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JW Mason

JW Mason

Assistant professor of economics at John Jay College - CUNY, and fellow at the Roosevelt Institute. RT = Read This

Articles by JW Mason

A Few Followup Links

7 days ago

The previous post got quite a bit of attention — more, I think, than anything I’ve written on this blog in the dozen years I’ve been doing it.
I would like to do a followup post replying to some of the comments and criticisms, but I haven’t had time and realistically may not any time soon, or ever. In the meantime, though, here is some existing content that might be relevant to people who would like to see the arguments in that post drawn out more fully.
Here is a podcast interview I did with some folks from Current Affairs a month or so ago. The ostensible topic is Modern Mone(tar)y Theory, but the conversation gave me space to talk more broadly about how to think about macroeconomic questions.
A pair of Roosevelt reports (cowritten with Andrew Bossie) on economic policy during World

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The American Rescue Plan as Economic Theory

March 15, 2021

So, this happened.
Some people are frustrated about the surrender on the minimum wage, the scaled-back unemployment insurance, the child tax credit that should have been a universal child allowance, the fact that most of the good things phase out over the next year or two.
On the other side are those who see it as a decisive break with neoliberalism. Both the Clinton and Obama administrations entered office with ambitious spending plans, only to abandon or sharply curtail them (respectively), and instead embrace a politics of austerity and deficit reduction. From this point of view, the fact that the Biden administration not only managed to push through an increase in public spending of close to 10 percent of GDP, but did so without any promises of longer-term deficit reduction,

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The Natural Rate of Interest?

February 11, 2021

(A year ago, I mentioned that Arjun Jayadev were writing a book about money. The project was then almost immediately derailed by covid, but we’ve recently picked it up again. I’ve decided to post some of what we’re writing here. Plucked from its context, it may be a bit unclear both where this piece is coming from and where it is going.)
The problem of interest rates is one of the key fissures between the vision of the economy in terms of the exchange of real stuff and and the reality of a web of money payments. Like a flat map laid over a globe, a rigid ideological vision can be made to lie reasonably smoothly over reality in some places only at the cost of ripping or crumpling elsewhere; the interest rate is one of the places that rips in the smooth fabric of economics most often

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“Has Finance Capitalism Destroyed Industrial Capitalism?”

January 23, 2021

(At the big economics conference earlier in January, I spoke on a virtual panel in response to Michael Hudon’s talk on the this topic. HIs paper isn’t yet available, but he has made similar arguments here and here. My comments were in part addressed to his specific paper, but were also a response to the broader discussion around financialization. A version of this post will appear in a forthcoming issue of the Review of Radical Political Economics.)
Michael Hudson argues that the industrial capitalism of a previous era has given way to a new form of financial capitalism. Unlike capitalists in Marx’s day, he argues, today’s financial capitalists claim their share of the surplus by passively extracting interest or economic rents broadly. They resemble landlords and other non-capitalist

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On Negative Rates

October 29, 2020

Negative interest rates – weird, right?
In the five thousand years that interest rates have been recorded, they’ve never hit zero before.  Today, there’s some $15 trillion in negative-yielding bonds — admittedly down from $17 trillion last year, but still a very substantial fraction of the global bond market outside the US. At first it was only shorter bonds that were negative, but today German bunds are negative all the way out to 30 years. What’s going on? Does this mean it would be profitable to bulldoze the Rockies for farmland? Will it cause the extinction of the banking system? And more fundamentally, if the interest rate reflects the cost of a good today in terms of the same good next year, why would it ever be negative? Why would people place a higher value on stuff in the

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On Cryptocurrencies

October 16, 2020

(This is an edited and expanded version of a talk I gave in Trento, Italy in June 2018, on a panel with Sheila Dow.)
The topic today is “Digital currencies: threat or opportunity?”
I’d like to offer a third alternative: New digital currencies like bitcoin are neither a threat or an opportunity. They do not raise any interesting economic questions and do not pose any significant policy problems. They do not represent any kind of technological advance on existing payment systems, which are of course already digital. They are just another asset bubble, based on the usual mix of fraud and fantasy. By historical standards, they are not a very large or threatening bubble. There is nothing important about them at all.
Why might you conclude that the new digital currencies don’t matter?

