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Khizr Khan is a Gold Star father best known for his iconic speech at the 2016 Democratic National Convention honoring his late son, Humayan Khan, a U.S. Army captain killed in the Iraq War. He joins David to discuss what led him from poverty in Pakistan to the pursuit of law in the United States, the experiences that informed his belief in American exceptionalism, his son's military service and the day he died, and the impact Donald Trump's rhetoric towards Muslims and immigrants has both domestically and globally.
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This morning, Chris Sabatini at Chatham House moderated a Zoom panel entitled, "How Prepared is Venezuela's Healthcare System for Covid-19." The participants were:José Miguel Vivanco, Executive Director, Americas Division, Human Rights WatchTamara Taraciuk Broner, Acting Deputy Director, Americas Division, Human Rights WatchDr Kathleen Page, Associate Professor of Medicine, John Hopkins UniversityThe answer to the panel's title question is, as anyone paying even passing attention would accurately guess, emphatically no. There is no good news. There is no silver lining. A massively corrupt and uncaring dictatorship is letting people die and lying about everything. Doctors are washing their hands from the drips of air-conditioning units before doing surgery. Many hospitals don't have potable water. Aid is tricky and the gasoline shortage makes it hard to reach the interior of the country. We have no idea how many people have the virus and how many people have died from it. Repression makes it hard to find out anything. BTW, I had never heard the phrase "verbal autopsy" before. That's where we are in terms of data collection, down to trying to get information on demand for funeral homes, but even then people are afraid to talk openly. It's an onslaught of bad, but Covid-19 has distracted the world from the disaster.What can the international community do? We need a truly multilateral effort with a common position. José Miguel Vivanco lamented the Trump's administration embrace of militaristic rhetoric, which makes things worse. The UN is barely paying attention.John Hopkins worked with Human Rights Watch before Covid-19, and already last year warned that Venezuela was in a dire healthcare crisis.Anyway, it was a really interesting discussion, but one that left me sad and frustrated. Subscribe in a reader

I recommend Brian Winter's article in Foreign Affairs on the durability of Jair Bolsonaro's popularity, which in fact just went up. He zeroes in on the country's interior:The interiorzão is not defined on any map, but it generally refers to a belt of land sagging around the country's geographic midsection, from the state of Mato Grosso do Sul in the west through Goiás, Minas Gerais, and parts of Bahia in the east. This is a Brazil of soy farms and cattle ranches, oversize Ford pickup trucks, air-conditioned shopping malls, and all-you-can-eat steakhouses. Some of it is old, but much of it was erected only in the last 30 years or so. Instead of Afro-Catholic syncretism and bossa nova, it boasts evangelical megachurches and sertanejo, a kind of tropicalized country music sung by barrel-chested men in cowboy hats and Wrangler jeans.It is Brazil's equivalent to flyover country, parts that are not tourist destinations and do not correspond to the foreigner's view of the country as a whole. As with Trump in the U.S., it constitutes a core of support that's not likely to fall away.I can imagine a similar worldview holding there and here. What I consider to be destroying institutions, Bolsonaro/Trump supporters see "getting things done." What I see as unacceptable rhetoric, they see as a return to morality. What I see as conspiracy theories, they see as truths. What I clearly see as lying, they see as "telling it like it is." Brazil's political history is so different from the U.S., but there are parallels here.As Brian writes, quite a few elites have repented their support for Bolsonaro. The same has happened here, but that doesn't necessarily signal change. That core is still there, and they love the show they're seeing. The difficulty for any analyst is to truly move away from trying to sort out self-interest. People adore their president despite the fact that he is screwing them. Depressed economic growth, rampant virus, you name it (wrecked post office, even!).From an electoral standpoint, it's sobering. The party systems of the two countries are so different that comparison isn't worthwhile, but at a very basic level, established opposite parties will find it hard to convince that core base that they have anything to offer. To win, you need to bring everyone else together. Subscribe in a reader

This is my annual post listing books I read in the most recent year. I have produced such a list since 2005 -- here's a link to the 2020 list if readers want to work backwards.Also, I posted short reviews of most of these books at Goodreads. Non-FictionRobert Vitalis, White World Order, Black Power PoliticsRobert C. Rowland, The Rhetoric of Donald Trump Paul Harris, Pathologies of Climate Governance Rikka Kuusisto,  International Relations Narratives Michael Lewis, The Fifth Risk Fareed Zakaria, Ten Lessons for a Post-Pandemic World Hank Aaron with Lonnie Wheeler, I Had a Hammer Joe Cox, The Immaculate Inning: Unassisted Triple Plays,
40/40 Seasons, and the Stories Behind Baseball's Rarest Feats Harvey Frommer, Shoeless Joe and Ragtime Baseball Jess Lebow, The Beer Devotional: A Daily Celebration of the
World's Most Inspiring Beers     The Vitalis book is not perfect, but it is an eye-opening must-read. I recommend it to anyone interested in international relations. Vitalis produces an amazing array of evidence revealing that the IR discipline was built by scholars and institutions that were fundamentally racist and imperial. He also discusses an array of black scholars who were building "the Howard School" of IR that pondered genuinely rival ideas, but that are mostly neglected, if not forgotten.Disclosure: I've been friends with Robin Rowland for over 40 years -- read his book on Trump's rhetoric anyway. It's not an insiders account of misdeeds. Arguably, in fact, it is a far more frightening account of Trump's appeal based on his public rhetoric.The Harris book is an update of a similar older book that I read some years ago. I adopted it as a textbook for my class on Global Environmental Politics this past fall. Both Lewis and Zakaria have penned better books. These had their moments, but also had some serious flaws. Both actually seemed a bit rushed and thus unfinished.   I don't know why I waited so long to read Hank Aaron's autobiography. It's a great story. Joe Cox's book is full of interesting tales of baseball rarities. Literature and Genre FictionPatrick Modiano, So You Don't Get Lost in the Neighborhood Graham Greene, Power and the Glory Chinua Achebe, Things Fall Apart I didn't read that many books this year that would count as "literature." I'm listing these three and could put them in almost any order. Modiano has won a Nobel Prize for Literature, though I found this book somewhat frustrating. That may have been the point. Greene was a master, but this book is kind of slow and perhaps repetitive. Achebe's tale is well-known, so I'm late to it. It's more enjoyable if you like magical realism. Charlie Fletcher, A Boy and His Dog at the End of the World Stephen King, Billy Summers Philip K. Dick, VALIS I think these three works were my favorite fiction books of the year. I was sometimes frustrated by Fletcher's story, but it easily held my interest and it is well worth your time. King's recent non-horror book is terrific (though flawed, ultimately) and Dick's work was bizarre at times, but compelling. Shawna Seed, Not in Time 

