Liberal Democrat Bill de Blasio wins New York Mayoralty Race in a Landslide.

Posted on November 6, 2013 by haroldchorneyeconomist

New York city has once again pointed the way forward for liberal political aspirations in the United States. In an election that will have repercussions far beyond its borders,52 year old Bill de Blasio has captured the New York mayoralty race defeating his moderate Republican  opponent 59 year old Joseph Lhota by 73 % of the vote to 24 %. This three to one victory will give de Blasio a clear mandate (although it must be noted that the turnout was low as it appears about only  one in four of the 4.3 million eligible voters turned out to vote.) De Blasio ran on a populist left of centre program that focused on excessive income and wealth inequality in New York and the need to do something about it, as well as a commitment to soften the sometimes harsh and harassing stop and frisk policing policy which was widely resented by by New Yorkers of colour who were often the targets of such policies. De Blasio’s victory represents another step toward the revival of progressive liberalism in the new political circumstances that have followed the crash of 2008 and the deep recession that has followed it.

Congratulations to him and we look forward to seeing how he advances his agenda while still ensuring that New York remains the dynamic metropolis that people worldwide know and appreciate.

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Montreal’s election important for future of economy

Posted on November 4, 2013 by haroldchorneyeconomist

Montreal is one of the three great metropolises of Canada. Along with Toronto and Vancouver,  Montréal has a larger than life presence in the la vie quotidienne of millions of people in Canada. Toronto has a population in its census metropolitan area of about 5.6 million people. Montreal is 3.8 million. Vancouver cma has a population of 2.3 million. Montreal is also the cultural and commercial capital of French speaking Canada.But its politics are byzantine and in the past decade very  disappointing for a metropolis of such high importance. This evening we will learn the results of the election for mayor of the city and the council of some 65 members as well as lesser elected officials in the 19 districts or arrondisements that the city is divided into.

Over the years, ever since the colorful but quite corrupt administration of Camillien Houde who served as mayor for a long period of time beginning in 1928 which ended with several interruptions including a spell in an internment camp for supporting the axis powers during the war years in 1954; Montreal has seen Jean Drapeau , a strong Québec nationalist; Sarto Fournier an associate of Houde; Jean Doré a left wing technocrat; Pierre Bourque an environmentalist; Gérald Tremblay a technocrat who appears to have run a permissive regime in which corruption seems to have thrived; Michel Applebaum a developer oriented mayor whose very short term ended in scandal, and Laurent Blanchard to have served as mayor .A total of seven mayors in the 59 years that followed the Houdini days of Camillien Houde. Tonight there are 11 candidates for mayor but realistically only four have a chance to be elected mayor. These include a former federal  Liberal cabinet member Denis Coderre who has been favoured in the polls ; Melanie Joly, a political novice who is young and comes from a private sector background; Marcel Coté a little known technocrat of considerable management intellect; and a radical but experienced environmentalist and urban planner Richard Bergeron who has many years of experience as a member of council. We shall see shortly if the 44 % or so of Montrealers who have bothered to vote prefer a fresh face who is untainted or voices of experience but who also have some baggage from the past.

8:55 pm The polls have been closed almost an hour and Denis Coderre looks like he is on the way to being elected Mayor of Montreal. With a substantial fraction of the polls reporting Coderre has 20,572 votes ; Joly has 12,781; Bergeron has 11,275 votes and Marcel Coté, 7333 votes. We shall see if the trend continues or the gap narrows somewhat but Coderre seems well on the way to victory.His party also leads in 36 council seats compared to 9 for Bergeron’s Projet Montréal, 8 for Marcel Coté’s Coalition Montréal and one for Melanie Joly’s Vrai changement pour Montréal .

Coderre is a staunch federalist and opposes the PQ’s Charter of Values and will be a strong voice for Montréal in defending its interests. The future of Québec’s economy and therefore an important chunk of metropolitan Canada depends upon it.

Results as of 10 pm Coderre 86,907 Joly 72,349, Bergeron 70,406, Coté 34,886

Council seats Coderre 32, Bergeron Projet Montréal 19 seats, Coalition Montréal Coté, 5; Joly 3

results as of 10.40 pm Coderre 115,022 Joly 96,483, Bergeron 95,289 Coté 46,785

council seats Coderre 30, Bergeron 19, Coté 5, Joly 3

results as of 11.52 council seats Coderre 27; Bergeron 22; Coté 5; Joly 3. Popular vote Coderre 135,465; Joly 112,737; Bergeron 110,227; Coté 54,495. the candidates and the Mayor elect have given their speeches. They were gracious in defeat and generous in victory. Melanie Joly was clearly excited by her excellent showing, a tremendous achievement by a political novice.Richard Bergeron was very pleased by the strong showing of his party who will form the core of the opposition at city hall. Denis Coderre was clear in stressing that all of the candidates loved Montreal and wanted to restore its status as a great Canadian and Quebec metropolis to which all could contribute and which would be transparent and honest and a city based on intelligence and culture. Lets hope he is right.

Final results as of Nov.5 2013 Denis Coderre 149,367 votes 32 % and 27 councillors; Melanie Joly 123,081 26.5 % of the vote and 4 councillors; Richard Bergeron 118,644 votes and his Projet Montréal party 20 councillors; Marcel Coté 59,446 votes 12.8 % and 6 councillors . In addition there are 2 councillors elected from Lachine on party led by Claude Dauphin; 2 elected from Anjou on an Anjou party platform; 2 from Lasalle on a local party platform; 1 from Outremont on a separate party platform and one independent elected in NDG. The voter turnout was better than last time but still pathetically low, 43 %.

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A little inflation would go a long way to helping reduce unemployment:The natural rate of unemployment versus the natural rate of inflation

Posted on October 27, 2013 by haroldchorneyeconomist

Almost a decade ago in 2004 I gave a paper at a conference on Social policy as if people matter organized by progressive economists and policy analysts at Adelphi university. One of the keynote speakers was Joseph Stiglitz. My paper which is available on line (http://www.adelphi.edu/peoplematter/pdfs/Chorney.pdf) made the case that, rather than rigidly adhering to the concept of the natural rate of unemployment – that rate of unemployment below which you would get accelerating inflation, a concept introduced by followers of Milton Friedman – we would be much better off paying attention to what I called the natural rate of inflation, that is: that rate of inflation below which we would experience accelerating unemployment.

