Occupy Indy

This should be my last post providing an update about Occupy Indy. I say this because Occupy Indy has apparently disbanded. As predicted, their leaderless cabal of people of no more than 5 at a time which have been camped out by the Statehouse for the last couple weeks is gone as of this weekend. Also, their 'official' (as official as a website not agreed to by 100% consensus can be) website hasn't been updated with any new posts in 2 weeks.

http://occupyindy.blogspot.com/

So, no known physical presence, no known up-to-date online presence = failure of message and of leadership.

Or, maybe I'm wrong and the group has dwindled down to such a small number that they've gone 'underground'. Doesn't strike me as particularly effective either way. Though evidence suggests this may be the case as there is another website (message board) that does have some recent activity on it.

According to one post on the board (by "Sanni"), they are planning on meeting at the Statehouse at 3 today to talk about a recent arrest - they didn't elaborate at the time I read the post as to who was arrested or why....

Here's a smattering of other recent board posts under "Events/Action", which obviously aims to tackle the major issues of our times:

I am thinking about setting up a freestyle instrument playing session on friday at 8pm.I know a really talented electric guitar player who can come out and just freestyle play it will be amazing I will work on a flyer and try to get more people to come play different instruments. Any Thoughts on this?? - guest

Its the Saturday before Halloween so let's celebrate! Bring the kids, we'll have safe trick or treating and maybe some surprises! Join us every Saturday at 12 noon for Solidarity Saturdays to show support for the Occupation of Wall Street to Main Street USA.- RDK1974

we dont have to vote to plan events. We can plan whatever we want. We can vote on whether the whole group will support the event but we as individuals can plan whatever we want. So please keep planning once the plans come together then we can present the plans and make sure the group as a whole endorse them but we do not need there vote to plan something thats the point of working groups.................. to plan and organize things............... then put them up for a vote after they are planned and there is something to vote on....... - guest

A poetry slam is a competitive event where poets go up against each other in rounds or do head to head competitions. It's very organized and fun and awesome.
That said, unless someone is planning all of that, this is not a poetry slam. It is an open mic reading. Please fix this. It is misleading to people who may show up expecting a slam. - DJ Shiva

Some economic development thoughts

Indiana is going to have a new Gov. in about a year. Since I have worked in economic development for over 6 years now, I have noticed a couple related improvement points that I think would truly expand Indiana's economy. These are just personal thoughts and unrelated to any policies or representations made or being made by the IEDC leadership (ie. I'm not speaking for IEDC).

1. Merge the Indiana Economic Development Corporation with the State Dept. of Workforce Development.

Consider DWD's goals:

Aggressively empower Indiana workers to become a highly-skilled, competitive workforce.
(On a daily basis, we will continue to) Raise everyone (workforce) up a level.

Consider IEDC's goals

The IEDC focuses its efforts on growing and retaining businesses in Indiana and attracting new business to the State....leverages Indiana's central location, pro-business environment, low tax rate, and skilled workforce to attract and support new business investment, create new jobs, and keep Indiana competitive in the 21st Century economy.

In other words, each entity represents half of the labor market. DWD attempts to improve the labor supply, and the IEDC attempts to improve the labor demand? Why should we expect that two separate agencies with two separate leaderships and two separate strategies, etc., should be able to work at top efficiency toward the same goal of expanding and improving the overall labor market of the State? Both agencies have made increased efforts to communicate with each other over the past few years, but there in my opinion is going to exist a wall that one cannot pass without a merge. I would, however, put unemployment benefits and insurance onto a separate agency - to me, unemployment insurance does not develop the workforce. It ensures a part of the labor force the ability to survive difficult times but it is certainly not a State development tool.

2. IEDC/DWD/State should adopt, via legislation, a grant that was at one time pursued by Mitch Daniels before the recession hit full gear: Hoosier Hope Scholarships. Another similar option would be to follow Maine's example and provide the benefit as a tax credit: read

Questioning Ron Paul

Today on Meet the Press, Paul directly related the marked reduction in government spending from 1945 and the years after to a growing post-war economy.

While it is true private investment started increasing to higher levels in the latter part of the 40's, it is not at all clear that that is due to the spending cuts of the government from post-WWII. The US economy really didn't hit it's stride until the 1950s. And certainly, for the first 3 years immediately after the War, GDP growth was negative or stagnant. And even the 1950s there were three significant recessions suggesting that the growth that occurred in the 50s was is spurts. Indeed, the dramatic growth in living standards really didn't occur until the 60s.

