ECONOMICS FOR SUSTAINABLE PROSPERITY STEVEN HAIL Binzagr Institute for Sustainable Prosperity Series Editors Mathew Forstater Department of Economics University of Missouri Kansas City Kansas City, MO, USA Fadhel Kaboub Denison University Granville, OH, USA Michael J Murray Bemidji State University Bemidji, MN, USA “Sustainable prosperity” is a holistic notion encompassing the physical, mental, environmental, financial, educational, and civic wellbeing of all individuals, families, neighborhoods, and regions throughout the world In this sense, sustainable prosperity requires the development of a multifaceted public policy framework addressing the root causes of global, national, and regional socioeconomic challenges It must guarantee all individuals a decent quality of life with dignity and the opportunity to be a member of an inclusive, participatory, and just society Sustainable prosperity means that every decision we make, individually or collectively, must take into account its direct and indirect effects on people, on the planet, and on the economy Crafting solutions to the complex challenges that confront us in the twenty-first century requires an interdisciplinary approach at the intersection of economics, ecology, and ethics The Binzagr Institute for Sustainable Prosperity book series seeks proposals from a broad range of fields that encompass and further this philosophy We welcome authored works or edited manuscripts that investigate socioeconomic inequality based on class, race, ethnicity, and/or gender, and that promote policies to further sustainable prosperity among marginalized groups We especially encourage proposals that build on the Job Guarantee approach to full employment, financial sovereignty (functional finance), renewable energy, sustainable agriculture, environmental policies, local community development, local capacity building, social ecology, social venture partnerships, and social entrepreneurship More information about this series at http://www.palgrave.com/gp/series/15386 Steven Hail Economics for Sustainable Prosperity Steven Hail University of Adelaide Aldgate, SA, Australia Binzagr Institute for Sustainable Prosperity ISBN 978-3-319-90980-6 ISBN 978-3-319-90981-3  (eBook) https://doi.org/10.1007/978-3-319-90981-3 Library of Congress Control Number: 2018940737 © The Editor(s) (if applicable) and The Author(s) 2018 This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations Cover image: © Manuel Breva Colmeiro/Getty Images Cover design by Tjaša Krivec Printed on acid-free paper This Palgrave Macmillan imprint is published by the registered company Springer International Publishing AG part of Springer Nature The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Preface This book has been written largely in response to comments made by Fadhel Kaboub, the President of the Binzagr Institute for Sustainable Development and Associate Professor of Economics at Denison University, on a doctoral thesis I submitted in 2016 He wrote that he would recommend me publishing the dissertation as a book, but would also encourage ‘the publication of a non-technical version of this work to invite non-academic audiences into these very important public policy discussions