I thought the paper was quite innovative and had the potential to change thinking about appropriate monetary and fiscal policy. I am pleased to see that economists at the Federal Reserve and elsewhere are now coming around to this idea. In the New York Times today there is an article reporting on economists advocating a higher rate of inflation as a method of reducing unemployment and warning against the dangers of excessive disinflation and even deflation such as Japan has experienced.(Binyamin Applebaum, In Fed and Out Many Now Think Inflation HelpsNYT , October 27, 2013) Falling prices increases the burden of the debt and discourages firms from hiring workers as well as complicating the process by which savings are brought into with investment. Tolerating a little more inflation while the economy is troubled by excessive unemployment and weaker animal spirits on the part of investors would help reduce the unemployment rate.

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The temporary end to shenanigans in Washington; Health care rollout blues;privacy undone;sequestration continues and global recovery slows

Posted on October 21, 2013 by haroldchorneyeconomist

Well the last minute end to the Washington showdown on the government shut down and raising the debt ceiling crisis brought to the world by the Tea party Republicans has ended, thankfully at least until next February. There is certainly no evidence that the right wing libertarian faction of the Republican party has drawn any sensible lessons from the near debacle to which they subjected the U.S. and the rest of the globe over the past month. Not only do they continue to insist that they were right to behave as they did but they threaten to do it all over again if they don’t get their way  over entitlement reform and fiscal austerity. They have already won a victory over the continuance of the sequestration cuts which will bite even harder come January. Given these events and the agreement to negotiate further cuts in basic welfare and well being programs over the coming months and years, it is difficult to maintain high  confidence over the US and global recovery over the coming year.                    Yet, despite the damage already done and the prospects of further trouble ahead in the near future the economy continues to grow albeit at a very slow pace and the unemployment rates continue their very slow downward trajectory. Unemployment in Canada has fallen to 6.9 % and the rate for August in the U.S. was 7.3 % with it falling in 311 out of 372 census metropolitan areas. According to the U.S. Bureau of Labour Statistics

Yuma, Ariz., and El Centro, Calif., had the highest unemployment rates
in August, 32.6 percent and 26.3 percent, respectively. Bismarck,
N.D., had the lowest rate, 2.4 percent. A total of 207 areas had
August unemployment rates below the U.S. figure of 7.3 percent, 158
areas had rates above it, and 7 areas had rates equal to that of the
nation.


So the situation is still far from perfect. The inflation front is stable and showing no sign of changing anytime soon. U.S. C.P.I. inflation over the past year has been 1.5 %. In Canada the rate is 
even lower 1.1 %. This suggests that the economy is still in need of more stimulus which sequestration cuts will not provide.
 
 
 
On other fronts, The Affordable Care Act or Obama Care as it is often called by critics and partisans alike is operational but because of very unfortunate flaws in the computer design of the government web site which is meant to offer consumers easy access to buying insurance at affordable rates where their state doesn’t offer a good alternative, the rollout is a bit of a debacle. Of course, the Republicans have been quick to pounce on this claiming that this shows how flawed the program will be. So a thorough and quick fix of the web site is needed. Given the US advantage in computer technology and ready access to other experts in Canada and abroad this should not be hard to accomplish. The credibility of the program depends upon it and hopefully it is now a top priority. Actually, it should have been all along but that’s another story.
 
France is complaining about American eavesdropping on its citizens with more than 70 million calls, computer searches, texts, social media messages and so on having been secretly vacuumed up in one month alone. The French have formally complained that its no way to treat a friend and ally and it was front page news in Le monde today. So far the Americans are not saying much, but the legitimate issues of privacy and civil rights in a democratic society continues to be front and centre in this debate. It doesn’t help matters to simply respond they are only doing what every one else is doing. 
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Washington coming to its senses ? Canadian unemployment falls to 6.9 %. Alice Munroe wins Nobel Prize for literature

Posted on October 11, 2013 by haroldchorneyeconomist

Amazingly the the government shutdown in the U.S. which began October 1, 2013 continues despite some serious efforts at negotiating an end to it, the restoration of services and a short term six week respite on the debt ceiling deadline which in its absence will be breached in less than a week. Over the past couple of days The President, and key Democratic party politicians have been meeting with Republicans in an effort to hammer out an acceptable deal that will end the shutdown, provide a relatively short term respite from the debt ceiling deadline and restore some degree of sanity to Washington politics. The difficult part will be in agreeing to the length of the debt ceiling pact. The house Republicans want it to be short but both President Obama and the Democratic party leadership and some Senate Republicans are trying to hammer out a much longer deal of at least a year. Final details on the deal are still being negotiated but the deal might involve some compromises on the President’s side regarding future adjustments in small aspects of the Affordable Care Act that could be seen as necessary fine tuning, longer term adjustments in medicaid and medicare as part of a general attempt to provide for better budget balance in future years . The Republicans however have lost the battle of public opinion by prolonging the shutdown and also by refusing to accept that Obama care is now operational and won’t be altered in fundamental ways  for the forseeable future as opposed to adustments that are a necessary part of good governance.

We shall see what the weekend brings and hopefully the government will reopen its doors and a debt ceiling deal will be reached  as cooler and more pragmatic heads prevail. 

On the cultural front Canadians, literary buffs, writers and readers everywhere are thrilled to learn that Canadian writer Alice Munro has won the Nobel Prize for literature for 2013. She is the first Canadian  if we don’t count Saul Bellow who moved to Chicago from Montreal as a young boy and only the thirteenth woman to win the prestigious prize. Alice Munro’s works are deeply revealing and drawn from acute observation of the lives of   her fellows mostly in small town and rural Ontario. She has been compared to Chekhov and described as “the master of the short story” which is high praise indeed. Canadians who do read a lot and not just about hockey or hunting or winter and mostly live in large cities are very pleased. Our writers and creative people who often work for years without proper reward or recognition in a culture that sometimes is reluctant to recognize its own talented people can take heart from this award. 

Finally Stats Canada released its September jobs report today. Unemployment fell to 6.9 % in September. but unfortunately this was almost entirely due to a fall in the participation rate as the number of people who dropped out of the labour market increased. This was also true in Quebec where unemployment fell from 7.9 % to 7.6 %.

