A prominent economist faced pressure from others in his field to step down from an editing post because of comments he made criticizing the Black Lives Matter and Defund the Police movements, reflecting some of the turmoil roiling economics and other professions following the recent police killing of George Floyd, an unarmed black man in Minneapolis.
The sparring this week between critics and defenders of University of Chicago economist Harald Uhlig, the lead editor of the Journal of Political Economy, comes during national protests over police brutality and discussions about racial inequality and policing practices.
The debate over Mr. Uhlig follows several years in which the economics profession has sought to grapple with tensions in its ranks over its lack of racial and gender diversity.
In a Twitter post late Monday, Mr. Uhlig said that Black Lives Matter—a long-running campaign focused on issues of police brutality—had “just torpedoed itself, with its full-fledged support of #defundthepolice,” a reference to calls by activists to shift government spending away from police departments. Those calls have increased since Mr. Floyd’s killing.
“Time for sensible adults to enter back into the room and have serious, earnest, respectful conversations about it all,” Mr. Uhlig wrote. “We need more police, we need to pay them more, we need to train them better,” he added.
Backlash grew quickly on Twitter, including demands from prominent and rank-and-file economists for Mr. Uhlig’s resignation from the publication, which describes itself as “one of the oldest and most prestigious journals in economics.”
“He belittled the movement,” said Olugbenga Ajilore, senior economist at the Center for American Progress, a left-leaning Washington think tank, who supports Mr. Uhlig’s resignation.
Mr. Uhlig and the Journal of Political Economy didn’t immediately return requests for comments. Mr. Uhlig apologized Tuesday on Twitter and said his views weren’t pronouncements by the journal or the University of Chicago.
“My tweets in recent days and an old blog post have apparently irritated a lot of people. That was far from my intention: let me apologize for that,” Mr. Uhlig wrote.
Too bad, but #blacklivesmatter per its core organization @Blklivesmatter just torpedoed itself, with its full-fledged support of #defundthepolice : “We call for a national defunding of police.” Suuuure. They knew this is non-starter, and tried a sensible Orwell 1984 of saying,279 people are talking about this
Critics also had flagged past posts on his blog, including one in 2017 that criticized National Football League players for on-field, kneeling protests over police brutality.
Mr. Ajilore said Mr. Uhlig’s comments reflected a failure to recognize that the Black Lives Matter movement has had an impact on policing policy. Mr. Ajilore said the comments were further troubling because of how closely academic economists’ career trajectories are tied to their ability to have editors approve research for publication in top-tier journals, such as the Journal of Political Economy.
“How can you be an objective arbiter of work when you’re not able to recognize actual, tangible, serious, significant movements?” Mr. Ajilore asked.
Maximilian Auffhammer, a professor at the University of California, Berkeley, tweeted on Tuesday a link to a letter that called for Mr. Uhlig to step down from his post at the journal, with encouragement for others to sign it.
“Prof. Uhlig is welcome to say whatever he wants. But his comments hurt and marginalize people of color and their allies in the economics profession,” Mr. Auffhammer, who planned to deliver the letter Thursday, said in an email Wednesday.
“I would also argue that they call into question his impartiality in assessing academic work on this and related topics. More broadly they damage the standing of the economics discipline in society,” he said.
Mr. Uhlig’s defenders also circulated their arguments online, saying in a letter he should remain in the journal post.
“We, the undersigned, do not believe political litmus tests should be applied when deciding who receives prominent academic positions. This is bad for economics,” the counterpetition said.
Robin Hanson, associate professor of economics at George Mason University, said he had signed the letter in support of Mr. Uhlig.
“The line is moving here in terms of how enthusiastically you must support a party line,” Mr. Hanson said. “You can’t in any way seem at all critical or you’re threatening our unity or something. That’s a Stalin level of conformity,” he added.
The American Economic Association has said it is working to improve the profession’s culture since a survey released in 2018 found women and minorities felt they were discriminated against in hiring and the publication process at top economics journals.
“We acknowledge the pain of our colleagues and students—and especially our Black colleagues and students—who must once again bear witness to evidence that violent racism has not yet been eradicated from our society,” the AEA’s executive committee said in a June 5 statement on Mr. Floyd’s death.
“We commit ourselves personally and professionally to actions that the economics profession can and should take to contribute to broader social efforts to root out racism,” the statement added.
Several black economists, and others, have called for the profession’s research methods to better address racial disparities.
William Spriggs, chief economist to the AFL-CIO, wrote in a recent open letter to the Federal Reserve Bank of Minneapolis that Mr. Floyd’s killing offers the economics profession a chance to reflect on shortcomings in its approach to race-related issues and research.
“The overwhelming majority of explorations of racial disparities in economic outcomes remains deeply tied to that view of race as an exogenous variable,” Mr. Spriggs wrote. That model leads to economic analysis that “assumes that there is something ‘deficient’ about black people.”
Mr. Spriggs, in an interview, said economists should instead be more willing to identify the construct of race itself as the cause of certain unequal outcomes for African-Americans.
“Our theory is that the market rewards everything equally,” Mr. Spriggs said. Sometimes, “somebody is putting their hand on the scale and race is the marker that they put their hand on the scale.”
Yves here. Get a cup of coffee. Another meaty chat with Michael Hudson, who focuses here on the role of finance in rent extraction.
An important theme here that Hudson has stressed before is the mistaken perception of home “ownership”. Only about 1/3 of homes in America are owned free and clear. For the rest, the banks, or mortgage trusts, hold a senior position as mortgage lenders. And over the decades, they have become far less accommodating when homeowners are late even on a single payment. Even worse, insiders have reported that mortgage servicers will even hold payments to assure that they are late, which typically leads to compounding charges that virtually assure a foreclosure. Borrowers also face Kafkaesque obstacles to clearing up errors when they unquestionably paid on time.
