Fiscal Conservatives renew their attack on government spending complaining that Covid -19 counter measures excessively increase deficits and government share of the economy

The American largely Republican Party dominated fiscal conservative lobby of policy advisors, academics and commentators have begun once again to try to undermine the very sensible congressional policy spending and investment plans which Congress has passed and which the House has added to in the apparent hope of aiding President Trump‘s re-election.

This weekend‘s on line Wall Street Journal featured an opinion piece by Stephen Moore in which he argued this point of view. He maintained that there is a danger of government spending rising to over 10 trillion dollars or over 50 % of the economy. The US GDP is currently 21.2 trillion dollars. Moore goes on to argue drawing on CBO projections that this level of government spending will push the American deficit to 17.9% of the GDP and the debt to GDP to 101 % as compared to 106.1 % in 1946 and a deficit of 9.8 % in 2008. He suggests strangely that this will crowd out private investment and cause a shortage of capital in global markets.

But this is a very false argument when unemployment is running at very high levels close to 15% and the pandemic threatens enormous job losses due to lockdowns, indicating a surplus of uninvested savings and underutilized labour. Moore ignores the fact that the Fed is financing a significant fraction of the deficit by purchasing US treasuries. As the economy recovers the Fed will find a way to resell them back to the markets over time as the ratio shrinks as the GDP grows. Instead he cites Milton Friedman’s warnings about the risks of inflationary excessively loose monetary policy which for the time being when oil prices are low and animal spirits depressed seem not applicable, though they could be under different conditions at some time in the distant future. Moore also warns against the Democratic Party using the crisis to implement its policy agenda of more socially progressive policy. But that is as understandable as the Republicans in the Senate using their advantage to block policy. In the end a compromise will be necessary until the next election possibly alters the political arithmetic.

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The political economy of Covid 19 in the early 21st century

The covid pandemic has had already a very significant impact beginning with the tragic death of over 100,000 people in North America alone. 6545 in Canada, 7633 in Mexico and a staggering 99,459 in the United States. World wide the total number of deaths is 347,873.As the New York Times Sunday edition made clear with its entire front page devoted to the names and short biography of a thousand of the American victims these are more than numbers but fellow human beings who loved and were loved, each of them much more than a number.

These shocking statistics have caused a number of politicians and analysts to a major rethinking of the public policy consensus on the role of the state and the degree of state intervention. Much of it is based on the growing renaissance in Keynes style analysis of what has been transpiring. Markets have been overwhelmed, unemployment has soared and aggregate demand and supply disrupted due to the virus and the threat it poses and the fear that it spreads.

Ideas that have been discussed in depth like basic income or the guaranteed annual income around since the 1960s are being discussed in the quality press and in the media. The leading market capitalist countries are mulling over these issues and already a number of states have spent billions on income replacement and job protection programs that would have been rejected by Neo-con voices a bare five months ago. Canada is spending 4.5 % of its GDP on these programs . The US even more 10.7 % of its GDP, The Euro zone 3.2 %, Japan 20 % the UK 2.9% (The Globe and Mail,May 23, 2020.p.A15) Fiscal conservatives and some orthodox monetarists have sounded the alarm about inflation but these arguments ring hollow in the face of falling inflation rates and low global oil prices. Furthermore , there is growing discussion of income inequalities and the way in which the virus has hit hardest on vulnerable low income persons. There is the possibility of a new emerging consensus on social and economic policy that tilts in a progressive direction.The key democratic aspiration for a more just and ecologically balanced outcome is within reach as the rational alternative to a more authoritarian and unequal world.

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President Trump suggests Negative interest rates to help economy. Its a useful suggestion that should stimulate a debate

Once again President Trump has made a useful suggestion to stimulate growth in the economy with which the chairman of the Federal Reserve disagrees. The chairman Jerome Powell has suggested that the Fed for the time being is not considering this option. But its quite possible that if excessive reluctance or the necessary closure of retail business and its  impact on spending  and cash hoarding continues this policy option will be debated. It is useful to discuss the pro and cons of such a policy now. Currently Denmark (-0.75), Switzerland(-0.75), Sweden( -0.25)and Japan (-0.10) have negative interest rates . The ECB has used them in the past.The more transparent Fed policy making is, the better ,because it permits a wider range of debate and discussion. Negative interest rates have been used before and proved to be quite workable although there is no consensus about how effective they were in reversing excessive disinflation and deflationary tendencies. Essentially they are meant to encourage investment and spending rather than hoarding cash. They involve charging a small fee for holding money as unspent savings. As such there is an inevitable clash between those who believe in thrift and those who believe the key to recovery is spending and investment.Critics of the policy suggest that they might have perverse effects on cash hoarding outside of the banks.