Eric Ambler, Cause for Alarm 

Donald E. Westlake, The Black Ice Score as Richard
Stark



Donald E. Westlake,  Dancing Aztecs 



Michael Connelly, The Last Coyote Ross Macdonald, The Underground Man 

John MacDonald, The Lonely Silver Rain Donald E. Westlake, Drowned Hopes Helen MacInnes, Ride a Pale HorseThis set of works is rated a bit higher than the books below. I read three books by Westlake and he rarely fails to entertain. As you can see, I completed the Travis McGee series this year. Indeed, as usual, this list includes a lot of crime fiction. Disclosure: I've known Shawna Seed for decades as we were undergrads together at Kansas. I liked her first book a great deal, but this one also made for an interesting read. Personally, I would have preferred that she not include the paranormal elements. Paul Auster, Music of Chance Carl Hiassen, Bad Monkey James Lee Burke, In the Electric Mist with Confederate Dead Duane Swierczynski, Expiration DatePD James, A Mind to Murder Sue Grafton, K is for Killer Stephen King, Later Ian Fleming, The Spy Who Loved Me David Goodis, Shoot the Piano Player Jean-Patrick Manchette, No Room at the Morgue Jim Thompson, Savage Night Robert Parker, Catskill Eagle I was really disappointed in the Spencer book by Parker. To me, the character jumped the shark, committing far too many acts of violence and lawlessness. I'm not sure when I might jump back into that series, which I had been reading in order.The books just above that Spencer story were a bit dated in one way or another. I found King's storytelling to be first-rate, of course, but the story itself was not all that interesting in the end. PD James, Sue Grafton, and James Lee Burke all told new stories about familiar characters -- but I didn't enjoy these books as much as others I have read by the authors. The Auster story was very strange (absurd even), which made it difficult to embrace. It has stuck with me, however, so that's a strong point in its favor. I had not read a Hiassen book in some years, but this one was kind of funny (as intended). 
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Viel dreht sich in diesen Tagen der "Corona-Krise", wie schon der Terminus nahelegt, um die gesellschaftlichen Folgen dieser Krankheit. Dabei wird in Deutschland wie in Polen gleichermaßen auf die weltweiten Entwicklungen geblickt, welche durch die Pandemie angestoßen worden sind oder an Dynamik gewonnen haben. Gleichwohl verengt sich der Blick allzu schnell oft wieder, etwa bei der Beurteilung der Maßnahmen der eigenen Regierung oder bei Überlegungen zu einer internationalen Solidarität. Dabei ist nicht davon auszugehen, dass Effekte des Auseinanderdriftens oder Zusammenrückens der Staatengemeinschaft automatisch in Zusammenhang mit der aktuellen Krise gedacht werden können; sie müssten aktiv gewollt und betrieben werden. Historisch gesehen hängen Krankheit und Krise und ihre Wechselwirkungen ohnehin fest zusammen, auch im deutsch-polnischen Kontext. Dabei handelt es sich um eine kulturelle Dynamik, die zwei Seiten vereint: einerseits die Eigenschaften einer speziellen Infektionskrankheit, wie etwa Gefährlichkeit für Gesundheit und Leben des Menschen und Möglichkeiten der Übertragbarkeit, andererseits die Handlungsmöglichkeiten zur Eindämmung der Krankheit von hygienischen Belangen über sonstige gesellschaftliche Regeln bis zur medizinischen Behandlung. Obgleich der eine Strang als Voraussetzung für den anderen erscheinen mag, zeigt der Blick in die Geschichte doch deren Interaktion und viel mehr noch, dass beide davon überformt werden, in welchen Bildern die betroffenen Gesellschaften den Prozess fassen, wie sie darüber nachdenken, wie sie darüber sprechen.Beim historisch motivierten Blick in die deutsch-polnischen Beziehungen lassen sich viele epidemische Erscheinungen ausmachen, deren Betrachtung als Fallbeispiele lohnt – einige davon sollen hier aufgegriffen werden: die Entwicklung eines Fleckfieber-Impfstoffs in der gerade entstandenen Zweiten Polnischen Republik in Lemberg (Lwów), die Anwendung von Fleckfieberimpfungen während des Zweiten Weltkriegs, die Cholera-Epidemie in Danzig 1831 und die Pestpogrome von 1348/49 am Rhein und ihre Folgen. Seuchen in KriegsbemalungEine Krankheit, die auch diskursiv aufs Engste nicht nur mit Krisen, sondern mit Kriegen verflochten war, ist das Fleckfieber. Diese Krankheit, die durch Läuse von Mensch zu Mensch übertragen wird, existierte wohl schon seit dem Altertum und trat im Mittelalter zunehmend in Europa auf, ab dem 16. Jahrhundert auch in der Neuen Welt, wie etwa 1576/77 in Mexiko mit etwa 2 Millionen Toten. Der Feldzug Napoleons gegen Russland 1812 wurde stark von einer heftigen Fleckfieberepidemie beeinflusst, ebenso der Krim-Krieg 1854–1856 und der russisch-türkische Krieg 1877/78. Auch in Zusammenhang mit den beiden Weltkriegen gab es im 20. Jahrhundert viele Erkrankte und Tote, u. a. eine schwere Epidemie in Russland 1918–1922 mit 30 Millionen Fällen, davon 3 Millionen mit tödlichem Ausgang. Quarantäneposten vor bewachten vom Fleckfieber befallenen Zivilhäusern in Perehińsko (Westukraine, Februar 1916)Die militärischen Bilder, die zur gedanklichen Fassung von Seuchen bemüht wurden, sind für das Fleckfieber und andere historisch gründlich untersucht worden. Das Phänomen als solches setzt sich bis in die Gegenwart[1] fort: Militärische Metaphern werden etwa aufgerufen, um Ohnmachtsgefühlen martialisch entgegenzutreten, Freiheitseinschränkungen im Innern einen größeren Rahmen zu verleihen oder Fragen nach der Herkunft von Seuchen und Schuldzuweisungen bildlich zu fassen. Ein emblematisches Beispiel war die TV-Ansprache an die Nation von Frankreichs Präsident Emmanuel Macron vom 16. März 2020, in der er konstatierte, man befinde sich im Krieg gegen einen unsichtbaren Feind. Ein viel weniger prominenter Fall war die Anfang März im polnischen Staatsfernsehen TVP übertragene Landkarte, die zeigte, wie das Coronavirus aus Deutschland nach Polen eingetragen wurde – mit großen und kleinen Pfeilen, wie sie vielen aus dem Schulunterricht zur Visualisierung angreifender Armeen bekannt sind. Der deutsche Finanzminister Olaf Scholz hingegen packte rhetorisch, ebenfalls im März 2020, die "Bazooka" nur aus zur Bekämpfung der wirtschaftlichen Folgen des Virus und behielt "Kleinwaffen" in der "Hinterhand". Belege für die Aktualisierung von historisch tradierten Ängsten, Feindbildern und Stereotypen, die mittels militarisierter Sprache verbreitet werden, ließen sich aus zahlreichen Staaten finden, darunter verstörend weit verbreitet antisemitische Verschwörungstheorien. Der Erste Weltkrieg, das Fleckfieber und die Anfänge der Zweiten Polnischen RepublikWährend des Ersten Weltkriegs wurde das seit den Teilungen Polens im 18. Jahrhundert politisch zergliederte und unter deutscher, österreichisch-ungarischer und russischer Herrschaft stehende polnische Territorium zu einem Hauptkriegsschauplatz. Mit der deutschen Besatzung während des Krieges kamen nicht nur das Fleckfieber, sondern auch die Deutungen der Krankheit und ihre feste Einordnung als unzivilisiert, rückständig und östlich. Dies zeigt Katharina Kreuder-Sonnen in ihrer historischen Studie über zirkulierendes bakteriologisches Wissen,[2] in der sie den mittelosteuropäischen Raum in eine globale Wissensgeschichte einordnet. Die Gefahr durch das Fleckfieber galt der deutschen Militärmacht viel mehr als ein Problem der Front im Osten als im Westen. Besonders richteten sich diese Interpretationen auch gegen orthodoxe Juden, die von Zwangsmaßnahmen durch die deutsche Besatzung ab 1915 in besonderer und unverhältnismäßiger Härte betroffen waren. Trotz der auch ansonsten getroffenen Vorkehrungen kam es in verschiedenen Orten Zentralpolens zwischen 1915 und 1917 zu Fleckfieberepidemien. Im polnischen medizinischen Diskurs wurde diese Fokussierung und Einschränkung auf die jüdische Bevölkerung ebenfalls übernommen. Im weiteren Verlauf des Krieges und gegen Ende verknüpfte und verschob sich diese Rhetorik hin zu einer festen Verbindung der Epidemie mit einer Einschleppung durch den Feind von außen, besonders wiederum aus Richtung Osten und dem gerade entstandenen Sowjetrussland, so Kreuder-Sonnen: "Die diskursive Verknüpfung von Seuche und bolschewistischer Bedrohung hatte (…) den jungen polnischen Staat als Schutzwall des 'Westens' gegen Sozialismus und Fieber etabliert. (…) Seuchenbekämpfung und Staatsbildung verschränkten sich hier eng miteinander.[3]"Die Ineinssetzung mit dem Bolschewismus im polnischen Kontext hatte das Fleckfieber mit der Spanischen Grippe gemein, die von 1918 bis 1920 in drei Wellen weltweit bis zu 50 Millionen Todesopfer forderte.[4] Während diesem Virus nur wenig entgegengesetzt werden konnte, was auch und gerade die deutsche Bakteriologie erschütterte, die sich für längere Zeit fälschlicherweise an der Identifizierung eines vermeintlich schuldigen Bakteriums (!) abarbeiten sollte,[5] gab es bei der Erforschung des Fleckfiebers im selben Zeitraum bald große Fortschritte. Die Entwicklung eines Fleckfieberimfpstoffs in Lemberg (Lwów)Der in Lemberg studierte Entomologe und Histologe Rudolf Weigl, der sich in Wien in Bakteriologie weitergebildet hatte, begann zunächst in Kriegsgefangenenlagern in Tarnów und Przemyśl mit seinen Forschungen am Fleckfieber. Dort legte er die Grundlage für seine Impfstoffentwicklung, die er an der Universität Lemberg fortführte. Er konnte dabei auf viele vorangegangene Forschungen aufbauen, die nötig gewesen waren, um den Erreger verlässlich zu identifizieren, der innerhalb der Kleiderlaus für die Auslösung der Krankheit verantwortlich war. Dieser hatte schließlich vom am Hamburger Tropeninstitut beschäftigten brasilianischen Mediziner Henrique da Rocha Lima den Namen Rickettsia prowazeki erhalten, benannt nach dem US-amerikanischen Mikrobiologen Howard Taylor Ricketts und dem tschechisch-österreichischen Bakteriologen Stanislaus von Prowazek, die beide während ihrer Forschungen dem Fleckfieber erlagen, Ricketts 1910 in Mexiko und Prowazek 1915 in Cottbus. Rudolf Weigl im Laboratorium, Datum unbekanntUm Filtrat für den Impfstoff zu erhalten, musste Weigl auf dem in vielen, meist in peripheren Gegenden – nämlich den Orten großer Epidemien – erworbenen und eng an Personen gebundenen Wissen aufbauen, das auch dazu diente, viele praktische Probleme zu lösen. Es galt, zunächst gesunde Läuse zu züchten, diese mittels ausgefeilter Gerätschaften zu infizieren und in kleinen fixierbaren Käfigen – die kurz zuvor von Rocha-Limas Kollegin Hilde Sikora[6] entwickelt worden waren – so zu halten, dass sie sich vom Menschen ernähren konnten ohne Gefahr der Entweichung. Die Übertragung der Krankheit erfolgte nicht durch den Biss der Läuse, sondern durch das Eintragen ihrer Ausscheidungen beim Kratzen. Trotzdem blieb die Läusefütterung durch den Menschen ein gefährliches Unterfangen, das zunächst im Selbstversuch und an Mitarbeitenden ausprobiert wurde. Auf dem Höhepunkt der Erkrankung der Läuse wurden diese getötet und aus ihrem Darm, mit einer besonders hohen Konzentration der Rickettsia, der Impfstoff hergestellt. Nach einer dreimaligen Impfung mit dem Präparat überlebten viele Probanden auch während Fleckfieberepidemien. Die Ergebnisse wurden publiziert, und viele Forscher kamen nach Lemberg, um die nötige Arbeit genau zu studieren, die im Laufe der 1930er Jahre im größeren Stil praktisch ausprobiert wurde.[7] Rudolf Weigls Fleckfieberimpfstoff, Ausstellungdisplay im Museum POLIN in WarschauLiteraturKatharina Kreuder-Sonnen, Wie man Mikroben auf Reisen schickt. Zirkulierendes bakteriologisches Wissen und die polnische Medizin, 1885–1939. Tübingen 2018.O. Gsell, W. Mohr (Hrsg.), Infektionskrankheiten. In vier Bänden, Bd. IV: Rickettsiosen und Protozoenkrankheiten, Berlin u. a. 1972.Ute Caumanns, Fritz Dross, Anita Magowska (Hg.), Medizin und Krieg in historischer Perpsektive / Medycyna i wojna w perspektywie historycznej, Frankfurt a. M. 2012.Laura Spinney, 1918. Die Welt im Fieber. Wie die Spanische Grippe die Gesellschaft veränderte, München 2018.
[1] Es ist verschiedentlich darauf hingewiesen worden, dass bei der politischen Planung der Seuchenbekämpfung und ihrer gesellschaftlichen Auswirkungen ein Befragen des bereits geschichtswissenschaftlich Erforschten mitunter hilfreich, wenn nicht gar geboten sein kann – s. dazu etwa Anthony Sheldon, Why every government department needs a resident historian, in: Prospect, 1. Mai 2020, https://www.prospectmagazine.co.uk/politics/government-department-chief-historian-whitehall-number-10-coronavirus-covid-brexit (9.6.2020). Zur Auswirkung militärischer Rhetorik vgl. u. a. Christoph Laucht , Susan T. Jackson, Soldiering a pandemic: the threat of militarized rhetoric in addressing Covid-19, in: History & Policy, 24. April 2020, http://www.historyandpolicy.org/opinion-articles/articles/soldiering-a-pandemic-the-threat-of-militarized-rhetoric-in-addressing-covid-19.