To put it another way, as Josh Rosner put it in the early 2000s. “A home with no equity is a rental with debt.” That can be generalized to homes with little equity.
Radical Imagination host Jim Vrettos interviews Professor Michael Hudson, Economist, Wall St. Analyst, Political Consultant, Commentator and Journalist; who offers his views in the way finance works
Welcome, welcome once again to the Radical imagination. I’m your host, Jim Vrettos. I’m a sociologist who’s talked at John Jay College of Criminal justice and Yeshiva University here in New York. Our guest today, on the Radical Imagination, is one of only eight economists named by the Financial Times who foresaw the credit crisis and ensuing great recession erupting in 2008. It was conventional wisdom at the time to say that no one saw the gravity of the crisis coming, including almost every leading economist and financier in the world.
In fact, many had seen it coming. It was seen by everyone except economists from Wall Street; as our guest put it. They were ignored by an establishment according to then, the Federal Reserve chairman Alan Greenspan that watched with innocent quote-unquote shock disbelief as its whole intellectual edifice collapsed in the summer of 2007.
Official models missed the crisis not because the conditions were so shockingly unusual, they missed it by design because the world they lived in was not a world of how finance really works. They missed it because their mathematical models made it impossible to warn against a debt-deflation recession.
Their innocent model worlds were worlds where debt simply did not exist. It’s a world that most of our economic policymakers still live in, and it’s no wonder that everyday people see most economists far removed from their practical economic concerns and interests their everyday concrete reality. Our guest today is an internationally renowned economist who’s followed a much different path of interest and concern.
Michael Hudson is a distinguished research professor of economics at the University of Missouri, Kansas City, a researcher at the Levy Economics Institute at Bard College, a former Wall Street analyst; political consultant to governments on finance and tax policy, a popular commentator sought after speaker and journalist.
He identifies himself as a Marxist economist. But his interpretation of Karl Marx that differs in most other major Marxists. He believes parasitical forms of finance have warped the political economy of modern capitalism. History has regressed back to a neo- feudal system. He’s also a contributor to the Hudson report, a weekly economic and financial news podcast produced by Left Out.
His many books include Killing the Host, J is for Junk Economics,The Bubble and Beyond, Super Imperialism, and “… and Forgive Them Their Debts.” Michael has devoted his entire scientific career to the study of debt —both domestic and foreign, loans and mortgages, and interest payments.
In 2006 he argued that debt deflation would shrink the real economy, drive down real wages and push our debt-ridden economy into a Japan-style stagnation or worse. And just for reference, the typical American household now carries an average debt of over $137,000 up from $50,000 or so in 2000. The average American has about $38,000 in personal debt, excluding home mortgages.
The average credit card debt per U.S. household is $8,500, and outstanding student loans are at an all-time high, in 2019, of $1.41 trillion, a 33 percent spike since 2014, and a 6 percent increase from 2018. Only 23 percent of the population say they carry no debt. As Hudson presciently puts it, debts grow and grow, and the more they grow, the more they shrink the economy.
When you shrink the economy, you shrink the ability to pay the debts. So, it’s an illusion that the system can be saved. The question is, how long are people going to be willing to live in this illusion? Every day people have to face reality. Our economic policymakers urgently need to get it too.
So welcome Michael to The Radical Imagination. Thank you very, very much for coming here and being with us. Your work is so interesting; it’s so new and different. You’re a Marxist economist and yet…
[Michael] I’m a classical economist…
[Jim] You are classical, ok.
[Michael] Marx was the last great classical economist. Classical economics basically runs from the French Physiocrats through Adam Smith via John Stuart Mill to Marx.
[Jim] Along with Ricardo.
[Michael] Yes, they were all talking about the rentiers. In their time the landed aristocracy were the main rent recipients. But Adam Smith also talked about monopoly rent. And finance was the major monopoly. And today, the role of the landlords played in the 19th century of stifling industrial capitalism is being played by the banks and the rest of the financial sector. Right now the collectors of land rent, which was the main focus of the labor theory of value to isolate what was unnecessary, is being paid to the banks as mortgage interest.
[Michael] So, we no longer have a small privileged private landlord class when you have 80 percent of the European population and two thirds of the American population being homeowners. However, they have to pay the equivalent of the rental value of their housing to the bank, in the form of mortgage interest.
[Jim] To the banks, right!
[Michael] My analysis follows from classical economics, as did Marx’s analysis. So Marx is simply the last great classical economist. They were all talking about how industrial capitalism sought to free itself from unnecessary costs of production, and hence how its political fight was against the landlord class and other rent extractors. Where Marx went beyond his predecessors was in looking at the laws of motion of industrial capitalism. He saw these as leading toward socialism. Later, Rosa Luxemburg said that if it’s not towards socialism, it will be toward barbarism.
[Jim] So capitalism would evolve into the possibility of socialism.
[Jim] Did he foresee the sort of predatory financial system that you worked out?
[Michael] No one described it better in his time than Marx, in Volume III of Capital.
[Jim] Volume III. Ok!
[Michael] Marx analyzed the “real” economy’s circular flow between employers and wage labor buying the products they produced. But then, in Volume III, he said that rentier debt claims by the financial sector was a separate dynamic, independent from the economy of production and consumption. This industrial capitalist economy is wrapped in a financial sector composed of debt and property claims. These are external to the economy. They slow it and ultimately cause a crash. Marx was one of the first to talk about business cycles of about 11 years and the internal contradictions that led to a market collapse. He pointed out that the financial sector had different mathematics of growth – the mathematics of compound interest. These are exponential and inherently unsustainable. In Volume III of Capital and also of his Theories of Surplus Value– which was Marx’s history of economic thought and the theories leading up to him – he collected everything from Martin Luther to other analyses pointing out that debts grew so rapidly at compound interest that it is impossible to pay them.
