J Is for Junk Economics Quotes

“When the volume of debt has grown as large as national income or GDP, and when it bears an interest rate (typically 5%) above the economy’s rate of growth (typically just 1% to 2%), then all the growth in national income is taken by the creditors.”
― Michael Hudson, J Is for Junk Economics: A Guide to Reality in an Age of Deception

“Surprising as it may seem today, classical ideas of creating a free market were to be achieved by “socialist” reforms. Their common aim was to protect populations from having to pay prices that included a non-labor rent or financial tax to pay landlords and natural resource owners, monopolists and bondholders. The vested interests railed against public regulation and taxation along these lines. They opposed public ownership or even the taxation of land, natural monopolies and banking. They wanted to collect rent and interest, not make land, banking and infrastructure monopolies public in character.”
― Michael Hudson, J Is for Junk Economics: A Guide to Reality in an Age of Deception

“Neofeudalism: Much as warlords seized land in the Norman Conquest and levied rent on subject populations (starting with the Domesday Book, the great land census of England and Wales ordered by William the Conqueror), so today’s financialized mode of warfare uses debt leverage and foreclosure to pry away land, natural resources and economic infrastructure. The commons are privatized by bondholders and bankers, gaining control of government and shifting taxes onto labor and small-scale industry. Household accounts, corporate balance sheets and public budgets are earmarked increasingly to pay real estate rent, monopoly rent, interest and financial fees, and to bear the taxes shifted off rentier wealth. The rentier oligarchy makes itself into a hereditary aristocracy lording it over the population at large from gated communities that are the modern counterpart to medieval castles with their moats and parapets.”
― Michael Hudson, J IS FOR JUNK ECONOMICS: A Guide To Reality In An Age Of Deception

“Oligarchy: Rule by the few, usually the richest One Percent. In Aristotle’s political theory, oligarchy is the stage into which democracy evolves, and which ends up becoming a hereditary aristocracy. “The essence of oligarchic rule,” wrote George Orwell in Nineteen Eighty-Four, “is not father-to-son inheritance, but the persistence of a certain world-view and a certain way of life ... A ruling group is a ruling group so long as it can nominate its successors ... Who wields power is not important, provided that the hierarchical structure remains always the same.” The word “oligarchy” has been applied to Russia’s kleptocrats who obtained natural resources and other assets under Boris Yeltsin, most notoriously in the 1994-1996 “bank loans for shares” insider deals. It also applies to Latin American and other client oligarchies that concentrate wealth in the financial and propertied class at the top of the pyramid. However, U.S. media vocabulary defines any country as a democracy as long as it supports the Washington Consensus and U.S. diplomacy.”
― Michael Hudson, J IS FOR JUNK ECONOMICS: A Guide To Reality In An Age Of Deception

“Mathiness: British economic journalist John Kay defines mathiness as a “use of algebraic symbols
and quantitative data to give an appearance of scientific content to ideological preconceptions.”
Expressing an idea in mathematical symbols instead of straightforward literary terms helps legitimize
it in the minds of many people, thanks to a seeming similarity with natural science. In this respect
math is basically a form of numerical rhetoric.

“The American economist Paul Romer has recently
written of ‘mathiness,’ by analogy with ‘truthiness,’ a term coined by American talk show host
Stephen Colbert. Truthiness presents narratives which are not actually true, but consistent with the
world view of the person who spins the story. It is exemplified in rightwing fabrications about
European health systems – their death panels and forced euthanasia.”
Paul Samuelson, for instance, trivialized economics in terms that give the outward appearance of science by being expressed mathematically, even when its assumptions are purely hypothetical (and not all realistic)and there are no quantitative statistics to illustrate its categories.”
― Michael Hudson, J Is for Junk Economics: A Guide to Reality in an Age of Deception

“Economics ultimately is political economy. To claim that it is “disinterested” and scientific is to cover up its political motives. The entire history of political economy has centered on the conflict between reformers seeking to free society from rentiers – landlords, creditors and monopolists – and the reaction by these wealthy vested interests to maintain their grip on the status quo that favors them.”
― Michael Hudson, J Is for Junk Economics: A Guide to Reality in an Age of Deception

“Junk Economics is the cover story for all this. Claiming to be scientific, it is sponsored by financial interests to redistribute income and wealth upward, reversing the policies urged by the 19th-century classical economists and Progressive Era reformers. Instead of progressive taxation, this ideology advocates shifting taxes off the One Percent onto the 99 Percent.”
― Michael Hudson, J IS FOR JUNK ECONOMICS: A Guide To Reality In An Age Of Deception

“Free Trade: The stage of trade policy that followed mercantilist and protectionist success in raising first Britain and then the United States and Germany to industrial and financial dominance. Pulling up the ladder, these leading industrial nations demand that other countries open their markets to lead-nation exports and investment instead of protecting, subsidizing and modernizing their own industry and agriculture. Such “free trade” has become a euphemism for centralizing industrial, agricultural and financial power in the United States, while offshoring employment to the low-wage countries. Academic rationalization of this kind of globalization is based on short-term equilibrium theory that excludes consideration of how protectionist policies may support capital investment to raise productivity over time. Also ignored are “off balance sheet” costs borne by society to clean up environmental pollution”
― Michael Hudson, J IS FOR JUNK ECONOMICS: A Guide To Reality In An Age Of Deception

“Net wages: “It’s not what you make, but what you net” after paying the FIRE sector, basic utilities and taxes. The usual measure of disposable personal income (DPI) refers to how much employees take home after income-tax withholding (designed in part by Milton Friedman during World War II) and over 15% for FICA (Federal Insurance Contributions Act) to produce a budget surplus for Social Security and health care (half of which are paid by the employer). This forced saving is lent to the U.S. Treasury, enabling it to cut taxes on the higher income brackets. Also deducted from paychecks may be employee withholding for private health insurance and pensions. What is left is by no means freely available for discretionary spending. Wage earners have to pay a monthly financial and real estate “nut” off the top, headed by mortgage debt or rent to the landlord, plus credit card debt, student loans and other bank loans. Electricity, gas and phone bills must be paid, often by automatic bank transfer – and usually cable TV and Internet service as well. If these utility bills are not paid, banks increase the interest rate owed on credit card debt (typically to 29%). Not much is left to spend on goods and services after paying the FIRE sector and basic monopolies, so it is no wonder that markets are shrinking. (See Hudson Bubble Model later in this book.) A similar set of subtrahends occurs with net corporate cash flow (see ebitda). After paying interest and dividends – and using about half their revenue for stock buybacks – not much is left for capital investment in new plant and equipment, research or development to expand production.”
― Michael Hudson, J IS FOR JUNK ECONOMICS: A Guide To Reality In An Age Of Deception

“Instead of leading to the promised leisure economy of abundance by freeing society from the legacies of feudalism and the hereditary privileges of aristocracies, bankers and monopolists, today’s financial elites promote Junk Economics to increase their time-honored “free lunch” at society’s expense. The debt overhead they create for the economy at large was well identified a century ago as avoidable. But today’s financial class has idealized running into debt as the way for economies to get rich by inflating asset prices. Wages, profits and rents are being turned into a flow of interest payments that are growing exponentially. Meanwhile, national statistics divert attention away from how debt service is siphoning household and business income up to the top of the economic pyramid. The suffering caused by the resulting financial austerity is unnecessary, not a result of any natural law. This reversal of the classical ideal of a “free market” – a market free from land rent, monopoly rent and predatory finance – has been promoted with a new vocabulary of Orwellian Doublespeak.”
― Michael Hudson, J IS FOR JUNK ECONOMICS: A Guide To Reality In An Age Of Deception