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The new reality: hoarding or avoiding using cash because of Covid- 19 and the relevance of Quantitative Easing

Keynes wrote at length about the increased attachment to cash which he called increased liquidity preference in a time of crisis which leads to a rise in the rate of interest as there are limits to the amount of cash in circulation. Keynes puts it as follows in his Quarterly Journal of Economics article in Feb. 1937, The General Theory of Employment. He writes:

When, as happens in a crisis, liquidity preferences are sharply raised, this shows itself not so much in increased hoards-for there is little if any more cash which is hoardable than there was before-as in a sharp rise in the rate of interest, i.e.securities fall in price until those ,who would now like to get liquid if they could do so at the previous price, are persuaded to give up the idea as being no longer practicable on reasonable terms.A rise in the rate of interest is a means alternative to an increase of hoards for satisfying an increased liquidity preference.Nor is my argument affected by the admitted fact that different types of assets satisfy the desire for liquidity in different degrees.The mischief is done when the rate of interest corresponding to the degree of liquidity of a given asset leads to a market capitalisation of that asset which is less than  its cost of production ( JMK, The General Theory and After,Part II Defense and Development.  Collected Works p.111.

Hence the need for quantitative easing in the current circumstances when the need for near zero interest rates is paramount. Simply increasing the velocity of money will not not satisfy the need and because of liquidity preference will not happen.People will tend to hang on to cash  balances rather than spend them. Corporations with large retained earnings might also avoid spending them on government bonds because of the risk of losses when interest rates rise from their near zero level and asset prices fall. The general public beecause of covid 19 contamination fears  will also try to avoid using cash -a phenomenon already widespread in Montreal- and rely on credit cards and debit cards.

But not everyone has these or uses them particularly in the underground economy which is a significant part of the small trader economy. Economists generally estimate the size of the underground economy as ranging from 8 to 14% of the economy . This only strengthens the need for greater central bank monetization of the debt or QE while the crisis lasts.  Contrary to monetarist dogma there is currently and for the foreseeable future no danger of this policy causing an inflation problem since the deflationary forces growing out of the sharp fall in oil prices  and the wave of job losses is far more powerful.

 

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Co vid 19 pandemic confirms again the critical relevance of Keynes and his policy tools

March 27 2020 , The current Covid19 crisis and the American and Canadian response to it by both the President and the Congress and the Fed , the Prime Minister, Parliament and the Bank of Canada is once again proof that Keynes is still very relevant and critically important in understanding how to fund countervailing policy to rescue the economy and society when it is attacked by a horrible scourge pandemic that tragically will cost the lives of many thousands or more of people world wide. There no longer is talk of excessive deficit spending, fear of inflation , condemnation of printing money and the whole range of deficit hysteria. Once again its crystal clear that massive disinflation and probable deflation will be the order of the day for awhile. Despite enormous deficit  spending and large bouts of QE which Keynes, Lerner , and Takahashi, called for in the 1930s and John Hotson, Mario  Seccareccia and myself called for more than thirty years ago , most economists and policy analysts will be supportive this time. Despite the barrage of criticism we faced we were correct in arguing for the wisdom of this set of policy tools. We should see a sharp recovery after the spending occurs  and we are able to pass beyond the epidemic and find safe vaccines and treatments. This program will need to be assessed as to how large the expenditure and income replacement needs to be and what needs to be adjusted as it is implemented.

 

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Poli 610 2019 schedule of student presentions

  1.   Janik Rogas  The crash and financial crisis of 2007- 2009.September 17.

2.    Luke Michel Donovan  Say‘s law, unemployment and the Labour market          clearing model.The natural rate of unemployment and inflation. Sept.24.

3.   . Keynes before the General theory. Keynes and Bloomsbury. His liberal Vision. hrc

4.Elora  Buss​ièrre -Ladouceur  Keynes before the General theory, the Economic consequences of the Peace October 1

5. Kendra Griggs The fundamental equations and the Treatise of Money October 15.

6.  Myriam Babin The great depression. hrc Kalecki, uncertainty and Minsky. October    22

7.Sabrina Coppola.  Stagflation and the re-emergence of monetarism. Oct.29

8. Jessica Gosselin  post Keynesian theory and policy.  Gabriel Ensong American fiscal conservatismNov.5.

9.Lise Marie De Luca  Canadian macro policy since the war technology and economic growth Nov.12

10. Noura Brek  Inequality Nov.19 Andrew Grant  Democratic and Republican approachs to Keynesian policy Nov.19

11. Charles Orme Brexit and the future of the EU.  Firmin Landre  EU economic policy. whither Canada  hrc Review Nov.26.

 

 

 

 

 

 

 

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Fall 2019 Poli 204 A course outline (under construction)

Poli 204  A/ 2019 Concordia university
Introduction to Canadian Politics
Professor Harold Chorney 
Course outline including essay topics list

Wed. 2:45-5:30 FG C070

Office hours Tuesday 4:30 to 5:30 Wed 1:30 -2:25 .

