Notes on 2026 Levy Economic Conference (part two)
James Keenan
Yesterday I posted some notes on the morning session of this year's Levy Economics Conference at Bard College, held this past Friday, May 8. Here are some notes from the afternoon part of that conference.
Session III: China and Alternative Development
Yan Liang spoke on Financing China's Sustainable Development: Sovereign Credit, Patient Capital, and State-Centered Financial Architecture. She described China as following policies designed to secure the nation's monetary sovereignty: managed float exchange rates; capital account controls; low foreign-denominated debt and high foreign exchange reserves. This opens up a large "policy space" for the state. The state maintains a multi-level financial architecture: policy banks; state-owned commercial banks; sovereign wealth funds and government-guided funds; venture and innovation funds. This leads to "credit-driven, investment-led, tech-enabled growth" which Liang described as a "Schumpeterian-Keynesian engine." She said China faces challenges from an "inverted debt structure" and "consumption gap" -- but I wasn't able to take good notes on those concepts, so I'll have to wait for working papers.
In the same session Isabella Weber of U. Mass Amherst spoke on China's System of Price Stabilization: Buffering Systematically Significant Sectors. Weber made a splash a couple of years back with research where she showed how oligopolists in the U.S. took advantage of pandemic supply chain problems to impose price increases and thereby accelerate the 2021-2023 inflation. How did she do that? Listening in on a lot of corporate earnings calls to financial analysts. She spoke at the 2023 on-line Levy conference -- see my notes here -- and I subsequently heard her speak at John Jay College in New York City. But Weber's original research focus was China. From the 1980s onward, she argues, China moved away from the Soviet-style "command economy" model but did so via state creation of, and participation in, markets rather than via the "shock therapy" of rapid dumping of state-owned businesses into the private sector which was practiced in Russia in the 1990s. Weber argues that China has been able to maintain relative domestic price stability despite a rapid increase in spending in response to major shocks like COVID-19. It does so by trying to prevent exteme volatility in systematically important sectors like food grains and pork.
Session IV: Employment and Economic Security
In this session both speakers emphasized the politics in political economy, albeit from different perspectives. Pavlina Tcherneva, author of the 2020 book The Case for a Job Guarantee, has continue to develop her thinking on this topic, most recently in a Levy Institute working paper, "After the Wreckage: The Job Guarantee as a New Labor Standard", which deserves a post to itself on this list. Tcherneva argues that precarity is the new economic model for the U.S. and that U.S. economic growth is largely a channeling of income to the the top of the income/wealth distribution. Under the Trump administration, the "wreckage of the administrative state" has accelerated. Tcherneva argues that we need to understand a Job Guarantee as an antidote to precarity which establishes a new norm as to what constitutes a good job. This would imply going beyond the New Deal-era conception of public jobs (like the Works Progress Administration) as "supplemental" to a private sector labor market which is thought to be "normally well functioning." The state can already provide a job guarantee -- for prison guards; we need to do better. Darrick Hamilton focused more on the sociology of political change, asking how does paradigm change happen. He decried the focus on relative status as the basis of "identity politics." That's something I've long agreed with, but I'll have to read more of his published work -- his bio in the conference program cites his work on "identity group stratification" -- to understand his particular take.
Session V: The Next Crisis, a Conversation
The final session of the day, an interview of former FDIC chair Sheila Bair conducted by Bloomberg managing editor Tom Keene.
Let me pause here to say that I have come to appreciate the Levy Institute conferences as places where the suits meet the scholars -- where Wall Street types and the journalists who cover them can be in the same room with people who believe U.S. capitalism is fundamentally unstable (and even some people who want to bring U.S. capitalism down). To get that mix of people, the institute appears to follow a practice of each year booking one big-name speaker who comes from a political and/or intellectual perspective clearly different from the Levy Institute scholars as individuals. So one year I heard a president of one of the regional Federal Reserve banks presenting a dynamic stochastic general equilibrium (DSGE) model of the economy; that's about as un-Minskyan as you can get. Another year I heard a prospective Democratic presidential candidate fail to grasp MMT's argument that taxes do not fund federal government spending.
Given this history, I was not shocked that the conference featured Bair, who was appointed chair of the U.S. Federal Deposit Insurance Corporation (FDIC) by Bush 43 in 2006 and who repeatedly clashed with Hank Paulson, Tim Geithner over how to hold the big banks accountable for their role in the 2008 financial crisis. During her interview, Bair stated that the big banks are currently advocating for lower capital requirements because they are confident that, in a crisis, they will be bailed out by the federal government. Bair says that in such a crisis, "let them [the big banks] fail. Why do you want to save this system?" She supports a downsized financial system and advocates for community banking. But ... Bair also is worried about the federal debt, panicked at the state of the Social Security trust funds, dislikes Modern Monetary Theory, agrees with Milton Friedman that inflation is first and foremost a monetary phenomenon, and dislikes "ultra-low interest rates." After all this, jaws dropped in the audience -- but then it was time for dinner!