Unemployment by province

Newf. 10.4%
N.S. 8.6%
PEI 11.0
N.B. 10.7
Manitoba 5.5%
Sask. 4.3%
Alberta 4.3%
B.C. 6.7 %
Ontario 7.3%
Quebec 7.6%

Participation rate by province
Newf. 59.9 %
N.S. 63.9
P.E.I 68.2
N.B. 63.6
Manitoba 68.8
Sask. 70.0
Alberta 73.1
B.C. 64.1
Ontario 66.4
Québec 64.8

The much lower participation rates in the Atlantic provinces and even to an extent in Ontario and Québec compared to the high rates in Alberta, Manitoba and Saskatchewan reflect both demographic factors and the larger number of discouraged workers in those provinces because of prolonged elevated unemployment.
All data courtesy of Statistics Canada

Posted in Canada, deficit hysteria, full employment, government shut down+debt ceiling U.S., U.S., Uncategorized, urban culture | Tagged | Leave a comment

U.S. government Shutdown Irrationality & higher Unemployment in Europe:A very bad combination

Posted on October 1, 2013 by haroldchorneyeconomist

The long predicted but nevertheless very foolish self inflicted irrational Tea party Inspired shutdown of all but essential U.S. government services has occurred as of midnight last night, Washington time. It is difficult to predict how long it will last and whether it is a prelude to the even more damaging refusal  to raise the debt ceiling that needs to be renegotiated before the middle of October or the U.S. could default on its federal public sector debt – a financial doomsday scenario for it and the global economy. In the seventeen or so government shutdowns that have occurred previous to this one so long as the shutdown was ended within a few days the damage was minimal-although plenty of government workers suffered economic damage. But if they persisted as they sometimes did for weeks the fall in stock markets and undermining of confidence was much more substantial.  The threat of not raising the debt ceiling and actually defaulting on debt interest payments which many Republicans self indulgently and extremely foolishly look like they also want to play chicken over is a far more damaging prospect.

One can only look on in despair at such irresponsible and irrational behaviour. It is simply unworthy of a global economic power and world leader to behave in this sort of way. It also could not come at a worse time. The global economy is still very fragile and not yet properly back on course to a robust recovery. In fact the latest unemployment numbers from Eurostat show that Europe as of August 2013 was still mired in depression style unemployment in many countries outside of low unemployment countries like Austria 4.9%, Germany 5.2 % and Luxembourg 5.8 %. So for example Greece has 27.9 % unemployment;Spain 26.2 %; Portugal 16.5%;Cyprus 16.9%, Ireland 13.6%, Italy 12.2 % and France 11.0%. Rates are very elevated but less depression style in Finland 8.0%; Denmark 6.6%; Belgium 8.7 % and Sweden 8.0 %. The U.S. currently has 7.3 % unemployment . The negative consequences of the craziness in the U.S. political system and in particular its extreme Tea Party wing for economic stability in both North America and Europe cannot be underestimated. History will judge them harshly if they provoke another crash and deeper depression.

Posted in austerity, business cycles, European financial stability fund, European unemployment, fiscal policy, France politics+economy, government shut down+debt ceiling U.S., Spain, U.K. economy, U.S., Uncategorized, unemployment | Tagged , , , | Leave a comment

Poli 204 fall 2013 course outline

Posted on September 5, 2013 by haroldchorneyeconomist

 

Introduction and overview:

This course is a survey course intended to introduce students to the study of Canadian politics. Canada is a complex country composed of several peoples with a diverse population and a history whose roots goes back many thousands of years before the European settlement of North America and the encounter of our aboriginal first nations Native peoples with European explorers and settlers. This encounter benefited enormously the European colonial traders, adventurers and settlers but imposed harsh and often life threatening circumstances upon the first nations peoples- a legacy which continues in contemporary Canada. By the time of Confederation in 1867 when the modern Canadian nation state was born the original Native  peoples of Canada were reduced to some 140,000 people, including 10,000 Inuit and 10,000 Metis.In the mid 16th century the aboriginal population of the Canadian portion of North America  has been estimated as at least 200,00 and possible as large as two million. (See A. Finkel and M.Conrad history of the Canadian peoples 1867 to the present;  Thornton, Russell (2000). “Population history of Native North Americans”. In Michael R. Haines, Richard Hall Steckel. A population history of North America. Cambridge: Cambridge University Press. p. 13. ) At the time of Confederation in 1867 the population of Canada according to the 1871 census consisted of 1.62 million people in Ontario; 1.192 million people in Québec; 285,594 people in New Brunswick; 388,000 people in Nova Scotia; 10,500 non aboriginal people in British Columbia; 150,000 people in Newfoundland; some 25,000 plus people in what became the Prairie provinces in modern Canada. So at the time of Confederation in 1867 the population of the entire country including its aboriginal people was about 3.7 million people. In 2013 some 146 years later the population is  35.14 million (Stats Canada estimate) almost 10 times  greater. So in demographic terms Canada must be considered a modest success story.Its neighbor , ally but sometimes rival to the south, the United States has grown from 37 million people in 1867 to 316.6 million people in 2013.At the time of the founding of the USA as an independent country the population was under three million people.

Canada as a country also inhabits the second largest land mass in the world. Only the Russian federation is larger.Its economic history over the past five centuries has involved  its exploration and exploitation of its natural resources at first by foreign European powers like Britain and France  and later the United States who developed a robust trade in staple commodities like fish, fur , timber , pulp and paper and mineral resources and later petroleum and natural gas which in turn enriched these metropolis powers and at the same time developed the Canadian domestic economy through backward and forward linkages to the staple base of development. The Canadian financial base also grew up out of this process of development. Canada was also the locus for the development of an initially limited but increasingly robust democracy supported by a sophisticated competitive party structure whose roots lay in the country’s colonial heritage and its eventual adoption of  the Westminister model of representative parliamentary democracy.the Native peoples of Canada have also contributed to Canadian democratic traditions of participatory democracy and community which play a growing role in contemporary Canada. The rise and development of the labour movement and agrarian populism also contributed to the growing sophistication of Canadian democracy. The federal status of the country and its relatively successful integration of French speaking Canadians in Quebec, as well as in New Brunswick, Ontario and Manitoba with smaller numbers in the other provinces through the constitutional  division of powers and a federal structure and a charter of rights that recognized the need to respect and protect minority language groups through out the country has also contributed to its relative success despite the strong presence of an independence movement and independence leaning political parties which compete for both federal parliamentary seats and provincial seats in Québec.

