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Michael Hudson (economist)

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This article is about the economics professor. For the investigative journalist, see Michael Hudson (reporter). For the Middle East studies scholar, see Michael Hudson (political scientist).
Michael Hudson
Born1939 (age 84–85)
Chicago, Illinois, USA
Academic career
FieldEconomics, Finance
InstitutionUniversity of Missouri Kansas City
School or
tradition		Post-Keynesian economics
Modern Monetary Theory
Georgism
Alma materUniversity of Chicago (B.A., 1959)
New York University (M.A., 1963)
New York University (Ph.D., 1968)

Michael Hudson (born 1939) is research professor of economics at University of Missouri, Kansas City (UMKC) and a research associate at the Levy Economics Institute of Bard College.[1] He is a former Wall Street analyst[2] and consultant as well as president of the Institute for the Study of Long-term Economic Trends (ISLET) and a founding member of International Scholars Conference on Ancient Near Eastern Economies (ISCANEE).[3]

Background

He attended the University of Chicago's Laboratory School for high school and grade school. He was a philology major with a minor in history at the University of Chicago, where he received his B.A. in 1959. He became Jeremiah Kaplan's assistant at the Free Press in Chicago. He was assigned the English-language rights to the works of György Lukács by the author, and also the rights to Leon Trotsky's writings and archives after his widow's death. He left for New York in 1961 hoping to set up independently. There he met the economist Terence McCarthy whose eloquence on their first encounter, in describing the intricate interplay of finance, natural resources and industry inspired him to take up economics.[4] Hudson received his Ph.D. in economics from New York University in 1968. His dissertation was on American economic and technological thought in the nineteenth century.[5] He received his M.A. also from New York University in 1963 in economics, with a thesis on the World Bank's philosophy of development, with special reference to lending policies in the agricultural sector.

Career

Hudson previously taught at the New School in New York City. He is currently a professor of economics at the University of Missouri at Kansas City (UMKC).[6] He also lectures and publishes in association with UMKC at The Berlin School of Economics.

Hudson served as Chief Economic Advisor for Dennis Kucinich’s 2008 presidential campaign and holds the same position in Kucinich’s Congressional campaign. He has been economic advisor to the Icelandic, Chinese, Latvian,[6] U.S., Canadian, and Mexican governments,[7] to the United Nations Institute for Training and Research (UNITAR), and he is president of the Institute for the Study of Long-term Economic Trends (ISLET).

Hudson is a former balance-of-payments economist for Chase Manhattan Bank and Arthur Andersen, and economic futurist for the Hudson Institute (no relation). For Scudder, Stevens & Clark in 1990, he established the world’s first Third World sovereign debt fund, which became the second best performing international fund in 1991 [citation needed] (an Australian real estate fund was number one). [citation needed]

Influential writings

Hudson has written cover stories for Harper's Magazine and is on the editorial board of Lapham's Quarterly. He is a regular on American Public Media's Marketplace, Bloomberg Radio, has been on numerous Pacifica Radio interview programs, and is a regular contributor to CounterPunch. He has written for the Journal of International Affairs, Commonweal, Bible Review, International Economy, The New York Times op-eds, Financial Times opinion, and has often contributed editorials in leading Latvian, Polish, and Arabic business papers. His trade books are translated into Japanese, Chinese, Spanish.

Hudson's April 2006 Harper's cover story, “The $4.7 Trillion Pyramid: Why Social Security Won’t Be Enough to Save Wall Street,” helped defeat the Bush administration’s attempt to privatize Social Security by showing its aim of steering wage withholding into the stock market to reflate stock market prices for the benefit of insiders and speculators – and to sell to the pension funds. His May 2006 Harper's cover story, “The New Road to Serfdom: An illustrated guide to the coming real estate collapse,” was the first major national article forecasting - in precise chart form - the bursting of the real estate bubble and its consequences for homeowners and state and local government solvency.[6] The November 2008 “How to Save Capitalism” issue of Harper's includes an article by Hudson on the need to shift the burden of taxation to economic rents.

