James K. Galbraith, Professor of Economics, University of Texas
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James K. Galbraith is a professor of economics and teaches a variety of other subjects at the LBJ School at the University of Texas. He holds degrees from Harvard (B.A. magna cum laude, 1974) and Yale (Ph.D. in economics, 1981). He studied economics as a Marshall Scholar at King's College, Cambridge in 1974-1975, and then served in several positions on the staff of the U.S. Congress, including Executive Director of the Joint Economic Committee. He was a guest scholar at the Brookings Institution in 1985. He directed the LBJ School's Ph.D. Program in Public Policy from 1995 to 1997. He directs the University of Texas Inequality Project, an informal research group based at the LBJ School.
Galbraith has co-authored two textbooks, The Economic Problem with the late Robert L. Heilbroner and Macroeconomics with William Darity, Jr. He is the author of Balancing Acts: Technology, Finance and the American Future (1989) and Created Unequal: The Crisis in American Pay (1998). Inequality and Industrial Change: A Global View (Cambridge University Press, 2001), is credited with Maureen Berner and features contributions from six LBJ School Ph.D. students. His latest book The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too was published in 2008.
Galbraith maintains several outside connections, including serving as a Senior Scholar of the Levy Economics Institute and as Chair of the Board of Economists for Peace and Security. He writes a column called "Econoclast" for Mother Jones, and occasional commentary in many other publications, including The Texas Observer, The American Prospect, and The Nation. He is an occasional commentator for Public Radio International's Marketplace.
Of all the utterly half-baked ideas. We have here ten King Canutes, who think that a commission can achieve what the laws of economic accounting, under the circumstances facing the United States, plainly forbid. Let's go through the exercise. 1. We know that Y = C + I + G + X - M. This is an accounting statement. It says that total national income is the sum of consumption, investment, government spending and net exports. It's in every textbook, often on the first page. From this is follows that: 2. [S-I] = [G-T] + [X-M] . This… Read more
“Of course, there were exceptions to these trends: a few economists challenged the assumption of rational behavior, questioned the belief that financial markets can be trusted and pointed to the long history of financial crises that had devastating economic consequences. But they were swimming against the tide, unable to make much headway against a pervasive and, in retrospect, foolish complacency.” Paul Krugman, New York Times Magazine, September 6, 2009 Amen. In two sentences, Professor Paul Krugman, Nobel Laureate in Economics for 2008, has summed up the failure of an entire era in economic thought, practice and policy discussion. And… Read more
Normal 0 false false false MicrosoftInternetExplorer4 st1:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} The budget process is in dire trouble. Turning matters over to a “Budget Fed” would be the worst of all possible cures. Professor Leeper’s ideas about transparency are beyond ludicrous. In the United States, fiscal policy is almost wholly transparent. You can follow the process every day as the budget goes through Congress. Projections abound. They are usually wrong, but this is not because of… Read more
Chairman Bernanke may, if he likes, try to define "fiscal sustainability" as a stable ratio of public debt to GDP. But this is, of course, nonsense. It is Ben Bernanke as Humpty-Dumpty, straight from Lewis Carroll, announcing that words mean whatever he chooses them to mean. Now, we may admit that the power of the Chairman of the Board of Governors of the Federal Reserve System is very great. But would someone please point out to me, the section of the Federal Reserve Act, wherein that functionary is empowered to define phrases just as he likes? A stable ratio of… Read more
This is a difficult topic, not least because so much of what most observers take for granted in the comparison between the U.S. and Europe simply is not so. For example, are wages in Europe more egalitarian than in the United States? This is the basic premise of the argument that the U.S. has a "flexible labor market" in comparison with Europe. The idea is also that U.S. wages adjust more readily, generating a more rapid approach to equilibrium and therefore a lower rate of unemployment. But the premise is false. European wages are not more egalitarian than here. It… Read more
My comments on this are also in wide circulation elsewhere this week, so I'll just leave links: 1) The Daily Beast, on the latest plan: http://www.thedailybeast.com/blogs-and-stories/2009-03-24/the-geithner-plan-wont-work/ 2) The Washington Monthly, on the broader issues: http://www.washingtonmonthly.com/features/2009/0903.galbraith.html 3) Some recent TV commentary: http://finance.yahoo.com/tech-ticker/article/216311/Part-I-Geithner's-Plan-%22Extremely-Dangerous%22-Economist-Galbraith-Says?tickers=%5Egspc,%5Edji,c,bac,jpm,WFC The Yahoo headline, incidentally, though widely quoted, is a bit stronger than my actual remark. I said the plan had some "extremely dangerous features" -- not that the whole thing was "extremely dangerous" per se. JG … Read more