The study of Canadian politics is a complex field which draws upon a number of traditions in Canadian political science including institutionalism, political behaviour, political theory, international politics, political economy, history, judicial and constitutional history and economic history. In a broad survey course lasting a single term we can only touch upon a number of key aspects of the field. In my view some knowledge of the key economic and political history of Canada and its initial colonial relationship to Great Britain and France and its relationship to the great republic to the south , the United States is essential in making sense of Canadian politics and its political history. The ongoing debate about the place of Québec in Canada can only be properly understood in the light of Canadian history and the history of the French fact in the founding of the country. Much has changed in Canada over its history. New France in the 18th century had a European origin  population of about 70,000. In 1867 the population of Canada was 3.46 million people excluding the first nations’ population of about 120,000 people.In 1913 the population was 7.63 million. In 1941 Canada had a population of about 11.5 million people. Its population today according to Statistics Canada is over 36 million. Whereas in the 1940s and fifties the major groups were those of British or French background and people from other ethnicities constituted less than twenty percent of the population this third group has grown substantially in importance. The first nations’ and indigenous population is now estimated to be over 1.4 million.

Canada can no longer be understood as a British country or a former French colony. This in strong contrast to the Canada of the early 1950s when both the Union Jack and the Red Ensign flew on the flagpole of my elementary school in Winnipeg and we were considered British subjects. Rather Canadian nationality has come into its own based as it is on a wide range of ethnicities , founding peoples and nations and immigrants from all over the world. We will likely be a nation of more than 40 million in the not too distant future and have in much of the country a strong pan-Canadian national sensibility. Yet at the same time, Québec maintains its identity as the very successful product of more than 4 centuries of French dominant presence in North America. This French presence and identity is also strong in several other regions of the country notably New Brunswick, Ontario and Manitoba. The partly bilingual character of Canada and the tension over Québec’s place in Canada are creative if difficult elements of the Canadian nation making process.
On October 19th, 2015 Canadians went to the polls to elect a new Parliament. This election was a very closely hard fought election with three major parties each according to the poll of polls having had a good chance initially to elect the largest number of members and form a minority government. In the end it produced a majority Trudeau led Liberal government.

We will discuss the election and the current election in detail, including the leading policy issues, the nature of the voting system, the differences between the parties, Canadian electoral history and the issue of getting younger Canadians to vote in much larger numbers. The election of a majority government under the leadership of Justin Trudeau a son of a former Prime Minister, Pierre Elliot Trudeau and a coalition of liberals, liberal progressives, environmentalists and liberal social democrats stands in sharp contrast to the recent electoral experience in the USA. Our complex but close trade relationship with the USA under the new Trump Republican administration has  strongly affected Canada and its democracy as anti free trade sentiments work their way through Congress, the White House and the halls of public opinion. We will face serious economic challenges if the protectionist anti- NAFTA nationalist sentiments apparently held  by the Congress toward the new agreement are not moderated. . We also face a potentially very dangerous situation should there not be a peaceful diplomatic resolution of the dispute over North Korea acquiring nuclear weapons and the means of delivering them to North American targets.

Text :Eric Mintz, Livianna Tossutti and Christopher Dunn, Canada’s Politics:Democracy, Diversity and Good Government. Pearson , 2017. Available at text bookstore.

Evaluation: An essay due in the first week of November on a topic chosen from a list of possible topics included in the list of possible essay topics below. 50 %. A final exam 50 %.

Additional reading: I draw upon several other works in Canadian history and Canadian politics . These include Alvin Finkel and Margaret Conrad’s two volume History of the Canadian Peoples vol.1 Beginning to 1867 (1993) vol.2 3rd ed. 1867 to the present; C.B.Macpherson, The Political Theory of Possessive Individualism:Hobbes to Locke;Stanley Ryerson, French Canada; Unequal Union; Craig Brown, the illustrated history of Canada, 2002; Donald Creighton, The Road to Confederation:The Emergence of Canada; Harold Innis, Essays in Canadian Economic History, Rand Dyck& Christopher Cochrane, Canadian Politics Critical Approaches; Stephen Brooks, Canadian Democracy, Oxford U Press, 2012. Michael Hart, A Trading Nation:Canadian Trade Policy from Confederation to Globalization, 2002. Mel Watkins and W. Easterbrook, Approaches to Canadian Economic History, 1969.Bob Rae,Whats’s Happened to Politics. Simon&Schuster, 2015; Richard Pound, Canadian Facts and Dates,Fitzhenry and Whiteside, 2005.

