The catch-all category for my blogs reflecting my professional expertise as a full professor of economics.

Progressives should move on from a reliance on ‘Robin Hood’ taxes

There was an article in the International Politics and Society journal (August 27, 2017) – Robin Hood had the right idea – which continues to demonstrate, how in my view, the Left has gone down a deadend path with respect to financial market reform and re-establishing a credible progressive agenda. The sub-title of the article ‘Why the left needs to deliver on the financial transaction tax’ indicates that the author, Stephany Griffith-Jones, who has long advocated positions I am sympathetic to (particularly with respect to development economics), thinks a financial tax is a viable strategy for the Left to push. The problem is that none of these ‘Robin Hood solutions’ are viable and are based on faulty understandings of the way monetary systems operate.

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When economists lose the plot entirely and show their colours

When I started studying economics at University, I had a lecturer in microeconomics who, thankfully, was an antagonist of the mainstream micro mantra about perfect markets and their capacity to deliver optimal, efficient outcomes for all. She is no longer with us but her early teachings have stayed with me (thanks Kaye!). She used to say that the market was like a voting system where the votes were cast in dollars. The rich have more votes and can sway the outcome in their favour. At the extreme, they can deprive the poor of the essentials of life, yet mainstream economists, who recite the mantra in those textbooks, would claim that outcome was optimal and efficient because supply and demand interacted to determine a ‘market-clearing’ price. For those who resisted the socio-pathological tendencies that arise from a complete undergraduate program in mainstream (neo-liberal) economics, it was obvious that the narrative was a fantasy. The real world is nothing like the requirements that the textbooks specify before ‘markets’ deliver optimal outcomes. Deeper study, not usually, taught in standard, mainstream economics programs also allowed one to understand that when the ‘market’ is not as specified in the textbook (read the real world) attempting to engineer ad hoc shifts towards that ‘idealisation’ probably resulted in even worse outcomes. At any rate, application of ‘perfectly competitive’ theory is fraught. And that is before we invoke basic morality and human valuation. Unfortunately, events like Hurricane Harvey, bring out economists who think it is smart to apply these ridiculous textbook models and claim authority over the rest of the citizenry. All they achieve is that they utter venal garbage and shame on the media outlets who give them oxygen.

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Fiscal policy is effective, safe to use, and markets know it

The Federal Reserve Bank of Kansas City has just hosted its annual Economic Policy Symposium at Jackson Hole in Wyoming where central banks, treasury officials, financial market types and (mainstream) economists from the academy and business gather to discuss economic policy. As you might expect, the agenda is set by the mainstream view of the world and there is little diversity in the discussion. A Groupthink reinforcing session. One paper that was interesting was from two US Berkeley academics – Fiscal Stimulus and Fiscal Sustainability – which the news reports claimed suggested that governments should be increasing fiscal expansion even though they may be carrying high levels of public debt. The conclusion reached by the paper is correct but the methodology is mainstream and so progressives should not get carried away with the idea that there is signs that some give is emerging, which will lead to more progressive outcomes. A progressive solution will only come when the neo-liberal dominance of my profession is terminated and an entirely new macroeconomics paradigm based on Modern Monetary Theory (MMT) is established. There is still a long way to go though.

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The divide-and-conquer strategy of the CIA in France 1985-style

A good friend sent me a document that was released under the US Central Intelligence Agency’s rules about archives. The CIA has established a fabulous ‘Freedom of Information Act Electronic Reading Room’ where all sorts of stuff is released after they deem it benign to current security concerns. The 1985 CIA document – France: Defection of the Leftist Intellectuals – written by CIA operatives, provides an analytical summary of the leading lights in the French left-wing intellectual thought in the 1980s with a view of promoting ….. It is redacted but only marginally. There is no doubt as to what the message is. It helps us understand the forces that were mounted against the progressive Left by right-wing, pro-market forces and how the public was manipulated to reject This is part of the research I am currently doing on the way literature, particularly fiction, is used to advance the neo-liberal ideological position – to make it look as though the ideas about governments running out of money and the like are just extensions of our usual individual experience in families and households. That research will be disseminated in a paper that Louisa Connors and I are giving at the upcoming MMT conference in Kansas City.

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When neo-liberal masquerades as anti-establishment

Regular readers will know I was doing some speaking engagements in New Zealand a few weeks ago. Please read my blogs – Travelling all day today but here is something to watch and listen to and Reflections on a visit to New Zealand – for more coverage of that visit. New Zealand is in the midst of a national election campaign and it seems that one of the aspiring parties – The Opportunities Party (TOP) – which is trying to carve out a niche for itself as an ‘anti-establishment’ party in opposition to neo-liberalism – obviously determined that the Modern Monetary Theory (MMT) message that I introduced many progressive New Zealanders to during my visit threatened their own credibility (which is a reasonable perception). So, to kill off the threat TOP went on the attack, although as you will read they found it impossible producing a credible critique of MMT and still maintain their alleged anti-neoliberal stance. Whatever, I would hope not too many New Zealand voters get lulled into believing that TOP is somehow a progressive force. Their macroeconomic narrative is strewn with neo-liberal falsehoods that are like neon-signs advertising their roots!