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The Coronavirus Recession Is Just Beginning

October 3, 2020

(A couple days ago I gave a talk — virtually, of course — to a group of activists about the state of the economy. This is an edied and somewha expanded version of what I said.)
The US economy has officially been in recession since February. But what we’ve seen so far looks very different from the kind of recessions we’re used to, both because of the unique nature of the coronavirus shock and because of the government response to it. In some ways, the real recession is only beginning now. And if federal stimulus is not restored, it’s likely to be a very deep and prolonged one.
In a normal recession, the fundamental problem is an interruption in the flow of money through the economy. People or businesses reduce their spending for whatever reason. But since your spending is someone else’s

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“Monetary Policy in a Changing World”

September 17, 2020

While looking for something else, I came across this 1956 article on monetary policy by Erwin Miller. It’s a fascinating read, especially in light of current discussions about, well, monetary policy in a changing world. Reading the article was yet another reminder that, in many ways, debates about central banking were more sophisticated and far-reaching in the 1950s than they are today.
The recent discussions have been focused mainly on what the goals or targets of monetary policy should be. While the rethinking there is welcome — higher wages are not a reliable sign of rising inflation; there are good reasons to accept above-target inflation, if it developed — the tool the Fed is supposed to be using to hit these targets is the overnight interest rate faced by banks, just as it’s been

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Marx on the Corporation

May 11, 2020

(I wrote this post back in 2015, and for some reason never posted it. The inspiration was a column by Matt Levine, where he wondered what Marx would think of the modern corporation.)
Let’s begin at the beginning.
Capital, for Marx, is not a thing, it’s a social relation, a way of organizing human activity. Or from another point of view, it’s a process. It’s the conversion of a sum of money into a mass of commodities, which are transformed through a production process into a different mass of commodities, which are converted back into a (hopefully greater) sum of money, allowing the process to start again.  Capital is a sum of money yielding a return, and it is a mass of commodities used in production, and it is a form of authority over the production process, each in turn.
When we have

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Announcement: Money and Things

May 11, 2020

Arjun Jayadev and I are writing a book. The working title is Money and Things: How Finance Shapes the World. Here’s what it’s about:
Money is one of our most ubiquitous social technologies. It is also one of the most misunderstood.  Economics students in college are taught that money is just a convenience to avoid the clumsiness of barter – that prices and incomes depend on underlying “real” values, and money is just a veil. Academic economists insist that money is “neutral” – that the long-run development of the economy depends on “real” factors like population growth and technological progress, which have nothing to do with money or credit. Many people still have some vague notion that money is backed by something “real”, perhaps vaults of gold under Fort Knox, while those who do

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Posts in Three Lines, Coronavirus Edition

April 21, 2020

I haven’t been able to write as much about the current situation as I would like to.
Personally, I am doing fine. My wife and I are lucky to have some of the most secure jobs in the country – we are both public university professors — and we’re all healthy and as comfortable as can be expected under the circumstances, and we have access to outdoor space. But we also have two children who are now home all day, both of them young enough to need more or less constant attention. And I’m teaching three classes this semester, and the transition to teaching online, which I’ve never before done, has been challenging. And of course there is work already in the pipeline that has to be completed, like my project with Andrew Bossie on the economic mobilization of World War as a model for today.

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Endless austerity, state and local edition

March 28, 2020

Brian Nichols of the essential Employ America has a useful, if depressing, roundup of the coming wave of state-local austerity. Some highlights: Ohio, Nevada and Pennsylvania have already announced hiring freezes; Ohio is also looking at a 20 percent across the board cut in state spending, while Virginia has canceled planned raises for teachers. Many cities, including New York, St. Paul and New Orleans, are laying off public employees. And as I noted in my last post, New York  State is planning to slash $400 million from the hospitals at the front line of the crisis.
This isn’t new. One of the many drawbacks of American federalism is that state and local government spending — which includes the great majority of public sevices that people use on a day to day basis — is distinctly

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Daily News Op-Ed: Why Is Governor Cuomo Still Trying to Cut Medicaid?

