Re: new thread: PKT and ecology

[Clifford Poirot <cpoirot@xxxxxxxxxxx>]

Tim, I think you raise some interesting points, though I do not entirely
agree. See my response below

-----Original Message-----
From: Canova, Timothy [mailto:CANOVA@xxxxxxxxxxxxx]
Sent: Thursday, March 22, 2001 2:01 PM
To: 'pkt@xxxxxxxxxxxxxxxx'
Subject: Re: new thread: PKT and ecology


it would be nice to see PKT adopt a more expansive view of ecology.  the
environment should include more than the physical environment, also the
social environment.  doesn't Keynesian economics have anything at all to say
about the fact that 2 million Americans are now behind bars, many because of
a lack of decent job opportunities and the utter fiction of a 4 percent
unemployment rate.  instead there are PKTers who have accepted the fiction
that the US has been at full employment for the past few years.  that's a
stretch -- only when compared to the basket cases of the world, like Japan.

My response:
I'm reminded of the quip that "we know the class struggle is important
because the maximum eigenvalue equals the rate of growth". OK-so it's a
cheap shot and applies more to the Sraffians than PKT'ers. But there is an
element of truth in that Post-Keynesianism has a tendency to lapse into
abstract, reified mathematical analysis as much as neo-classical analysis.
Thus, sometimes PKT seems to me to be unfortunately a bit like Neo-classical
analysis, but with a different set of equations.

All that said, I haven't heard many arguing that 4% unemployment is full
employment-simply that its better than what we have had in the past. I think
one point that has come through on this list is that we can do better than
the current 4%, though there are differences about how to get there. Also,
PKT'ers do a better job at looking at income distribution and changing
structural factors in the economy.

it's a vicious cycle:  the economy underperforms and social programs (job
training, education, public sector job programs) are underfunded.  the Drug
War is applied in a racially disparate manner, locking up disproportionately
large numbers of African-Americans, Latinos, Native Americans.  many of
those "felons" then lose the right to vote under state felony
disenfranchisement laws.  as a result, Democrats lose close elections and
anti-Keynesian policies are adopted by Republicans and "new Democrats."

My response:
I never cease to be amazed at what we have accepted in the name of the war
on drugs. Could you have a Keynesian analysis of the Drug War?

before PKTers go overboard waxing eloquent on ecology, maybe we should have
something to say about the fictitous full employment economy, the booming
prison population, yes even the Drug War and of course felony
disenfranchisement.  the political and social environment has been neglected
for too long by PKTers.  hug some victims of this bubble economy and the
Drug War before hugging trees.

My response:
I've been toying with an idea (hardly original i am sure, but perhaps worth
pursuing) that the primary constraint on the economy is energy prices. It
seems there is surface empirical support for the premise that we have an
energy constrained economic cycle: high rates of growth lead to rising
energy prices. This accelerates the rate of inflation causing central
bankers to tighten the money supply. Lower growth leads to falling energy
prices. So the higher "natural rate" observed by classical economists is
nothing more than a changed policy regime brought on by higher energy
prices.

I think of a different politics. Here would be my dream list, which I think
would be supported by most PKT'ers. It aims at resolving the
jobs-environment dichotomy. Essentially, my view is that the current
military machine should be replaced by an environmental machine of green
public works. This would be a massive construction/engineering project of
bullet trains criss-crossing the country combined with cheap, and plentiful
mass transit. Government would fund new types of engines and embark on a
real energy policy aimed at meaningful conservation.

Simply put, we could think of technological advance as a reduction in the
environmental damage per unit of output. The PPF sets the limits between
growth and environmental protection. A green technological innovation pushes
the PPF out, allowing us to have growth and environmental protection.
Traditionally, non-green technological change leads to growth, but also
leads to more resource damage.

The drug war is a much harder nut to crack. It is not about Keynesianism,
and only partially about race. Deep down it is about Americans' peculiar
sense of morality. How Keynesian economists can address that, I do not know.



Timothy A. Canova
Assistant Professor of Law
University of New Mexico School of Law
1117 Stanford Drive N.E.
Albuquerque, New Mexico  87131

Tel:  (505) 277-5654
Fax:  (505) 277-0068
e-mail:  canova@xxxxxxxxxxx


-----Original Message-----
From: Paul Davidson [mailto:pdavidson@xxxxxxx]
Sent: Thursday, March 22, 2001 10:37 AM
To: stephen block
Cc: pkt@xxxxxxxxxxxxxxxx
Subject: Re: new thread: PKT and ecology


At 07:05 AM 3/22/01 -0800, you wrote:
>Thanks Paul. Yes I had in mind _economic prospects for our grandchildren_.
>And look forward to reading your thoughts in the chapter you suggested. The
>idea was to attempt to engage in the impossible: to anticipate what JMK
>would have done or proposed given our present circumstamces.  I am  happy
to
>note, but not surprised, that you have given this some thought. Any other
>suggestions would of course be appreciated should this discussion take any
>twists and turns with which you  agree or disagree.


keynes's concept of user costs  (chapter 6) is very important.  See my AER
(1963) article on the Oil industry and the rate of extraction.

Also I wrote (with two of my graduate students at the time -- it was part
of their disserations) several studies on the demand and supply for outdoor
recreation --  including one published by the Government -- which was the
largest empirical econometric study that was published as a entitled
THE  DEMAND AND SUPPLY OF OUTDOOR RECREATION (1965) which studied
recreation by 25 different recreational activities (anywhere from water
sports to bird watching) based on the Census of Recreation and projecting
these results for nine regions of the country through the year 2000..  Talk
about a green study!!

We also did studies for water recreation in the Deleware rstuary, another
for TVA.  Also the effect of highway beautification on automobile accidents
and fatalities-- all published !! and all using good Keynesian concepts.

Paul