After all, public policy in a democratic society ought to be truly participatory in nature, but when the public lacks the ability of understanding the basic implications of alternative economic policy proposals, and also lacks the ability of challenging so-called experts, then we end up with people submitting to policies that actually work against their own interest, and increase inequality and socio-economic exclusion’ I set out to as he recommended However, I have not removed every equation and chart from the book, since to so would have blunted its effectiveness in advocating for the replacement of the neoclassical orthodoxy which has been used so successfully in support of a neoliberal agenda in recent decades, with a new economics for sustainable prosperity, which can be used in support of a genuinely progressive and inclusive agenda for the future Instead, I have kept them to a minimum, explaining their significance along the way, and occasionally inviting those readers not wanting to bother with algebra to take the results for granted and move on v vi    Preface At the heart of this new economics is modern monetary theory In February 2018, I saw a podcast of a brilliant interview, conducted by Steve Grumbine of Real Progressives, with two of the founders of modern monetary theory, Professor Stephanie Kelton and Professor William Mitchell Kelton and Mitchell separately made the point that without an understanding of modern monetary theory, there can be no successful prosecution of a genuinely progressive agenda in the USA or elsewhere, and that the achievement of equitable and sustainable prosperity in the future depends on a widespread understanding of the principles of modern monetary policy among the voting public As Professor Joan Robinson said, long ago, people need to learn some economics to avoid being fooled by economists It is my hope that people will choose to read this book, and that it will help equip them with enough understanding of both the old economics and the new so that they are not fooled, but instead are empowered by what they have learned My thanks go to Philip Lawn, a colleague and a mentor over many years, at both the University of Adelaide and Flinders University I have also benefited greatly from regular discussions with Colin Rogers, at the University of Adelaide; with Anna Mihaylov, now at Kaplan Australia; and, in recent times, with the prize-winning journalist, Claire Connelly Occasional opportunities down the years to talk with and to be inspired by Geoffrey Harcourt have also been a treasure I wish I could thank an unknown banker, who, in spite of his seniority at work, was a student on a course I was teaching in London, leading to the membership examinations of the Chartered Institute of Bankers, at some point during the late 1990s He approached me, at the end of an intensive course, and, with reference to the orthodox description of monetary policy, said, ‘You know it couldn’t really work that way, don’t you?’ Twenty years later, I now know very well that it doesn’t work that way This book is an attempt to share with you some of what I have learned My greatest debts will always be to my father and late mother, Tom and Trudy, and to my wife, Katherine, for their unfailing love and support Adelaide, Australia Steven Hail Contents Introduction—Searching for a New Economics ‘Real’ Analysis of an Unreal World 21 New Wisdom from Old Books 63 Behavioural Foundations 101 Modern Monetary Theory 141 Stock-Flow Consistent Monetary Economics 183 A Job Guarantee 219 Conclusion—Economics for Sustainable Prosperity 253 Bibliography 271 Index 283 vii List of Figures Fig. 2.1 Fig. 3.1 Fig. 3.2 Fig. 3.3 Fig. 3.4 Fig. 4.1 Fig. 4.2 Fig. 4.3 Fig. 5.1 Fig. 5.2 Fig. 5.3 Fig. 5.4 Fig. 6.1 Fig. 6.2 A family tree of soft economics 22 Variations in the annual rates of growth of consumption, investment and government purchases in the USA (Source Federal Reserve Economic Data Federal Reserve Bank of St Louis) 79 Minsky’s Keynesian two-price model of investment 80 Investment spending during a period of euphoria 82 Percentage share of wages in US Gross Domestic Income, and US inequality; 1967–2016 (Source Federal Reserve Economic Data Federal Reserve Bank of St Louis) 96 Kahneman and Tversky’s two-part subjective value function, with = 2.3, and α = β = 0.6 130 Decision weighting function, over-weighting rare events (γ = 0.5, δ = 1) 131 Value functions for disadvantageous inequality; advantageous inequality (negative relationship); and advantageous inequality (positive relationship) 135 Fiscal balances (Sources Federal Reserve Economic Data; Australian Bureau of Statistics; Reserve Bank of Australia) 146 Endogenous reserves 175 The corridor system 176 Excess reserves 177 Household debt-to-GDP ratios; Australia, Japan, UK and USA (Source BIS Data Bank for International Settlements) 192 3-Sector balances in the model, base case 193 ix x    List of Figures Fig. 6.3 Fig. 6.4 Fig. 6.5 Fig. 7.1 Fig. 7.2 Fig. 7.3 Fig. 7.4 Fig. 7.5 Fig. 7.6 Fig. 7.7 US 3-Sector financial balances (Source Office of Management and Budget Historical Tables; Federal Reserve Economic Data, Federal Reserve Bank of St Louis) Australia 5-Sector financial balances (Source Australian National Accounts Australian Bureau of Statistics) One-off reduction in rate of growth of G in 2001, combined with a permanent cut in the ‘Cash Rate’ from 2% to 0% Impact on GDP relative to base case Life satisfaction and real GDP per person, 143 countries (Sources Gallup; World Bank) Life satisfaction and real GDP per person, 28 rich countries (Sources Gallup; World Bank) Happiness in the USA (Sources Gallup; US General Social Survey) Inequality in the USA (Source Federal Reserve Economic Data Federal Reserve Bank of St Louis) Productivity and the minimum wage (Source OECD Data Organisation for Economic Co-operation and Development) US ‘Phillips Curves’ (Source Federal Reserve Economics Data Federal Reserve Bank of St Louis) 3-part Phillips Curve 195 205 207 222 223 224 226 227 234 239 Bibliography   275 Glimcher, Paul 2011 Foundations of Neuroeconomic Analysis New York: Oxford University Press Global Footprint Network 2018 Ecological Footprint https://www.footprintnetwork.org/our-work/ecological-footprint/ Godley, Wynne 1992 “Maastricht and All That.” London Review of Books 14, no 19: 3–4 Godley, Wynne 1999 “Seven Unsustainable Processes: Medium-Term Prospects for the United States and the World.” Special Report