From David Ruccio
Back in 2011, thousands of Chilean students participated in protests against the high cost of higher education. The most famous took place in front of La Moneda, the president’s palace, dancing to Michael Jackson’s “Thriller.”
According to the latest statistics from the OECD report, “Education at a Glance 2017,” the costs of a college education in Chile were still very high in 2015-16.
But they’re still not as high as in the United States, where it costs more to go to college than anywhere else in the world.
Of the 35 member countries in the OECD, the United States has the highest average tuition at both public and private colleges, for Bachelor’s as well as Master’s degrees.

Average public tuition in the United States for a Bachelor’s degree is $8,202 annually,

From David Ruccio

David Brooks should have left well enough alone.

Middle-class wage stagnation is the biggest economic fact driving American politics. Over the past many years, so the common argument goes, capitalism has developed structural flaws. Economic gains are not being shared fairly with the middle class. Wages have become decoupled from productivity. Even when the economy grows, everything goes to the rich.
But then Brooks spends the rest of his column trying to convince us that there aren’t any really structural flaws, that “the market is working more or less as it’s supposed to.”
Well, maybe it’s working “more or less as it’s supposed to” for those at the top. But it’s certainly not working for everyone else, for those who actually have to work for a living.
The

From David Ruccio

Back in June, Kim Hemphill, in her letter to the editor of the Washington Post, challenged pharmaceutical industry claims that it must charge high prices on lifesaving drugs to recover research and development costs.
The case detailed in the June 11 Business article “Max’s best hope costs $750,000” was yet another example of how the pharmaceutical industry continues to put profits above morals and humanity. . .
Research and development costs are a part of the business pharmaceutical companies are in and should have little, if any, bearing on the ultimate price of a drug. What they charge for these specialty drugs is profit-motivated price gouging, plain and simple.
The fact is, as is clear from the chart above, pharmaceutical prices (at the wholesale level) have

From David Ruccio

Apologists for mainstream economics (such as Noah Smith) like to claim that things are OK because good empirical research is crowding out bad theory. 
I have no doubt about the fact that the theory of mainstream economics has been bad. But is the empirical research any better?
Not, as I see it, in the academy, in the departments that are dominated by mainstream economics. But there is interesting empirical work going on elsewhere, including of all places in the International Monetary Fund (as I have noted before, e.g., here and here).
The latest, from Mai Dao, Mitali Das, Zsoka Koczan, and Weicheng Lian, documents two important facts: the decline in labor’s share of income—in both developed and developing economies—and the relationship between the fall in the labor

From David Ruccio
As I tell my students, nothing gets a mainstream economist frothing at the mouth quite like mentioning Karl Polanyi.
Or at least it used to, when mainstream economists actually knew who Polanyi was and grasped—however dismissively—what he wrote about the history of capitalism.
To his credit, Eric Hilt (pdf) appears to know something about the author of The Great Transformation and how his work influenced the new history of capitalism. And his review of ten recent books, including Edward Baptist’s The Half Has Never Been Told and Sven Beckert’s Empire of Cotton: A Global History, is not as dismissive as those of other mainstream economists, such as Alan L. Olmstead.
Much of the research of economic historians focuses on questions originating in economic theory, which

From David Ruccio
There are plenty of reasons to be interested in—and, even more, concerned about—Facebook. Many of them are raised in the recent review of Facebook-related books by John Lanchester [ht: db]: the fragmentation of the polity (via the targeting of posts), the dissemination of “fake news” (which played an important role in the 2016 U.S. presidential election), the undermining of other livelihoods (such as journalism and music), the level of surveillance of users (much more than any national government), the violation of anti-monopoly rules (via individualized pricing), and so on.
All of them are important—and they get at what the Facebook business model is all about:
For all the talk about connecting people, building community, and believing in people, Facebook is an

From David Ruccio

John Hatgioannides, Marika Karanassou, and Hector Sala are absolutely right: mainstream macroeconomists and policymakers never venture beyond the “holy trinity” of economic growth, inflation, and unemployment.* Everything else, including the distribution of income and wealth, is relegated to the fringes. 
This problem, while always serious, has been magnified in recent decades as inequality has grown to obscene levels, particularly in the United States. The labor share (the blue line in the chart above) has been falling since 1960 and, in the past decade and a half, it dropped an astounding 10.2 percent. Meanwhile, the share of income captured by the top 1 percent (the red line in the chart) has soared, rising from 10.5 percent in 1976 to 19.6 percent in 2014.
In

From David Ruccio

The new jobs report is out and, once again, little has changed—including wage growth (the blue line in the chart above), which for production and nonsupervisory workers was only 2.3 percent. 
That may not be good for workers but their employers and stock-market investors couldn’t be happier. The Dow Jones Industrial Average (the red line in the chart above) continues to soar, on the expectation of higher future profits.

