times.
  3. Jump up^ “News65”. 19 June 1998.
  4. Jump up^ “The Tuscaloosa News – Google News Archive Search”.
  5. Jump up^ “The Montreal Gazette – Google News Archive Search”.
  6. Jump up^ Heibutzki, Ralph (2012-06-04). “Stockman Surprise Speaker at Lakeshore’s Graduation”. The Herald-Palladium. Retrieved 2012-06-04.
  7. ^ Jump up to:a b c William Greider (December 1981). “The Education of David Stockman”. The Atlantic Online.
  8. ^ Jump up to:a b c d Treasury Department’s Historical Debt Outstanding – Annual 1950 – 1999
  9. Jump up^ Office of Management and Budget Historical Tablessee Table 1.1 (Excel Spreadsheet)
  10. Jump up^ “Jefferson Awards”. Jefferson Awards.
  11. ^ Jump up to:a b c David Carey & John E. Morris (2001). King of Capital: The Remarkable Rise, Fall and Rise Again of Steve Schwarzman and Blackstone. Crown.
  12. ^ Jump up to:a b “Collins & Aikman seeks to emerge from bankruptcy,” Bloomberg News article by Jeff Bennett, published in the newspaper The Advocate of Stamford and (identical version, perhaps with changes by the local editor in the common business section for both newspapers) in the Greenwich Time on September 5, 2006, page A7, The Advocate
  13. Jump up^ David Carey and Lou Whiteman, “PE firms find buyer for Metaldyne,” The Deal, Sept. 1, 2006.
  14. Jump up^ Levin, Doris (29 March 2007). “Stockman Outsmarts Self in Detroit”. Bloomberg. Retrieved 19 September 2014.
  15. Jump up^ “Ex-Collins Chief David Stockman Charged With Fraud (Update10)”. Bloomberg. March 26, 2007. Retrieved 2010-08-02.
  16. Jump up^ “Fraud charges dropped against ex-Reagan aide David Stockman”. Chicago Tribune. 10 January 2009. Retrieved 19 September 2014.
  17. Jump up^ About Us Republican Majority for Choice
  18. Jump up^ Trustees, Solomon R. Guggenheim Foundation
  19. Jump up^ [1]
  20. Jump up^ “Why David Stockman Isn’t buying it”. CBS News. March 2, 2012.
  21. Jump up^ Dickinson, Tim (Nov 9, 2011). “How the GOP Became the Party of the Rich”. Rolling Stone. Retrieved 2011-11-10.
  22. Jump up^ David Stockman: I Invest In Anything Bernanke Can’t Destroy, John Carney, CNBC, October 6, 2010
  23. Jump up^ Stockman, David (2013). The Great Deformation — the corruption of capitalism in America. PublicAffairs. p. 688. ISBN 978-1586489120.

External links

United States House of Representatives
Preceded by
Edward Hutchinson
Member of the U.S. House of Representatives
from Michigan’s 4th congressional district

1977–1981
Succeeded by
Mark Siljander
Political offices
Preceded by
Jim McIntyre
Director of the Office of Management and Budget
1981–1985
Succeeded by
Jim Miller
Read Full Post | Make a Comment ( None so far )

Progressive Interventionist Neoconservative Warmonger Senator John McCain — Let The NATO Nations Defend Themselves and Pay For Their Own Defense — Progressive Democrats and Republicans Have Given The American People The Warfare and Welfare State and Replaced The Constitutional American Republic With A Declining and Falling American Empire of The Two Party Tyranny — $20 Trillion in Debt and Unfunced Liabilities Exceeding $210 Trillion and Growing — A Day of Reckoning — United States Is Bankrupt — Steve Bannon and President Trump Know It — Videos

Posted on March 16, 2017. Filed under: Articles, Banking, Blogroll, Books, Business, Communications, Computers, Congress, conservatives, Constitution, Corruption, Culture, Demographics, Diasters, Documentary, Economics, History of Economic Thought, Investments, Macroeconomics, Microeconomics, Monetary Policy, Money, Non-Fiction, Technology, Unemployment, Video, War, Wealth, Weather, Welfare, Wisdom, World War II, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , |

 “It is our true policy to steer clear of permanent alliance with any portion of the foreign world”

~George Washington

 “Peace, commerce, and honest friendship with all nations-entangling alliances with none.”

~Thomas Jefferson

Image result for quotes george washington on steer clear of permanent alliancesImage result for quotes george washington on alliances

Image result for NATO map

Image result for NATO list of countries and date joined

Image result for NATO list of countries and date joined

Image result for NATO list of countries and date joined

Image result for NATO list of countries and date joined

Image result for quotes george washington on alliances

Image result for quotes george washington on alliancesImage result for thomas jefferson on debt burdening future generationsImage result for thomas jefferson on debt burdening future generations

National Debt Clock

Image result

Sen McCain on Sen. Paul: “The Senator from Kentucky is now working for Vladimir Putin.” (C-SPAN)

Rand Paul ‘John McCain is proof we need term limits’

[youtube3=https://www.youtube.com/watch?v=AGT4wCmKjas]

RAND PAUL VS. JOHN MCCAIN: RAND REACTS TO MCCAIN’S RUSSIAN AGENT CLAIM!!

Rand Paul: McCain ‘past his prime,’ maybe ‘unhinged’

Pence: Time For Allies To Pay Fair Share For NATO

Other NATO members need to pay their fair share?

Trump complains at NATO countries for not paying defense share

Congressman Ron Paul, MD – We’ve Been NeoConned

Steve Bannon Lays Out His AMAZING Political Philosophy

Published on Nov 18, 2016

Speech by Stephen K. Bannon (Steve Bannon), Donald Trump’s senior strategic advisor and architect of his winning 2016 election. In this speech delivered to the Liberty Restoration Foundation, Bannon layed out the poliitical philosophy both he and Trump embrace, and which appealed to the American people in the election. It is conservative, perhaps explaining why the political liberal left has resorted to evidently incorrect allegations of antisemitism or racism to try to derail his appointment. Bannon was a Hollywood producer who invested in the Seinfeld comedy TV series, and later became the chair of the Brietbart News Service, expanding it into one of the leading news sources nationally, as an alternative to liberal media outlets that previously dominated US media. He joined the Trump campaign in June 2016, leading him to victory and the White House. Do you think that Bannon is racist, as the democrats have alleged?

Deficits, Debts and Unfunded Liabilities: The Consequences of Excessive Government Spending

Uploaded on May 10, 2010

Huge budget deficits and record levels of national debt are getting a lot of attention, but this video explains that unfunded liabilities for entitlement programs are Americas real red-ink challenge. More important, this CF&P mini-documentary reveals that deficits and debt are symptoms of the real problem of an excessive burden of government spending. http://www.freedomandprosperity.org

III – Unfunded Liabilities

Rhett Talks – Is the United States Bankrupt?

Laurence Kotlikoff at MTSU November 5, 2015

‘US hides real debt, in worse shape than Greece’

Unfunded Liabilities: James Cox of Silver Bullion interviews Professor Kotlikoff

The Actual Fiscal Gap Is Approximately $210 Trillion Dollars With All The Unfunded Liabilities, The Average Person, Every Man, Woman, And Child Owes……$666,666.667

8 years ago, when Obama took office, the Debt Clock was at 9 TRILLION Dollars.
Today, the US Debt Clock at almost 20 TRILLION Dollars.
http://www.usdebtclock.org/

This is an 87% increase.

The actual Fiscal Gap is approximately $210 TRILLION Dollars.
with all the unfunded liabilities.

With the population of the US is over 315 MILLION People, this means that the average person, every man, woman, and child owes……$666,666.667

Where does this lead?
Look at Brazil, Argentina, Cyprus, Greece, Italy,……

Who ends up with the bill?
THE TAXPAYER!

http://investmentwatchblog.com/the-actual-fiscal-gap-is-approximately-210-trillion-dollars-with-all-the-unfunded-liabilities-the-average-person-every-man-woman-and-child-owes-666666-667/

17 Nobel Laureates and 1200+ Economists Agree with Ben Carson re U.S. Fiscal Gap

I cover economics, personal, national, and international.

Michelle Lee, a fact checker with the Washington Post, just posted a long and, to my mind, highly political column. Her column, read carefully, undermines Presidential candidate Ben Carson’s absolutely correct claim, made in announcing his candidacy, that the true measure of U.S. fiscal debt is not the $13 trillion our government reports as its debt. Instead, our true debt is over $200 trillion. Obviously, most of this true debt has been kept off the books by our politicians.

In this column, I’m going to defend Dr. Carson’s statement. But I want to point out that I don’t know Dr. Carson. I have never spoken with him. And I don’t yet know enough about Dr. Carson’s positions to have a view about his overall suitability for President. I am, however, impressed that out of the gate he is talking about the right measure of our nation’s fiscal condition.

I spoke at length to Michelle Lee prior to her writing her column. She told me she was a fact checker. But when fact checking turns into disguised political commentary, there’s a problem. Fact checkers are supposed to check the facts with experts. When it comes to economics, the experts are PhD economists, not political organizations or people, without real economics training, parading as economists, both of which she quotes in undermining Dr. Carson’s credibility.

Now let me turn to the substance. In referring to $211 trillion in unfunded mandates, Dr. Carson was referencing my calculation of the U.S. fiscal gap. As I explained in a NY Times op ed, the U.S. fiscal gap is $210 trillion. So Dr. Carson was off by $1 trillion – by less than one half of one percent.

The fiscal gap is the present value of all projected future expenditures less the present value of all projected future taxes. The fiscal gap is calculated over the infinite horizon. But since future expenditures and taxes far off in the future are being discounted, their contribution to the fiscal gap is smaller the farther out one goes. The $210 trillion figure is based on the Congressional Budget Office’s July 2014 Alternative Fiscal Scenario projections, which I extended beyond their 75-year horizon.

Dr. Carson referenced $211 trillion as the size of “unfunded mandates.” Michelle Lee correctly points out that Dr. Carson was referencing the U.S. fiscal gap, not the present value of mandatory spending. What she knew (because I told her), but failed to say, is that the present value of mandatory spending is far larger than $210 trillion because the fiscal gap is a net, not a gross number.

Michelle Lee is not a PhD economist. Nor is Bruce Barlett, whose truly absurd statement about the debt being an asset she quotes. Yes, it’s an asset, but it’s an asset that young and future generations must pay off. Social Security benefits are also an asset to their recipients, but again, they must be paid off by people who aren’t getting the benefits.

Michelle Lee apparently takes Bruce Bartell’s views more seriously than the views of 17 Nobel Laureates in economics and over 1200 PhD economists from MIT, Harvard, Stanford, Chicago, Berkeley, Yale, Columbia, Penn, and lesser known universities and colleges around the country. Each of these economists has endorsed The Inform Act, a bi-partisan bill that requires the CBO, GAO, and OMB to do infinite horizon fiscal gap accounting on a routine and ongoing basis.

https://www.forbes.com/sites/kotlikoff/2015/05/13/17-nobel-laureates-and-1200-economists-agree-with-ben-carson-re-u-s-fiscal-gap/#46c13e954d17

National Debt

What You’ll Find

Comprehensive and meticulously documented facts about the national debt. Learn about various measures of the national debt, contributing factors, consequences, and more. For example:


Citation Generator

Introductory Notes

In keeping with the practice of the Congressional Budget Office and other federal agencies that deal with budget policy, many of the federal debt, spending, and revenue figures in this research are expressed as a portion of gross domestic product (GDP). This is because debates about the size of government and the effects of its debt are frequently centered upon how much of a nation’s economy is consumed by government. This measure also accounts for population growth, some of the effects of inflation, and the relative capacity of government to service its debt.

However, the federal government does not have the entire U.S. economy at its disposal to service federal debt. The private sector, which produces the goods and services that comprise most of the economy, utilizes some of these resources, and local and state governments also consume some of the nation’s GDP. Hence, this research sometimes expresses federal debt as a portion of annual federal revenues. This is a more direct measure of the federal government’s capacity to service its debt.

In keeping with Just Facts’ Standards of Credibility, all graphs in this research show the full range of available data, and all facts are cited based upon availability and relevance, not to slant results by singling out specific years that are different from others.

Click here for a video that summarizes some of the key facts in this research.

Quantifying the National Debt

* As of March 1, 2017, the official debt of the United States government is $19.9 trillion ($19,920,418,771,289).[1] This amounts to:

  • $61,365 for every person living in the U.S.[2]
  • $158,326 for every household in the U.S.[3]
  • 106% of the U.S. gross domestic product.[4]
  • 560% of annual federal revenues.[5]
Debt as a Portion of the Economy

[6]

* Publicly traded companies are legally required to account for “explicit” and “implicit” future obligations such as employee pensions and retirement benefits.[7] [8] [9] The federal budget, which is the “government’s primary financial planning and control tool,” is not bound by this rule.[10] [11]

* At the close of the federal government’s 2016 fiscal year (September 30, 2016), the federal government had roughly:

  • $8.5 trillion ($8,542,000,000,000) in liabilities that are not accounted for in the publicly held national debt, such as federal employee retirement benefits, accounts payable, and environmental/disposal liabilities.[12]
  • $29.0 trillion ($29,038,000,000,000) in obligations for current Social Security participants above and beyond projected revenues from their payroll and benefit taxes, certain transfers from the general fund of the U.S. Treasury, and assets of the Social Security trust fund.[13] [14]
  • $32.9 trillion ($32,900,000,000,000) in obligations for current Medicare participants above and beyond projected revenues from their payroll taxes, benefit taxes, premium payments, and assets of the Medicare trust fund.[15] [16]

* The figures above are determined in a manner that approximates how publicly traded companies are required to calculate their liabilities and obligations.[17] [18] [19] The obligations for Social Security and Medicare represent how much money must be immediately placed in interest-bearing investments to cover the projected shortfalls between dedicated revenues and expenditures for all current participants in these programs (both taxpayers and beneficiaries).[20] [21] [22]

* Combining the figures above with the national debt and subtracting the value of federal assets, the federal government had about $84.3 trillion ($84,306,000,000,000) in debts, liabilities, and unfunded obligations at the close of its 2016 fiscal year.[23]

* This $84.3 trillion shortfall is 93% of the combined net worth of all U.S. households and nonprofit organizations, including all assets in savings, real estate, corporate stocks, private businesses, and consumer durable goods such as automobiles and furniture.[24] [25]

* This shortfall equates to:

  • $260,382 for every person living in the U.S.[26]
  • $670,058 for every household in the U.S.[27]
  • 451% of the U.S. gross domestic product.[28]
  • 2,370% of annual federal revenues.[29]

* These figures do not account for the future costs implied by any current policies except those of the Social Security and Medicare programs.[30]

* These figures are based upon current federal law and “a wide range of complex assumptions” made by federal agencies.[31] Regarding this:

  • The Board of Social Security Trustees has stated that “significant uncertainty” surrounds the “best estimates” of future circumstances.”[32]
  • The Board of Medicare Trustees has stated that the program’s financial projections “are highly uncertain, especially when looking out more than several decades.”
  • The Board of Medicare Trustees has stated that the program’s long-term costs may be “substantially higher” than projected under current law. This is because current law includes the effects of the Affordable Care Act, which will cut Medicare prices for “many” healthcare services to “less than half of their level” under prior law. Per the Trustees:
Absent an unprecedented change in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services will fall increasingly short of the costs of providing these services. … Before such an outcome would occur, lawmakers would likely intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.[33]

Causes of the National Debt

Spending and Taxes

Current Expenditures and Receipts

† To measure the entirety of government expenditures and receipts, “total” instead of “current” figures are preferable, but such data (shown in the next graph) only extends back to 1960.[34]

‡ In 2015, receipts consisted of: 97% taxes; 2% premiums, settlements, donations, fines, fees, & penalties; 1% interest & dividends.[35]

[36]

* Data from the graph above:

Year Receipts
(Portion of GDP)
Expenditures
(Portion of GDP)
1930 3% 3%
1940 8% 9%
1950 16% 16%
1960 17% 17%
1970 17% 20%
1980 19% 22%
1990 18% 22%
2000 20% 19%
2010 16% 25%
2015 19% 22%

Total Expenditures and Receipts

[37]

* Data from the graph above:

Year Receipts
(Portion of GDP)
Expenditures
(Portion of GDP)
1960 18% 19%
1970 18% 21%
1980 19% 23%
1990 18% 22%
2000 20% 19%
2010 16% 27%
2015 19% 22%

Spending Distribution

Current Expenditures by Function

† Social programs include income security, healthcare, education, housing, and recreation.

‡ National defense includes military spending and veterans’ benefits.

§ General government and debt service includes the executive & legislative branches, tax collection, financial management, and interest payments.

# Economic affairs includes transportation, general economic & labor affairs, agriculture, natural resources, energy, and space. (This excludes spending for infrastructure projects such as new highways, which is not accounted for in this graph.[38])

£ Public order and safety includes police, fire, law courts, prisons, and immigration enforcement.

[39]

* Data from the graph above:

Category Portion of Total Federal Spending
1960 1970 1980 1990 2000 2010 2015
Social Programs 21% 32% 45% 44% 54% 61% 63%
National Defense 53% 42% 26% 25% 19% 20% 19%
General Government & Debt Service 19% 18% 21% 25% 21% 13% 13%
Economic Affairs & Infrastructure 6% 7% 7% 5% 5% 4% 4%
Public Order & Safety 0% 0% 1% 1% 1% 1% 1%

Tax Distribution

Effective Tax Rates by Income

NOTE: This data does not account for 7% of federal revenues that could not be allocated to households by income group.

[40]

* Data from the graph above:

Average Effective Federal Tax Burdens (2013)
Income Group Household Income Tax Rate Taxes Paid
Lowest 20% $25,400 3.3% $838
Second 20% $47,400 8.4% $3,982
Middle 20% $69,700 12.8% $8,922
Fourth 20% $103,700 17.0% $17,629
Highest 20% $265,000 26.3% $69,695

* Breakdown of the highest 20%:

Income Group Household Income Tax Rate Taxes Paid
81st – 90th $147,100 20.7% $30,450
91st – 95th $201,400 23.0% $46,322
96th – 99th $326,800 26.3% $85,948
Top 1 % $1,571,600 34.0% $534,344

Consequences

* As detailed in publications of the Congressional Budget Office, the Brookings Institution, and Princeton University Press, the following are some potential consequences of unchecked government debt:

  • reduced “future national income and living standards.”[41] [42] [43]
  • “reductions in spending” on “government programs.”[44]
  • “higher marginal tax rates.”[45]
  • “higher inflation” that increases “the size of future budget deficits” and decreases the “the purchasing power” of citizens’ savings and income.”[46] [47]
  • restricted “ability of policymakers to use fiscal policy to respond to unexpected challenges, such as economic downturns or international crises.”[48]
  • “losses for mutual funds, pension funds, insurance companies, banks, and other holders of federal debt.”[49]
  • increased “probability of a fiscal crisis in which investors would lose confidence in the government’s ability to manage its budget, and the government would be forced to pay much more to borrow money.”[50] [51]

* In 2012, the Journal of Economic Perspectives published a paper about the economic consequences of government debt. Using 2,000+ data points on national debt and economic growth in 20 advanced economies (such as the United States, France, and Japan) from 1800–2009, the authors found that countries with national debts above 90% of GDP averaged 34% less real annual economic growth than when their debts were below 90% of GDP.[52]

* The United States exceeded a debt/GDP level of 90% in the second quarter of 2010.[53]

* Per the textbook Microeconomics for Today:

GDP per capita provides a general index of a country’s standard of living. Countries with low GDP per capita and slow growth in GDP per capita are less able to satisfy basic needs for food, shelter, clothing, education, and health.[54]

* In 2013, the Political Economy Research Institute at the University of Massachusetts, Amherst, published a working paper about the economic consequences of government debt. Using data on national debt and economic growth in 20 advanced economies from 1946-2009, the authors found that countries with national debts over 90% of GDP averaged:

  • 31% less real annual economic growth than countries with debts from 60% to 90% of GDP,
  • 29% less real annual economic growth than countries with debts from 30% to 60% of GDP,
  • and 48% less real annual economic growth than countries with debts from 0% to 30% of GDP.[55]

* The authors of the above-cited papers have engaged in a heated dispute about the results of their respective papers and the effects of government debt on economic growth. Facts about these issues can be found in the Just Facts Daily article, “Do large national debts harm economies?

Politics

Responsibility

* The U.S. Constitution vests Congress with the powers to tax, spend, and pay the debts of the federal government. Legislation to carry out these functions must either be:

  • passed by majorities in both houses of Congress and approved by the President; or
  • passed by majorities in both houses of Congress, vetoed by the President, and then passed by two-thirds of both houses of Congress; or
  • passed by majorities in both houses of Congress and left unaddressed by the President for ten days.[56]

* Other factors impacting the national debt include but are not limited to legislation passed by previous congresses and presidents,[57] economic cycles, terrorist attacks, natural disasters, demographics, and the actions of U.S. citizens and foreign governments.[58]


Current Policies

* In 2014, the Congressional Budget Office (CBO) projected the debt that the U.S. government would accumulate under current federal policies.[59] The projection used the following assumptions:

  • Unemployment will incrementally decline from 6.8% in 2014 to 5.8% in 2018 and 5.3% in 2027, where it will remain thereafter.[60] (For reference, the average of the previous 40 years is 6.5%.[61])
  • GDP growth will incrementally decline from an average rate of 3.4% above the rate of inflation in 2015 to 1.9% in 2021 and remain constant thereafter.[62] (The average of the previous 40 years is 2.9%.[63])
  • Federal revenues (i.e., taxes) will incrementally increase from 17.4% of GDP in 2014 to 18.0% in 2024 and remain constant thereafter.[64] (The average of the previous 40 years is 17.4%.[65])
  • Federal spending will incrementally increase from 20.4% of GDP in 2014 to 23.6% in 2025 and 31.8% in 2040.[66] (The average of the previous 40 years is 20.5%.[67])
  • Payments for Medicare services will undergo scheduled reductions that would likely cause “severe problems with beneficiary access to care.”[68] [69]

* Combining these projections with historical data yields the following results:

Revenues and Spending Under Current Policies

[70]

Debt Under Current Policies

† To measure the entirety of the national debt, it would be preferable to show “gross” debt instead of “publicly held” debt, but this data is not presented in this report. Nonetheless, it would make little difference because the excluded debt primarily resides in federal government trust funds that dwindle and become insolvent during the projection period.[71] Facts regarding why and how the federal government keeps its books in this manner are covered in the section of this research entitled “Government Accounting.”

