Corbyn more scary than Brexit

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1. Dear Bill,

   “….then they fight you, then you win.”

   You are at stage three of four. Well done!

   Mr S.

2. Dear Bill,

   I’m sure you already talked about it elsewhere, but can you spare some words on Brexit? I can understand Italy or Greece leaving the currency union, but for Britain it seems like an unnecessary meassure. I fail to see the impasse due to the EU when I go through the UK situation:

   – currency sovereign
   – floating, non-convertible exchange rate
   – faces no penaltys for non-compliance with the growth and stability pact

   Given that the Uk is, however, relying heavily on food and energy imports, I would have thought that there was some value in remaining in the common market.

   Wouldn’t it be best, if the UK was to show the way from within the Union? Just plainly doing the opposite of the mainland partners, i.e. engaging in massive public investment programms and sending the neoliberals a clear message to them?

   I feel like there are unnecessary conflict and friction losses involved in Brexit given that Britain had so much policy “freedom” to begin with. In fact, it is my perception that the only little bit of market regulation in Britain, e.g. in the financial sector, came out of Brussels.

   To formulate it as an easy question: What part of the EU is halting the UK from engaging in appropriate deficit spending or the implementation of a JG?

3. What mr shegimitsu said!

4. There is a concerted action from so-called progressive neokeynesian economists against MMT. Even in Spain. Up till now we were getting attack from Austrian “economist” Juan Ramón Ralló, who has written not one but two books against MMT (including a cover with Friedman’s analogy to explain the origin of money, a helicopter dropping bank notes) https://www.planetadelibros.com/libro-contra-la-teoria-monetaria-moderna/231382. But now the attacks are coming from the socioliberal spectrum. A sign that they are scared s*less. This is ironic. If they were real progressives you’d think they woud embrace MMT. It is so contradictory that it inspired a piece I wrote: Imagine a Marxist right. Unfathomable, right? But you do have a Neoclassical Left.

5. Hermann, The Brexit Blog by Chris Grey is a reasonable source for Brexit issues. He takes a quite measured approach.

   “What part of the EU is halting the UK from engaging in appropriate deficit spending or the implementation of a JG?” None of it. The major problem is the incompetence of the government itself. It would have been a decent solution to show the way from within, as you put it, but this group of incompetents have alienated everyone, even many on their side. And May must be one of the most rigid, intractable personalities I have seen in a long while. In addition to her seemingly insatiable need for secrecy. Even the DUP are fed up with this. And then there is the arrogance. I could go on but I will save your sanity. The best thing that might come out of Brexit would be the destruction of the Tory party.

6. @ larry:

   Thanks for the hint regarding the blog. I’ll be sure to look it up.

   From what I understand from your post, it would seem that you too view Brexit as a means to “punish” incompetent/corrupt or simply bad politicians. The immediate consecuences of Brexit are in my opinion too high a price to pay for a lesson that won’t be learnt by those clowns. On top of that, the tabloids will have two thirds of the electorate blaming “the left”, the EU, Raheem Sterling or whatever boogeyman they fancy nowadays.

   I guess hope dies last and maybe Labour can grow a spine in the coming months, but I’m certainly not holding my breath. I do belive that Corbyn is a decent and principled fellow, but those are traits for which politicians are not commonly rewarded.

7. Sounds like a good deal of “group think” going on among the twitter crowd; one of the reasons I avoid it. Short but potent, if misleading, narratives are the advantage of the mainstream and it’s proponents. MMT almost always requires more words, because MMT has to do the double duty of explaining how things actually work, while at the same time, debunking the mainstream myths that have been nurtured so carefully.
   MMT’rs almost have to work in pairs like old time comedians with one playing the neoliberal/mainstream foil, for good contrast.

   There are people like myself who are not economists ,and yet, even lacking that background, knew something had begun to go terribly wrong with policy by the latter part of the 1970’s. I had always understood the federal government to be the monopoly issuer of money so the debates about federal debt etc never made any sense. Reading about MMT put flesh on the skeleton of an understanding I had. It was a breath of fresh air.

   What’s stunning to me is how few others ever begin to question the bunk neoliberals propagate. The first reaction upon learning the truth is always anger though.

