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On the blogs

How To And How Not To Attack Marx's Economics -- Robert Vienneau thoughtful account of various topics on Marxist scholarship. There is also this post by Lord Keynes on the LTV, which he has been discussing more lately. My views are closer to Robert's point of view.

Germany's trade surplus is a problem -- New blogger Ben Bernanke continues with the savings glut theme, and in this case he is right. Germany surpluses hurt the rest of Europe. Germany should spend more and allow the rest of Europe to enjoy less austerity.

The Inbred Bernanke-Summers Debate On Secular Stagnation -- Steve Keen's take on the debate (mine here), which is not on the substance of the debate though (he will post more later). The problem for Steve is that they all are New Keynesians, I think. Not sure if that is a problem. Don't get me wrong pluralism is important, but not sure how an Austrian perspective, for  example, would help clarify matters.

Big data is watching you -- by Lambert Strether, via Yves Smith's Naked Capitalism. I was teaching on efficiency wages last week and told students about how much firms spend on monitoring. I remembered David Gordon's Fat and Mean, that had something to say about that.

Sir John and Maynard Would Have Rejected the IS-LM Framework for Conducting Macroeconomic Analysis -- Mario Seccareccia on the ISLM. Note that Hicks recantation is not particularly good. And regarding Mario's point about investment not being sensitive to the rate of interest (a point made here several times; it's the accelerator!) that does not mean that the IS is vertical. Other spending components might be affected by the rate of interest (e.g. consumption). I would say the problem with modern mainstream macro is that it abandoned (other than for teaching undergrads) the old ISLM. And also, everybody forgets that they not only abandoned the LM for the MP (which Mario notes, and that's just a flat LM), but that they abandoned the multiplier and the IS is based on an intertemporal Ramsey model (that's the problem; the return of Say's Law). On my views on the ISLM go here.

A Stagnating Minimum Wage has Left Low-Wage Workers Facing a Longer Climb to Reach The Middle Class -- EPI's snapshot by David Cooper. Title is self-explanatory. Topic discussed here recently.

PS: I noted that Bernanke, a Republican, is at the Brookings Institution and not at the American Enterprise Institute. I was under the impression, maybe incorrect, that Democrats went to the Brookings, a center-left think tank, and Republicans to the AEI, a center right one. Something has changed if a moderate Republican can make it into the AEI.


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There will be a lot of postmortems for the European Union (EU) after Brexit. Many will suggest that this was a victory against the neoliberal policies of the European Union. See, for example, the first three paragraphs of Paul Mason's column here. And it is true, large contingents of working class people, that have suffered with 'free-market' economics, voted for leaving the union. The union, rightly or wrongly, has been seen as undemocratic and responsible for the economics woes of Europe.

The problem is that while it is true that the EU leaders have been part of the problem and have pursued the neoliberal policies within the framework of the union, sometimes with treaties like the Fiscal Compact, it is far from clear that Brexit and the possible demise of the union, if the fever spreads to France, Germany and other countries with their populations demanding their own referenda, will lead to the abandonment of neoliberal policies. Aust…

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So besides the coup in Brazil (which was all but confirmed by the last revelations, if you had any doubts), and the electoral victory of Macri in Argentina, the crisis in Venezuela is reaching a critical level, and it would not be surprising if the Maduro administration is recalled, even though right now the referendum is not scheduled yet.

The economy in Venezuela has collapsed (GDP has fallen by about 14% or so in the last two years), inflation has accelerated (to three digit levels; 450% or so according to the IMF), there are shortages of essential goods, recurrent energy blackouts, and all of these aggravated by persistent violence. Contrary to what the press suggests, these events are not new or specific to left of center governments. Similar events occurred in the late 1980s, in the infamous Caracazo, when the fall in oil prices caused an external crisis, inflation, and food shortages, which eventually, after the announcement of a neoliberal economic package that included the i…