[72]

* Per CBO, postponing action to stabilize the debt will:

  • punish younger generations of Americans, because most of the burden would fall on them.
  • reward older generations of Americans, because “they would partly or entirely avoid the policy changes needed to stabilize the debt.”
  • “substantially increase the size of the policy adjustments needed to put the budget on a sustainable course.”[73] [74]

* The following Ph.D. economists and political scientists have claimed that the level of national debt during World War II is a good reason to not be overly concerned about the modern national debt:

  • Paul Davidson, editor of the Journal of Post Keynesian Economics and author of The Keynes Solution: The Path to Global Economic Prosperity:[75]
Rather than bankrupting the nation, this large growth in the national debt [during World War II] promoted a prosperous economy. By 1946, the average American household was living much better economically than in the prewar days. Moreover, the children of that Depression–World War II generation were not burdened by having to pay off what then was considered a huge national debt. Instead, for the next quarter century, the economy continued on a path of unprecedented economic growth and prosperity….[76]
  • Douglas J. Amy, professor of politics at Mount Holyoke College:[77]
Conservatives are also wrong when they argue that deficit spending and a large national debt will inevitably undermine economic growth. To see why, we need to simply look back at times when we have run up large deficits and increased the national debt. The best example is World War II when the national debt soared to 120% of GDP—nearly twice the size of today’s debt. This spending not only got us out of the Great Depression but set the stage for a prolonged period of sustained economic growth in the 50s and 60s.[78]
  • Paul Krugman, Nobel Prize-winning economist and Princeton University professor:[79]
Right now, federal debt is about 50% of GDP. So even if we do run these deficits, federal debt as a share of GDP will be substantially less than it was at the end of World War II.
Again, the debt outlook is bad. But we’re not looking at something inconceivable, impossible to deal with; we’re looking at debt levels that a number of advanced countries, the U.S. included, have had in the past, and dealt with.[80]

* In the 40 years that followed the end of World War II (1946–1985):

  • federal spending as a percent of GDP averaged 42% lower than the last year of the war.[81]
  • publicly held debt as a percent of GDP decreased by 72 percentage points.[82]

* In 2010, around the time when the statements above were written, the Congressional Budget Office projected that under current policy and a sustained economic recovery over the next 40 years:

  • federal spending as a percent of GDP will average over 78% higher than in the four decades that followed World War II.[83]
  • publicly held debt as a percent of GDP will rise by 277 percentage points.[84]

Alternative Policies

* As alternatives to the CBO’s current policy projections detailed above, the CBO also ran projections for scenarios such as these:

1) Current law:[85]

  • Federal revenues will incrementally increase from 17.6% of GDP in 2014 to 18.0% in 2020, 19.9% in 2044, and 23.5% in 2084.[86] [87] At this point, federal revenues (i.e., taxes) will be 35% higher than the average of the previous 40 years.[88]
  • Federal spending on all government functions will incrementally increase from 20.4% of GDP in 2014 to 21.5% in 2020, and 26.0% in 2040.[89] At this point, spending will be 27% higher than the average of the previous 40 years.[90]
  • Payments for Medicare services will undergo reductions that will likely cause “severe problems with beneficiary access to care.”[91] [92]

2) Republican Congressman Paul Ryan’s 2014 budget resolution, called the “The Path to Prosperity”:[93]

  • Starting in 2024, Medicare beneficiaries will have a choice to enroll in private plans paid for by Medicare or remain in the traditional Medicare program.[94] Also starting in 2024, the eligibility age for Medicare benefits will incrementally rise to correspond with Social Security’s retirement age.[95] Compared to the projections under the current policy scenario, Medicare spending will be 0.5% lower in 2016, 2% lower in 2020, and 4% lower in 2024.[96]
  • Federal Medicaid spending will be converted to an “allotment that each state could tailor to meet its needs, indexed for inflation and population growth.”[97] The expansion of Medicaid manadated by the Affordable Care Act (a.k.a. Obamacare) will be repealed.[98] Compared to the projections under the current policy scenario, Medicaid spending will be 9% lower in 2016, 19% lower in 2020, and 24% lower in 2024.[99]
  • All federal spending related to Obamacare’s exchange subsidies will be repealed.[100]
  • Spending on all government functions except for interest payments on the national debt will incrementally decline from 18.9% of GDP in 2015 to 16% in 2025 before increasing to 16.4% in 2035.[101] (The average of the previous 40 years is 18.3%).[102]
  • Revenues will increase from 18.2% of GDP in 2015 to 18.4% in 2025, 19% in 2032 and stay constant thereafter.[103] (The average of the previous 40 years is 17.4%.[104])

* Combining historical data on the national debt with CBO’s projections for current policy, current law, and the Ryan plan yields the following results:

Debt Under Different Policies

[105] [106]


Public Opinion

* A poll conducted by NBC News and the Wall Street Journal in February 2011 found that:

  • 80% of Americans are concerned “a great deal” or “quite a bit” about federal budget deficits and the national debt.
  • if the deficit cannot be eliminated by cutting wasteful spending, 35% of Americans prefer to cut important programs while 33% prefer to raise taxes.
  • 22% think cuts in Social Security spending will be needed to “significantly reduce the federal budget deficit,” 49% do not, and 29% have no opinion or are not sure.
  • 18% think cuts in Medicare spending will be needed to “significantly reduce the federal budget deficit,” 54% do not, and 28% have no opinion or are not sure.[107]

* Other than interest on the national debt, most of the long-term growth in federal spending (as a percent of GDP) under the CBO’s current policy and current law scenarios stems from Social Security, Medicare, Medicaid, the Children’s Health Insurance Program, and Affordable Care Act (a.k.a. Obamacare) subsidies.[108]

* A poll conducted in November 2010 by the Associated Press and CNBC found that:

  • 85% of Americans are worried that the national debt “will harm future generations.”
  • 56% think “the shortfalls will spark a major economic crisis in the coming decade.”
  • when asked to choose between two options to balance the budget, 59% prefer to cut unspecified government services, while 30% prefer to raise unspecified taxes.[109]

* A poll conducted in July 2005 by the Associated Press and Ipsos found that:

  • 70% of Americans were worried about the size of the federal deficit.
  • 35% were willing to cut government spending.
  • 18% were willing to raise taxes.
  • 1% were willing to cut government spending and raise taxes.[110]

Congresses

* During the first session of the 113th Congress (January–December 2013), U.S. Representatives and Senators introduced 168 bills that would have reduced spending and 828 bills that would have raised spending.[111]

* The table below quantifies the costs and savings of these bills by political party. This data is provided by the National Taxpayers Union Foundation:

Costs/Savings of Bills Sponsored or Cosponsored

in 2013 by Typical Congressman (in Billions)

Increases Decreases Net Agenda
House Democrats $407 $10 $397
Senate Democrats $22 $3 $18
House Republicans $9 $91 -$83
Senate Republicans $6 $165 -$159

[112] [113]

* Click here to look up any member of Congress and see the annual costs or savings from the legislation he or she has sponsored or cosponsored.

* The table below quantifies the net agendas of the political parties in previous Congresses:

Costs/Savings of Bills Sponsored or Cosponsored in the First

Sessions of Congress by Typical Congressman (in Billions)

2011 2009 2007 2005 2003 2001 1999
House Democrats $497 $500 $547 $547 $402 $262 $34
Senate Democrats $24 $134 $59 $52 $174 $88 $15
House Republicans -$130 -$45 $7 $12 $31 $20 -$5
Senate Republicans -$239 $51 $7 $11 $26 $19 -$324
NOTE: Data not adjusted for inflation.

[114]


Presidents

* In February 2001, Republican President George W. Bush stated:

Many of you have talked about the need to pay down our national debt. I listened, and I agree. We owe it to our children and grandchildren to act now, and I hope you will join me to pay down $2 trillion in debt during the next 10 years. At the end of those 10 years, we will have paid down all the debt that is available to retire. That is more debt, repaid more quickly than has ever been repaid by any nation at any time in history.[115]

* From the time that Congress enacted Bush’s first major economic proposal (June 7, 2001[116]) until the time that he left office (January 20, 2009), the national debt rose from 53% of GDP to 74%, or an average of 2.7 percentage points per year.[117]

* During eight years in office, President Bush vetoed 12 bills, four of which were overridden by Congress and thus enacted without his approval.[118] These bills were projected by the Congressional Budget Office to increase the deficit by $26 billion during 2008–2022.[119]


* In February 2009, Democratic President Barack Obama stated:

I refuse to leave our children with a debt that they cannot repay—and that means taking responsibility right now, in this administration, for getting our spending under control.[120]

* From the time that Congress enacted Obama’s first major economic proposal (February 17, 2009[121]) until September 30, 2016, the national debt rose from 74% of GDP to 105%, or an average of 4.0 percentage points per year.[122]

* As of November 4, 2016, President Obama has vetoed twelve bills, one of which has been overridden by Congress and thus enacted without his approval.[123] This bill is projected by the Congressional Budget Office to “have no significant effect on the federal budget.”[124]

Government Accounting

Trust Funds and the Two Main Categories of Debt

* Some federal programs (such as Social Security) have “trust funds” that are legally separated from the rest of the federal government.[125]

* When these programs spend less than the federal government allocates to them, their surpluses are loaned to the federal government. This creates a legal obligation for the federal government to pay money and interest to these programs, thus adding to the national debt.[126] [127] [128] [129] [130]

* The federal government divides the national debt into two main categories:[131] [132]

  1. Money that it owes to federal entities such as the Social Security program.
  2. Money that it owes to non-federal entities such as individuals, corporations, local governments, and foreign governments.[133] Also, money owed to the Federal Reserve is classified under this category, even though the Federal Reserve is a federal entity.[134] [135]

NOTE: Just Facts has identified numerous instances in which politicians and journalists have used terms that technically refer to the overall national debt, when in fact, they are only referring to a portion of it. In order to clear up some of the confusion this has created, below are common terms for the national debt categorized by their proper meanings:

  • Overall national debt: gross debt, federal debt, public debt[136]
  • Portion of the national debt owed to federal entities: debt held by government accounts, government-held debt, intragovernmental holdings[137] [138] [139]
  • Portion of the national debt owed to non-federal entities: debt held by the public, publicly held debt[140][141]

* On September 30, 2016, the national debt consisted of:

  • $5.4 trillion owed to federal entities
  • $14.2 trillion owed to non-federal entities
  • $19.6 trillion owed in total[142]

* The federal law that governs the repayment of the national debt draws no distinction between the debt owed to federal and non-federal entities. Both must be repaid with interest.[143]

* The White House Office,[144] [145] Congressional Budget Office,[146] and other federal agencies[147] sometimes exclude the debt owed to federal entities in their reckonings of the national debt because this portion of the debt “represents internal transactions of the government and thus has no effect on credit markets.”

* Federal programs to which this money is owed, such as Social Security and Medicare, include this money and the interest it generates in their assets and financial projections.[148] [149] [150]

* In the 2000 presidential race, the Gore-Liebermann campaign released a 192-page economic plan that contains over 150 uses of the word “debt.” In none of these instances does the plan mention or account for any of the debt owed to federal entities.[151] The same plan includes the debt owed to federal entities in the assets of the Social Security and Medicare programs.[152]


“Deficits” and “Surpluses”

* During the federal government’s 2010 fiscal year (October 1, 2009 to September 30, 2010[153]), the national debt rose from $12.0 trillion to $13.6 trillion, thus increasing by $1.6 trillion.[154]

* The White House,[155] USA Today,[156] Reuters,[157] and other government and media entities reported that the 2010 federal “deficit” was $1.3 trillion.

* The difference between the national debt increase of $1.6 trillion and the reported deficit of $1.3 trillion is attributable to the following accounting practices:

  • When calculating the reported deficit, the federal government merges the finances of all federal programs into what is called the “unified budget.” Hence, the deficit does not account for the intergovernmental debt that arises when programs such as Social Security loan their surpluses to the federal government.[158]
  • When the federal government lays out money for programs such as TARP and student loans, the outgo is not fully counted in the deficit. The deficit reflects only what the government expects to lose or gain on these loans.[159] [160]

* PolitiFact, a Pulitzer Prize-winning project of the Tampa Bay Times to “help you find the truth in politics,”[161] has stated that there were “several years of budget surpluses” during Bill Clinton’s presidency. This same article cites the rise in “national debt” during the tenure of George W. Bush.[162]

* Using the same criterion PolitiFact applied to Bush’s presidency (change in gross national debt), the national debt rose every year of Clinton’s presidency:

Year National Debt on Inauguration Date†

(billions)

1993 $4,188
1994 $4,501
1995 $4,797
1996 $4,988
1997 $5,310
1998 $5,496
1999 $5,624
2000 $5,706
2001 $5,728
† NOTE: PolitiFact used the inauguration date for its debt baseline.

The national debt also rose every fiscal year of Clinton’s presidency.

[163] [164]

Ownership

* As of September 30, 2016, the national debt consists of:

Amount Owed To: Portion of Total
$14.2 trillion owed to non-federal entities (i.e., publicly held debt) 72%
$5.4 trillion owed to federal entities (i.e., intragovernmental debt) 28%

[165]


Debt Owed to Non-Federal Entities

* Ownership of publicly held debt as of September 30, 2016:

Debt Owed to Non-Federal Entities

* Data from the chart above:

Entities Amount (billions) Portion of Total
Foreign & International $6,148 45%
Federal Reserve[166] $2,462 18%
Other Investors $1,343 10%
Mutual Funds $1,315 10%
State & Local Governments $687 5%
Banks & Savings Institutions $547 4%
Private Pension Funds $540 4%
Insurance Companies $297 2%
U.S. Savings Bonds $172 1%
State and Local Government Pension Funds $164 1%

[167]


Debt Owed to Foreign Entities

* Per the White House Office of Management and Budget (2016):

During most of American history, the Federal debt was held almost entirely by individuals and institutions within the United States. In the late 1960s, foreign holdings were just over $10 billion, less than 5 percent of the total Federal debt held by the public. Foreign holdings began to grow significantly starting in the 1970s and now represent almost half of outstanding [publicly held] debt.[168]

* Ownership of U.S. government debt by foreign creditors as of August 31, 2016:

Debt Owed to Foreign Entities

* Data from the chart above:

Country Amount (billions) Portion of Total
China, Mainland $1,185 19%
Japan $1,144 18%
Ireland $266 4%
Cayman Islands $264 4%
Brazil $256 4%
Switzerland $238 4%
Luxembourg $220 4%
United Kingdom $205 3%
Hong Kong $192 3%
Taiwan $190 3%
Others $2,037 33%
Total $6,196 100%

[169]

* Foreign purchases of U.S. government debt increase the demand for this debt, thus putting downward pressure on U.S. interest rates. Conversely, foreign sales of U.S. government debt place upward pressure on U.S. interest rates.[170] [171]

* Per a 2008 Congressional Research Service report, a “potentially serious short-term problem would emerge if China decided to suddenly” sell its holding of U.S. government debt. Possible effects could include:

  • “a more general financial reaction (or panic), in which all foreigners responded by reducing their holdings of U.S. assets”;
  • “a sudden and large depreciation in the value of the dollar”;
  • “a sudden and large increase in U.S. interest rates”;
  • a stock market fall; and/or
  • “a recession.”[172]

* The same report states:

The likelihood that China would suddenly reduce its holdings of U.S. securities is questionable because it is unlikely that doing so would be in China’s economic interests. First, a large sell-off of China’s U.S. holdings could diminish the value of these securities in international markets…. Second, such a move would diminish U.S. demand for Chinese imports…. A sharp reduction of U.S. imports from China could have a significant impact on China’s economy….[173]

* During a visit to China in February 2009, Secretary of State Hillary Clinton said:

By continuing to support American Treasury instruments [i.e., buy U.S. government debt] the Chinese are recognizing our interconnection. … We have to incur more debt. It would not be in China’s interest if we were unable to get our economy moving again. … The U.S. needs the investment in Treasury bonds to shore up its economy to continue to buy Chinese products.[174]

* In August 2007 during a currency dispute between the U.S. and China, two leading officials of Chinese Communist Party bodies suggested that China use the threat of selling U.S. debt as a “bargaining chip.”[175]

* In February 2009 during a dispute over U.S. arms sales to Taiwan, a Chinese general made the following statements in the state-run magazine Outlook Weekly:

Our retaliation should not be restricted to merely military matters, and we should adopt a strategic package of counterpunches covering politics, military affairs, diplomacy and economics to treat both the symptoms and root cause of this disease. … [W]e could sanction them using economic means, such as dumping some U.S. government bonds.[176]

* One month later while appearing before China’s parliament, the head of China’s State Administration of Foreign Exchange said:

the U.S. Treasury market is important to us. … This is purely market-driven investment behavior. I would hope not to see this matter politicized.[177]

Debt Owed to Federal Entities

* Ownership of intergovernmental debt as of September 30, 2016:

Debt Owed to Federal Entities

* Data from the chart above:

Funds Amount (billions) Portion of Total
Social Security $2,843 53%
Civil Service Retirement and Disability $874 16%
Military Retirement $591 11%
Medicare $256 5%
Department of Defense Retiree Healthcare $213 4%
Postal Service Retiree Health Benefits $51 1%
Other $572 11%

[178]

Media

Budget Cuts

* In April 2011, journalists reported on a $38 billion federal budget cut agreement with the following headlines and phraseology:

  • “New Cuts Detailed in Agreement for $38 Billion in Reductions”; “deep budget cuts in programs for the poor, law enforcement, the environment and civic projects” – Los Angeles Times[179]
  • “Congress Sends Budget Cut Bill to Obama”; “cutting a record $38 billion from domestic spending” – Associated Press[180]
  • “Budget Deal to Cut $38 Billion Averts Shutdown”; “Republicans were able to force significant spending concessions from Democrats….” – New York Times[181]

* None of these articles reported that this figure of $38 billion in cuts was primarily relative to a portion of the budget called “discretionary non-emergency appropriations.”[182] Relative to the entire federal budget, this cut left a projected spending increase of $135 billion from 2010 to 2011. This equates to an inflation-adjusted increase of $49 billion or 0.1 percentage points of GDP:[183]

Federal Outlays

[184]

* None of the articles quoted above contains a budget-wide frame of reference for the cuts. A spending reduction of $38 billion equates to 1.0% of the estimated 2011 budget or 2.7% of the projected deficit:

Budget Cut

[185]


Bush Tax Cuts

* In February 2010, Fareed Zakaria of CNN stated:

Now, please understand that the Bush tax cuts are the single largest part of the black hole that is the federal budget deficit.[186]

* In 2010, the Bush tax cuts lowered federal revenues by about $283 billion.[187] [188] This was equivalent to 8% of the federal budget or 22% of the deficit.[189]

* Per the Congressional Budget Office (CBO), “Most parameters of the tax code are not indexed for real income growth, and some are not indexed for inflation.” Thus, if tax cuts are not periodically implemented, average federal tax rates “increase in the long run.”[190]

* In 2000, the year before the first Bush tax cuts were passed,[191] the federal government collected revenues equal to 20.4% of the nation’s gross domestic product (GDP), the highest level in the history of the United States.[192] Over the previous 30 years, federal revenues averaged 18.3% of GDP.[193]

* In 2000, the stock market “dot.com” bubble burst,[194] the NASDAQ lost 39% of its value,[195] and profits for nonfinancial corporations fell by 18%.[196] In the first quarter of 2001, the nation’s GDP contracted and a recession began.[197] [198]

* In June 2001 and May 2003, Congress passed and President Bush signed laws that implemented various tax cuts.[199] [200]

* After the Bush tax cuts were fully implemented, federal revenues were 17.8% of GDP in 2005, 18.5% in 2006, and 18.6% in 2007.[201] Average federal revenues for the 30 years preceding the Bush tax cuts were 18.4%.[202]

* The Great Recession began in December 2007,[203] and federal revenues declined to 17.7% of GDP in 2008.[204]

* In February 2009, Congress passed and President Obama signed a law that implemented various tax cuts.[205]

* Federal revenues declined to 15.7% of GDP in 2009 and 16.4% in 2010.[206]

* Federal spending rose from 21.0% of GDP in 2007 to 26.5% in 2010.[207] Average federal spending for the 30 years preceding the Great Recession was 21.8%.[208]


The “Do Nothing” Plan

* In April 2011, Ezra Klein of the Washington Post posted a graph of spending and revenue projections based upon CBO’s “current law” scenario and wrote that it:

shows what happens if we do … nothing. The answer, as you can see, is that the budget comes roughly into balance.[209]

* Klein’s graph and commentary omitted the interest and outcome of the national debt under this plan.[210] In the “do nothing” scenario, outlays were projected to exceed revenues every year through 2084, and the publicly held debt was projected to increase from 62% of GDP in 2010, to 74% in 2030, 90% in 2050, and 113% in 2084.[211]

* In the same commentary, Klein wrote that the “current law” scenario is “a pretty good plan” that contains:

a balanced mix of revenues, through returning tax rates to Clinton-era levels and implementing the taxes in the Affordable Care Act, and program cuts … in Medicare….[212]

* Under this scenario:

  • Certain elements of the tax code are not indexed for inflation or wage growth. Consequently, taxpayers are shifted over time into higher tax brackets.
  • According to the Congressional Budget Office, by 2020 revenues “reach higher levels relative to the size of the economy than ever recorded in the nation’s history.”
  • Revenues as a portion of GDP continue climbing through 2084, rising 69% higher than the average of the past 40 years and 47% higher than ever recorded in the history of the United States.[213] [214]
  • As a portion of GDP, federal spending without interest on the national debt rises by 2084 to 68% higher than the average of the past 40 years.[215]

Context

* Without mentioning the role of Congress in taxes, spending, or the national debt,[216] [217] PolitiFact (in the same article cited above) wrote that the national debt increased by $5.73 trillion “under” George W. Bush whereas there were budget surpluses “at the end of the Clinton administration.”[218]

* Below are the fluctuations in national debt organized by the tenures of recent presidents and congressional majorities:

Political Power

Dates

Average Annual Change in National Debt

(Percentage Points of GDP)

Bill Clinton with Democratic House and Senate 1/20/93 – 1/4/95 0.9
Bill Clinton with Republican House and Senate 1/4/95 – 1/19/01 -1.6
George W. Bush with Republican House and Senate 1/19/01 – 6/6/01, 11/12/02 – 1/4/07 0.8
George W. Bush with Republican House and Democratic Senate 6/6/01 – 11/12/02 2.3
George W. Bush with Democratic House and Senate 1/4/07 – 1/20/09 6.5
Barack Obama with Democratic House and Senate 1/20/09 – 1/4/11 9.3
Barack Obama with Republican House and Democratic Senate 1/5/11 – 1/6/15 1.9

[219]

* Other factors impacting the national debt include but are not limited to: legislation passed by previous congresses and presidents,[220] economic cycles, terrorist attacks, natural disasters, demographics, and the actions of U.S. citizens and foreign governments.[221]

Read Full Post | Make a Comment ( None so far )

Non-accelarating Inflation Rate of Unemployment (NAIRU) — Phillips Curve — Money and Inflation — No Real Tradeoff Between Price Increases and Unemployment Rate In The Long Run — States and Nations Cutting Taxes Resulted In Higher Growth and Lower Unemployment — Videos

Posted on March 14, 2017. Filed under: American History, Banking, Blogroll, Books, Business, College, Communications, Congress, conservatives, Constitution, Corruption, Documentary, Economics, Education, Elections, Employment, Faith, Family, Federal Government, Federal Government Budget, Fiscal Policy, Freedom, government, High School, history, History of Economic Thought, Inflation, Investments, Law, liberty, Life, Links, Literacy, Macroeconomics, media, Microeconomics, Monetary Policy, Money, Money, Newspapers, Non-Fiction, People, Philosophy, Photos, Political Correctness, Politics, Radio, Rants, Raves, Raymond Thomas Pronk, Taxation, Taxes, Tutorials, Unemployment, Video, Wealth, Wisdom, Work, Writing | Tags: , , , , , , , , , , , , , , , |

Image result for us history nairu

Image result for value of us dollar 1913 through 1916

Image result for cartoons non-accelerating inflation rate of unemploymentImage result for phillips curve

Image result for non-accelerating inflation rate of unemployment

Image result for phillips curve

Image result for phillips curve

NAIRU: What it is and why it matters

The NAIRU.mov

The Phillips Curve – 60 Second Adventures in Economics (3/6)

The Phillips Curve (Macro Review) Macro 3.4

Phillips Curve

Phillips curve | Inflation – measuring the cost of living | Macroeconomics | Khan Academy

Image result for milton friedman nobel prize

Image result for milton friedman

Milton Friedman – Money and Inflation

Milton Friedman: Inflation vs Unemployment

Milton Friedman – Stimulus and Inflation

Milton Friedman – Money and Inflation (Q&A)

TAKE IT TO THE LIMITS: Milton Friedman on Libertarianism

Milton Friedman: There’s No Such Thing as a Free Lunch

The Power of Choice: The Life and Ideas of Milton Friedman

Milton Friedman: Why soaking the rich won’t work.

Milton Friedman – Redistribution of Wealth

Milton Friedman – Socialism is Force

Why Free Markets Work: Milton Friedman on Political Economy (1996)

Image result for robert a mundell economist quotesImage result for robert a mundell

[2013 Shanghai Forum] Robert Mundell “Monetary Unions Free Trade Areas in the World Economy”

Supply-Side Economics: From the Reagan Era to Today. Part 3 – with Paul Gigot and Robert Mundell

‘Europe was always plagued with debt, even before euro’

Robert Mundell Says Italy is Biggest Threat to Euro: Video

Robert Mundell Ph.D – 01=22-86

The Father of Reaganomics and the Euro…

Nobel Prize in Economic 1999 Robert A Mundell

Arthur B. Laffer 2014 ALEC Annual Meeting

Lower Taxes, Higher Revenue

Do the Rich Pay Their Fair Share?

EAT THE RICH!

