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When the mainstream Left gets lost down its Europhile hole

Thomas Fazi and I recently published an Op Ed in Social Europe (October 20, 2017) – Everything You Know About Neoliberalism Is Wrong, which is a precis of the main arguments in our new book Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017). It seems that our message resonates with a lot of people. And, inasmuch as it is deeply critical of the extant Left position on ‘internationalism’ who continually seem to live in terror of those amorphous financial markets just waiting for a chance to send a nation state bankrupt, it seems to have also upset some who I consider to be the ‘lost’ mainstream Left. One such critic accuses us of using a “presumptuous title” but he is seemingly unable to capture the pop culture irony that is inherent in the choice. Just a bit of fun Andrew. Since when is comedy presumptuous? But failing to grasp the subtlety of the title is just the start. Things go downhill from there.

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The ‘infinite-horizon fiscal gap’ is just an infinity of nonsense – try measuring that!

The ‘infinite-horizon fiscal gap’ is just an infinity of nonsense. That is, if such a level of ridiculousness can be measured, which it cannot. So suffice to say a pretty large dose of nonsense. Certainly nothing to take seriously. Anyone who sprouts this nonsense declares themselves unqualified to discuss notions of sovereignty and the capacities of a currency-issuing state. But while some mainstream economists are firmly stuck in their Groupthink-riddled stupors with their ‘infinite-horizon fiscal gap’ calculations producing ever increasing (scaremungous) $ sums that the US government is allegedly unable to ever pay, the movers and shakers of the political scene, such as the Koch Brothers in the US, feel no compunction to stick with a consistent line attacking fiscal deficits. A few years ago they were predicting mayhem and insolvency just like the stupified academics. How things change when some dollars are up for grabs even if the fiscal deficit has to rise to transfer that largesse to the non-government sector. Then it is look the other way on the deficit and send us the cash. Sickening.

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The sham of ECB independence

One of the major claims the founders of the EMU made was that by creating an independent ECB – by which they meant ‘independent’ of the influence from the Member States or other EU bodies (such as the Eurogroup) – they were laying the foundations of financial stability and disciplining the fiscal policy of the Member States. This so-called independence was embodied in the – Treaty on the Functioning of the European Union – where Article 123 prevents the ECB from giving “overdraft facilities or any other type of credit facility” to the Member State governments (and other EU bodies); Article 124 prohibits any Member State government (and other EU bodies) from having “privileged access” to the financial institutions; and Article 125 prohibits the ECB from assuming any liabilities or “commitments” of the Member State governments (etc) – the famous ‘no bailout’ clause. But a recent report from the Corporate Europe Observatory (CEO) – Open doors for forces of finance – (published October 3, 2017) – suggests that the ECB feigns independence and is in fact captive of the largest profit-seeking financial institutions that sit on its advisory groups. In other words, the ECB has become a vehicle to advance private return and avoid regulative imposts when the TFEU outlines an entirely different role for the bank.

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Time to nationalise superannuation in Australia – even conservatives think so!

In our new book, Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017) – Thomas Fazi and I argue that that reversal of many of the neoliberal changes that governments have agreed to over the last three or more decades is not only possible but desirable. While many of our proposals exploit the legislative power that a democratic government clearly possesses (such as reregulating banking etc), other proposals directly rely on the currency-issuing capacity of the government. One such proposal is to create national pension funds (or superannuation funds in the Australian terminology), which provide an efficient and secure vehicle for workers to channel savings while working to improve their retirement prospects later in life. This idea runs counter of the neoliberal myth, which claimed that the ‘market’ would be a better vehicle for creating institutions to manage workers’ saving and maximise pension entitlements. In Australia, we are now witnessing the indecent greed and major rip-off of workers that the ‘market’ solution has delivered. Even one of the architects of privatised superannuation schemes, the former conservative Treasurer Peter Costello is seeing the folly of his work. In the UK Guardian article (October 13, 2017) – Peter Costello calls for nationalisation of superannuation – we learn that the former treasurer believes that “Australia’s collective $2.3 trillion pension pot would be better invested by a government agency”. The natives are getting restless!