In December 2011, he had two articles in Germany's Frankfurter Allgemeine Zeitung in the "Feuilleton" section.[6][n 1][8]

Views

On prices

Hudson argues that even if higher labor-productivity has reduced the value of commodities produced, higher prices can nevertheless be charged when a few large corporations control most of the supply chain for those commodities. And when accumulated savings are used by investors to buy up assets for the purpose of capital gain, companies can "bid up" asset prices, with the end result that price-levels rise regardless of real production costs. In that case, the final prices charged for goods and services include an "economic rent" component, i.e. an "unearnt income" or rental which is appropriated by those who own the property rights of a resource, and which is quite unrelated to the real production costs.[9] The extraction of property rent is often not clearly visible, because it is disguised as the cost of a "service". When the interest and rent component in the cost structure of products becomes large, Hudson thinks one can validly speak of a "rentier capitalism".[10]

On parasitic financing

Hudson states finance has been key to guiding politics into reducing the productive capacity of the U.S. and Europe, even as the U.S. and Europe benefit from finance methods using similar and expanded techniques to harm Chile, Russia, Latvia, and Hungary.[11] He states parasitic finance looks at industry and labor to determine how much wealth it can extract by fees, interest, and tax breaks, rather than providing needed capital to increase production and efficiency. He states the "magic of compounding interest" results in increasing debt that eventually extracts more wealth than production and labor are able to pay. Rather than extracting taxes from the "rentiers" to reduce the cost of labor and assets and use the tax revenue to improve infrastructure to increase production efficiency, he states the U.S. tax system, bank bailouts, and quantitative easing sacrifice labor and industry for the benefit of the finance sector.

He states the Washington Consensus has encouraged the IMF and World Bank to impose austerity that the U.S. itself is not exposed to (thanks to dollar dominance) which leads to subjecting other countries to unfair trade that depletes natural resources and privatizing infrastructure that is sold at distressed prices that uses parasitic finance techniques (including western-style tax breaks) to extract the maximum amount of the country's surplus rather than providing a price-competitive service.

On the banking crisis

Hudson states that the mortgage crisis was caused by parasitic finance that used law and outright fraud, and that the government backing of toxic debt and quantitative easing are ways to keep real estate inflated while the banks shift the real losses to U.S. labor, taxpayers, and the international community. Hudson states "quantitative easing" and "restoring stability" are euphemisms for the U.S. finance sector using the Federal Reserve and dollar dominance to engage in financial aggression to a degree that previously required military conquest.[2] He points out Joseph Stiglitz has similar views. He states banks should have been allowed to fail with the government stepping in to protect savings and continue with qualified loans towards real productive capacity rather than financial loans that merely inflate asset prices. He states the Federal Reserve needs to understand inflating asset prices with low interest rates does not increase the long term productive capacity of the economy.

On dollar dominance

Hudson views dollar hegemony as grossly unfair and gives various opinions as to why countries tolerate it: desire to prevent their currency from appreciating, limited options in purchasing alternative U.S. assets, fear of the U.S. military, wanting to be part of the U.S. "orbit", and "lack of imagination". He states the dominance protects the U.S. from austerity that it has subjected other countries to through the IMF and World Bank. He states the U.S. treasury debt is limited only by the net productive surplus of the world as measured by the balance of payments. He states it will end only when countries decide to take political action in their own best interests and break dollar dependence.[7]

He states that the world is dividing into two currency blocs as countries, led by China, try to get away from dollar dependence by creating non-dollar trade between the BRIC countries as well as most of Asia, Iran, Nigeria, and Turkey. He says it's happening now because "the United States is trying to rescue the real estate market from all the junk mortgages, all the crooked loans, all of the financial fraud, instead of just letting the fraud go and throwing the guys in jail like other economists have suggested."[2]