So, take Dr. Paul's comments with a grain of salt as there are lots of economic changes that occurred between the end of the War and the early 50s that can explain the relative good times of the 1950s-1960s including a dramatically growing and changing manufacturing sector (and an increased move out of agriculture) and a booming suburban housing market. And particularly with regard to the housing boom, perhaps the biggest explanation is a post-Keynesian one: the rapid increase in the late 50s and onward of non-revolving credit used to buy durable goods (the stuff put in those new cookie cutter homes and the cars in the driveways). The crux of Paul's argument is that the reduced spending of the government from 1945 onward freed up resources for the private sector. But with the onset of heavy uses of credit, citizens didn't need present-day resources, they could borrow from future-day resources instead. And thus began our credit-heavy economy.

This point is key so I will restate: in our modern economy, we use uncertain future resources to finance growth, not present resources. To quote Minsky, this is why "stability is unstable."

US Double Exports in 5 years? (by end of 2015?)

Obama proposed we would.

He recently signed some free-trade agreements toward this end.

But I remember thinking at the time he mentioned this how incredibly unlikely doing that would be. The linked article above says the administration says we are well on our way? Well, 1.5 years later, and I would say we are not at all on our way. According to foreign trade figures from the US Census Bureau, we are on track to roughly hit a little over $2 trillion by the end of this year. The US exported about $1.6 trillion in 2009. So, after a year and a half, we can say exports have increased by about 12% during that time - and that is even giving Obama the benefit of the doubt since a good deal of that increase is just due to the slow overall economic recovery since 2009. We are, after all, essentially back to pre-recession levels. Given the continuing uncertainty of recovery, if Obama does get re-elected, he has really put himself in quite a spot and a goal that is unlikely to be realized.

But, if I'm proved wrong, I'll own up to it ;)

OWS update

In Indy:
What started as a rally of nearly 1,000 people last Saturday, is now represented by a trickle of people, with usually no more than 4 or 5 persons 'occupying' the front of the Statehouse at any one time. After one week, the only official statement from the ragtag group is:

"We at Occupy Indianapolis are gathering in FULL SUPPORT of the Occupy Wall Street movement in NYC."

The Indy group hasn't really received much (if any?) national notice. Part of the issue it seems to me is that this Indy group is much more tepid and cautious compared to groups in NY, Seattle, etc. I'm not saying that's good or bad, but I'm providing a reason as to their seemingly low media-draw. The other (big) problem is that this group seems to equate democracy with 'full consensus' (or near full, 9/10 or other variation), which is, on its face, a ridiculous idea. One dissenter can raise their arms in an "X" of objection and they are back to square one. This is not the way ideas happen. That's not even how a workable democracy happens, let alone a republic.

In NY:
Meanwhile, arrests, bottle throwing, and arguabe police brutality are happening elsewhere. Still no specific agreement on major topics are leading the movement, and the only major agreement seems to be one emotion: anger.

IMOP, the majority of that anger is being directed at banks, and indirectly or directly, at our government for enabling them with bailouts. This makes sense. As the financial crisis escalated our government spent or loaned millions of dollars to save the banks - their argument being that if they didn't, it would severely hurt Joe-average. The problem as I see it is that they did that and then Joe-average got hurt anyway, with persistently high unemployment and stagnant wages coupled with rising costs. Meanwhile, banks and other corporations see record profits.

Seems to me that OWS is having trouble converting that fact into a policy statement. I've already suggested a few specific areas / or statements they should focus on, but since they have no leadership and aren't really moving the ball forward, I suppose I'll keep throwing them more bones until one of them picks it up (and as I've said before, I have no interest in being a 'leader' of this local group at this point because I have too many concerns about their existing formation, and because I've got enough stuff on my plate, and because as I've stated before - hippies scare me).

So here's another:
How about we demand our economic and finance educators to teach, and our governments to focus on, things that enhance social well-being and standards of living other than GDP. One of the things I discuss in my macro class is the limitation of GDP which most textbooks usually just gloss over or ignore. GDP is suppose to measure all the stuff that's produced or equivalently spent or equivalently earned as income in the economy over a given time-frame.

The major issues with GDP from the output perspective is just because it's produced doesn't mean it's doing anybody any good (if it's sitting in a warehouse somewhere), and if it is produced it could be doing more harm than good (off-shore deep sea drilling that is left un-regulated).