New York: Jerome Levy Institute of Bard College 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210, 213, 216 Bank for International Settlements, 169, 179 Barro-Ricardian equivalence, 58, 160 Bat and ball game, 109 Bernanke, Ben, 14, 26, 51, 56 Bernoulli, Daniel, 102, 112, 113, 116, 123, 138 Binzagr Institute, v, 17, 143, 259, 269 Blanchard, Olivier, 14, 18 Borrower’s risk, 81–83, 86 Borrowing facility, 176 Boulding, Kenneth, 261, 268 Bretton Woods, 165 Bryson, Bill, Budget black hole, 265 C Calvo pricing rule, 50 Cantril Self-Anchoring Scale, 221 Cash rate, 173, 176, 178 Certainty effect, 119, 124 Classical economics, 22, 55, 65, 66, 78, 97, 112 Coase, Ronald, 13 Competitive social relations, 245 Congressional Budget Office, 14, 18, 40, 238 Connors, Louisa, 264, 269 Consumption, 31, 38, 44, 45, 47–49, 53, 57, 59, 60, 75, 84, 94, 95, 103, 114, 136, 150, 160, 188, 196, 203, 212, 219, 220, 228, 230, 260, 261 © The Editor(s) (if applicable) and The Author(s) 2018 S Hail, Economics for Sustainable Prosperity, Binzagr Institute for Sustainable Prosperity, https://doi.org/10.1007/978-3-319-90981-3 283 284  Index Co-operative social relations, 245 Cost push, 87 Cripps, Francis, 183 Crowding in, 85 Crowding out, 38, 85, 137 D Daly, Herman, 261, 262, 269 Davidson, Paul, 2, 4, 34, 54, 57, 58, 63–72, 75, 77, 83, 90, 97, 98, 107, 141, 184, 253 Decision weighting function, 127, 129, 131 Decoupling, 179 Deficit, 14, 17, 84, 85, 94, 95, 147–149, 156, 157, 159–161, 190–192, 201, 203, 205, 210, 211, 215, 265 De Grauwe, Paul, 15, 46, 53, 54, 59 Degree of monopoly, 64, 79, 92–95, 209, 236, 237 Demand pull, 87 Deposit facility, 176 Doughnut model, 260 Duesenberry, James, 52, 60, 139 Dynamic stochastic general equilibrium models, 25, 26, 29, 31, 43, 47, 57, 70, 102, 105, 109, 124, 137, 183, 184, 198, 219, 237 E Easterlin Paradox, 223 Ecological footprint, 27, 260 Ecological sustainability, 8, 17, 107, 145, 221, 243, 260, 261, 263 Effective demand, 32, 64, 66, 67, 74, 75, 78, 95, 148, 196, 241, 243 Eichner, Alfred, 64 Ellsberg Paradox, 120, 124, 127 Employment guarantee scheme See Job guarantee Endogenous money, 31, 32, 59, 167, 175 Epistemological uncertainty, 68 Equity capital, 169, 170, 199 Ergodic, 66, 67, 69, 76, 80, 97, 103, 138 ESNAIBER, 242, 250 Euler equation, 48, 59 European Central Bank, 13, 154, 158, 180 Eurozone, 143 Excess reserves, 155, 165–168, 173, 175–179 Expectations augmented Phillips Curve, 39, 237, 238 Expected utility theory, 38, 101, 105, 106, 108, 111, 112, 115, 117–124, 126–130, 132 F Federal funds rate, 155, 167, 173– 176, 178 Federal Reserve Bank, 14, 158, 165, 180, 237 Financial instability hypothesis, 55, 64, 77, 78, 83 Fiscal deficit, 84, 85, 87, 96, 144, 146–149, 153, 155–160, 177, 209, 210, 215, 244 Fiscal policy, 13, 17, 26, 35, 37, 38, 43, 45, 46, 56, 58, 67, 85, 97, 137, 142, 145, 154, 157, 159– 161, 178, 179, 184, 196–198, 206, 208, 209, 243 Fiscal space, 153, 160, 161, 210 Fiscal sustainability, 153, 154, 157, 159, 160, 185, 192, 208 Fischer, Stanley, 43, 58, 155, 158, 180 Fisher, Irving, 31, 56, 57, 90 Foreign sector financial balance, 190, 191 Forstater, Matt, 184 Index Framing, 102, 106, 107, 110, 127, 128, 130, 131, 133, 137, 243, 244, 247, 263, 264, 266 Friedman, Milton, 