Stephen Moore 2014 ALEC Annual Meeting

NAIRU

From Wikipedia, the free encyclopedia

NAIRU is an acronym for non-accelerating inflation rate of unemployment,[1] and refers to a level of unemployment below which inflation rises. It was first introduced as NIRU (non-inflationary rate of unemployment) by Franco Modigliani and Lucas Papademos in 1975, as an improvement over the “natural rate of unemployment” concept,[2][3][4] which was proposed earlier by Milton Friedman.[5]

Monetary policy conducted under the assumption of a NAIRU involves allowing just enough unemployment in the economy to prevent inflation rising above a given target figure. Prices are allowed to increase gradually and some unemployment is tolerated.

Contents

 [show] 

Origins

An early form of NAIRU is found in the work of Abba P. Lerner (Lerner 1951, Chapter 14), who referred to it as “low full employment” attained via the expansion of aggregate demand, in contrast with the “high full employment” which adds incomes policies (wage and price controls) to demand stimulation.

The concept arose in the wake of the popularity of the Phillips curve which summarized the observed negative correlation between the rate of unemployment and the rate of inflation (measured as annual nominal wage growth of employees) for number of industrialised countries with more or less mixed economies. This correlation (previously seen for the U.S. by Irving Fisher) persuaded some analysts that it was impossible for governments simultaneously to target both arbitrarily low unemployment and price stability, and that, therefore, it was government’s role to seek a point on the trade-off between unemployment and inflation which matched a domestic social consensus.

During the 1970s in the United States and several other industrialized countries, Phillips curve analysis became less popular, because inflation rose at the same time that unemployment rose (see stagflation).

Worse, as far as many economists were concerned, was that the Phillips curve had little or no theoretical basis. Critics of this analysis (such as Milton Friedman and Edmund Phelps) argued that the Phillips curve could not be a fundamental characteristic of economic general equilibrium because it showed a correlation between a real economic variable (the unemployment rate) and a nominal economic variable (the inflation rate). Their counter-analysis was that government macroeconomic policy (primarily monetary policy) was being driven by a low unemployment target and that this caused expectations of inflation to change, so that steadily accelerating inflation rather than reduced unemployment was the result. The resulting prescription was that government economic policy (or at least monetary policy) should not be influenced by any level of unemployment below a critical level – the “natural rate” or NAIRU.[6]

The natural rate hypothesis

The idea behind the natural rate hypothesis put forward by Friedman was that any given labor market structure must involve a certain amount of unemployment, including frictional unemployment associated with individuals changing jobs and possibly classical unemployment arising from real wages being held above the market-clearing level by minimum wage laws, trade unions or other labour market institutions. Unexpected inflation might allow unemployment to fall below the natural rate by temporarily depressing real wages, but this effect would dissipate once expectations about inflation were corrected. Only with continuously accelerating inflation could rates of unemployment below the natural rate be maintained.

The analysis supporting the natural rate hypothesis was controversial, and empirical evidence suggested that the natural rate varied over time in ways that could not easily be explained by changes in labor market structures. As a result, the “natural rate” terminology was largely supplanted by that of the NAIRU, which referred to a rate of unemployment below which inflation would accelerate, but did not imply a commitment to any particular theoretical explanation, or a prediction that the rate would be stable over time.

Properties

If {\displaystyle U*}U* is the NAIRU and {\displaystyle U}U is the actual unemployment rate, the theory says that:

if {\displaystyle U<U*}U<U* for a few years, inflationary expectations rise, so that the inflation rate tends to increase;
if {\displaystyle U>U*}U>U* for a few years, inflationary expectations fall, so that the inflation rate tends to slow (there is disinflation); and
if {\displaystyle U=U*}U=U*, the inflation rate tends to stay the same, unless there is an exogenous shock.

Okun’s law can be stated as saying that for every one percentage point by which the actual unemployment rate exceeds the so-called “natural” rate of unemployment, real gross domestic product is reduced by 2% to 3%.

Criticism

The NAIRU analysis assumes that if inflation increases, workers and employers can create contracts that take into account expectations of higher inflation and agree on a level of wage inflation that matches the expected level of price inflation to maintain constant real wages. Therefore, the analysis requires inflation to accelerate to maintain low unemployment. However, this argument implicitly assumes that workers and employers cannot contract to incorporate accelerating inflation into wage expectations, but there is no clear justification for assuming that expectations or contract structures are limited in this way aside from the fact that such wage arrangements are not commonly observed.

The NAIRU analysis is especially problematic if the Phillips curve displays hysteresis, that is, if episodes of high unemployment raise the NAIRU.[7] This could happen, for example, if unemployed workers lose skills so that employers prefer to bid up of the wages of existing workers when demand increases, rather than hiring the unemployed.

Others, such as Abba Lerner (1951, 1967) and Hyman Minsky (1965) have argued that a similar effect can be achieved without the human costs of unemployment via a job guarantee, where rather than being unemployed, those who cannot find work in the private sector should be employed by the government. This theory, and the policy of the job guarantee replaces the NAIRU with the NAIBER (non-accelerating-inflation-buffer employment ratio).[8]

Relationship to other economic theories

Most economists do not see the NAIRU theory as explaining all inflation. Instead, it is possible to move along a short run Phillips Curve (even though the NAIRU theory says that this curve shifts in the longer run) so that unemployment can rise or fall due to changes in inflation. Exogenous supply-shock inflation is also possible, as with the “energy crises” of the 1970s or the credit crunch of the early 21st century.

The NAIRU theory was mainly intended as an argument against active Keynesian demand management and in favor of free markets (at least on the macroeconomic level). There is, for instance, no theoretical basis for predicting the NAIRU. Monetarists instead support the generalized assertion that the correct approach to unemployment is through microeconomic measures (to lower the NAIRU whatever its exact level), rather than macroeconomic activity based on an estimate of the NAIRU in relation to the actual level of unemployment. Monetary policy, they maintain, should aim instead at stabilizing the inflation rate.

Naming

The NAIRU, non-accelerating inflation rate of unemployment, is actually misnamed. It is the price level that is accelerating (or decelerating), not the inflation rate. The inflation rate is just changing, not accelerating.[9]

See also

References

  1. Jump up^ Coe, David T, Nominal Wages. The NAIRU and Wage Flexibility. (PDF), Organisation for Economic Co-operation and Development
  2. Jump up^ Modigliani, Franco; Papademos, Lucas (1975). “Targets for Monetary Policy in the Coming Year”. Brookings Papers on Economic Activity. The Brookings Institution. 1975 (1): 141–165. doi:10.2307/2534063. JSTOR 2534063.
  3. Jump up^ Robert M. Solow, Modigliani and Monetarism, p. 6.
  4. Jump up^ Snowdon, Brian; Vane, Howard R. (2005). Modern Macroeconomics: Its Origins, Development and Current State. Cheltenham: E. Elgar. p. 187. ISBN 1-84376-394-X.
  5. Jump up^ Friedman, Milton (1968). “The Role of Monetary Policy”. American Economic Review. 58 (1): 1–17. JSTOR 1831652.
  6. Jump up^ Hoover, Kevin D, “Phillips Curve”, The Concise Encyclopedia of Economics, The Library of Economics and Liberty, retrieved 16 July 2007
  7. Jump up^ Ball, Laurence (2009), Hysteresis in Unemployment: Old and New Evidence (PDF)
  8. Jump up^ William Mitchell, J. Muysken (2008), Full employment abandoned: shifting sands and policy failures, Edward Elgar Publishing, ISBN 1-85898-507-2
  9. Jump up^ Case, K.E. and Fair, R.C. and Oster, S.M. (2016). Principles of Macroeconomics. Pearson. ISBN 9780133023671.

Further reading

External links

https://en.wikipedia.org/wiki/NAIRU

Phillips curve

From Wikipedia, the free encyclopedia
For the Phillips curve in supernova astrophysics, see Phillips relationship.

The Phillips curve is a single-equation empirical model, named after A. W. Phillips, describing a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result within an economy. Stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.

While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run.[1] In 1968, Milton Friedman asserted that the Phillips curve was only applicable in the short-run and that in the long-run, inflationary policies will not decrease unemployment.[2][3] Friedman then correctly predicted that, in the 1973–75 recession, both inflation and unemployment would increase.[3] The long-run Phillips curve is now seen as a vertical line at the natural rate of unemployment, where the rate of inflation has no effect on unemployment.[4] Accordingly, the Phillips curve is now seen as too simplistic, with the unemployment rate supplanted by more accurate predictors of inflation based on velocity of moneysupply measures such as the MZM (“money zero maturity”) velocity,[5] which is affected by unemployment in the short but not the long term.[6]

Contents

 [show] 

History

Rate of Change of Wages against Unemployment, United Kingdom 1913–1948 from Phillips (1958)

William Phillips, a New Zealand born economist, wrote a paper in 1958 titled The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957, which was published in the quarterly journal Economica.[7] In the paper Phillips describes how he observed an inverse relationship between money wage changes and unemployment in the British economy over the period examined. Similar patterns were found in other countries and in 1960 Paul Samuelson and Robert Solow took Phillips’ work and made explicit the link between inflation and unemployment: when inflation was high, unemployment was low, and vice versa.[8]

In the 1920s, an American economist Irving Fisher noted this kind of Phillips curve relationship. However, Phillips’ original curve described the behavior of money wages.[9]

In the years following Phillips’ 1958 paper, many economists in the advanced industrial countries believed that his results showed that there was a permanently stable relationship between inflation and unemployment.[citation needed] One implication of this for government policy was that governments could control unemployment and inflation with a Keynesian policy. They could tolerate a reasonably high rate of inflation as this would lead to lower unemployment – there would be a trade-off between inflation and unemployment. For example, monetary policy and/or fiscal policy could be used to stimulate the economy, raising gross domestic product and lowering the unemployment rate. Moving along the Phillips curve, this would lead to a higher inflation rate, the cost of enjoying lower unemployment rates.[citation needed] Economist James Forder argues that this view is historically false and that neither economists nor governments took that view and that the ‘Phillips curve myth’ was an invention of the 1970s.[10]

Since 1974, seven Nobel Prizes have been given to economists for, among other things, work critical of some variations of the Phillips curve. Some of this criticism is based on the United States’ experience during the 1970s, which had periods of high unemployment and high inflation at the same time. The authors receiving those prizes include Thomas Sargent, Christopher Sims, Edmund Phelps, Edward Prescott, Robert A. Mundell, Robert E. Lucas, Milton Friedman, and F.A. Hayek.[11]

Stagflation

In the 1970s, many countries experienced high levels of both inflation and unemployment also known as stagflation. Theories based on the Phillips curve suggested that this could not happen, and the curve came under a concerted attack from a group of economists headed by Milton Friedman.[citation needed] Friedman argued that the Phillips curve relationship was only a short-run phenomenon. In this he followed eight years after Samuelson and Solow [1960] who wrote ” All of our discussion has been phrased in short-run terms, dealing with what might happen in the next few years. It would be wrong, though, to think that our Figure 2 menu that related obtainable price and unemployment behavior will maintain its same shape in the longer run. What we do in a policy way during the next few years might cause it to shift in a definite way.”[8] As Samuelson and Solow had argued 8 years earlier, he argued that in the long run, workers and employers will take inflation into account, resulting in employment contracts that increase pay at rates near anticipated inflation. Unemployment would then begin to rise back to its previous level, but now with higher inflation rates. This result implies that over the longer-run there is no trade-off between inflation and unemployment. This implication is significant for practical reasons because it implies that central banks should not set employment targets above the natural rate.[1]

More recent research has shown that there is a moderate trade-off between low-levels of inflation and unemployment. Work by George Akerlof, William Dickens, and George Perry,[12]implies that if inflation is reduced from two to zero percent, unemployment will be permanently increased by 1.5 percent. This is because workers generally have a higher tolerance for real wage cuts than nominal ones. For example, a worker will more likely accept a wage increase of two percent when inflation is three percent, than a wage cut of one percent when the inflation rate is zero.

Today

U.S. Inflation and Unemployment 1/2000 to 4/2013

Most economists no longer use the Phillips curve in its original form because it was shown to be too simplistic.[6] This can be seen in a cursory analysis of US inflation and unemployment data from 1953–92. There is no single curve that will fit the data, but there are three rough aggregations—1955–71, 1974–84, and 1985–92—each of which shows a general, downwards slope, but at three very different levels with the shifts occurring abruptly. The data for 1953–54 and 1972–73 do not group easily, and a more formal analysis posits up to five groups/curves over the period.[1]

But still today, modified forms of the Phillips Curve that take inflationary expectations into account remain influential. The theory goes under several names, with some variation in its details, but all modern versions distinguish between short-run and long-run effects on unemployment. Modern Phillips curve models include both a short-run Phillips Curve and a long-run Phillips Curve. This is because in the short run, there is generally an inverse relationship between inflation and the unemployment rate; as illustrated in the downward sloping short-run Phillips curve. In the long run, that relationship breaks down and the economy eventually returns to the natural rate of unemployment regardless of the inflation rate.[13]

The “short-run Phillips curve” is also called the “expectations-augmented Phillips curve”, since it shifts up when inflationary expectations rise, Edmund Phelps and Milton Friedman argued. In the long run, this implies that monetary policy cannot affect unemployment, which adjusts back to its “natural rate“, also called the “NAIRU” or “long-run Phillips curve”. However, this long-run “neutrality” of monetary policy does allow for short run fluctuations and the ability of the monetary authority to temporarily decrease unemployment by increasing permanent inflation, and vice versa. The popular textbook of Blanchard gives a textbook presentation of the expectations-augmented Phillips curve.[14]

An equation like the expectations-augmented Phillips curve also appears in many recent New Keynesiandynamic stochastic general equilibrium models. In these macroeconomic models with sticky prices, there is a positive relation between the rate of inflation and the level of demand, and therefore a negative relation between the rate of inflation and the rate of unemployment. This relationship is often called the “New Keynesian Phillips curve.” Like the expectations-augmented Phillips curve, the New Keynesian Phillips curve implies that increased inflation can lower unemployment temporarily, but cannot lower it permanently. Two influential papers that incorporate a New Keynesian Phillips curve are Clarida, Galí, and Gertler (1999),[15] and Blanchard and Galí (2007).[16]

Mathematics

There are at least two different mathematical derivations of the Phillips curve. First, there is the traditional or Keynesian version. Then, there is the new Classical version associated with Robert E. Lucas, Jr.

The traditional Phillips curve

The original Phillips curve literature was not based on the unaided application of economic theory. Instead, it was based on empirical generalizations. After that, economists tried to develop theories that fit the data.

Money wage determination

The traditional Phillips curve story starts with a wage Phillips Curve, of the sort described by A.W. Phillips himself. This describes the rate of growth of money wages (gW). Here and below, the operator g is the equivalent of “the percentage rate of growth of” the variable that follows.

{\displaystyle gW=gW^{T}-f(U)}gW=gW^{{T}}-f(U)

The “money wage rate” (W) is shorthand for total money wage costs per production employee, including benefits and payroll taxes. The focus is on only production workers’ money wages, because (as discussed below) these costs are crucial to pricing decisions by the firms.

This equation tells us that the growth of money wages rises with the trend rate of growth of money wages (indicated by the superscript “T”) and falls with the unemployment rate (U). The function f() is assumed to be monotonically increasing with U so that the dampening of money-wage increases by unemployment is shown by the negative sign in the equation above.

There are several possible stories behind this equation. A major one is that money wages are set by bilateral negotiations under partial bilateral monopoly: as the unemployment rate rises, all else constant worker bargaining power falls, so that workers are less able to increase their wages in the face of employer resistance.

During the 1970s, this story had to be modified, because (as the late Abba Lerner had suggested in the 1940s) workers try to keep up with inflation. Since the 1970s, the equation has been changed to introduce the role of inflationary expectations (or the expected inflation rate, gPex). This produces the expectations-augmented wage Phillips curve:

{\displaystyle gW=gW^{T}-f(U)+\lambda .gP^{ex}.}gW=gW^{{T}}-f(U)+\lambda .gP^{{ex}}.

The introduction of inflationary expectations into the equation implies that actual inflation can feed back into inflationary expectations and thus cause further inflation. The late economist James Tobin dubbed the last term “inflationary inertia,” because in the current period, inflation exists which represents an inflationary impulse left over from the past.

It also involved much more than expectations, including the price-wage spiral. In this spiral, employers try to protect profits by raising their prices and employees try to keep up with inflation to protect their real wages. This process can feed on itself, becoming a self-fulfilling prophecy.

The parameter λ (which is presumed constant during any time period) represents the degree to which employees can gain money wage increases to keep up with expected inflation, preventing a fall in expected real wages. It is usually assumed that this parameter equals unity in the long run.

In addition, the function f() was modified to introduce the idea of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) or what’s sometimes called the “natural” rate of unemployment or the inflation-threshold unemployment rate:

[1] gW = gWTf(UU*) + λ·gPex.

Here, U* is the NAIRU. As discussed below, if U < U*, inflation tends to accelerate. Similarly, if U > U*, inflation tends to slow. It is assumed that f(0) = 0, so that when U = U*, the f term drops out of the equation.

In equation [1], the roles of gWT and gPex seem to be redundant, playing much the same role. However, assuming that λ is equal to unity, it can be seen that they are not. If the trend rate of growth of money wages equals zero, then the case where U equals U* implies that gW equals expected inflation. That is, expected real wages are constant.

In any reasonable economy, however, having constant expected real wages could only be consistent with actual real wages that are constant over the long haul. This does not fit with economic experience in the U.S. or any other major industrial country. Even though real wages have not risen much in recent years, there have been important increases over the decades.

An alternative is to assume that the trend rate of growth of money wages equals the trend rate of growth of average labor productivity (Z). That is:

[2] gWT = gZT.

Under assumption [2], when U equals U* and λ equals unity, expected real wages would increase with labor productivity. This would be consistent with an economy in which actual real wages increase with labor productivity. Deviations of real-wage trends from those of labor productivity might be explained by reference to other variables in the model.

Pricing decisions

Next, there is price behavior. The standard assumption is that markets are imperfectly competitive, where most businesses have some power to set prices. So the model assumes that the average business sets a unit price (P) as a mark-up (M) over the unit labor cost in production measured at a standard rate of capacity utilization (say, at 90 percent use of plant and equipment) and then adds in the unit materials cost.

The standardization involves later ignoring deviations from the trend in labor productivity. For example, assume that the growth of labor productivity is the same as that in the trend and that current productivity equals its trend value:

gZ = gZT and Z = ZT.

The markup reflects both the firm’s degree of market power and the extent to which overhead costs have to be paid. Put another way, all else equal, M rises with the firm’s power to set prices or with a rise of overhead costs relative to total costs.

So pricing follows this equation:

P = M × (unit labor cost) + (unit materials cost)
= M × (total production employment cost)/(quantity of output) + UMC.

UMC is unit raw materials cost (total raw materials costs divided by total output). So the equation can be restated as:

P = M × (production employment cost per worker)/(output per production employee) + UMC.

This equation can again be stated as:

P = M×(average money wage)/(production labor productivity) + UMC
= M×(W/Z) + UMC.

Now, assume that both the average price/cost mark-up (M) and UMC are constant. On the other hand, labor productivity grows, as before. Thus, an equation determining the price inflation rate (gP) is:

gP = gWgZT.

Price[edit]

Then, combined with the wage Phillips curve [equation 1] and the assumption made above about the trend behavior of money wages [equation 2], this price-inflation equation gives us a simple expectations-augmented price Phillips curve:

gP = −f(UU*) + λ·gPex.

Some assume that we can simply add in gUMC, the rate of growth of UMC, in order to represent the role of supply shocks (of the sort that plagued the U.S. during the 1970s). This produces a standard short-term Phillips curve:

gP = −f(UU*) + λ·gPex + gUMC.

Economist Robert J. Gordon has called this the “Triangle Model” because it explains short-run inflationary behavior by three factors: demand inflation (due to low unemployment), supply-shock inflation (gUMC), and inflationary expectations or inertial inflation.

In the long run, it is assumed, inflationary expectations catch up with and equal actual inflation so that gP = gPex. This represents the long-term equilibrium of expectations adjustment. Part of this adjustment may involve the adaptation of expectations to the experience with actual inflation. Another might involve guesses made by people in the economy based on other evidence. (The latter idea gave us the notion of so-called rational expectations.)

Expectational equilibrium gives us the long-term Phillips curve. First, with λ less than unity:

gP = [1/(1 − λ)]·(−f(UU*) + gUMC).

This is nothing but a steeper version of the short-run Phillips curve above. Inflation rises as unemployment falls, while this connection is stronger. That is, a low unemployment rate (less than U*) will be associated with a higher inflation rate in the long run than in the short run. This occurs because the actual higher-inflation situation seen in the short run feeds back to raise inflationary expectations, which in turn raises the inflation rate further. Similarly, at high unemployment rates (greater than U*) lead to low inflation rates. These in turn encourage lower inflationary expectations, so that inflation itself drops again.

This logic goes further if λ is equal to unity, i.e., if workers are able to protect their wages completely from expected inflation, even in the short run. Now, the Triangle Model equation becomes:

f(UU*) = gUMC.

If we further assume (as seems reasonable) that there are no long-term supply shocks, this can be simplified to become:

f(UU*) = 0 which implies that U = U*.

All of the assumptions imply that in the long run, there is only one possible unemployment rate, U* at any one time. This uniqueness explains why some call this unemployment rate “natural.”

To truly understand and criticize the uniqueness of U*, a more sophisticated and realistic model is needed. For example, we might introduce the idea that workers in different sectors push for money wage increases that are similar to those in other sectors. Or we might make the model even more realistic. One important place to look is at the determination of the mark-up, M.

New classical version

The Phillips curve equation can be derived from the (short-run) Lucas aggregate supply function. The Lucas approach is very different from that the traditional view. Instead of starting with empirical data, he started with a classical economic model following very simple economic principles.

Start with the aggregate supply function:

{\displaystyle Y=Y_{n}+a(P-P_{e})\,}Y=Y_{n}+a(P-P_{e})\,

where Y is log value of the actual output, Yn is log value of the “natural” level of output, a is a positive constant, P is log value of the actual price level, and Pe is log value of the expected price level. Lucas assumes that Yn has a unique value.

Note that this equation indicates that when expectations of future inflation (or, more correctly, the future price level) are totally accurate, the last term drops out, so that actual output equals the so-called “natural” level of real GDP. This means that in the Lucas aggregate supply curve, the only reason why actual real GDP should deviate from potential—and the actual unemployment rate should deviate from the “natural” rate—is because of incorrect expectations of what is going to happen with prices in the future. (The idea has been expressed first by Keynes, General Theory, Chapter 20 section III paragraph 4).

This differs from other views of the Phillips curve, in which the failure to attain the “natural” level of output can be due to the imperfection or incompleteness of markets, the stickiness of prices, and the like. In the non-Lucas view, incorrect expectations can contribute to aggregate demand failure, but they are not the only cause. To the “new Classical” followers of Lucas, markets are presumed to be perfect and always attain equilibrium (given inflationary expectations).

We re-arrange the equation into:

{\displaystyle P=P_{e}+{\frac {Y-Y_{n}}{a}}}P=P_{e}+{\frac {Y-Y_{n}}{a}}

Next we add unexpected exogenous shocks to the world supply v:

{\displaystyle P=P_{e}+{\frac {Y-Y_{n}}{a}}+v}P=P_{e}+{\frac {Y-Y_{n}}{a}}+v

Subtracting last year’s price levels P−1 will give us inflation rates, because

{\displaystyle P-P_{-1}\ \approx \pi }P-P_{{-1}}\ \approx \pi

and

{\displaystyle P_{e}-P_{-1}\ \approx \pi _{e}}P_{e}-P_{{-1}}\ \approx \pi _{e}

where π and πe are the inflation and expected inflation respectively.

There is also a negative relationship between output and unemployment (as expressed by Okun’s law). Therefore, using

{\displaystyle {\frac {Y-Y_{n}}{a}}=-b(U-U_{n})}{\frac {Y-Y_{n}}{a}}=-b(U-U_{n})

where b is a positive constant, U is unemployment, and Un is the natural rate of unemployment or NAIRU, we arrive at the final form of the short-run Phillips curve:

{\displaystyle \pi =\pi _{e}-b(U-U_{n})+v\,}\pi =\pi _{e}-b(U-U_{n})+v\,

This equation, plotting inflation rate π against unemployment U gives the downward-sloping curve in the diagram that characterises the Phillips curve.