   Love that Hammond B3 sound!

8. Hermann, I agree with you when you write:

   ‘Wouldn’t it be best, if the UK was to show the way from within the Union? Just plainly doing the opposite of the mainland partners, i.e. engaging in massive public investment programms and sending the neoliberals a clear message to them?’

   Brexit is acting as a neoliberal decoy tactic – get the populace absorbed with things that are fundamentally a diversionary activity. It is sucking up energy and creating a daily Tsunami of misinformation and lies. ‘Neo-liberal Central’ (to borrow Bill’s apposite term) must be laughing themselves silly.

9. Dear Hermann,

   The issue is with “free movement of capital” (please search for “capital movements” on the European Commission’s website) and with Article 126 of the Lisbon Treaty (“Member States shall avoid excessive government deficits.”). These two limit the policy tools available for a non-Euro member states. One of the worst examples of the damage done to local populations because of the broad interpretation of the “free movement of capital” rule were foreign-currency denominated mortgage lending scandals in Hungary, Poland and Croatia. (The loans were extended in local currencies and then a series of transactions involving a cross-currency interest rate swap (CIRS) and spot forex were used to re-denominate the loan to a foreign currency, the goal was to lower the interest rate at the cost of fully exposing the borrower to the exchange rate risk).
   Without restrictions to the movement of speculative financial capital especially derivative trading, currencies are exposed to speculative attacks what may force governments to run more restrictive and monetary fiscal policies (not because “money printing” itself weakens currencies but because running the economies close to full capacity leads to trade deficits which seem to be semi-persistent, financed by inflows of speculative capital, until an exchange rate readjustment occurs, leading to a liquidity crisis involving the central bank). This was tried and tested many times in the 1970s and later.

   How is then possible for some Central European governments to go ahead with the “re-Polonisation of the banking sector” or with similar activities in Hungary? How can they defy Mrs Merkel and the Bundesbank officials? This is a matter of who is in power and who supports the government. Jarosław Kaczyński and Father Rydzyk, two most influential politicians effectively pulling all the strings in Poland are hardly liberal democrats or “progressives”. They have hired Mateusz Morawiecki, a former bank executive and staunch nationalist to run the economy. Despite all the effort of the “Eurocrats” to undermine it a balanced-budget-multiplier fiscal stimulus approach seems to be working… Crucially they have Jerzy Osiatynski who was a student of Michał Kalecki and is well-know as the editor of his works, in the Monetary Policy Council (Polish central bank). Also – for Germany Poland is a buffer country isolating it from Russia and all what’s bad in the East. Mrs Merkel is too pragmatic to go after Poles even if she doesn’t like the current government.

   Things which are possible in Central Europe won’t work in the UK. They might work in Italy but this is a different issue. The West “proper” has a different mentality, nationalism is defined in a different way and the City of London is far more influential than Polish “oligarchs” who can easily be controlled by politicians. There has been a few hundred years of liberal tradition in the UK. In Poland the experiment with “liberal democracy” ran between 1922-1926 ended up in a bloody coup. The second experiment with “liberal democracy” ran in the late 1990s-early 2000s ended up with the current government being elected when the crucial middle-class voters were turned back due to the CHF-denominated lending scandal (see above, over 500000 families had negative equity). So it is true that Poland and Hungary can be seen ignoring some of the principles enshrined in the Treaty of Lisbon (but not running the extensive budget deficits – this would be too risky) however this simply wouldn’t wash in the UK as the political system works differently and attempts to run truly progressive policies in the UK would be easily subverted. Personally I believe that this is going to happen anyway. A nationalist government in Poland of Hungary can easily mobilise a mob to kick off the traitors and disloyal bankers-bloodsuckers out of the country, if necessary. If a currency crisis is engineered then maybe more people may turn against the ruling party but otherwise the system is stable.

10. “…the progressive wing of the Party should start cleaning out the leadership as soon as possible.”
    Yes!

