The Grizzly Political Cost of Bad Economics

After Thursday night’s debate in Brooklyn between Bernie Sanders and Hillary Clinton, analysis focused mainly on candidate attitude and demeanor. How did each candidate perform? Was Sanders too sarcastic? Was Clinton too evasive? The reality is that strong language, frequent interruptions, and personal attacks are inevitable in the circus atmosphere of presidential debates: With nothing to look at but people standing at microphones, viewers tend to get bored in the absence of combative argumentation. The TV news producers know this. In this debate, personal attacks were invited from the outset when Wolf Blitzer opened by asking Bernie Sanders what he meant when he said Hillary Clinton was not “qualified” to be the president. (Let’s get ready to rummm-bbble!!) Amid a crowd outburst, Sanders emphasized the meaning he had always intended for that poor choice of words – that she has compromised her independence by accepting huge campaign contributions from wealthy donors. There seemed to be audible sighs of disappointment in the muted audience response.

This debate was more informative than some, however, and I have to credit both candidates for doing as well as they could under the circumstances. When it was over, viewers who listened closely had a better sense of differences in many major issue areas, such as foreign policy, immigration, election finance reform, and the minimum wage. I remain extremely concerned, however, that the hard core economic issues, like taxation and banking are so poorly understood – not just by the public in general but also by the media, the economics profession and the candidates themselves – that even if given more time, the candidates would still have left viewers feeling uninformed and perhaps even confused. I sincerely believe that both Democratic candidates have sincere, progressive intentions, and that the opposite is true of all of the Republican presidential hopefuls in this election cycle. The outcome of this election cycle is gravely important, for after 35 unabated years of trickle-down Reaganomics, American prosperity and democracy is rapidly declining, and with it our hopes for an acceptable future.

More and more people are coming to realize the serious implications of the 2016 election. Ironically, for the first time in decades, the New York primary this coming Tuesday will be pivotal for both parties. In today’s Albany Times Union, the paper’s editor Rex Smith has prfesented a near-perfect perspective on the situation in “Curtain rises on New York party shows” (here):

In most years, New York is more a backdrop for political theater than a place where the show gets fully staged. * * * But this election year neither party has gotten its show together as quickly as usual, so the audience here matters, for once. * * *

Polls suggest the frontrunners aren’t likely to be tripped up here Tuesday. A Marist-NBC4 poll released Friday showed Clinton widening her lead over Sanders. And Trump running away from Kasich and Cruz. That means that most of each party’s voters are comfortable with the prospect of autumn’s big nationwide show being a contest between the incremental liberalism of Clinton and the radical authoritarianism of Trump.

If that turns out to be the outcome when Wednesday dawns, it will mean that New York has passed up its chance to truly unsettle American politics, for good or ill. But whatever happens, change is coming.

Wins here would energize the campaigns of Sanders or Cruz, and either as the nominee of his party would unhinge long-standing realities, shifting the fulcrum of American politics to the left or right, with corresponding push-back from the other side.

The notable suggestion here is that New York has an opportunity to “truly unsettle American politics.” I would argue that a Sanders/Trump outcome in New York would reflect a deep seated disturbance that has already taken place and has been growing for a long time: It’s not that change is coming, but that change, driven by economic decline, is well underway. After the Wisconsin primary the New York Times reported that exit polls showed economic issues to be the greatest concern of voters of both parties, and it is the growing seriousness of economic issues that explains the political revolts in both parties.

This post will look beneath the candidate positions and voter concerns on major economic issues to identify the underlying reality at play in each instance. The use of terms like “liberal” versus “conservative,” or “moderate” versus “radical,” often generate conclusions with little more thought, and can generate wildly varying impressions depending upon what they mean to each reader. Thus, I will use he terms “Right” and “Left” as representing relative positions on a continuum of “Lorenz curves” (here), depicting the distribution of income. On the extreme hypothetical “Left,” every household has the same income and wealth. No communist economy ever came close to making such a  high degree of “liberalism” a reality; nor has any communist philosophy, contrary to popular myth, ever aspired to absolute equality. On the extreme “Right,” hypothetically, one household possesses all wealth and everyone in else the society is a serf. That represents no known reality today either, and so far as I know no “authoritarian” rule has ever come close to that reality.

