I sent this letter to the Canberra Times this morning:
Two correspondents (CT, 17 Nov) raise concerns that are symptomatic of our modern condition. Laurie Quigg (Long waits) laments extremely long waits for services, and Chirs Ellis (Kicking toddlers) wonders what values lead the ACT to spend millions on football while firing five teachers who support children with special needs.
Laurie wonders if anyone can help. Yes, we can help ourselves, by changing our voting habits.
[I have been focussing on developing some models of how money works, after the manner of Steve Keen in The Roving Cavaliers of Debt. Until I get through that, here’s a vignette.]
One John Poole has been conducting a personal defence of “capitalism” in the Letters section of the Canberra Times. His argument is basically that markets always sort things out, that a system with markets is, necessarily, “capitalism”, and that anyone who disagrees is a socialist. Here is my own letter in response.
I have two manuscripts in the works. See the image in the left column, or the menu tag Books and Downloads at the top of the site.
Also you will notice I have changed the visual Theme of the site, and rejigged some things. Is it readable, pleasant, clear?
[This post is addressed to fringe economists and others who have broken with ever-more dysfunctional mainstream neoclassical economics, but who still search for a replacement paradigm.]
[2 Aug: Posted on Real-World Economics Review Blog.]
The need for a new conception of economics is widely acknowledged in the wake of the global financial crisis[1], at least outside of diehard neoclassical circles. However a common perception seems to be that no adequate and coherent general conception is in sight, though many loosely related or unrelated heterodoxies vie for attention, as noted by the Editor of Real World Economic Review blog. I argue here that when the subject is approached from the point of view of dynamical systems a broad new framework becomes evident. Furthermore, once the nature of the beast is identified, some fundamental conclusions can immediately be drawn.
[A related article was posted on On Line Opinion 2 Aug 2010.]
The smoke screen obscuring the real obstacles to reducing Australias greenhouse gas emissions is unlikely to be dissipated by the imminent election campaign, whatever the global warming policies the Gillard Government.
Extracts from Economia.
The writing of Economia was essentially completed in 2003. It was obvious then that the global financial system must come to crisis within a few years.
The Global Financial Crisis, serious as it is, is only part of a deeper crisis reaching to the core of how modern economies are conceived and managed. The problem is not just that financial markets have acquired excessive power and are greedy, corrupt, unstable and destructive. It is not even that the GFC has not yet shown us its worst, as Steven Keen argues (Declaring victory at half time). It is that mainstream economists have fundamentally mis-identified the nature of the beast they are dealing with.
You can now download the book Economia as a pdf file.
See the tag at the top of the page.
Update Dec 2015. This version does not reflect the way modern banks work. A new version is posted here.
[Update 18 March 2010: this is the text-book explanation, but Steve Keen argues persuasively that this is only a minor part of the modern money creation process, most of which is beyond the control of central banks. See Kevin Cox’s comment below, including his proposed remedy.]
A little-known or poorly understood fact about our banking system is that banks create money. Out of nothing.
That in itself need not be a bad thing. We need a medium of exchange, which is the basic function of money, and the money has to come from somewhere. However the creation of new money is buried within our fractional-reserve system of banking. This makes it invisible to most people. Also, banks create the money in the course of making loans, which means they can charge interest on money they create at essentially no cost to themselves. That is a guarantee of unearned profits, even apart from the myriad fees banks charge for other services.
Because the fact and the process are obscure, I post here an explanation of how it comes about.
It is almost universally believed that reducing Australia�s carbon emissions will be very expensive and therefore our economy will be disadvantaged if our emission reductions get ahead of the rest of the world, but it is not true.
The way global warming and our efforts to stop it have been discussed in this critical Parliamentary week tells a sorry tale of Australian societys scientific illiteracy, myopia and psychological denial.
According to global warming sceptics and denialists, climate scientists are variously really stupid, prone to irrational herd behaviour, egotists pushing barrows, trying to feather their nests, or all of the above. According to the media they are apparently nerdy pains whose gloomy message is easily trumped by serious, reality-based political dramas. According to politicians they are another interest group to be placated. According to the Prime Minister they are radical greens.
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