[2] Katharina Kreuder-Sonnen, Wie man Mikroben auf Reisen schickt. Zirkulierendes bakteriologisches Wissen und die polnische Medizin, 1885–1939. Tübingen 2018, hier und zum Folgenden S. 121–139.


[3] Kreuder-Sonnen, Wie man Mikroben auf Reisen schickt, S. 139.


[4] Zur Spanischen Grippe s. Laura Spinney, 1918. Die Welt im Fieber. Wie die Spanische Grippe die Gesellschaft veränderte, München 2018.


[5] https://www.deutschlandfunkkultur.de/nachwirkungen-der-spanischen-grippe-ein-massensterben-und.976.de.html?dram:article_id=474661.


[6] Kreuder-Sonnen, Wie man Mikroben auf Reisen schickt, S. 243–254.


[7] Lesław Portas, Rudolf Weigl – jego szczepionka przeciwtyfusowa a wojna / Rudolf Weigl, sein Flecktyphusimpfstoff und der Krieg, in: Ute Caumanns, Fritz Dross, Anita Magowska (Hg.), Medizin und Krieg in historischer Perpsektive / Medycyna i wojna w perspektywie historycznej, Frankfurt a. M. 2012, S. 173–187.

Welcome to another episode of Fully Automated!



With the inauguration of Joe Biden just around the corner, many are pondering what new approaches his team might bring to US foreign policy. Despite President Trump's penchant for bombast and bellicose rhetoric, it can't be gainsaid that his reign has been more or less dovish in comparison to those of his more recent predecessors. One huge exception to this rule, of course, has been Iran.



Early 2020 US forces assassinated the Iranian General Qasem Soleimani. Then, in November 2020, we saw the assassination of military scientist Mohsen Fakhrizadeh — a hit apparently green lit by Trump himself. In response to this latest provocation, the Iranian parliament introduced a law that will require Biden to renew the Iranian nuclear deal, or JCPOA, effectively within a month of taking office. The law also requires Iran to produce at least 120 kg of 20-percent enriched uranium annually. What does it all mean? On the one hand, as former UNSCOM inspector Scott Ritter has been arguing, Iran's response has been remarkably calm. The amount of higher enriched fuel to be produced is still very low, arguably not for military purposes, and is "in conformity" with the limits proscribed under the JCPOA. Nevertheless, as Ryan Grimm reports, even on the way out the door, the Trump Administration has been plotting military strikes against Iran.



To discuss the current situation, and the release of their new co-authored book, Understanding and Explaining the Iranian Nuclear 'Crisis': Theoretical Approaches (Lexington: 2020), our guests for this episode are Drs. Hal Tagma and Paul Lenze Jr. Tagma is Assistant Professor at the Department Politics and International Affairs, at Northern Arizona University, where he teaches Middle Eastern politics, the political economy of international conflict, and critical approaches to international relations theory. Lenze Jr is Senior Lecturer in Politics, also at Northern Arizona University. He teaches International Relations and Comparative Politics with a focus on Civil-Military Relations, Middle East politics, and US National Security. Lenze can be reached on Twitter @DrPaulELenzeJr



This is a rich book, which I think will appeal both to IR theorists, and those looking to gain a sense of the debates around US-Iran relations. On the one hand, it contains a rich meta-commentary on contemporary IR, and the theoretical possibilities it contains for dialogue between its various theoretical paradigms. Second, its a very detailed and reasoned analysis of the state of US Iran relations, and the idea that there is a 'crisis' (and what it even means to speak of crisis).



Before we get started, the authors make strong claims in the book in favor of what they term eclectic pluralism, and they are critical of the idea that there is only one truth, or one story to be told, about International relations. That might seem to imply they see all truths in IR as somehow equal or equivalent. Nevertheless, as you'll hear, the book is doesn't hesitate to land some punches. In the chapter on Marxism and World Systems Theory, for example, they write that, from the perceptive of Marxism:




Modern academic Realism is a superstructural tool that legitimizes and naturalizes the exploitative and violent polito-economic order of global capitalism. Modern academic Realism is not outside of history nor is it 'timeless wisdom.' Instead, Realism is caught up in constructing the violent, capitalist World-System that it is hopelessly trying to make sense of.




Thanks for listening. We don't ask for any financial support, in bringing you this show. But if you like what you hear, please leave a kind review on your podcast app. If you have any feedback, you can DM us @occupyirtheory on Twitter and Instagram. Thanks!

My latest paper, 'Pandemic Ethics and Status Quo Risk', has just been accepted for publication in Public Health Ethics. Here's the abstract:Conservative assumptions in medical ethics risk immense harms during a pandemic. Public health institutions and public discourse alike have repeatedly privileged inaction over aggressive medical interventions to address the pandemic, perversely increasing population-wide risks while claiming to be guided by "caution". This puzzling disconnect between rhetoric and reality is suggestive of an underlying philosophical confusion. In this paper, I argue that we have been misled by status quo bias—exaggerating the moral significance of the risks inherent in medical interventions, while systematically neglecting the (objectively greater) risks inherent in the status quo prospect of an out-of-control pandemic. By coming to appreciate the possibility and significance of status quo risk, we will be better prepared to respond appropriately when the next pandemic strikesThe central idea is that heuristics of ambiguity-aversion and favouring inaction over (potentially risky) action can be expected to backfire terribly in circumstances -- such as a pandemic -- in which "business as usual" is leading us towards disaster.  Instead, I suggest that our policy and institutional responses to such emergency circumstances need to be rebalanced towards (i) liberalizing access to experimental treatments and vaccines, and (ii) requiring an explicit cost-benefit analysis to justify any sort of vaccine obstructionism (e.g. failure to immediately grant Emergency Use Authorization to any credible candidate vaccine early in the pandemic, and of course any post-authorization suspensions).Other key points of the paper:(1) "Governments and their agencies are not generally entitled to describe vaccine suspensions as reflecting "an abundance of caution", unless they can show that the policy actually reduces overall risk. If it instead increases overall risk, it would seem more objectively accurate to describe such suspensions as "reckless"—as they would then reveal a reckless disregard of the objectively greater threat posed by the unchecked spread of the virus."(2) Non-consequentialists should be even more appalled by vaccine obstructionism, as it constitutes harmful coercion resulting in death (which is to say: killing) by the government -- no less than if the FDA sent out agents to steal a cure from the hands of those who will die without it.(3) Vaccine challenge trials were a no-brainer, and opposing them on ethical grounds constitutes anti-beneficent paternalism -- a kind of moral insanity.  The basic argument also carries over to "any research that has a feasible chance of reducing the population-wide toll of the pandemic," including research into variolation, and challenge trials for candidate preventative measures (such as antiseptic nasal sprays). (4) Early targeted immunity via variolation (ideally preceded with experimental vaccination) could have done a lot of good, slowing the spread of the virus and freeing many healthy young people from unnecessary lockdowns.(5) Fear of "vaccine hesitancy" provides but weak reasons to oppose liberalization.  I offer several reasons for this in the paper, but I think the strongest is that however much you'd like to reduce vaccine hesitancy, it isn't ethical to pursue this goal via killing innocent people, but (as per #2 above) that's precisely what obstructionism amounts to.(6) If you're on board with my conclusion that pandemic policy was rife with status quo bias, the next step is to design institutional reforms to change the incentives that lead to this result.  Right now, "policy-makers are more likely to be blamed if an intervention goes wrong (resulting in highly salient identifiable victims), whereas they tend to escape blame for inaction that results in grave preventable harms (many of which may be less salient, or only linkable to the policy decision on a statistical basis—we cannot identify which particular deaths would have been prevented by earlier access to vaccines, for example)."  My paper doesn't address this problem, but perhaps it could help to shift EUA-granting authority to a new institution that's authorized to make such decisions on the basis of explicit cost-benefit analysis, and very explicitly does not recommend that anyone take the experimental treatments that it authorizes (i.e. makes legally available) for personal use.

Is Biden a worse protectionist than Trump? Prove it isn't so, Joe.I've been engaged with a lot of real-world work, so I haven't been able to post that much as of late (apologies). Still, here's my initial take on events of 2021 with Joe Biden assuming the US presidency. Although the rest of the world breathed a sigh of relief that the isolationist Donald Trump has literally departed the White House with little fanfare, the question remains: How much of an improvement will Biden be for international economic relations? A new article makes me question whether he will be much of an improvement since Biden is indicating more "Buy American" provisos for government procurement are in store to shore up US industry during these challenging times: President Joe Biden will
take steps Monday to encourage the federal government to buy more
American-made products, a move the new administration argues will
protect U.S. jobs and juice an economy severely hobbled by the deadly coronavirus pandemic.Biden, who pushed a $700 billion Buy American campaign as a candidate for president, is set to sign an executive order
that will advance several policies to boost the federal government's
purchase of U.S.-manufactured goods and services, administration
officials said Sunday.Federal law requires
government agencies to give preference to American firms when possible,
but critics say those requirements haven't always been implemented
consistently or effectively. Some have not been substantially updated
since the 1950s.The federal government spends
nearly $600 billion a year on contracts, which is money the
administration says can spur a revitalization of the nation's industrial
strength and create new markets for new technologies.To that end, Biden's order will increase the
domestic content threshold, which is the amount of a product that must
be made in the U.S. before it can be purchased by the federal
government.Right now, loopholes in federal law
allow products to be stamped "made in America" for purposes of federal
procurement even if barely 51% of the materials used to produce them are
domestically made. Administration officials did not say how much Biden
intends to increase that threshold.Actually, Trump has tried to implement something similar, although it had some loopholes still that Biden is currently trying to close:Shortly after taking office in 2017, President Donald Trump
issued a series of executive orders that were intended to strengthen
rules requiring federal agencies to buy U.S.-made goods when possible.
But critics argued that effort fell short, partly because of Trump's
failure to adequately enforce the rules.The
order that Biden will sign is expected to include a clear timeline for
updating domestic content requirements and a process for reducing
unnecessary waivers, which the administration argues would fundamentally
change how the program operates.Agencies will be required to report twice a year on their implementation of Made in America laws.Oof! Is Biden even more protectionist than Trump? That won't be such a good signal to open with in terms of repairing strained relationships with other countries. Remember also that the United States is a signatory to the WTO's Government Procurement Agreement (GPA) that was intended to limit these shenanigans encouraging the purchase of own-country goods and services, and would therefore be subject to litigation by other signatories. Indeed, the Trump administration considered pulling out of the GPA for the purpose of introducing more "Buy American" policies:The U.S. is mulling a plan to withdraw from a global pact worth $1.7
trillion in government contracts, a person familiar with the matter
said, in a move that may anger close allies during a delicate moment for
trade.