The Bourbons. They learned nothing, and forgot nothing. Came the revolution. Some of my colleagues' responses below beautifully typify the attitude of many academic economists: Nothing to see here. Just move along. As Michael Bernstein tells in "A Perilous Progress," in late 1915 a member of the American Economic Association wrote the president of that eminent group, about the agenda for that year's scholarly meetings. He noted that "[his colleagues] are a ‘rather impractical lot. Here is a world crisis, the greatest in half a thousand years, or more' -- and economists do not even deign to discuss it." Nothing… Read more
The forecasts of the CBO, Federal Reserve and the administration are probably too optimistic, for technical, psychological and political reasons. First, the underlying baseline models incorporate the notion of a natural rate of unemployment. This is an arbitrary rate to which the economy is assumed to return automatically over time – even if no action is taken. CBO pegs this rate at 4.80 percent and builds a five-year reversion period into its model. There is no foundation in real life for this. The implicit idea, drawn from textbook theory, is that real wages will fall to adjust the labor market.… Read more
Litan makes a point: this topic will provide future employment to economists. Otherwise, to say that sticky wages (or prices) play a role in unemployment is a bit like blaming gravity for the collapse of a bridge. It's not of any use to the civil engineers. … Read more
Improve what bank plan? There are laws on these matters. Let me first refer you to William K. Black, of the author of The Best Way to Rob a Bank is to Own One: "Whatever happened to the law (Title 12, Sec. 1831o) mandating that banking regulators take ‘prompt corrective action' to resolve any troubled bank? The law mandates that the administration place troubled banks, well before they become insolvent, in receivership, appoint competent managers, and restrain senior executive compensation (i.e., no bonuses and no raises may be paid to them). The law does not provide that the taxpayers… Read more
What Next? James K. Galbraith The compromises necessary to pass the recovery bill in the Senate damaged it in several ways. The overall size of the package was reduced, evidently for the cosmetic purpose of keeping the top-line number below $800 billion. And funds urgently needed to stabilize state and local governments and for construction were cut back, along with the credit against the payroll tax – evidently to make room for a rollback of the alternative minimum tax, a step with a strong political constituency but a weak economic rationale. In my local paper Thursday morning, I read of… Read more
I believe the President's economic team is acting and speaking in good faith. This is in distinct contrast to the previous administration, which had few if any discernible fixed beliefs. The new administration has not formally spelled out an economic analysis, nor a full-fledged policy vision. But it's reasonably clear that they are proceeding on two tracks. First, they believe that we are in a business-cycle downturn, a recession – a severe one, but still basically an ordinary recession. This belief implies that the economy will eventually start to recover, even if nothing is done. (The President said today that… Read more
Nationalization. Such a big word. Such a scary word. Such political word. Such a misleading word. Treasury Secretary Geithner has already announced, according to Politico.com, that banks will not be nationalized. “We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system,” he said. Indeed. But what does the United States do, when financial institutions are insolvent? What is the correct policy, tested by history, when the value of capital held by "private shareholders" has already been reduced, by business losses, to zero?… Read more
No. The question is grossly misconceived. Right now and for the immediate future, the budget deficit is the only source of demand that can fuel a recovery. Our present problem is not that it is too big, but that it is too small. Far too small. In principle, economic growth can come from household consumption, business investment, government spending, or exports. This is a tautology, indisputable and known to everyone who has ever opened a textbook. Household consumption depends on incomes and on credit. The collapse of credit, rooted in the decline of housing values, is at the root of… Read more
Jared is right on this one. The collapse of GM might entail the loss of both Ford and Chrysler as suppliers also go down. Knock-on effects would destroy state and local governments in the auto zones, along with associated industries and would make the housing crisis that much worse. A bridge loan that buys time to get a new government into Washington is therefore an act of minimal prudence. Once Team Obama is in place, an orderly review of conditions and a restructuring of the industry can begin, including potential public components such as health care reform. Bankruptcies may happen… Read more
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