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Falling enrolments in mainstream economics programs is a desirable outcome

If you have had the misfortune to study economics formally at university then you will recall sitting through endless and tedious lectures where the instructor asserted some superior knowledge about psychology and human behaviour. If you had combined the economics study with studies in psychology and sociology, you would have soon realised that what was being taught in your economics course was total nonsense. There was an article in the Fairfax press recently (August 6, 2017) – Crisis in high school economics a threat to national wellbeing – ruing the declining enrolments in secondary school economics programs. The point is that these courses are typically more damaging than useful and the contention of the journalist that we are reducing the quality of the economic debate as a result of less people studying economics is problematic. The typical economics program is simple indoctrination into a set of neoliberal principles that allow poor policy to continue despite it delivering disastrous outcomes. There is a crying need for more economic and financial literacy, but that requires an entirely different approach to be adopted rather than jamming more kids into the existing courses and having them come out dangerously brain dead.

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The neo-liberal infestation – Australia’s broadband fiasco gets worse

I have written about Australia’s fraught venture into establishing a national broadband network (the so-called NBN) to apparently take us into the next era of communications, although it seems the lifespan of what they eventually will build will be short, in the sense, that it will need massive new investment almost immediately to make it workable. The current conservative (neo-liberal) government came into office not long after the NBN, which was commissioned by the outgoing Labor government, was in its development phase. It immediately altered the design to fibre-to-node (so optic fibre goes to boxes in suburbs and the final route relies on the dysfunctional copper wire), from fibre-to-home to apparently make it quicker to implement and require less government outlay. The changes and the ‘business model’ the government has forced on the NBN Company (the public monopoly constructor and wholesaler) have created such a mess with respect to our network availability and speed that it really serves as an ideal case study for students seeking to understand how the neo-liberal ideology stifles national interest and innovation. The latest dynamics being revealed about this disaster are simply staggering. We have moved so far away from an understanding of public infrastructure as the Government engages in its ideological crusade against innovation and government spending. Amazing really how all of us can be so stupid to tolerate it.

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Reflections on a visit to New Zealand

Last Friday, I gave a public lecture organised by the strategy group Strategy2040 and the full presentation is available on YouTube – Thinking in a Modern Monetary Theory Way (I made it available in yesterday’s blog). After that presentation I was invited to a ‘Roundtable’ meeting (although the layout was rectangular) which comprised about 30 or so people (mostly economists as I gather) being given the opportunity for 90 minutes to question me about the presentation etc – to tear me apart really. There was a call from an former senior central banker in the audience to have Chatham House rules governing the meeting. I declined acceptance of that constraint. Opinions should be owned. But what the meeting taught me was that, despite the GFC and the failure of the mainstream macroeconomics to predict it, deal with it when it arrived and then change its approach in the aftermath, very little has changed within the mainstream narrative. The same myths are being propagated and academic and senior policy economists seem blithe to reality.

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There is nothing much that Milton Friedman got right!

“If we want to ensure more people are well-employed, central banks alone will certainly not suffice” is a quote I am happy to republish because I consider it to be 100 per cent accurate. The only problem is that the way I think about that statement and construct its implications is totally at odds with the intent of its author, who claimed it was “an important lesson of Friedman’s speech”, which “remains valid”. The quote appeared in a recent Bloomberg article (July 17, 2017) – What Milton Friedman Got Right, and Wrong, 50 Years Ago – written by journalist Ferdinando Giugliano. It celebrates the Presidential Speech that Friedman gave to the American Economic Association on December 29, 1967 at their annual conference in Washington D.C. In terms of the contest of paradigms, the speech is considered to be the starting point proper of the Monetarist era, even though it took at least another 5 or 6 years (with the onset of the OPEC oil crises) for the gospel espoused by Friedman to really gain ground. The problem is that Friedman was selling snake oil that became the popular litany of the faithful because it suited those who wanted to degrade the role of government in maintaining full employment. It was in step with the push by capital to derail the Post War social democratic consensus that had seen real wages growing in proportion with productivity, reduced income inequality, jobs for all who wanted to work and a strong sense of collective solidarity emerge in most advanced nations. This consensus was the anathema of the elites who saw it as squeezing their share of national income and giving too much power to workers to negotiate better terms and conditions in their work places. Friedman provided the smokescreen for hacking into that consensus and so began the neo-liberal era. We are still enduring its destructive consequences.

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EU clones itself in West Africa and then tries to ransack the region

In a recent blog – If Africa is rich – why is it so poor? – I considered the question of why the resources that make Africa rich have not been deployed to the benefit of the indigenous people who reside there. We saw that poverty is rife in Africa, when it is obvious to all and sundry that these nations possess massive resource wealth. The answer to that paradox is that the framework of development aid and oversight put in place by the richer nations and mediated through the likes of the IMF and the World Bank can be seen more as a giant vacuum cleaner designed to suck resource and financial wealth out of the poorer nations either through legal or illegal means, whichever generates the largest flows. So while Africa is wealthy, its interaction with the world monetary and trade systems, leaves millions of its citizens in extreme poverty – unable to even purchase sufficient nutrition to live. The ‘free trade agreement’ (EPA) between the EU and the West African nations is one such ‘vacuum’-like device. In fact, the West African states are still mired in post-colonial dependency not because they lack the resources available to set out their own development path, but, rather, because of the post-colonial institutions that have been set up to maintain control by the former colonialists of those resources. Not content to ruin the prosperity in the Eurozone, the EU is pressuring some of the poorest nations in the world to adopt the same sort of failed monetary and fiscal arrangements and then go further – and sign ‘free trade’ agreements with reciprocal access. The rest of the West African states should follow Nigeria’s example and abandon these arrangements.

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