Just in the first couple of hours of trading, the average was up more than 58 points.

From David Ruccio
“When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master—that’s all.”
Alice in Wonderland (pdf) is the key to understanding much of what is happening in the world today—especially the language of economics.
For example, we’re going to hear and read a great deal about tax reform in the days and weeks ahead. But, based on the proposals I’ve seen, nothing in the way of tax reform is being proposed.
The usual meaning of reform is that it involves changes for the better. Most of the so-called reforms that are being proposed by the Trump

From David Ruccio
Corporate duplicity, it seems, knows no bounds.
First, ExxonMobil misled the public about climate change for years, even as its research echoed the growing scientific consensus that global warming is real and caused by human activity. Then, while various states attorneys-general launched investigations of whether Exxon deceived shareholders and the public to protect its profits, the Wall Street Journal published 21 opinion pieces about current or potential Exxon investigations, all of which were critical of government entities investigating Exxon.
We now know, thanks to a study by two Harvard University researchers, Geoffrey Supran and Naomi Oreskes, that Exxon acknowledged that climate change is real and human-caused in 83 percent of peer-reviewed papers and 80

From David Ruccio
Corporate duplicity, it seems, knows no bounds.
First, ExxonMobil misled the public about climate change for years, even as its research echoed the growing scientific consensus that global warming is real and caused by human activity. Then, while various states attorneys-general launched investigations of whether Exxon deceived shareholders and the public to protect its profits, the Wall Street Journal published 21 opinion pieces about current or potential Exxon investigations, all of which were critical of government entities investigating Exxon.
We now know, thanks to a study by two Harvard University researchers, Geoffrey Supran and Naomi Oreskes, that Exxon acknowledged that climate change is real and human-caused in 83 percent of peer-reviewed papers and 80

From David Ruccio
The election and administration of Donald Trump have focused attention on the many symbols of racism and white supremacy that still exist across the United States. They’re a national disgrace. Fortunately, we’re also witnessing renewed efforts to dethrone Confederate monuments and other such symbols as part of a long-overdue campaign to rethink Americans’ history as a nation.
In economics, the problem is not monuments but the discipline itself. It’s the most disgraceful discipline in the academy. Therefore, we should dethrone ourselves. 

In the United States, thanks to the work of the Southern Poverty Law Center, we know there are over 700 monuments and statues to the Confederacy, as well as scores of public schools, counties and cities, and military bases named for

From David Ruccio
Last fall, just before the presidential election, I posted a report on the perilous condition of the American working-class.
Now, thanks to the Rand Corporation [ht: ja], we have a report on how terrible working conditions are in the United States.
Most Americans between the ages of 25 and 71 spend most of their available time in a given day, week, or year forced to have the freedom to sell their ability to work to a small group of employers. Thus, as the authors of the study note,
The characteristics of jobs and workplaces—including wages, hours worked, and benefits, as well as the physical demands and risk of injury, the pace of work, the degree of autonomy, prospects for advancement, and the social work environment, to name a few—are important determinants of

From David Ruccio

Russia is back in the news again in the United States, with the ongoing investigation of Russian interference in the U.S. presidential election as well as a growing set of links between a variety of figures (including Cabinet and family members) associated with Donald Trump and the regime of Vladimir Putin. 
This year is also the hundredth anniversary of the October Revolution, which sought to create the conditions for a transition to communism in the midst of a society characterized by various forms of feudalism, peasant communism, and capitalism. But we shouldn’t forget that, in addition, the Red Century has clearly left its mark on the political economy of the West, including the United States—both in the early years, when the “communist threat” undoubtedly led to

From David Ruccio

The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought — Rudi Dornbusch
Last week, a wide variety of U.S. media (including the Wall Street Journal and USA Today) marked what they considered to be the ten-year anniversary of the beginning of the global economic crisis—from which we still haven’t recovered. 
The event in question, which occurred on 9 August 2007, was the announcement by international banking group BNP Paribas that, because their fund managers could not calculate a reliable net asset value of three mutual funds, they were suspending redemptions.
But, as I explain to my students, “Beware the appearance of precision!” For example, the more numbers after the decimal point (2.9, 2.93, 2.926,