Given this economic , historical, geopolitical background we will explore a number of core aspects of Canadian democracy and politics. Our objective is to permit students to understand the rich history of the country, the diversity of its peoples and political culture and the promise of Canadian democratic institutions and its politics in an age of increasing global integration.

 

Texts: Eric Mintz, Livianna Tossutti and Christopher Dunn, Canada’s Politics:Democracy, diversity and Good government second edition Pearson Toronto 2011&2014

Recommended Supplemental reading :Alvin Finkel and Margaret Conrad , History of the Canadian Peoples, vol 2, third edition, Parson Addison Wesley Longman.

Robert Jackson & Doreen Jackson, Politics in Canada:Culture, Institutions, Behaviour and Public Policy Pearson Prentice Hall

Topics:

1.Introduction and Overview: Canada’s history and peoples. its economic heritage. The development of a staple base and its impact upon trade and finance and employment.The banks, the railways and the political system. Wealth and social class and Canadian political culture.Brokerage versus class politics.Minz et al pp.1-54; pp.72-86; Finkel & Conrad pp.1-82.

2.Liberal democracy, possessive individualism, Canadian structures and diversity.Mintz et al, pp.1-54; C.B. Macpherson excerpt on reserve.

3.Canadian political culture, class and linguistic cleavages and the regional division of labour in the age of globalization.Québec versus Canadian nationalism. Mintz et alpp.87-108

4. The question of economic management.foreign investment, free trade the crash and its consequences, the rise of chronic unemployment and its political and social impact. Inequality.the debt and the impact upon the Canadian health care and welfare system. Mintz et al pp.55-86

5. The constitutional division of powers. The charter of rights and Freedoms. Centralization versus decentralization and the problem of economic management.Executive federalism, assymetrical federalism, Federal provincial financial arrangements.Mintz et al, pp.310-354; Finkel &Conrad pp.444-467;Jackson&Jackson, pp.140-186.

6.The party system and Canadian electoral history. electoral reform.the role of the media.Mintz et al, pp.242-309.

7.Political ideologies and party politics. Liberalism, conservatism, environmentalism, and social democracy.Jackson& Jackson pp.376-403

8. Institutions of government. the executive The governor General and King Byng.Mintz et al pp.410-439

9. The PMO, the Cabinet Mintz et al pp.410-439.

10. Parliament, the House of Commons, the Senate, the need for reform.Mintz et al pp.441-475

11. The bureaucracy, public administration and the policy process Mintz et al,pp.476-507

12. The courts and the judicial system Mintz et al. pp.508-531

13. Canadian foreign policy: Peacemaker or Powder Monkey ? mintz et al pp.150-177

13 Summing up and review.

Evaluation: one term essay due third week of October. Topics to be posted. 50 % A final exam 50 %.

Essay : Write an essay of between 9-10 pages on one of the following topics. The essay must include a bibliography of sources consulted. Sources should include scholarly books, articles from academic journals and where appropriate the quality press, for example The Globe and Mail, The New York Times, Le Devoir. Use a manual of style and proper citation.The essay is due in class the third week of October.

Topics:(under construction)
1. “The Quebec Charter of Values is rooted in the Quebec nationalist opposition to Canadian federalism and the nationalists’ rejection of multi-culturalism.” Discuss critically explaining the roots of the debate over values in Quebec, the goal of a secular society in the light of Quebec history and your assessment of the claim that this Charter is simply a legitimate expression of the need to protect Quebec’s culture.

2. How can C.B. Macpherson’s notion of possessive individualism be used to construct a theory of Canadian politics? Explain his theory and explore Canada’s class cleavages and political economy in your essay.

3. Foreign ownership and control of the Canadian economy is still an issue of considerable importance in Canada’s political economy. Explain why and discuss how it has been integrated into our politics in the past and its current status.

4. Does Canada’s voting system of first past the post need to be reformed? What alternative systems are there, how would they work, why would they be better and how could they be implemented.

5.Discuss the power of the Prime Minister and his/her office. What checks if any need to be placed on it?

6. What ought to be Canada’s role in global affairs? Are we a peacemaker or a powder monkey ?

7. Discuss the relationship of Canada to the U.S. Given the close economic integration that the free trade pact has promoted explore what challenges this poses to our sovereignty and independence.

8. Analyze the problem of unemployment. What role has government economic policy played in this problem? What is the role of the Bank of Canada and the Department of Finance in managing this problem? Explain the competing approaches of Keynesianism versus monetarism with respect to this problem.

Note several more topics will be added to the list.

 

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poli463 fall 2013 outline (under construction)

