Monday, June 6, 2011

Political Economy 101

When he's right, he's right:
everything we’re seeing makes sense if you think of the Right as representing the interests of rentiers, of creditors who have claims from the past — bonds, loans, cash — as opposed to people actually trying to make a living through producing stuff. Deflation is hell for workers and business owners, but it’s heaven for creditors. ... thinking of what’s happening as the rule of rentiers, who are getting their interests served at the expense of the real economy, helps make sense of the situation.
Or, almost right. Because it isn't just the Right...

EDIT: It's interesting to note how reflexively DeLong shied away from this thought when it occurred to him a while back, with the ludicrous-on-its-face argument that only "coupon-clippers with their portfolios 100% in government bonds" could have an interest in deflation. The existence of rentiers as a distinct social class is an unthought in respectable circles. Which shows how impressively disrespectable Krugman is becoming.


  1. dictateursanguinaireJune 6, 2011 at 2:25 PM

    been surreptitiously reading your blog for a few months now (i'm a second year undergrad phil/polisci student) and just wanted to say that your political economy insights are trenchant and your blog is great (appreciate your CT comments as well.) any supplementary reading you'd suggest to go along with a formal econ 101 class/attendant dogma?

  2. Ha! DeLong ;-) He's now even lecturing how a real social democrat must think. Me thinks Jim is right on the money. My comment:

    "Jim, as almost always your post is right on the money! DeLong is a mutant neoliberal robot who is programmed to confuse real social democrats by occasionally pretending to be a social democrat and thus blurring the definition of what constitutes social democratic thinking.

    DeLong likes to play on his imaginary superior knowledge of the history of economics. Now in regard to the need of roughly balanced budget over the business cycle or the long run (how long is this run?) my simple answer is: with notably rare exceptions the federal government of the United States of America always run a deficit.

    And this happened for good economic reasons. One of this notably rare exceptions happened on the watch of Brad DeLong — which he is never tired to remind us — and which was followed by a recession very typical for any of these rare exceptions because the private sector was starved of financial assets by the thrifty Brad DeLong. This guy is only a living joke."

  3. No, it is not just the Right.

    It is worth recalling how Krugman plays his own part in this game, in particular his insistence on arguing within the frame of "cyclic" v. "structural" unemployment. If rentier interests are keeping unemployment high, then the problem is very much structural, because rents are tied to the very essence of economic structure, and stimulus spending, logically, should have been targeted at changing the economic structure, which created financial crisis and high unemployment.

    Of course, such an economics would rip away the mask of technocracy. Ben Bernanke wouldn't be the expert on the Great Depression and the fine fellow, who hired Krugman at Princeton; he would be the reactionary conservative, who devoutly wished the New Deal had never happened, and who was hired, because he could be counted on to do whatever it took to preserve the predatory financial system.

    The fight over the size and shape of the Federal stimulus would not have been a boring round of log-rolling in tax-cuts and eliminating birth control; it would have revealed the deep divisions of interest between predator and prey, parasite and host, aka the rest-of-us.

    My favorite rant this week has been Ian Welsh's The Depression and the future. In his brief essay, Mr. Welsh ties the finance rentier to the petro-economy rentier, in a way that I found quite persuasive, though he does not extend it, as I might have wished, to encompass the politics of political extortion. Nothing makes the case for rentier interests like the threat of structural collapse, and it is no coincidence that the threat of structural breakdown is now trotted out regularly in the Punch & Judy show, which is politics as presented on cable-news.

  4. good stuff by you at the de-pugsley site

    on the emergence of the rentier bloc

    forget about it

    the corporations have their own reasons for
    squelching price level management as an overt macronautic tool


  5. i see the great whig wilder desports himself here

    good portent indeed

  6. Yo Paine.

    Good to see you here. Did/do you comment at Mark Thoma's place? Seems to me that's where I first encountered your inimitable style.

    Hate to make promises, but -- got a couple posts coming up here, you may like.

  7. dictateuresanguinaire,

    Great question. I'll put up a recommended reading list in the next couple days, ojala.

  8. jw
    yes i comment at mt frequently
    and blog at

    btw i have huge problems commenting at places
    with flim flam traps even the most common plcae

    i hope this gets up here
    not sure how i did it last time

    btw i saw your comment at delongs latest fudge bath

    my reaction where did corporate rates end up ???

    in fact i don't care
    i'm a veteran no string push modeler