From David Ruccio

Over the years, I’ve reproduced and created many different charts representing the spectacular rise of inequality in the United States during the past four decades.
Here’s the latest—based on the work of Thomas Piketty, Emmanuel Saez, and Gabriel Zucman—which, according to David Leonhardt, “captures the rise in inequality better than any other chart or simple summary that I’ve seen.”  
I agree.
The chart shows the different rates of change in income between 1980 and 2014 for every point on the distribution. The brown line illustrates the change in the distribution of income in the 34 years before 1980, when those at the bottom saw larger growth than those at the top. In contrast, in the decades leading up to 2014, only those at the very top saw high levels of income

From David Ruccio
[ht: ja] describes the arrival of the first robots at Tenere Inc. in Dresser, Wisconsin:

The workers of the first shift had just finished their morning cigarettes and settled into place when one last car pulled into the factory parking lot, driving past an American flag and a “now hiring” sign. Out came two men, who opened up the trunk, and then out came four cardboard boxes labeled “fragile.”
“We’ve got the robots,” one of the men said.
They watched as a forklift hoisted the boxes into the air and followed the forklift into a building where a row of old mechanical presses shook the concrete floor. The forklift honked and carried the boxes past workers in steel-toed boots and earplugs. It rounded a bend and arrived at the other corner of the building, at the end of

From David Ruccio  
At one time, from the late-1970s until the last couple of years, Britain—or at least the British ruling class—was in love with neoliberalism.
Neoliberalism was the common sense of both major political parties—the Tories and Labor (plus, the Conservative coalition partner Liberal Democrats)—as well as most large corporations and wealthy individuals.

As Andy Beckett explains,  
In the early years of the 21st century, the inevitability of an ever more competitive, deregulated, internationally orientated market economy, to which both government and society were subordinate – a doctrine often called neoliberalism – was accepted right across the mainstream of British politics: from the Thatcherites who still dominated the Conservative party; to the increasingly

From David Ruccio

Narayana Kocherlakota, professor of economics at the University of Rochester and past president of the Federal Reserve Bank of Minneapolis, is right: in some ways, the 2007-08 was worse than the Great Depression.  
It certainly has been worse for average households in the United States. Real median household income (the red line in the chart above) is still below what it was in 2007—and lower still from what it was even earlier, in 1999.
But it hasn’t been a lost decade for the members of the top 1 percent. Their share of income (the blue line in the chart above), which was already an obscene 19 percent in 2007, is today even higher, at 19.6 percent.*
Still, Kocherlakota’s warning is appropriate:
financial crises and the responses to them can have highly persistent

From David Ruccio
Back in April, Raumplan and Cascina Cuccagna organized an exhibit for Milan Design Week titled “Capitalism is Over.” The basic argument was that, while capitalism may have worked in the first few decades of the postwar period, during the “Golden Age” of capitalism—when “the demand for products and everyday objects rose to never before attained summits”—since the late 1970s, growth has slowed down and “following the neoliberal theories, governments promoted policies that fostered the expansion of financial profits and lower wages.” Their example was Olivetti:
The historical Olivetti attitude to resilience and innovation suffered a fairly marked setback during the crises of the Seventies, which reduced investments in the production sector and initiated the financialized

From David Ruccio
Culture, it seems, is back on the agenda in economics. Thomas Piketty, in Capital in the Twenty-First Century, famously invoked the novels of Honoré de Balzac and Jane Austen because they dramatized the immobility of a nineteenth-century world where inequality guaranteed more inequality (which, of course, is where we’re heading again). Robert J. Shiller, past president of the American Economic Association, focused on “Narrative Economics” in his address at the January 2017 Allied Social Association meetings in Chicago. His basic argument was that popular narratives, “the stories and models people are talking about,” play an important role in economic fluctuations. And just the other day, Gary Saul Morson and Morton Schapiro—professor of the arts and humanities and

From David Ruccio
We’ve all heard it at one time or another.
Why is the price of gasoline so high? Mainstream economists respond, “it’s the market.” Or if you think you deserve a pay raise, the answer again is, “go get another offer and we’ll see if you’re worth it according to ‘the market’.”

And then there’s CEO pay, which last year was 271 times the average pay of workers. Ah, it’s what “the market” has determined the appropriate compensation to be.
“The market” explains everything—and, of course nothing.
Chris Dillow argues that invoking “the market” (e.g., to explain the gender disparities in pay for BBC broadcasters) serves to hide from view the role of power.
Talk of the “market” is therefore what Georg Lukacs called reification – the process whereby “a relation between people

From David Ruccio
There is perhaps no more cherished an idea within mainstream economics than that everyone benefits from free trade and, more generally, globalization. They represent the solution to the problem of scarcity for the world as a whole, much as free markets are celebrated as the best way of allocating scarce resources within nations. And any exceptions to free markets, whether national or international, need to be criticized and opposed at every turn.
That celebration of capitalist globalization, as Nikil Saval explains, has been the common sense that mainstream economists, both liberal and conservative, have adhered to and disseminated, in their research, teaching, and policy advice, for many decades.
Today, of course, that common sense has been challenged—during the