Officials in President Donald Trump's administration are
circulating a draft executive order that would trigger a U.S. exit from
the World Trade Organization's Government Procurement Agreement, or GPA,
if the pact isn't reformed in line with American views, according to
the person, who asked not to be identified because discussions are
ongoing. It remains to be seen how Biden will tiptoe around the United States' WTO GPA commitments without offending other member countries. Still, the question remains: Is Biden really going to be more internationalist in outlook than Trump? This episode gives us reasons to doubt whether Biden's actions will match his rhetoric (which is admittedly better to listen to).

I have been watching politics unfold for a long time—first
as a young idealist hopeful to make the world a better place, later as a
student of history interested in understanding the stories of our past, and now
as a scholar and analyst helping others to understand the process and its
intricacies. But today I write as a father concerned for the future of our
political discourse. I'm specifically concerned when I see certain American
politicians turn to fearmongering as a way to manipulate the electorate.


Politics has never been for the faint of heart, and very
often, civil discourse can get drowned out by those who choose to be nastier
than perhaps is necessary or over-simplistic in their rhetoric. And yet, this
year—this time—is different. The tone is nastier, more simplistic, and more
willing to disregard basic facts than at any time I have seen. It is a politics
based upon raw emotion, rather than dispassionate analysis.











During this political season, I have seen candidates both nationally
and here in Montana resort to the divisive language of "us" versus "them,"
pretending that they are leaders for "telling it like it is." These candidates
purport to say what regular politicians refuse to voice, and because of that,
they argue, we should lend them our support. They are not corruptible, they
claim, because they are "one of us" and not "one of them." They come from
outside the contemptible, "broken" political system. They can make America, and
Montana, great again because only they have the will to do the tough things the
venal politicians in the pocket of special interests refuse to stomach.




These candidates aren't tough and principled. They are
master manipulators asking us to give in to our basest fears. They are
unscrupulous charlatans selling us bill of goods.



That's not leadership. It calls to mind the Red Panic
following World War I, or the McCarthyism of the 1950s. Have we lost all
decency?



Leaders don't play on people's fears. They acknowledge our
fears, but inspire us to overcome them. They ask us to move beyond fear and bind
us together. They do not push us apart. Leaders, like all of us, are not
perfect. They make mistakes. But they fundamentally strive to bring out the
best in us as a people, together.



Make no mistake: Political disputes are healthy and good in
a republic. We should disagree and do so vigorously. The problem is when that
discourse becomes poisoned by a desire to win a political argument at all
costs. This mentality encourages doubling down on fear to marshal our darkest
doubts against our perceived enemies. It fosters and deepens divisions between
us. It is especially dangerous when that fear encourages a majority "us" versus
a minority "them"—stoked by too cute by half political framing that skews facts
to make a convenient argument.



All is not yet lost. We—the people—are at a time of
choosing, Ronald Reagan once said. We can chose candidates that manipulate our
fears to advance their campaign, or we can chose candidates who wish to
overcome them. We can chose hucksters who have no fidelity to truth or civil
discourse.



Or we can choose leaders.



May Americans be inspired to act together this election
season "by the better angels of our nature" rather than give into our fear. If
we choose to surrender to the "nameless, unreasoning, unjustified terror which
paralyzes needed efforts to convert retreat into advance," then not only is our
republic imperiled, but we really have lost our collective national soul.




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May we choose wisely. 

Updated: Edited for grammar and to spell John Adams' name properly.







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In my role as political analyst for MTN, I sat down on
August 14 with Republican House candidate Ryan Zinke and asked him about
releasing his full military records. In case you missed the interview, you can
watch it here. I was promised during that interview, and afterwards by Zinke
spokesperson Shelby DeMars, that I—along with the AP and Chuck Johnson of Lee Newspapers—would
receive the complete set of records. I was also told that this would take some
time.



It is now October 22, 2014, and the general election is less
than two weeks away. In last night's House debate in Great Falls, John Adams of
the Great Falls Tribune specifically asked state senator Zinke about a fitness
report in 1999 that one other former Navy Seal suggests indicates some problems
with Zinke's performance. Zinke did not provide a clear answer as to what was
in that report, and suggested that Adams "was unjust, unfair, and shameless"
for asking the question.

Adams' request was not shameless.Watch the exchange here.



I have, thus far, believed
that the Zinke campaign would in good faith produce those records in a timely
fashion. And I'm hopeful that they will still release those records. And yet, I still have not gotten what was promised. I, like John Adams,
am beginning to wonder why.



But, if I may suggest, the problem is bigger than Ryan Zinke
and his record as a Navy Seal. The problem hits directly at democratic
discourse and accountability in an era when fewer and fewer candidates running
for public office have extensive records in elected office. Yet, they ask US to
credit them with those experiences as evidence they are suitable for service in
higher public office. I believe Ryan Zinke, Steve Daines, John Lewis, and
Amanda Curtis all should release as much of their employment records as
possible to the press and the public. These experiences, they claim, will make
them excellent public servants. If that's the case, then we—the public who
choose them—should be able to make the judgment ourselves of those records.



I think there are three very good reasons for why we should
expect transparency from our congressional candidates in this regard.



First, such transparency is not unusual for those seeking
public employment of any kind. Take, for example, the information I have to
generally produce when applying for academic jobs (both public and private). As
a job candidate, I have produced the following for employers:



1.      
Transcripts (Graduate and undergraduate)

2.      
A copy of my diploma

3.      
My cv (an academic version of a resume)

4.      
References and letters of support from those
references

5.      
Student evaluations of my teaching

6.      
A teaching statement

7.      
A research statement

8.      
Publications



Then, if I'm lucky enough to get a campus interview, I often
have to give a research presentation and a teaching demonstration. All of this
is to demonstrate that my academic credentials are real and that I am competent
as a teacher and researcher. 



And, I should say, that a request for my transcripts from
Wisconsin or Indiana can be filled within 24 hours. Not more than two or three
months.



In running for Congress, candidates use their records to
bolster the case for why voters should vote for them and that they deserve the
trust of voters. Candidates who have served in elected office often have
extensive public records that voters can evaluate and pick apart—and even if
they do not, the opposition is more than happy to do it for the voters.



Ryan Zinke's House campaign biography begins with the
headline: Montana's Proven Leader. He highlights his accomplishments in nine
paragraphs. One paragraph details his service in the Montana Senate. Five
paragraphs focus on his "distinguished record" of military service. It is clear
that this service as a Navy Seal is critical to how he would like voters to
evaluate him.



Congressman Daines' campaign slogan is "More Jobs, Less
Government" and much of his campaign pitch focuses on his experience in
creating jobs—an experience he says begins with cutting government regulation
and red tape. In his campaign biography of seven paragraphs, one full paragraph
and the portion of another details his business experience. Only one full
paragraph, by contrast, details his experience in Congress. Congressman Daines
says he's a job creator. How exactly did he create jobs during his time at
RightNow and how many of those jobs were created in Montana, in the United
States, and in other countries?



Democratic candidates John Lewis and Amanda Curtis are not off
the hook here. John Lewis spent his professional career working as a staffer
for Senator Baucus, and on his campaign webpage, he notes that "working for
Senator Max Baucus and with Montana veterans, John spearheaded legislation
giving businesses incentives to hire veterans.  What began as John's idea
to better serve veterans is now the law of the land." We, as voters, should
have access to the memos staffer Lewis wrote which demonstrate how central he
was to this veterans legislation. Lewis should also ask that Senator Baucus
release his personnel file so we can see the evaluations he received as a part
of the Senator's staff in Washington and here in Montana. And Amanda Curtis,
who touts her experience as a teacher, should demonstrate to us whether she
excelled as a teacher or not.



The main point of all of this is not that Ryan Zinke was a
bad Navy Seal, that Steve Daines didn't create jobs as part of an important
hi-tech company, that John Lewis wasn't a competent Senate staffer, and Amanda
Curtis wasn't a great teacher. The point is the voters deserve to have the
ability to evaluate those claims for themselves absent a narrative constructed
by the campaign, just as my fellow political scientists have the right to
examine my academic record to help them decide—without my own spin—that I am
the right person or not for their institution. We should be able to determine
how distinguished a military career is, what makes job creator successful, and
the whether the influence a Senate staffer has on legislative outcomes is
substantial.



A second reason why these records should be made available
is the nature of who is running for Congress. In the past, the common path for
folks running for higher office was to spend considerable time working their
way up through a series of public offices, building a public record that voters
could evaluate. As our elected officials are increasingly coming from outside
the public sphere or, if they do serve in the public eye, with much shorter
tenures in office, we need to be able to assess those experiences. At least
with public officials, there is a clear public record for all to see. Without a
public track record, voters are left to the rhetoric of the candidates—who are
clearly not unbiased—to make sense of those private employment experiences. At
the very least, they should give us as much access to private records that we
can get from those in public employ. 



Finally, in an era of political polarization, it is even
more important that voters have access to unbiased sources of information to
help them make informed political judgments outside the spin room. Instead of blindly
accepting what candidates or their opponents tell you, it is even more
important to have metrics with which voters can independently judge the
records, temperament, and fitness of their candidates for public office. And,
even more important, an independent and free press must have access to these
records to do just that. 



Transparency helps us make better decisions and to have more
trust in the democratic process. One of the most important New Deal reforms, in
my judgment, was the creation of the Securities and Exchange Commission which
required publicly traded companies to release particular information in a
timely and regular fashion about the company's operations and budgets. This
information allows investors far more confidence when they participate while at
the same time providing a somewhat level playing field for investors. This
trust has allowed the creation of mutual funds and a retirement system funded
largely by investments in the stock market. Shouldn't we demand the same kind
of accountability and openness of those who wish to serve in public office?
Shouldn't we demand more of and from them as investors in the democratic
marketplace?

There are a lot of moving parts to the MMT program. I want to focus on one of these parts today: the relation between monetary and fiscal policy.
One thing I find appealing about MMT scholars is their attention to monetary history and
institutional details. I've learned a lot from them in this regard.
But as is often the case with details, one has to worry about whether they help
shed light on a specific question of interest, or whether they sometimes let us not see
the forest for the trees. And in terms of the broader picture, since I grew up
in that branch of macroeconomics that tries to take money, banking, and debt
seriously (i.e., not standard NK theory), I sometimes have a hard time understanding what all the fuss is
about. Much of standard monetary theory (SMT) seems perfectly consistent with
some of the ideas I seen discussed in MMT proponents; see, for example, The Failure to Inflate Japan. 

