Michael G. Heller, author of Capitalism, Institutions, and Economic Development, has taught Southeast Asian and Latin American political economy in the UK, Argentina, and Australia.
Michael G. Heller, author of Capitalism, Institutions, and Economic Development, has taught Southeast Asian and Latin American political economy in the UK, Argentina, and Australia.
Schumpeter’s obituary of Keynes became news during May 2013, for all the wrong reasons. Schumpeter had said that Keynes “was childless”, and…
Can a mass delusion be instrumentally rational? No. But it could be rational to strategically profit from other people’s stubborn delusion t…
On average, higher debt correlates with lower economic growth. This is what studies by the IMF, the Bank for International Settlements, and …
What sort of crisis is the West living through now? Has the response to the crisis been correct? The answer to the second question depends h…
I have a theory, though lack statistical evidence to support it, that the Third Way trope is a phenomenon that recurs every three years, wit…
Michael: This is an excellent, timely, and balanced article in my view. Only one thing was not made explicit - the private sector will need government help in order to respond to the deleveraging cycle. Structural adjustment (removing obstacles to growth) inevitably has this (very tough) institutional dimension. But your discussion will sharpen minds among reluctant reformers and deluded money magicians. It is good to have contested facts confirmed -- the debt was misused; exit from excessive debt inevitably mean less demand, less growth, and more savings; nothing will be achieved by deleveraging alone; there are big risks and limits to what central banks can do; and burden-sharing solutions require real compromise.
Ralph, you must be studying a different economics - the one I call magic wand economics or flushing plumber economics, in which new purchasing power for increased consumption is literally “created out of nothing”, and, allegedly, “for nothing” (free lunches). In a situation like the present one, real capitalist economics is not against credit at all. But it should be passive credit at market-restrained competitive rates for entrepreneurial purchasing power, i.e. for investment in innovation, and credit for putting factors of production to new uses in new combinations. You activists can paper over an innovation-production supply blockage by compensating consumers with ‘monetary base’ for a week or two, but not for a month or a year (not unless you want to risk destroying production potentials for a decade or more).
Reckless Caution: The Stress and Strain of Sovereign Debt
Ralph Musgrave: Michael, You argue, as I understand you, that given excess unemployment, money or credit should be created ONLY to enable entrepreneurs to “invest in innovation”. The first problem there is that in a …
Reckless Caution: The Stress and Strain of Sovereign Debt
Ralph Musgrave: Michael Heller’s article is complete nonsense. I cannot possibly deal with all the mistakes, so I’ll concentrate on one fallacy he trots out, which debt-phobes repeat ad nausiam. It’s his claim that “…