March 26, 2020

(My Roosevelt colleague Naomi Zewde and I have an op-ed in the March 26 Daily News, criticizing Governor Cuomo’s plans to push ahead with cuts to state Medicaid spending despite the epidemic.)

Last week, as the coronavirus shut down much of New York, the state announced a bold plan to drastically cut funding for the state’s hard-pressed health care providers.

That’s right: As the coronavirus crisis escalates across New York State, Gov. Cuomo is proposing to slash funding for those at the frontlines.

Specifically, the cuts come via the Medicaid Redesign Team, appointed last month by the governor with the charge of cutting $2.5 billion from the state’s annual health spending. These cuts will not only mean an even more overstretched health care system; they will mean lost jobs.

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Talk on the Economic Mobilization of World War II

March 24, 2020

Two weeks ago – it feels much longer now – I was up at UMass-Amherst to give a talk on the economic mobilizaiton of World War II and its lessons for the Green New Deal.
Here is an audio recording of the talk. Including Q&A, it’s about an hour and a half. Here are the slides that I used.

The big three lessons I draw are:
1. The more rapid the economic transformation that’s required, the bigger the role the public sector needs to take, in investment especially, and more broadly in bearing risk.
2. Output can be very elastic in response to stronger demand, much more so than is usually believed. There’s a real danger that over-conservative estimates of potential output will lead us to set our sights

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Tracking COVID-19

March 12, 2020

You’ve probably seen various graphs online showing the increase in coronavirus cases in various countries.
I don’t know that I am adding any value here, but I decided to reproduce those graphs using the convenient data from Johns Hopkins Coronavirus Research Center. (I can’t vouch for  the reliability of the Johns Hopkins data, but it seems to be what most news organizations are relying on.) Here’s one showing cases for all countries other than China that have reported at least 100 cases. The x axis is days after the 100-case mark was reached.

What we see here is that most countries show a consistent 35-45 percent daily growth in reported cases. Only Japan, at 20 percent, and Singapore and more recently Korea, at around 10 percent, depart significantly from this. It’s also interesting

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Slides on WWII Mobilization

March 1, 2020

I just did a presentation at the Eastern Economic Association meeting on “Lessons for the Green New Deal from the Economic Mobilization for World War Two.” Here are my slides.
The paper itself should becoming out from the Roosevelt Institute in the next month or so.

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Teaching notes on capitalism

February 14, 2020

I just put up a some new notes on my teaching pages, a brief handout on capital and capitalism.
The goal of this isn’t, of course,to give a comprehensive overview of what capital means or what capitalism has been historically. I just want to introduce students to the basic terms and concepts that they’ll encounter in the sort of Marxist and Marx-influenced historians I assign in my economic history class — Sven Beckert, Immanuel Wallerstein, Fernand Braudel, Ellen Meiksins Wood, Eric Foner, Mike Davis, and so on.
That said, I’ve tried to write it in clear, non-technical language and keep it focused on the most fundamental concepts, so if you are looking for an eight-page introduction to how Marxists think about capital and capitalism, perhaps this will do.
If you are a teacher yourself

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2019 Books

January 27, 2020

Books I read in 2019. I’m sure I’m forgetting one or two.
Novels and stories
Transit. This is a lovely short novel by the German communist Anna Seghers, which I stumbled across on my parents’ shelves. Set, and written, in World War II France, it tells the story of various refugees waiting in Marseilles to work through the interminable bureaucratic process of acquiring the exit and transit visas they need to leave the country. It’s a beautiful evocation of the mix of unsettledness and bureaucratic stasis that is the life of the refugee, but it’s also got the tight construction of a classic 19th century novel, where the plot unfolds with a retrospective inevitability. There was apparently (and coincidentally) a movie based on it that came out this year.
Jews without Money, by Mike Gold.