Posted on September 3, 2013 by haroldchorneyeconomist

Poli 463/2 fall 2013 course outline under constructionPoli 463/2
Government and Business: course outline
Keynes versus monetarists before and after the crash of 2008
Prof.Harold Chorney
Fall 2013 Course overview:This course explores the tools that are necessary to deal with the contemporary global economy and the public policy that is appropriate after the events in the financial markets these past six years, including the re-election of President Obama; the appointment of Mark Carney as the Governor to be of the Bank of England; the resort to sequestration of public spending in the U.S.;and  the on going neo-conservative irrational obsession with fiscal austerity and anti Keynesian doctrine.The crash of September 2008 in the financial markets,the financial bubble that preceded it, the global dimension to the recession which followed it and the presence of widespread significant fraud and excessive reckless risk taking obliges us to reinvigorate standards of regulation in the public interest and to understand the full dimension of financial instability.Governments all over the world have reacted by engaging in some degree of  re-regulation, Keynesian deficit finance and a dramatic overhaul of policy to roll back some of the laissez-faire ideology that had come to dominate public policy over the past two decades has reappeared after a thirty year absence.
In recent months  during and after the Presidential  election of 2012 there has been considerable backtracking as the defenders of laissez-faire and the Republican critics of President Barack Obama have reasserted the ”wisdom” of laissez faire against what they claim are the failures of liberal socialism and Keynesian intervention and social engineering. Jean Claude Trichet the former head of the European central bank has also been outspoken in his defense of sound finance and budget balance. The new head of the European  central bank, Mario Draghi has been slightly more flexible but on the whole still follows the monetarist path. Mark Carney after a successful but also lucky term at the Bank of Canada has moved on to head the Bank of England promising more flexible transparent policy than his predecessor Mervyn King. Despite the monetary policy promise of greater flexibility at the ECB, austerity rather than stimulation has been adopted by Europe and consequently there has been a major rise in the rate of unemployment and the slump in Europe has deepened.In Britain there is now after a period of negative growth a slight uptick in the growth rate but not strong enough to significantly lower the unemployment rate which is still 7.8 %.Hence the debate between the two schools continues.The new British coalition Liberal Conservative Government under the leadership of David Cameron and Nicholas Clegg has unfortunately also embraced sound finance and budget slashing despite the severity of the recession in the U.K. and the evidence that Labour’s return to Keynesian stimulation was working
.In the past this course examined intensively the clash between the Keynesians and the monetarists and the impact of this paradigmatic debate upon public policy. It also examined the neo-conservative and neo-liberal ideology and the break these ideologies have made with post-war liberalism, progressive toryism and social democracy. It argued the case for a return to Keynesian public policy.This has happened to an extent in the leading capitalist economies like the US, Canada and Japan, post crash. In many respects the American Presidential administration of Barack Obama has led the way, although critics like Nobel prize winners Joseph Stiglitz and Paul Krugman and others have argued that the American stimulus was too small and improperly focused. It had also been undertaken minimally in Europe with Great Britain and to a lesser extent France initially leading the way, with Germany a very reluctant follower. But in the past year Europe has reversed course and foolishly embraced austerity. Despite considerable resistance it has, in a much less dramatic fashion, been undertaken in Canada by the Harper conservative government. Although, here also the Government and its central bank governor were too quick to re-embrace fiscal orthodoxy despite the elevated unemployment.We shall still do some exploration of the history of the previous monetarist classical macroeconomics paradigm but I intend to spend much more time this year on deepening our understanding of how the Keynesian technique of demand stimulation is intended to work, the implications for public policy, and how I believe it should work given all of the economic and ideological changes that have occurred over the past thirty years. We will also explore the current return to austerity in Europe and the sovereign debt crisis in Europe. The politics of Keynes’s political economy as opposed to those of the pro-austerity Hayekians will also be explored.
We will also look briefly at   the environmental movement and assesses how environmentalism and green public policy can be integrated with Keynesian approaches to globalization.We explore the transition from the original Keynesian welfare state to the neo-con/neo-liberal doctrine of balanced budgets, free trade and unregulated globalization and to its consequences and now to the partial return of a refurbished Keynesian approach to public policy. The role of the media and popular culture in transmitting these changes is also explored.The impact of the successful Obama campaign for the Presidency as well as the Republican neo-conservative counter-attack will also be explored in terms of its impact upon public policy.Texts and basic readings:The first four works are basic texts and will be  available from the text book store , where possible the library on reserve,or in the case of Keynes on the net.  In addition there is a collection of papers The Deficit papers available from from me.My blog also contains a number of key readings.

John Maynard Keynes, The General Theory of Employment, Interest and Money.

Joseph Stiglitz, Free Fall:America, Free Markets and the Sinking of the World Economy , 2010

Peter Clarke, Keynes:The  Rise, Fall, And Return of the 20th Century’s Most Influential Economist, New York :Bloomsbury Press, 2009.

Harold Chorney, The Deficit Papers available from me in electronic format.

Paul Krugman, End This Depression Now! N.Y. W.W.Norton,

Other core readings:

Hyman Minsky, Stabilizing an Unstable economy

Can ”It” Happen again?:Essays on instability and finance

John Maynard Keynes

Kevin Phillips, Bad Money:Reckless finance, Failed Politics and the Global Crisis of American Capitalism

David Mendell, Obama from Promise to Power

Harold Chorney, “On Manias, panics and bail-outs:further thoughts on the financial crisis” see my blog Haroldchorneypoliticaleconomist.piczo.com.

Harold Chorney, Revisiting deficit hysteria, labour/Le travail, #54, 2004 available on the net

Harold Chorney, The Global Financial Crisis, the Re-emergence of Keynes and the Role of Quantitative Easing
paper Presented to the World Congress of Social Economics, Concordia university, Montréal, June 2010 (excerpt on blog.)

Harold Chorney Restoring full employment:the natural rate of inflation versus the natural rate of unemployment paper presented to the Conference on Social Policy as if People Matter, Adelphi university, Garden City New York, November 12, 2004 (available on net)

Alvin Hansen, A Guide to Keynes (on reserve)

Sidney Blumenthal, The rise of the Counter-establishment:From Conservative Ideology to Political Power

Desmond King, The New Right:Politics, Markets and Citizenship

Brian Snowdon and Howard Vane, eds. A macroeconomics reader, 1997.

Snowdon and Vane, Modern Macroeconomics:its origins, development and current state.Edward elgar, 2006

The following are some selected basic supplementary readings.You are not expected to read them all but rather portions of some of them. Some of them will be placed on reserve. Others are available through the library .They are intended to help with your research papers and illustrate the breadth and richness of the literature in the area.

John McMurtry, Unequal freedoms:the global market as an ethical system.

Adam Harmes, The Return of the state: protestors, power brokers and the new global compromise, douglas and mcIntyre, 2004.