On such a scale, it is generally understood that the American political parties have both shifted toward the Right over the last one-half century. The Republican Party has strenuously opposed all economic policies – such as Social Security, unemployment benefits, Medicare and Medicaid, and Food Stamps – that would effectively move distribution to the Left on the Lorenz Curve. The Democratic Party has also supported corporate welfare (subsidies and tax breaks) that move economic reality to the Right on the Lorenz Curve.

In this election cycle, we are witnessing rank and file Republicans rising up in great numbers to oppose the GOP establishment, supporting Trump because he promises a move to the Left on the Lorenz curve. Although this is fairly obviously a revolt, I offer this view from Chris Collins, a Republican representative from Western New York, from an Op-ed in the April 15 New York Times entitled “The Case for Trump” (here):

Americans are angry. I hear it from the former factory workers who lost their jobs or other countries because of bad trade deals, and veterans who wait months to see a doctor at a Veterans Affairs hospital and the small business owners who are struggling to stay afloat because of the Affordable Care Act’s crippling regulations. The professional politicians they trusted and supported have repeatedly sold out our country in favor of special interests and the status quo. Finally, millions of Americans are saying, “Enough is Enough.”

Although, as Collins observes, Trump endorses the arguments of the Right against Obamacare, and claims there is economic growth and job creation potential (as did Mitt Romney four years ago) in “buying and rebuilding distressed companies,” Collins also points out that Trump acknowledges the need to get our country “back on course and restore the possibility of the American dream for our children and grandchildren.” Trump supporters, he argues, want a chief executive to run the country, not a politician. In that view, of course, achieving growth and prosperity is nothing more than a business management problem. Thus, even as Trump endorses the faulty economics of Republican orthodoxy, it rejects the consequences of that orthodoxy, propelling him inexorably toward the GOP nomination.

Although Collins no doubt fails to see it this way, the rejection of Republican economic orthodoxy amounts to acknowledging a need to move to the Left on the Lorenz Curve. This is almost exactly the same perception of economic reality to which the revolution on the Left is responding in its support for Bernie Sanders. As we shall see, all of the internal inconsistencies and bad economics are on the Republican side, and the progressive economic arguments are correct.

The reason the Democratic Party hasn’t “gotten its show together” yet, as Rex Smith puts it, is that the Sanders supporters do not believe that the “liberal gradualism” of Hillary Clinton will be nearly enough to get us where we need to go. Thus, the Sanders campaign rejects Democratic Party orthodoxy in the same way Trump’s campaign rejects Republican orthodoxy, but again, only the Sanders revolution has the economics right. Clinton’s economics is about one-half correct, but for bad economic reasons her “gradualism” approach remains too far to the Right on the Lorenz Curve. This post intends to make that abundantly clear. Let’s begin with a review of the minimum wage issue.

The Minimum Wage

In the Brooklyn debate, the moderators focused much attention on the minimum wage issue, and reduced it to a relatively trivial dispute over each candidate’s past support for a national $15 hourly minimum wage. The current minimum wage in the United States is $7.25, and only seven states and the District of Columbia have enacted minimum wages in excess of $10.00, some of which, including New York’s and California’s $15 minimum wage are to be gradually implemented and fully effective on 12/31/2018 and 1/1/2022, respectively. (NCSL, 2016 Minimum Wage by State, here).