[Jim] You have a great chart where you talk about compound interest, a penny that was invested at 5% interest from Christ’s time to 1776.
[Michael] Richard Price was an actuarial accountant. He calculated that a penny saved that at the time of Jesus’s birth at 5% interest would become a solid sphere of gold extending from the sun out to the planet of Jupiter.
[Michael] Obviously, many people did save pennies at the time of Christ, and the annual interest rate then in Rome was 8 1/3%, one twelfth per year. But of course nobody has a sphere of gold extending out to Jupiter. That’s because debts that can’t be paid, won’t be.
That’s basically my motto: Debts, that can’t be paid, won’t be paid, because there’s no way of paying out of current income that grows much more slowly, tapering off.
[Michael] So debts have to be written down. It usually takes the form of a financial crash. Nobody before Marx explained crashes in terms of the financial claims growing and causing a break in the chain of payments. The actual break could be a result of fraud or embezzlement, or a bad crop, because crashes happened in the autumn when the crops were moved and there was a drain of money from the banks to pay for moving the crop and paying the harvesters. But at least a crash wiped out debts, and then the debt buildup could begin all over again.
[Jim] But in pre-industrial civilizations that didn’t occur did it? We want to play a short little clip from your book, “… and Forgive Them Their Debts,” in which you talk about the debt phenomenon in primitive or pre-industrial civilizations, very different than what we’ve experiencing today, correct?
[Michael] That’s right. You mentioned the Financial Times report of the economists who did see the crash coming. I was the only one who actually made a chart showing why the break had to come. The Financial Time review was by Dirk Bezemer, who showed the chart that I published in a Harper’s magazine, based on an earlier paper I’d given at the University of Missouri at Kansas City for one of our Minsky Conferences.
[Jim] Let’s play this. It’s a two-minute clip on what you talking about, and debt within pre-industrial societies.
[Michael] Economists don’t talk much about religion or society, or how these concerns shape markets. Theologians for their part act as if religion is all about heaven and sex, so debt is left out. Yet it used to be at the core of Judaism, Christianity, and earlier Near Eastern religion.
[Host] Why is that? If religious leaders are interested in social justice, as Jesus was, it you have to talk about economics.
[Michael] I think part of the reason is that when they translated the Bible into English, German and the vernacular, they didn’t know what many of the words originally meant, like deror (for the Jubilee Year), or how to distinguish between “sin” and “debt” as originally a reparations payment for sin. They didn’t understand that most of the Bible was redacted by the returnees from the Babylonian captivity, who brought back this concept of debt cancellation, “andurarum” – Clean Slate. The Hebrew word was “deror.” In the Bible, you’ll have other words or terms for the Clean Slate, the Jubilee year of Leviticus 25, such as “Year of the Lord” in Jesus’s first sermon.
They didn’t realize that the word “gospel” was the “good news.” That good news was that there was going to be a debt cancellation. They didn’t realize that the Ten Commandments were very largely about debt; that “one shall not covet the neighbor’s wife,” that means you don’t make a loan to the guy so he has to pledge his wife as a debt slave to her so that you can have your way with her.
[Jim] But ordinarily that just gets translated as adultery.
[Michael] Yes, but they didn’t realize that the vehicle for this immorality was largely debt bondage. “Thou shalt not take the Lord’s name in vain” meant that a creditor couldn’t swear that so-and-so owes you money if he didn’t. All of this had to do with fact that the great destabilizing factor in society in the first millennium BC was debt beyond the ability to be paid, leading to bondage of the debtor, and ultimately forfeiture of land to wealthy creditors eager to grab it and do as Isaiah accused, join plot to plot and house to house until there were no more people left in the land.
[Jim] “No more people left in the land.” This is an incredible narrative. Please flesh out the narrative so that we can understand what was going on at that time.
[Michael] In order to explain the dynamics of debt in early times, you have to explain how the overall economic system worked as part of the social system. Most people ran into debt not by borrowing, but simply by not being able to pay the taxes or other payment obligations that accrued. These debts weren’t the result of loans. Most personal debts in Sumer and Babylonia were owed to the palace, so when the crops failed or there was a military fighting they couldn’t pay what they owed to the bureaucracy of tax collectors or for public services.
[Jim] Who were working for the palace.
[Michael] Yes. The rulers had a choice at this point: Either they could let the debtor fall into bondage when he couldn’t pay the tax collectors or the palace. If that happened, he’d owe the crop surplus to the creditor, not the palace.
He owed his payment in labor. That was the scarce resource in antiquity. He’d owe his labor to the creditor, so he couldn’t serve in the army, or do corvee work to build infrastructure or palace walls.
So rulers canceled these personal debts to regain control over agrarian labor and its crop surplus. Every new ruler who took the throne in Sumer and Babylonia started the reign with an amnesty, a Clean Slate to start from a position of balance in Year One. During their subsequent reign, if the crops failed or if there was a military conflict, the ruler would cancel consumer debts (but not commercial debts among businessmen for foreign trade or similar enterprise). That’s in the laws of Hammurabi, cancelled Babylonian debts four times. It’s obvious that if you’re at war or if the crops are hurt, cultivators can’t pay the loans.
What early modern scholars could not believe, until our Harvard group began to compile the economic history of antiquity, that canceling such debts actually was what maintained stability. We began our Harvard group in the 1990’s , and we’ve published five colloquia volumes of the origins of economic enterprise in the ancient Near East, on land tenure, urbanization, debt, and debt cancellation.
