The current economic crisis has one of the causes in the subprime mortgages and the subsequent debt problems of banks and governments. This has caused a renewed interest in the work by Hyman Minsky and Wynne Godley, see http://www.levyinstitute.org.
A synthesis of various economic approaches is possible, such that our fellow economists will awake from their slumbers. We can formulate alternatives to this synthesis such that the data will decide which approach is more powerful.
The old synthesis can now be extended
I already formulated a synthesis in 1990, before the financial markets were deregulated to the very extent that has now caused this crisis. The deregulation took place since our fellow economists neglected my suggestion of that synthesis. The inclusion with the work by Minsky and Godley makes for an even better synthesis. Basically: to the Minsky and Godley approaches that researchers may now be familiar with, I suggest the additions of the notions of the Economic Supreme Court, tax void, dynamic marginal tax rate, and the shift of the Phillipscurve and NAIRU also due to differential indexation. These notions are in my book DRGTPE. A suggestion is that the Levy institute studies this too and considers an adaptation of its model.
My Economic Plan for Europe is based upon DRGTPE:
An interview by graduate student Protesilaos Stavrou:
There is also my note in the Royal Economic Society Newsletter about the current debt finance error and proposal for a regime ladder to eliminate stigma on government debt.
DRGTPE contains the notion of national investment banks and shows that full employment better be a target and that it can be attained. Minsky uses the term Employer of Last Resort (ELR). Starting from Keynes and Tinbergen I apparently found a similar analysis as Minsky on this though I use full employment rather than ELR.
The analysis in DRGTPE about the impact of taxation is a useful addition to the Minsky analysis on the ELR. Here I employ the same idea as Godley for finance: the use of accounting relations to show the limitations to the economy. I call this the “definition & reality methology” since it concerns definitions in models on economic reality.
This methodology is important, see my note on the paper “No one saw it coming” by Dirk Bezemer: http://thomascool.eu/Papers/Drgtpe/Crisis-2007plus/2009-10-23-ColignatusVsBezemer.pdf
In 1990 I regarded unemployment as the main problem to solve, see: http://thomascool.eu/Papers/Drgtpe/Crisis-2007plus/2011-10-16-Ghost-1989.html
We can now include the current crisis of 2007+.
Unemployment, CPB, Economic Supreme Court
Overall, we need a constitutional amendment of the Trias Politica with an Economic Supreme Court (ESC), per nation. Currently our fellow economists jump about in all kinds of directions but given an ESC there will be structure and order. Compare lawyers and the Supreme Court. See the draft amendment in DRGTPE.
Holland has been running systematic surplusses on the external account. Apparently there are vested interests in that country to resolve home grown unemployment by exporting (it). The Dutch Central Planning Bureau (CPB) has a role in that too. The directorate claims that it is a scientific bureau, but it is not a scientific bureau (for then it would be like an ESC).
Professor Robert Haveman who has ties with the Levy Institute has been in Holland and visited the CPB. He was linked to a CPB-review team. The CPB directorate censors science, but the review team with professor Haveman did not report on that. It is a bit strange that professor Haveman researches poverty but supports a CPB directorate that censors an analysis on unemployment and poverty. See http://thomascool.eu/Thomas/English/TPnCPB/Audit2/2003-03-26.html
I have been protesting this censorship of science for more than 20 years now. Since 2004 I advise to a boycott of Holland till this is resolved:
I hope that economic scientists in the world will study this economic synthesis. It will include a firm position on the integrity of economic science. It is painful to see the suffering that has been happening these last 20 years as a result of this censorship.