James Galbraith

 

James K. Galbraith is author of Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe. He is an elected member
of the Accademia Nazionale dei Lincei, the Italian national academy. 

Recent Articles

Shock without Therapy

The Russia Hand: A Memoir of Presidential Diplomacy By Strobe Talbott. Random House, 457 pages, $29.95 The Oligarchs: Wealth and Power in the New Russia By David E. Hoffman. PublicAffairs, 567 pages, $21.00 Russia's Post-Communist Economy Edited by Brigitte Granville and Peter Oppenheimer. Oxford University Press, 551 pages, $29.95 The New Russia: Transition Gone Awry Edited by Lawrence R. Klein and Marshall Pomer. Foreword by Mikhail Gorbachev. Stanford University Press, 451 pages, $24.95 I n the late days of 1992, economist Axel Leijonhufvud of UCLA got in touch with me. Leijonhufvud was then an adviser to the new country of Kazakhstan. He had written a penetrating analysis of how free-market policies would destroy the industrial structure of the old Soviet Union, and with it the livelihoods of many millions living there. Leijonhufvud asked that I find a way to convey his papers to Strobe Talbott, who had just assumed a position as President Clinton's special adviser on Russian...

Corporate Democracy; Civic Disrespect

With the events of late in the year 2000, the United States left behind constitutional republicanism, and turned to a different form of government. It is not, however, a new form. It is, rather, a transplant, highly familiar from a different arena of advanced capitalism. This is corporate democracy. It is a system whereby a Board of Directors -- read Supreme Court -- selects the Chief Executive Officer. The CEO in turn appoints new members of the Board. The shareholders, owners in title only, are invited to cast their votes in periodic referenda. But their franchise is only symbolic, for management holds a majority of the proxies. On no important issue do the CEO and the Board ever permit themselves to lose. The Supreme Court clarified this in a way that the Florida courts could not have. The media have accepted it, for it is the form of government to which they are already professionally accustomed. And the shameless attitude of the George W...

A War Economy...

I n a war economy, the public obligation is to do what is necessary: to support the military effort, to protect and defend the home territory, to stabilize the economy itself, and, especially, to maintain the physical well-being, solidarity, and morale of the people. These may not be easy tasks in the months ahead. We are facing an economic war--but not exactly a war economy. That means we get the dislocation without the usual growth. The impact of the September 11 attacks now includes a 14.4 percent drop in stock prices in the first week and collapse in sectors related to travel and leisure, notably airlines, hotels, and resorts. As these events cascade through the economy, they will weaken fragile household balance sheets and precipitate steep cuts in consumer spending. This, in turn, will deepen layoffs and depress economic activity. The ensuing recession could be severe. This is not merely a shock to a healthy system, requiring only limited measures to restore confidence and...

Did the U.S. Military Plan a Nuclear First Strike for 1963?

Recently declassified information shows that the military presented President Kennedy with a plan for a surprise nuclear attack on the Soviet Union in the early 1960s.

During the early 1960s the intercontinental ballistic missile (ICBM) introduced the world to the possibility of instant total war. Thirty years later, no nation has yet fired any nuclear missile at a real target. Orthodox history holds that a succession of defensive nuclear doctrines and strategies -- from "massive retaliation" to "mutual assured destruction" -- worked, almost seamlessly, to deter Soviet aggression against the United States and to prevent the use of nuclear weapons. The possibility of U.S. aggression in nuclear conflict is seldom considered. And why should it be? Virtually nothing in the public record suggests that high U.S. authorities ever contemplated a first strike against the Soviet Union, except in response to a Soviet invasion of Western Europe, or that they doubted the deterrent power of Soviet nuclear forces. The main documented exception was the Air Force Chief of Staff in the early 1960s, Curtis LeMay, a seemingly idiosyncratic case. But beginning in 1957...

Self-Fulfilling Prophets: Inflated Zeal at the Federal Reserve

Greenspan's rate increases needlessly threaten to abort the recovery. A more accountable central bank is long overdue.

On February 4, 1994, Federal Reserve Chairman Alan Greenspan announced a quarter-point rise in federal funds rate, which is the overnight interbank lending rate and a basic instrument of monetary policy. It was the first of four interest rate hikes. By late May, the Federal Reserve had driven up short-term interest rates by a percentage point and a quarter. From the beginning, things went badly. Contrary to Greenspan's professed purposes, long-term interest rates soared. Thirty-year fixed-rate home mortgage loans had been available at about 7 percent before the Federal Reserve acted. At this writing they are over 8 1/2 percent. Some medium- and long-term rates actually rose by more than short rates at first: three-year notes jumped a full point and a half; 10-year bonds jumped a point and a quarter before the Board's fourth rate-hike, of a half-point, in May. Four months later, many questions remain. Why did the Federal Reserve act? What went wrong? What can we do? In answering these...

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