Our researches showed that as soon as you had interest-bearing debts (mainly in the commercial sphere), you had debt cancellation for the personal agrarian debts. Business debts were not canceled because the merchants were also citizens, so no matter what, all citizens had their designated self-support land. So only the barley debts were canceled; not the personal debts. We showed that rulers canceled the debts because number one, they were canceling debts owed to themselves. It’s politically easy to forgive a debt if it’s owed to you. But it’s more difficult if there is an oligarchy and debts are owed to private creditors.
Canceling crop debts was what maintained economic stability without mass bankruptcy, which would have meant that a lot of debtors would have ended up as bond servants to their creditors. It also maintained demographic staility, because otherwise, debtors would have run away and joined another community. Many did run away after Babylonia fell in 1600 BC. Four centuries later we find them joining the hapiru, which many people connected to the Hebrews. They were sort of gangs of laborers who also would do a little bit of piracy or serve as mercenaries. Their own groups were very egalitarian, just as pirates were egalitarian in their own ranks in the 18thcentury West.
With the hapiru you find for the first time an ideology saying that they were not going to let themselves fall into debt to the rich or to landlords. Their ranks were joined by fugitives walking out. Of course, that’s how Rome came to be settled under its “kings,” and what the Roman commoners did 594 BC after the kings were overthrown. The oligarchy took over, and tried to reduce the Roman population to bondage. You had numerous Secessions of the Plebs, for instance, again when the oligarchy broke its word by 449 BC.
[Jim] the aim was to forgive all the debts, just as in the Bible, right?
[Michael] When the Bible really was edited and put together by the Jews who were coming back from Babylonia, they brought back with them many Babylonian practices.
[Jim] So, they had learned from that experience . . .
[Michael] At that time all the Near Eastern kingdoms, even the Neo-Assyrian and Neo-Babylonian empires had rulers who continued to proclaim Clean Slates.
[Jim] The Persians and so on. But that tradition didn’t survive into modern times, although it became a tradition within the old Judaism.
[Michael] And also the original preachings of Jesus. Leviticus 25 projected the practice all the way back to the commandments of Moses. But there’s not very much documentation of Judaism after the compilation of the Jewish Bible, because the Judeans didn’t write on clay tablets, they wrote on perishable materials that haven’t survived. The little that did survive was the sacred library of Jerusalem, which became the Dead Sea Scrolls. When the Romans came, they took the library and they put it in pots. We now have many of these scrolls. One was a midrash, a collection of all of the biblical passages about debt cancellation, including those of the prophets.
[Michael] So we know that by the time of Jesus, there was an active popular demand for another Jubilee. But meanwhile, within Judaism itself, the wealthiest families became the rabbinical school. Luke’s description of Jesus in the New Testament said that the Pharisees loved money. They became the rabbinical school of Hillel. Luke said that Jesus went back to the temple in his hometown to give a sermon, and unrolled the scroll of Isaiah to read the passage about the Year of the Lord – meaning the Jubilee Year – and said, that he had come to proclaim this year. That was his destiny.
Early translators of the Bible just read “the Year of the Lord” without realizing that this meant the Jubilee Year, deror, a debt cancellation. Luke immediately says a lot of families got very angry and chased Jesus out of town. They didn’t like his message. The Pharisees in particular got upset, and complained to the Roman that Jesus wanted to be King. Well, the reason they said was that they knew that Rome hated kingship. Roman tradition as written by Livy and by Dionysius and Halicarnassus described Servius as cancelling the debts, and most other kings of trying to keep the oligarchy in its place. Rome grew by making itself a haven for immigrants, whom they attracted precisely by keeping the oligarchy in its place.
[Jim] But they also had an empire. . .
[Michael] We are talking before the eighth to sixth centuries BC. But then the oligarchs took over and throughout the rest of Roman history down to the empire, the great fear was that somebody would do what the kings did: cancel the debts and redistribute the land to the poor. Julius Caesar was killed for “seeking kingship,” meaning that the Senate worried that he was going to cancel the debts after decades of civil warfare over this issue and the assassination of Catiline and other advocates of debt cancellation.
[Jim] And people will be free from their economic bondage
[Michael] Yes. Even many rich people were behind Catiline, who led the revolt a generation before Caesar, who actually seems to have been an early sponsor of Catiline. We’re talking about 62 to 64 BC; Caesar was killed in 44 BC.
So to make a long story short, what made the West “Western” was that it was the first society notto cancel the debts. It was to prevent this that oligarchies opposed a central authority. We don’t find any sign of debt in Greece and Rome until about 750 B.C. It was brought by near Eastern traders, along with standardized calendrically based weights and measures, ritual and religious practices. They set up temples as trading vehicles. For thousands of years, traders had set up local temples to act as a sort of Chamber of Commerce, to negotiate trade. In Greece, and Rome at that time there were chieftainships, which began to adopt the patronage practices of extending loans to the population, and then taking the payment and labor.
These dependency relationships are what made Western civilization different from what went before. There was no palatial economy, no state authority to override the oligarchy, cancel debts, redistribute land or liberate citizens who had been reduced to bondage as a result of their debt.
[Jim] You’re talking about the Middle Ages as well, feudalism?
[Michael] No, I’m talking about Greece and Rome in contrast to the Near Eastern mixed economies that were palatial as well as private. There was much private mercantile enterprise in Sumer. Its foreign trade was largely left to private enterprise (with the palace being a major customer, to be sure), so, these were mixed economies, as the five volumes that our Harvard group published have shown.
[Jim] This is all contained in your book “… and Forgive Their Debts.”
[Jim] So this is what is crucial to understanding lending, foreclosure and redemption from the Bronze Age finance to the Jubilee.
[Jim] This is a fascinating history. Can we bring it up to date, including issues of militarization and empire and imperialism in the 20thcentury, World Wars I and II? What are some of the things that occurred, the inception of the World Bank and the IMF? How did America control and attempt to defend its empire by using debt leverage?