  Course Topics:

  1. Introduction and overview. The last Canadian federal election, issues , polls and media spin.The electoral system and the need for reform.The recent American election and its impact upon Canada.The economics of full employment and the impact of globalization and growing inequality.
  2. Geography and Economic history: the role of the staple in French Canada and British North America.Readings and sources: Mintz et al, Canada’s Politics, pp.1-51, pp.91-120; Finkel & Conrad, History of the Canadian Peoples vol.1 & 2; pp.1-208 in vol.2, pp. tba; Michael Hart, A Trading Nation:Canadian Trade Policy from Colonization to Globalization ch.1,2&3. Stanley Ryerson, Unequal Union:Confederation and the Roots of the Conflict in the Canadas 1815-1873; Stephen Clarkson, Does North America exist? Governing the continent after NAFTA and 9/11.Mel Watkins, A Staple Theory of Economic Growth, D.Drache, Harold Innis and Canadian Capitalist Development, and Claire Pentland, The Development of a Capitalistic Labour Market in Canada all in G.Laxer ed, Perspectives on Canadian Economic Development,Oxford U. Press, 1991. J.Bhagwati ,Protectionism; Arghi Emmanuel, Unequal Exchange:A study of the Imperialism of Trade.
  3. Indigenous peoples in pre European Canada. Indigenous Rights and Governance. The Riel rebellions Manitoba and Québec.
  4. The conquest and its legacy.Québec nationalism in twentieth and twenty-first century Canada.
  5. Democracy and the Liberal democratic state.The 1837 rebellions and the chartists. The roots of confederation and the Canadian constitution. Canadian political culture. Gender politics. Identity politics.
  6. The clash between labour and capital in the nineteenth and twentieth centuries and its impact upon Canadian politics and the political party system.
  7. The Canadian economy, the business cycle, free trade , globalization, unemployment, inequality and regional disparities.
  8. Canada as an urban nation. The growth of diversity. Canada’s treatment of its minorities. Québec nationalism and Canadian federalism.
  9. Canadian political culture and our place in global politics. The other North America.
  10. Political parties, interest groups and social movements. Democratic reform.
  11. The constitution and the Charter of Rights. The Federal system and the economics of federalism.
  12. The institutions of government: Parliament and the power of the Prime Minister.
  13. The judiciary and the courts.
  14. Summary and Review.

Essay Topics for the TermAssignment: Due the first Wednesday in November i.e. Nov. 6 . 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, Toronto Star, The Wall Street Journal. Use a manual of style and proper citation and include a reference to it in your bibliography.

 Essay Topics:
1.“The Quebec Charter of Values and the bill 21 on religious symbols  was rooted in the Quebec nationalist opposition to Canadian federalism and the nationalists’ rejection of multiculturalism.” 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 was simply a legitimate expression of the need to protect Quebec’s culture.

  1. 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.
  2. 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.
  3. 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?
  4. Discuss the power of the Prime Minister and his/her office. What checks if any need          to be placed on it?  What countervailing powers and influences are available in Canadian democracy?
  5. What ought to be Canada’s role in global affairs? Are we a peacemaker or a powder monkey ?
  6. 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. If NAFTA negotiations fail what ought our trade strategy be.
  7. 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.
  8. Discuss Canadian economic history from the point of view of staple development ?Does staple theory still have explanatory power in the twenty first century?
  9. Discuss the struggle for responsible democratic government in Canada and its roots in the 1837 rebellions, the Riel rebellion, the struggle of the suffragettes for women’s voting rights and the struggle of the indigenous people for their rights.
  10. What role have trade unions played in Canada’s political and economic development ? How have they enhanced democracy? What is their role in an increasingly globalized world economy?
  11. Discuss the evolution of indigenous rights and governance in Canada.
  12. Discuss the recent Canadian election. In the end what do you believe determined the outcome: policy differences, the image of the party leader; regional differences; ideology; economic circumstances or media manipulation? What can polling tell us about this? Does the election show us the need for reforming the electoral system?
  13. Discuss Canada and free trade in the context of globalization. How can we break free from excessive dependence on an uncertain American market? What differences has the new Trump administration made to the Canada U.S. relationship and how should Canada respond?
  14. Discuss gender issues in Canadian politics.
  15. Discuss the importance of environmental issues and climate change in Canadian politics.
  16. Discuss the housing crisis in Canada. What policies are necessary to deal with it?

END

 

Statistics Canada found the median net worth of Canadian families had risen … The report comes amid growing concern about widening income inequality in many .

 

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Pol. 610  Macro-economic policy-making after Keynes (under construction)

Concordia University

fall 2019

Prof. H. Chorney tel. 848 2424 ext.2106 

e mail harold.chorney@concordia.ca

Office hours tba

This course is an intensive examination of macro-economic policy-making and macro-economic theory in the light of recent and earlier global developments, including the crisis and fraud in global financial markets, the sub prime mortgage market crisis, the accompanying collapse in asset backed commercial paper and the Keynesian backed recovery now the longest recession free recovery in post war history, the original fear of the possibility of a double dip recession and the recrudescence of monetarism, deficit hysteria and laissez-faire in certain conservative circles.