11. J Christensen… very much my trajectory.
    The worst offenders, IMO, are the Koukoulases, as they talk to a large pro Labor/progressive audience (around 36.7K Followers, as I recall). The ‘look at what *you* lot have done to the Deficit!’ is reaching a crescendo of sorts. Intervention is sometimes attempted, taking special care on phrasing, nuance, and ‘attitude’. Taking a deep breath and counting to 20 is a good start before hitting the keyboard.
    Bill’s B3 link took me straight back to the 70s, an open air Saturday gig by Tamam Shud at the beach end of Manly Corso. Lesley in full whirling tilt.

12. I suppose that where you stand on the reformability of the EU is just a judgement call. In my view, it is impossible for UK voters to persuade German policymakers to relinquish their “fight inflation first” obsession. But by contrast it is eminently achievable for UK voters to elect an MMT-informed House of Commons majority that enacts policies of full employment, price stability, sustainable resource use, and drastically reduced inequality of income and wealth.

    I am under no illusions about how difficult it is to win a House of Commons majority that would enact those policy changes.

    But there is at least a possibility of that happening.

    There is zero possibility of UK voters influencing German technocrats.

    So I see the EU as a lost cause, like USA Gymnastics. It should be disbanded. Since the Maastricht Treaty the EU has been incorrigibly committed to pro-austerity, economically illiterate policies. The EU’s treatment of Greece demonstrates sociopathic tendencies in EU technocrats. I will never trust the EU to abandon neoliberalism and to promote the active use of fiscal policy to achieve societal and environmental wellbeing.

    All the good elements of the EU – environmental regulations, quality control standards for goods and services – can be enacted by the UK Parliament by statute. It is not necessary to be part of the EU to benefit from those things.

    Plenty of non-EU nations enjoy healthy diplomatic and trade relations with the EU.

    I think that the Remainers overstate the difficulty of leaving the EU.

    With appropriate use of fiscal policy to assist the transition, the UK will be fine.

    I know that it is difficult to persuade the UK’s political class to embrace active fiscal policy, but the probability of achieving that goal is surely higher than the probability of persuading “fight inflation first” zealots in Germany to drop their obsessions and become economically literate and humane.

    I acknowledge that as an Australian citizen who resides in Australia, I don’t have a direct stake in this issue. My opinion counts for little.

    I just hope that progressives in the UK can embrace the opportunities afforded by leaving behind the silly, arbitrary debt to GDP and deficit to GDP ratios prescribed by the EU.

    I hope that progressives in the UK take the constructive step of using national political processes to improve the wellbeing of the people and natural ecosystems of the UK.

    EU membership is probably not as important as the Remainers believe.

    The House of Commons existed centuries before the advent of the EU and I predict that the House of Commons will endure long after the EU has disbanded.

    The people of the UK should be proud of their political institutions. It makes sense for them to use their own political institutions to advance their wellbeing and to set a good example for other nations to emulate. The EU has performed poorly and does not deserve the deference it so often receives from progressives.

    UK voters have the power to hire and fire UK parliamentarians. They have no such power over German technocrats.

13. Cory Henry is a very gifted Hammond B3 artist. You might enjoy this clip.

    https://www.youtube.com/watch?v=qLDKGbhr5Ps

    MMT + B3 = A Very Good Day!

14. Used to play bass in a band with a bloke on Hammond B3 and Leslie box, in the late 60’s. Was a proper bastard to get them set up on stage and off again. They weighed a ton!

15. Nicholas,
    I totally agree with your view that it is much easier to get your national Gov. to accept and act on MMT than it would be to get the EU to do the same.
    IIRC, the treaty says that to change the treaty you must get unanimous agreement.
    In the US we tried that with the Articles of Confederation during and right after the Revolutionary War. We had to call a convention and illegally write and ratify a new constitution to allow Amendments with just 3/4 of the states.
    So yes, getting the treaty changed will never happen until a large number of nations have already left and more are threatening to.

16. @ Adam K:

    I’m not informed enough to assess your point about the “free movement of capital” but it immediately raised a red flag in my head. Whenever big finance is offered a little window to opperate in a shady fashion, they’ll make a big door out of it. Still, as I pointed out before, it’s not like the government in the city is big on financial regulation anyway.