[Michael] Already in Greece and Rome there was a linkage between debt and militarization. A Greek general, Tacticus in the third century BC, wrote a book of military tactics. He said that if you want to conquer a town, the way to take it over is to promise to cancel the debts. The population will come over to your side. And conversely, he said, if you’re defending a town, cancel the debts and they’ll support you against the attacker. So that was one of the reasons that debts tended to be canceled by one group or another. It’s what Coriolanus did, and then he went back on his word in Rome. That’s what Zedekiah did in Judea. Well, today it’s different. Here you have the imposition of a military force – really NATO – to enforce debt collection, not only from individuals but on debt entire countries. The job of the World Bank and IMF is to impose such heavy debt service on countries, and indeed to impose it in dollars, that countries have to earn these dollars to pay their debts. They can’t simply print the money to pay these debts like America can do. They have to obtain dollars by steadily lowering the price of their labor. But as yet there is no debt revolt.
[Jim] Because, when we went off the gold standard the American dollar became all powerful.
[Jim] And we control 75% of the gold reserves?
[Michael] By the end of World War II, we controlled 75%, right.
[Jim] These are tremendous transformations in the world economy. The IMF and World Bank have supposedly developed through the UN for development, but as you argue, it’s more to create dependency.
[Michael] The World Bank is effectively part of the Defense Department. Their heads are usually former Secretaries of Defense, from John J McCloy, the first president, to McNamara and subsequent heads. What the United States discovered is that you don’t need to go to war to control other countries. If you can have them accept the assumption that all debts should be paid, they will voluntarily submit to austerity, which is class warfare against their own labor force. They will continue to devalue their currency …
[Jim] And create puppet governments that will support that as surrogates.
[Michael] Yes. What the free market boys at the University of Chicago discovered is that you can’t have a pro-financial free market – free of government regulation and its own public infrastructure and credit system – unless you’re prepared to assassinate everyone who wants a strong government. When they went to Chile and supported Pinochet, U.S. officials provided a list of who had to be killed –
- land reformers,
- labor leaders,
- socialists, and
- especially economics professors.
They closed down every Economics Department in the country, except for the one at Catholic University, the right wing economics department teaching Chicago School neoliberalism. So, you have to be totalitarian in order to impose a free market pro-financial style – which, under today’s circumstances, means pro-US.
[Jim] It’s occurring across Latin America, right?
[Michael] Yes. A free market means libertarianism and totalitarian government. What the Chicago boys and the so-called New Institutional Economics school calls the rule of contracts. You have the history of Western civilization now being taught almost everywhere as if what created civilization was the rule of contracts, not canceling the debts. So, you’ve created an inside-out view of history. Its aim is to deny the fact that the only way that you can prevent the kind of economic slowdown that we’re having in America now is to write down the debts. If you don’t write down the debts, you’re internal market will shrink and you’re going to end up looking like Greece, or like France with all the riots that they are having there, or like the other countries that are rioting because they don’t want to be turned into a Neo-feudal society.
[Jim] This seems to be occurring in Puerto Rico as well. So what becomes more profitable for American economy is the military and the armaments that we ship and use in all these adventurers wars that we have in the 800 hundred US military bases around the world.
[Michael] The difference is that in the past when you had militarism, you actually had to fight a war. Soldiers had to go in. You know the old joke about wine that’s being sold in an auction. It’s a hundred-year-old bottle and is very, very expensive. A rich guy buys it and pours it out to impress his friends, but it tastes like vinegar. He complains to the auction house, but is told, “Oh, that’s not wine for drinking! That’s for trading!” That’s what most U.S. arms are for: not really to use. You’re never again going to get Americans to be drafted and go into the army to actually, use them. These arms are not for fighting; they’re for making profits. Seymour Melman explained that in Pentagon Capitalism.
[Jim] The permanent war economy.
[Michael] That’s right. Meaning more profits for the military industrial complex. You don’t actually use the arms. You just pay to produce them and throw them away. It’s like what Keynes talked about, building pyramids in order to create domestic purchasing power.
[Jim] And you can’t, as Melman tried to do, use economic conversion to more civilian uses. That never happened.
[Michael] Seymour Melman explained that the U.S. government decided to make a different kind of a contract with the arms manufacturers. It’s called cost-plus. As he summarized it, the government guarantees them a profit, but to prevent monopoly rents, they determined the prices to be paid at, say, ten percent over the actual cost of production. This led the arms-makers to see that if their profits were going to rise in keeping with the cost of production, they wanted as high of a cost of production as possible.
So, the engineers working on the American military industrial complex aimed at maximizing costs. That’s how we got toilet seats that cost $650.
Countries that don’t have Pentagon capitalism, like Russia or China, are able to produce weaponry that outshines America. Even broke Iran, can make missiles that apparently get right through the U.S. defenses in Syria and Iraq, because they don’t have cost-plus. They’re trying to be efficient, not just to have an excuse for making money via a cost-plus contract.
[Jim] How do we turn this around? You’ve made the connections to show that everyday people and their lives are profoundly impacted by the unreal world that the financial predators are creating.
[Michael] Reality isn’t the aim of their economic models. For instance, just today I saw Paul Krugman on Democracy Now. He said that the reason we’re in a depression is because President Obama did not run a large enough budget deficit! He’s a Keynesian, but goes so far as to insist that debt has no role to play in deflating the economy. That’s largely because Krugman serves in effect as a bank lobbyist – not only here, but in Iceland and other countries. To me, the current economic squeeze is that Obama didn’t let the banks collapse. He kept the bad he debts on the books instead of treating them as bad loans to be absorbed by the banks that wrote the junk mortgages and lost in their speculative gambles.