  

This post is devoted to better
understanding a contribution by Eric Tymoigne. Eric is one of the people I go
to whenever I want to learn more about MMT (if you're interested in MMT, you
should follow him on Twitter @tymoignee). In this post, I discuss his
article "Modern Monetary Theory, and Interrelations Between the Treasury
and Central Bank: The Case of the United States." (JEI 2014). Passages quoted from his paper are highlighted in blue. The working
paper version of the paper can be found here. Eric has kindly agreed to respond to my comments and let me post our conversation. We had to some editing, hopefully this did not disrupt the flow too much. In any case, I hope you find it interesting. And, as always, feel free to join in on the conversation in the comments section below. -- DA



============================================================================



DA: Eric, let's start with the opening paragraph:



One of the main contributions of modern money theory (MMT) has been
to explain why monetarily sovereign governments have a very flexible policy
space. Not only can they issue their own currency to spend and to service their
public debt denominated in their own unit of account, but also any self-imposed
constraint on budgetary operations can be easily bypassed. 



I'm
curious to know what the contribution is here relative to standard monetary
theory (SMT). In SMT, the government can also issue its own currency to spend
and to service the public debt denominated in its own unit of account. So this
degree of "flexibility" is already accounted for. As for
"self-imposed constraints on budgetary operations," SMT takes several
approaches to this issue, depending on the purpose of the analysis. One
approach is to take these constraints as given and then to study their
implications. But it is also common to consolidate the central bank, treasury
and government into a single authority, which implies no self-imposed
constraints on budgetary operations. 


Perhaps what is meant is that MMT shows how existing self-imposed constraints
on budgetary operations can be (or are) bypassed in reality.  This leads
us to question, however, concerning what those self-imposed constraints are doing there in
the first place. Are they there by design and, if so, why? Or are they there by
accident (and, if so, how in the world did this happen)?



ET: Yes
consolidation is not unique to MMT as we have said repeatedly. Not only is it
used quite commonly in the economic literature, but also it is a common
rhetorical tool in economic talks, discourse, etc.

























 

DA: Right, so everyone understands this (at least, they should)--it's perfectly consistent with standard monetary theory. So far, so good.



ET: Most
economists, politicians and the public don't understand this or its
implications. They will interpret the above as saying that it is obvious that
the government can create money but it is not a normal way to proceed and it is
inflationary. MMT just pushes consolidation to its logical conclusions and
shows that institutional details do back those conclusions. In a consolidated
framework, the federal government can only implement spending by creating
money, this is not abnormal and it is not inflationary by itself. There is no
other way to find the necessary dollars to spend. Here is what consolidation means in terms of balance sheets:



For the federal government, taxes destroy currency
(L1 falls) and claims on non-fed sectors falls (A1 falls) (an alternative
offsetting operation is net worth of government rises). When US spends, it
credits accounts (L1 rises). Similarly, bond issuance does not lead to a gain
of any asset for the government; all it does is replace a non-interest earning government
liability (monetary base) with an interest-earning government liability (Treasury
securities).



DA: I am not going to argue against your accounting. As for bond-issuance, in
SMT, an open-market operation is modeled as a swap of zero-interest reserves
for interest-bearing treasuries. The interest on treasuries is explained by
their relative illiquidity (another self-imposed constraint). The economic
consequences of such a swap depends on a host of factors, which I'm sure you're
familiar with. 



ET: Sure, in
addition, self-imposed financial constraints (e.g. debt ceiling, no direct
financing by the Fed, no monetary power for treasury) have been put in place at
various times with the argument that they impose discipline in public finances.
MMT argues, these financial constraints are not necessary and are bypassed
routinely through Treasury-Central Bank coordination.



DA: Sure, the standard view is that these
self-imposed constraints are designed to impose discipline in public finance.
The proposition that these financial constraints are or are not necessary, however, must be
based on a set of assumptions that may or may not be satisfied in reality. (The
fact that these constraints may be bypassed through Treasury-Central Bank
coordination does not seem relevant to me -- the conflict emphasized by SMT is
between an "independent" central bank and the legislative authority
(e.g., the Fed and Congress, not the Fed and Treasury). I'm not sure why a new
theory is needed here. We know, for example, that if the legislative branch of
government fully trusts itself (and future elected representatives) to behave
in a fiscally responsible manner, the notion of an "independent"
central bank (and other self-imposed constraints) makes little sense. 



ET: Remember
that MMT emphasizes the irrelevance of financial/nominal constraints for
monetarily sovereign governments (bond vigilantes, risk of insolvency of social
security, etc.). One can do that by using the consolidated government (taxes
don't finance, bonds don't finance, government spends by crediting accounts,
etc.) or by using the unconsolidated government (the central bank helps the Treasury,
the Treasury helps the central bank). The second method conforms to actual
federal government operations but it is much less easy to use rhetorically and it
waters down the core point: government finances are never a financial issue as
long as monetary sovereignty applies.

Given that point, as you note, financial constraints are not only
irrelevant, but also disruptive and used for political games. MMT wants to make
government financial operations as smooth and flexible as possible. Once
society has decided how, and to what degree, government should be involved in
solving socioeconomic problems, finding the money should not be an issue when
monetary sovereignty prevails. That means demystifying
and eliminating financial barriers to government operations so the political
debate can focus on solving real issues (environment issues, socio-economic
issues, etc.). Fearmongering about the public debt and fiscal deficits makes for
poor political debates and policy prescriptions.



There is a view, expressed by Paul Samuelson, that if
we tell policymakers and the public that there are no financial limits to
government spending, policymakers will spend like mad; therefore, economists
need to lie to policymakers and the public (and themselves). This is nonsense.
We ought to discuss policy choices not on the basis of Noble Lies but rather on
the basis of sound and informed premises. Economists needs to make sure that
policymakers focus on resource constraints.



In addition, political constraints on government should be geared
toward improving the transparency and participatory aspects of government (e.g.
limit role of big money in elections, limit wastes, etc.). We already have a
government that passes a budget (it needs to do so for transparency and
accountability purposes), we already have an auditing process, and we already
have some (limited) democratic process, so aim at improving these aspects. MMT
proponents are not naive, we know that some politicians are self-interested, we
know that policy implementation may lead to mistakes, we know people may try to
game the system ("free riders"); however we trust that a transparent and
democratic government can (and does) get through these issues. MMT does not see
financial constraints as helping in any ways, rather they inhibit the
democratic process.



Of course, MMT proponents also have a policy agenda (Job guarantee,
financial regulation based on Minsky, etc.) because we do not see market
mechanisms as self-promoting full employment, price stability and financial
stability. As such, as you said, MMT proponents favor alternative means to
achieve these goals through direct government intervention. We don't see the
central bank as an effective means to promote price stability. The central bank
should focus on financial stability through interest-rate stabilization and
financial regulation (an area where the Fed has not performed well).



Finally, yes independence
of the central bank is seen as a big deal but MMT disagrees for two reasons.
First, MMT emphasizes the lack of effectiveness of monetary policy in managing
the business cycle and, second, and probably more importantly, MMT notes that
central-bank independence in terms of interest-rate setting and goal settings
does not mean independence from the financial needs of the Treasury.



DA: I think it's fair to say most people want to see government
operations run smoothly, and would welcome a sober debate over the issues at
hand without the fear-mongering that some like to promote. The broad objective seems the same--the debate is more over implementation--how monetary and fiscal policy is to be coordinated--given human frailties. 



Having said this, I think you go too far by asserting that
"government finances are never an issue as long as monetary sovereignty
applies." Of course, technical default on nominal debt is not an issue (we
all understand this). But SMT also recognizes the importance of economic default
on nominal debt. True, a government can always print money to satisfy its
nominal debt obligation, but if money printing dilutes the purchasing power of
money, this is a de facto default. 



On a related issue, SMT asks "what are the limits to
seigniorage?" The fact that a government can print money does not give it
the power to command resources without constraint. People can (and do) find
substitutes for government money (they may also substitute out of taxed activities
into non-taxed activities). SMT treats the limits to seigniorage as a financial constraint.
Maybe MMT has a different label for this constraint? Perhaps it is related to
what I hear MMT proponents call an "inflation constraint." Maybe
one way to reconcile MMT with SMT on this score is by recognizing that SMT
usually assumes (sometimes incorrectly) that the inflation constraint is always
binding. If this is the case, a monetarily-sovereign government does have
a financial constraint, even according to MMT. 



ET: Yes, ability to create a
currency does not mean ability to command resources because there may not be a
demand for the currency. That is where tax liabilities and other dues owed to
the government become important (cf. the chartalist theory of money, a
component of MMT). That's also why taxes, monetary creation and bond issuance
are not conceptualized by MMT as alternative financing means but rather as
complementary. The government imposes a tax liability, spends by issuing the
currency necessary to pay the tax liability, then taxes and issues bonds. Spending may be inflationary
indeed and so there is an inflation constraint; but it is not a financial constraint,
it is a resource constraint.



About the "printing" of money
by government, inflation and economic default. Regarding the first two, there
is no evidence of an automatic relation between money and inflation. In a
consolidated view, government always spends by monetary creation but controls
the impact on inflation via taxes and the impact on interest rates via bond
issuance. In an unconsolidated view, the central bank routinely finances and
refinances the Treasury by helping some of the auction bidders and by
participating in the auction.

Finally, regarding economic
default, governments routinely "default" in that sense with no problems. I
don't see that as a relevant concept unless someone can show that economic
default raises interest rates or generates rising inflation (it does not); here
again, there is no automatic link between inflation and interest rates. That
link depends on how the central bank reacts; if it does not then market
participants don't either.



DA: Let me return to the manner in which the Fed/Treasury/Congress
are consolidated (or not) in SMT and why this matters, in your view. In some
SMT treatments, Congress decides spending and taxes, which implies a primary
deficit. It's up to the Treasury to finance that deficit, with the Fed playing
a supporting role (by determining interest rate and issuing reserves for
treasury debt). What's wrong with this approach?

   

ET: That goes in the
right direction with an understanding that the government really has no control
over its fiscal position. All this, which relates to the implementation of
monetary sovereignty, helps understand why the financial crowding out is not
operative, why monetary financing is not by definition inflationary, why i >
g is normal. It helps explain why the hysterical rhetoric surrounding the
public debt and deficits in nonsense. I recently wrote a piece for Challenge Magazine on that topic. Surpluses are celebrated, governments implement
austerity during a recession to "live within our means", Social Security needs
to be fixed to avoid bankrupting it, governments need to save more, etc. All of this is incorrect.