It examines in close detail the problems of inflation,deflation,disinlation, public finance, unemployment, recession,depression, stagflation and economic growth and the financial markets in the light of the work of John Maynard Keynes and his interpreters, co-creators and supporters like Michal Kalecki , Joan Robinson, R.F.Kahn, J.K.Galbraith, Abba Lerner, Hyman Minsky, Robert Eisner, Paul Davidson on the one hand and Friedrich Von Hayek,Lionel Robbins, Milton Friedman, Harry Johnson, David Laidler, Robert Lucas, Gregory Mankiw and their followers on the other hand, as well as the neo-classical synthesis that draws from both schools.

In addition, we shall examine certain aspects of the contemporary political economy and explore the bursting bubble in high technology in 2000 and the 2007-09 collapse of the financial markets, as well as the current turbulence over the periodic collapse in world oil and commodity prices; aspects of globalization and their impact upon growth theory as well as,the election battles  of Barack Obama and Hillary Clinton’s and Bernie Sanders’ campaign for election against a Republican party that originally rejected Keynesian policy but now under Trump partly embraces aspects of it; the surprise victory of the economic nationalist Donald Trump and his anti regulation politics;the Canadian success of Justin Trudeau running on a moderate Keynesian platform and the challenges he faces in trying to win a second mandate;the  credit crisis, the revenge of the bond markets in Europe and the ECB and Greece and shifting attitudes in public opinion and policy towards Keynesian intervention and planning and away from strict laissez-faire.

From 2008 a modest New Deal style Keynesian Intervention was  introduced by the Obama administration including substantial investment in infrastructure and reregulation of the banking, financial, energy and transportation sectors. This had stabilized the slump that followed the financial crash . Growth resumed although it was not initially robust but it is now prolonged so that the current recovery is the longest in US post war history. It may now be threatened by global turbulence in trade relations, including a trade war with China initiated by President Trump and policy error from the Federal Reserve.  Some doubts still remain among skeptics  that the recession is truly over and a double dip can be avoided. Nevertheless there is considerable evidence that Keynes is back and that his theories once brought up to date by innovations like quantitative easing or temporarily monetizing some of the debt (an innovation that I first proposed in detail in a number of scholarly articles and monographs in the early 1980s and nineties, but whose roots lie in the work of John Maynard Keynes and his circle in the early 1930s (see  my papers on Keynes and the origins of quantitative easing and on the 75th anniversary of the General Theory posted  on this site in June 2011)  These innovations are clearly sound and are very effective in fighting recessions and reversing slumps. The dogma of the past twenty-five years that unregulated markets work best and are always rational is now partly eclipsed by both events and public opinion. The previous Canadian political party obsessive consensus on balanced budgets and fiscal prudence is now clearly anachronistic in the light of events in the global economy.

The course includes an intensive examination of the economic, political and social thought of Keynes, the relationship between Keynes and Bloomsbury, the way in which his ideas were received, interpreted and applied and the revolution and then counterrevolution in thinking which his work provoked. The clash between Keynesianism and Milton Friedman’s monetarism is explored in detail. An attempt is made to present the rudiments of an alternative theory of macro-economic performance that is more consistent with contemporary reality and incorporates insights from both schools. Presentation is through lectures and seminars. Extensive reading is expected of all students.

The severe recessions of the early 1980s and 1990s and the growing fear of disinflation becoming deflation in the first decades of the 21st century and the current shocks to global financial markets and national economies serve as the contemporary backdrop for the course. The controversies over the public sector debt and deficit,the use of surpluses, the neglect of infrastructure, full employment and the role of the state in modern capitalist society are thoroughly explored.

Texts and Basic readings and films. (All students should view the film The big short and several of the other documentary style films made about the crash. A good guide to them is available on Moyers and Company:Six films on the financial crisis Jan.27, 2012.( Text *)

John Maynard Keynes, The General Theory of Employment, Interest

and Money *

Hassan Bougrine and Mario Seccareccia  eds. Introducing macroeconomic analysis, Edmund Montgomery publications ltd. Toronto *

Robert Reich, Saving Capitalism for the Many Not the Few*

Richard Parker, John Kenneth Galbraith: his life, his economics , his politics. recommended reading selected chapters.

