universal basic income

Preferences vs Interests by Chris Dillow

America is running out of jobs. It's time for a universal basic income. by Ryan Cooper

helicopter drop, Kalecki, and Lenin

To fix the economy, let's print money and mail it to everyone by Dylan Matthews

Interview with Brown political economist Mark Blyth and hedge fund manager Eric Lonergan

Mark Blyth: There was a brilliant piece in 1943 by the Polish economist Michał Kalecki. It was a critique of full employment policy. He said a problem with Keynesian macroeconomics is that if we get away with it, if you have permanently full employment, two things happen. One, job switching becomes costless and employers no longer have the whip hand. There will be a political revolution, employers will find economists who'll say it's unsustainable, and they'd try to overturn it. He wrote that in 1943, and that was basically the neoliberal revolution foretold.
Two, capitalism embodies an ethic that you must earn your crust, and if you create an economy whereby the crust is there without being earned, it's deeply disturbing on some political, ideological, and moral level. The other thing, besides the vested interest of employers in stopping full employment, is the idea that there must just be something wrong with doing this. 

Deep down inside, many people refuse to accept something simple: central banks, in a fiat money system, are just printing. There's no corresponding liability besides the balance sheet convention of listing cash as a liability. There's nothing claimed against anything else like gold. All that matters is the credibility of policy — that the place is reasonably well-run — and that you have the intergenerational ability to tax. If you have both of these things, you're just printing. So instead of printing it, shoving it through the banking system and hoping some of it trickles down after it's blown the stock market up to 15,000, why not just give people the cash?

And as Chris Dillow wrote:

I agree with Steve that the rich hate inflation not least because it creates uncertainty. (There's also the historical point that the inflationary 70s also saw the nadir of the fortunes of the 1%: this might be just coincidence, but why risk it?) 

This alone creates a bias to tighten. What amplifies this bias is that the rich can tolerate mass unemployment. Nick's parallel with the 1930s is, I think, irrelevant. Back in the 30s, mass unemployment was a threat to the rich because workers could see a plausible alternative to the existing order in communism. Today, by contrast, there are no big feasible alternatives to capitalism and so unemployment is not a political danger - which means it is more tolerable. 

This answers Peter's question: why has the Keynesian coalition vanished from modern politics? It's because it is no longer politically necessary. It was not Keynes who convinced capitalists of the need for full employment but Lenin.

The timeline is a little off. The Soviet Union didn't collapse until the earlier 90s, but basically things turned in the 70s. America destroyed Vietnam in order to save it and Nixon turned the Chinese Communists against the Soviets. Then Reagan and Thatcher came in the 80s as Mitterand's Socialists buckled under pressure from the bond vigilantes.

Helicopter Drop and the SecStags

William Buiter:

A permanent/irreversible increase in the nominal stock of fiat base money rate which respects the intertemporal budget constraint of the consolidated Central Bank and Treasury.... Three conditions must be satisfied for helicopter money always to boost aggregate demand. First, there must be benefits from holding fiat base money other than its pecuniary rate of return. Second, fiat base money is irredeemable – viewed as an asset by the holder but not as a liability by the issuer. Third, the price of money is positive. Given these three conditions, there always exists – even in a permanent liquidity trap – a combined monetary and fiscal policy action that boosts private demand – in principle without limit. Deflation, ‘lowflation’ and secular stagnation are therefore unnecessary. They are policy choices."

(via DeLong)

Depression is a choice as Steve Randy Waldman wrote.

Why don't the elites like helicopter drops or universal basic income? Because they don't want to provide economic and even political rights (campaign cash outweighs voting). Legal rights are okay but even there, there's two different system. 

They'd rather that campaign spending equal free speech and the banks distribute the Fed's digital money.

Europe

MORNING MUST-READ: BARRY EICHENGREEN: THE ECB TRIES AGAIN by DeLong

Barry Eichengreen: The ECB Tries Again: "In June the European Central Bank announced a sers of new steps to counter deflation....

...Rather than bemoaning the failure of President Draghi & Co. to move earlier, it is more productive at this stage to ask: are the central bank's measures now up to the task?... The ECB's conventional measures, reducing its benchmark interest rate from 0.25 to 0.15 per cent and charging commercial banks 0.1 per cent on the money they deposit with the central bank, will make little difference.... Conventional monetary policy has run its course.... Thus, if policy is going to make a difference, policy will have to be unconventional. Here the ECB unveiled... one and a half... initiatives in June... 'Targeted Long-Term Refinancing Operation'... €400 billion, or some US$550 billion, cumulatively over four months. Recall that the Federal Reserve, under QE3, had been injecting $85 billion a month into U.S. financial markets before starting to taper in December. This makes TLTRO look like a substantial commitment.... The additional 'half an initiative' announced in June was that the ECB would study the possibility of security purchases.... These cautions should not be taken as a council of despair. If ECB officials conclude that the impact of TLTRO and securities purchase will be marginal, they should not give up hope; rather, they should strive to do more...

Emphasis added.

Bundesbank shifts stance and backs unions’ push for big pay rises

The Bundesbank has backed the push by Germany’s trade unions for inflation-busting wage settlements, in a remarkable shift in stance from a central bank famed for its tough approach to keeping prices in check. 

Jens Ulbrich, the Bundesbank’s chief economist, told Spiegel, a German weekly, that recently agreed pay rises of more than 3 per cent were welcome, despite being above the European Central Bank’s inflation target of below but close to 2 per cent.

In an article published on Sunday, Mr Ulbrich said that recent wage trends were “moderate” given Germany’s relative economic strength and low levels of unemployment. His comments echo the views of Jens Weidmann, Bundesbank president, according to a senior central bank official. 

The push for higher pay underlines the heightened concern among even the most hawkish members of the ECB’s governing council over the eurozone’s low inflation and signs that the region’s fledgling recovery is stalling. On Monday, the Bundesbank acknowledged the German economy was unlikely to have grown at all over the three months to June.

helicopter money and UBI

When is helicopter money optimal? by Nick Rowe

Universal Basic Income Recycling by Max Sawicky

"Why, sometimes I've believed as many as six impossible things before breakfast." Work that brain muscle.