1, 2, 17, 25, 37–40, 42, 43, 52, 56, 58, 133, 233, 250, 255–258, 268 Fullwiler, Scott, 153, 166, 180, 184, 244, 253 Functional finance, 141, 142, 147– 150, 185 Fundamental uncertainty, 29, 32, 33, 41, 47, 53, 54, 67, 111, 120 G Galbraith, James, 65 Gallup World Poll, 250 General equilibrium, 3, 23, 25, 29–31, 35–40, 43, 44, 46, 47, 49, 52–54, 56, 57, 63, 65, 67, 70, 90, 92, 106, 114, 124, 137, 184, 185, 232, 256, 263 General Theory, The, 1, 6, 30, 32–35, 63–66, 68, 73, 75, 78, 83, 84, 98, 142, 195 Genuine Progress Indicator (GPI), 3, 86, 261–263 Gini statistic, 27, 56, 226 Global Footprint Network, Globalisation, 89, 90, 92, 94, 258 Godley, Wynne, 2, 141, 183–185, 195, 197, 198, 201, 210–212, 214, 217, 238, 243, 253 Goodhart, Charles, 15, 18, 24, 55, 162, 180 Government as household metaphor, 148, 160, 172, 264 Government debt, 45, 59, 86, 149, 157–159, 161, 177, 179, 208, 265 Government financial balance, 191, 266   285 Government liabilities, 86, 156, 199, 201, 215 Graeber, David, 55, 135, 245, 247 Graziani, Augusto, 142, 180 ‘Great moderation’, 14, 21, 25, 27, 51, 78, 86, 89, 91, 235, 237 Great recession, 12, 26, 34, 78, 91, 143, 192, 231, 235, 237, 238 Greenspan, Alan, 92, 180, 255 Gross Domestic Product (GDP), 85, 94–96, 149, 157–159, 194, 195, 203, 206, 208, 211, 215, 236, 244, 261, 262 Gross substitution axiom, 66, 67 H Harcourt, Geoffrey, vi, 3, 97 Hard economics, 10–13, 16, 18, 21, 25, 125, 127, 137 Harrod, Roy, 71, 97 Hedge financing, 82, 83, 85 Heuristics, 53, 70, 102, 104, 108, 125–127, 188 Hicks, John, 25, 33, 34, 57, 70, 97 Horizontal money, 164, 165, 169 Household debt, 28, 91, 95, 147, 193–195, 198, 203 Hyperinflations, 156 I Inequality, v, 3, 5, 7, 21, 27, 40, 56, 87, 96, 97, 102, 127, 133–136, 194, 209, 219–221, 225, 226, 228, 231, 235–237, 245–248, 253, 257, 259, 260, 263 Inflation, 23, 26, 27, 29, 32, 36, 37, 39, 40, 48, 50–53, 57, 59, 73, 86, 87, 89, 93, 94, 96, 144, 145, 149, 150, 156, 160, 197, 199, 286  Index 208, 210, 231–241, 243, 250, 261 Innes, Alfred Mitchell, 162, 164, 179, 180 International Monetary Fund, 13, 154 Investment, 31, 32, 37, 38, 41, 47, 57, 64, 68, 70, 71, 75, 78, 80–86, 88, 91, 95, 126, 128, 160, 171, 189, 191, 192, 197, 203, 212, 214, 235 IS-LM model, 33, 34, 57, 59, 72 J Job guarantee, 16, 97, 102, 134, 137, 143, 150, 184, 197, 198, 208, 209, 219–221, 228, 231, 232, 235, 238, 241–244, 246–250, 253, 259 K Kaboub, Fadhel, v, 143, 180, 243, 253 Kahneman, Daniel, 102, 108, 119, 125–128, 130, 132, 133, 136, 139, 253 Kaldor, Nicholas, 2, 25, 84, 142, 175, 184, 210 Kalecki, Michal, 2, 4, 54, 63–65, 81, 84, 92–94, 96, 141, 184, 185, 211, 235, 237, 241, 253, 256 Kalecki equation, 84 Keen, Steve, 18, 56, 180, 207, 268 Kelton, Stephanie (Bell), vi, 141, 160, 253 Keynes, John Maynard, 1–4, 6, 9, 10, 16, 17, 22, 24, 25, 29, 30, 32–37, 42, 46, 52, 54–57, 60, 63–74, 76–78, 80, 87, 90, 97, 98, 104, 107, 120, 121, 128, 142, 162, 172, 180, 184, 241, 249, 250, 253, 257, 258, 268 Knapp, Georg Friedrich, 162, 179 Knight, Frank, 97 Kregel, Jan, 64 Krugman, Paul, 14, 15, 33, 34, 54, 58 L Laidler, David, 2, 17 Lakatos, Imre, 53, 60, 256, 264, 268 Lakoff, George, 264, 269 Lavoie, Marc, 56, 180, 183, 184, 198, 210–212, 214, 238, 243 Lawn, Philip, vi, 3, 250, 