Athol Fitzgibbons, Keynes Vision * (several copies will be circulated among students )

Joseph Stiglitz, Freefall:Free Markets and the Sinking of theGlobal Economy *, N.Y. : W.W.Norton, 2010

Peter Clarke, Keynes:the Rise, Fall, and Return of the 20th Century’s Most Influential Economist,  *strongly recommended 

Richard Davenport Hines, Universal Man:the Seven Lives of John Maynard Keynes
Paul Krugman, End This Depression Now.
 N.Y.Berlin&London:Bloomsbury Press, 2009.  *

Ben Bernanke,The Courage to Act:A Memoir of a Crisis and its Aftermath

Frank Stilwell, Political Economy: The Contest of Economic Ideas(highly recommended for students with limited economics background)

David Wessel, In Fed We Trust        

Trust: Ben Bernanke’s War on the Great Panic, How the Federal Reserve Became the Fourth Branch of Government, New York:Random House, Crown Business, 2009.

Thomas Kuhn, The Structure of Scientific Revolutions (recommended )

Harold Chorney, The deficit papers *(available through me)

Haroldchorneypoliticaleconomist blog available on the internet

Haroldchorneyeconomist.com current web site and blog on internet begun

Scott Patterson, The Quants:How a New Breed of Math Whizzesconquered Wall street and Nearly destroyed It

Kevin Phillips, Bad

Money: Reckless Finance, Failed politics, and the Global Crisis of American Capitalism (Viking, 2008)

The Rotman School ofManagement, The Finance Crisis and Rescue:what went wrong?why? what lessons can be learned? U of Toronto Press, 2008

John Maynard Keynes, Essays in Persuasion (Reserve)

The Economic Consequences of the Peace

Treatise of Money, Vol 1 & vol 2(Reserve)

Henry M. Paulson, Jr.On the brink: Inside the Race to Stop the

Collapse of the Global Financial System, N.Y. Grand central publishing, Hachette, 2010

Charles Kindleberger, Manias,Panics and Crashes:A History of Financial Crises,London:Macmillan,1978

Scott Patterson, The Quants:How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, New York Crown business,2010.

Michael Lewis, The Big Short: Inside the Doomsday Machine, N.Y. :Norton, 2010.

Justin Fox, The myth of the rational market,A history of risk, reward and delusion on Wall  Street,N.Y. Harper, 2011.

Simon Johnson and James Kwak, 13 bankers: The Wall Street Takeover and the Next Financial Meltdown, New York :Vintage, 2011.

Gordon Brown, Beyond the crash:Overcoming the First Crisis

of Globalization, N.Y.,London, Toronto &Sidney, Free Press

The General Theory and After: Preparation Vol.13,C.W. (R)       The General Theory and After: Defense and Development Vol.14 C.W.

(R)

The General Theory and After: A Supplement Vol.29 ( R )

Robert Skidelsky, John Maynard Keynes, Vols 1 & 2 &3 (R )

 Robert Skidelsky, Keynes The Return of the Master *

Donald Moggridge,John Maynard Keynes: An Economist’s Biography (R )

Harold Chorney, Revisiting Deficit Hysteria in Labour/Le Travail Fall 2004 No.54, pp.245-258. * (available on internet) *

Harold Chorney, The Deficit and Debt Management: An Alternative to Monetarism * (Reserve)

Harold Chorney, After the Crash:Rediscovering Keynes and the Origins of Quantitative Easing paper presented to the Eastern Economics Association, New York,Feb. 27, 2011. (posted on this site June 3, 2011) *

Harold Chorney, John Maynard Keynes and the General Theory after 75 Years:Preface to a Presentation to the Canadian Economics Association Special Panel on” Reconsidering Keynes in a Time of Crisis” * (posted on this site June 3, 2011)

A.Fitzgibbons, Keynes’ Vision * (Reserve)

Brian Snowdon & Howard Vane eds. A Macroeconomics Reader (Reserve)

Timothy Lewis, In the long run We Are All Dead: The Canadian Turn to Fiscal Restraint 

Joseph Stiglitz, Making Globalization Work (Reserve)

Joseph Stiglitz, Globalization and its Discontents(Reserve)

Joseph Stiglitz, The Roaring Nineties(Reserve)

William D. Cohan, Money and Power:How Goldman Sachs Came to Rule the World

Dean Baker, Gerald Epstein and Robert Pollin, Globalization and Progressive Economic Policy (Reserve)

Doug Henwood, Wall Street (Reserve)

L.Randall Wray, Understanding Modern Money:The Key to Full Employment and Price Stability (Reserve)

James Macdonald, A free nation Deep in Debt (Reserve)

J.C.Gilbert, Keynes’s Impact on Monetary Economics

  Harry G.Johnson, Macroeconomic theory and monetary policy,

Chicago: Aldine publishing, 1972.

Axel Leijonhufvud,On Keynesian Economics and the Economics of

Keynes,London: Oxford University press, 1968.
Gilles Dostaler, Keynes et ses combats, Paris:Albin Michel, 2005. (Also available in a new English language edition)
G.Boismenu &G.Dostaler, eds. La Theorie générale et le keyésianisme, Montreal:ACFAS, 1987.