From David Ruccio

Sometimes you just have to sit back and admire capitalism’s ingenuity.
It’s able to make profits twice over. First, capitalists know that, when they keep workers’ wages down—even when there’s “full employment”—they can make spectacular profits. And, second, they can make additional profits by loaning money to those same workers, who are desperate to purchase goods and services and send their children to college, thereby financing the demand for the goods and services industrial capitalists need to sell to realize their profits.
Thus, as we can see in the chart at the top of the post, the amount of consumer credit is once again soaring to record highs. In relation to personal income, consumer credit fell after the Great Recession (to just under 20 percent in December

From David Ruccio

Mainstream economists have been taking quite a beating in recent years. They failed, in the first instance, with respect to the spectacular crash of 2007-08. Not only did they not predict the crash, they didn’t even include the possibility of such an event in their models. Nor, of course, did they have much to offer in terms of explanations of why it occurred or appropriate policies once it did happen.
More recently, the advice of mainstream economists has been questioned and subsequently ignored—for example, in the Brexit vote and the support for Donald Trump’s attacks on free trade during the U.S. presidential campaign. And, of course, mainstream economists’ commitment to free markets has been held responsible for delaying effective solutions to a wide variety of

From David Ruccio
The effects of climate change are, as we know, distributed unequally across locations. Therefore, the damages from climate change—in terms of agriculture, crime, coastal storms, energy, human mortality, and labor—are expected to increase world inequality, by generating a large transfer of value northward and westward from poor to rich countries.
What about within countries—specifically, the United States?
A new report, published in Science, predicts the United States will see its levels of economic inequality increase due to the uneven geographical effects of climate change—resulting in “the largest transfer of wealth from the poor to the rich in the country’s history,” according to Solomon Hsiang, the study’s lead author.  

What is new in the study is that, instead

From David Ruccio
As I argued a couple of days ago, recent events—such as Brexit, Donald Trump’s presidency, and the rise of Bernie Sanders and Jeremy Corbyn—have surprised many experts and shaken up the existing common sense. In short, they’ve rocked the neoliberal boat.
The question is, where does this leave us?
Thomas Edsall thinks it means we’ve reached the end of class-based politics. I’m not convinced.
Yes, the response to the problems with neoliberal globalization has challenged and cut across traditional party families and their positions on domestic matters, in the United States as in Western Europe. But that doesn’t mean the differences between the Left and the Right have disintegrated or that class politics have become irrelevant.
To take but one of Edsall’s examples, just

From David Ruccio
New technologies—automation, robotics, artificial intelligence—have created a specter of mass unemployment. But, as critical as I am of existing economic institutions, I don’t see that as the issue, at least at the macro level. The real problem is the distribution of the value that is produced with the assistance of the new technologies—in short, the specter of growing inequality.
David Autor and Anna Salomons (pdf) are the latest to attempt to answer the question about technology and employment in their contribution to the recent ECB Forum on Central Banking. Their empirical work leads to the conclusion that while “industry-level employment robustly falls as industry productivity rises. . .country-level employment generally grows as aggregate productivity rises.”
To

From David Ruccio

Sometimes you just have to sit back and admire capitalism’s ingenuity.
It’s able to make profits twice over. First, capitalists know that, when they keep workers’ wages down—even when there’s “full employment”—they can make spectacular profits. And, second, they can make additional profits by loaning money to those same workers, who are desperate to purchase goods and services and send their children to college, thereby financing the demand for the goods and services industrial capitalists need to sell to realize their profits.
Thus, as we can see in the chart at the top of the post, the amount of consumer credit is once again soaring to record highs. In relation to personal income, consumer credit fell after the Great Recession (to just under 20 percent in December

From David Ruccio
Obviously, recent events—such as Brexit, Donald Trump’s presidency, and the rise of Bernie Sanders and Jeremy Corbyn—have surprised many experts and shaken up the existing common sense. Some have therefore begun to make the case that an era has come to an end.
The problem, of course, is while the old may be dying, it’s not all clear the new can be born. And, as Antonio Gramsci warned during the previous world-shaking crisis, “in this interregnum morbid phenomena of the most varied kind come to pass.”
For Pankaj Mishra, it is the era of neoliberalism that has come to an end.
In this new reality, the rhetoric of the conservative right echoes that of the socialistic left as it tries to acknowledge the politically explosive problem of inequality. The leaders of Britain