The current $7.25 minimum wage fails, in most instances,  to meet the current minimum poverty threshold computed by the Census Bureau (here). Before taxes, a full 40-hour workweek over 51 weeks would produce a pretax income of $14,790. That is under the poverty threshold for a two person household, even without any children under 18 to support. A $15 minimum wage would produce $30,600 in a year, barely enough (if it was effective in 2015) to meet the poverty threshold for a family of two parents and three children.

Several points should be discussed here: Because of inflation, $15 will be worth less in 2019 or 2020 than today, and so it will not go as far for financially strapped families than as suggested by these computations.

One argument against raising the minimum wage that has been pressed in the states is the claim that employer cost increases will force them to cut back on employment to maintain profit margins, and could cause small businesses to fold. These claims are insubstantial for several reasons:.That would happen only in instances where business prices are so constrained by competition they could not be raised in response to cost increases, but that is rarely the case in today’s market’s. Moreover, competitors typically face the same state-level minimum wage requirement, and all American  employers face the same national requirement.

There are macroeconomic benefits to raising the minimum wage: At either the state or federal level, an increase in the minimum wage will:

  • Reduce reliance on federal aid programs, like food stamps, freeing up tax dollars for other purposes;
  • Reduce subprime dis-saving and associated bad debt;
  • Increase direct spending on goods and services.

The net effect of reducing inequality is demonstrably to increase income growth. Thus, these three factors together would tend to stimulate the economy even if the increase is otherwise neutral in effect, because it would reduce income inequality. Moreover, employers are receive benefits offsetting the higher wage costs, because:

  • The stimulation of effective demand from wage increases in response to an increase in the minimum wage, through all of the above mechanisms, will provide offsetting revenues for employers;
  • Raising wages to meet a higher minimum wage will reduce the pressure for collective bargaining, and help avoid the potential cost of strikes and other labor relations strife.

At the state level, concerns about employers moving away from the state to avoid the minimum wage are unrealistic. Large employers, like Walmart, Lowes, Target, AT&T or Verizon, cannot move and continue to serve the same customer base, nor would they need to move. Smaller businesses have already been largely marginalized by or consolidated into the big companies, and “middle class” business income has significantly declined. An increase in the federal minimum wage eliminates any possible advantage of moving, and the similarity of most state minimum wages today suggests that little advantage currently exists.

Taking income and wealth distribution in effect, therefore, leads to the conclusion that raising the minimum wage will tend to increase business income, benefiting all marginal and small businesses that are struggling to survive. Increasing the minimum wage at the national level would have the greatest positive effect on growth.

Republicans routinely oppose increases in the minimum wage, because their supply-side ideology prevents recognition of the positive income effects I have identified. Instead, they make strained supply-side arguments. Ted Cruz, for example, a few days ago argued that “I think the minimum wage systematically hurts the most vulnerable” (here). His reasoning was that when you order food on an iPad at a fast food restaurant “you’re seeing the minimum wage.” That’s a flawed argument: Although iPad ordering may increase ordering efficiency, it does not necessarily reduce labor requirements at fast food restaurants. Even if technological enhancements reduce labor requirements, there is no priori reason to assume that investing in the more capital intensive approach will likely reduce total cost of output, and that low end labor cost would be a decisive factor.

Donald Trump is the only Republican  candidate for the presidency in the past two years, so far as I am aware, who has ever supported an increase in the minimum wage. However, back in August of 2015 (here), he argued that “having a low minimum wage is not a bad thing for this county.”  He suggested that decisions to locate or relocate were based on differences among the states in the minimum wage, but he quickly backed away from that insensible claim, arguing:”But we are no longer competing against one state against the other. … It’s the United States against other places. Where the taxes are lower, where the wages are lower, where lots of things are” lower.

With “lots of things” driving business out of this country, it would hardly make sense to try to prevent the exodus by holding wages, down. The median income has fallen ten percent over the last eight years, and real incomes of the bottom 80% have been stagnant since 1980. And as higher paying jobs have relocated out of the country, the American work force has had to adjust to taking the available, lower-paying work. Reflecting this shift of the workforce to lower-paying jobs, there has been a steady shift in the “most common” job in the states from “secretaries” in 1978 to “truck, delivery and tractor drivers” in 2014 (here).

