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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

Climate Policy from a Keynesian Perspective

December 7, 2021

(This is the extended abstract for a piece I am writing for “The Great Turnaround,” a collection of essays on the economics of decarbonization from ZOE-Institute for Future-fit Economies and the Heinrich Böll Foundation.) 
In the world in which we live, large-scale cooperation is largely organized through payments of money. Orthodox economics conflates these money flows, on the one hand with quantities of real social and physical things, and on the other hand with a quantity of wellbeing or happiness. One way of looking at Keynes’ work is as an attempt to escape this double conflation and see money as something distinct. Eighty years later, it can still be a challenge to imagine our collective productive activity except in terms of the quantities of money that organize it. But this

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“Inflation is bad. But mass unemployment would have been worse.”

November 25, 2021

(Lauren Melodia and I had an op-ed in the Nov. 21 Washington Post, challenging the idea that today’s inflation means that the stimulus measures of the past year and half were too large. I’m posting it here as well.)
As we think about rising prices today, it’s important not to lose sight of where we were not so long ago. In the spring of 2020, much of the economy abruptly shut down. Schools and child-care centers closed. Air travel fell below 100,000 people a day, compared with 2.5 million daily passengers in a normal year. No one was staying in hotels or going to the gym. About 1.4 million small businesses shut their doors in the second quarter of the year.

More than 20 million Americans lost their jobs in the early days of the pandemic, and there was a very real possibility that many

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“Earnings Shocks and Stabilization During COVID-19”

October 28, 2021

The other day, I put up a post arguing, on the basis of my analysis of the income data in the Current Population Survey, that the economic disruptions from the pandemic had not led to any reduction in real income for the lowest-income families. This is the opposite of the Great Recession, and presumably earlier recessions, where the biggest income losses were at the bottom. The difference, I suggested, was the much stronger fiscal response this time compared with previous downturns. 
My numbers were rough — tho I think informative — estimates based on a data set that is mainly intended for other purposes. Today I want to call attention to an important paper that reaches similar conclusions on the basis of far better data.
The paper is “Earnings Shocks and Stabilization During COVID-19”

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A C-Shaped Recovery?

October 26, 2021

The coronavirus crisis has been different from normal recessions in many ways, but one of the most important is the scale of the macroeconomic response to it. 
Thanks to the stimulus payments, the pandemic unemployment insurance, the child tax credit, and a raft of other income support measures, this is the first recession in history in which household income actually rose rather than fell, and households ended up in a stronger financial position than before — with bankruptcies, for instance, running at half their pre-pandemic rates. It’s this that’s allowed spending to come back so quickly as the pandemic recedes. It wasn’t written in stone that the economic problem at the end of 2021 would be labor “shortages” and inflation, rather than double-digit unemployment and mass immiseration.

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The Politics of Pay-Fors Revisited

October 4, 2021

A couple of weeks ago  I wrote a post on the logic of pay-fors.
The key point of that post was that you might support the principle that public spending ought to be be paid for, even if you did not believe that government faces a genuine financing constraint. Specifically, you might think that linking spending to tax increases would (1) enforce a stricter prioritization of public spending, eliminating programs of minimal or negative social value that would otherwise be adopted; and/or, (2) create pressure for desirable but politically. challenging tax increases, including higher taxes on concentrated income and wealth.
I thought it was worth spelling this out because there are a nontrivial number of people in the liberal-to-left world whose hostility to the idea that the government is

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The Politics of Pay-Fors: A Simple Framework

September 16, 2021

One of the central economic debates among progressives is over the necessity or desirability of accompanying new public spending with similar-sized tax increases. In recent years perhaps the most visible, or at least the most heated, instances of this debate have been around Modern Mone(tar)y Theory. But the debate itself is broader and older.
These debates are in part about economic questions — both what the constraints on issuing new public-sector liabilities (“borrowing”) are in principle, and of how close we are to those constraints in practice. But a second and arguably more important dimension of the debate is political: In a public or legislative debate, what are the advantages and disadvantages of linking proposals for public spending with proposals for increased taxes?
I think

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Inflation for Whom?

August 23, 2021

EDIT: I am getting some very confused readers, who note that historically rent, education and health care have historically risen in price faster than most goods, while in this post I’m saying they are rising more slowly. The original post, should have, but did not, make clear that the pattern of price changes over the past year or so is quite different from what we are used to. That said, this is not all about the pandemic. As I did note, inflation in education has been slowing for a long time; health care inflation has fallen dramatically during the pandemic but was also slowing before that, arguably thanks to the ACA. But the key point is that I am not saying that poor people face lower inflation in general; I’m saying this is a distinct feature of the inflation we’re experiencing

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Alternative Visions of Inflation

July 27, 2021

Like many people, I’ve been thinking a bit about inflation lately. One source of confusion, it seems to me, is that underlying concept has shifted in a rather fundamental way, but the full implications of this shift haven’t been taken on board.
I was talking with my Roosevelt colleague Lauren Melodia about inflation and alternative policies to manage it, which is a topic I hope Roosevelt will be engaging in more in the later part of this year. In the course of our conversation, it occurred to me that there’s a basic source of confusion about inflation. 
Many of our ideas about inflation originated in the context of a fixed quantity money. The original meaning of the term “inflation” was an increase in the stock of money, not a general increase in the price level. Over there you’ve got a

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At Age of Economics: How Should an Economist Be?

July 24, 2021

The website Age of Economics has been carrying out a series of interviews with economists about what the purpose of the discipline it is, and what its relationship is to capitalism as a historical social system. I believe there will be 52 of these interviews, one each week over the course of 2021. Earlier this spring, they interviewed Arjun Jayadev and myself. You can watch video of the interview here. I’ve pasted the transcript below.