From a spending perspective, as hopefully everyone has learned, not all spending of a given $1 is created equal, but GDP assumes it is because it assumes everything is priced perfectly. Unregulated housing markets, stock markets, oil markets etc. are prone to bubbles and bursts. And when coupled with 'too big to fail', mean eventual systematic failures when credit tightens up.

From an income perspective, GDP doesn't care if you are poor or rich. It doesn't care if income growth comes from profits or from workers wages. But most Americans care. Most Americans have some problems where failed CEO's or bailed out bankers earn multi-million dollar severance or bonuses, while workers are expected to work more and earn less.

So all this means that GDP, while a useful measure, should be taken with a grain of salt. Schools and governments need to incorporate other measures of human development (and they do exist) into their models - portray a more accurate picture to students, the media, and the world.

So OWS, there's another idea of substance. I urge you to spend less time playing koombaya and expressing Utopian generalities and more time discussing real things that we can change.

Good luck.

Why Can't We Be Friends: Post-Keynesians and Austrians

I've been thinking about something lately, and it has to do with what I believe to be a significant overlap in the theories of Post-keynesian economics and Austrian economics. They both have radically different prescriptions, but their rhetoric is very similar.

Austrians blame the monopoly power of the Federal Reserve fractional system for artificially keeping interest rates low, in the presence of economic uncertainty, causing mal-investment and credit bubbles that eventually crash.

Post-Keynesians blame the failure of the private markets for engaging in increasingly speculative and illegal behaviors, in the presence of economic uncertainty, at various times, causing unsustainable investment and credit bubbles that eventually crash.

Similar talk yet all I hear from post-Keynesians is how 'off base' the Austrians are about the endogeneity of credit money. In fact though, while money creation to fund a bubble may indeed be demand driven, the fact nevertheless remains that it is the Fed that accommodates that demand to maintain an interest rate target. Post-Keynesians tend to focus their efforts at regulating the private banking practices but don't spend much time thinking about how the Fed itself may need to be regulated.

Similar talk yet all I hear from the Austrians is almost a disturbing fervor to get the government out of everything - including money. Go on the gold standard, have a 100% reserve requirement, reduce systematic risks in our financial system thereby reducing the likelihood of mal-ivestement. In fact though, the private market is at least equal to be blamed for their own 'irrationality'. The Austrians, opposite the post-Keynesians, think that all can be solved by changing the nature of the Fed (or elimination of it's power altogether).

Point is, even though the two schools blame different things or focus on what may be considered divergent prescriptions, the meat of their analysis are markedly similar. The focus on uncertainty and on credit booms and busts seem to be really two sides of a similar coin. And by the way, there is no logic that suggests both couldn't be a little bit 'correct.' After all, the private market would likely be less likely to fail if the Fed didn't accommodate its failures, but focusing just on the Fed ignores the larger systematic problem of private market failures and excessive risk taking (or perhaps perversely, the Austrian prescription ensures too little risk be taken).

Ok, so maybe friendship is too much to ask for, but Post-Keynesians and Austrians, in the interest of being true pluralists, could at least learn from each other

Direction of Occupy Wall Street

What I hope the direction goes:

1. Toward holding mainstream media accountable for what they report. In my opinion, and this may be heavy-handed for some, but I believe media outlets should be required by law to cite specific allegations made in Op-Eds etc., and or to severely limit Op-Eds in general (not to be confused with opinions sent in by the public).

2. Toward a newer better kind of financial reform than what the Obama administration passed 2 years ago. What we need is to break-up big banks NOW, like we did Ma Bell. We need more strict financial leverage and capital requirements to prevent the systematic risks many financial institutions increased during the crisis. We need to get the Fed out of the business of fine-tuning (playing) with base interest rates. They think they do the economy good when in fact they just act to help the private sector hide bubble formations by accommodating risky loans. I am not in favor of full 'rule' requirements, but nor am I in favor of full 'discretion' which is what we have now. To this end I hope the movement focuses on the causes of the disease (academic economists and finance persons who ignored reality for decades in favor of training future generations the same faulty science).

3. We need to demand a different kind of Congress - one where rules of the House don't dominate the needs and demands of the people. This is the trickiest thing to change and something I at least think we need to have a real dialog about.

Where I hope the direction doesn't:

1. I hope it doesn't disintegrate into an Obama-coddling liberal (spending) love-fest. I hope it isn't just about class warfare or short-sighted robbing Trump to pay Bob the Builder. Playing games with tax policy is not helpful. I would love for the bad bankers etc. (tax the rich) to pay up for destroying the economy, but at some point we have to stop focusing on the past and move on toward preventing it in the future.

