Michael Hudson (economist)


Michael Hudson (economist)
Michael Hudson
Post Keynesian economics
Born 1939 (age 71–72)
Chicago, Illinois, USA
Institution University of Missouri Kansas City
Field Economics, Finance
Alma mater University of Chicago (B.A., 1959)
New York University (M.A., 1963)
New York University (Ph.D., 1968)

Michael Hudson (born in 1939, Chicago, Illinois, USA) 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 also a Wall Street analyst 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).[2]

Contents

Background

Professor 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. 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. He was a philology major with a minor in history at the University of Chicago, where he received his B.A. in 1959. He attended the University of Chicago's Laboratory School for high school and grade school.

Career

Hudson previously taught at The New School in New York City, and he is currently a research professor at the University of Missouri at Kansas City. 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 U.S., Canadian, Mexican, and Latvian governments, 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 (http://counterpunch.com/). 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 and Russian.

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.[3] The November 2008 “How to Save Capitalism” issue of Harper's includes an article by Hudson on the inevitability of a large write-off of debts and the savings they back.

Views

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.[4] 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 1) subjecting other countries to unfair trade that depletes natural resources and 2) 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[5] 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. 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

Dr. 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.[6]

He states that 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."[7]

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.[8] 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.[9] 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

Professor Hudson is the author of several books.

  • Super Imperialism: The Economic Strategy of American Empire,[10] 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,[11] a sequel to Super Imperialism, forecast the division of the world into regional trade and currency blocs.
  • Super Imperialism - New Edition: The Origin and Fundamentals of U.S. World Dominance,[12] 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,[13] a new and updated edition that explores how and why the US came to achieve world economic hegemony.

His forthcoming book, The Fictitious Economy, tries to explain to general readers how a corrosive bubble economy is replacing industrial capitalism via debt-financed, asset price inflation with the main purpose of increasing balance-sheet net worth, benefiting a select few[14] while spreading risk among the general population.

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.

References

  1. ^ Hudson, Michael. "Scholars: Levy Economics Institute of Bard College". Levy Economics Institute of Bard College. http://www.levyinstitute.org/scholars/?auth=123. Retrieved 2011-10-05. 
  2. ^ Hudson, Michael. "Hudson CV". University of Missouri Kansas City Department of Economics. http://cas.umkc.edu/econ/economics/faculty/Hudson/HudsonCV.htm. Retrieved 2011-10-05. 
  3. ^ Michael Hudson. Harper's. May 2006. Available at: http://www.michael-hudson.com/articles/debt/Hudson,RoadToSerfdom.pdf
  4. ^ http://michael-hudson.com/2010/09/how-brazil-can-defend-against-financialization/
  5. ^ http://www.levyinstitute.org/pubs/wp_639.pdf
  6. ^ http://www.itulip.com/forums/showthread.php/1088-iTulip-Interview-Dr.-Michael-Hudson-Parts-I-II-of-IV
  7. ^ http://www.democracynow.org/2010/11/5/new_600b_fed_stimulus_fuels_fears
  8. ^ http://michael-hudson.com/2010/09/how-brazil-can-defend-against-financialization/
  9. ^ http://michael-hudson.com/2010/11/dollar-war-in-detail/
  10. ^ Hudson, Michael (1972). Super Imperialism: The Economic Strategy of American Empire. Holt, Rinehart and Winston. ISBN 978-0030859960. 
  11. ^ Hudson, Michael (March 1979). Global Fracture: The New International Economic order. Harper & Row. ISBN 978-0745323954. 
  12. ^ Hudson, Michael (March 2003). Super Imperialism - New Edition: The Origin and Fundamentals of U.S. World Dominance. Pluto Press. ISBN 978-0745319896. 
  13. ^ Hudson, Michael (April 2005). Global Fracture: The New International Economic order, Second Edition. Pluto Press. ISBN 978-0745323947. 
  14. ^ See also FIRE economy.

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