Q: Why does economics matter?
JWM: The most obvious way that economics matters is that it has an enormous prestige in our society. Economists have a level of respect and authority that no other social scientist, arguably no other academic discipline possesses. An enormous number of policy debates are conducted in the language of economics. There’s an

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At The International Economy: How Worried Should We Be about Asset Bubbles?

July 22, 2021

(I am an occasional contributor to roundtables of economists in the magazine The International Economy. This month’s topic was “What about the Risk of a Bursting Asset Bubble?”, with corporate debt and equity mentioned as possibilities. Contributors were asked to rank their level of concern from 1 to 10. My response is below.)

Any time you have an asset held primarily for capital gains, a story that allows people to extrapolate from recent price increases to future ones, and a reasonably elastic credit system, you have the ingredients for a bubble. The question is not whether there will be bubbles, but how damaging they will be, and what steps we should take if we think one is developing in a particular asset market.
Corporate debt is an unlikely asset for a bubble. Unlike with

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At Roosevelt: Reimagining Full Employment

July 22, 2021

Mike Konczal, Lauren Melodia and I have a new report out from the Roosevelt Institute, on what true full employment might look like in the United States.
This is part of a larger project of imagining what an economic boom would look like. As Mike and I argued in our recent New York Times op-ed, there’s a real possibility that the coming years could see a historic boom, thanks to the exceptionally strong stimulus measures of the past year and, hopefully, the further expansions of public spending on the way. (Interestingly, the term “boom” is now making it into Biden’s speeches on the economy.) If the administration, Congress and the Fed don’t lose their nerve and stay on the path they’re currently on, we could soon be seeing economic growth and rising wages in a way that we haven’t

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A new macroeconomics?

July 2, 2021

[On Friday, July 2, I am taking part in a panel organized by Economics for Inclusive Prosperity on “A new macroeconomics?” This is my contribution.]
Jón Steinsson wrote up some thoughts about the current state of macroeconomics. He begins:
There is a narrative within our field that macroeconomics has lost its way. While I have some sympathy with this narrative, I think it is a better description of the field 10 years ago than of the field today. Today, macroeconomics is in the process of regaining its footing. Because of this, in my view, the state of macroeconomics is actually better than it has been for quite some time.
I can’t help but be reminded of Olivier Blanchard’s 2008 article on the state of macroeconomics, which opened with a flat assertion that “the state of macro is good.”

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The Roaring 2020s: Further Reading

June 16, 2021

Mike Konczal and I have a piece in the New York Times arguing that the next few years could see a historic boom for the US economy, if policy makers recognize that strong demand and rising wages are good things, and don’t get panicked into turning toward austerity. 
Mike and I and our colleagues at the Roosevelt Institute are planning a series of papers on “planning for the boom” over the coming year. The first, asking how high employment could plausibly rise under conditions of sustained strong demand, will be coming out later this month. In the meantime, here are some things I’ve written over the past few years, making the case that there is much more space for demand-led growth in the US economy than conventional estimates suggest, and that the benefits from pursuing it are broader

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The Persistence of Demand

May 23, 2021

Here’s the very short version of this very long post:
Hysteresis means that a change in GDP today has effects on GDP many years in the future. In principle, this could be because it affects either future aggregate demand or potential output. These two cases aren’t distinguished clearly in the literature, but they have very different implications. The fact that the Great Recession was followed by a period of low inflation, slow wage growth and low interest rates, rather than the opposite, suggests that the persistent-demand form of hysteresis is more important than potential-output hysteresis. The experience of the Great Recession is consistent with perhaps 20 percent of a shock to demand in this period carrying over to demand in future periods. This value in turn lets us estimate how

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Video: Finance and Decarbonization

May 22, 2021

Here is a roundtable hosted by the Jain Family Institute on finance and decarbonization.
What’s the best way to fund the massive investments the green transition will require? Saule Omarova and Bob Hockett make the case for a specialized National Investment Authority (NIA), which would issue various kinds of new liabilities as well as lend to both the public and private sector. Anusar Farooqui and Tim Sahay present their proposal for a green ratings agency, to encourage private investment in decarbonization. I speak for the Green New Deal approach, which favors direct public spending. Yakov Feygin and Daniela Gabor also take part. Yakov is another voice for the NIA, while Daniela criticizes a private finance-based approach to decarbonization, which effectively puts her with me on team

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Finance, Money and Cow Clicking

May 5, 2021

Finance and its derivatives like financialization, are like many political economy categories: they’re a widely used term but lack an agreed-upon definition. One often encounters formulations like “financialization means the increasing role of financial motives, financial markets, financial actors and financial institutions.” That isn’t very helpful!
Let me offer a simple definition of finance, which I think corresponds to its sense both for Marx and in everyday business settings. Finance is the treatment of a payment itself  as a commodity, independent of the transaction or relationship that initially gave rise to it. 
The most straightforward and, I think, oldest, form of finance in this sense is the invoice. Very few commercial transactions are in cash; much more common is an

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Video: The Macro Case for the Green New Deal

April 30, 2021

(Earlier this week, I gave a virtual presentation at an event organized by the Roosevelt Institute and the Green New Deal Network. Virtual events are inferior to live ones in many, many ways. But one way they are better, is that they are necessarily on video, and can be shared. Anyway, here is 25 minutes on why the economic situation calls for even more spending than the (surprisingly ambitious) proposals from the Biden administration, and also on why full employment shouldn’t be seen as an alternative to social justice and equity goals but as the best way of advancing them.)


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A Few Followup Links

April 10, 2021

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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