Of course, minimum wage requirements apply to secretaries and truck drivers too; but the concentration of truck drivers is increasing because these are all jobs that cannot be exported. None of this provides a basis for not increasing the minimum wage. The GOP claim that an increase in the minimum wage would hurt low income people and business is baseless.

Even though the minimum wage is important as a backstop against increased poverty, and the drift of more and more households toward the poverty threshold, the problem of low and declining real incomes across the board in America is a much bigger problem. More recently, The Guardian (here) reported that Trump “flip-flops” on wages and the minimum wage issue:

Donald Trump, billionaire Republican presidential frontrunner, has changed his mind about wages: Americans aren’t earning enough. He’s also not keen on Wall Street. The shift has Trump on a collision course with Democrat Bernie Sanders – while oddly agreeing with many of his points.

“Wages in are [sic] country are too low, good jobs are too few, and people have lost faith in our leaders. We need smart and strong leadership now!” Trump tweeted on Monday.

The opinion appeared to reverse what the Republican frontrunner said in November during the fourth Republican debate. Asked if he was sympathetic to the protesters demanding a $15-an-hour minimum wage, Trump said: “I can’t be.”

This report falsely conflates the minimum wage with wage levels generally. There is no inconsistency between Trump’s position that the minimum wage is not too low (which as just discussed is not persuasive) and his recognition that American wages in general are too low. The latter argument pits him, as he responds directly to the demands of his middle-aged white working-class support base, squarely against the GOP establishment by admitting that income inequality is a macroeconomic problem.

Increasing the minimum wage will provide modest economic benefits, and slightly reduce the growing number of former middle class income earners that are drifting toward and over the poverty line. Increasing the minimum wage is a good idea, and we should do it, but that won’t begin to counter the damage to lower income groups caused by the forces of growing inequality.

Breaking Up the Big Banks

A more significant issue addressed in the Brooklyn debate is the question of breaking up the big banks. Hillary Clinton argued that Sanders was remiss in not explaining how he would break up the big banks and leaving it to the banks to work out, but then, curiously, she pointed out that the banks have been charged in the Dodd-Frank legislation with working out their own plans for dissolution in the case of another banking crisis. Sanders correctly argued that developing the details of dissolution must be left to the big banks in the first instance.

Clinton attempted to minimize the danger of a big bank failure, arguing as Krugman did in his recent Op-ed “Sanders Over the Edge” (here) that it was the smaller “shadow” banks, not the big banks, that were “really at the heart of the financial crisis.” Incredibly, Krugman has missed the point: It is the big banks who were bailed out by U.S. taxpayers to prevent economic collapse, and the burden of the bailout fell disproportionately on low income groups. The reporter Matt Taibbi immediately, and correctly, shredded Krugman’s Op-ed in a Rolling Stone article “Why the Banks Should Be Broken Up” (here).

Clinton argued she would definitely act, should the need arise, to prevent a recurrence of that cataclysmic event. Sanders responded that this wait and see approach is inadequate and the banks simply must be broken up now. He reacted sarcastically to Clinton’s argument that she has “called out” the big banks in the past. The media argued that chiding Clinton in this way was inappropriate, but there is a serious point here: The concern of the Sanders campaign about the big donations Clinton is getting from Wall Street corporations, and her unwillingness to release the transcripts of private speeches she has given at Wall Street gatherings (a point she waffled on when Dana Bash pressed her about it) cannot be easily dismissed in connection with enforcing Wall Street reform.