Other Key Works:

Hyman Minsky, John Maynard Keynes (N.Y.:McGraw Hill, 2008);                        Stabilizing an Unstable Economy(N.Y.:McGraw Hill, 2008);   Can it Happen again:Essays on Instability and Finance (Armonk, N.Y.: M.E.Sharpe, 1982);  R.Dimand, The Origins of the Keynesian Revolution;  Charles Hessian, John Maynard Keynes: A Personal Biography of the Man Who Revolutionized Capitalism and the Way We Live;  Roy Harrod,John Maynard Keynes;  A. Hansen, A Guide to Keynes;  Fausto Vicarelli, Keynes:The Instability of Capitalism;  Paul Davidson,Post Keynesian Macroeconomic Theory;  R.Allen & G.Rosenbluth,False Promises: The Failure Of Conservative Economics;  Lars Osberg & Pierre Fortin, Unnecessary Debts;  D.Drache & R.Boyer,States Against Markets: The Limits of Globalization;  Thomas Palley; Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism;  Adrian Ham, Treasury Rules: Recurrent Themes in British Economic Policy;  James Rock, ed. Debt and the Twin Deficits Debate;  Warren Young,Interpreting Mr. Keynes: The IS LM Enigma;  Peter Clarke, The Keynesian Revolution in the Making;  A. Carabelli, On Keynes’ Method;   J.A.Trevithick, Involuntary Unemploment:Macroeconomics From a Keynesian Perspective;  A.Asimakopulos, Keynes’ General Theory and Accumulation;  Victoria Chick, Macroeconomics after Keynes;  David Colander & Dewey Daane eds. The Art of Monetary Policy  Maurice Lamontagne, Business Cycles in Canada;  Frank Hahn, Money and Inflation;  William Greer, Ethics and Uncertainty:The Economics of John Maynard Keynes and Frank H. Knight;  Lydia & Maynard eds. Polly Hill&Richard Keynes;  Jan Marsh, Bloomsbury Women: Distinct Figures in Life and Art;  Quentin Bell, Virginia Woolf:A Biography;  Frances Spalding, Vanessa Bell;  Leon Edel ,Bloomsbury;  G.E.Moore, Principia Ethica ; Armand Van Dormael,Bretton Woods:Birth of a Monetary system;  Allan Meltzer, A History of the Federal Reserve ; Milton Friedman & Anna Schwartz,A Monetary History of the United States;  Milton Friedman,Capitalism and Freedom;  Lanny Ebenstein, Milton Friedman . Milton and Rose Friedman, Two Lucky People; James Tobin, Full Employment and Growth:Further Keynesian Essays on Policy.

Key Internet sites:  http://www.Statistics Canada; OECD; Eurostat; U.S. Bureau of Labour Statistics;Statistics Canada;The Federal Reserve,European Union;D.Henwood’s Site; New York TimesThe Financial Times.The Hayek list. The post-Keynesian list; The Wall Street Journal; haroldchorneyeconomist

Evaluation: Students will be expected to make a presentation to the seminar, , complete a major paper and write a test.They will also be expected to be regular , informed and active members of the seminar. To be informed obliges one to do significant reading and attend the seminar regularly.  Presentation and participation – 20 % ;Essay – 40 %; Test – 40   % .

Topics Outline:

  1. Introduction and Overview.Why study the work of Keynes ? Contemporary economic orthodoxy. New technology and the business cycle. Globalization. The return of intervention and planning post 9/11, the New Orleans effect.The crash and  financial crisis,the recovery its origins and prospects.Financial derivatives, the collapse of Wall Street and TARP.Canadian versus American conditions. Stimulus and deficit finance and deficit hysteria. The Republicans rediscover Hayek and Ayn Rand.
  2. The macro-economic problem; The role of markets; laissez-faire and rational markets versus   economic regulation;Paul Volker’s critique of the new regulatory framework; the world of classical economics.The monetarist counter-revolution.The economics of full employment. Galbraith’s notions of countervailing power, the technostructure, corporate planning and the new industrial state.  The post modern age and the political economy of globalization and its impact upon policy making.An outline of an alternative model of market behaviour.OPEC and the theory of cartels.
  3. Say’s law and the question of unemployment; the question of wage rigidity.The labour market clearing model. Wage flexibility, the natural rate of unemployment and inflation, the problem of aggregate demand.Aggregate supply.
  4. Keynes before the General Theory:1. Keynes the quantity theorist;the Marshallian roots of Keynes. Keynes and Bloomsbury; The Economic Consequences of the Peace;
  5. Keynes before the General Theory: 2 Keynes and G.E.Moore, The Tract and The Treatise; The Essay on Probability, The Economic Consequences of Mr.Churchill,   his liberal vision. Uncertainty.
  6. The Fundamental Equations. the Treatise on money and the problem of inflation and unemployment. The death of inflation and the return of deflation? Cartels and futures markets and inflation.
  7. The Great Depression, Keynes and the General Theory; Michal Kalecki .Uncertainty and the investment process; the role of speculation. the asset backed commercial paper crisis and the work of Hyman Minsky. The Canadian American reception of Keynes. The New Deal.
  8. The General Theory: towards a synthesis; Keynes versus

Hayek and the classics. Keynes and Shaw and Marx. The origins of quantitative easing. the Treasury view and bond market revenge.