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Utz-Pieter Reich on the Nominal and the Real

January 7, 2020

What oft was thought, but ne’er so well expressed:
The lack of realism in microeconomic value theory has been overcompensated by an unquenched desire for `real’ figures. Idealism in the concepts of theory has resulted in a plethora of empirical concepts for real value, and the development of index number theory is thus characterised by an inventive sequence of euphemistic terms. We have an `ideal’ index, a `true’ (cost of living) index, an `exact’ index, a `superlative’ index and, last but not least, a `hedonic’ index. At the same time the word `real’ is employed in more than one sense in economics. It can mean the opposite to `nominal’, in other words a value figure corrected for a change in the value of the currency unit through a general price index. It can also mean `volume’, which

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What Should be Universal and Free?

January 7, 2020

In the US, as in many  countries, local governments often provide fire protection. In general — there are exceptions, but they’re still rare enough to make news — this is a free service, available to everyone who lives in whatever jurisdiction provides it. No one has to sign up or pay for coverage. To most people, I suppose, this is a normal and reasonable thing to do. 
One effect of fire protection is to stop peoples’ homes from burning down. As it happens, rich people are more likely to own homes than poor people. And when people with lower incomes do own houses, they are generally less expensive. So the distributional effect of preventing houses from burning is clearly regressive.
Why should everyone have to pay to keep millionaires’ mansions from burning? Modern apartment buildings

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Are We Mismeasurng Productivity?

December 19, 2019

(I am an occasional contributor to roundtables of economists in the magazine The International Economy. This month’s topic was: “What are the policy implications if productivity growth is being under-measured in the official data?” My answer is below.)
How many hamburgers equal one haircut? 
In itself, the question doesn’t make sense. They’re just different things. What we can compare, is how much they cost. This is true across the board: The only way we can convert all the endlessly varied objects and activities that make up “the economy” into a single number, is through their market prices. Markets are what let us express all the various products of human labor as a single quantity we call output. 
This means that productivity is only meaningful in the context of market prices. There

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Considerations on Rent Control

November 14, 2019

(On November 13, I was invited to testify before the Jersey City city council on rent control. Below is an edited version of my testimony.)
My name is J. W. Mason. I have a Ph.D. in Economics from the University of Massachusetts at Amherst, I am an assistant professor of economics at John Jay College of the City University of New York, and I am a Fellow at the Rosevelt Institute.
My goal today is to present some general observations on rent regulation from the perspective of an economist.
Among economists, rent regulation seems be in similar situation as the minimum wage was 20 years ago. At that time, most economists  took it for granted that raising the minimum wage would reduce employment. Textbooks said that it was simple supply and demand — if you raise the price of something,

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Presentation on Public Spending and Debt

November 5, 2019

I was in DC today at an event for legislative staffers organized by the Congressional Progressive Caucus, on fiscal policy and government debt. For anyone interested, the slides I used for my presentation are below.
fiscal policy slides for 11-5-19

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CBO Interest Rate Forecasts, 2011-2019

November 4, 2019

This is just a brief addition to the previous post. I should have included this figure, which shows the CBO’s 10-year forecasts for the interest rate on the 10-year Treasury bond, compared with the actual interest rate.
Forecasts by year made. Source: CBO 10-Year Economic Projections, various yearsOne obvious point here is that, for most of the past decade, the CBO has been projecting a return of interest rates to “normal” levels, which has stubbornly failed to take place. If we compare the interest rate on Treasury bonds at any point since 2010 to the CBO’s forecasts from a couple years before, the actual interest rate is lower than the forecast. This is especially true in the earlier years.
Another point, more relevant to my post, is the latest adjustment really is a big deal. While

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The CBO Just Handed Us Two Trillion Dollars