DA: I'm not sure why you claim SMT leads to the idea of i > g.
The case i < g is perfectly consistent with SMT (see Blanchard's 2019 AEA
Presidential address, and also my posts here and here). The
correct criticism (I think) is that mainstream economists have assumed i > g
as being the empirically relevant case (it is not).



ET: That is what I meant. MMT links that to monetary sovereignty.



DA: I think that's correct. I should like to add that mainstream economists (apart from a small set of
monetary theorists) have not appreciated the role of high-grade sovereign debt
as an exchange medium in wholesale financial markets and as a global store of value, which in my view likely explains a lot of the "missing inflation." But as for
"surpluses being celebrated," you are now talking about individual
viewpoints and not SMT per se. There were plenty of calls out there
for countercyclical fiscal policy based on standard macroeconomic principles.
But I do agree virtually all mainstream economists are (perhaps overly)
concerned about "long-run fiscal sustainability." The view is that at
the end of the day, stuff has to be paid for -- and that having the ability to
print money, while granting an extra degree of flexibility, does not get around
this basic fact. 



DA: I'd like to ask you about this statement you make:



In (the unconsolidated) case, the Treasury collects taxes and
issues securities before it can spend. However, federal taxes and bond
offerings also serve another highly important function that is overlooked in
standard monetary economics. Specifically, federal taxes and bond offerings
result in a drainage of funds from the banking system, and MMT carefully
analyzes the implication of this fact. From that analysis, MMT argues that
federal taxes and bond offerings are best conceptualized as devices that
maintain price and interest-rate stability, respectively (of course, the tax
structure also has some important role to play in terms of influencing
incentives and income distribution; something not disputed by MMT). 



DA: Well, yes, taxes serve both as a revenue device
(permitting the government to gain control over resources that would otherwise
be in control of the private sector) and as a way to control inflation. I'm not
sure about the idea of the Treasury offering bonds for the purpose of achieving
interest-rate stability (though this may happen to some extent when the
treasury determines which maturity to offer). I don't think this is the way
things work in the U.S. today.



ET: Taxes and issuance of
treasuries drain reserves and so raise the overnight rate. Hence, on a daily
basis, a fiscal surplus raises the overnight rate and a fiscal deficit lowers
it. There has been significant Treasury-Fed coordination to smooth the impact
of taxes (and treasury spending) on the money market.



DA: Fine, but so what? We all understand
"coordination" between Fed and Treasury exists at the operational
level. 



ET: I think you are too kind to other
economists and policymakers. On taxes as price-stabilizing factors, there is
indeed some similarities here. On the role of treasuries for interest-rate
stability, it does work like this today. It may not be obvious because of the
current emphasis on treasuries as Treasury's budgetary tools, but Treasury has issued securities for
other purposes than its budgetary needs. In the US, this occurred most recently during the 2008
crisis (SFP bills). In Australia, in the early 2000s, the Treasury issued
securities while running surpluses in order to promote financial stability.



DA: But even if this is not the way things actually work
(in my view, it's the Fed that stabilizes interest rates, possibly through OMOs
involving U.S. Treasuries), I'm not sure what point is being made. I think we
can all agree that monetary and fiscal policy can be thought of as being
consolidated in some manner. What would be good to know is how a specific MMT
consolidation matters (relative to other specifications) for a specific set of
questions being addressed. There is nothing in the abstract or introduction of
this paper that suggests an answer to this question.  

ET: The point being made is that in a consolidated
government, tax and bond issuance lose the financial purpose
they have for the Treasury but keep their price and interest-stability purposes.





DA: In standard monetary theory, tax and bond issuance keeps
its funding purposes for the government and at the same time can be used to
influence the price-level (inflation) and interest rates. Is this wrong? I
don't think so. At some level, taxes (a vacuum cleaner sucking up money from
the private sector) must have some implications for the ability of government
to exert command over real resources in the economy. What we label this ability
(whether "funding" or ''finance" or whatever, seems
inconsequential). 



ET: Ok here comes the crucial difference between financial
and real sides of the economy. In financial terms, taxes do not increase the
capacity of the government to spend, i.e. the government does not earn any
money from taxing; taxes destroy the currency. In financial terms, there is no
reason to fear a fiscal deficit; deficits are the norm, are sustainable and
help other sectors grow their financial net wealth. As such, it is not because a
government wants to spend more that it must tax more or lower spending
somewhere else. That is the PAYGO mentality. This mentality makes policymakers
think of spending and taxing in terms of how they impact the fiscal balance
instead of their impact on employment, inflation, incentives, etc. While
deficits may have negative consequences, they are not automatic. If
one takes a look at the evidence, deficits have no automatic negative impacts
on interest rates, tax rates, public-debt sustainability, or inflation.



In real terms, the necessity to increase tax rates to prevent
inflation, and so move more resources to the government, depends on the state
of the economy and the permanency of the increase in government spending relative to
the size of the economy. In an underemployed economy, the government
can spend more without raising tax rates. In a fully employed economy, shifting
resources to the government without generating inflation does require raising
tax rate and/or putting in place other measures such as rationing, price
controls, and delayed private-income payment. Here Keynes's "How to Pay for the
War" provides the roadmap. Standard economics is full-employment economics so
opportunity costs are always present. MMT follows Kalecki, Keynes and the work
of their followers (have a look at Lavoie's "Foundations of Post
Keynesian Economic Analysis") and note that capitalist
economies are usually underemployment and economic growth is demand driven. Put
in a picture, the economy is usually at point a.









Put succinctly, the real constraint is conditionally relevant, the
financial constraint is irrelevant if monetary sovereignty prevails. That is
the proper way to frame the policy debates and to advise policymakers; don't
worry about the money, worry about how spending impacts the economy.



ET: Moving to another topic, consolidation of the government brings to the forefront
forces that are operating in the current system but that are buried under
institutional complications. Namely that a fiscal deficit lowers interest rates
and treasuries issuance brings them back up, that spending must come before
taxing and treasuries issuance, that monetary financing of the government is
not intrinsically unsound and does not mean that tax and treasuries issuance
don't have to be implemented. 



DA: The statement that "deficit lower
interest rates" needs considerable qualification. Among other things, it
depends on the monetary policy reaction function. As for the claim that
spending *must* come before taxes, this is not a universally valid statement
(even if it may be true in some circumstances. But even more importantly, who
cares? Mainstream theory does not suggest that monetary financing is
intrinsically unsound (seigniorage is fine, if it respects inflation ceiling).
As for money, taxes and bonds not being alternative "funding"
sources, I worry that this semantics. You can call X a "funding"
source or not -- it's just a label. The real question is: what are the
macroeconomic implications of X? 



ET: Let me emphasize where I agree. Yes, evidence
shows the central role of monetary policy for the direction of interest rates,
fiscal policy is at best a very small driver. And yes, one ought to focus on
the real implications of government spending and we ought to forget about the financial implications. A fiscal
deficit is not unsustainable nor abnormal; deficits are the stylized fact of
government finances and are financially sustainable if monetary sovereignty is
present. So don't try to frame the policy debate and set policy in terms of
household finances, bankruptcy, fixing the deficit, etc.

To conclude I see three reasons why the "taxes/bonds don't
finance the government" rhetoric is helpful:



1- It is strictly true for the federal government (i.e.
consolidation).



2- it brings to the forefront some lesser-known aspects of taxes
and treasuries issuance: impacts on money market, role of central bank in
fiscal policy, role of treasury in monetary policy.



3- It changes the narrative in terms of policy and political
economy: government does not rely on the rich to finance itself, taxes should
be set to remove the "bads" not to finance the government (e.g. one
should not set tax rates on pollution with the goal of balancing the budget but
with the goal of curbing pollution to whatever is considered appropriate, that
may lead to much higher tax rates than what is needed to balance the budget),
PAYGO is insane, one should focus on the real outcomes of government policies
not the budgetary outcomes.



DA:

1. I think this is semantics.

2. Not sure how it helps in this regard.

3. I think all of these positions are defensible without the
statement "taxes/bonds don't finance the government", so
if this is the ultimate goal (and I think it should be), perhaps we should set
aside semantic debates and focus on the real issues at hand. 



ET: 1 is not semantic. I know you have in mind taxes as a
means to leave resources to the government. MMT makes a clear difference
between financial (ability to find the money) and resources constraint (ability
to get the goods and services) as explained above. The financial
constraint is highly relevant for non-monetarily sovereign governments so it
should be noted and clearly separated from the real constraint. Too many
policy discussions and decisions by policymakers operating under monetary
sovereignty are based on an inexistent inability to find money and the imagined dear financial
consequences of budgeting fiscal deficits. 2 helps to understand how monetary
sovereignty is implemented in practice. On 3, yes focus on the real issues.



DA: We agree on 3! Thank you for an interesting discussion,
Eric. There's so much more to talk about, but let's leave that for another day. 



ET: You are welcome and thank you too!

Keith Hart on the
Informal Economy, the Great Transformation, and the Humanity of Corporations














International Relations
has long focused on the formal relations between states; in the same way,
economists have long focused exclusively on formal economic activities. If by
now that sounds outdated, it is only because of the work of Keith Hart. Famous
for coining the distinction between the formal and the informal economy in the
1970s, Hart is a critical scholar who engages head-on with some of the world's
central political-economic challenges. In this Talk, he, amongst others, discusses the value of the distinction 40
years after; how we need to rethink The
Great Transformation nearly a century later; and how we need to undo the
legal equivalence of corporations to humans, instituted nearly 150 years back.














Print version of this Talk (pdf)




What is, according to you, the
central challenge or principal debate in International Relations? And what is
your position regarding this challenge/in this debate?







I think it is the lack of fit between politics, which
is principally national, and the world economy, which is global. In particular,
the system of money has escaped from its national controls, but politics, public
rhetoric aside, has not evolved to the point where adequate responses to our
common economic problems can be posed. At this point, the greatest challenge is
to extend our grasp of the problems we face beyond the existing national
discussions and debates. Most of the problems we see today in the world—and the
economic crisis is only one example—are not confined to a single country.