2. I hope it doesn't serve to bash capitalism beyond what is called for. The problem is not capitalism per se in relation to other economies. The problem is how we teach capitalism to our young. We teach everything in terms of 'profit-maximization' and short-sighted 'utility-maximization' and we hope that our students come out well-rounded persons for society? That just doesn't make sense. We could instead teach a kind of moral capitalism. Where the good of the individual is at least in part based on the good of society as a whole. Are humans inherently greedy, sure to a degree, but our teachings certainly don't do anything to temper that - it actually exacerbates it.

Right To Work

Members debated today at the Statehouse about this year's biggest topic: whether or not to make Indiana a 'right to work' state. My employer, being an economic development corporation and all, has taken a strong stance in favor of right to work. I've been somewhat agnostic on the issue until recently. Having done a little research on both the pro and con side, I have yet to find an argument that makes much sense on the con side.

I've personally spoken with site consultants who echo the sentiments of those in favor of right to work that Indiana is automatically taken off the 'potential' list for many business expansions simply because we are not right to work. Beyond that, there is what I believe to be hard evidence that Unions, having once been important and vital to our economy, have become too big and greedy. IE, the pendulum has swung too far.... Whether it's the GM stamping plant in Indy, or the collapse of Kokomo during the Great Recession where Union gardeners were paid $30 an hour to mow the lawn, the evidence shows that Unions have pushed too hard.

But even if you disagree, there is something un-American about forcing non-union employees to pay Union agency fees (if a contract exists). If I'm a worker, I shouldn't be forced to join a union (and that is true by law), but I also shouldn't be forced to pay union dues should I decide not to join the union. Part of the problem is that the collective bargaining agreements are typically broadly executed for the entire operations, not specific to just its union members. This whole right to work issue wouldn't be an issue if the benefits would just be provided to the Union members. The alternative of setting different wage and benefit programs for union vs. non-union employees is often costly which is why businesses shy away from it, but it would solve this RTW issue.

Beyond that though, it seems to me that RTW laws help keep unions more honest and more competitive as opposed to being secretive and conducting business in smokey rooms with union leaders. ...All because they have to try that much harder to get people to sign on to their Union to get the fee.

Having said all this, I for one do not trust the statistics that RTW States are that much more economically well off because of it than their non-RTW counterparts. Correlation does not equal causation and any study I've seen just hasn't adequately accounted for that complexity.

Anyway, I'm open to debate on this issue. But, really, I don't see how Unions have much of a leg to stand on this.

Why I Will Attend "Occupy Indianapolis"

1. Because I'm pretty sure the laid back cops of Indy will be unlikely to pepper-spray me.
2. Because I feel like I should at least add to a voice, despite that voice lacking a harmony of message, to indicate my disgust with the following:

a. How our political system has turned into a beauty contest of talking heads, who do a lot of talking from their asses. We need to get monetary influence out of congress sure, but that's unlikely to happen completely and that frankly is not the only problem. More than that, we need to completely remake congress - these 'rules' of the game are obviously broken. End the filibustering sound bites. I no longer want to vote, not because I ever thought my marginal vote added much, but because I used to think that it was a social obligation toward a social good. I now feel otherwise.

b. How our major media outlets have grown weak and complacent. You know there is something wrong with Jon Stewart provides more information than Fox News. I for one think that the main reason that many persons my age are turning to independent bloggers and certain foreign media is because ours have simply turned into an extension of our politics. See above.

c. How our mainstream economics has been allowed to be taught and function with assumptions that have no basis in reality. The collective 'we' have brainwashed generations that our markets operate smoothly, and when they don't it's just a brief thing that we can overcome with a little spending here or there. Ignore how crazy 'money' and 'finance' has gotten, ignore how certain banks and investment managers can cause a crisis and then profit from it (see a above as well). I for one don't think everything that happens on Wall St. is bad. Particularly since our policies reward those that have bad behavior. We need to blame the teachers of the faulty doctrine, not the followers.

I may be only person with an economics background in attendance. I like to think that this will add a level of diversity. I can't relate at all to hippies, in fact, they scare the shit out of me. But I can relate to the generally discontented per my points above. And it will be those with whom I will stand.

I only wish I could stay indefinitely... but then, I must earn a living... and like most Americans, I only care so much.... I think that says something about my weakness... and I think it says something about our country's

Occupy - if but for a time.