October 22, 2019

Anyone who follows the DC budget game at all knows that the Congressional Budget Office (CBO) is supposed to be its referee. Any proposal that involves new spending or revenue is scored by the CBO for its impact on the federal debt over the next ten years. That score normally sets the terms on which the proposal will be debated and voted on. This ritual is sufficiently established that most spending proposals are described in terms of their cost over the next ten years – the CBO’s scoring window.
The CBO doesn’t only assess individual bills, it also gives a baseline, producing regular forecasts of major economic variables and the path of the debt under current policy. In a sense, these forecasts are the playing field on which budget proposals compete. So it ought to be a big deal when

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In The American Prospect: The Collapse of Austerity Economics

October 1, 2019

(This review is coauthored with Arjun Jayadev, and appears in the Fall 2019 issue of the The American Prospect. The version below includes a few passages that were cut from the published version for space reasons.)
Review of Albert Alesina, Carlo Faverro and Francesco Giavazzi,  Austerity: When It Works and When It Doesn’tWith Arjun Jayadev
A decade ago, Alberto Alesina was one of the most influential economists in the world. His theory of ‘expansionary austerity’ – the paradoxical notion that reducing public expenditure would lead to an increase in economic activity — was one of the hottest ideas in macroeconomics. He claimed to have shown that government surpluses could actually boost growth, but only if they were achieved via spending cuts rather than tax increases. At a moment when

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“Can We Afford a Green New Deal?”

September 18, 2019

[I was at an event the other night bringing together people from the economic-policy and climate activism worlds. I was asked to talk about the macroeconomic case for a Green New Deal, and the question of “how do we pay for it?” Here is a somewhat extended and edited version of my remarks.]
Most of the Democratic candidates now have plans for major public investment programs to deal with the challenge of climate change. These involve spending on the order of 2 percent of GDP on average, ranging from half a percent for Beto O’Rourke up to 4 percent for Bernie Sanders.  
A question that will get asked about any of these plans is, how do we pay for it? Can we afford it?
We might simply reject the question, on the grounds that what we cannot afford is to continue dumping carbon into the

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A Baker’s Dozen of Reasons Not to Worry about Government Debt

July 24, 2019

(EDIT: It’s not sufficiently clear in the original post, but I wrote this as a sort of compendium of arguments one might use in response to claims that the federal debt is a binding constraint on new spending. I’m not saying these are the best or only reasons to reject the idea that federal government cannot borrow more. I’m saying that these are arguments that seem to have some traction in the mainstream policy world, such that you could use them in a newspaper op-ed or conversation with a congress member’s staff. Also, a premise here is that there are urgent needs we want the public sector to spend more on. Apart from the last couple, these are not arguments for more public dbet as an end in itself.)

Why might larger budget deficits be ok?
There are a number of reasons why

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The Return of the Renter

July 20, 2019

Every month, the Census releases new numbers on new housing construction. As an indicator of current economic conditions, June’s numbers didn’t give any dramatic news one way or another. But they did highlight a trend that I think should get more attention: the decline of single-family housing in the US.
To market watchers, housing is an important sign of business cycle turning points. A well-known article argues that Housing Is the Business Cycle.  From this point of view, June’s numbers were not very informative. They told the same story the last several months’ did: After steadily rising from the end of the recession, housing construction has stabilized — housing starts and permits issued have been basically unchanged since early 2017. Last month’s housing starts were almost exactly

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Good News on the Economy, Bad News on Economic Policy

June 7, 2019

(Cross-posted from the Roosevelt Institute blog. I am hoping to start doing these kinds of posts on new economic data somewhat regularly.)
On Friday, the the Bureau of Labor Statistics released the unemployment figures for May. As expected, the reported unemployment rate was very low—3.6 percent, the same as last month. Combined with the steady growth in employment over the past few years, this level of unemployment—not seen since the 1960s—suggests an exceptionally strong labor market by historical standards.  On one level this really is good news for the economy. But at the same time it is very bad news for economic policy: The fact that employment this low is possible, shows that we have fallen even farther short of full employment in earlier years than we thought.
Some skeptics, of

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