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

Ending food price speculation – Part 1

We are currently finalising the manuscript of my latest book (with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and formed the view that the state has become powerless (or severely constrained) in the face of the transnational movements of goods and services and capital flows. We argue that while social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and, as a result, champion right-wing policies that compromise the well-being of their citizens, the reality is that currency-issuing governments retain the capacity to ensure there is full employment and can advance the material well-being of their citizens. In Part 3 of the book, which we are now completing, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world are available. A chapter in Part 3 will concentrate on financial market reforms (what to do with banks etc) and one topic in that context relates to the area of food speculation. We argue that food speculation causes havoc in poor nations and a progressive stance should make it illegal. The enforcement would be through the new institutional framework I outlined previously. In today’s blog I discuss the arguments advanced to justify our position.

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Currency-issuing governments can keystroke their outstanding debt into oblivion

It is always a good sign when some fiscal deficit terrorist or another bleeds in the media that they’re not getting enough attention. Yesterday (October 12, 2016), the Forbes Magazine published an Op Ed (although I wouldn’t call the content educational in any way) by a commentator with the Twitter username @bthebudgetguy – The Deficit Was A Big, Big Loser In Sunday Night’s Debate Between Trump And Clinton. It is not the first time the author has entertained this theme. His bleat? That the current political farce that Americans call the Presidential election campaign is ignoring the state of the fiscal balance. Oh my! What a travesty. The two liars, masquerading as Presidential candidates, have the audacity to talk about other irrelevant things and leave the most irrelevant thing I can think of neglected. But what this tells me is that the millions that the likes of the Peter Peterson Foundation and its ilk have spent on trying to scare Americans witless about the fiscal debt and the US public debt situation has been wasted. That is something to celebrate in fact.

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Reforming the international institutional framework – Part 4

This is the fourth and final part of the discussion relating to reforming the international institutional framework. In brief, the argument is that there are several essential functions that a multilateral institutional framework has to serve that need to be incorporated within any new structure. It is clear that an agency to channel development aid remains essential. Further, it is important to create an agency that will provide liquidity to nations who are unable to access essential imported resources (such as food) without invoking exchange rate crises. While these functions seem to align with the current World Bank and the IMF, a progressive approach to service delivery in these areas would not resemble the operational procedures currently in place.

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Pragmatic retreats into reality by the IMF will be ephemeral

On June 26, 2016, the Bank of International Settlements (BIS) published its – 86th Annual Report, 2015/16 – claimed that “there is an urgent need to rebalance policy in order to shift to a more robust and sustainable global expansion and address accumulated vulnerabilities”. Yesterday (October 5, 2106), the IMF issued its latest – Fiscal Monitor – Debt: Use it Wisely – which as the title might suggest focuses on what it sees as a dangerous exposure to global debt, which it currently estimates to be “at 225 percent of world GDP … currently at an all-time high.” Needless to say, this latest offering from the IMF has attracted news headlines with dire warnings about impending catastrophes. Some of this emphasis is justified but overall the IMF is erring, once again, in the opposite direction to its pre-GFC prediction errors. The context is obvious – mass unemployment continues as economic growth is stalling (or modest at best) because of a combination of non-government sector spending caution and the government obsession with fiscal austerity. The latter obsession has been stoked for years by the likes of the BIS and the IMF and while they do not explicitly recognise that in these latest documents, their stilted support for more fiscal action now, amounts to an admission of prior failures driven by the neo-liberal Groupthink that pervades these institutions.

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When the term ‘progressive’ loses all meaning …

The UK Guardian newspaper began life as the Manchester Guardian in 1821 as an artifact of the cotton mill owners who were opposed to the reform movement (for parliamentary representation to alleviate the mass unemployment and poverty that followed the end of the Napoleonic Wars). The suppression of the reformist agenda culminated in the Peterloo Massacre the cavalry charged into around 80,000 protesters killing and injuring many of them. The police closed the newspaper (Manchester Observer) which had been sympathetic to the reform movement. Step in one John Edward Taylor, a cotton merchant, who established the Manchester Guardian to advance the interests of the capitalists. After a period under the editorship of C.P. Scott, where the Manchester Guardian was significantly more progressive in outlook (for example, supporting the Republican government against Franco; supporting women’s suffrage), the paper has increasingly become a neo-liberal propaganda machine with respect to its economic coverage, irrespective of progressive positions that might take on other issues (for example, its criticism of Israeli government policy). It now rarely publishes anything on economics that passes muster.