Regardless, Sanders is correct on the issue of breaking up the big banks. Dana Bash pointed out in her question that the Federal Reserve and FDIC had just jointly announced (here) that 5 of the 6 largest banks are still too big to fail (The New York Times, here): Eight years after passage of the Dodd-Frank Wall Street reform legislation, these banks still had not developed adequate “living will” provisions for dissolving in the case of another crisis in a way that would prevent the need for taxpayer bailouts to avoid catastrophe.The danger of another such event is growing with significant debt bubbles inflating that could burst at any time. It is common knowledge that regulators and economists did not see the 2008 crash coming, and it is irresponsible to ignore that risk now, knowing how dangerous it would be to put “living will” provisions to the test in an emergency.

In the debate, Sanders appropriately held firm to his commitment to break up the big banks now, rather than wait for another disaster to take place. The media characterize Sanders’s positions as “radical” but there is nothing radical about avoiding an extremely debilitating crash that would likely hasten the onset of another Great Depression. The “living will” approach, quite frankly, was a stop-gap measure that avoided dealing immediately with the “to big to fail” problem, preserving the high profitability of the  private banking system.

Of course, the GOP will never support tampering with its money-making machine. There is no difference between Trump and Cruz in this regard. Given the general media ignorance of the banking issue, the political advantage falls to the GOP: An unwary public is being misled into ignoring a very dangerous situation.

Inequality and Growth

The same can be said about the popular perspectives on inequality and growth, and the role of taxation in controlling both, that has permeated federal policy and infected the political atmosphere in every election cycle. Because of the long-term dominance of economic thinking by “neoclassical” economics, almost everyone is blinded to the extent of the danger we face from inequality growth. I have written a thorough account of the failure of the economics profession and of the disastrous consequences the “neoclassical synthesis” has had for the U.S. and world economies. Hopefully, it will soon be published, but I have been blogging my thesis here for several years, so I’ll just summarize the basic points here:

  • As income inequality grows, “economic” (i.e., income) growth declines, substantially and, over time, exponentially. This is consistently proved over the entire century of income tax records, and theoretically required by the quantity theory of money;
  • U.S. inequality has grown since 1980 because the wealthiest Americans and their corporations have been allowed to take in too much money (profit and rent) for the value they provide, and have been allowed (through reduced taxation) to keep too much of it as accumulated wealth;
  • This has led to steady decline, and will lead eventually to depression and collapse; after 35 years of the Reagan Revolution we have already suffered one collapse (the Crash of 2008) and we can expect more as our depression worsens.

The officially unrecognized signs of this debilitating process are everywhere, but it has advanced to the point where economic factors have caused a political revolution that is ripping apart both political party establishments. Consider the following evidence which is becoming increasingly apparent over the last two years:

  • Income growth has been gradually declining for several decades, as inequality has grown, and recently aggregate growth has fallen to one percent or less. Because aggregate growth includes the high income growth going to the top, lower incomes are necessarily declining;
  • The median income has fallen 10% since the Crash of 2008; and the number of households living in poverty or near poverty is increasing rapidly as below median incomes decline ever faster;
  • Interests rates have been near zero for several years, an unprecedented failure of the monetary system which means the demand for capital remains very low;
  • The low demand for capital is explained by the gradual shrinking of the economy. According to EPI estimates, between 1983 and 2009, 40.9% of all wealth gains went to the top 1%, and 81.7% of all wealth gains went to the top 5%. Meanwhile, the bottom 60% lost 7.5% of its wealth. Growth in the level of economic activity therefore continues to decline;
  • Meanwhile, wealth is accumulating at the top. Corporations increasingly buy back outstanding shares of their stock, reducing their payout obligations, a clear sign of economic contraction, and as the demand for investment funds in the U.S. shrinks, several trillions of dollars have been removed to offshore accounts.

Clearly, the GOP narrative that income growth is merely a business management problem is false: The “supply-side” neoclassical economics that sustains that narrative fails to address the need for effective consumer demand to promote growth.

