It is Wednesday and I have been busy on other writing projects. But today I offer some data analysis on the Greek fire tragedy as well as a short video promoting a very important festival that is coming up. Then I offer some personal insights on the accusation by the right-wing press that on-line learning is just a ruse for lazy “work-shy” professors. And to calm us after all that – we have some fine jazz from 1960.
It is Wednesday and I have been quite busy today on non-writing things, including a very long lunch (yep), which may lead to progressing the development of the – MMTed – project. I also was thinking about Tunisia today. And, of course, I listened to some great jazz. So only a few snippets today as usual but hopefully something of interest.
I have recently updated my trade databases as I write a book chapter on the topic. I am also curious about the dramatic growth in freight charges over the last 12 months in international shipping. I have a friend who runs a business importing cement who is now paying 5 times the freight charges now than he was a year ago. Why that would be the case is an interesting question. I have previously written about the way that the neoliberal ideology became conflated with the trends towards globalisation in supply chains. Globalisation, was then weaponised with the ‘free market’ ideology, which undermined key aspects of the benefits of trade, particularly for poorer nations. The ‘free market’ mantra became code for increasing the rate of surplus extraction from these nations by financial interests in the richer nations – a sort of more sophisticated version of the way colonialism sucked wealth from the colonies to the benefit of the metropolitan economies. But in recent years (since about 2007), a fundamental shift in the relationship between trade volumes and income growth (a relationship that is often used as a proxy for the pace of globalisation) has occurred. Some think this indicates that peak trade has been reached. There are good reasons for thinking that to be the case.
Today, we have a guest blogger in the guise of Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. Today, he is writing about the way the Federal Australian government is starving the National Disability Insurance Scheme of funding. The usual arguments are being used – ‘taxpayer’s funds’ are in short supply – which seriously undermine the future for thousands of people with disabilities. The NDIS is the national structure that supports people with disabilities to increase their capacity to participate in employment and provide opportunities for them to so. So, once again, to Scott …
It’s Wednesday, and I have been filming most of the day some of the material that will appear in the next set of course material offered by – MMTed. We hope to offer some new courses later in September. But progress is slow (see below). Today, I provide some brief comments on my response to the Federal government’s latest – 2021 Intergenerational Report – which is one of the ridiculous, smokescreen-creating exercises that allow the government to avoid political responsibility for its fiscal surplus obsession. They come out every five years and are usually jam-packed with scaremongering about unsustainable fiscal deficits and the need for spending cuts. The only difference this time is that the damage caused by the years of following the austerity path – to health care, to aged care, to skills development, etc, have changed our attitudes. We have also seen that the government can spend what it likes without taxes going up and without bond markets declaring the government insolvent. We have now lived with large deficits as a result of the pandemic and the game is up on the deficits are bad and the sky will crash down story line. Our changing view on what we now demand from the Government is reflected in this latest effort.
Today is Wednesday and I have to travel most of the day and present to a large financial markets gathering in Sydney tonight. My theme tonight will be ‘What the Hell is Going On’, as a challenge to the mainstream who haven’t a clue about what is happening and summarise their lack of awareness and the dissonance that is creating for them by screaming about inflation. The mainstream macroeconomists are so far off the mark these days that they must be like the flat earth theorists who watched ships successfully sail off the edge of the globe only to come back around the other side. They are lost and can only interpret the current events in terms of ‘duh, central banks buying bonds, too much money in the system, duh, must be inflationary’. Anyway, today some jazz and a video to watch.
Today, I am publishing a special guest post from four authors working in the Modern Monetary Theory (MMT) tradition about inflation in Brazil. They are examining recent claims by Paul Krugman that the Brazilian experience ratifies basic Monetarist theory that links excessive monetary expansion with inflation (and hyperinflation). It turns out that the reality is quite different which is no surprise when it comes to confronting Krugman’s assertions with facts. Over to Daniel and co …
This is Part 2 in a two part series that deals with the importance of the = Cambridge capital controversy – which saw economists associated with Cambridge University in England and MIT in Cambridge, Massachusetts argue about the validity of neoclassical distribution theory. Most recently, in response to a New York Times article about Joan Robinson, one of the key protagonists in that controversy, Paul Krugman declared the Controversy “a huge intellectual muddle” which was really unimportant in the scheme of things. That just revealed his ignorance and/or his part in an on-going denial that the basis of the framework he operates in is deeply flawed and has no scientific legitimacy. In this Part, we get down to the complexity (as best I can without becoming too technical) of the debates. The import though is clear – orthodox economics, which is still taught on a daily basis in our universities and which people like Krugman use to make money by writing textbooks about is based on a series of myths that cannot be sustained, both logically, in terms of their own internal consistency, and, in relation to saying anything about the real world we live in.
Some years ago, I promised to write about the – Cambridge capital controversy – which saw economists associated with Cambridge University in England and MIT in Cambridge, Massachusetts argue about the validity of neoclassical distribution theory. I never wrote the blog posts because I considered the material was a little difficult for a blog audience. Also, while of great interest to me, the topic was not necessarily compulsory reading for those trying to come to terms with Modern Monetary Theory (MMT). But today, I relent. For two reasons. First, I think my readership has reached much higher levels of economic literacy over the last 15 years and can handle a challenge. But, more importantly, there are times when the mainstream characters, who have been claiming that there is nothing new in MMT and that they knew it all along and all the important results can be explained within an orthodox New Keynesian approach, reveal their true colours. Their hubris sees them get ahead of themselves and they show they never really understood the basics that undermine their own approach. Such was the case this week when Paul Krugman declared the Controversy “a huge intellectual muddle” and “a tortured debate that illuminated nothing much”. Well, that just goes to show how the mainstream denial functions. A body of work comes along and blows the dominant paradigm out of the water, and the response is to ignore it as a meaningless muddle. Their current attacks on MMT are just another application of that approach, which I first encountered as a student while studying the capital debates. Given the complexity of this issue and the amount of material, this will be a two-part series. Today, we learn the historical context, which will convince you that this was not idle or arcane discussion. This was a debate that went to the heart of the existence of capitalism and the defenders of that system – the mainstream economists did everything they could to defend the myths that they had erected to make the system look fair. They failed but went on anyway. Here is Part 1.
Remember on February 3, 2021, when the RBA governor Philip Lowe spoke at the National Press Club in Australia and told the audience that the Reserve Bank of Australia is not funding the federal government deficit, either in part, or, in full. This was in response to being asked whether the current situation that sees the RBA buying large swathes of government bonds are in any way consistent with Modern Monetary Theory (MMT). Well, since he gave that speech and answered questions from Australia’s journalists, a very interesting session was held by the – Economic Affairs Committee (House of Lords) – in London as part of the Committee’s investigation into the ins-and-outs of Quantitative Easing (QE). And some very revealing statements were made in those hearings which the RBA governor might reflect on. They rather directly challenge the veracity of his public statements about MMT in recent years. They also expose the way in which public officials tell the public they are not doing A but B, while doing exactly A. The cat is progressively getting out of the bag.! This is Part 1 of a two-part series explaining how the cat is escaping.