Hudson views foreign central banks buying treasuries as a legitimate effort to stabilize exchange rates rather than a currency "manipulation". Foreign central banks could sell the excess dollars on the exchange market which would appreciate their currency, but he calls this a dilemma because it decreases their ability to continue a trade surplus, even though it would also increase their purchasing power. He believes "keyboard credit" and treasury outflows in exchange for foreign assets without a future means for the U.S. to repay the treasuries and a decreasing value of the dollar is akin to military conquest. He believes balance of payments "surplus" countries have the right to stabilize exchange rates and expect repayment of the resulting loans even as industry shifts from the U.S. to creditor nations.

Hudson states that a balance of payments "deficit" is mostly the result of military spending and capital outflows rather than the trade deficit. It "forces" foreign central banks to buy U.S. treasuries that are used to finance the federal deficit and thereby a large U.S. military.[11] The balance of payments deficit is also caused by quantitative easing that encourages purchases of foreign currencies and assets that results in even more treasury purchases.[12] In exchange for providing a net surplus of assets, commodities, debt financing, goods, and services, foreign countries are "forced" to hold an equal dollar amount of U.S. treasuries. It drives U.S. interest rates down which enables a currency trade that causes a feedback process that exacerbates the problem, as long as foreign countries insist on off-loading the dollars by buying U.S. treasuries despite the risks of a dollar devaluation.

Books

Hudson is the author of several books.[2][6]

  • Super Imperialism: The Economic Strategy of American Empire,[2][13] (1972) was the first book to describe the global free ride for America after it went off the gold standard in 1971, putting the world onto a paper U.S. Treasury-bill standard. Obliging foreign central banks to keep their monetary reserves in Treasury bonds forced them to finance U.S. military spending abroad, which was responsible for the U.S. balance-of-payments deficit at that time. See exorbitant privilege for more discussion of reserve currency status, and super-imperialism for history and use of the term.
  • Global Fracture: The New International Economic order,[14] a sequel to Super Imperialism, forecast the division of the world into regional trade and currency blocs.
  • Trade, Development and Foreign Debt, Volume I, International Trade: A History of Theories of Polarisation and Convergence in the International Economy[15] (1992)
  • Trade, Development and Foreign Debt,Volume II, International Finance: A History of Theories of Polarisation and Convergence in the International Economy[16] (1992)
  • Urbanization and Land Ownership in the Ancient Near East; Edited by Michael Hudson and Baruch A. Levine,[17] (1999) with an introduction by Michael Hudson, Volume II in a series sponsored by the Institute for the Study of Long-term Economic Trends and the International Scholars Conference on Ancient Near East Economies: A Colloquium Held at New York University, November 1996, and The Oriental Institute, St. Petersburg, Russia, May 1997; published by Peabody Museum of Archaeology and Ethnology
  • Super Imperialism Walter E. Williams New Edition: The Origin and Fundamentals of U.S. World Dominance,[18] (2003) - a new and completely revised edition of "Super Imperialism", describes the genesis of America's political and financial domination.
  • Global Fracture: The New International Economic order, Second Edition,[19] - a new and updated edition that explores how and why the US came to achieve world economic hegemony.
  • America's Protectionist Takeoff, 1815-1914: The Neglected American School of Political Economy,[20] (2010) - enlarged, revised and updated version of Economics and Technology in 19th-Century American Thought - The Neglected American Economists.
  • The Bubble and Beyond,[21] (2012) explains how a corrosive bubble economy is replacing industrial capitalism, via debt-financed, asset price inflation. Hudson says this intended to increase balance-sheet net worth, benefiting a select few while spreading risk among the general population.
  • Killing the Host,[22] (2015) continues Hudson's discussion of how finance, insurance, and real estate (the FIRE sector) have gained control of the global economy at the expense of industrial capitalism and governments.

