This from John T. Harvey, economist, at Forbes Blogs:

…I wonder how many people know the formal Monetarist (Milton Friedman’s school of thought) explanation of how the Great Depression occurred? Their analysis depends on the existence of something called money illusion on the part of workers. The idea is that laborers are never quite certain what the current cost of living is since they do not keep a careful accounting of their expenditures. Meanwhile, firms are pretty darn sure what prices are because it is so important to their livelihood to pay close attention. Now imagine the following. Let’s say there is a massive collapse in the supply of money, leading to a fall in prices … The fall in prices, because it means they are earning lower profits, leads firms offer lower wages to their employees. But–and here’s what they say happened in the Great Depression–workers, not realizing because of money illusion that the cost of living has declined (and that firms’ offer is therefore not unreasonable), quit their jobs. And that, apparently, is how unemployment rose to 25% in the 1930s: the money supply fell, lowering prices, leading firms to offer lower wages, and causing workers to VOLUNTARILY QUIT THEIR JOBS!

I’ve heard this before – the monetarist explanation for the Great Depression, but had no idea it was mainstream neoclassical thought.

Read the whole article here.

CALCULABLE

In his Jan. 25 letter to the Tribune, Montana state legislator Tom Bur­nett presented the idea that state employees should punch a time clock because he feels that they’re not being honest about their hours. As a “part-time” public school teacher, I have to say I love this idea.

Currently, most of my work is long-term sub­bing. I don’t know how many hours I spend meet­ing with teachers who are planning long leaves, preparing lesson plans for their absences, evaluating student work, submitting grades, cleaning class­rooms and working with parents to solve problems, but I must say if I were punching a time clock, I’d be making twice my cur­rent wage. The same is true of every teacher I know.

They put in hours before school, after school, on weekends, during “vaca­tions” and all the rest.

Montana’s public educa­tors put in an incalculable number of hours of their own time, all of which is not paid.

Maybe Burnett’s on to something. Mount a time clock on my wall, and I’ll punch in while I’m writ­ing constructive feedback on my students’ work dur­ing the time between when school gets out and dinner with my family begins. I’ll clock out while I eat, then I’ll clock in while I enter that grading data. I’ll clock out while I bathe my kids, put them in jammies, brush their teeth and read them their nighttime story. Then I’ll punch back in while I plan tomorrow’s lesson. I’m all for this plan.

— Christopher Cummings, Kalispell

In the mind of the right-winger, people only “earn” what they are “worth.”

Oh, we have markets indeed, but in no way are they “free.” That clever little phrase is merely a mental trick, use of a word that has a pleasant feel about it to mask the true nature of markets. As shown in the photo above – “free markets” place no restraint on the powerful in exploiting the weak. It is not talent or contribution to our well-being that determines our wage (scuze me — salary). It’s power, proximity, acquisitiveness, scaling, enclosure, and the kill instinct.
Continue reading “The view from Neptune” →

This seems incongruent to me, and I need for a neo-classical economist, or a Randian or Austrian School person to explain it. Your theory states that optimal economic performance is achieved if taxes are kept low, and that wealthy people should not be taxed at rates higher than anyone else. That way they invest their money and create jobs. [sic]

We have low tax rates now for very wealthy people, and learn that Mitt Romney has paid an effective rate of 13.9% in 2010, lower than anyone above EIC status. And yet he takes his money and stashes it in the Cayman Islands! What’s up with that? Why is he not reinvesting? Why is he not creating jobs? [sic]

Ingy? Budge? Gregg Smith? Craig? Eric? Perfesser?

[chirp]

On a few occasions here I’ve ventured into the unspeakable – that the events of 9/11 are mysterious and unexplained by the official investigative body, the 9/11 Commission. I don ‘t know what the real explanations are, as it is all hidden from view, but do know that the cellular phone calls, the un-invterviewed witnesses, the highly unlikely coincidences … the very fact that everything went right for a guy in a cave 7,000 miles away while everything went wrong for the most powerful and sophisticated military in the world … that a passport with a hijacker’s name on it survives a towering inferno … c’mon. You guys know this too. You know something’s up.

And that is why I am writing this – not because I know the answers, as I do not. I am addressing the various reactions that people have when they come across the same anomalies. It’s understandable. I get it. I was there at one time.
Continue reading “Realistic vs fearful vs wishful” →