[Jim] And ate the homeowners!
[Michael] Yes. He kept their bad, outrageously priced loans on the books and evicted 10 million families. He called them “the mob with pitchforks,” and Hillary called them “deplorables.” That shows you where the Democratic Party is at, and why it was so easy for Donald Trump to make a left wing run around the Democratic Party. That is how right wing Obama was. His legacy was Donald Trump, via Hillary Clinton.
[Jim] Krugman is the most well-known so-called Keynesian economist in the country, right?
[Michael] The reason he’s so well-popularized by the pro-financial class is precisely because he doesn’t understand money. So bank lobbyists love him and he’s popularized by the right-wing New York Times. He had a wonderful debate with Steve Keen that anybody can see on Google, where he says that it’s impossible for banks to create money and credit. He thinks that banks are savings banks, and they’re just relending deposits. Steve Keen explained what endogenous money is. That’s what we talk about in Modern Monetary Theory.
[Jim] And the Wall Street Journal.
[Michael] And the Washington Post. They go together. They don’t want economists to be popular who talk about debt and why the debts can’t be paid or the need for a debt write down. Krugman attacks Bernie Sanders as if he is an unbelievable radical for backing public medical care.
[Jim] On February 17, Krugman wrote a column “Have Zombies eaten Bloomberg’s and Buttigieg Brains?” He said “My book is arguing with zombies.” And one of the zombies is his obsession with public debt and the belief that we should be terribly scared of government debt, can’t do anything because of deficits. Eeek! And that’s the way Buttigieg talks. The very moment when mainstream economics, if you like centrist economics, has concluded that these debt worries, were way overblown. The president of American Economic Association gave this presidential address saying that debt is not nearly the problem people think it is. It’s not a constraint, and of course, Republicans have pulled off one of the greatest acts of policy hypocrisy in history – you know, the existential deficit threat. I don’t want to see a democratic centrist bring us into this deficit scaremongering. That would be a really bad thing that would block any kind of initiative.
So, what does the everyday person make of this debate? And what’s the attraction of Trump his message to people who feel that their real-world needs are being addressed?
[Michael] I think the reason people voted for Trump’s was mainly Hillary. She said that voters should vote for the lesser evil. There was no question who the “lesser evil” was. It was Donald Trump. Did you want World War III, or Donald Trump? It’s not a very nice choice, but Hillary’s viciously right-wing, especially where Russia is concerned. The Democratic National Committee and deep state are all about Russia, Russia, Russia! And calling Trump Putin’s puppet.
Then finally the Mueller report came out and found nothing there! So you can view the Democratic Party as the political arm of the military industrial complex and the banking complex.
[Jim] And Obama totally propped them up. But now, Bernie! What about him? The Democratic establishment is against him, and so is the Republican establishment.
[Michael] If the enemy of my enemy is my friend, then Bernie’s enemies are the Democratic Party establishment and the Democratic National Committee. So of course a lot of people are going to love him.
[Jim] Yup. He wants to cancel student debt! He is talking your language!
[Michael] If the student debt is not canceled, you’re going to have a generation of graduates unable to get the mortgage loans to buy homes, because they’re already paying their income to the banks.
[Jim] They’re living at home!
[Michael] That means that you’re going to have a shrinking economy. So of course you have to write down student debt, and also other forms of debt – credit card debt and other debt. The economy cannot recover if you don’t write down the debt overhead.
The good thing about writing down the debts is that you wipe out the savings on the other side of the balance sheet. Some 90 percent of the debts in America are owed to the wealthiest 10 Percent. So the problem is not only the debt; it’s all these savings of the One Percent! The world is awash in their wealth. If you don’t wipe out their financial claims – which are the basis of their wealth – they’re going to take you over and become the new financial Lords, just like the feudal landlords. The banks are the equivalent of the Norman invasion. and the conquering landlords that reduce the economy to a peonage!
[Jim] But the moral argument is made that they’re the best. They’ve survived, right? I’m playing devil’s advocate here. So they serve a purpose, don’’ they? Their wealth is a sign that the system is working.
[Michael] That’s not what Adam Smith and John Stuart Mill said, or Ricardo and the entire 19th century classical economic school. They said that economic rent is unearned income. So the aristocracy (“the best”) doesn’t earn it. It is a result of privilege, which almost always is inherited wealth or monopoly privilege, that is, the right to appropriate something that really should be public. Land ownership and mining should be public wealth, as are mineral resources in much of the world. Education should be public. People shouldn’t have to pay for it. The idea initially in the United States was that education should be free as a human right. Medical care is also, as Bernie says, a human right, as it is in a lot of the world. So America, which people used to think was the most progressive capitalist country, suddenly becoming the most neo-feudal economy.
[Jim] How about Max Weber and the Protestant ethic as the spirit of capitalism? The argument is made that those who are productive are rewarded by heaven, while those who are poor deserve it. Wealth was a sign that God had bestowed his grace on its owner.
[Michael] That sort of the patter talk a century ago hasn’t stood up very well. The wealthy claim to be wealthy because God loves them. If they can convince other people that God loves them and hates the rest of the people, they make God into the devil. They make him hate the working class, and make them dependent on this unnecessary class of parasites. That’s crazy! But that’s what happens if you let the wealthy take over religion. Of course, they’re going to say that religion justifies their wealth.
That’s what makes modern religion the opposite of the religion that I described in the Bronze Age. Upon taking the throne, rulers took a pledge to the gods to restore equity and cancel the debts. That included restoring lands that had been forfeited, giving it back to the defaulting debtors to re-establish order. That was the idea of religion back then. But today’s religion has become a handmaiden of wealth and privilege, and of “personal responsibility” to make people pay for education, health care, access to housing and other basic things that should be a public right.