Henry M.Paulson,Jr. On The Brink, Inside the Race to Stop the Collapse of the Global Financial System, N.Y. :Business plus, 2010;

Scott Patterson, The Quants:How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, N.Y.: Crown Business, 2010;

William Cohan; House of Cards:A Tale of Wretched Excess on Wall Street,N.Y.:Random House Doubleday, 2009;

Benoit Mandelbrot & Richard Hudson, The Misbehaviour of Markets:A Fractal View of Financial turbulence, N.Y.:Basic Books, 2004;

Haroldchorneypoliticaleconomist.blogspot;

Nouriel Roubini & Stephen Mihm, Crisis Economics:A crash course in the future of finance, N.Y.&London: the Penguin Press, 2010;

Paul Jorion, La Crise:Des subprimes au seisime financier planétaire,Paris, France: Fayard, 2008;

Richard Posner, A failure of Capitalism:The crisis of 08 and the descent into depression, Cambridge, Mass. and London U.K., 2009;

Bill Bamber & Andrew Spencer,Bear Trap: The Fall of Bear Stearns and the Panic of 2008, New York :Brick Tower Press, 2008;

Richard Bookstaber,A Demon of Our Own Design: Markets, Hedge funds and the Perils of Financial Innovation,Hoboken N.J., John Wiley & sons, 2007 )
John Kenneth Galbraith, The Great Crash,1929
Alvin Hansen, Monetary theory and Fiscal Policy.
Fausto Vicarelli, Keynes:The Instability of Capitalism
George Soros, The New Paradigm for financial markets..
Charles Kindleberger, Manias, Panics and Crashes.
The World in Depression:1929-1939.
David Colander and Dewey Daane, The Art of Monetary Policy.
J.A. Trevithick , Involuntary Unemployment:Macroeconomics from a Keynesian Perspective.
Robert Kuttner, Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency.
Tim Lewis, In the Long Run We`re all Dead: The Canadian Turn to Fiscal restraint.(on reserve)
Robert Ascah, Politics and Public debt:the Dominion, the Banks and Alberta’s Social Credit.
Doug Henwood, Wall Street.
Richard Parker, John Kenneth Galbraith: His Life, His Politics , His Economics.
Peter Clarke, The Keynesian Revolution in the Making.
Will Hutton, The Revolution that Never Was: an Assessment of Keynesian Economics.
Lawrence Klein, The Keynesian Revolution.
J.C.Gilbert, Keynes’Impact on Monetary Economics.
Axel Leijonhufvud, On Keynesian Economics and the Economics of Keynes.
Gary Teeple, Globalization and the Decline of Social Reform(reserve)
Jonathon Michie and John Grieve Smith eds., Managing the Global Economy.
David Held & Mathias Koenig-Archibugi, Taming globalization: frontiers of Governance.
Bao Gao, Japan’s Economic Dilemma:the institutional origins of prosperity and stagnation.
Sidney Blumenthal, The Rise of the Counter Establishment, From Conservative Ideology to Political Power.
Armand Van Dormael, Bretton Woods: Birth of a Monetary System.
Robert Lucas, Studies in Business Cycle Theory.
Milton Friedman,” The role of monetary policy” The American Economic Review, 1968, vol.58, March, pp.1-17 reproduced in Brian Snowdon and Howard Vane, A Macroeconomics Reader.
Alan Blinder, The fall and rise of Keynesian economics, Economic Record, 1988, December reproduced in Snowdon and Vane., A Macroeconomics Reader
James Tobin, “Price Flexibility and output stability:an old Keynesian view.Journal of Economic Perspectives, 1993 vol7, Winter. reproduced in Snowdon and Vane.a Macroeconomics reader
David Laidler, Monetarism:an Interpretation and an assessment.Economic Journal,1981, vol.91 March reproduced in Snowdon and Vane.
F.A.Hayek, The Fatal Conceit:The Errors of Socialism.
Allan Meltzer, A History of the Federal Reserve, Vol. 1:1913-1951.
James Rock ed. ,Debt and the Twin Deficits Debate.
Robert Heilbroner and Peter Bernstein, The debt and the Deficit:false Alarms/Real Possibilities.
Harold Chorney& Phil Hansen, Toward a Humanist Political Economy
Joseph Stiglitz, The Roaring Nineties;
Making Globalization Work
Thomas Kuhn, The Structure of Scientific revolutions;
Adam Harmes, The Return of the State:Protesters, power brokers and the new global compromise;
Georges Campeau, From UI to EI:Waging War on the Welfare State;
Stephen Clarkson, Uncle Sam and Us.
Michael Woodin & Caroline Lucas, Green alternatives to Globalisation.
Al Gore, An Inconvenient Truth,the planetary emergency of global warming and what we can do about it.
Nicholas Stern, Review Report on the economics of climate change to the British government (available on the internet)
Gwyne Dyer, Climate Wars.
Rubin Simkin, Comments on Consumption, Income distribution and Growth (on reserve)
E.F.Schumacher, Small is Beautiful.(on reserve)
E.J.Mishan, the Costs of Economic Growth (on reserve)
J.Kenneth Galbraith, The New Industrial State (on reserve)
The Affluent Society (on reserve)
A Short history of financial euphoria.
Nicholas Georgescu-Roegen, The Entropy Law and the Economic Process (on reserve)
Joseph Schumpeter, History of Economic Analysis.
Paul Davidson, Post Keynesian Macroeconomic Theory.
H.Binhammer, Money and Banking and the Canadian Financal System
Alan Booth, British Economic Policy 1931-1949.Was There a Keynesian Revolution?
Anna Carabelli, On Keynes’ Method.
Leo Pliatzky, The Treasury under Mrs. Thatcher.
L.Randall Wray, Understanding Modern Money.the Key to Full Employment and Price Stability
William Greer, Ethics and Uncertainty, The Economics of John M. Keynes and Frank H. Knight.

Students are also expected to read extensively the financial and quality press each week.These include The Financial Times, The New York Times,the Wall Street Journal, The Guardian,The Globe and Mail, and focus on stories on the economy, the financial crisis and the recovery.

Evaluation: Essay due mid term, the first week of November 50 %

Final exam 50 %.

Topics

1.Introduction and overview.The interface between economics and politics.The art and science of political economy. The recent financial crisis, sub -prime mortgages, bank bailouts and the crash of 2008. The need for stimulus and the revival of Keynes. The eclipse of monetarism.? The challenge of climate change and the protection of the environment. The impact of the crash and challenges before Barack Obama. The rise and fall of the new right.The Canadian response. the origins of macroeconomics.

readings: Chorney, On manias , panics and crashes; Chorney; the introduction to the Deficit papers,Chorney the global financial Crisis, re-emergence of Keynes and origins of Quantitative easing.the essay on Keynes in the Deficit papers;chapter one in Kuttner.Obama’s challenge.chapter one in Phillips. Kindleberger; Galbraith, on the crash and Minsky, introduction to Can it Happen again and editors’ introduction to stabilizing an unstable economy.
chapter one Seccareccia and Bougrinepp.1-33.Snowdon and Vane, introduction.modern macroeconomics.