New Keynesian version

The New Keynesian Phillips curve was originally derived by Roberts in 1995,[17] and since been used in most state-of-the-art New Keynesian DSGE models like the one of Clarida, Galí, and Gertler (2000).[18][19]

{\displaystyle \pi _{t}=\beta E_{t}[\pi _{t+1}]+\kappa y_{t}}\pi _{{t}}=\beta E_{{t}}[\pi _{{t+1}}]+\kappa y_{{t}}

where {\displaystyle \kappa ={\frac {\alpha [1-(1-\alpha )\beta ]\phi }{1-\alpha }}}\kappa ={\frac {\alpha [1-(1-\alpha )\beta ]\phi }{1-\alpha }}. The current expectations of next period’s inflation are incorporated as {\displaystyle \beta E_{t}[\pi _{t+1}]}\beta E_{{t}}[\pi _{{t+1}}]

NAIRU and rational expectations

Short-Run Phillips Curve before and after Expansionary Policy, with Long-Run Phillips Curve (NAIRU)

In the 1970s, new theories, such as rational expectations and the NAIRU (non-accelerating inflation rate of unemployment) arose to explain how stagflation could occur. The latter theory, also known as the “natural rate of unemployment“, distinguished between the “short-term” Phillips curve and the “long-term” one. The short-term Phillips Curve looked like a normal Phillips Curve, but shifted in the long run as expectations changed. In the long run, only a single rate of unemployment (the NAIRU or “natural” rate) was consistent with a stable inflation rate. The long-run Phillips Curve was thus vertical, so there was no trade-off between inflation and unemployment. Edmund Phelps won the Nobel Prize in Economics in 2006 in part for this. However, the expectations argument was in fact very widely understood before his work on it.[20]

In the diagram, the long-run Phillips curve is the vertical red line. The NAIRU theory says that when unemployment is at the rate defined by this line, inflation will be stable. However, in the short-run policymakers will face an inflation-unemployment rate tradeoff marked by the “Initial Short-Run Phillips Curve” in the graph. Policymakers can therefore reduce the unemployment rate temporarily, moving from point A to point B through expansionary policy. However, according to the NAIRU, exploiting this short-run tradeoff will raise inflation expectations, shifting the short-run curve rightward to the “New Short-Run Phillips Curve” and moving the point of equilibrium from B to C. Thus the reduction in unemployment below the “Natural Rate” will be temporary, and lead only to higher inflation in the long run.

Since the short-run curve shifts outward due to the attempt to reduce unemployment, the expansionary policy ultimately worsens the exploitable tradeoff between unemployment and inflation. That is, it results in more inflation at each short-run unemployment rate. The name “NAIRU” arises because with actual unemployment below it, inflation accelerates, while with unemployment above it, inflation decelerates. With the actual rate equal to it, inflation is stable, neither accelerating nor decelerating. One practical use of this model was to provide an explanation for stagflation, which confounded the traditional Phillips curve.

The rational expectations theory said that expectations of inflation were equal to what actually happened, with some minor and temporary errors. This in turn suggested that the short-run period was so short that it was non-existent: any effort to reduce unemployment below the NAIRU, for example, would immediately cause inflationary expectations to rise and thus imply that the policy would fail. Unemployment would never deviate from the NAIRU except due to random and transitory mistakes in developing expectations about future inflation rates. In this perspective, any deviation of the actual unemployment rate from the NAIRU was an illusion.

However, in the 1990s in the U.S., it became increasingly clear that the NAIRU did not have a unique equilibrium and could change in unpredictable ways. In the late 1990s, the actual unemployment rate fell below 4% of the labor force, much lower than almost all estimates of the NAIRU. But inflation stayed very moderate rather than accelerating. So, just as the Phillips curve had become a subject of debate, so did the NAIRU.

Furthermore, the concept of rational expectations had become subject to much doubt when it became clear that the main assumption of models based on it was that there exists a single (unique) equilibrium in the economy that is set ahead of time, determined independently of demand conditions. The experience of the 1990s suggests that this assumption cannot be sustained.

Theoretical questions

The Phillips curve started as an empirical observation in search of a theoretical explanation.[citation needed] Specifically, the Phillips curve tried to determine whether the inflation-unemployment link was causal or simply correlational. There are several major explanations of the short-term Phillips curve regularity.

To Milton Friedman there is a short-term correlation between inflation shocks and employment. When an inflationary surprise occurs, workers are fooled into accepting lower pay because they do not see the fall in real wages right away. Firms hire them because they see the inflation as allowing higher profits for given nominal wages. This is a movement along the Phillips curve as with change A. Eventually, workers discover that real wages have fallen, so they push for higher money wages. This causes the Phillips curve to shift upward and to the right, as with B. Some research underlines that some implicit and serious assumptions are actually in the background of the Friedmanian Phillips curve. This information asymmetry and a special pattern of flexibility of prices and wages are both necessary if one wants to maintain the mechanism told by Friedman. However, as it is argued, these presumptions remain completely unrevealed and theoretically ungrounded by Friedman.[21]

Economists such as Milton Friedman and Edmund Phelps reject this theory because it implies that workers suffer from money illusion. According to them, rational workers would only react to real wages, that is, inflation adjusted wages. However, one of the characteristics of a modern industrial economy is that workers do not encounter their employers in an atomized and perfect market. They operate in a complex combination of imperfect markets, monopolies, monopsonies, labor unions, and other institutions. In many cases, they may lack the bargaining power to act on their expectations, no matter how rational they are, or their perceptions, no matter how free of money illusion they are. It is not that high inflation causes low unemployment (as in Milton Friedman’s theory) as much as vice versa: Low unemployment raises worker bargaining power, allowing them to successfully push for higher nominal wages. To protect profits, employers raise prices.

Similarly, built-in inflation is not simply a matter of subjective “inflationary expectations” but also reflects the fact that high inflation can gather momentum and continue beyond the time when it was started, due to the objective price/wage spiral.

However, other economists, like Jeffrey Herbener, argue that price is market-determined and competitive firms cannot simply raise prices.[citation needed] They reject the Phillips curve entirely, concluding that unemployment’s influence is only a small portion of a much larger inflation picture that includes prices of raw materials, intermediate goods, cost of raising capital, worker productivity, land, and other factors.

Gordon’s triangle model

Robert J. Gordon of Northwestern University has analyzed the Phillips curve to produce what he calls the triangle model, in which the actual inflation rate is determined by the sum of

  1. demand pull or short-term Phillips curve inflation,
  2. cost push or supply shocks, and
  3. built-in inflation.

The last reflects inflationary expectations and the price/wage spiral. Supply shocks and changes in built-in inflation are the main factors shifting the short-run Phillips Curve and changing the trade-off. In this theory, it is not only inflationary expectations that can cause stagflation. For example, the steep climb of oil prices during the 1970s could have this result.

Changes in built-in inflation follow the partial-adjustment logic behind most theories of the NAIRU:

  1. Low unemployment encourages high inflation, as with the simple Phillips curve. But if unemployment stays low and inflation stays high for a long time, as in the late 1960s in the U.S., both inflationary expectations and the price/wage spiral accelerate. This shifts the short-run Phillips curve upward and rightward, so that more inflation is seen at any given unemployment rate. (This is with shift B in the diagram.)
  2. High unemployment encourages low inflation, again as with a simple Phillips curve. But if unemployment stays high and inflation stays low for a long time, as in the early 1980s in the U.S., both inflationary expectations and the price/wage spiral slow. This shifts the short-run Phillips curve downward and leftward, so that less inflation is seen at each unemployment rate.

In between these two lies the NAIRU, where the Phillips curve does not have any inherent tendency to shift, so that the inflation rate is stable. However, there seems to be a range in the middle between “high” and “low” where built-in inflation stays stable. The ends of this “non-accelerating inflation range of unemployment rates” change over time.

Joke article

In 2008, Gregor Smith published a joke article in the prestigious Journal of Money, Credit and Banking titled “Japan’s Phillips Curve Looks Like Japan”. This article points out the uncanny resemblance between Japan’s Phillips curve and the country’s geographic shape.[22]

See also

References

  1. ^ Jump up to:a b c Chang, R. (1997) “Is Low Unemployment Inflationary?” Federal Reserve Bank of Atlanta Economic Review 1Q97:4-13
  2. Jump up^ Friedman, Milton (1968). “The role of monetary policy”. American Economic Review. 68 (1): 1–17. JSTOR 1831652.
  3. ^ Jump up to:a b Phelan, John (23 October 2012). “Milton Friedman and the rise and fall of the Phillips Curve”. thecommentator.com. Retrieved September 29, 2014.
  4. Jump up^ “Phillips Curve: The Concise Encyclopedia of Economics – Library of Economics and Liberty”.
  5. Jump up^ “Velocity of MZM Money Stock”. 22 December 2016.
  6. ^ Jump up to:a b Oliver Hossfeld (2010) “US Money Demand, Monetary Overhang, and Inflation Prediction” International Network for Economic Research working paper no. 2010.4
  7. Jump up^ Phillips, A. W. (1958). “The Relationship between Unemployment and the Rate of Change of Money Wages in the United Kingdom 1861-1957”. Economica. 25 (100): 283–299. doi:10.1111/j.1468-0335.1958.tb00003.x.
  8. ^ Jump up to:a b Samuelson, Paul A.; Solow, Robert M. (1960). “Analytical Aspects of Anti-Inflation Policy”. American Economic Review. 50 (2): 177–194. JSTOR 1815021.
  9. Jump up^ Fisher, Irving (1973). “I discovered the Phillips curve: ‘A statistical relation between unemployment and price changes'”. Journal of Political Economy. The University of Chicago Press. 81 (2): 496–502. doi:10.1086/260048. JSTOR 1830534. Reprinted from 1926 edition of International Labour Review.
  10. Jump up^ Forder, James (2014). Macroeconomics and the Phillips Curve Myth. Oxford University Press. ISBN 978-0-19-968365-9.
  11. Jump up^ Domitrovic, Brain (10 October 2011). “The Economics Nobel Goes to Sargent & Sims: Attackers of the Phillips Curve”. Forbes.com. Retrieved 12 October 2011.
  12. Jump up^ Akerlof, George A.; Dickens, William T.; Perry, George L. (2000). “Near-Rational Wage and Price Setting and the Long-Run Phillips Curve”. Brookings Papers on Economic Activity. 2000 (1): 1–60.
  13. Jump up^ Jacob, Reed (2016). “AP Macroeconomics Review: Phillips Curve”. APEconReview.com.
  14. Jump up^ Blanchard, Olivier (2000). Macroeconomics (Second ed.). Prentice Hall. pp. 149–55. ISBN 0-13-013306-X.
  15. Jump up^ Clarida, Richard; Galí, Jordi; Gertler, Mark (1999). “The science of monetary policy: a New-Keynesian perspective”. Journal of Economic Literature. American Economic Association. 37 (4): 1661–1707. doi:10.1257/jel.37.4.1661. JSTOR 2565488.
  16. Jump up^ Blanchard, Olivier; Galí, Jordi (2007). “Real Wage Rigidities and the New Keynesian Model”. Journal of Money, Credit, and Banking. 39 (s1): 35–65. doi:10.1111/j.1538-4616.2007.00015.x.
  17. Jump up^ Roberts, John M. (1995). “New Keynesian Economics and the Phillips Curve”. Journal of Money, Credit and Banking. 27 (4): 975–984. JSTOR 2077783.
  18. Jump up^ Clarida, Richard; Galí, Jordi; Gertler, Mark (2000). “Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory”. The Quarterly Journal of Economics. 115 (1): 147–180. doi:10.1162/003355300554692.
  19. Jump up^ Romer, David (2012). “Dynamic Stochastic General Equilibrium Models of Fluctuation”. Advanced Macroeconomics. New York: McGraw-Hill Irwin. pp. 312–364. ISBN 978-0-07-351137-5.
  20. Jump up^ Forder, James (2010). “The historical place of the ‘Friedman-Phelps’ expectations critique”. European Journal of the History of Economic Thought. 17 (3): 493–511. doi:10.1080/09672560903114875.
  21. Jump up^ Galbács, Peter (2015). The Theory of New Classical Macroeconomics. A Positive Critique. Heidelberg/New York/Dordrecht/London: Springer. doi:10.1007/978-3-319-17578-2. ISBN 978-3-319-17578-2.
  22. Jump up^ Smith, Gregor W. (1 September 2008). “Japan’s Phillips Curve Looks Like Japan”. 40 (6): 1325–1326. doi:10.1111/j.1538-4616.2008.00160.x – via Wiley Online Library.

Further reading

External links

https://en.wikipedia.org/wiki/Phillips_curve

Milton Friedman

From Wikipedia, the free encyclopedia
  (Redirected from Milton friedman)
Milton Friedman
Portrait of Milton Friedman.jpg

Friedman in 2004
Born July 31, 1912
Brooklyn, New York, U.S.
Died November 16, 2006 (aged 94)
San Francisco, California, U.S.
Nationality American
Spouse(s) Rose Friedman
Institution
School or
tradition
Chicago School
Alma mater
Doctoral
advisor
Simon Kuznets
Doctoral
students
Phillip Cagan
Harry Markowitz
Lester G. Telser[1]
David I. Meiselman
Neil Wallace
Miguel Sidrauski
Influences
Influenced
Contributions
Awards
Information at IDEAS / RePEc
Signature
Milton friedman signature.svg
Notes

Milton Friedman (July 31, 1912 – November 16, 2006) was an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy.[4] With George Stigler and others, Friedman was among the intellectual leaders of the second generation of Chicago price theory, a methodological movement at the University of Chicago’s Department of Economics, Law School, and Graduate School of Business from the 1940s onward. Several students and young professors that were recruited or mentored by Friedman at Chicago went on to become leading economists; they include Gary Becker, Robert Fogel, Thomas Sowell,[5] and Robert Lucas, Jr.[6]

Friedman’s challenges to what he later called “naive Keynesian” theory[7] began with his 1950s reinterpretation of the consumption function. In the 1960s, he became the main advocate opposing Keynesian government policies,[8] and described his approach (along with mainstream economics) as using “Keynesian language and apparatus” yet rejecting its “initial” conclusions.[9] He theorized that there existed a “natural” rate of unemployment, and argued that employment above this rate would cause inflation to accelerate.[10] He argued that the Phillips curve was, in the long run, vertical at the “natural rate” and predicted what would come to be known as stagflation.[11] Friedman promoted an alternative macroeconomic viewpoint known as “monetarism“, and argued that a steady, small expansion of the money supply was the preferred policy.[12] His ideas concerning monetary policy, taxation, privatization and deregulation influenced government policies, especially during the 1980s. His monetary theory influenced the Federal Reserve’s response to the global financial crisis of 2007–08.[13]

Friedman was an advisor to Republican U.S. President Ronald Reagan[14] and Conservative British Prime Minister Margaret Thatcher.[15] His political philosophy extolled the virtues of a free market economic system with minimal intervention. He once stated that his role in eliminating U.S. conscription was his proudest accomplishment. In his 1962 book Capitalism and Freedom, Friedman advocated policies such as a volunteer military, freely floating exchange rates, abolition of medical licenses, a negative income tax, and school vouchers.[16] His support for school choice led him to found the Friedman Foundation for Educational Choice, later renamed EdChoice.[17]

Milton Friedman’s works include many monographs, books, scholarly articles, papers, magazine columns, television programs, and lectures, and cover a broad range of economic topics and public policy issues. His books and essays have had an international influence, including in former communist states.[18][19][20][21] A survey of economists ranked Friedman as the second-most popular economist of the twentieth century after John Maynard Keynes,[22] and The Economist described him as “the most influential economist of the second half of the 20th century … possibly of all of it”.[23]

Contents

 [show] 

Early life

Friedman was born in Brooklyn, New York on July 31, 1912. His parents, Sára Ethel (née Landau) and Jenő Saul Friedman,[24] were Jewish immigrants from Beregszász in Carpathian Ruthenia, Kingdom of Hungary (now Berehove in Ukraine). They both worked as dry goods merchants. Shortly after Milton’s birth, the family relocated to Rahway, New Jersey. In his early teens, Friedman was injured in a car accident, which scarred his upper lip.[25] A talented student, Friedman graduated from Rahway High School in 1928, just before his 16th birthday.[26][27]

In 1932, Friedman graduated from Rutgers University, where he specialized in mathematics and economics and initially intended to become an actuary. During his time at Rutgers, Friedman became influenced by two economics professors, Arthur F. Burns and Homer Jones, who convinced him that modern economics could help end the Great Depression.

After graduating from Rutgers, Friedman was offered two scholarships to do graduate work—one in mathematics at Brown University and the other in economics at the University of Chicago.[28] Friedman chose the latter, thus earning a Master of Arts degree in 1933. He was strongly influenced by Jacob Viner, Frank Knight, and Henry Simons. It was at Chicago that Friedman met his future wife, economist Rose Director. During the 1933–1934 academic year he had a fellowship at Columbia University, where he studied statistics with renowned statistician and economist Harold Hotelling. He was back in Chicago for the 1934–1935 academic year, working as a research assistant for Henry Schultz, who was then working on Theory and Measurement of Demand. That year, Friedman formed what would prove to be lifelong friendships with George Stigler and W. Allen Wallis.[29]

Public service

Friedman was initially unable to find academic employment, so in 1935 he followed his friend W. Allen Wallis to Washington, where Franklin D. Roosevelt‘s New Deal was “a lifesaver” for many young economists.[30] At this stage, Friedman said that he and his wife “regarded the job-creation programs such as the WPA, CCC, and PWA appropriate responses to the critical situation,” but not “the price- and wage-fixing measures of the National Recovery Administration and the Agricultural Adjustment Administration.”[31] Foreshadowing his later ideas, he believed price controls interfered with an essential signaling mechanism to help resources be used where they were most valued. Indeed, Friedman later concluded that all government intervention associated with the New Deal was “the wrong cure for the wrong disease,” arguing that the money supply should simply have been expanded, instead of contracted.[32] Later, Friedman and his colleague Anna Schwartz wrote A Monetary History of the United States, 1867–1960, which argued that the Great Depression was caused by a severe monetary contraction due to banking crises and poor policy on the part of the Federal Reserve.[33]

During 1935, he began work for the National Resources Committee, which was then working on a large consumer budget survey. Ideas from this project later became a part of his Theory of the Consumption Function. Friedman began employment with the National Bureau of Economic Research during autumn 1937 to assist Simon Kuznets in his work on professional income. This work resulted in their jointly authored publication Incomes from Independent Professional Practice, which introduced the concepts of permanent and transitory income, a major component of the Permanent Income Hypothesis that Friedman worked out in greater detail in the 1950s. The book hypothesizes that professional licensing artificially restricts the supply of services and raises prices.

During 1940, Friedman was appointed an assistant professor teaching Economics at the University of Wisconsin–Madison, but encountered antisemitism in the Economics department and decided to return to government service.[34][35] From 1941 to 1943 Friedman worked on wartime tax policy for the Federal Government, as an advisor to senior officials of the United States Department of the Treasury. As a Treasury spokesman during 1942 he advocated a Keynesian policy of taxation. He helped to invent the payroll withholding tax system, since the federal government badly needed money in order to fight the war.[36] He later said, “I have no apologies for it, but I really wish we hadn’t found it necessary and I wish there were some way of abolishing withholding now.”[37]

Academic career

Early years

In 1940, Friedman accepted a position at the University of Wisconsin–Madison, but left because of differences with faculty regarding United States involvement in World War II. Friedman believed the United States should enter the war.[38] In 1943, Friedman joined the Division of War Research at Columbia University (headed by W. Allen Wallis and Harold Hotelling), where he spent the rest of World War II working as a mathematical statistician, focusing on problems of weapons design, military tactics, and metallurgical experiments.[38][39]

In 1945, Friedman submitted Incomes from Independent Professional Practice (co-authored with Kuznets and completed during 1940) to Columbia as his doctoral dissertation. The university awarded him a PhD in 1946. Friedman spent the 1945–1946 academic year teaching at the University of Minnesota (where his friend George Stigler was employed). On February 12, 1945, his son, David D. Friedman was born.

University of Chicago

In 1946, Friedman accepted an offer to teach economic theory at the University of Chicago (a position opened by departure of his former professor Jacob Viner to Princeton University). Friedman would work for the University of Chicago for the next 30 years. There he contributed to the establishment of an intellectual community that produced a number of Nobel Prize winners, known collectively as the Chicago school of economics.

At that time, Arthur F. Burns, who was then the head of the National Bureau of Economic Research, asked Friedman to rejoin the Bureau’s staff. He accepted the invitation, and assumed responsibility for the Bureau’s inquiry into the role of money in the business cycle. As a result, he initiated the “Workshop in Money and Banking” (the “Chicago Workshop”), which promoted a revival of monetary studies. During the latter half of the 1940s, Friedman began a collaboration with Anna Schwartz, an economic historian at the Bureau, that would ultimately result in the 1963 publication of a book co-authored by Friedman and Schwartz, A Monetary History of the United States, 1867–1960.

Friedman spent the 1954–1955 academic year as a Fulbright Visiting Fellow at Gonville and Caius College, Cambridge. At the time, the Cambridge economics faculty was divided into a Keynesian majority (including Joan Robinson and Richard Kahn) and an anti-Keynesian minority (headed by Dennis Robertson). Friedman speculated that he was invited to the fellowship, because his views were unacceptable to both of the Cambridge factions. Later his weekly columns for Newsweek magazine (1966–84) were well read and increasingly influential among political and business people.[40] From 1968 to 1978, he and Paul Samuelson participated in the Economics Cassette Series, a biweekly subscription series where the economist would discuss the days’ issues for about a half-hour at a time.[41][42]

Friedman was an economic adviser to Republican presidential candidate Barry Goldwater during 1964.

Personal life

Retirement

In 1977, at the age of 65, Friedman retired from the University of Chicago after teaching there for 30 years. He and his wife moved to San Francisco where he became a visiting scholar at the Federal Reserve Bank of San Francisco. From 1977 on, he was affiliated with the Hoover Institution at Stanford University. During the same year, Friedman was approached by the Free To Choose Network and asked to create a television program presenting his economic and social philosophy.

The Friedmans worked on this project for the next three years, and during 1980, the ten-part series, titled Free to Choose, was broadcast by the Public Broadcasting Service (PBS). The companion book to the series (co-authored by Milton and his wife, Rose Friedman), also titled Free To Choose, was the bestselling nonfiction book of 1980 and has since been translated into 14 foreign languages.

Friedman served as an unofficial adviser to Ronald Reagan during his 1980 presidential campaign, and then served on the President’s Economic Policy Advisory Board for the rest of the Reagan Administration. Ebenstein says Friedman was “the ‘guru’ of the Reagan administration.”[43] In 1988 he received the National Medal of Science and Reagan honored him with the Presidential Medal of Freedom. Milton Friedman is known now as one of the most influential economists of the 20th century.[44][45] Throughout the 1980s and 1990s, Friedman continued to write editorials and appear on television. He made several visits to Eastern Europe and to China, where he also advised governments. He was also for many years a Trustee of the Philadelphia Society.[46][47][48]

Later life

According to a 2007 article in Commentary magazine, his “parents were moderately observant [Jews], but Friedman, after an intense burst of childhood piety, rejected religion altogether.”[49] He described himself as an agnostic.[50] Friedman wrote extensively of his life and experiences, especially in 1998 in his memoirs with his wife Rose, titled Two Lucky People.

Death

Friedman died of heart failure at the age of 94 years in San Francisco on November 16, 2006.[51] He was still a working economist performing original economic research; his last column was published in The Wall Street Journal the day after his death.[52] He was survived by his wife (who died on August 18, 2009) and their two children, David, known for the anarcho-capitalist book The Machinery of Freedom, and Janet.

