Things to Read on the Evening of February 22, 2015

Must- and Shall-Reads:

• Raghu Rajan: “People want to live in a safe prosperous country where they enjoy freedom of thought and action, and where they can… choose their government. But how do countries ensure political freedom and economic prosperity? Why do the two seem to go together?… These are enormously important questions…”
• Menzie Chinn: “Paul Krugman notes Governor Walker’s advisers on economics at a recent meeting are Larry Kudlow, Stephen Moore and Arthur Laffer. These folks make appearances in the Econbrowser archives…”
• Barry Eichengreen*: Cambridge Society for Economic Pluralism: February 23rd, 5.30PM: Rethinking Central Banking

1. Jared Bernstein: A Few Quick Fed Points: “1) The sharply stronger dollar… pushes against Fed tightening…. 2) In their just released minutes, the Fed board clearly identified with the asymmetric risk…. 3) Some recent reports suggest a tension among FOMC members as to whether they should be data driven or just basically assume that inflationary pressures lurk around the next corner…. 4) Remember, nobody knows what the “natural rate of unemployment” is…. There you have four factors pointing towards holding rates steady at zero for the near term. Which factors point the other way? There’s the tightening job market, for sure, but see #4…”

2. Yanis Varoufakis: Confessions of an Erratic Marxist in the Midst of a Repugnant European Crisis: “Europe is experiencing a slump that differs substantially from a ‘normal’ capitalist recession, of the type that is overcome through a wage squeeze which helps restore profitability. This secular, long-term slide toward asymmetrical depression and monetary disintegration puts radicals in a terrible dilemma: Should we use this once-in-a-century capitalist crisis as an opportunity to campaign for the dismantling of the European Union, given the latter’s enthusiastic acquiescence to the neoliberal policies and creed? Or should we accept that the Left is not ready for radical change and campaign instead for stabilising European capitalism? This paper argues that, however unappetising the latter proposition may sound in the ears of the radical thinker, it is the Left’s historical duty, at this particular juncture, to stabilise capitalism; to save European capitalism from itself and from the inane handlers of the Eurozone’s inevitable crisis. Drawing on personal experiences and his own intellectual journey, the author explains why Marx must remain central to our analysis of capitalism but also why we should remain ‘erratic’ in our Marxism. Furthermore, the paper explains why a Marxist analysis of both European capitalism and of the Left’s current condition compels us to work towards a broad coalition, even with right-wingers, the purpose of which ought to be the resolution of the Eurozone crisis and the stabilisation of the European Union. In short, the paper suggests that radicals should, in the context of Europe’s unfolding calamity, work toward minimising the human toil, reinforcing Europe’s public institutions and, therefore, buying time and space in which to develop a genuinely humanist alternative.”

3. Simon Wren-Lewis: Greece: A Simple Macroeconomic gGuide: “In 2010 periphery Eurozone countries… [had] government deficits [that] were too high, and… economies [that] had become uncompetitive…. The deficits needed to be reduced. Under flexible exchange rates this could have been done with relatively little cost…. In a monetary union, this cannot happen, so a period of unemployment is inevitable to restore competitiveness. The key macroeconomic question is how quick adjustment should be…. Slow is much more efficient. So it makes sense for some institution like the IMF to provide loans to the government to allow it to eliminate deficits gradually…. When it came to Greece, the Eurozone made three key mistakes. 1) Too much austerity too quickly, violating the logic…. 2) There was only partial (and delayed) default on Greek government debt…. 3) Adjustment… required in an environment of Eurozone recession and deflation, caused by needless fiscal austerity in the non-periphery countries…. This Vox piece [by Lars P Feld, Christoph M Schmidt, Isabel Schnabel, Benjamin Weigert, Volker Wieland]… displays so much that is wrong with macro arguments coming out of the Eurozone at the moment… ignores the basic macro… denial of the importance of wage and price rigidities… the speed of adjustment matters, and… the article makes no attempt to address this central issue… a complete collapse in GDP, where over half of young people are unemployed… [was not] just par for the course, [but] rather than a function of the amount of austerity imposed… lenders are demanding Greece run significant primary surpluses now, and they need not make this demand. I could go on and on…”

Should Be Aware of:

• Jeet Heer: “When I was growing up, almost all gatherings of my extended clan would include buckets and buckets of Kentucky Fried Chicken…. Two focal points of embarrassment merged when I was 19 and went on a KFC run with a cousin I will call Amandeep. As our car glided into the parking lot, we saw a black family exiting the fast food joint. ‘Boy, black people sure love fried chicken,’ Amandeep muttered…. He clearly couldn’t see the irony of stereotyping black culture while heading for one of our regular KFC pick-ups…. I wish Amandeep’s racial theories were an anomaly, but… if blacks are near the bottom of the perceived racial hierarchy across North America, some enterprising immigrants find it useful to step on blacks as a way of climbing higher…. At the heart of this sort of immigrant racism is the desire to differentiate oneself from the group one could easily be identified with…. Dinesh D’Souza, the right-wing provocateur whose history of incendiary racial comments stretches to his undergraduate days in the early 1980s, provides an interesting case study for the intersection of immigrant upward mobility and racism…”
• Jeffrey Zeldman: Designing with Web Standards