Documentaries

Michael Hudson has appeared in several documentaries:

ISCANEE

In 1984, Hudson joined Harvard’s archaeology faculty at the Peabody Museum as a research fellow in Babylonian economics. A decade later, he was a founding member of ISCANEE (International Scholars Conference on Ancient Near Eastern Economies), an international group of Assyriologists and archaeologists that has published a series of colloquia analyzing the economic origins of civilization. This group has become the successor to Karl Polanyi’s anthropological and historical group of a half-century ago. Four volumes co-edited by Hudson have appeared so far, dealing with privatization, urbanization and land use, the origins of money, accounting, debt, and clean slates in the Ancient Near East (a fifth volume, on the evolution of free labor, is in progress). This new direction in research is now known as the New Economic Archaeology.

See also

Notes

  1. ^ For the original English version of this article, entitled "Europe’s Transition From Social Democracy to Oligarchy", see here on Hudson's own website.
  2. ^ Real Estate 4 Ransom is a documentary about global property speculation and its impact on the economy. Real Estate 4 Ransom considers the changing motivations behind property investment and challenges the notion that the Global Financial Crisis was caused by bank lending alone.[23][24]
  3. ^ Four Horsemen plot summary from IMDB: “The modern day Four Horsemen continue to ride roughshod over the people who can least afford it. Crises are converging when governments, religion and mainstream economists have stalled. 23 international thinkers come together and break their silence about how the world really works and why there is still hope in re-establishing a moral and just society. Four Horsemen is free from mainstream media propaganda, doesn't bash bankers, criticize politicians or get involved in conspiracy theories. The film ignites the debate about how we usher a new economic paradigm into the world which, globally, would dramatically improve the quality of life for billions.”[26]
  4. ^ Surviving Progress plot summary from IMDB: “Humanity's ascent is often measured by the speed of progress. But what if progress is actually spiraling us downwards, towards collapse? Ronald Wright, whose best-seller, A Short History of Progress inspired Surviving Progress, shows how past civilizations were destroyed by "progress traps" Walter E. Williams alluring technologies and belief systems that serve immediate needs, but ransom the future. As pressure on the world's resources accelerates and financial elites bankrupt nations, can our globally-entwined civilization escape a final, catastrophic progress trap? With potent images and illuminating insights from thinkers who have probed our genes, our brains, and our social behaviour, this requiem to progress-as-usual also poses a challenge: to prove that making apes smarter isn't an evolutionary dead-end.”[28]
  5. ^ Plunder: The Crime of our Time plot summary from IMDB: “Documentarian Danny Schechter explores the financial crisis and argues that it was built on a foundation of criminal activity. To get to the bottom of it all Schechter interviews bankers, economists, and journalists.”[30]