Scholarly contributions

Economics

Friedman was best known for reviving interest in the money supply as a determinant of the nominal value of output, that is, the quantity theory of money. Monetarism is the set of views associated with modern quantity theory. Its origins can be traced back to the 16th-century School of Salamanca or even further; however, Friedman’s contribution is largely responsible for its modern popularization. He co-authored, with Anna Schwartz, A Monetary History of the United States, 1867–1960 (1963), which was an examination of the role of the money supply and economic activity in the U.S. history. A striking conclusion of their research regarded the way in which money supply fluctuations contribute to economic fluctuations. Several regression studies with David Meiselman during the 1960s suggested the primacy of the money supply over investment and government spending in determining consumption and output. These challenged a prevailing, but largely untested, view on their relative importance. Friedman’s empirical research and some theory supported the conclusion that the short-run effect of a change of the money supply was primarily on output but that the longer-run effect was primarily on the price level.

Friedman was the main proponent of the monetarist school of economics. He maintained that there is a close and stable association between inflation and the money supply, mainly that inflation could be avoided with proper regulation of the monetary base’s growth rate. He famously used the analogy of “dropping money out of a helicopter.”,[53] in order to avoid dealing with money injection mechanisms and other factors that would overcomplicate his models.

Friedman’s arguments were designed to counter the popular concept of cost-push inflation, that the increased general price level at the time was the result of increases in the price of oil, or increases in wages; as he wrote,

Inflation is always and everywhere a monetary phenomenon.

— Milton Friedman, 1963.[54]

Friedman rejected the use of fiscal policy as a tool of demand management; and he held that the government’s role in the guidance of the economy should be restricted severely. Friedman wrote extensively on the Great Depression, which he termed the Great Contraction, arguing that it had been caused by an ordinary financial shock whose duration and seriousness were greatly increased by the subsequent contraction of the money supply caused by the misguided policies of the directors of the Federal Reserve.

The Fed was largely responsible for converting what might have been a garden-variety recession, although perhaps a fairly severe one, into a major catastrophe. Instead of using its powers to offset the depression, it presided over a decline in the quantity of money by one-third from 1929 to 1933 … Far from the depression being a failure of the free-enterprise system, it was a tragic failure of government.

— Milton Friedman, Two Lucky People, 233[55]

Friedman also argued for the cessation of government intervention in currency markets, thereby spawning an enormous literature on the subject, as well as promoting the practice of freely floating exchange rates. His close friend George Stigler explained, “As is customary in science, he did not win a full victory, in part because research was directed along different lines by the theory of rational expectations, a newer approach developed by Robert Lucas, also at the University of Chicago.”[56] The relationship between Friedman and Lucas, or new classical macroeconomics as a whole, was highly complex. The Friedmanian Phillips curve was an interesting starting point for Lucas, but he soon realized that the solution provided by Friedman was not quite satisfactory. Lucas elaborated a new approach in which rational expectations were presumed instead of the Friedmanian adaptive expectations. Due to this reformulation, the story in which the theory of the new classical Phillips curve was embedded radically changed. This modification, however, had a significant effect on Friedman’s own approach, so, as a result, the theory of the Friedmanian Phillips curve also changed.[57] Moreover, new classical Neil Wallace, who was a graduate student at the University of Chicago between 1960 and 1963, regarded Friedman’s theoretical courses as a mess.[58] This evaluation clearly indicates the broken relationship between Friedmanian monetarism and new classical macroeconomics.

Friedman was also known for his work on the consumption function, the permanent income hypothesis (1957), which Friedman himself referred to as his best scientific work.[59] This work contended that rational consumers would spend a proportional amount of what they perceived to be their permanent income. Windfall gains would mostly be saved. Tax reductions likewise, as rational consumers would predict that taxes would have to increase later to balance public finances. Other important contributions include his critique of the Phillips curve and the concept of the natural rate of unemployment (1968). This critique associated his name, together with that of Edmund Phelps, with the insight that a government that brings about greater inflation cannot permanently reduce unemployment by doing so. Unemployment may be temporarily lower, if the inflation is a surprise, but in the long run unemployment will be determined by the frictions and imperfections of the labor market.

Friedman’s essay “The Methodology of Positive Economics” (1953) provided the epistemological pattern for his own subsequent research and to a degree that of the Chicago School. There he argued that economics as science should be free of value judgments for it to be objective. Moreover, a useful economic theory should be judged not by its descriptive realism but by its simplicity and fruitfulness as an engine of prediction. That is, students should measure the accuracy of its predictions, rather than the ‘soundness of its assumptions’. His argument was part of an ongoing debate among such statisticians as Jerzy Neyman, Leonard Savage, and Ronald Fisher.[60]

Statistics

One of his most famous contributions to statistics is sequential sampling. Friedman did statistical work at the Division of War Research at Columbia, where he and his colleagues came up with the technique. It later became, in the words of The New Palgrave Dictionary of Economics, “the standard analysis of quality control inspection”. The dictionary adds, “Like many of Friedman’s contributions, in retrospect it seems remarkably simple and obvious to apply basic economic ideas to quality control; that however is a measure of his genius.”[61]

Public policy positions

Federal Reserve

Due to its poor performance,[62] Friedman believed that the Federal Reserve Board should be abolished.[63][64] Friedman was deeply critical about Federal Reserve policies, even during the so-called ‘Volcker shock’ that was labelled ‘monetarist.’[65] He further believed that if the money supply was to be centrally controlled (as by the Federal Reserve System) that the preferable way to do it would be with a mechanical system that would keep the quantity of money increasing at a steady rate.

Exchange rates

Friedman was a strong advocate for floating exchange rates throughout the entire Bretton-Woods period. He argued that a flexible exchange rate would make external adjustment possible and allow countries to avoid Balance of Payments crises. He saw fixed exchange rates as an undesirable form of government intervention. The case was articulated in an influential 1953 paper, “The Case for Flexible Exchange Rates”, at a time, when most commentators regarded the possibility of floating exchange rates as a fantasy.[66][67]

School choice

In his 1955 article “The Role of Government in Education”[68] Friedman proposed supplementing publicly operated schools with privately run but publicly funded schools through a system of school vouchers.[69] Reforms similar to those proposed in the article were implemented in, for example, Chile in 1981 and Sweden in 1992.[70] In 1996, Friedman, together with his wife, founded the Friedman Foundation for Educational Choice to advocate school choice and vouchers. In 2016, the Friedman Foundation changed its name to EdChoice to honor the Friedmans’ desire to have the educational choice movement live on without their names attached to it after their deaths.[17]

Conscription

While Walter Oi is credited with establishing the economic basis for a volunteer military, Milton Friedman was a proponent, stating that the draft was “inconsistent with a free society.”[71][72] In Capitalism and Freedom, he argued that conscription is inequitable and arbitrary, preventing young men from shaping their lives as they see fit.[73] During the Nixon administration he headed the committee to research a conversion to paid/volunteer armed force. He would later state that his role in eliminating the conscription in the United States was his proudest accomplishment.[12] Friedman did, however, believe a nation could compel military training as a reserve in case of war time.[73]

Foreign policy

Biographer Lanny Ebenstein noted a drift over time in Friedman’s views from an interventionist to a more cautious foreign policy.[74] He supported US involvement in the Second World War and initially supported a hard line against Communism, but moderated over time.[74] He opposed the Gulf War and the Iraq War.[74] In a spring 2006 interview, Friedman said that the USA’s stature in the world had been eroded by the Iraq War, but that it might be improved if Iraq were to become a peaceful independent country.[75]

Libertarianism and the Republican Party

He served as a member of President Reagan’s Economic Policy Advisory Board starting at 1981. In 1988, he received the Presidential Medal of Freedom and the National Medal of Science. He said that he was a libertarian philosophically, but a member of the U.S. Republican Party for the sake of “expediency” (“I am a libertarian with a small ‘l’ and a Republican with a capital ‘R.’ And I am a Republican with a capital ‘R’ on grounds of expediency, not on principle.”) But, he said, “I think the term classical liberal is also equally applicable. I don’t really care very much what I’m called. I’m much more interested in having people thinking about the ideas, rather than the person.”[76]

Public goods and monopoly

Friedman was supportive of the state provision of some public goods that private businesses are not considered as being able to provide. However, he argued that many of the services performed by government could be performed better by the private sector. Above all, if some public goods are provided by the state, he believed that they should not be a legal monopoly where private competition is prohibited; for example, he wrote:

There is no way to justify our present public monopoly of the post office. It may be argued that the carrying of mail is a technical monopoly and that a government monopoly is the least of evils. Along these lines, one could perhaps justify a government post office, but not the present law, which makes it illegal for anybody else to carry the mail. If the delivery of mail is a technical monopoly, no one else will be able to succeed in competition with the government. If it is not, there is no reason why the government should be engaged in it. The only way to find out is to leave other people free to enter.

— Milton Friedman, Friedman, Milton & Rose D. Capitalism and Freedom, University of Chicago Press, 1982, p. 29

Social security, welfare programs, and negative income tax

After 1960 Friedman attacked Social Security from a free market view stating that it had created welfare dependency.[77]

Friedman proposed that if there had to be a welfare system of any kind, he would replace the existing U.S. welfare system with a negative income tax, a progressive tax system in which the poor receive a basic living income from the government.[78] According to the New York Times, Friedman’s views in this regard were grounded in a belief that while “market forces … accomplish wonderful things”, they “cannot ensure a distribution of income that enables all citizens to meet basic economic needs”.[78]

Drug policy

Friedman also supported libertarian policies such as legalization of drugs and prostitution. During 2005, Friedman and more than 500 other economists advocated discussions regarding the economic benefits of the legalization of marijuana.[79]

Gay rights

Friedman was also a supporter of gay rights.[80][81] He never specifically supported same-sex marriage, instead saying “I do not believe there should be any discrimination against gays.”[81]

Economic freedom

Michael Walker of the Fraser Institute and Friedman hosted a series of conferences from 1986 to 1994. The goal was to create a clear definition of economic freedom and a method for measuring it. Eventually this resulted in the first report on worldwide economic freedom, Economic Freedom in the World.[82] This annual report has since provided data for numerous peer-reviewed studies and has influenced policy in several nations.

Along with sixteen other distinguished economists he opposed the Copyright Term Extension Act and filed an amicus brief in Eldred v. Ashcroft.[83] He supported the inclusion of the word “no-brainer” in the brief.[84]

Friedman argued for stronger basic legal (constitutional) protection of economic rights and freedoms to further promote industrial-commercial growth and prosperity and buttress democracy and freedom and the rule of law generally in society.[85]

Honors, recognition, and influence

George H. Nash, a leading historian of American conservatism, says that by, “the end of the 1960s he was probably the most highly regarded and influential conservative scholar in the country, and one of the few with an international reputation.”[86] Friedman allowed the libertarian Cato Institute to use his name for its biannual Milton Friedman Prize for Advancing Liberty beginning in 2001. A Friedman Prize was given to the late British economist Peter Bauer in 2002, Peruvian economist Hernando de Soto in 2004, Mart Laar, former Estonian Prime Minister in 2006 and a young Venezuelan student Yon Goicoechea in 2008. His wife Rose, sister of Aaron Director, with whom he initiated the Friedman Foundation for Educational Choice, served on the international selection committee.[87][88] Friedman was also a recipient of the Nobel Prize in Economics.

Upon Friedman’s death, Harvard President Lawrence Summers called him “The Great Liberator” saying “… any honest Democrat will admit that we are now all Friedmanites.” He said Friedman’s great popular contribution was “in convincing people of the importance of allowing free markets to operate.”[89]

In 2013 Stephen Moore, a member of the editorial forward of the Wall Street Journal said, “Quoting the most-revered champion of free-market economics since Adam Smith has become a little like quoting the Bible.” He adds, “There are sometimes multiple and conflicting interpretations.”[90]

Nobel Memorial Prize in Economic Sciences

Friedman won the Nobel Memorial Prize in Economic Sciences, the sole recipient for 1976, “for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy.”[4]

Hong Kong

Friedman once said, “If you want to see capitalism in action, go to Hong Kong.”[91] He wrote in 1990 that the Hong Kong economy was perhaps the best example of a free market economy.[92]

One month before his death, he wrote the article “Hong Kong Wrong – What would Cowperthwaite say?” in the Wall Street Journal, criticizing Donald Tsang, the Chief Executive of Hong Kong, for abandoning “positive noninterventionism.”[93] Tsang later said he was merely changing the slogan to “big market, small government,” where small government is defined as less than 20% of GDP. In a debate between Tsang and his rival, Alan Leong, before the 2007 Chief Executive election, Leong introduced the topic and jokingly accused Tsang of angering Friedman to death.

Chile

Main articles: Miracle of Chile and Chicago Boys

During 1975, two years after the military coup that brought military dictator President Augusto Pinochet to power and ended the government of Salvador Allende, the economy of Chile experienced a severe crisis. Friedman and Arnold Harberger accepted an invitation of a private Chilean foundation to visit Chile and speak on principles of economic freedom.[94] He spent seven days in Chile giving a series of lectures at the Universidad Católica de Chile and the (National) University of Chile. One of the lectures was entitled “The Fragility of Freedom” and according to Friedman, “dealt with precisely the threat to freedom from a centralized military government.”[95]

In an April 21, 1975, letter to Pinochet, Friedman considered the “key economic problems of Chile are clearly … inflation and the promotion of a healthy social market economy“.[96] He stated that “There is only one way to end inflation: by drastically reducing the rate of increase of the quantity of money …” and that “… cutting government spending is by far and away the most desirable way to reduce the fiscal deficit, because it … strengthens the private sector thereby laying the foundations for healthy economic growth”.[96] As to how rapidly inflation should be ended, Friedman felt that “for Chile where inflation is raging at 10–20% a month … gradualism is not feasible. It would involve so painful an operation over so long a period that the patient would not survive.” Choosing “a brief period of higher unemployment…” was the lesser evil.. and that “the experience of Germany, … of Brazil …, of the post-war adjustment in the U.S. … all argue for shock treatment“. In the letter Friedman recommended to deliver the shock approach with “… a package to eliminate the surprise and to relieve acute distress” and “… for definiteness let me sketch the contents of a package proposal … to be taken as illustrative” although his knowledge of Chile was “too limited to enable [him] to be precise or comprehensive”. He listed a “sample proposal” of 8 monetary and fiscal measures including “the removal of as many as obstacles as possible that now hinder the private market. For example, suspend … the present law against discharging employees”. He closed, stating “Such a shock program could end inflation in months”. His letter suggested that cutting spending to reduce the fiscal deficit would result in less transitional unemployment than raising taxes.

Sergio de Castro, a Chilean Chicago School graduate, became the nation’s Minister of Finance in 1975. During his six-year tenure, foreign investment increased, restrictions were placed on striking and labor unions, and GDP rose yearly.[97] A foreign exchange program was created between the Catholic University of Chile and the University of Chicago. Many other Chicago School alumni were appointed government posts during and after the Pinochet years; others taught its economic doctrine at Chilean universities. They became known as the Chicago Boys.[98]

Friedman did not criticize Pinochet’s dictatorship at the time, nor the assassinations, illegal imprisonments, torture, or other atrocities that were well known by then.[99] In 1976 Friedman defended his unofficial adviser position with: “I do not consider it as evil for an economist to render technical economic advice to the Chilean Government, any more than I would regard it as evil for a physician to give technical medical advice to the Chilean Government to help end a medical plague.”[100]

Friedman defended his activity in Chile on the grounds that, in his opinion, the adoption of free market policies not only improved the economic situation of Chile but also contributed to the amelioration of Pinochet’s rule and to the eventual transition to a democratic government during 1990. That idea is included in Capitalism and Freedom, in which he declared that economic freedom is not only desirable in itself but is also a necessary condition for political freedom. In his 1980 documentary Free to Choose, he said the following: “Chile is not a politically free system, and I do not condone the system. But the people there are freer than the people in Communist societies because government plays a smaller role. … The conditions of the people in the past few years has been getting better and not worse. They would be still better to get rid of the junta and to be able to have a free democratic system.”[101][102] In 1984, Friedman stated that he has “never refrained from criticizing the political system in Chile.”[95] In 1991 he said: “I have nothing good to say about the political regime that Pinochet imposed. It was a terrible political regime. The real miracle of Chile is not how well it has done economically; the real miracle of Chile is that a military junta was willing to go against its principles and support a free market regime designed by principled believers in a free market. […] In Chile, the drive for political freedom, that was generated by economic freedom and the resulting economic success, ultimately resulted in a referendum that introduced political democracy. Now, at long last, Chile has all three things: political freedom, human freedom and economic freedom. Chile will continue to be an interesting experiment to watch to see whether it can keep all three or whether, now that it has political freedom,that political freedom will tend to be used to destroy or reduce economic freedom.”[103] He stressed that the lectures he gave in Chile were the same lectures he later gave in China and other socialist states.[104]

During the 2000 PBS documentary The Commanding Heights (based on the book), Friedman continued to argue that “free markets would undermine [Pinochet’s] political centralization and political control.”,[105][106] and that criticism over his role in Chile missed his main contention that freer markets resulted in freer people, and that Chile’s unfree economy had caused the military government. Friedman advocated for free markets which undermined “political centralization and political control”.[107]

Iceland

Friedman visited Iceland during the autumn of 1984, met with important Icelanders and gave a lecture at the University of Iceland on the “tyranny of the status quo.” He participated in a lively television debate on August 31, 1984 with socialist intellectuals, including Ólafur Ragnar Grímsson, who later became the president of Iceland.[108] When they complained that a fee was charged for attending his lecture at the University and that, hitherto, lectures by visiting scholars had been free-of-charge, Friedman replied that previous lectures had not been free-of-charge in a meaningful sense: lectures always have related costs. What mattered was whether attendees or non-attendees covered those costs. Friedman thought that it was fairer that only those who attended paid. In this discussion Friedman also stated that he did not receive any money for delivering that lecture.

Estonia

Although Friedman never visited Estonia, his book Free to Choose exercised a great influence on that nation’s then 32-year-old prime minister, Mart Laar, who has claimed that it was the only book on economics he had read before taking office. Laar’s reforms are often credited with responsibility for transforming Estonia from an impoverished Soviet Republic to the “Baltic Tiger.” A prime element of Laar’s program was introduction of the flat tax. Laar won the 2006 Milton Friedman Prize for Advancing Liberty, awarded by the Cato Institute.[109]

United Kingdom

After 1950 Friedman was frequently invited to lecture in Britain, and by the 1970s his ideas had gained widespread attention in conservative circles. For example, he was a regular speaker at the Institute of Economic Affairs (IEA), a libertarian think tank. Conservative politician Margaret Thatcher closely followed IEA programs and ideas, and met Friedman there in 1978. He also strongly influenced Keith Joseph, who became Thatcher’s senior advisor on economic affairs, as well as Alan Walters and Patrick Minford, two other key advisers. Major newspapers, including the Daily Telegraph, The Times, and The Financial Times all promulgated Friedman’s monetarist ideas to British decision-makers. Friedman’s ideas strongly influenced Thatcher and her allies when she became Prime Minister in 1979.[110][111]

Criticism

Econometrician David Hendry criticized part of Friedman’s and Anna Schwartz’s 1982 Monetary Trends.[112] When asked about it during an interview with Icelandic TV in 1984,[113] Friedman said that the criticism referred to a different problem from that which he and Schwartz had tackled, and hence was irrelevant,[114] and pointed out the lack of consequential peer review amongst econometricians on Hendry’s work.[115] In 2006, Hendry said that Friedman was guilty of “serious errors” of misunderstanding that meant “the t-ratios he reported for UK money demand were overstated by nearly 100 per cent”, and said that, in a paper published in 1991 with Neil Ericsson,[116] he had refuted “almost every empirical claim […] made about UK money demand” by Friedman and Schwartz.[117] A 2004 paper updated and confirmed the validity of the Hendry–Ericsson findings through 2000.[118]

Although Keynesian Nobel laureate Paul Krugman praised Friedman as a “great economist and a great man” after Friedman’s death in 2006, and acknowledged his many, widely accepted contributions to empirical economics, Krugman had been, and remains, a prominent critic of Friedman. Krugman has written that “he slipped all too easily into claiming both that markets always work and that only markets work. It’s extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose.”[119]

In her book The Shock Doctrine, author and social activist Naomi Klein criticized Friedman’s economic liberalism, identifying it with the principles that guided the economic restructuring that followed the military coups in countries such as Chile and Indonesia. Based on their assessments of the extent to which what she describes as neoliberal policies contributed to income disparities and inequality, both Klein and Noam Chomsky have suggested that the primary role of what they describe as neoliberalism was as an ideological cover for capital accumulation by multinational corporations.[120]

Visit to Chile

Because of his involvement with the Pinochet government, there were international protests when Friedman was awarded the Nobel Prize in 1976.[121] Friedman was accused of supporting the military dictatorship in Chile because of the relation of economists of the University of Chicago to Pinochet, and a controversial six-day trip[122] he took to Chile during March 1975 (less than two years after the coup that deposed President Salvador Allende). Friedman answered that he never was an adviser to the dictatorship, but only gave some lectures and seminars on inflation, and met with officials, including Augusto Pinochet, while in Chile.[123]

Chilean economist Orlando Letelier asserted that Pinochet’s dictatorship resorted to oppression because of popular opposition to Chicago School policies in Chile.[124] After a 1991 speech on drug legalisation, Friedman answered a question on his involvement with the Pinochet regime, saying that he was never an advisor to Pinochet (also mentioned in his 1984 Iceland interview[95]), but that a group of his students at the University of Chicago were involved in Chile’s economic reforms. Friedman credited these reforms with high levels of economic growth and with the establishment of democracy that has subsequently occurred in Chile.[125][126] In October 1988, after returning from a lecture tour of China during which he had met with Zhao Ziyang, Friedman wrote to The Stanford Daily asking if he should anticipate a similar “avalanche of protests for having been willing to give advice to so evil a government? And if not, why not?”[127]

Capitalism and Freedom

Capitalism and Freedom is a seminal work by Friedman. In the book, Friedman talks about the need to move to a classically liberal society, that free markets would help nations and individuals in the long-run and fix the efficiency problems currently faced by the United States and other major countries of the 1950s and 1960s. He goes through the chapters specifying a specific issue in each respective chapter from the role of government and money supply to social welfare programs to a special chapter on occupational licensure. Friedman concludes Capitalism and Freedom with his “classical liberal” stance, that government should stay out of matters that do not need and should only involve itself when absolutely necessary for the survival of its people and the country. He recounts how the best of a country’s abilities come from its free markets while its failures come from government intervention.[77]

Selected bibliography

  • A Theory of the Consumption Function (1957)
  • A Program for Monetary Stability (Fordham University Press, 1960) 110 pp. online version
  • Capitalism and Freedom (1962), highly influential series of essays that established Friedman’s position on major issues of public policy excerpts
  • A Monetary History of the United States, 1867–1960, with Anna J. Schwartz, 1963; part 3 reprinted as The Great Contraction
  • “The Role of Monetary Policy.” American Economic Review, Vol. 58, No. 1 (Mar., 1968), pp. 1–17 JSTOR presidential address to American Economics Association
  • “Inflation and Unemployment: Nobel lecture”, 1977, Journal of Political Economy. Vol. 85, pp. 451–72. JSTOR
  • Free to Choose: A personal statement, with Rose Friedman, (1980), highly influential restatement of policy views
  • The Essence of Friedman, essays edited by Kurt R. Leube, (1987) (ISBN 0-8179-8662-6)
  • Two Lucky People: Memoirs (with Rose Friedman) ISBN 0-226-26414-9 (1998) excerpt and text search
  • Milton Friedman on Economics: Selected Papers by Milton Friedman, edited by Gary S. Becker (2008)
  • An Interview with Milton Friedman, John B. Taylor (2001). Macroeconomic Dynamics, 5, pp 101–31