  1. Neo-classical economics

and the bastardization of Keynes. Samuelson,Meade, Harrod, Timlin, Hicks and the IS -LM. The neo-classical synthesis and its vulnerabilities in the age of stagflation.

  1. Stagflation, the re-emergence of monetarism, the deficit and public finance, what to do with the surplus.Keynesian policy in a federal state.
  2. Supply-side and rational expectations theory. The natural rate hypothesis. The natural rate of inflation versus the natural rate of unemployment.
  3. Post -Keynesian theory and policy;New Keynesian theory; Canadian macro-economic policy since the war.Technology and economic growth. Can we banish the cycle ?
  4. Rediscovering full employment.A look again at an alternative model to current orthodoxy.Integrating the natural rate of inflation, OPEC cartelization and interest rate policy. Capital versus current accounting in public finance. The conversion of the Bush Republicans to Keynesian technique and its impact upon policy making in the US. The Obama Democrats and the 787 billion dollar deficit financed stimulus. The Republican counter-attack and the conversion of the party back to Tea party fiscal conservatism;The Return of deficit hysteria. The Stiglitz- Krugman critique. the need for a second stimulus.The bond market.Harper’s cautious conversion to Keynesian deficits.  The road ahead.The economics of fuller employment.

Tentative presentation schedule:

HRC  Sept 3. Tarp and the crash. Keynes in the era of globalization.The current crunch over falling oil prices and the Canadian dollar. policy responses.Deficit hysteria and stimulus.

Sept. 10   On Wealth and income inequality and unemployment;    .Aspects of the macro-economic problem.The role of markets laissez faire and monetarism Globalization and post modernism., high tech and the dual labour market.

. Sept.17.  Say’s Law. the labour market clearing model and NAIRU and aggregate demand versus aggregate supply.

Sept.24 Keynes before the General theory. hrc

October 1.The treatise on money, the fundamental equations the problem of inflation and unemployment.Asset speculation.  Minsky..

Oct.8 Hyman Minsky and Michel Kalecki. financial markets speculation a post Keynesian approach. hrc Keynes Shaw and Marx. Latin American approaches. Keynes and Bloomsbury. Keynes vision;

Oct.15. QE Deficits and public finance . Keynes, Shaw and Marx. Keynes and Bloomsbury. Keynes’s vision continued.

October 24. arc further notes on deficit finance on crises and crashes. Keynesian policy in a federal state.hrc the Keynesian multiplier

Oct.22.  Post capitalism ? Keynesian macro economics in a globalized world

Oct. 29      Euro zone crisis .Brexit, Reagan and Thatcher and rise of neoconservative economics.  World Bank, IMF and Bretton Woods. The European union and NAFTA.Trade and full employment. The world bank and IMF need for reform.

Nov.5 The EU, Brexit and Nafta and Keynesian economics. IS LM and the distortion of Keynes.

Nov.12 IS LM and its distortions. Rationl expectations and irrational results.

Nov. 19 Inequality and wealth distribution and globalization.

Nov. 26   ,Monetarism and quantitative easing.Neo classicals and classicals versus Keynes. Impact on public policy. International development and the World Bank and the IMF. Full  and fuller employment in a post-Keynesian world.

Dec. 3 Review

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Fed keeps interest rate at current level: Debate emerges within it over wisdom of not cutting the rate.

The Federal Reserve has recently announced its FOMC decision to not cut or raise interest rates. But a necessary debate is beginning to emerge among Fed decision takers about the nature of disinflationary and even perhaps deflationary trends in the economy. The header at the Minneapolis branch Neel Kashkari has published an essay examining the risk of deflationary and disinflationary pressure and the apparent weakness of inflationary expectations as once again CPI inflation has failed to meet the 2 % target. There is little evidence that it will anytime soon. Excluding energy prices it is 1.6 % .Supporting his argument is work done by St.Louis Fed branch leader  James Bullard who also is warning that inflationary forces are very weak and are likely to continue to be for some time. The dissenters need to be encouraged and the careful reassessment of natural rate arguments accelerated to ensure growth and low unemployment continue. The other central banks including the Bank of Canada should take note of this debate.

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Final two chosen Johnson and Hunt are the finalists Gove eliminated by two vote margin.

Boris Johnson. 160   Michael Gove. 75  Jeremy  Hunt  77.   Gove is eliminated and Johnson versus Hunt will be put to a vote of the Conservative party membership.

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