121,169 research outputs found
"The Ownership Society: Social Security Is Only the Beginning"
No full textFrom this paper's Preface, by Dr. Dimitri B. Papadimitriou, President: As his new term begins, President Bush has been trying to focus his domestic agenda on what he calls the Òownership society,Ó a sweeping vision of an America in which more citizens would hold significant assets and be free to make their own choices about providing for their health care and retirement, and educating their children. L. Randall Wray, who has written for the Levy Institute on many topics, evaluates the premises and logic of this program in this new public policy brief. Wray points out that much of the history of the Western world since the advent of liberalism has been marked by a gradual rise in the power of those who lack property. Some of the milestones in this progression include universal suffrage, regulation of business, and progressive taxation. BushÕs ownership society proposals, according to Wray, would result in a partial reversal of the progress of the last 250 years. The reason is that, while BushÕs plans would undoubtedly increase the choices and power of those who have property, they would fail to democratize ownership. Many gains to the wealthy would come at the expense of the poor, the sick, and the elderly. Consider, for example, the condition of the nationÕs private pension system. Increasingly, firms are switching from defined-benefit to definedcontribution plans. This development would seem on its surface to favor the establishment of a new class of stockholders, empowered and holding a larger stake in the system. But, as Wray demonstrates, retirement accounts and other assets just do not add up to a substantial amount for most Americans. This means that most citizens have much to lose indeed from attacks on Social Security and the erosion of the traditional pension system. Much as the safety net for the poor has largely vanished since the Reagan years, the bread-and-butter benefits and rights of the middle class are now threatened by the ownership-society agenda. To many, the claim made by Republicans that all should take responsibility for their wellbeing rings true. But it is important to keep in mind the real alternative to public benefits for the middle class: a society in which success would depend largely upon luck, inheritances, or charity. A society that forces individuals to read their future in their Microsoft Money files inevitably creates a class of nonowners who are insecure and lack independent means. Ironically, this runs up against the aims of those who sincerely hope for a world in which more have the opportunity to become rich: moving upward often brings some setbacks along the way, which might be fatal in a world of reduced bankruptcy protection, disability and medical benefits, and educational aid.
"The Return of Big Government--Policy Advice for President Obama"
No full textIn the current global financial crisis, economists and policymakers have reembraced Big Government as a means of preventing the reoccurrence of a debt-deflation depression. The danger, however, is that policy may not downsize finance and replace money manager capitalism. According to Senior Scholar L. Randall Wray, we need a permanently larger fiscal presence, with more public services. His advice to President Obama is to discard all of former Treasury Secretary Paulson's actions. Wray believes that we can afford any necessary spending and bailouts, and that these actions will not burden our grandchildren.
Mary Jane A. Rathburn letter to Martha E. Wray
No full textLetter from Mary Jane Rathburn to Martha Wray describing her illness following the birth of her son, Van
Mary Jane A. Rathburn letter to Martha E. Wray
No full textLetter from Mary Jane Rathburn to Martha Wray describing her illness following the birth of her son, Van
"Financial Markets Meltdown: What Can We Learn from Minsky"
No full textAccording to this new Public Policy Brief by Senior Scholar L. Randall Wray, the current crisis in financial markets can be traced back to securitization (the "originate and distribute" model), leverage, the demise of relationship-based banking, and the dizzying array of extremely complex instruments that--quite literally--only a handful understand.
"The Origins of Money and the Development of the Modern Financial System"
No full textThe origins of money and banking are explained in nearly every introduction money and banking course, but Wray proposes an alternative approach that emerges from a comparative analysis of economic institutions. Orthodox theory suggests that barter replaced self-sufficiency and increased efficiency by fostering specialization- subsequently, establishing some object as a medium of exchange permits greater efficiency. In essence, the orthodox economist espouses the view that we operate in a free market economy in which "neutral money is used primarily to facilitate exchange of real goods, undertaken by self-interested maximizers for personal gain." Institutionalists reject this argument because it emerges from the perspective of a rational economic agent facing scarce resources and unlimited wants-thus, the focus is on choice. Wray states that economic analyses must incorporate interactions between humans and nature, and that the economy is a "component of the material life process of society." Hence, the conventionalists' focus on choice should instead be directed at production and distribution. The Wray thesis suggests that money is necessarily endogenously determined: Monetary economies have not, and cannot, operate with exogenous money supply can function with a commodity reserve system, such a system is subject to periodic debt deflations. In sum, the monetarist policy prescription would be counterproductive to systemic stability and would not yield greater control of the money supply.
"It's Time to Rein In the Fed"
No full textScott Fullwiler and Senior Scholar L. Randall Wray review the roles of the Federal Reserve and the Treasury in the context of quantitative easing, and find that the financial crisis has highlighted the limited oversight of Congress and the limited transparency of the Fed. And since a Fed promise is ultimately a Treasury promise that carries the full faith and credit of the US government, the question is whether the Fed should be able to commit the public purse in times of national crisis.
"Is Keynesianism Institutionalist?: An Irreverent Overview of the History of Money from the Beginning of the Beginning to the Present"
No full textThis paper poses that the one commonality between institutionalist thought and Keynesianism (as presented in his General Theory) was money. Tracing the origins and uses of money, the myth of the development of money as a medium of exchange is dispelled and replaced with money used as evidence of debt, specifically, government debt. This paper was presented as the Presidential Address to the 1998 Association for Institutionalist Thought conference. As such, the paper should be taken in the same spirit as the [in]famous neoclassical Robinson Crusoe story, or Paul Samuelson's story of the evolution of money. The only significant change that has been made is to add several endnotes that will make some of the references more clear; this might make the piece more accessible for students.
"What Should Banks Do? A Minskyan Analysis"
No full textIn this new brief, Senior Scholar L. Randall Wray examines the later works of Hyman P. Minsky, with a focus on Minsky’s general approach to financial institutions and policy. The New Deal reforms of the 1930s strengthened the financial system by separating investment banks from commercial banks and putting in place government guarantees such as deposit insurance. But the system’s relative stability, and relatively high rate of economic growth, encouraged innovations that subverted those constraints over time. Financial wealth (and private debt) grew on trend, producing immense sums of money under professional management: we had entered what Minsky, in the early 1990s, labeled the “money manager” phase of capitalism. With help from the government, power was consolidated in a handful of huge firms that provided the four main financial services: commercial banking, payments services, investment banking, and mortgages. Brokers didn’t have a fiduciary responsibility to act in their clients’ best interests, while financial institutions bet against households, firms, and governments. By the early 2000s, says Wray, banking had strayed far from the (Minskyan) notion that it should promote “capital development” of the economy.
"Government Deficits, Liquidity Preference, and Schumpeterian Innovation"
No full textWray asserts that rigorous analyses of the role played by innovation in economic development must acknowledge the contribution of Joseph Schumpeter. However, the author suggests that the current stagnation confronting most developed, capitalist economies "cannot be understood without synthesizing Schumpeter's insights with those of Kalecki and Keynes." Hence, Schumpeter's work alone is inadequate in explaining the links between government deficits in ensuring aggregate demand and corporate profits.
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