See also

Notes

  1. Jump up^ Ebenstein, Lanny (2007). Milton Friedman: A Biography. Palgrave Macmillan. p. 89.
  2. Jump up^ Charles Moore (2013). Margaret Thatcher: The Authorized Biography, Volume One: Not For Turning. Penguin. pp. 576–77.
  3. Jump up^ Lanny Ebenstein (2007). Milton Friedman: A Biography. St. Martin’s Press. p. 208.
  4. ^ Jump up to:a b “Milton Friedman on nobelprize.org”. Nobel Prize. 1976. Retrieved February 20, 2008.
  5. Jump up^ Thomas Sowell (2016-09-16). A Personal Odyssey. Free Press. p. 320. ISBN 0743215087.
  6. Jump up^ The Chicago School: How the University of Chicago Assembled the Thinkers Who Revolutionized Economics and Business
  7. Jump up^ “Milton Friedman”. Commanding Heights. PBS. October 1, 2000. Retrieved September 19, 2011.
  8. Jump up^ Milton Friedman—Economist as Public Intellectual
  9. Jump up^ Mark Skousen (2009-02-28). The Making of Modern Economics: The Lives and Ideas of the Great Thinkers. M.E. Sharpe. p. 407. ISBN 0-7656-2227-0.
  10. Jump up^ Among macroeconomists, the “natural” rate has been increasingly replaced by James Tobin‘s NAIRU, the non-accelerating inflation rate of unemployment, which is seen as having fewer normative connotations.
  11. Jump up^ Nobel prize winner Paul Krugman stated that, “In 1968 in one of the decisive intellectual achievements of postwar economics, Friedman not only showed why the apparent tradeoff embodied in the idea of the Phillips curve was wrong; he also predicted the emergence of combined inflation and high unemployment … dubbed ‘stagflation.” Paul Krugman, Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations (1995) p. 43 online
  12. ^ Jump up to:a b Doherty, Brian (June 1, 1995). “Best of Both Worlds”. Reason Magazine. Retrieved October 24, 2009
  13. Jump up^ Edward Nelson, “Friedman’s Monetary Economics in Practice,” Finance and Economics Discussion Series, Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, April 13, 2011. Nelson stated, “in important respects, the overall monetary and financial policy response to the crisis can be viewed as Friedman’s monetary economics in practice.” and “Friedman’s recommendations for responding to a financial crisis largely lined up with the principal financial and monetary policy measures taken since 2007.” Nelson, “Review,” in Journal of Economic Literature (Dec, 2012) 50#4 pp. 1106–09
  14. Jump up^ Lanny Ebenstein (2007). Milton Friedman: A Biography. St. Martin’s Press. p. 208.
  15. Jump up^ Charles Moore (2013). Margaret Thatcher: The Authorized Biography, Volume One: Not For Turning. Penguin. pp. 576–77.
  16. Jump up^ Milton Friedman (1912–2006)
  17. ^ Jump up to:a b Sullivan, Maureen (July 30, 2016). “Milton Friedman’s Name Disappears From Foundation, But His School-Choice Beliefs Live On”. Forbes. Retrieved 14 September 2016.
  18. Jump up^ “Capitalism and Friedman” (editorial), The Wall Street Journal November 17, 2006
  19. Jump up^ Václav Klaus (January 29, 2007). “Remarks at Milton Friedman Memorial Service”. Retrieved August 22, 2008.
  20. Jump up^ Johan Norberg, Defaming Milton Friedman: Naomi Klein’s disastrous yet popular polemic against the great free market economist, Reason Magazine, Washington, D.C., Oct. 2008
  21. Jump up^ Friedman 1999, p. 506
  22. Jump up^ Davis, William L, Bob Figgins, David Hedengren, and Daniel B. Klein. “Economic Professors’ Favorite Economic Thinkers, Journals, and Blogs”, Econ Journal Watch 8(2): 126–46, May 2011.
  23. Jump up^ “Milton Friedman, a giant among economists”. The Economist. November 23, 2006. Retrieved February 20, 2008.
  24. Jump up^ “Who’s who in American Jewry”. 1980.
  25. Jump up^ Alan O. Ebenstein, Milton Friedman: a biography (2007) p. 10; Milton & Rose Friedman, Two Lucky People. Memoirs, Chicago 1998, p. 22.
  26. Jump up^ Eamonn Butler, Milton Friedman (2011) ch 1
  27. Jump up^ Alan O. Ebenstein, Milton Friedman: a biography (2007) pp. 5–12
  28. Jump up^ “Milton Friedman and his start in economics”. Young America’s Foundation. August 2006. Retrieved March 12, 2012.
  29. Jump up^ Ebenstein, Milton Friedman: a biography (2007) pp. 13–30
  30. Jump up^ Feeney, Mark (November 16, 2006). “Nobel laureate economist Milton Friedman dies at 94”. The Boston Globe. Retrieved February 20, 2008.
  31. Jump up^ Friedman 1999, p. 59
  32. Jump up^ “Right from the Start? What Milton Friedman can teach progressives.” (PDF). J. Bradford DeLong. Retrieved February 20, 2008.
  33. Jump up^ Bernanke 2004, p. 7
  34. Jump up^ Friedman 1999, p. 42
  35. Jump up^ Friedman 1999, pp. 84–85
  36. Jump up^ Milton Friedman; Rose D. Friedman (1999). Two Lucky People: Memoirs. University of Chicago Press. pp. 122–23. ISBN 9780226264158.
  37. Jump up^ Doherty, Brian (June 1995). “Best of Both Worlds”. Reason. Retrieved July 28, 2010.
  38. ^ Jump up to:a b “Milton Friedman Biography – Academy of Achievement”. Achievement.org. Retrieved 2014-04-22.
  39. Jump up^ Philip Mirowski (2002). Machine Dreams: Economics Becomes a Cyborg Science. Cambridge University Press. pp. 202–03. ISBN 9780521775267.
  40. Jump up^ CATO, “Letter from Washington,” National Review, September 19, 1980, Vol. 32 Issue 19, p. 1119
  41. Jump up^ Rose and Milton Friedman
  42. Jump up^ Inventory of the Paul A. Samuelson Papers, 1933–2010 and undated | Finding Aids | Rubenstein Library
  43. Jump up^ Ebenstein (2007). Milton Friedman: A Biography. p. 208.
  44. Jump up^ “Milton Friedman: An enduring legacy”. The Economist. November 17, 2006. Retrieved February 20, 2008.
  45. Jump up^ Sullivan, Patricia (November 17, 2006). “Economist Touted Laissez-Faire Policy”. The Washington Post. Retrieved February 20, 2008.
  46. Jump up^ Milton Friedman – Biography | Cato Institute
  47. Jump up^ Trustees
  48. Jump up^ Milton Friedman
  49. Jump up^ Lanny Ebenstein, Milton Friedman, Commentary, May 2007, p. 286.
  50. Jump up^ Asman, David (November 16, 2006). “‘Your World’ Interview With Economist Milton Friedman”. Fox News. Retrieved August 2, 2011.
  51. Jump up^ Christie, Jim (November 16, 2006). “Free market economist Milton Friedman dead at 94”. Reuters. Retrieved February 20, 2008.
  52. Jump up^ Peter Robinson (2008-10-17). “What Would Milton Friedman Say?”. forbes.com. Retrieved 2014-12-13.
  53. Jump up^ Optimum Quantity of Money. Aldine Publishing Company. 1969. p. 4.
  54. Jump up^ Friedman, Milton. Inflation: Causes and Consequences. New York: Asia Publishing House.
  55. Jump up^ “Milton Friedman: END THE FED”. Themoneymasters.com. Retrieved 2014-04-22.
  56. Jump up^ Friedman, Milton (1969). Memoirs of an Unregulated Economist. Aldine Publishing Company. p. 4.
  57. Jump up^ Galbács, Peter (2015). The Theory of New Classical Macroeconomics. A Positive Critique. Heidelberg/New York/Dordrecht/London: Springer. doi:10.1007/978-3-319-17578-2. ISBN 978-3-319-17578-2.
  58. Jump up^ Kevin Hoover; Warren Young (2011). Rational Expectations – Retrospect and Prospect (PDF). Durham: Center for the History of Political Economy at Duke University.
  59. Jump up^ “Charlie Rose Show”. December 26, 2005. Missing or empty |series= (help)
  60. Jump up^ David Teira, “Milton Friedman, the Statistical Methodologist,” History of Political Economy (2007) 39#3 pp. 511–27,
  61. Jump up^ The Life and Times of Milton Friedman – Remembering the 20th century’s most influential libertarian
  62. Jump up^ https://www.youtube.com/watch?v=m6fkdagNrjI “There in no institution in the US that has such a high public standing and such a poor record of performance” “It’s done more harm than good”
  63. Jump up^ “My first preference would be to abolish the Federal Reserve” on YouTube
  64. Jump up^ https://www.youtube.com/watch?v=m6fkdagNrjI “I have long been in favor of abolishing it.”
  65. Jump up^ Reichart Alexandre & Abdelkader Slifi (2016). ‘The Influence of Monetarism on Federal Reserve Policy during the 1980s.’ Cahiers d’économie Politique/Papers in Political Economy, (1), pp. 107–50. https://www.cairn.info/revue-cahiers-d-economie-politique-2016-1-page-107.htm
  66. Jump up^ [1]
  67. Jump up^ [2]
  68. Jump up^ Friedman, Milton (1955). Solo, Robert A., ed. “The Role of Government in Education,” as printed in the book Economics and the Public Interest (PDF). Rutgers University Press. pp. 123–144.
  69. Jump up^ Leonard Ross and Richard Zeckhauser (December 1970). “Review: Education Vouchers”. The Yale Law Journal. 80 (2): 451–61. doi:10.2307/795126. JSTOR 795126.
  70. Jump up^ Martin Carnoy (August 1998). “National Voucher Plans in Chile and Sweden: Did Privatization Reforms Make for Better Education?”. Comparative Education Review. 42 (3): 309–37. doi:10.1086/447510. JSTOR 1189163.
  71. Jump up^ Milton Friedman (1991). The War on Drugs. America’s Drug Forum.
  72. Jump up^ Rostker, Bernard (2006). I Want You!: The Evolution of the All-Volunteer Force. Rand Corporation. p. 4. ISBN 978-0-8330-3895-1.
  73. ^ Jump up to:a b Friedman, Milton (November 15, 2002). Capitalism and Freedom. University Of Chicago Press. p. 36.
  74. ^ Jump up to:a b c Ebenstein, Lanny (2007). Milton Friedman: a biography. New York: St. Martin’s Press. pp. 231–32. ISBN 978-0-230-60409-4.
  75. Jump up^ Ebenstein, Lanny (2007). Milton Friedman: a biography. New York: St. Martin’s Press. p. 243. ISBN 978-0-230-60409-4.
  76. Jump up^ Friedman and Freedom. Queen’s Journal. Archived from the original on August 11, 2006. Retrieved February 20, 2008., Interview with Peter Jaworski. The Journal, Queen’s University, March 15, 2002 – Issue 37, Volume 129
  77. ^ Jump up to:a b Milton Friedman; Rose D. Friedman (1962). Capitalism and Freedom: Fortieth Anniversary Edition. U. of Chicago Press. ISBN 9780226264189.
  78. ^ Jump up to:a b Frank, Robert H (2006-11-23). “The Other Milton Friedman: A Conservative With a Social Welfare Program”. New York Times. The New York Times.
  79. Jump up^ “An open letter”. Prohibition Costs. Retrieved November 9, 2012.
  80. Jump up^ “Milton Friedman”. Liberal Democratic Party (Australia). Retrieved February 19, 2013.
  81. ^ Jump up to:a b Alan O. Ebenstein, Milton Friedman: A Biography (2007) p. 228
  82. Jump up^ “Economic Freedom of the World project”. Fraser Institute. Retrieved 16 February 2016.
  83. Jump up^ “In the Supreme Court of the United States” (PDF). Harvard Law School. Retrieved February 20, 2008.
  84. Jump up^ Lessig, Lawrence (November 19, 2006). “only if the word ‘no-brainer’ appears in it somewhere: RIP Milton Friedman (Lessig Blog)”. Lessig.org. Retrieved April 2, 2013.
  85. Jump up^ “A New British Bill of Rights: The Case For”. ISR Online Guide. Retrieved 16 February 2016.
  86. Jump up^ Lanny Ebenstein (2007). Milton Friedman: A Biography. Palgrave Macmillan. p. 260.
  87. Jump up^ Selection Committee Announced for the 2008 Milton Friedman Prize for Advancing Liberty,” Cato Institute, September 5, 2007. Accessed 4 January 2014.
  88. Jump up^ Milton Friedman Prize page at Cato Institute website. Accessed 5 January 2014.
  89. Jump up^ Summers, Larry (November 19, 2006). “The Great Liberator”. The New York Times.
  90. Jump up^ Stephen Moore, What Would Milton Friedman Say?” Wall Street Journal, May 30, 2013 p. A13
  91. Jump up^ Ingdahl, Waldemar (March 22, 2007). “Real Virtuality”. The American. Retrieved February 20, 2008.
  92. Jump up^ Friedman, Milton; Friedman, Rose (1990). Free to Choose: A Personal Statement. Harvest Books. p. 34. ISBN 0-15-633460-7.
  93. Jump up^ Friedman, Milton (October 6, 2006). “Dr. Milton Friedman”. Opinion Journal. Retrieved February 20, 2008.
  94. Jump up^ Letter from Arnold Harberger to Stig Ramel as reprinted in the Wall Street Journal 12/10/1976, and in Two Lucky People: Memoirs By Milton Friedman, Rose D. Friedman. Appendix A, pp. 598–99. Accessible at books.google.com
  95. ^ Jump up to:a b c Milton Friedman (August 31, 1984). Iceland Television Debate (Flash Video) (Television production). Reykjavík: Icelandic State Television. Event occurs at 009:48:00. Retrieved June 27, 2010.
  96. ^ Jump up to:a b [http:// Two Lucky People: Memoirs By Milton Friedman, Rose D. Friedman. Appendix A, pp. 591–93. Letter from Friedman to Pinochet, April 21, 1975.]
  97. Jump up^ Mask II, William Ray (May 2013). The Great Chilean Recovery: Assigning Responsibility For The Chilean Miracle(s) (Thesis). California State University, Fresno.
  98. Jump up^ “Chile and the “Chicago Boys””. The Hoover Institution. Stanford University. Retrieved 20 June 2014.
  99. Jump up^ O’Shaughnessy, Hugh (December 11, 2006). “General Augusto Pinochet”. The Independent. Retrieved February 20, 2008.
  100. Jump up^ Newsweek of June 14, 1976
  101. Jump up^ “Free to Choose Vol. 5”. Archived from the original on February 9, 2008. Retrieved February 20, 2008.
  102. Jump up^ Frances Fox Piven vs. Milton Friedman, Thomas Sowell, debate, 1980, YouTube.
  103. Jump up^ The Smith Center: Milton Friedman’s lecture, “Economic Freedom, Human Freedom, Political Freedom”, by Milton Friedman, delivered November 1, 1991.
  104. Jump up^ Friedman 1999, pp. 600–01
  105. Jump up^ “Interview with Jeffery Sachs on the “Miracle of Chile””. PBS. Retrieved February 20, 2008.
  106. Jump up^ “Commanding Heights: Milton Friedman”. PBS. Retrieved December 29, 2008.
  107. Jump up^ “Milton Friedman interview”. PBS. Retrieved February 20, 2008.
  108. Jump up^ Friedman, Milton; Grímsson, Ólafur Ragnar. Milton Friedman on Icelandic State Television in 1984.
  109. Jump up^ “Mart Laar”. Cato Institute. Retrieved February 20, 2008.
  110. Jump up^ John F. Lyons (2013). America in the British Imagination: 1945 to the Present. Palgrave Macmillan. p. 102.
  111. Jump up^ Subroto Roy & John Clarke, eds., Margaret Thatcher’s Revolution: How it Happened and What it Meant (Continuum 2005)
  112. Jump up^ David F. Hendry; Neil R. Ericsson (October 1983). “Assertion without Empirical Basis: An Econometric Appraisal of ‘Monetary Trends in … the United Kingdom’ by Milton Friedman and Anna Schwartz,” in Monetary Trends in the United Kingdom, Bank of England Panel of Academic Consultants, Panel Paper No. 22, pp. 45–101.See also Federal Reserve International Finance Discussion Paper No. 270 (December 1985), which is a revised and shortened version of Hendry–Ericsson 1983.
  113. Jump up^ “M.Friedman – Iceland TV (1984)”. YouTube. Retrieved 16 February 2016.
  114. Jump up^ van Steven Moore, CMA (1984-08-31). “Milton Friedman – Iceland 2 of 8”. YouTube. Retrieved 2014-04-22.
  115. Jump up^ J. Daniel Hammond (2005). Theory and Measurement: Causality Issues in Milton Friedman’s Monetary Economics. Cambridge U.P. pp. 193–99.
  116. Jump up^ David F. Hendry; Neil R. Ericsson (July 1989). “An Econometric Analysis of UK Money Demand in Monetary Trends in the United States and the United Kingdom by Milton Friedman and Anna J. Schwartz” (PDF). International Finance Discussion Papers: 355. Federal Reserve. Retrieved 2 August 2013.
  117. Jump up^ Hendry, David F. (25 April 2013). “Friedman’s t-ratios were overstated by nearly 100%”. ft.com. Retrieved 1 May 2013.
  118. Jump up^ Escribano, Alvaro (2004). “Nonlinear error correction: The case of money demand in the United Kingdom (1878–2000)” (PDF). Macroeconomic Dynamics. 8 (1): 76–116. doi:10.1017/S1365100503030013.
    Escribano’s approach had already been recognized by Friedman, Schwartz, Hendry et al. (p. 14 of the pdf) as yielding significant improvements over previous money demand equations.
  119. Jump up^ The New York Review of Books, Who Was Milton Friedman?, February 15, 2007
  120. Jump up^ Noam Chomsky (1999). Profit Over People: Neoliberalism and Global Order. New York, NY: Seven Stories Press.
  121. Jump up^ Feldman, Burton (2000). “Chapter 9: The Economics Memorial Prize”. The Nobel Prize: A History of Genius, Controversy, and Prestige. New York: Arcade Publishing. p. 350. ISBN 1-55970-537-X.
  122. Jump up^ O’Shaughnessy, Hugh (11 December 2006). “General Augusto Pinochet”. The Independent.
  123. Jump up^ Friedman, Milton; Friedman, Rose D. “Two Lucky People: One Week in Stockholm”. Hoover Digest: Research and Opinion on Public Policy. 1998 (4).
  124. Jump up^ Orlando Letelier, “Economic Freedom’s Awful Toll”, The Nation, August 28, 1976.
  125. Jump up^ The Drug War as a Socialist Enterprise, Milton Friedman, From: Friedman & Szasz on Liberty and Drugs, edited and with a Preface by Arnold S. Trebach and Kevin B. Zeese. Washington, D.C.: The Drug Policy Foundation, 1992.
  126. Jump up^ YouTube clip: Milton Friedman – Pinochet and Chile
  127. Jump up^ Friedman, Milton; Friedman, Rose D. Two Lucky People: Memoirs. University of Chicago Press. ISBN 9780226264158. Retrieved 18 October 2016.

References

  • Bernanke, Ben (2004). Essays on the Great Depression. Princeton University Press. ISBN 0-691-11820-5
  • Butler, Eamonn (2011). Milton Friedman. Harriman Economic Essentials.
  • Ebenstein, Alan O. (2007). Milton Friedman: a biography.
  • Friedman, Milton (1999). Two Lucky People: Memoirs. University of Chicago Press. ISBN 0-226-26415-7.
  • Wood, John Cunningham, and Ronald N. Wood, ed. (1990), Milton Friedman: Critical Assessments, v. 3. Scroll to chapter-preview links. Routledge.

Further reading

External links

Free to Choose (original series) https://www.youtube.com/watch?v=f1Fj5tzuYBE

Videos

Robert Mundell

From Wikipedia, the free encyclopedia
Robert Mundell
Rmundell.jpg
Born October 24, 1932 (age 84)
Kingston, Ontario, Canada
Nationality Canadian
Institution Johns Hopkins University (1959–61, 1997–98, 2000–01)
University of Chicago (1965–72)
Graduate Institute of International Studies in Geneva, Switzerland (1965–75) [1]
University of Waterloo (1972–74)
McGill University (1989–1990)[2]
Columbia University (1974 – present)
Chinese University of Hong Kong (2009 – present)
Field Monetary economics
School or
tradition
Supply-side economics
Alma mater London School of Economics
UBC Vancouver School of Economics
University of Washington
Massachusetts Institute of Technology
University of Waterloo
Doctoral
advisor
Charles Kindleberger[3]
Doctoral
students
Jacob A. Frenkel
Rudi Dornbusch[4]
Carmen Reinhart[5]
Influences Ludwig Von Mises
Influenced Arthur Laffer
Jude Wanniski
Michael Mussa
Contributions Mundell–Fleming model
Optimum currency areas
Research on the gold standard
Awards Nobel Memorial Prize in Economics (1999)
Information at IDEAS / RePEc

Robert Alexander Mundell, CC (born October 24, 1932) is a Nobel Prize-winning Canadian economist. Currently, he is a professor of economics at Columbia University and the Chinese University of Hong Kong.

He received the Nobel Memorial Prize in Economics in 1999 for his pioneering work in monetary dynamics and optimum currency areas. Mundell is known as the “father”[6] of the Euro, as he laid the groundwork for its introduction through this work and helped to start the movement known as supply-side economics. Mundell is also known for the Mundell–Fleming model and Mundell–Tobin effect.

Background

Mundell was born in Kingston, Ontario, Canada. He earned his BA in Economics at the University of British Columbia in Vancouver, Canada, and his MA at the University of Washington in Seattle. After studying at the University of British Columbia and at The London School of Economics in 1956,[7] he then attended the Massachusetts Institute of Technology (MIT), where he obtained his PhD in Economics in 1956. In 2006 Mundell earned an honorary Doctor of Laws degree from the University of Waterloo in Canada.[8] He was Professor of Economics and Editor of the Journal of Political Economy at the University of Chicago from 1965 to 1972, Chairman of the Department of Economics at the University of Waterloo 1972 to 1974 and since 1974 he was Professor of Economics at Columbia University.[9] He also held the post of Repap Professor of Economics at McGill University.[10][11]

Career

Since 1974 he has been a professor in the Economics department at Columbia University; since 2001 he has held Columbia’s highest academic rank – University Professor. After completing his post-doctoral fellowship at the University of Chicago in 1957, he began teaching economics at Stanford University, and then Paul H. Nitze School of Advanced International Studies at Johns Hopkins University during 1959–1961.[2] In 1961, he went on to staff the International Monetary Fund. Mundell returned to academics as professor of economics at the University of Chicago from 1966 to 1971, and then served as professor during summers at the Graduate Institute of International Studies in Geneva until 1975. In 1989, he was appointed to the post of Repap Professor of Economics at McGill University.,[10][11] In the 1970s, he laid the groundwork for the introduction of the euro through his pioneering work in monetary dynamics and optimum currency forms for which he won the 1999 Nobel Prize in Economics. During this time he continued to serve as an economic adviser to the United Nations, the IMF, the World Bank, the European Commission, the Federal Reserve Board, the United States Department of Treasury and the governments of Canada and other countries. He is currently the Distinguished Professor-at-Large of The Chinese University of Hong Kong.

Among his major contributions are:

Awards

Mundell was awarded the Guggenheim Fellowship in 1971 and the Nobel Memorial Prize in Economics in 1999. In 2002 he was made a Companion of the Order of Canada.

In 1992, Mundell received the Docteur Honoris Causa from the University of Paris. Mundell’s honorary professorships and fellowships were from Brookings Institution, the University of Chicago, the University of Southern California, McGill University, the University of Pennsylvania, the Bologna Center and Renmin University of China. He became a fellow of the American Academy of Arts and Sciences in 1998. In June 2005 he was awarded the Global Economics Prize World Economics Institute in Kiel, Germany and in September 2005 he was made a Cavaliere di Gran Croce del Reale Ordine del Merito sotto il Titolo di San Ludovico by Principe Don Carlo Ugo di Borbone Parma.

The Mundell International University of Entrepreneurship in the Zhongguancun district of Beijing, People’s Republic of China is named in his honor.

International monetary flows

Mundell is best known in politics for his support of tax cuts and supply-side economics; however, in economics it is for his work on currency areas[12] and international exchange rates[13] that he was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel by the Bank of Sweden (Sveriges Riksbank). Nevertheless, supply-side economics featured prominently in his Bank of Sweden prize speech.

In the 1960s, Canada, of which Mundell is a native, floated its exchange: this caused Mundell to begin investigating the results of floating exchange rates, a phenomenon not widely seen since the 1930s “Stockholm School” successfully lobbied Sweden to leave the gold standard.