[Jim] Which is what preoccupies the average American, when seventy percent of their earnings are going to these sorts of things, and for taxes and rent. I have a brief quote here from Martin Luther King, who I think represents the sort of religious tradition you’re advocating. He had been deeply influenced by the theologian, Walter Rauschenbusch and his 1907 book, Christianity and the Social Crisis.
[Michael] Read it, so that so they can hear it.
[Jim] Here’s the main quote: “The gospel at its best deals with the whole man; not only his soul, but his body; not only the spiritual well-being, but his material well-being.” King wrote in an inspired passage, “any religion that professes to be concerned about the souls of men and is not concerned about the slums that damned them, the economic conditions that strangled them and the social conditions that crippled them is a spiritually moribund religion awaiting burial.”
[Michael] That’s right. Religion was about the whole economy. Not just a part of the economy. Today they’ve separated religion, as if only spiritual and has nothing to do with the economic organization of society. Religion used to be all about the economic organization of society. So, you’ve had a decontextualization of religion, taking away from analyzing society to justify the status quo by teaching that if things are the way they are, it’s because God wants it this way. That’s saying that God wants the wealthy and privileged to exploit you, especially by getting you into debt. And that’s just crap!
[Jim] And that gets us away from the classical tradition, which does try to see this as social.
[Michael] And that’s why Christian evangelicals hate Jesus so much.
[Jim] There you go! But we love Bernie! Can he win? We’ve only got about a minute to go …
[Michael] Of course he can.
[Jim] You think he will be able to withstand the onslaught that he’s going to get?
[Michael] A year ago I was pretty sure that the Democratic National Committee was going to put the super delegates in to sabotage any attempt that he was going to make to get the nomination. Now it’s clear that the Democratic Party will be torn apart, and this means the end of it if he’s not the nominee.
[Jim] All right! Well, from your mouth to God’s ears! Thank you, Michael. This has been so enlightening.
[Michael] Thank you.
[Jim] I’m so blessed that we are in the audience here too on the Radical Imagination. So happy to have had you here. I hope you’ll come back again. This is your most recent book, “… and Forgive Them Their Debts.” Thank you very much! This is Jim Vrettos for the Radical Imagination. See you next week. Thank you, Michael!
“My grandfather was the biggest Communist in America,” he said, “and I became the biggest capitalist in Russia.”
.. Bill Browder created his hedge fund, Hermitage, in 1996. The Kremlin turned on him hard in 2005, declaring him persona non grata. He had been a thorn in the side of Putin’s oligarchs.
In 2008, the authorities arrested Browder’s fearless and whistleblowing lawyer, Sergei Magnitsky — and tortured him to death.
.. I read an obituary of Felix Browder, Bill’s father. I then realized why Bill had asked me to be more specific when I asked, “Any relation?” Felix Browder was one of the greatest mathematicians in the world. (I don’t know from mathematicians.) He was, for example, chairman of the math department at Chicago.
Earl Browder had two more children, two more sons: Andrew and William. The former became the
- chairman of the math department at Brown; the latter became
- chairman of the department at Princeton. And there’s more Browder talent where that came from.
.. He was named after Shakespeare, having been born on the 400th anniversary of the writer’s birth (April 23, 1964).
.. Andrew’s daughter Laura, a professor at the University of Richmond, discovered something in the KGB archives: The dear nanny had been a spy, charged with keeping tabs on Earl. Of course.
.. Earl coined the famous (or infamous) slogan “Communism is 20th-century Americanism.” He ran for president in 1936, getting some 80,000 votes.
.. Communists in America were in particularly bad odor. In early ’41, the U.S. government sent Browder to prison on technicalities: passport fraud. But that summer, Hitler double-crossed Stalin, and the United States would soon be allies with Uncle Joe.
.. FDR commuted Browder’s sentence as a goodwill gesture.
.. After the war, Browder got on the wrong side of Moscow and was expelled from the American party. He died in 1973, having spent his last years with his son Bill in Princeton
.. Raisa, a Russian mother, and a mother of three sons. A Russian-Jewish mother at that
.. Felix entered MIT at 16. He had his bachelor’s degree in two years. By 20, he had his Ph.D. from Princeton.
.. One of his undergraduate professors testified that Felix was not a party member — and, moreover, that Felix had been the best math student in the history of MIT
.. Bill Browder affirms that his father was not a Communist. Rather, he was “a hard-core leftist professor,” like all the others. “I never met one who wasn’t,” says Bill.
.. Felix was indeed drafted into the Army. Not trusted with sensitive work, he spent two years pumping gas at Fort Bragg.
.. Felix worked on his math and, for the first and only time in his life, was around regular folks... Felix and his wife Eva had another child besides Bill: their son Tom. He entered the University of Chicago at 15. Today, he is a leading particle physicist, dividing his time between Hawaii and Japan, searching for the origin of the universe... Bill was a rebellious kid, and he figured out how to rebel against a family of leftists: become a capitalist. He majored in economics at Chicago, whose department was a den of free-marketeers.
.. In an act of shocking gall, the Russian state is investigating Browder for the murder of Magnitsky — and three other men. Thus do the murderers finger the champion of the murdered. Putin’s predecessors in the KGB would grin in admiration.
Francisco had originally been named as the No. 2 in the solicitor general’s office, which represents the federal government in appellate courts. He might be best known as the lawyer who represented former Virginia governor Robert F. McDonnell last year when the Supreme Court unanimously overturned McDonnell’s conviction on corruption charges.
.. The solicitor general is considered to be one of the nation’s best legal jobs, and the occupant is often referred to as the “10th justice.
.. Jeffrey B. Wall, a veteran of the office who now works for the firm Sullivan & Cromwell, will assume Francisco’s role as principal deputy.