2.Globalization and the ethical dilemma. Myths and truths about globalization.The environmental challenge.Economic growth and entropy.
Readings: Nicholas Stern, Al Gore;K.Phillips; Stiglitz, introduction and chapter one. John McMurtry pp.1-52.

3. The myth of no alternative.The role of regulation and public enterprise. Laissez-faire versus planning.Hayek versus Keynes. The eclipse of Marx.The rejection of Keynes. Daniel Bell and the End of Ideology. The rise of post-modernism and the new classical macroeconomics.
Readings :Chorney global financial crisis…; Chorney deficit papers :The future of crown corporations:government ownership, Regulation or market control,A Keynesian approach, 1998; Blumenthal; King, Hayek, Mcmurtry, Harmes, Lucas, Friedman,Laidler.

4.The role of the media; political pressure groups;democracy propaganda and the policy process. The rise of the neo-cons.
Media and popular culture in the post modern age.The post war consensus and how it unravelled. Stagflation
and misinterpreting Keynes’s General theory.
Readings :Chorney, the Deficit Papers: The economic and political consequences of Canadian monetarism; Keynes and the problem of inflation.Keynes, the General Theory The two postulates of classical economics; the possibility that labour markets do not clear; the notion of involuntary unemployment.
Blumenthal, King, Block, Chorney, the natural rate of inflation…, Keynes GT ch.1-3; Peter Clarke Keynes, introduction.

5. The consumption function. The multiplier. Savings and investment.The theory of interest rate determination.Readings: Keynes GT; Hansen a guide to Keynes.

6. The controversy over debt and public finance.readings:Cavenaugh, Rock; Eisner; Heilbroner and Chorney: Rediscovering deficit hysteria, The deficit: hysteria and the current crisis and Chorney commentary on the FT’s austerity debate plus U tube video on deficits and debt.

7. The strategy of stimulus. investment in infrastructure. Investment versus tax cuts. The impact of capital flows.
Readings :Chorney blog entries on stimulus and the strategy behind it plus others tba.

8. The roots of neo-conservatism.The cold war. The Vietnam war and the sixties. The OPEC crisis of the 1970s. Stagflation. Thatcher Reagan and Mulroney in the 1980s. The Clinton, Blair and Chretien third way.The Bush and Blair war in Iraq. The challenge of Afghanistan.The resurgence of liberalism in America. Obama’s challenge. The challenge of preserving civil liberties in the age of information and technology.
Readings: blog; Stiglitz Free Fall; Stiglitz The roaring nineties;globalization and its discontents.Chorney and P.Hansen Toward a Humanist Political economy, The falling rate of legitimation ; introduction and Neo-conservatism, social democracy and provinve building;King and Blumenthal.

9. The roots of monetarism.Hayek versus Keynes in the thirties. Friedman versus neo-classical Keynesianism in the sixties and seventies. The post-Keynesians and John Kenneth Galbraith. Towards a new Keynesian paridigm.The return of regulation and the state. The bail-out of the banks , Freddie Mac and Fannie Mae and AIG insurance ; cleaning up the bubble,Readings :Stiglitz,Paulson,Phillips, Tobin; Blinder; Davidson;Harmon; Chorney

10. Post and neo-Keynesian policy in the age of OPEC. readings:Davidson,Harmon , others TBA.

11. Development issues. The IMF and the World Bank. The turn to the left in Latin America. The return of full employment ? Capitalism in Asia.
Readings: Stiglitz, Chorney.

12. Prospects for democracy, balanced ecologically sound growth and the compassionate society in the new world order.

Weekly notes: I will use this space to refer students to readings, updates sources etc.

Please note that the reading Harold Chorney,”On manias, panics and bailouts:further thoughts on the financial crisis” is available by referring to my blog. Jan.14, 2009 On manias, panic and bailouts: further thoughts. Keynes GT is on order but also widely available in libraries. There are  numerous copies in the libraries around town including Concordia and it is also accessible on line. Begin reading the first 50 pages and we will discuss it in class.

Please go to the PBS.org site and watch their excellent documentary Inside the financial Meltdown which was broadcast on Frontline.It provides an insightful and personal look at the financial crisis as it unfolded in New York and Washington in 2008.

Essay assignment due in class in the first week of November.
Please research and write a 12 to 15 page essay on one of the following topics or if you prefer propose an alternative topic to me. Be sure to use a manual of style, include a full bibliography and proper notes identifying your sources. Sources should include books, periodical literature, quality financial papers like the Wall Street Journal, the Globe and Mail, The Financial Times or the New York Times well as internet sources.

Possible topics include:

1. Discuss the root causes of the financial crisis. Explore the factors that influenced its unfolding as it has. What are the principal flaws in the economic theory that business leaders and policy makers relied upon that led to this crisis? How must economic theory be reconstructed to avoid these policy failures in the future?

2. Compare and contrast the monetarist approach to public policy and management of the business cycle with the Keynesian schools’ approach.Why and how did monetarism displace the Keynes style approach in the 1970s? Does the current crisis suggest another paradigm shift?

3. Discuss the controversy over government use of deficits to stimulate the economy in an economic downturn.Explore the role of deficits in the current policy environment. How does the Canadian Harper stimulus compare with that of the Obama administration? What is the appropriate monetary policy in conjunction with stimulative deficits ? what impact will the new Osborne budget in the U.K. likely have ?

4. Explore the roots and current operations of the IMF and the World Bank.
What reforms appear necessary at these institutions. Give concrete country based examples.

5. Explore panics, manias and crashes in financial history. How does this panic compare with previous ones ?

6. Explore the theory of the multiplier and Keynes’ theory of investment. How ought we to modify Keynes’ theory of investment to adjust to the current circumstances of globalization ?

7. Explore the roots of neo-conservatism. Does it have a future ?

8. Explore the environmental aspects of economic stimulus. Is there an inherent contradiction between stimulus leading to full employment and sound environmental policy ?