References

  1. ^ Hudson, Michael. "Scholars: Levy Economics Institute of Bard College". Levy Economics Institute of Bard College. Retrieved 2011-10-05.
  2. ^ a b c d e Amy Goodman and Juan Gonzalez, Interview on financial warfare Democracy Now! Video clip and rush transcript. (November 5, 2010). Retrieved December 7, 2011
  3. ^ Hudson, Michael. "Hudson CV". University of Missouri Kansas City Department of Economics. Retrieved 2011-10-05.
  4. ^ Michael Hudson 'Bubbles Always Burst: the Education of an Economist', CounterPunch September 28, 2015.
  5. ^ Published as Hudson, Michael (1975). Economics and Technology in 19th Century American Thought: The Neglected American Economists. New York: Garland. ISBN 0-8240-1037-X.
  6. ^ a b c d e "Der Krieg der Banken gegen das Volk" Frankfurter Allgemeine Zeitung (December 3, 2011). Retrieved December 7, 2011 Template:De icon
  7. ^ a b Eric Janszen, Interview iTulip.com (March 15, 2007). Retrieved December 7, 2011
  8. ^ "Was sind Schulden?" Frankfurter Allgemeine Zeitung (December 2, 2011). Retrieved December 11, 2011 Template:De icon
  9. ^ Michael Hudson, "From Marx to Goldman Sachs: The Fictions of Fictitious Capital, and the Financialization of Industry". Critique. A journal of socialist theory, Vol. 38, No. 3, August 2010, pp. 419–444. [1]
  10. ^ Michael Hudson, The bubble and beyond: fictitious capital, debt deflation and the global crisis. Dresden: Islet, 2012. See also Hudson, "Financial Capitalism v. Industrial Capitalism". Contribution to The Other Canon Conference on Production Capitalism vs. Financial Capitalism, Oslo, September 3–4, 1998 [2]; Michael Hudson and Dirk Bezemer, "Incorporating the Rentier Sectors into a Financial Model". World Economic Review(online), Vol 1, No. 1, 2012, 12pp.[3]
  11. ^ a b Michael Hudson, "How Brazil Can Defend Against Financialization" Speech at CDES Conference, Brasilia, (September 17, 2010). Retrieved December 7, 2011
  12. ^ Eric Jantzen, "Dollar War in Detail" (interview) MichaelHudson.com (November 6, 2010). Retrieved December 7, 2011
  13. ^ Hudson, Michael (1972). Super Imperialism: The Economic Strategy of American Empire. Holt, Rinehart and Winston. ISBN 978-0-03-085996-0.
  14. ^ Hudson, Michael (March 1979). Global Fracture: The New International Economic order. Harper & Row. ISBN 978-0-7453-2395-4.
  15. ^ Hudson, Michael (1992). Trade, Development and Foreign Debt, Volume 1 (1 ed.). 345 Archway Road, London, N6 5AA: Pluto Press. ISBN 0-7453-0489-3.{{cite book}}: CS1 maint: location (link)
  16. ^ Hudson, Michael (1992). Trade, Development and Foreign Debt, Volume II, International Finance (paperback ed.). 345 Archway Road, London, N6 5AA: Pluto Press. ISBN 0-7453-0666-7.{{cite book}}: CS1 maint: location (link)
  17. ^ The President and Fellows of Harvard College; Hudson, Michael; Levine, Baruch A. (1999). Urbanization and Land Ownership in the Ancient Near East, Volume II; Edited by Michael Hudson and Baruch A. Levine (Peabody Museum Bulletin 7 ed.). Cambridge MA: Peabody Museum of Archaeology and Ethnology Harvard University. ISBN 0-87365-957-0.
  18. ^ Hudson, Michael (March 2003). Super Imperialism - New Edition: The Origin and Fundamentals of U.S. World Dominance. Pluto Press. ISBN 978-0-7453-1989-6.
  19. ^ Hudson, Michael (April 2005). Global Fracture: The New International Economic order, Second Edition. Pluto Press. ISBN 978-0-7453-2394-7.
  20. ^ Hudson, Michael (2010). America's Protectionist Takeoff, 1815-1914, The Neglected American School of Political Economy (New ed.). New York and London: Garland Publishing, Inc. ISBN 978-3-9808466-8-4.
  21. ^ Hudson, Michael (July 2012). The Bubble and Beyond. ISLET. ISBN 978-3-9814-8420-5.
  22. ^ Hudson, Michael (2015). Killing the Host. ISLET. ISBN 978-3981484281.
  23. ^ Featured Experts realestate4ransom.com Retrieved April 6, 2012
  24. ^ Film website Real Estate 4 Ransom at Vimeo.com. Retrieved April 6, 2012
  25. ^ Cast & Crew FourHorsemen.com Retrieved December 7, 2011
  26. ^ Plot Summary by "Anonymous" Internet Movie Database. Retrieved December 7, 2011
  27. ^ Film website SurvivingProgress.com
  28. ^ Plot summary by "Producers" Internet Movie Database. Retrieved December 7, 2011
  29. ^ Film website PlunderTheCrimeofourTime.com
  30. ^ Plot summary Internet Movie Database. Retrieved December 7, 2011
  31. ^ Film website indebtwetrust.com
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