In economics, “social cost” is really a euphemism for the destructive consequences of capitalism. Milton Friedman famously referred to them as “neighborhood effects,” and today it is more common to call them “market failures” or “externalities.” Regardless of what we label them, they are the secondary or indirect effects of some market transaction or transactions. And because I am convinced of their urgency, today I want to call attention to the social costs of social media and the internet in …
Modern Monetary Theory – or Practice?
March 20, 2021It is time to make good on an earlier promise. In earlier posts (e.g., here), I hinted that I would, in the future, post more on Modern Monetary Theory (MMT). Well, economic and political events are rapidly making a proper understanding of MMT more urgent. Indeed, in large part due to recent Fed largesse, the question becomes whether we should be talking about Modern monetary theory or practice? The premise behind MMT is that governments, unlike businesses or households, can …
Bidenomics: The Broader Context
March 14, 2021This past Thursday President Biden signed into law his coronavirus relief package, which amounts to $1.9 trillion of new outlays. Even the most hardened cynic would be hard pressed to find much here that smells rotten. The new policy is indeed far removed from anything advanced by Trump and his manipulators over the past four years. It alone provides reason for hope, perhaps even for a new era of “Bidenomics.” The package contains money for a variety of purposes. Notably …
Are We Approaching a Tipping Point?
March 8, 2021Texas has been on my mind lately. No, I’m not a Republican, and I’m not crazy about hot weather. That is, in fact, the problem. Texas has been in the recent news, but not because of its heat. Quite the contrary. An unexpected winter storm last month stressed the electric grid in Texas and almost brought it down. Bill Magness, president and chief executive of the Electric Reliability Council of Texas (ERCOT), said Texas was “seconds and minutes” from complete …
Do We Fear Inflation or Hope for It?
February 28, 2021Fear of inflation again appears to be rising to a fever pitch. Yet confusion about it persists, both among the uninitiated and the cognoscenti. It calls for a quick review of the basics. My students invariably state that inflation means the value of their money is going down. But of course, it is not what it means. Erosion of monetary value is a mere consequence. They will also sometimes claim that they can no longer afford Knicks tickets due to …
Path Dependence and the Folly of Incrementalism
“History matters” (Robert Jensen) I am currently teaching a seminar entitled “Rethinking Progress.” One recurring topic in our discussions is the modern world’s present rate of technological advance in the absence of commensurate progress in the social sphere. My students sense an ominous imbalance and probable environmental overshoot. I want them to see the folly of incrementalism as a solution, yet do not want them to see me as preaching revolution. I therefore believe an understanding of path dependence to …
The Inevitability of a (Probably Massive) Green New Deal
February 21, 2021Did I get your attention? Ok, let me preface by adding “at some point” to the title. After all, to say that the present political climate in Washington makes a Green New Deal impossible might even be an understatement. And there really is nothing inevitable about such a policy breakthrough. One could alternatively imagine an endless political war of attrition. Yet most thinking people are coming to realize, however slowly, that continuing to ignore the global environmental crisis spells ruin …
The 1.9 Trillion-Dollar Question
February 14, 2021The truth is that approval of the Biden Administration’s proposed stimulus package is inconceivable without major revision. We know that. But let us for the moment ignore the partisan political challenges that make passage impossible. Pretend, in other words, that Congress is unified and ready to rubber stamp whatever plan Biden advances. The 1.9 trillion-dollar question then becomes whether the size of his present proposal is too large – or not large enough. The political arguments on each side are …
Is Progress “Progressive?”
February 6, 2021It is not only because I am presently running a seminar on progress that I write about it here, although it has inspired me. Economic progress is a subject that has interested me for my entire career, and much of my research and writing is devoted to it. But progress is an idea that goes far beyond economics. It is, for example, related to politics, which is from where we hear the term “progressive.” But is progress progressive? What does progress even …
Revenge of the Little Guy
February 1, 2021By now everyone has heard about the recent “assault” on Wall Street by legions of day traders. Coordinating purchases over Reddit and using the Robin Hood app, possibly a few million individuals bought large quantities of shares from GameStop as well as other companies like Blackberry, AMC Entertainment, and Nokia, pumping up their prices as much as 300 percent – and much more in the case of GameStop. The surge in their share prices caused hedge funds like Melvin, Point72, …