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The Weekend Quiz – October 21-22, 2017 – answers and discussion

Here are the answers with discussion for yesterday’s quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

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Australian labour market delivers more jobs growth but still no trend emerging

The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for September 2017 shows that total employment growth was positive but weaker than last month with most of the action coming via part-time employment. However, total hours worked continued to rise, which suggests that employers are offering extra hours to existing jobs. Unemployment declined with a constant labour force participation rate, which says that employment growth was slightly stronger than the underlying population growth – a good sign. Labour underutilisation overall (underemployment and unemployment) was at 13.6 per cent summing to 1,814 thousand persons, which tells you that there is still considerable slack in the labour market. The teenage labour market showed modest improvement but remains in a poor state. Overall, my assessment from last month remains – it still to early to conclude that the uncertainty of the last few years is giving way to sustained growth.

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British productivity slump – all down to George Osborne’s austerity obsession

Apparently, whenever some poor economic news is published about the United Kingdom, journalists have to weave in their on-going gripe about the outpouring of democracy in June last year that saw the Brexit vote to leave successful. Its hysterical really. The most recent example is from the otherwise sensible Aditya Chakrabortty from the UK Guardian (October 17, 2017) – Who’s to blame for Brexit’s fantasy politics? The experts, of course. The story has nothing much to do with the June 2016 Referendum but more about massive forecasting failures of the Office of Budget Responsibility. But somehow the story opines about the lies told about Brexit and a fiscal “bloodbath” – the latter being the description for the fact that the fiscal deficit is likely to increase a little as a result of a slower than expected economic growth outcome. The UK Guardian continually writes about these two obsessions – the first that Brexit will be a disaster and the second that the fiscal position of the British government is in jeopardy and will undermine the capacity of the government to defend the economy if a major downturn comes along (as a result of the ‘Brexit disaster’). The narratives are interlinked – Brexit is bad, it will cause deficits to rise which are bad, and the government will be powerless as a result of the rising deficits to stop the bad consequences of Brexit – which is a big bad. All propositions are largely nonsense. Brexit will be bad if the British government continues to implement neoliberal policy. Rising deficits do not alter the spending capacity of government. And as a currency-issuing government, Britain can always arrest a recession, if there is political will. The fact is that the OBR forecast errors are just part of the neoliberal lie. And the productivity growth slump the OBR has now ‘discovered’ predates the Brexit referendum by years and is all down to the misplaced austerity imposed by George Osborne in June 2010. But it is disappointing to read this sort of stuff being repeated by so-called progressive commentator. There is clearly more work to be done via education.

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Three recent interviews – transcripts and video

Today, I have translated two interviews I did while I was in Europe recently. The original interviews were in Spanish. The first interview was with Andrés Villena Oliver for CTXT and was published in the Spanish newspaper Público. It was conducted at Ecooo in Madrid on September 28, 2017. The the second interview was with journalist Marta Luengo Garcés from the progressive newspaper El Salto Diaro. It was conducted at the Principe Pio Hotel in Madrid on September 29, 2017. You can get a feel for the concerns of the progressive journalists in Spain by the type of questions they asked me. I have also included the video of an interview I did yesterday (October 16, 2017) with Steve Grumbine of the Real Progressives. That should keep readers more than busy until tomorrow.

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Wolfgang Schäuble is gone but his disastrous legacy will continue

History is often made by single, very powerful individuals acting on their own mission according to their own calling. Many of these individuals are seemingly immune to the reality around them and try to recreate their own reality – sometimes succeeding to advance the well-being of those around them and beyond, but, usually, they just leave the main stage after creating havoc. I could name names. But only one name is relevant for today’s blog – Wolfgang Schäuble, the former CDU German Minister for Finance. Schäuble resigned that role after the recent German elections and is now being feted by the mainstream press as some sort of visionary who kept the Eurozone together through his disciplined thinking and his resistance to populist ideas that would have broken the discipline imposed on Member States by the European Finance Ministers. History tells us differently. He has overseen a disastrous period in European history where its major step towards political and economic integration in the 1990s has delivered dysfunctional and divergent outcomes for the Member States. Some countries (Greece) has been ruined by the policies he championed while others are in serious trouble. Further, despite him claiming the monetary union has been successful, the fact is that the Eurozone is still together only because the ECB has been effectively violating the no bailout articles of the Treaty of Lisbon via its various quantitative easing programs since May 2010. Should it stayed within the ‘law’ of the union, then several nations would have been forced into insolvency between 2010 and 2012. The problem is that while Schäuble is now gone from the political stage, his disastrous legacy will continue.

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