251, 261, 262 Lender’s risk, 81–83, 86 Lerner, Abba, 2, 141, 142, 147–150, 153, 253, 256 Levy Institute of Bard College, 183 Life satisfaction, 221–225, 228, 229, 260 Lipsey, Richard, 254–256 Liquidity, 31–33, 66, 71, 73–77, 81, 83–87, 145, 165, 166, 173, 174 Liquidity preference theory, 64, 71, 72, 74–77 Loewenstein, George, 102, 133, 135, 139, 236, 247, 248, 253 Loss aversion, 106, 123, 124, 127– 130, 134, 225, 228 Lucas, Robert, 1, 14, 18, 40–42, 58, 70, 256 M Marx, Karl, 2, 16, 18, 22, 32, 141 Mazzucato, Mariana, 269 Mental accounting, 106, 107, 123, 124, 128, 129, 138 Minimum wage, 17, 26, 226–228 Index Minsky, Hyman, 2, 4, 12, 18, 33, 34, 37, 42, 46, 54, 55, 57, 58, 63, 64, 71, 72, 77–84, 86–91, 94, 96, 97, 107, 135, 141, 142, 150, 151, 162, 171, 180, 184, 187, 207, 210, 232, 235, 237, 241, 245, 248, 253, 255, 256, 268 Mitchell, William (Bill), vi, 3, 141, 180, 242, 250, 253, 264, 266, 268, 269 Modern monetary theory, vi, 3, 4, 10, 15, 16, 18, 24, 63, 96, 97, 105, 107, 141, 142, 144–148, 150, 152–154, 156, 175, 180, 183, 185, 196, 209, 263, 264, 267, 268 Monetarism, 9, 25, 39, 41, 237 Monetary analysis, 10, 16, 22, 25, 30, 32, 33, 36, 37, 47, 54–56, 63, 64, 66, 67, 92, 125, 137, 141, 183, 256, 263 Monetary base, 145, 155–157, 163, 166, 167, 175, 177, 178 Monetary policy, vi, 3, 25, 26, 35, 37, 43, 56, 87, 145, 149–152, 154, 172, 178, 179, 184, 196, 198, 206–209 Monetary sovereignty, 143, 150, 153, 154, 179 Money manager capitalism, 135, 237, 248 Money multiplier, 142, 154, 156, 167, 168, 173, 177 Money supply, 34, 37–39, 41, 43, 57, 156, 163–165, 167, 168, 172, 175 Moore, Basil, 142, 175, 180 Mosler, Warren, 141, 184, 253, 266   287 N NAIBER, 242, 243, 250 Natural rate of interest, 31, 32, 35, 52 Natural rate of unemployment (NRU), 23, 38–40, 47, 67, 219, 233, 238 Neoclassical economics, 9, 15, 16, 54, 64, 92, 97, 112, 136, 254, 264, 268 Neoclassical synthesis, 25, 28, 36, 37, 41, 43, 55, 56, 70, 72, 78, 159, 185 Neo-Keynesian economics, 17, 37, 41, 43 Neoliberalism, 3, 235, 248 Neutral money axiom, 66, 67 Newclassical economics, 41 New Keynesian economics, 32, 43, 158 Non-accelerating inflation rate of unemployment (NAIRU), 23, 40, 234, 238–242 Normative economics, 256 O Okun’s Law, 220 Ontological uncertainty, 68, 71 P Pareto, Vilfredo, 102, 113, 114, 116, 125 Pascal, Blaise, 111, 112, 138 Patronising social relations, 245 Phillips Curve, 26, 36, 37, 50, 56, 197, 233, 234, 238 Piketty, Thomas, 92, 93 Plan Jefes, 244, 250, 251 Polanyi, Karl, 136, 139 288  Index Ponzi financing, 79, 82, 83 Popper, Karl, 255, 256, 264 Positive economics, 254–257 Post-Keynesian economics, 3, 16, 63, 137 Precautionary demand for money, 67, 77 Private sector financial balance, 209 Procedural rationality, 103–107, 109, 111, 125, 184, 188 Prospect theory, 102, 124, 126–129, 131–134, 137, 225 R Rabin paradox, 121, 124, 127, 129 Rational expectations, 1, 40–42, 47, 52, 53, 70, 102, 106, 107, 189, 233 Raworth, Kate, 259, 260, 262, 268 Real analysis, 9, 23–25, 29, 30, 32, 33, 35–38, 40, 43, 46, 47, 52, 54–57, 63, 64, 66, 67, 92, 125, 234 Real business cycle theory, 41–43, 55 Real GDP, 27, 28, 86, 157, 158, 205, 210, 220–225, 236, 241, 251, 259–262 Reference dependence, 106, 123, 124, 127, 133, 225 Reflexity, 