Taxation

Ever since the Reagan Revolution began, its cornerstone policy has been reducing the income tax burden on the wealthy and their corporations. This point, thoroughly addressed in previous posts, will only to be highlighted here: The top income tax rate on ordinary income was reduced from 71% to 35% since 1980, and the top marginal capital gains tax rate has been kept considerably lower. The justification for this systematic tax avoidance has been the supply-side claim that lower taxation of the wealthy encourages increased investment and job creation, and promotes income growth. That “trickle-down” argument is just the opposite of the truth, as is finally becoming abundantly clear. It remains the official economic policy of Republican orthodoxy, nonetheless, and every GOP presidential candidate this year has promoted more tax decreases for the rich and more tax relief for  corporations, even as they profess a desire to promote growth. On February 22, 2016, Jackie Calmes reported in the New York Times (here):

The tax plans of the Republican presidential candidates would cut federal revenues as much as $12 trillion over a decade, a post-World War II record eclipsing the deep tax cuts of George W. Bush, Ronald Reagan and John F. Kennedy. And they would come just as America faces the costs of its aging baby-boom generation.

The combination of the tax cuts’ size and timing has many tax and budget policy analysts questioning their viability. The Republican rivals routinely denounce the current $14 trillion debt, but none has said how he would offset the revenues lost to his tax cuts, beyond unspecified cuts to domestic programs and repeals of some existing tax breaks.

Each candidate has said his tax cuts are needed to promote work, saving, investment and faster economic growth.

“I believe by cutting taxes and simplifying the tax code, we will grow our economy and create more taxpayers rather than more taxes,” Senator Marco Rubio of Florida has said.

Tax policy groups agree generally, but only if the revenue losses are offset by budget savings that avoid piling up more debt that would be counterproductive to spurring the economy.

Tax policy groups generally agree, we are told, with trickle-down economics. Thus, the prevalent mainstream belief is that trickle-down works in the long run, so long as we avoid too much additional short-run debt accumulation by cutting government spending. This caveat is the so-called “austerity doctrine” which has proved unworkable at home and abroad for decades. Both ideas are dead wrong: Income and wealth do not trickle back down, but accumulate and concentrate at the top, as just discussed.

Both Hillary Clinton and Bernie Sanders advocate higher taxes for the rich, but the Clinton “liberal gradualism” as described by Rex Smith (and that was just today endorsed by his newspaper, the Albany Times Union, here) ignores the continuing drag on economic growth and concentration of income and wealth at the top resulting from the tax decreases at the top that created this problem to begin with. That’s a frame of mind I call “partial trickle-down.”

            Paul Krugman’s “Partial Trickle-down”

            This remaining difference between Sanders an Clinton will prove to be the most significant of all, and it can be traced back to Paul Krugman’s belief that inequality is just a “political” problem. As I have pointed out countless times, he fails to recognize the concentration of income at the top and the associated transfers of wealth. This perspective has led him, somehow, to recognize that reducing taxes on top incomes will not stimulate growth but to deny or overlook the fact that those tax cuts actually reduced growth. From that erroneous perspective, it is easy to deny that restoring the previous levels of taxation would restore the previous level of growth and, more to the point, that doing so is needed to restore that growth. In short, Krugman misses the entire mechanism of income redistribution associated with income inequality growth.

This is no trivial problem – it is a problem with major dimensions. Not only can we not rely on increasing the minimum wage to provide any significant stimulus, but nothing else is available to stop the huge decline. Fiscal and monetary policy are no longer available to influence growth. Fiscal policy only works if you eventually pay back the loans. However, we now have over $18 trillion of national debt that can never be paid off under the current tax structure, and the top 1% has gained roughly $25 trillion of additional wealth since 1980, about one-half of that concentrated in the top 0.1% of wealth holders. Inequality is our most serious economic problem, and to prevent the accelerating slide toward a collapse into another Great Depression there is no alternative to greatly increasing the taxation at the top.