In 1962, along with Marcus Fleming, he co-authored the Mundell–Fleming model of exchange rates, and noted that it was impossible to have domestic autonomy, fixed exchange rates, and free capital flows: no more than two of those objectives could be met. The model is, in effect, an extension of the IS/LM model applied to currency rates.

According to Mundell’s analysis:

  • Discipline under the Bretton Woods system was more due to the US Federal Reserve than to the discipline of gold.
  • Demand side fiscal policy would be ineffective in restraining central banks under a floating exchange rate system.
  • Single currency zones relied, therefore, on similar levels of price stability, where a single monetary policy would suffice for all.

His analysis led to his conclusion that it was a disagreement between Europe and the United States over the rate of inflation, partially to finance the Vietnam War, and that Bretton Woods disintegrated because of the undervaluing of gold and the consequent monetary discipline breakdown. There is a famous point/counterpoint over this issue between Mundell and Milton Friedman.[14]

This work later led to the creation of the euro and his prediction that leaving the Bretton Woods system would lead to “stagflation” so long as highly progressive income tax rates applied. In 1974, he advocated a drastic tax reduction and a flattening of income tax rates.

Mundell, though lionized by some conservatives, has many of his harshest critics from the right: he denies the need for a fixed gold based currency or currency board[citation needed] (he still often recommends this as a policy in hyperinflationary environments) and he is both a fiscal and balance of payments deficit hawk. He is well known for stating that in a floating exchange rate system, expansion of the money supply can come about only by a positive balance of payments.

In 2000, he predicted that before 2010, the euro zone would expand to cover 50 countries, while the dollar would spread throughout Latin America, and much of Asia would look towards the yen.[15] Such predictions have proved highly inaccurate.

Nobel Prize winner

Mundell won the Nobel Memorial Prize in Economic Science in 1999 and gave as his prize lecture a speech titled “A Reconsideration of the Twentieth Century”. According to the Nobel Prize Committee, he got the honor for “his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas”.

Mundell concluded in that lecture that “the international monetary system depends only on the power configuration of the countries that make it up”. He divided the entire twentieth century into three parts by different periods of time:

  • The first third of the century, from its beginning to the Great Depression of the 1930s, economics was dominated by the confrontation of the Federal Reserve System with the gold standard.
  • The second third of the century was from World War II to 1973, when the international monetary system was dominated by fixing the price of gold with the US dollar.
  • The last third of the century started with the destruction of the old monetary system due to the problem of inflation.

With the destruction of the old monetary system, a new international monetary system was finally founded. Controlling inflation by each country became a main topic during this era.

Television appearances

Mundell has appeared on CBS‘s Late Show with David Letterman. His first appearance was on October 17, 2002[16] where he gave The Top 10 List on “Ways My Life has Changed Since Winning the Nobel Prize.” In March 2004[17] he told “You might be a redneck” jokes followed in May 2004[18] with “Yo Mama” jokes. In September 2004[19] he appeared again, this time to read excerpts from Paris Hilton‘s memoir at random moments throughout the show. In November 2005[20] he told a series of Rodney Dangerfield‘s jokes. On February 7, 2006[21] he read Grammy Award nominated song lyrics, the night before CBS aired the 48th Grammy Awards.

Mundell also appeared on Bloomberg Television many times.

Mundell has also appeared on China Central Television‘s popular Lecture Room series. Professor Mundell was also a special guest making the ceremonial first move in Game Five of the 2010 World Chess Championship between Viswanathan Anand and Veselin Topalov.

Mundell started the Pearl Spring Chess Tournament, a double round robin tournament with six players. The first tournament in 2008 was won by the Bulgarian, Veselin Topalov. The next two: 2009–2010 was won by the Norwegian, Magnus Carlsen.

See also

References

  1. Jump up^ http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1999/mundell-bio.html
  2. ^ Jump up to:a b Nobel Prize Winners from Johns Hopkins University
  3. Jump up^ Essays in the theory of international capital movementspage 3. Retrieved September 12, 2016.
  4. Jump up^ RUDI DORNBUSCH by Stanley Fischer – Project Syndicate
  5. Jump up^ Warsh, David (November 1, 2009). “What The Woman Lived”. Economic Principals. Retrieved October 17, 2016.
  6. Jump up^ “Mr. Mundell, known as the father of the euro”[dead link]
  7. Jump up^ “Robert Mundell – Nobel Prize Winners – Key facts – About LSE – Home”. .lse.ac.uk. March 13, 2009. Retrieved January 1, 2012.
  8. Jump up^ [1]
  9. Jump up^ http://www.polyu.edu.hk/iao/nobel2009/mundell_bio.pdf
  10. ^ Jump up to:a b “Robert A. Mundell – Biography”. Nobelprize.org. Retrieved January 1, 2012.
  11. ^ Jump up to:a b “Biography | The Works of Robert Mundell”. Robertmundell.net. Retrieved January 1, 2012.
  12. Jump up^ A Theory of Optimum Currency Areas; The American Economic Review, Vol. 51, No. 4, pp. 657–665, 1961
  13. Jump up^ Capital Mobility, and Stabilization Policy under Fixed and Flexible Exchange Rates; Revue Canadienne d’Economique et de Science Politique, Vol. 29, No. 4, pp. 475–485, 1963
  14. Jump up^ “Mundell-Friedman debate” (PDF). Retrieved January 1, 2012.
  15. Jump up^ Mark Milner and Charlotte Denny (January 14, 2000). “The new endangered species | Business”. London: The Guardian. Retrieved January 1, 2012.
  16. Jump up^ show #1891 Archived August 15, 2006, at the Wayback Machine.
  17. Jump up^ show #2144 Archived October 17, 2006, at the Wayback Machine.
  18. Jump up^ show #2162 Archived May 16, 2006, at the Wayback Machine.
  19. Jump up^ show # 2238 Archived February 23, 2006, at the Wayback Machine.
  20. Jump up^ show #2466 Archived December 15, 2005, at the Wayback Machine.
  21. Jump up^ show #2505 Archived May 16, 2006, at the Wayback Machine.

External links

Read Full Post | Make a Comment ( None so far )

People vs. “Elites”: Nationalist Capitalism Winning — Global Socialism Losing — Videos

Posted on December 29, 2016. Filed under: American History, Articles, Banking, Blogroll, British History, Business, College, Communications, Constitution, Corruption, Crime, Crisis, Documentary, Economics, Education, Elections, Employment, European History, Faith, Family, Federal Government Budget, Fiscal Policy, Foreign Policy, Fraud, Freedom, Friends, Genocide, government, history, History of Economic Thought, Illegal, Immigration, Law, Legal, liberty, Life, Links, Macroeconomics, media, Microeconomics, Middle East, Monetary Policy, Money, Money, People, Philosophy, Politics, Radio, Rants, Raves, Raymond Thomas Pronk, Religious, Speech, Tax Policy, Trade Policiy, Video, War, Wealth, Wisdom, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , |

Image result for cartoons nationalism vs. globalismImage result for cartoons nationalism vs. globalism

Image result for cartoons nationalism vs. globalism

Image result for cartoons nationalism vs. globalismImage result for cartoons new world order

Image result for cartoons new world orderImage result for cartoons new world order

Image result for cartoons brexit nigel farageImage result for cartoons brexit nigel farageImage result for cartoons brexit nigel farageImage result for cartoons brexit nigel farage

Steve Davies and Dave Rubin: Brexit, Classical Liberalism, Libertarianism (Full Interview)

The Difference Between Classical Liberals and Libertarians (Steve Davies Part 2)

Syria, the Middle East, and America’s War on Drugs (Steve Davies Part 3)

Nigel Farage speech in The United States about Brexit and Trump

Emergency! Man Behind Brexit Issues Warning For America

Nigel Farage : The Speech That WON Us Our BREXIT – 24 June 2016

Nigel Farage roasts the EU Parliament before & after Brexit

Nigel Farage on Fox News after Brexit

Epic Rant – ‘Nigel Farage Was Right!’

George Carlin – It’s a Big Club and You Ain’t In It! The American Dream

George Carlin – Dumb Americans

The Collapse of The American Dream Explained in Animation

Obama: We Must Guard Against American Nationalism

Trump’s Nationalism Is Destroying Globalism

BREXIT & America First: The Battle of Globalism vs Nationalism

The Most Important Reason Why the European Union Will Surely Fail

Italy Rejects EU Globalism, Defeats Referendum to Give Globalists Limitless Power

Tony Blankley – At Last, an American Nationalist!

Three Big Ideas: Liberalism, Socialism, Nationalism

 Nationalism: Crash Course World History #34

Capitalism and Socialism: Crash Course World History #33

07 Nationalism, Imperialism &amp; Globalization the good, the bad and the really, really ugly

What is Classical Liberalism? – Learn Liberty

The History of Classical Liberalism – Learn Liberty

Libertarianism 101 with Dr Stephen Davies

The Decline and Triumph of Classical Liberalism (Pt. 1) – Learn Liberty

The Decline and Triumph of Classical Liberalism (Pt. 2) – Learn Liberty

 

Dawn of the New World Order: 2017 will be the year EVERYTHING changes

A NEW World Order is set to emerge next year as huge political changes sweep across Europe including the rise of the mega-alliance under Vladimir Putin and Donald Trump.

Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTY/DSNEW WORLD ORDER: Vladimir Putin and Donald Trump will trigger a revolution across Europe
Putin’s growing power and Trump’s extraordinary US Election victory are both herald’s of a growing movement against the established world governments.Anti-establishment parties raging against the political class could sweep to victory in a swathes of elections next year and change the face of the West.

From Germany, to France, to the Netherlands – fringe and extremist parties are gaining momentum hand over fist and looked primed to seize power.

Notable victories have already been won – with a shocking referendum win in Italy causing Prime Minister Matteo Renzi to resign in a move said to pave the way for the collapse of the EU.

Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUDSEND OF THE EU: Anti-establishment parties are set to sweep to power in Europe

“The new axis between Trump’s America, Putin’s Russia, and European populists represents a toxic mix”

Fredrik Wesslau

Fredrik Wesslau, from the European Council of Foreign Relations, predicted the “unthinkable is now thinkable” after Trump was swept into the White House.

He said the political parties are trying to unseat the “liberal order” in a campaign backed by Putin and Trump.

Politicians look to overthrow the established order are hailing Trump’s election victory as the beginning of the “Patriotic Spring”.

There are six key elections coming up in 2017 which could very easily be won by right-wing parties with nationalist policies which would spell the end of the EU.

Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYGOLDEN DAWN: The Neo-nazi movement in Greece is the most extreme example
Marine Le Pen, leader of France’s National Front, could be poised to take power after the election in May in a move which could pull France out of the EU.
She has described the coming year as a “global revolution” after the election of Trump and the victory of Brexit.Mrs Le Pen has promised to pull france out of NATO and “push migrants who want to come to Europe back into international waters”.The alliance is feared to be a further casualty of the looming political shift – with NATO bosses “preparing for the worst” as they fear Putin will invade Eastern Europe and Trump will pull all US support.
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYMARINE LE PEN: France’s National Front leader could seize power next year
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGEERT WILDERS: The Netherlands’ Party for Freedom leader has compared the Koran to Mein Kampf
Meanwhile, anti-Islam and anti-migrant leader of the Party of Freedom Geert Wilders ended 2016 leading the polls in the Netherlands – contesting the general election in March.He tweeted a picture of Angela Merkel with blood on her hands following the Berlin Christmas market attack – and shared the message “they hate and kill us. An nobody protects us”.He has also compared the Koran to Adolf Hitler’s book Mein Kampf – campaigning to have the Muslim holy book banned – and coined the phrase “patriotic spring”.
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUFRAUKE PETRY: Angela Merkel faces losing Chancellor’s seat next year after major unrest
Frauke Petry is also contesting the German federal election next year as the aftermath of the Berlin attack rocks the government of Angelea Merkel.While she does not have a seat in the Bundestag – the German parliament – approval of her Alternative for Germany party has been swelling in wake of backlash against refugees following terrorist attacks.In her first election manifesto she declared “Islam is not part of Germany” and has previously called on border guard to use “firearms if necessary” when dealing with refugees. 
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYGERMANY: Unrest is sweeping across the European nation after terror attacks
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYBEPE GRILLO: This comedian turned politician has already struck a blow to the EU
Leader of Italy’s Five Star Movement TV comedian Beppe Grillo has already caused a stir as the the Italian government lost a key referendum.Savagedly anti-EU, he has said “political amateurs are conquering the world”, called Trump’s victory an “extraordinary turning point” and his party won two key mayoral seats in Turin and Rome.He has been called the “Italian Donald Trump” and his party could be a key player with elections expected to be held in 2017.
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYJIMMIE AKESSON: Sweden Democrats’ outspoken leader led a campaign against migrants
The Czech Republic is also set to hold elections in 2017 while Sweden goes to the polls in 2018, both with own Trump-esque leaders who could make a shocking grab for power.Andrej Babis, the second richest man in the Czech Republic, is expected to win the general election for the ANO party and has been reported to have close ties to Putin’s Russia.While in Sweden, anti-immigration Jimmie Akesson of the Sweden Democrats is gaining in popularity – campaigning against his nation’s membership of the EU and advocating a campaign to tell people not to come to Sweden.
With Europe’s biggest economies set to go to the polls, struggling Greece could also follow suit.The extreme right fringes of their politics is dominated by the neo-nazi party Golden Dawn – who have launched attacks on refugee camps.While it is very unlikely they have any chance at power, their nationalist cause is of the most intense and hate-filed in Europe.Centre-right party New Democracy is the most likely to unseat the government should a snap election be called.
The former EU diplomat Wesslau said: “The new axis between Trump’s America, Putin’s Russia, and European populists represents a toxic mix for the liberal order in Europe.”He added: “Within Europe, populists on the left and right are trying to roll back the liberal order.”This insurgency is being actively backed by Putin’s Russia, and, now, it seems, Trump’s America.”The European Union itself risks being an early casualty.”

The Globalists Have Declared War on Nationalists

 

Trump’s populist views of self-determination are sweeping the planet and the elite are in a sheer panic. Only a few weeks ago, the sheep of the planet were being marched to their Armageddon. The dumbed down masses have managed to mount a ninth inning rally that have sent the elite into frenzy.

 

Hillary Clinton Was Supposed to Usher in the New World Order Through the Fall of America

The lies are exposed. Hillary and Bill cannot unring the bill, the truth has been exposed for millions of people to see.

The lies are exposed. Hillary and Bill cannot unring the bill, the truth has been exposed for millions of people to see.

Two months ago, I called upon the Independent Media to step up their attacks on Hillary Clinton’s criminal behavior in a last-ditch and desperate effort to derail her presidential aspirations. After issuing my plea, I can happily report that I got more than I had hoped for. Merely a year ago, I was one of the few voices that was pounding away at Hillary Clinton’s sociopathic behavior. Today, the attacks are so bombastic and vitriolic, that I am joyfully reporting that I feel that my voice is being drowned out by a relentless chorus of voices that has Hillary Clinton in a death grip and they won’t let go. This is a great time for humanity. Even if the criminal elite unleash genocidal hell on Earth, at least humanity will die on their feet. There is absolutely no way that the criminal elite can stem the tide of rebellion against their corrupt and satanically inspired rule over the people.

The criminal elite had pinned their hopes on Hillary Clinton ushering in the NWO by tearing down what was left of American sovereignty. From a Bilderberg, Trilateral and CFR perspective, this woman was sociopathic enough to do what would need to be done to complete this task. However, the criminal elite forgot to do one thing. They neglected to manage her public image. It is leaders like Clinton and Cameron which have awakened the masses, through their abject criminality, and the people are saying enough is enough.

Clinton’s role in the emails, her treason by selling uranium to the Russians to raise money for her foundation, the Benghazi affair, etc., etc, are exploding on the national scene. Former Clinton campaign leaders and Secret Service personnel are speaking out against this despot. The genie will not fit back into the bottle. The elite know this and they are on the verge of a mass nervous breakdown. The playground bully has just been punched in the nose by the 98 pound weakling.

Zbigniew Brzezinski saw this awakening coming in 2011 which prompted him to say the following:

brzezinski kill a million

This is what wounded animals do, they lash out in an uncontrollable manner.

The following op-ed piece written for the Council on Foreign Relations captures the criminal elite’s sense of desperation.

The Face of Global Elite Arrogance

face of pomposity

Meet the face of global pomposity and unbridled arrogance. His disdain for “your type” is noteworthy and speaks to the desperation of global criminal elite.

His name is James Traub and he and his kind are the absolute enemy of every American. He is the heir to the Bloomingdale industries and a prominent member of the Council on Foreign Relations (CFR).

Traub’s elitist views leave nothing to the imagination. Writing for the mouthpiece of The Council on Foreign Relations, he leaves little doubt that the the evil empire is going to strike back.

It is clear that Traub and his fellow CFR elitist snobs are declaring war on any kind self-determination. He expects every Westerner to relish in their servitude to the globalists as he states the following in the article:

  • “the Brexit vote…utter repudiation of….bankers and economists”…
  • “…establishment political parties in major western countries must combine forces to keep out the nationalists”.
  • “…globalization means culture as well as economics: Older people whose familiar world is vanishing beneath a welter of foreign tongues and multicultural celebrations are waving their fists at cosmopolitan elites.”
  • “…(describes) the pro-Trump Republican base as “know nothing” voters…”

In one fell swoop, Traub validated several conspiracy theories, as being conspiracy facts as his statements admit to the following conspiratorial beliefs held by much of the Independent Media:

  • The bankers are involved in a conspiracy that work against the interests of the common man…all wars are bankers’ wars. 
  • The Democrats and the Republicans are “establishment” parties and for all intents and purposes these two parties are two flavors of the same party. 
  • There is an overt admission that illegal immigration is about decultralizing the west. 
  • The “Know-nothing voters” who support Trump should be viewed with extreme disdain (e.g. extremists and domestic terrorists). 

Conclusion

After reading Traub’s article, there is nothing left to the imagination, the elite are in absolute panic. This is what makes the criminal elite so very dangerous. It is my considered opinion that the panicked elite may resort to one of more of the following to reassert control over dumbed down masses, who are awake to the corruption that has ruled over them for so long:

  1. False flag induced martial law, followed by mass incarcerations and genocide.

  2. A complete economic collapse which will pit one useless eater vs. another useless eater. 

  3. Bankers start world wars of epic proportions. World War III could be right around the corner. 

If this is not the future that you want for your children, you best get off of your backside and get involved in the planet-changing conflict.

http://www.thecommonsenseshow.com/2016/06/29/the-globalists-have-declared-war-on-nationalists/

Getty Images
Appeared in: Volume 12, Number 1
Published on: July 10, 2016
NATIONALISM RISING

When and Why Nationalism Beats Globalism

And how moral psychology can help explain and reduce tensions between the two.

Jonathan Haidt is a social psychologist and professor in the Business and Society Program at New York University—Stern School of Business. He is the author of The Righteous Mind: Why Good People are Divided by Politics and Religion.
Read Full Post | Make a Comment ( None so far )

Saul Alinsky — Rules for Radicals — Videos

Posted on October 16, 2016. Filed under: American History, Articles, Banking, Blogroll, Books, Business, College, Communications, Congress, Constitution, Corruption, Documentary, Economics, Education, Elections, Employment, Faith, Family, Federal Government Budget, Fiscal Policy, Freedom, Friends, government spending, history, Illegal, Immigration, Inflation, Law, Legal, liberty, Life, Links, Macroeconomics, media, Microeconomics, Monetary Policy, Money, Non-Fiction, People, Philosophy, Police, Political Correctness, Politics, Speech, Talk Radio, Tax Policy, Taxation, Taxes, Unemployment, Video, War, Wealth, Welfare, Wisdom, Work, Writing | Tags: , , , |

 

Image result for saul alinsky rules for radicalsImage result for cartoon saul alinsky rules for radicals

Image result for saul alinsky rules for radicals

Image result for saul alinsky rules for radicals

Image result for saul alinsky rules for radicals

Image result for saul alinsky rules for radicals

Image result for saul alinsky rules for radicals

Image result for cartoon saul alinsky rules for radicals

Image result for cartoon saul alinsky rules for radicalsImage result for saul alinsky rules for radicals

Image result for cartoon saul alinsky rules for radicals

Image result for saul alinsky rules for radicals

Image result for saul alinsky rules for radicals

Image result for saul alinsky rules for radicals

Image result for cartoon saul alinsky rules for radicals

“I’d Organize Hell” – Saul Alinsky TV interview 1966

William F Buckley Jr & Saul Alinsky – Mobilizing The Poor

Rules for Radicals: What Constitutional Conservatives Should Know About Saul Alinsky

Alinsky for Dummies (Mr. Joseph A. Morris – Acton Institute)

Alinsky’s Power Tactics (Rules for Radicals Excerpt)

Saul Alinsky and the IAF

Rules for Radicals: An Analysis

Barack Obama/Saul Alinsky Connection

Saul Alinsky’s 12 Rules for Radicals

The Truth About Saul Alinsky’s Rules for Radicals

Ben Shapiro 1st Alinsky Rule give the impression of power

Ben Shapiro 2nd Alinsky Rule never go outside the expertise of your people

Saul Alinsky speaking at UCLA 1/17/1969

The Democratic Promise: Saul Alinksy & His Legacy – Part 1

The Democratic Promise: Saul Alinksy & His Legacy – Part 2

The Democratic Promise: Saul Alinsky & His Legacy – Part 3

The Democratic Promise: Saul Alinsky & His Legacy – Part 4

The Democratic Promise: Saul Alinksy & His Legacy – Part 5

The Democratic Promise: Saul Alinksy & His Legacy – Part 6

O’Reilly: ‘The Anti-Trump Press’ Is Using Saul Alinsky Tactics to Take Him Down

Our Warrior Andrew Breitbart: “Barack Obama is a Saul Alinsky Radical”

Andrew Breitbart why the left hated him

Rush Limbaugh remembers Andrew Breitbart (1969-2012)

Beck with David Horowitz discuss conservatives using Saul Alinsky tactics

Mind blowing speech by Robert Welch in 1958 predicting Insiders plans to destroy America

Rules for Radicals

From Wikipedia, the free encyclopedia
Rules for Radicals
Rules for Radicals.png
Author Saul Alinsky
Country U.S.A.
Language English
Subject Grassroots, community organizing
Publisher Random House
Publication date
1971
Pages 196 pp
ISBN 0-394-44341-1
OCLC 140535
301.5
LC Class HN65 .A675

Rules for Radicals: A Pragmatic Primer for Realistic Radicals is the last book published in 1971 by activist and writer Saul D. Alinsky shortly before his death. His goal for theRules for Radicals was to create a guide for future community organizers to use in uniting low-income communities, or “Have-Nots”, in order for them to gain social, political, legal andeconomic power.[1] Within it, Alinsky compiled the lessons he had learned throughout his experiences of community organizing from 1939–1971 and targeted these lessons at the current, new generation of radicals.[2]

Divided into ten chapters, Rules for Radicals provides 10 lessons on how a community organizer can accomplish the goal of successfully uniting people into an active organization with the power to effect change on a variety of issues. Though targeted at community organization, these chapters also touch on other issues that range from ethics, education,communication, and symbol construction to nonviolence and political philosophy.[3]

Though published for the new generation of counterculture-era organizers in 1971, Alinsky’s principles have been successfully applied by numerous government, labor, community, and congregation-based organizations, and the main themes of his organizational methods that were elucidated upon in Rules for Radicals have been recurring elements in political campaigns in recent years.

