Defending Bernie-nomics and debunking the housing market

This week, I interview two guests on fairly different topics linked by the fact that they both give very effective debunkings of some mainstream economic thinking. First, I speak with JW Mason, economics professor at John Jay College in New York City, about the debate that has erupted around Bernie Sanders’ economic program. JW argues convincingly that the criticism of Sanders from mainstream liberal economists is about managing and keeping a lid on regular people’s expectations for the economy. The critics are effectively saying “this is the best we can do” even when millions are condemnded to poverty and shitty jobs. Be sure to check out his posts (1, 2 and 3), which are among the best on this debate.

Second, I speak with Nathan Tankus, a writer also based in New York City, on why housing is so unaffordable in large cities even amidst massive condo building booms. Nathan goes through the history of his Chelsea neighbourhood in NYC and its long process of gentrification as a way of drawing some conclusions about why the housing market is so screwed up. It turns out this market doesn’t work like the model described in Economics 101 textbooks. For further reading on the topic, Nathan suggests Bob Fitch (especially The Assassination of New York), Doug Henwood and Michael Hudson.

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Where is Canada’s mild Keynesian alternative?

You know something is up when the social democrats are trailing the centrist pundits on the economy. The space for a just a mild Keynesian alternative in Canada is wide open. Such an alternative, however, needs a political rather than merely a technocratic push.

Here is a fragment of a piece that just appeared in Canadian Business magazine and is typical of recent centrist commentary:

No one would counsel a return to unchecked spending. But the magical thinking around balanced budgets should stop. Canada’s debt is a sunk cost, not an anchor. The IMF now advises that countries with enough fiscal room to manoeuvre should think twice about reducing debt for the sake of it. If debt is manageable, economic growth should be the priority. An expanding economy will reduce the debt burden organically.

After establishing centrist credentials via the bogeyman of “unchecked spending”, the author quickly offers an argument to the left of all three major political parties, including the NDP. Debt reduction for its own sake is contrasted with restarting economic growth and there’s even an appearance of the now-common progressive appeal to the IMF as the voice of technocratic reason.

The left counterpart to this centrist line is the “Varoufakiste” argument of trying “to save capitalism from itself…to minimise the unnecessary human toll from crisis.” This argument concedes that today even the meager gains from growth that would go to the many are better than redistributive austerity that encourages stagnation amidst the “creative destruction” of social protections. It is a modest Keynesianism fit for neoliberal times. (more…)

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