Climate change issues including degrowth, deep adaptation

ECB estimates suggest meeting current challenges will be impossible within fiscal rule space

In the recent issue of the ECB Economic Bulletin (issue 4/2024) there was an article – Longer-term challenges for fiscal policy in the euro area – which demonstrates why the common currency and its bevy of fiscal rules and restrictions is incapable of meeting the challenges that humanity and the natural world face in the coming years. The ECB article is very interesting because it pretty clearly articulates the important challenges facing the Member States and provides some rough estimates of what the fiscal implications will be if governments are to move quickly to deal with the threats posed. However, it is clear from the analysis and my own calculations that significant austerity will be required in areas of expenditure not related to these challenges. Given the current political environment in Europe, it is hard to see how such austerity can be imposed and maintained in areas that impact the daily lives of families. What is demonstrated is that the architecture of the EMU is ill-equipped to deal with the problems that Member States now face. The common currency and fiscal rules were never a good idea. But as the challenges mount it is obvious that Europe will have to change its monetary system approach in order to survive.

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The green growth paradigm has a long tradition – which has never been supportable

In October 1987, the United Nations published a report – Our Common Future – (aka Brundland Report) which was the work of the then World Commission on Environment and Development (WCED) – that was chaird by the then Norwegian Prime Minister Gro Harlem Brundtland. It laid out a multilateral approach to dealing with climate change and establishing a path to sustainable development (growth). While the Report was published by Oxford University Press, you can access it via the UN – HERE. It is the foundation of the more recent ‘green growth’ and ‘green new deal’ movements that have besotted the progressives in the advanced nations. The problem is that the framework presented implies that we can maintain the capitalist market system with some tweaks and continue prioritising the pursuit of private profit as the main organising principle for resource allocation. I disagree with that approach and my current research is building the case for system change and the abandonment of the ‘growth paradigm’.

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Latest European Union rules provide no serious reform or increased capacity to meet the actual challenges ahead

It’s Wednesday and we have discussion on a few topics today. The first relates to the new agreement between the European Parliament and the European Council that was announced on February 10, 2024, which purports to reform the fiscal rules structure that has crippled the Member States of the EMU since inception. The reality is that the changes are minimal and actually will make matters worse. I keep reading progressives who claim the EU fiscal rules are no longer operative. Well, sorry, they are and the temporary respite during the pandemic is now over and the new agreement makes that very clear. I also express disappointment that high profile progressives continue to misrepresent Modern Monetary Theory (MMT) as they advance their own agenda, which effectively provides support to the sound finance narratives. Then some updated health data which continues to support my perspective on Covid. And then some anti-fascist music. What’s not to like.

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Latest US inflation data is no cause for alarm – the trend is down

It’s Wednesday and I have looked at the US CPI release overnight that has set alarm bells off in the ‘financial markets’ and among mainstream economists. My assessment is that there is nothing much to see – annual inflation less volatile items is still falling and the lagged impact of shelter (housing) is still evident even though that component is also in decline. I also examine an argument that the trend towards increasing self-reliance among nations is likely to precipitate renewed global conflict. My own view of this trend is that it must accelerate to allow us to shift to a degrowth trajectory. And I finish with some fine concertina music.

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US inflation rate is declining – no case for further rate rises

It’s Wednesday and I have comments on a few items today. I haven’t been able to write much today because the power has been down after the dramatic storms yesterday in Victoria damaged the network and caused absolute chaos (see below). Power is mostly back on now (which is why this post is later than usual). The US CPI data released yesterday showed that inflation continues to decline and the so-called ‘surprise’ that seems to have shocked the ‘markets’ are mostly down to the eccentric way the US Bureau of Labor Statistics calculates housing costs. The data provides no justification for further rate hikes in the US or anywhere else for that matter. I also report on an interesting survey from Japan regarding local attitudes to foreigners. I don’t think it reflects Japanese insularity although many will conclude otherwise. Then some Wayne Shorter.

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British Labour Party no longer fit for purpose

It was interesting to spend a few weeks in London recently and catch up with friends and research colleagues. It always focuses the mind on issues when one is in situ rather than gazing at data and reports from afar. My view of British Labour as being incapable of providing the British people with a progressive solution to the poly crisis the nation confronts has strengthened in the last few weeks and was emphasised once again by the decision of the leadership to backtrack on its £28 billion green investment strategy – its second U-turn on this key policy in the last few years. Touted as making Britain “A fairer, greener future” for Britain, “Labour’s Green Prosperity Plan” certainly differentiated it somewhat from the ruling Tories. Now that differentiation has been abandoned and the Labour politicians are claiming that “Labour’s fiscal rules … [are] … more important than any policy”, which is about as moronic as it gets. More of the same from the so-called political voice of the working class. I told an audience in London a few weeks ago that I considered the ‘institutions’ that had been created in the late C19 and into the C20 to give political voice to the working class had past their use-by date and were no longer fit for purpose. The British Labour Party is one such institution and it has been so captured by ‘conservatism’ of the worst type (sound finance etc) that it no longer is capable of delivering sustainable prosperity.

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Moving to a sustainable system of food production within a degrowth paradigm

I read an interesting report in the last few days – The Economics of the Food System Transformation – published on January 29, 2024 by the – Food Systems Economics Commission (FSEC) – which “is a joint initiative that brings together 21 commissioners from 19 global institutions”. The topic is very relevant to research I am engaged in at present as part of my upcoming book release on Degrowth and Capitalism. It is also relevant to my lived experience which I will briefly touch on.

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Anything we can actually do, we can afford

I often make the point in talks that the fictional world that mainstream economists promote leads to poor decisions in the real world by our policy makers. We saw that in the 1980s and 1990s with the large scale privatisations of public enterprises, touted as employment-enriching, productivity-boosting strategies to provide ‘more money for government to spend on welfare’. We now have enough data to know that in almost all the examples the promises have not been fulfilled and the outcomes worse than what would have been had the enterprises been maintained in the public sector and motivated to provide public service rather than private profit. The same mistake is being made with the response to the climate emergency. Economists and commentators are claiming we need to ‘repeat the privatisations’ to get enough investment cash to facilitate the necessary restructuring. They are wrong and if governments, operating on the assumption that they do not have ‘enough cash’, rely on private funding for climate initiatives then the outcome will be poor for societies.

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Whether real wages have stopped declining depends on how one measures it

For the time being I will continue my Wednesday format where I cover some things that crossed my mind in the last week but which I don’t provide detailed analysis. The items can be totally orthogonal. The latest inflation data for Australia continues to affirm the transitory narrative – dropping significantly over the last month. I will analyse that tomorrow in the context of a recent ECB paper that decomposes the different factors that drove the inflationary pressures across the globe. Today, I consider the basis of a claim by the Australian Treasurer that real wages are now growing. Like many things in statistics, the numbers can say almost anything that you want them to via different ways of measurement and combination. In one sense, the Treasurer is correct. But when we use a more careful method of calculating purchasing power loss, he is incorrect. If the Treasurer was wanting to be really honest with the Australian people he would admit that rather than try to score petty political points against an opposition that has no clue at all. I also consider the role of the US in the on-going massacre of innocent people in Gaza. The US could stop the conflict immediately and the fact that they don’t demonstrates the poverty of the capitalist system in terms of advancing humanity in general. And some old folk music to finish.

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