70, 257, 258 Representative agent, 44, 45, 47, 53 Representative household, 46, 48, 49, 51, 53, 59, 124 Reserve Bank of Australia, 146 Reserve requirements, 165, 166, 173 Ricardo, David, 22, 23, 29, 33, 55 Risk aversion, 46, 80, 90, 112, 121–124, 128 Robbins, Lionel, 258, 259 Robinson, Joan, vi, 2, 6, 25, 35, 57, 65, 92, 210 Rogers, Colin, vi, 3, 12, 18, 29, 57 Romer, Paul, 15, 18 Rural Employment Guarantee Scheme, 244, 250 S Samuelson, Paul, 12, 13, 18, 25, 35, 36, 56, 70, 76, 102, 114, 125, 254, 268 Say’s Law, 23, 47, 52, 55, 59, 66, 67, 259 Sectoral balances, 190, 209, 210 Simon, Herbert, 103, 125, 132, 138, 184, 253 Smith, Adam, 22, 33, 111, 112, 257 Soft economics, 9–14, 16, 21–24, 29, 40, 55, 59, 137, 220, 226, 234, 237, 255 Solow, Robert, 36, 56, 57 Soros, George, 70, 257 Speculative financing, 82, 83 Stagflation, 36, 37, 232, 235 Stock-flow consistent macroeconomics, 146, 147, 183, 263 Substantive rationality, 103, 105, 106, 108, 109, 111, 128 Supply-side policies, 236, 237 Surplus, 14, 45, 84, 85, 87, 90, 95, 146–148, 154, 158, 160, 161, 174, 191, 192, 197, 203, 205, 210, 265, 266 Sustainable prosperity, v, vi, 3, 4, 6, 7, 9–12, 15–17, 19, 102, 141–144, 146, 160, 161, 170, 171, 179, 210, 219, 226, 238, 248, 250, 253, 254, 258–260, 262, 263, 266–269 Suzuki, David, 5, 7, 261 System one, 102, 108–110, 161, 263, 264 System two, 102, 108–110 Index T Tawney, Richard H., 254 Taxation, macroeconomic purpose of, 145 Taylor rule, 32, 43, 52, 57, 89, 237 Tcherneva, Pavlina, 56, 251, 253 Tobin, James, 2, 37, 58, 70, 76, 185, 214, 261 Trade deficit, 144, 190, 199, 211 Trade surplus, 144, 154 Transactions-flow matrix, 202, 204 Transversality condition, 45, 58 Treatise on Money, 65, 142 Treatise on Probability, 68, 121, 128 Tversky, Amos, 102, 118, 119, 125– 128, 132, 133, 136, 139, 253 U Underemployment, 6, 26, 27, 196, 229, 230, 235, 237, 240, 241, 246, 247, 261 Unemployment, 6–8, 13, 26, 27, 30, 32, 35, 36, 39–43, 51, 54, 56, 65–67, 89, 94, 96, 105, 106, 137, 144, 154, 179, 193, 196, 208–210, 217, 219–221, 229–236, 238–243, 247   289 V Value function, 128–130, 132–136 Veblen, Thorstein, 16, 18, 137, 139 Vertical money, 163, 170, 172 von Neumann and Morgenstern, 116, 123, 133 W Walrasian, 23, 25, 28–32, 34, 35, 37, 39, 44, 47, 49, 55, 63, 114, 184 Walras, Leon, 25, 35, 52, 55, 113 Weintraub, Stanley, 150 Well-being, 5, 6, 16, 58, 97, 101, 102, 105, 113, 123, 130, 136, 220, 221, 224–226, 228, 229, 245, 246, 259, 262, 267 Wicksell, Knut, 25, 30–32, 35, 43, 52, 112, 180 Woodford, Michael, 30, 32, 44, 58, 112 Wray, L Randall, 91, 98, 141, 142, 180, 184, 253, 264, 269 Y Yellen, Janet, 14 ... attend to, before we start on our path towards a modern monetary theory for sustainable prosperity If we not get our economics right, we will not achieve sustainable prosperity Getting the economics. .. Friedman I was vaguely aware of a © The Author(s) 2018 S Hail, Economics for Sustainable Prosperity, Binzagr Institute for Sustainable Prosperity, https://doi.org/10.1007/978-3-319-90981-3_1 2  S... http://www.palgrave.com/gp/series/15386 Steven Hail Economics for Sustainable Prosperity Steven Hail University of Adelaide Aldgate, SA, Australia Binzagr Institute for Sustainable Prosperity ISBN 978-3-319-90980-6