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An optimistic view of worker power

I am close to finishing the manuscript for my next book (with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and formed the view that the state has become powerless (or severely constrained) in the face of the transnational movements of goods and services and capital flows. Social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and, as a result, champion right-wing policies that compromise the well-being of their citizens. In Part 3 of the book, which we are now completing, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world are available. In today’s blog I discuss trade unions and strategies available for workers.

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First appearance by Australia’s new central bank governor disappointing

On September 18, 2016, the Reserve Bank of Australia ushered in a new governor, in the form of Philip Lowe. It been the deputy governor for several years and has worked at the RBA all his professional life except for a short stint with the Bank of International Settlements. He speaks Central Bank-speak. On September 22, 2016, he appeared for the first time as governor before the House of Representatives Standing Committee on Economics and delivered the RBA Annual Report 2015 to Parliament. His – Opening Statement – and the subsequent answers to questioning by the House Committee members were revealing because they indicated that the new governor clearly understood the vexed situation that the government had placed the central bank in over the last decade or so, but, at the same time, indicated he was also prepared to continue perpetuating neo-liberal myths that have created the vexed situation in the first place. Not a great start in my opinion. The full transcript of the hearing is available in the Parliamentary Transcript.

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The neo-liberal race to the bottom is destroying communities and killing workers

I have been reading an interesting book – The Unwinding: An Inner History of the New America – by US journalist – George Packer – which traces the evolution of America over the period from 1978 to 2012. It is about how Americans have been dudded by the system they economic and political system that they hold dear to their hearts and how the core institutions that condition those beliefs have declined (changed) in the face of the rising dominance of the investment banksters. I am not so much interested in American history as I am the metamorphosis of Capitalism and the impact it has had on the working class. The book created a number of thought strands, which ultimately, led me to an interesting article in the Proceedings of the National Academy of Sciences of the USA (published December 8, 2015) – Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century – by Princeton University academics Anne Case and Angus Deaton. What we learn is that the neo-liberal race to the bottom in advanced nations is destroying communities and killing workers.

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Monetary policy has to work hand-in-glove with fiscal policy to be effective

In a paper – Fiscal Policy, Monetary Policy and Central Bank Independence – delivered to the Jackson Hole Economic Policy Symposium, hosted by the Federal Reserve Bank of Kansas City, last week (August 25-27, 2016), Princeton University academic Christopher Sims suggested that monetary policy effectiveness cannot be judged independent of the fiscal position taken by the government. He argued that the current reality has demonstrated that when central banks shift to very loose monetary policy settings these policy changes will be ineffective if the fiscal authorities are simultaneously pursuing austerity. Even conservatives like Christopher Sims are starting to understand that the dominant mantra that places all policy responsibility on central banks and, meanwhile, pursues fiscal austerity, represents a failed and deeply flawed overall strategy. That is, the core neo-liberal macroeconomics strategy is now being shown by conservatives to be ridiculous. Modern Monetary Theory has long argued that monetary policy has to work hand-in-glove with fiscal policy and if the central bank is cutting interest rates then the fiscal authority has to be increasing its fiscal deficit to make the policy changes stick. Some of the more enlightened conservative economists are now seeing this reality.

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Australian Treasurer embarrasses himself

The Australian Treasurer gave his first major statement in Sydney last week (August 25, 2016) since being barely re-elected in July. The speech – Staying the course – strengthening our resilience in uncertain economic times – was before an invited gathering of the business world who sat their listening to total nonsense from a man who disgraces the role he holds. Australians have always lagged behind developments in the rest of the world in many ways. It used to be blamed on the ‘tyranny of the distance’ (geography) but that excuse can no longer be used in this digital age. You realise how far behind the times our Treasurer is when you read articles such as this one in Foreign Policy (August 26, 2016) – The Stimulus Our Economy Needs. In that article, we read that “Now, the idea that governments, with or without the help of central banks, should spend substantial resources on creating jobs, both directly and through private sector incentives, is widely accepted among economists across the political spectrum”. Sound advice but lost on the Australian Treasurer. Bad luck for us. He is an embarrassment.

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