Inspiration for Rules for Radicals

The inspiration for Rules for Radicals was drawn from Alinsky’s personal experience as a community organizer.[1] It was also taken from the lessons he learned from his University of Chicago professor, Robert Park, who saw communities as “reflections of the larger processes of an urban society”.[3] The methods Alinsky developed and practiced were described in his book as a guide on future community organizing for the new generation of radicals emerging from the 1960s.[3][4]

Alinsky believed in collective action as a result of the work he did with the C.I.O and the Institute for Juvenile Research in Chicago where he first began to develop his own, distinct method of community organizing. Additionally, his late work with the Citizens Action Program (CAP) provided some of his most whole and conclusive practices in organizing through the empowerment of the poor, though not well-known. Alinsky saw community structure and the impoverished and the importance of their empowerment as elements of community activism and used both as tools to create powerful, active organizations.[5] He also used shared social problems as external antagonists to “heighten local awareness of similarities among residents and their shared differences with outsiders”.[3] Ironically, this was one of Alinsky’s most powerful tools in community organizing; to bring a collective together, he would bring to light an issue that would stir up conflict with some agency to unite the group. This provided an organization with a specific “villain” to confront and made direct action easier to implement. These tactics as a result of decades of organizing efforts, along with many other lessons, were poured into Rules for Radicals to create the guidebook for community organization.[2]

Themes

Rules for Radicals has various themes. Among them is his use of symbol construction to strengthen the unity within an organization.[3] He would draw on loyalty to a particular church or religious affiliation to create a structured organization with which to operate. The reason being that symbols by which communities could identify themselves created structured organizations that were easier to mobilize in implementing direct action. Once the community was united behind a common symbol, Alinsky would find a common enemy for the community to be united against.

The use of common enemy against a community was another theme of Rules for Radicals, with nonviolent conflict as a uniting element in communities.[6]

Alinsky would find an external antagonist to turn into a “common enemy” for the community within which he was operating. Often, this would be a local politician or agency that had some involvement with activity concerning the community. Once the enemy was established, the community would come together in opposition of it. This management of conflict heightened awareness within the community as to the similarities its members shared as well as what differentiated them from those outside of their organization.[3] The use of conflict also allowed for the goal of the group to be clearly defined. With an established external antagonist, the community’s goal would be to defeat that enemy.[3]

Symbol construction helped to promote structured organization, which allowed for nonviolent conflict through another element in Alinsky’s teaching, direct action. Direct action created conflict situations that further established the unity of the community and promoted the accomplishment of achieving the community’s goal of defeating their common enemy.[2] It also brought issues the community was battling to the public eye. Alinsky encouraged over-the-top public demonstrations throughout Rules for Radicals that could not be ignored, and these tactics enabled his organization to progress their goals faster than through normal bureaucratic processes.[3]

Lastly, the main theme throughout Rules for Radicals and Alinsky’s work was empowerment of the poor.[5] Alinsky used symbol construction and nonviolent conflict to create a structured organization with a clearly defined goal that could take direct action against a common enemy. At this point, Alinsky would withdraw from the organization to allow their progress to be powered by the community itself.[3] This empowered the organizations to create change.[2]

The rules[1]
  1. “Power is not only what you have, but what the enemy thinks you have.” Power is derived from 2 main sources – money and people. “Have-Nots” must build power from flesh and blood.
  2. “Never go outside the expertise of your people.” It results in confusion, fear and retreat. Feeling secure adds to the backbone of anyone.
  3. “Whenever possible, go outside the expertise of the enemy.” Look for ways to increase insecurity, anxiety and uncertainty.
  4. “Make the enemy live up to its own book of rules.” If the rule is that every letter gets a reply, send 30,000 letters. You can kill them with this because no one can possibly obey all of their own rules.
  5. “Ridicule is man’s most potent weapon.” There is no defense. It’s irrational. It’s infuriating. It also works as a key pressure point to force the enemy into concessions.
  6. “A good tactic is one your people enjoy.” They’ll keep doing it without urging and come back to do more. They’re doing their thing, and will even suggest better ones.
  7. “A tactic that drags on too long becomes a drag.” Don’t become old news.
  8. “Keep the pressure on. Never let up.” Keep trying new things to keep the opposition off balance. As the opposition masters one approach, hit them from the flank with something new.
  9. “The threat is usually more terrifying than the thing itself.” Imagination and ego can dream up many more consequences than any activist.
  10. “The major premise for tactics is the development of operations that will maintain a constant pressure upon the opposition.” It is this unceasing pressure that results in the reactions from the opposition that are essential for the success of the campaign.
  11. “If you push a negative hard enough, it will push through and become a positive.” Violence from the other side can win the public to your side because the public sympathizes with the underdog.
  12. “The price of a successful attack is a constructive alternative.” Never let the enemy score points because you’re caught without a solution to the problem.
  13. “Pick the target, freeze it, personalize it, and polarize it.” Cut off the support network and isolate the target from sympathy. Go after people and not institutions; people hurt faster than institutions.

Criticisms

Alinsky received criticism for the methods and ideas he presented. Robert Pruger and Harry Specht noted that much of his instruction has only been effective in urban, low-income areas.[7] Pruger and Specht also criticized his broad statement that Rules for Radicals is a tool for organizing all low-income people. Further, Alinsky’s use of artificially stimulated conflict has been criticized for its ineffectiveness in areas that thrive on unity.[7] According to Judith Ann Trolander, in several Chicago areas in which he worked, his use of conflict backfired and the community was unable to achieve the policy adjustments they were seeking.[2]

Much of the philosophy of community organization found in Rules for Radicals has also come under question as being overly ideological. Alinsky believed in allowing the community to determine its exact goal. He would produce an enemy for them to conflict with, but the purpose of the conflict was ultimately left up to the community. This idea has been criticized due to the conflicting opinions that can often be present within a group.[7] Alinsky’s belief that an organization can create a goal to accomplish is viewed as highly optimistic and contradictory to his creation of an external antagonist. By producing a common enemy, Alinsky is creating a goal for the community, the defeat of that enemy. To say that the community will create their own goal seems backwards considering Alinsky creates the goal of defeating the enemy. Thus, his belief can be seen as too ideological and contradictory because the organization may turn the goal of defeating the common enemy he produced into their main purpose.[7]

Legacy

The scope of influence for Rules for Radicals is a far-reaching one as it is a compilation of the tactics of Alinsky. It has been influential for policymaking and organization for various communities and agency groups, and has influenced politicians and activists educated by Alinsky and the IAF, and other grassroots movements.

Direct impact

After Alinsky died in California in 1972, his influence helped spawn other organizations and policy changes. Rules for Radicals was a direct influence that helped to form the United Neighborhood Organization in the early 1980s.[3] Its founders Greg Galluzzo, Mary Gonzales, and Pater Martinez were all students of Alinsky.[3] The work of UNO helped to improve the hygiene, sanitation, and education in southeastern Chicago.[3] Additionally, the founders of Organization of the North East in Chicago during the 1970s applied Alinsky’s principles to organize multiethnic neighborhoods in order to gain greater political representation.[3]

Rules for Radicals have been dispersed by Alinsky’s students who undertook their own community organizing endeavors. Students of Alinsky’s such as Edward T. Chambers used Rules for Radicals to help form the Industrial Areas Foundation, the Queens Citizens Organization, and the Communities Organized for Public Service. Another student of Alinsky’s, Ernest Cortez, rose to prominence in the late 1970s in San Antonio while organizingHispanic neighborhoods. His use of congregation-based organizing received much acclaim as a popular method of Alinsky’s by utilizing “preexisting solidary neighborhood elements, especially church groups, so that the constituent units are organizations, not individuals.”[5] This congregation-based organizing and symbol construction was taught to him by Edward Chambers and the IAF during his time studying under both.

The methods and teachings of Rules for Radicals have also been linked to the Mid-America Institute, the National People’s Action, the National Training and Information Center, the Pacific Institute for Community Organizations, and the Community Service Organization.[5]

Later influence

The methods from Rules for Radicals have been seen in modern American politics. The use of congregation-based organizing has been linked to Jesse Jackson when he was organizing his own political campaign.[8] The book was praised and used as an organizational guide by the Tea Party conservative group FreedomWorks during Dick Armey‘s tenure as chairman.[9][10]

Publication data

References

  1. ^ Jump up to:a b c Rules for Radicals, by Saul Alinsky
  2. ^ Jump up to:a b c d e Trolander, Judith Ann (1982). “Social Change: Settlement Houses and Saul Alinsky, 1939–1965”. Social Service Review. University of Chicago Press. 56 (3): 346–65. ISSN 1537-5404. JSTOR 30011558 – viaJSTOR. (registration required (help)).
  3. ^ Jump up to:a b c d e f g h i j k l m Reitzes, Donald C.; Reitzes, Dietrich C. (1987). “Alinsky in the 1980s: Two Contemporary Chicago Community Organizations”. The Sociological Quarterly. Midwest Sociological Society.28 (2): 265–83. doi:10.1111/j.1533-8525.1987.tb00294.x. ISSN 1533-8525. JSTOR 4121434 – via JSTOR. (registration required (help)).
  4. Jump up^ “Playboy Interview: Saul Alinsky”. Playboy Magazine. March 1972.
  5. ^ Jump up to:a b c d McCarthy, John D. (1989). “The Alinsky Legacy: Alive and Kicking.by Donald C. Reitzes, Dietrich C. Reitzes”. Contemporary Sociology.American Sociological Association. 18 (1): 46–7. ISSN 1939-8638.JSTOR 2071926 – via JSTOR. (registration required (help)).
  6. Jump up^ Marshall, Dale Rogers (1976). “Rules for Radicals: A Pragmatic Primer for Realistic Radicals by Saul D. Alinsky; How People Get Power: Organizing Oppressed Communities for Action by Si Kahn; Action for a Change: A Student’s Manual for Public Interest Organizing by Ralph Nader, Donald Ross; Winning Elections: A Handbook in Participatory Politics by Dick Simpson; Political Action: A Practical Guide to Movement Politics by Michael Walzer”. The American Political Science Review. American Political Science Association. 70 (2): 620–3. doi:10.2307/1959680. ISSN 1537-5943.JSTOR 1959680 – via JSTOR. (registration required (help)).
  7. ^ Jump up to:a b c d Pruger, Robert; Harry Specht (June 1969). “Assessing Theoretical Models of Community Organization Practice: Alinsky as a Case in Point”.Social Service Review. 43 (2): 123. doi:10.1086/642363.JSTOR 30020552.
  8. Jump up^ Swarts, Heidi (2011). “Drawing New Symbolic Boundaries Over Old Social Boundaries: Forging Social Movement Unity in Congregation-Based Community Organizing”. Sociological Perspectives. Sage Publications. 54(3): 453–77. doi:10.1525/sop.2011.54.3.453. ISSN 1533-8673.JSTOR 10.1525/sop.2011.54.3.453 – via JSTOR. (registration required (help)).
  9. Jump up^ Knickerbocker, Brad (January 28, 2012). “Who is Saul Alinsky, and why is Newt Gingrich so obsessed with him?”. Christian Science Monitor. Retrieved July 22, 2016.
  10. Jump up^ Vogel, Kenneth P. (October 22, 2010). “Right loves to hate, imitate Alinsky”. Politico. Retrieved September 11, 2016.

Further reading

External links

https://en.wikipedia.org/wiki/Rules_for_Radicals

Saul Alinsky

From Wikipedia, the free encyclopedia
Saul Alinsky
Saul Alinsky.jpg
Born Saul David Alinsky
January 30, 1909
Chicago, Illinois, U.S.
Died June 12, 1972 (aged 63)
Carmel-by-the-Sea, California, U.S.
Cause of death Heart attack
Nationality American
Ethnicity Ashkenazi Jewish
Education University of Chicago, Ph.B.1930
U. of Chicago Graduate School, criminology, 1930–1932
Occupation Community organizer, writer,political activist
Known for Political activism, writing,community organization
Notable work Rules for Radicals (1971)
Spouse(s)
  • Helene Simon (m. 1932; d. ?)
  • Jean Graham (m. 1952;div. 1970)
  • Irene McInnis Alinsky (m. 1971)
Children Katherine and David (by Helene)
Awards Pacem in Terris Award, 1969
Notes

Saul David Alinsky (January 30, 1909 – June 12, 1972) was an American community organizer and writer. He is generally considered to be the founder of modern community organizing. He is often noted for his 1971 book Rules for Radicals.

In the course of nearly four decades of political organizing, Alinsky received much criticism, but also gained praise from many public figures. His organizing skills were focused on improving the living conditions of poor communities across America. In the 1950s, he began turning his attention to improving conditions in the African-American ghettos, beginning with Chicago’s and later traveling to other ghettos in California, Michigan, New York City, and a dozen other “trouble spots”.

His ideas were adapted in the 1960s by some U.S. college students and other young counterculture-era organizers, who used them as part of their strategies for organizing on campus and beyond.[5] Time magazine wrote in 1970 that “It is not too much to argue that American democracy is being altered by Alinsky’s ideas.”[6] Conservative author William F. Buckley Jr. said in 1966 that Alinsky was “very close to being an organizational genius”.[7]

Biography

Early life

Saul David Alinsky was born in 1909 in Chicago, Illinois, to Russian Jewish immigrant parents, the only surviving son of Benjamin Alinsky’s marriage to his second wife, Sarah Tannenbaum Alinsky.[8] Alinsky stated during an interview that his parents never became involved in the “new socialist movement.” He added that they were “strict Orthodox, their whole life revolved around work and synagogue … I remember as a kid being told how important it was to study.”[4] He attended Marshall High School in Chicago until his parents divorced and then went to live with his father who moved to California, graduating from Hollywood High School[9] in 1926.

Because of his strict Jewish upbringing, he was asked whether he ever encountered antisemitism while growing up in Chicago. He replied, “it was so pervasive you didn’t really even think about it; you just accepted it as a fact of life.”[4] He considered himself to be a devout Jew until the age of 12, after which time he began to fear that his parents would force him to become a rabbi.

I went through some pretty rapid withdrawal symptoms and kicked the habit … But I’ll tell you one thing about religious identity…Whenever anyone asks me my religion, I always say—and always will say—Jewish.[4]

At the same time, he was also an agnostic.[10][11][12]

University of Chicago

In 1930, Alinsky graduated with a Bachelor of Philosophy from the University of Chicago, where he majored in archaeology, a subject that fascinated him.[4] His plans to become a professional archaeologist were changed due to the ongoing economic Depression. He later stated, “Archaeologists were in about as much demand as horses and buggies. All the guys who funded the field trips were being scraped off Wall Street sidewalks.”[4]

Employment

After attending two years of graduate school at the University of Chicago, he accepted work for the state of Illinois as a criminologist. On a part-time basis, he also began working as an organizer with the Congress of Industrial Organizations (CIO). By 1939, he became less active in the labor movement and became more active in general community organizing, starting with the Back of the Yards and other poor areas on the South Side of Chicago. His early efforts to “turn scattered, voiceless discontent into a united protest” earned the admiration of Illinois governor Adlai Stevenson, who said Alinsky’s aims “most faithfully reflect our ideals of brotherhood, tolerance, charity and dignity of the individual.”[4]

As a result of his efforts and success at helping slum communities, Alinsky spent the next 10 years repeating his organization work across the nation, “from Kansas City and Detroit to the barrios of Southern California.” By 1950 he turned his attention to the black ghettos of Chicago. His actions aroused the ire of Mayor Richard J. Daley, who also acknowledged that “Alinsky loves Chicago the same as I do.”[4] He traveled to California at the request of the San Francisco Bay Area Presbyterian Churches to help organize the black ghetto in Oakland. Hearing of his plans, “the panic-stricken Oakland City Council promptly introduced a resolution banning him from the city.”[4]

Community organizing and politics

In the 1930s, Alinsky organized the Back of the Yards neighborhood in Chicago (made infamous by Upton Sinclair‘s 1906 novel, The Jungle, which described the horrific working conditions in the Union Stock Yards). He went on to found the Industrial Areas Foundation while organizing the Woodlawn neighborhood; IAF trained organizers and assisted in the founding of community organizations around the country.

In Rules for Radicals (his final work, published in 1971 one year before his death), Alinsky wrote at the end of his personal acknowledgements:

Lest we forget at least an over-the-shoulder acknowledgment to the very first radical: from all our legends, mythology, and history (and who is to know where mythology leaves off and history begins or which is which), the first radical known to man who rebelled against the establishment and did it so effectively that he at least won his own kingdom – Lucifer.[13]

In the book, he addressed the 1960s generation of radicals, outlining his views on organizing for mass power. In the opening paragraph Alinsky writes,

What follows is for those who want to change the world from what it is to what they believe it should be. The Prince was written by Machiavelli for the Haves on how to hold power. Rules for Radicals is written for the Have-Nots on how to take it away.[13]

Alinsky did not join political parties. When asked during an interview whether he ever considered becoming a Communist Party member, he replied:

Not at any time. I’ve never joined any organization—not even the ones I’ve organized myself. I prize my own independence too much. And philosophically, I could never accept any rigid dogma or ideology, whether it’s Christianity or Marxism. One of the most important things in life is what Judge Learned Hand described as ‘that ever-gnawing inner doubt as to whether you’re right.’ If you don’t have that, if you think you’ve got an inside track to absolute truth, you become doctrinaire, humorless and intellectually constipated. The greatest crimes in history have been perpetrated by such religious and political and racial fanatics, from the persecutions of the Inquisition on down to Communist purges and Nazi genocide.[4]

He did not have much respect for mainstream political leaders who tried to interfere with growing black–white unity during the difficult years of the Great Depression. In Alinsky’s view, new voices and new values were being heard in the U.S., and “people began citing John Donne‘s ‘No man is an island.'”[4] He observed that the hardship affecting all classes of the population was causing them to start “banding together to improve their lives,” and discovering how much in common they really had with their fellow man.[4]

Alinsky once explained that his reasons for organizing in black communities included:

Negroes were being lynched regularly in the South as the first stirrings of black opposition began to be felt, and many of the white civil rights organizers and labor agitators who had started to work with them were tarred and feathered, castrated—or killed. Most Southern politicians were members of the Ku Klux Klan and had no compunction about boasting of it.[4]

Alinsky’s tactics were often unorthodox. In Rules for Radicals he wrote,

[t]he job of the organizer is to maneuver and bait the establishment so that it will publicly attack him as a ‘dangerous enemy.’ [According to Alinsky], the hysterical instant reaction of the establishment [will] not only validate [the organizer’s] credentials of competency but also ensure automatic popular invitation.[14]

As an example, after organizing FIGHT (an acronym for Freedom, Independence [subsequently Integration], God, Honor, Today) in Rochester, New York,[15] Alinsky once threatened to stage a “fart in” to disrupt the sensibilities of the city’s establishment at a Rochester Philharmonic concert. FIGHT members were to consume large quantities of baked beans after which, according to author Nicholas von Hoffman, “FIGHT’s increasingly gaseous music-loving members would tie themselves to the concert hall where they would sit expelling gaseous vapors with such noisy velocity as to compete with the woodwinds.”[16] Satisfied with his threat yielding action, Alinsky later threatened a “piss in” at Chicago O’Hare Airport. Alinsky planned to arrange for large numbers of well-dressed African Americans to occupy the urinals and toilets at O’Hare for as long as it took to bring the city to the bargaining table. According to Alinsky, once again the threat alone was sufficient to produce results.[16] In Rules for Radicals, he notes that this tactic fell under two of his rules: Rule #3: Wherever possible, go outside the experience of the enemy; and Rule #4: Ridicule is man’s most potent weapon.

Alinsky described his plans for 1972 to begin to organize the white middle class across the United States, and the necessity of that project. He believed that many Americans were living in frustration and despair, worried about their future, and ripe for a turn to radical social change, to become politically active citizens. He feared the middle class could be driven to a right-wing viewpoint, “making them ripe for the plucking by some guy on horseback promising a return to the vanished verities of yesterday.”[4] His stated motive: “I love this goddamn country, and we’re going to take it back.”[4]

Death

Alinsky died at the age of 63 from a heart attack near his home in Carmel, California, on June 12, 1972. He was cremated in Carmel and his ashes were interred at Mt. Mayriv Cemetery (the cemetery is now included in Zion Gardens Cemetery) in Chicago.[17][18] Shortly before his death he had discussed life after death in Playboy:[4]

ALINSKY: … if there is an afterlife, and I have anything to say about it, I will unreservedly choose to go to hell.
PLAYBOY: Why?
ALINSKY: Hell would be heaven for me. All my life I’ve been with the have-nots. Over here, if you’re a have-not, you’re short of dough. If you’re a have-not in hell, you’re short of virtue. Once I get into hell, I’ll start organizing the have-nots over there.
PLAYBOY: Why them?
ALINSKY: They’re my kind of people.

Legacy and honors

The documentary, The Democratic Promise: Saul Alinsky and His Legacy, states that “Alinsky championed new ways to organize the poor and powerless that created a backyard revolution in cities across America.”[19] Based on his organizing in Chicago, Alinsky formed the Industrial Areas Foundation (IAF) in 1940. After he died, Edward T. Chambers became its Executive Director. Hundreds of professional community and labor organizers, and thousands of community and labor leaders have been trained at its workshops. Fred Ross, who worked for Alinsky, was the principal mentor for Cesar Chavez and Dolores Huerta. Other organizations following in the tradition of the Congregation-based Community Organizing pioneered by IAF include PICO National Network, Gamaliel Foundation, Brooklyn Ecumenical Cooperatives, founded by former IAF trainer, Richard Harmon and Direct Action and Research Training Center (DART).[20][21][22]

Several prominent American leaders have been influenced by Alinsky’s teachings,[21] including Ed Chambers,[19] Tom Gaudette, Ernesto Cortes, Michael Gecan, Wade Rathke, and Patrick Crowley.[23][24] Alinsky is often credited with laying the foundation for the grassroots political organizing that dominated the 1960s.[19] Jack Newfield, writing in New York magazine, included Alinsky among “the purest Avatars of the populist movement”, along with Ralph Nader, Cesar Chavez, and Jesse Jackson.[25]

Although Alinsky held little respect for elected officials,[26] he has been described as an influence on several notable politicians in both the Democratic and Republican parties.

In 1969, while a political science major at Wellesley College, Hillary Rodham chose to write her senior thesis on Alinsky’s work, with Alinsky himself contributing his own time to help her.[27][28] Although Rodham defended Alinksy’s intentions in her thesis, she was critical of his methods and dogmatism.[27][29] (Years later when she became First Lady, the thesis was not made publicly available by the school based upon a White House request.[30])

According to biographer Sanford Horwitt, U.S. President Barack Obama was influenced by Alinsky and followed in his footsteps as a Chicago-based community organizer. Horwitt asserted that Barack Obama’s 2008 presidential campaign was influenced by Alinsky’s teachings.[31] Alinksy’s influence on Obama has been heavily emphasized by some of his detractors, such as Rush Limbaugh and Glenn Beck. Thomas Sugrue of Salon.com writes, “as with all conspiracy theories, the Alinsky-Obama link rests on a kernel of truth”.[26] For three years in the mid 80s, Obama worked for the Developing Communities Project, which was influenced by Alinsky’s work, and he wrote an essay that was collected in a book memorializing Alinsky.[26][32] Newt Gingrich repeatedly stated his opinion that Alinsky was a major influence on Obama during his 2012 presidential campaign, equating Alinsky with “European Socialism”, although Alinsky was U.S.-born and was not a Socialist.[33] Gingrich’s campaign itself used tactics described by Alinsky’s writing.[34]

Adam Brandon, a spokesman for the conservative non-profit organization FreedomWorks, one of several groups involved in organizing Tea Party protests, says the group gives Alinsky’s Rules for Radicals to its top leadership members. A shortened guide called Rules for Patriots is distributed to its entire network. In a January 2012 story that appeared in The Wall Street Journal, citing the organization’s tactic of sending activists to town-hall meetings, Brandon explained, “[Alinsky’s] tactics when it comes to grass-roots organizing are incredibly effective.” Former Republican House Majority Leader Dick Armey also gives copies of Alinsky’s book Rules for Radicals to Tea Party leaders.[35]

In 1969, Alinsky was awarded the Pacem in Terris Peace and Freedom Award, an annual award given by the Diocese of Davenport to commemorate an encyclical by Pope John XXIII.[36]

See also

Works

  • Reveille for Radicals, Chicago: University of Chicago Press, 1946.
  • John L. Lewis: An Unauthorized Biography. New York: Putnam, 1949.
  • Rules for Radicals: A Pragmatic Primer for Realistic Radicals. New York: Random House, 1971.
  • The Philosopher and the Provocateur: The Correspondence of Jacques Maritain and Saul Alinsky. Bernard E Doering (ed.). Notre Dame, IN: University of Notre Dame Press, 1994.

https://en.wikipedia.org/wiki/Saul_Alinsky

Read Full Post | Make a Comment ( None so far )
<