.. representatives of the Trump transition approached U.S. Circuit Court Judge Brett Kavanaugh of the U.S. Court of Appeals for the District of Columbia Circuit — an influential judicial voice on the right — to see whether he would be interested in the job.
.. For a time, there appeared to be two front-runners. One was George T. Conway III, a New York lawyer who received high marks from those in the Supreme Court bar and who is also married to Trump adviser Kellyanne Conway.
.. The other was Charles Cooper, a Washington legal fixture and confidant of Attorney General Jeff Sessions.
.. Cooper pulled out of consideration, and the Trump administration expanded its search.
.. he has had to recuse himself from some of the most important cases, such as the legal battle over Trump’s first travel ban executive order, because his law firm Jones Day represented parties in the dispute.
.. Francisco is a former clerk to Justice Antonin Scalia
.. Francisco was part of the team that represented President George W. Bush in the 2000 Florida presidential election recount.
.. He was raised in Oswego, N.Y., and both his undergraduate and law degrees are from the University of Chicago... he represented religiously affiliated organizations that said providing contraception services for their female employees would implicate them in sin.
Several years ago Robert Zimmer was asked by an audience in China why the University of Chicago was associated with so many winners of the Nobel Prize — 90 in all, counting this month’s win by the behavioral economist Richard Thaler. Zimmer, the university’s president since 2006, answered that the key was a campus culture committed to “discourse, argument and lack of deference.”
.. “Concerns about civility and mutual respect,” the committee wrote, “can never be used as a justification for closing off discussion of ideas, however offensive or disagreeable those ideas may be to some members of our community.”
.. If you can’t speak freely, you’ll quickly lose the ability to think clearly. Your ideas will be built on a pile of assumptions you’ve never examined for yourself and may thus be unable to defend from radical challenges. You will be unable to test an original thought for fear that it might be labeled an offensive one.
Writing long articles always involves muscle strain, but the parturition of this piece (which ran in the summer of 2014) was excruciating, because the material seemed to lack any conceptual edges. The ferment had been billed in the press as a “culture war.” And yet the two sides of the conflict—in terms of beliefs, ideological lineage, and language—were almost entirely the same.
.. The trouble in San Francisco, I realized, wasn’t that the warring tribes followed different doctrines. It was that they followed the same doctrine, abstractly stated, but had less and less of a way to gather and work from the abstract into the specific. Everyone was operating as a good San Francisco liberal, struggling against the establishment, outside the system, for the people.
Ironically, this meant there was less and less system left, no common terms by which the whole community could move ahead. Public language, as I put it in the piece, was coming unmoored from public process. I wondered what the future would bring if the rhetoric of our best ideals kept moving in this direction—if people of a single political identity couldn’t agree on the real sense of the words that, they were certain, gave voice to their values.
.. public conversation has begun to seem performative, incapable of producing results.
.. Self-defining language has grown easy to pass around but hard to translate into social results. “Diversity,” we know, is crucial. Yet the word means disparate things to a housing activist, a tech executive, and an admissions dean, and they end up talking past one another.
.. our community is the people who appear to understand our language, more or less, the way we do.
.. The Trump campaign, since its inception, has traded in counterfactual hyperbole, praeteritio (“a lot of people say . . . I won’t say”), and dubious innuendo. But using words as if they have no definition marks a shift.
.. Trump does not demur when it’s suggested that abstract nouns such as “bigot” and “founder” have meanings he’s transgressed. (“He’s their Most Valuable Player,” Trump said, of Obama, by way of clarification, three days after his isisremarks. “He was the founder.”) Oddly, though, the outlandish words seem not to obscure his message. When he makes his isis-founder remark, there are immediate cheers.
.. When newscasters quote Trump’s statements back to his representatives, they reply, “That’s not what Mr. Trump is saying”; his words aren’t held to convey a fixed message.
.. To know what Trump means, despite the words that he is saying, you have to understand—or think you understand—the message before he opens his mouth. That way of interpreting language is unassailable because it allows no persuasion, only self-revelation: the words don’t convey information but, like candles and jasmine perfume, serve as aesthetic trappings, prompts that may lead listeners to locate certain passionate moods in themselves.
.. In a climate where common language is not held accountable to common meaning, “taking a stand” becomes a mostly theatrical exercise.
.. He can say anything these days—because the rest of us can, too.
.. It is hard to talk about politics and language without mentioning George Orwell.
.. His point was that, especially at such moments, imprecision and easy idiom in public language carry political stakes.
.. I’ve increasingly found myself a supporter of messy public process: the legislation pushed through government slowly, in curtailed form; the interminable, fruitless-seeming town-hall meeting; many of the government’s lumbering, error-prone efforts at regulation. These processes are cumbersome, often wasteful, and inevitably infuriating. But at their best they have the virtue of occurring in a common arena, the place where all parts of a population meet. They force us, if we hope to get anything done, to translate our values and thoughts into language that communicates broadly.
They do have a point.
On the right, there are the future consultants, the pre-professionals, the “organization kids.” They run the College Republicans, and for that matter the UC Democrats; they’re Chicago’s equivalent to the bipartisan coastal elite we hear so much about these days. They want to have fun at college and get some networking done, activities that often overlap if you play your cards right. For them, the core curriculum is a distraction (and sometimes a threat to their GPAs) and amenities are essential.
.. Meanwhile, the university spends enormous sums on glass-fronted residential complexes, state-of-the-art student-recreation centers, a large and growing private army of security guards to assuage parents’ fears about the South Side
.. the acceptance rate has dropped from 68 percent in 1995 to 7.6 percent this spring
.. 20 percent of last year’s graduates went straight into jobs in finance or consulting.
.. The left’s attacks on free speech may endanger the academic project, but the greater threat to the free exchange of ideas comes from academic corporatization.