9. What would constitute a viable and contemporary theory of economic liberalism that would respect the social and economic needs of people but at the same time be open to global values ?

Other core readings:

Robert Skidelsky, Keynes, The Return of the Master:New York:Public Affairs, Perseus group,+ in U.K.  Allen Lane,  Penguin, 2009,2010.

 

Posted in Uncategorized | Leave a comment

The long hot summer recovery continues

Posted on August 26, 2013 by haroldchorneyeconomist

I have been away from my blog and web site for  an extended period, last posting at the close of June. I will be resuming a more frequent schedule beginning next week. A heck of a lot has transpired both politically and economically since I last posted commentary and analysis. I have also travelled to London for an LSE reunion and visits with family there and an opportunity to hear directly from the new head of the School, Professor Craig Calhoun who gave an excellent talk at the reunion about the noble LSE tradition of dissent,radicalism, argument  and critical thinking.This was a long tradition in many branches of the social sciences and certainly was close to the heart of the some of the founders of the school. During the time I was a Ph.D. student there it lived in the person of teachers like Amartya Sen, Ralph Miliband, Michio Morishima, Harry Johnson and others who regardless of the side of the issue they tended to be on emphasized critical thinking, careful research and solid argument as well as rhetoric and eloquence. At a time where simple even crude ideological assertion has come to dominate public policy discourse its an important tradition to reinvigorate.

I also spent time in Winnipeg the city where I grew up and still have family. It pleased me to see how with the lamentable exception of their last place football team how well the city seemed to be doing in terms of building a new and architecturally striking  museum of human rights which has been the product of the generous contribution and hard work of the Asper family and all three levels of government and a new strikingly modernist airport terminal. The city has its problems with neglected infrastructure and lack of a proper rapid transit system but it bustles with energy,interesting politics, very nice people, modernist architecture and a concern for culture and good cuisine. A pleasure to visit(in summer, of course)

The controversy over privacy continues, as it should and the debate over the economy and how best to sustain the recovery is ongoing. The data suggests that slow but steady recovery continues. But it is far from the time where it would make any sense to jettison quantitative easing and substitute interest rate increases, except very gradually in slow and deliberate process. The unemployment rate is still simply too high.

There is a legitimate debate about the efficacy of QE actually stimulating directly additional aggregate demand but it is clear that without it interest rates would have risen as deficit hysteria took hold. Money may well be hoarded in quasi hoards internal to firms, banks and in wealth holders’ balance sheets but if we tried to liquidate these hoards through raising rates it is likely the negative impact upon growth and employment would be at this point in the cycle substantial.

Posted in austerity, business cycles, classical economics, deficit hysteria, fiscal policy, full employment, monetary policy, U.K. economy, Uncategorized, unemployment, urban culture | Tagged , , | Leave a comment

Markets always overreact to changing expectations: this time was no different

Posted on June 27, 2013 by haroldchorneyeconomist

I have been away working on my research and publishing and nursing a very nasty summer cold these past few weeks . A lot has happened that needs to be noted. First let me pay tribute to the long and productive career of Bob Rae in Canadian politics. Bob is someone I have known off and on since our students days in Britain. I haven’t always agreed with him on fiscal policy questions but I always respected his high intelligence,his gracious diplomacy, his political passion for justice and equity and his many valuable contributions to Canadian and global politics.As a federal M.P. in the 1980s, a leader of the Ontario NDP, Ontario Premier, again member of Parliament and interim leader of the Liberal party Bob made an outstanding contribution . I wish him the very best in his post parliamentary politics career.

Second it is impossible to ignore the controversy and scandal around the question of privacy and civil liberties raised by recent events. A long overdue honest debate needs to take place about the inevitable need for security and safety and its clash with the sacred democratic rights of civil liberties and privacy. Otherwise there will be an inevitable turning away from the rich promise of the internet and new communications technology as a global forum for free discussion and the pursuit of knowledge.

Third  we have just witnessed the defeat of Julia Gillard by the former Australian  PM Kevin Rudd in the run up to the Australian election expected this fall. Rudd who had himself been defeated by Gillard after being elected Prime Minister in 2010 defeated Gillard by 57 votes to 45 as the Australian parliamentary Labour party facing defeat in the upcoming elections sought to improve its chances by choosing Rudd who is more popular than the opposition leader Tony Abbott of the Liberal party. We shall see if this gambit works for Labour in the upcoming Australian election. Abbott is a big advocate unfortunately of austerity, the last thing that Australia needs at this point.

Finally, the latest economic data and the markets. Keynes long ago in 1936 pointed out “that in a world ruled by uncertainty, with an uncertain future linked to an actual present, a final position of equilibrium, such as one deals with in static economics, does not properly exist.” At this point in writing to Hubert Henderson he was talking about interest rates and his belief that the rate of interest was dependent upon the supply and demand for money and that other things being equal during a boom interest rates would rise and during a slump they were more likely to fall subject to changes in the degree of liquidity preference and to central bank adjustments in the supply of money. ”If the supply of money is suitably adjusted, then here is no necessary reason why interest rates need rise during a boom or fall during a depression.” It is these calculations under conditions of expectations and uncertainty that bedevil the current stock market and its traders. A mere hint improperly conveyed by the Fed that it may in the future be curbing quantitative easing which has helped keep interest rates low is converted into unjustified panic on the markets by computerized trading programs and hedge funds who are staffed by a generation of young people who know very little of economic history and pre Friedman economic thought. The markets have since recovered on somewhat better , although uneven economic data. So we should expect a bouncy sometimes up sometimes sharply down market for the forseeable future. But despite sequestration and obsession with deficits affecting policy negatively and slowing growth the upward momentum in the U.S. should continue.

A last thought and observation. A headline in The Guardian reads Ireland falls back into recession despite multibillion euro austerity drive: Official data means Ireland has endured three successive quarters of recession.   The headline shows how far the conventional wisdom about macro-economics has been perverted by the prevailing anti Keynesian orthodoxy. Austerity leads in all circumstances to slower growth. If its is implemented after a crash and a sharp rise in unemployment worsening the recession is inevitable.

Posted in austerity, business cycles, classical economics, deficit hysteria, European debt crisis, J.M.Keynes, quantitative easing, unemployment | Tagged , , , | Leave a comment