As I have pointed out, the Congressional Budget Office has projected that by 2021 the interest on the national debt will exceed the entire defense budget, the nation’s largest discretionary budget item, and that projection was made without taking into account the drag on growth created by the ever-growing inequality. Our government is effectively bankrupt, because it cannot repay its existing debt, and it must borrow to pay the interest on that debt. It is not at all clear that the dollar can be sustained long enough to get through the first term of the next presidency.

It is their perception of the gravity of the situation, and the extensive evidence of decline, that led Oregon Senator Jeff Merkley to become the first U.S. Senator to announce his support for Bernie Sanders on April 13 (here), and Alison McLean Lane, an Albany County Legislator, to support Sanders in a letter to the Times Union published April 14 (here). In support of their endorsements, both offered their observations of the continuing long-term decline they have experienced. Lane offered this explanation:

The school district my 4-year-old twins will attend this fall has a student body of which 11 percent are homeless and 36 percent live in poverty. If I sent my children today to the same university I attended, it would bankrupt us.

Here are three more alarming statistics that explain why this epidemic is in this legislative district: In 1980, 11.7 percent of the entire income of New York went to the top 1 percent; in 2015, that number soared to 30.2 percent; yet, America’s suburban poverty rate is 11.8 percent, the highest since 1967. Our entire state should be screaming from the rafters over statistics like this.

We live in the world’s wealthiest nation, yet our country has one of the highest poverty rates of any developed nation. We have homeless veterans and children, but our nation spent $2 billion a day on two wars. We could have housed, fed and clothed these vulnerable populations.

Merkley offered a similar assessment:

I grew up in working-class Oregon. On a single income, my parents could buy a home, take a vacation and help pay for college. My father worked with his hands as a millwright and built a middle-class life for us.

My parents believed in education and they believed in the United States. When I was young, my father took me to the grade school and told me that if I went through those doors, and worked hard, I could do just about anything because we lived in America. My dad was right.

Years later, my family and I still live in the same working-class community I grew up in. But America has gone off track, and the outlook for the kids growing up there is a lot gloomier today than 40 years ago.

Many middle-class Americans are working longer for less income than decades ago, even while big-ticket expenses like housing, health care and college have relentlessly pushed higher.

I have discussed in earlier posts how neoclassical economics, especially the “neoclassical synthesis” promoted by Paul Samuelson (Paul Krugman’s PhD faculty adviser) over the last 60 years, has perverted the thinking of mainstream economists. That perverted thinking insists that our economy will continue to grow, and to thrive “in the long run” despite continuous evidence that the alleged pendulum forces (a la Alfred Marshall, circa 1880) and the forces of the “rocking horse” (a la Paul Samuelson, circa 1953) are just fantasies. Now, at last, enough evidence has accumulated for people to seriously question the very foundations of modern mainstream economics.

That is what I have done. No one will take my word for the advanced degree of the neoclassical perversion, however, so I have written it up in a 500-page book that I am seeking to publish as soon as possible. This election cycle makes this summary of my findings essential.

Conclusion

In the general election, it will be crucial to elect the democratic presidential candidate, and to restore a democratic majority to both houses of Congress. If Hillary Clinton is the nominee, Bernie Sanders (as his wife Jane has already announced, in the April 13 interview with Jane Sanders entitled “The need for party unity,” here) will vote for her, and we can expect Sanders to do everything in his power to dissuade his supporters from defecting, and to encourage them to vote for Clinton, and for Democrats across the board. This, by the way, was a revealing caution from Jane Sanders, given that her husband is still in the race and has won seven of the last eight primary caucuses.

If Sanders does not get the nomination, we must fervently hope that Clinton wins and that what she has learned in this election cycle has informed her natural progressive tendencies sufficiently that she will be able to avoid the major catastrophe that looms ahead in the not-too-distant future. Basic elements of the Sanders economic plan should be adopted for the Democratic Party’s platform in the fall.

JMH – 4/17/2016

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