For me, the question is how we can extend our research
from the local to the global. Let the conservatives restrict themselves to
their national borders. This is not to say I believe that political solutions
to the economic problems the world faces are readily available.  Indeed, it is possible that we are entering
another period of war and revolution, similar to 1776-1815 or 1914-1945. Only
after prolonged conflict and much loss might the world reach something like the
settlement that followed 1945. This was not only a settlement of wartime
politics, but also a framework for the economic politics of the peace,
responding to problems that arose most acutely between the wars.  It sounds tragic, but my point in raising the
possibility now is to remind people that there may be even more catastrophic
consequences at stake that they realize already. We need to confront these and
mobilize against them. When I go back in history, I am pessimistic about
resolving the world's economic problems soon, since the people who got us into
this situation are still in power and are still pursuing broadly the same
policies without any sign of them being changed. I believe that they will bring
us all into a much more drastic situation than we are currently facing. Yet in
some way we will be accountable if we ignore the obvious signs all around us.











How did you arrive at where you currently are in your thinking about IR?







My original work in West Africa arose out of a view that
the post-colonial regimes offered political recipes that could have more
general relevance for the world. I actually believed that the new states were
in a position to provide solutions, if you like, to the corrupt and decadent
political structures that we had in the West. That's why, when we were demonstrating
outside the American embassies in the '60s, we chanted the names of the great
Third World emancipation leaders—Frantz Fanon, Kwame Nkrumah, Fidel Castro, and so
on.







So for me, the question has always been whether
Africans, in seeking emancipation from a long history of slavery, colonialism, apartheid
and postcolonial failure, might be able to change the world. I still think it
could be and I'm quite a bit more optimistic about the outcome now than I have
been for most of the last fifty years. We live in a racialized world order
where Africa acts as the most striking symbol of inequality. The drive for a
more equal world society will necessarily entail a shift in the relationship
between Africa and the rest of the world. I have been pursuing this question
for the last thirty years or more. What interests me at the moment is the
politics of African development in the coming decades.







Africa began the twentieth century as the least populated
and urbanized continent. It's gone through a demographic and urban explosion
since then, doubling its share
of world population in a century. In 2050, the UN predicts that 24% of the world
population will be in Africa, and in 2100, 35% (read the report here, pdf)! This is because Africa is growing
at 2.5% a year while the rest of the world is ageing fast. Additionally, 7 out
of the 10 fastest growing economies in the world are now African—Asian
manufacturers already know that Africa holds the key to the future of the world
economy.







But, besides Africa as a place, if you will, a number
of anti-colonial intellectuals have played a big role in influencing me. The
most important event in the twentieth century was the anti-colonial revolution.
Peoples forced into world society by Western Imperialism fought to establish
their own independent relationship to it. The leading figures of that struggle
are, to my mind, still the most generative thinkers when we come to consider
our own plight and direction. My mentor was the Trinidadian writer C.L.R. James, with whom I spent a
number of years toward the end of his life. I am by temperament a classicist; I
like to read the individuals who made a big difference to the way we think now.
The anti-colonial intellectuals were the most important thinkers of the 20th
century, by which I mean Gandhi, Fanon and James.







But I've also pursued a very classical, Western
trajectory in seeking to form my own thinking. When I was an undergraduate, I
liked Durkheim and as a graduate student Weber. When I was a young lecturer, I
became a Marxist; later, when I went to the Carribbean, I discovered Hegel,
Kant and Rousseau; and by the time I wrote my book on money, The Memory Bank,
the person I cited more than anyone else was John Locke. By then I realized I
had been moving backwards through the greats of Western philosophy and social
theory, starting with the Durkheim school of sociology. Now I see them as a set
of possible references that I can draw on eclectically. Marx is still probably
the most important influence, although Keynes, Simmel and Polanyi have also shaped my
recent work. I suppose my absolute favorite of all those people is Jean-Jacques
Rousseau for his Discourse on Inequality and his inventive
approach to writing about how to get from actual to possible worlds.











What would a student need (dispositions, skills) to become a specialist
in IR or understand the world in a global way?







In your 20s and 30s, your greatest commitment should
be to experience the world in the broadest way possible, which means learning
languages, traveling, and being open to new experiences. I think the kind of
vision that I had developed over the years was not one that I had originally
and the greatest influence on it was the time I spent in Ghana doing my
doctoral fieldwork; indeed, I have not had an experience that so genuinely
transformed me since!







Even so, I found it very difficult to write a book
based on that fieldwork. I moved from my ethnographic investigations into a
literature review of the political economy of West African agriculture, and it
turns out that I am actually not an ethnographer, and am more interested in
surveying literature concerning the questions that interest me. I am still an
acute observer of everyday life; but I don't base my 'research' on it. Young people
should both extend their comparative reach in a practical way and dig very
deeply into circumstances that they encounter, wherever that may be. Above all,
they should retain a sense of the uniqueness of their own life trajectory as
the only basis for doing something new. This matters more than any professional
training.











Now we see spectacular
growth rates in African countries, as you mentioned, one of which is the DRC.
How can we make sense of these formal growth rates: are they representative of
the whole economies of these countries, or do they only refer to certain
economic tendencies?







The whole question of measuring economic growth is a
technical one, and it's flawed, and I only use it in the vaguest sense as a
general indicator. For example, I think it's more important that Kenya, for
example, is the world leader in mobile phone banking, and also a leader in
recycling old computers for sale cheaply to poor people.







The political dispensation in Africa—the combination
of fragmented states and powerful foreign interests and the predatory actions
of the leaders of these states on their people -- especially the restrictions
they impose on the movements of people and goods and money and so on – is still
a tremendous problem. I think that the political fragmentation of Africa is the
main obstacle to achieving economic growth.







But at the same time, as someone who has lived in
Africa for many years, it's very clear that in some countries, certainly not
all, the economies are very significantly on the move. It's not--in principle—that
this will lead to durable economic growth, but it is the case that the cities
are expanding fast, Africans are increasing their disposable income and it's the
only part of the world where the people are growing so significantly. Africa is
about to enter what's called the demographic dividend that comes when the
active labor force exceeds the number of dependents. India has just gone
through a similar phase.







The Chinese and others are heavily committed to taking
part in this, obviously hoping to direct Africa's economic growth in their own
interest. This is partly because the global economy is over the period of
growth generated by the Chinese manufacturing exports and the entailed infrastructure
and construction boom, which was itself an effect of the greatest shift from the countryside to the city in history. Now, the Chinese
realize, the next such boom will be—can only take place—in Africa.







I'm actually not really interested in technical
questions of how to measure economic growth. In my own writing about African
development, I prefer anecdotes. Like for example, Nollywood—the Nigerian film industry—which has just past
Bollywood as the second largest in the world! You mention the Congo which I
believe holds the key to Africa's future. The region was full of economic
dynamism before King Leopold took it over and its people have shown great
resilience since Mobutu was overthrown and Rwandan and Ugandan generals took
over the minerals-rich Eastern Congo. Understanding this history is much more
important than measuring GDP, but statistics of this kind have their uses if
approached with care.











Is it possible to
understand the contemporary economic predicament that we are seeing, which in
the Western world is referred to as the "crisis", without attributing it to
vague agencies or mechanisms such as neoliberalism?







I have written at great length about the world
economic crisis paying special attention to the problems of the Eurozone. My belief
is that it is not simply a financial crisis or a debt crisis. We are actually
witnessing the collapse of the dominant economic form of the last century and a
half, which I call national capitalism—the attempt to control markets, money
and accumulation through central bureaucracies in the interests of a presumed
cultural community of national citizens.







The term neoliberalism is not particularly useful, but
I try to lay out the history of modern money and why and how national
currencies are in fact being replaced. That, to my mind, is a more precise way
of describing the crisis than calling it neoliberal. On the other hand, neoliberalism does refer to
the systematic privatization of public interests which has become normal over
the last three or four hundred years. The bourgeois revolution claimed to have
separated public and private interests, but I don't think it ever did so. For
example, the Bank of England, the Banque de France, and the Federal Reserve are
all private institutions that function behind a smokescreen of being public
agencies.







It's always been the case that private interests
corrupted public institutions and worked to deprive citizens of the ability to
act purposefully under an ideological veil of liberty. But in the past, they
tried to hide it. The public wasn't supposed to know what actually went on
behind the scenes and indeed modern social science was invented to ensure that
they never knew. What makes neoliberalism new is that they now boast about it
and even claim that it's in everyone's interest to diminish public goods and
use whatever is left for private ends—that's what neoliberalism is.







It's a naked grab for public resources and it's also a
shift in the fundamental dynamic of capitalism from production for profit
through sales tow varieties of rent-seeking. In fact, Western capitalism is now
a system for extracting rents, rather than producing profits. Rents are income
secured by political privilege such as the dividends of patents granted to Big
Pharma or the right to control distribution of recycled movies. This has got
nothing to do with competitive or free markets and much opposition to where we
are now is confused as a result. Sometimes I think western capitalism has
reverted to the Old Regime that it once replaced—from King George and the East
India Company to George W and Halliburton. If so, we need another liberal
revolution, but it won't take place in the North Atlantic societies.











In your recent work,
you refer to The Great Transformation, which invokes Karl Polanyi's famous
analysis of the
growth of 19th century capitalism and industrialization. How can Polanyi
help us to make sense of contemporary global economy, and where does this
inspiring work need to be complemented? In other words, what is today's Great Transformation
in light of Polanyi?







First of all, the
Great Transformation is a brilliant book. I have never known anyone who
didn't love it from the first reading. The great message of Polanyi's work is
the spirit in which he wrote that book, regardless of the components of his
theory. He had a passionate desire to explain the mess that world society had
reached by the middle of the 20th century, and he provided an
explanation. It's always been a source of inspiration for me.







A central idea of Polanyi's is that the economy was
always embedded in society and Victorian capitalism disembedded it. One problem
is that it is not clear whether the economy ever was actually disembedded (for
example capitalism is embedded in state institutions and the private social
networks mentioned just now) or whether the separation occurs at the level of
ideology, as in free market economics. Polanyi was not against markets as such,
but rather against market fundamentalism of the kind that swept Victorian
England and has us in its grip today. The political question is whether politics
can serve to protect society from the excesses produced by this disembedding;
or whether it lends itself to further separation of the economy from society.







