August 17, 2020

Fake America great again

Comment on Barkley Rosser on ‘The End Of Special Fiscal Stimulus’


Barkley Rosser reports on the actual state of the economy: “Dems indicated that they were willing to compromise on many issues. To pick a big symbolic one has to do with the total spending level. Going into this the Dems were pushing $3+ trillion and the GOP was pushing $1 trillion. Gosh, looks like $ 2 trillion would be an obvious compromise, and the Dems have publicly indicated they would be willing to go to that, but, no, … As it is, Meadows left town and the Senate has gone on leave until after Labor Day. No deal.”

This is Barkley Rosser’s usual newspaper digest. Not one small crumb of real economic analysis. That is regrettable because what unfolds before our eyes is the spectacular finale of the so-called free-market economy.

In the elementary production-consumption economy with a state sector, macroeconomic profit comes ultimately from the household and state sector’s deficit-spending/money-creation, i.e. Qm≡(G−T)−Sm.#1

For Sm=0 this boils down to (G−T)=Qm, i.e. public deficit equals private profit. The profit of the monetary economy is in this analytical limiting case produced entirely by the state. This case is at odds with the popular ideas of a free-market economy and Laissez-faire but it is practically the new normal.

The greater part of the profit in the United States is actually produced by the state. The US economy hangs for a long time already on the state ventilator for its survival. With the current boost of deficit-spending, the situation becomes even more extreme.

The policy of deficit-spending/money-creation is ultimately a means of postponing the breakdown of the US economy. Deficit-spending/money-creation is a free lunch for the Oligarchy. Financial wealth grows in lockstep with public debt. While employment and wage income go down, Mr. Trump’s current policy will blow up macroeconomic profit to hitherto unimaginable proportions. This profit will nearly 100 percent be state-produced.

Say, economists, what exactly has always been the strong point of Laissez-faire capitalism?

Egmont Kakarot-Handtke

#1 Wikipedia, economics, scientific knowledge, or political agenda pushing?

REPLY to Barkley Rosser Aug 18

You say: “Second you have the oddity that while you claim profits are tied to budget deficits, why is it that it is pro-business Republicans who are now opposing larger deficits thereby endangering business profits?”

Economics is about how the economy works and NOT about how the brains of GOP Senators work.

Btw. this question has already been dealt with. See
Stephanie Kelton and the self-destructive stupidity of the super-rich

REPLY to Barkley Rosser

You say: “Yo are one of those caricatures of an economist who when confronted with facts that do not coincide with his theory declare that the facts are either wrong or irrelevant because the theory is true.”

The voting behavior of GOP Senators is NOT part of any economic theory but your re-telling of what you have read in the newspapers, which is obviously your main intellectual occupation.

What I told you is that profit in the US economy is nowadays entirely produced by the state and that the exploding deficit-spending will explode profit within a short time span.

This perverse correlation of high unemployment and high state-produced profit is a bit at odds with the popular idea of a free-market economy and should, therefore, provoke the interest of the professional economist.

I realize that it is impossible to get you above the newspaper level.

Anyway, I take the opportunity and, in order to honor myself as the author of the Axiomatic Profit Law, I call the correlation of exploding unemployment, exploding public debt, and exploding profit Handtke’s Law of Exitus Capitalism. It replaces the Law of the Tendency of the Rate of Profit to Fall.

REPLY to Barkley Rosser Aug 19

You say: “Sorry, Egmont, but your claim tha profit is produced by the state is simply wrong, so wrong that it is not even wrong, as they say.”

What “they” say is absolutely irrelevant, because it is known by now that “they” are scientifically incompetent. Economics is a failed science. That is a fact.

The macroeconomic Profit Law for a closed economy is given by Qm≡Yd+(I−Sm)+(G−T) and this implies Qm=(G−T), i.e. macroeconomic profit is equal to the state’s budget deficit.#1 In order that there is a surplus in the business sector, there must be a deficit in the state sector. Balances always add up to zero.

So, I am right and you and “they”, i.e. the rest of American academics, are wrong. This is elementary algebra, the proof is in the public domain, and you can do NOTHING against it.

#1 Wikipedia, economics, scientific knowledge, or political agenda pushing?