Bijou Smith
Warren Mosler
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Warren Mosler
Yesterday I posted some notes on the morning session of this year's Levy Economics Conference at Bard College, held this past Friday, May 8. Here are some notes from the afternoon part of that conference.
Session III: China and Alternative Development
Yan Liang spoke on Financing China's Sustainable Development: Sovereign Credit, Patient Capital, and State-Centered Financial Architecture. She described China as following policies designed to secure the nation's monetary sovereignty: managed float exchange rates; capital account controls; low foreign-denominated debt and high foreign exchange reserves. This opens up a large "policy space" for the state.
The state maintains a multi-level financial architecture: policy banks; state-owned commercial banks; sovereign wealth funds and government-guided funds; venture and innovation funds. This leads to "credit-driven, investment-led, tech-enabled growth"
which Liang described as a "Schumpeterian-Keynesian engine." She said China faces challenges from an "inverted debt structure" and "consumption gap" -- but I wasn't able to take good notes on those concepts, so I'll have to wait for working papers.
In the same session Isabella Weber of U. Mass Amherst spoke on China's System of Price Stabilization: Buffering Systematically Significant Sectors. Weber made a splash a couple of years back with research where she showed how oligopolists in the U.S. took advantage of pandemic supply chain problems to impose price increases and thereby accelerate the 2021-2023 inflation. How did she do that? Listening in on a lot of corporate earnings calls to financial analysts. She spoke at the 2023 on-line Levy conference -- see my notes here -- and I subsequently heard her speak at John Jay College in New York City. But Weber's original research focus was China. From the 1980s onward, she argues, China moved away from the Soviet-style "command economy" model but did so via state creation of, and participation in, markets rather than via the "shock therapy" of rapid dumping of state-owned businesses into the private sector which was practiced in Russia in the 1990s. Weber argues that China has been able to maintain relative domestic price stability despite a rapid increase in spending in response to major shocks like COVID-19. It does so by trying to prevent exteme volatility in systematically important sectors like food grains and pork.
Session IV: Employment and Economic Security
In this session both speakers emphasized the politics in political economy, albeit from different perspectives. Pavlina Tcherneva, author of the 2020 book The Case for a Job Guarantee, has continue to develop her thinking on this topic, most recently in a Levy Institute working paper, "After the Wreckage: The Job Guarantee as a New Labor Standard", which deserves a post to itself on this list. Tcherneva argues that precarity is the new economic model for the U.S. and that U.S. economic growth is largely a channeling of income to the the top of the income/wealth distribution.
Under the Trump administration, the "wreckage of the administrative state" has accelerated. Tcherneva argues that we need to understand a Job Guarantee as an antidote to precarity which establishes a new norm as to what constitutes a good job. This would imply going beyond the New Deal-era conception of public jobs (like the Works Progress Administration) as "supplemental" to a private sector labor market which is thought to be "normally well functioning." The state can already provide a job guarantee -- for prison guards; we need to do better.
Darrick Hamilton focused more on the sociology of political change, asking how does paradigm change happen. He decried the focus on relative status as the basis of "identity politics." That's something I've long agreed with, but I'll have to read more of his published work -- his bio in the conference program cites his work on "identity group stratification" -- to understand his particular take.
Session V: The Next Crisis, a Conversation
The final session of the day, an interview of former FDIC chair Sheila Bair conducted by Bloomberg managing editor Tom Keene.
Let me pause here to say that I have come to appreciate the Levy Institute conferences as places where the suits meet the scholars -- where Wall Street types and the journalists who cover them can be in the same room with people who believe U.S. capitalism is fundamentally unstable (and even some people who want to bring U.S. capitalism down).
To get that mix of people, the institute appears to follow a practice of each year booking one big-name speaker who comes from a political and/or intellectual perspective clearly different from the Levy Institute scholars as individuals. So one year I heard a president of one of the regional Federal Reserve banks presenting a dynamic stochastic general equilibrium (DSGE) model of the economy; that's about as un-Minskyan as you can get. Another year I heard a prospective Democratic presidential candidate fail to grasp MMT's argument that taxes do not fund federal government spending.
Given this history, I was not shocked that the conference featured Bair, who was appointed chair of the U.S. Federal Deposit Insurance Corporation (FDIC) by Bush 43 in 2006 and who repeatedly clashed with Hank Paulson, Tim Geithner over how to hold the big banks accountable for their role in the 2008 financial crisis. During her interview, Bair stated that the big banks are currently advocating for lower capital requirements because they are confident that, in a crisis, they will be bailed out by the federal government. Bair says that in such a crisis, "let them [the big banks] fail. Why do you want to save this system?"
She supports a downsized financial system and advocates for community banking. But ... Bair also is worried about the federal debt, panicked at the state of the Social Security trust funds, dislikes Modern Monetary Theory, agrees with Milton Friedman that inflation is first and foremost a monetary phenomenon, and dislikes "ultra-low interest rates." After all this, jaws dropped in the audience -- but then it was time for dinner!
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