And I would say that Polanyi's biggest failure was to
claim that what happened in the 19th century was the rise of "market
society". This concept misses entirely the bureaucratic revolution that was
introduced from the 1860s onwards based on a new alliance between capitalists
and landlords which led to a new synthesis of states and corporations aiming to
develop mass production and consumption. Polanyi could not anticipate what
actually happened after he wrote his book in 1944. An American empire of free
trade was built on a tremendous bureaucratic revolution. This drew on
techniques and theories of control developed while fighting a war on all
fronts. The same war was the source of the technologies that culminated late in
the digital revolution. Karl Polanyi's interpretation of capitalism as a market
economy doesn't help us much to understand that. In fact, he seems to have
thought that bureaucracy and planning were an antidote to capitalist market
economy.







If you ask me what is today's great transformation, I
would prefer to treat the last 200 years as a single event, that is, a period
in which the world population increased from one billion to seven billion, when
the proportion of people living in cities grew from under 3% to around half,
and where energy production increased on average 3% a year. The Great Transformation
is this leap of mankind from reliance on the land into living in cities. It has
been organized by a variety of institutions, including cities, capitalist
markets, nation-states, empires, regional federations, machine industry, telecommunications
networks, financial structures, and so on. I'm prepared to say that in the
twentieth century national capitalism was the dominant economic form, but by no
means all you need to know about if you want to make a better world.







I prefer to look at the economy as being organized by
a plural set of institutions, including various political forms. The Great Transformation
in Polanyi's sense was not really the same Great Transformation that Marx and
Engels observed in Victorian England—the idea that a new economic system was
growing up there that would transform the world. And it did! Polanyi and Marx
had different views (as well as some common ideas), but both missed what
actually happened, which is the kind of capitalism whose collapse is constitutes
the Great Transformation for us today. The last thirty years of financial
imperialism are similar to the three decades before the First World War. After
that phase collapsed, thirty years of world war and economic depression were
the result. I believe the same will happen to us! Maybe we can do something
about it, but only if our awareness is historically informed in a
contemporarily relevant way.











The distinction between
states and markets really underpins much of what we understand about the workings
of world economy and politics. Even when we just say "oh, that's not economic"
or "that's not rational", we invoke a separation. How can we deal with this
separation?







This state-market division comes back to the bourgeois
revolution, which was an attempt to win freedom from political interference for
private economic actors. I've been arguing that states and markets were always
in bed together right from the beginning thousands of years ago, and they still
are! The revolution of the mid 19th century involved a shift from
capitalists representing workers against the landed aristocracy to a new
alliance between them and the traditional enforcers to control the industrial
and criminal classes flocking into the cities. A series of linked revolutions
in all the main industrial countries during the 1860s and early 70s—from the
American civil war to the French Third Republic via the Meiji Restoration and
German unification—brought this alliance to power.







Modernity was thus a compromise between traditional
enforcers and industrial capitalists and this dualism is reflected in the
principal social form, the nation-state. This uneasy partnership has marked the
relationship between governments and corporations ever since. I think that we
are now witnessing a bid of the corporations for independence, for home rule,
if you like. Perhaps, having won control of the political process, they feel
than can go ahead to the next stage without relying on governments.  The whole discourse of 'corporate social responsibility'
implies that they could take on legal and administrative functions that had
been previously 'insourced' to states. It is part of a trend whereby the
corporations seek to make a world society in which they are the only citizens
and they no longer depend on national governments except for local police
functions. I think that it is a big deal—and this is happening under our noses!







Both politicians and economic theorists (OliverWilliamson got a Nobel prize for
developing Coase's theory of the form along these lines)
are proposing that we need to think again about what functions should be
internal to the firm and what should be outside. Perhaps it was a mistake to
outsource political control to states and war could be carried out by private
security firms. The ground for all of this was laid in the late 19th
century when the distinction in law between real and artificial persons was
collapsed for business enterprises so that the US Supreme Court can protect
corporate political spending in the name of preserving their human rights!
Corporations have greater wealth, power and longevity than individual citizens.
Until we can restore their legal separateness from the rest of humanity and
find the political means of restricting their inexorable rise, resistance will
be futile. There is a lot of intellectual and political work still to be done
and, as I have said, a lot of pain to come before more people confront the
reality of their situation.











What role do
technological innovations play in your understanding and promoting of shifts in
the way that we organize societies? Is it a passive thing or a driver of
change?







I wrote a book, the
Memory Bank: Money in an Unequal World
(read it here, with the introduction
here), which centered on a
very basic question: what would future generations consider is interesting
about us? In the late '90s, the dot com boom was the main game in town. It
seemed obvious that the rise of the internet was the most important thing and
that our responses to it would have significant consequences for future
generations.







When I started writing it, I was interested in the
democratic potential of the new media; but most of my friends saw them as a new
source of inequality – digital exclusion, dominance of the big players and so
on. I was accused of being optimistic, but I had absorbed from CLR James a
response to such claims. It is not a question of being optimistic or
pessimistic, but of identifying what the sides are in the struggle to define
society's trajectory. In this case the sides are bureaucracy and the people. Of
course the former wish to confine our lives within narrow limits that they
control in a process that culminates as totalitarianism. But the rest of us
want to increase the scope for self-expression in our daily lives; we want
democracy and the force of the peoples of world is growing, not least in Africa
which for so long has been excluded from the benefits of modern civilization.
Of course there are those who wish to control the potential of the internet
from the top; but everywhere people are making space for themselves in this
revolution. When I see how Africans have moved in the mobile phone phase of
this revolution, I am convinced that there is much to play for in this
struggle. What matters is to do your best for your side, not to predict which
side will win. Speaking personally, Web 2.0 has been an
unmitigated boon for me in networking and dissemination, although I am aware
that some think that corporate capital is killing off the internet. A lot depends
on your perspective. I grew up learning Latin and Greek grammar. The
developments of the last 2-3 decades seem like a miracle to me. I guess that
gives me some buoyancy if not optimism as such.







It's obvious enough to me that any democratic response
to the dilemmas we face must harness the potential of the new universal media.
That's the biggest challenge. But equally, it's not clear which side is going
to win. I'm not saying that our side, the democratic side, is going to beat the
bureaucratic side. I just know which side I'm on! And I'm going to do my best
for our side. Our side is the side that would harness the democratic potential
of the new media. In the decade or more since I wrote my book on money and the
internet, I have become more focused on the threat posed by the corporations
and more accepting of the role of governments. But that could change too. And I
am mindful of the role the positive role that some capitalists played in the
classical liberal revolutions of the United States, France and Italy.











Final Question. I would
like to ask you about the distinction between formal and informal economy which
you are famous for having coined. How did you arrive at the distinction? Does the
term, the dichotomy, still with have the same analytical value for you today?








Around 1970, there was a universal consensus that only states could organize economies for development. You were either a Marxist or a Keynesian, but there were no liberal economists with any influence at that time. In my first publication on the topic (Informal Income Opportunities and Urban Employment in Ghana, read it here, pdf)—which got picked up by academics and the International Labor Organization—I was reacting against that; the idea promoted by a highly formal economics and bureaucratic practice that the state as an idea as the only actor. In fact, people in Third World cities engaged in all kinds of economic activities, which just weren't recognized as such. So my impulse was really empiricist—to use my ethnographic observations to show that people were doing a lot more than they were supposed to be doing, as recorded in official statistics or discussed by politicians and economists.






Essentially, I made a distinction between those things
which were defined by formal regulation and those that lay outside it. I posed
the question how does it affect our understanding in the development process to
know more what people are doing outside the formal framework of the economy.
And remember, this came up in West Africa, which did not have as strong a colonial
tradition as in many other parts of Africa. African cities there were built and
provisioned by Africans. There were not enough white people there to build
these cities or to provide food and transport, housing, clothing and the rest
of it.







In my book on African agriculture, I went further and
argued that the cities were not the kind of engines of change that many people
imagined that they were, but were in fact an extension of rural civilizations
that had effectively not been displaced by colonialism, at least in that
region. Now if you ask me how useful I think it is today, what happened since
then of course is neoliberal globalization, for want of a better term, which of
course hinges on deregulation. So, as a result of neoliberal deregulation, vast
areas of the economy are no longer shaped by law, and these include many of the
activities of finance, including offshore banking, hedge funds, shadow banking,
tax havens, and so on. It also includes the criminal activities of the
corporations themselves. I've written a paper on my blog called "How the
informal economy took over the world" which argues that we are witnessing the
collapse of the post-war Keynesian consensus that sought to manage the economy in
the public interest through law and in other ways that have been dismantled; so,
it's a free-for-all. In some sense, the whole world is now an informal economy,
which means, of course, that the term is not as valuable analytically as it
once was. If it's everything, then we need some new words.







The mistake I made with other people who followed me was
to identify the informal economy with poor slum dwellers. I argued that even
for them, they were not only in the informal economy, which was not a separate
place, but that all of them combined the formal and informal in some way. But
what I didn't pay much attention to was the fact that the so-called formal
economy was also the commanding heights of the informal economy—that the
politicians and the civil servants were in fact the largest informal operators.
I realize that any economy must be informal to some degree, but it is also
impossible for an economy to be entirely informal. There always have to be
rules, even if they take a form that we don't acknowledge as being
bureaucratically normal like, for example, kinship or religion or criminal
gangs. So that's another reason why it seems to me that the distinction has
lost its power.







At the time, it was a valuable service to point to the
fact that many people were doing things that were escaping notice. But once
what they were doing had been noticed, then the usefulness of the distinction
really came into question. I suppose in retrospect that the idea of an informal
economy was a gesture towards realism, to respect what people really do in the
spirit of ethnography. I have taken that idea to another level recently in mywork on the human economy at the University of Pretoria in South Africa. Here, in addition to
privileging the actors' point of view and their everyday lives, we wish to
address the human predicament at more inclusive levels than the local or even
the national. Accordingly, our interdisciplinary research program (involving a
dozen postdocs from around the world, including Africa, and 8 African doctoral
students) seeks ways of extending our conceptual and empirical reach to take in
world society and humanity as a whole. This is easier said than done, of
course.







Keith
Hart is Extraordinary Visiting Professor in the Centre for the Advancement of
Scholarship and Co-Director of the Human Economy Program at the University of
Pretoria, South Africa. He is also centennial professor of Economic Anthropology at the LSE.











Related links










Faculty Profile at U-London


Personal webpage


Read Hart's Notes towards an Anthropology of the Internet (2004, Horizontes Antropológicos) here (pdf)


Read Hart's Marcel Mauss: In Pursuit of a Whole (2007, Comparative Studies in Society and History) here (pdf)


Read Hart's Between Democracy and the People: A Political History of Informality (2008 DIIS working paper) here (pdf)


Read Hart's Why the Eurocrisis Matters to Us All (Scapegoat Journal) here (pdf)









Print version of this Talk (pdf)