    I understand the feeling that it is easier to change the system on a national rather than a EU-wide stage, but as I also stated before, the situation of the UK is different than that of other member states because it is NOT subject to sanctions if it infringes the Maastricht treaty as other members do:

    “All EU members had to take part, but some, like Britain, who had decided not to use the Euro were not bound by the penalties.”
    Source: http://civitas.org.uk/content/files/EC.10.SGP_.pdf

    The EU-honey-pot is too precious to countries such as Poland to risk upsetting the paymasters in Brussels too much, so they have to tip-toe around deficit spending policies.

    As for changing all of Europe’s mind, let’s be honest, the only ones that need convincing are the german sadomonetarists. I know, I know, people like Schäuble would rather have everybody jump off a cliff than incuring deficits, as long as they jumped off in an orderly manner.

17. “The EU has performed poorly and does not deserve the deference it so often receives from progressives”

    They – the ‘progressives’ – have, since the 1980s, seen the EU as the antidote to Thatcherism.

    After 40+ years of being in the EEC->EC->EU, there is almost no concept in the UK, particularly amongst younger people, of being a country in your own right.

    If you put democracy first you are labelled a fundamentalist.

    If you want to stay a democracy then you have to put democracy in pole position. But ‘how will my vote affect my purse/wallet?’ has overtaken concern for democracy. Apparently, democracy isn’t worth much if it makes you financially poorer – democracy itself has been reduced to a money-making enterprise.

    So in the UK for 40+ years we’ve lived in a society which is just what Jean Monnet et al hoped for: people willingly turning away from democracy and instead rushing headlong into the arms of technocrats as their economic savious.

    And they say voting against supranational government is ‘self-harm’ because of its effect on the economy. The effect on government and on democracy doesn’t count for anything. But then, one thing almost all politicians and bureaucrats agree on is ‘don’t let the public think too much about how they’re governed’.

    The UK should serve as a warning to countries like New Zealand, Australia, and Canada to stay well away from this kind of thing. Preserve your knowledge of what is means to be a country in your own right. There are people who want to take it away from you, and they are very clever, capable people who are in it for the long-haul (just shy of a century so far), which is one way they’re able to easily outsmart politicians – and public – who function at the level of electoral terms.

18. @Herman – Adam K is absolutely right about FoM of Capital – and for me it’s existence is a good enough reason alone to leave the EU. Almost all meaningful regulation of the City of London could be curtailed or restricted by an endless list of corporations crying off to the ECJ at any whiff of an infringement of this, the most pernicious of the four freedoms.

    One aspect of the Brexit debate that is often overlooked (certainly by the pro-EU left in the UK) is that the EU that was on offer was one with even MORE opt outs and concessions for the City thanks to the unspecified (but gleefully accepted) concessions negotiated by David Cameron prior to the vote.

    A post Brexit UK government will be in a unique position to do something truly significant about financial corruption and the global economy – with significant changes possible at the stroke of a (Corbyn) pen. To acheive anything similar inside would require the development and successful steering of a pan-European progressive movement capable of overcoming the corporate capture and diffuse power structures of the EU (an argument made by @Nicolas above – although I feel no pride in UK political institutions).

19. Nicholas, US gymnastics a lost cause? How would you incorporate Simone Biles into this view? As an anomaly?

20. Larry, USA Gymnastics (capital G) is an organization. The United States Olympic Committee wants to revoke its status as the sport’s governing body in the United States.

    https://www.google.com.au/amp/s/amp.cnn.com/cnn/2018/11/05/us/usa-gymnastics-us-olympic-committee/index.html

21. Larry, USA Gymnastics (capital G) is an organization. The United States Olympic Committee wants to revoke its status as the sport’s governing body in the United States.

22. Nicholas, what to they expect to put in its place? Without a proper structure Biles will have difficulty either improving or surviving, as the great gymnist she indoubtedly is. I would have thought. Any thoughts?

23. My point is simply that at some point an organization is no longer worthy of supporting and needs to be disbanded and / or replaced with something different. In my view both the EU and the Eurozone have long since passed that point.

24. Well, this blog’s not only a great place to learn what’s going on behind the scene of political ideology and policies. But really groovy music postings. Having been a fan of the B3 genre myself with standouts Shirley Scott and Charles Earland, I’m going to expand the list with Lou Donaldson. Thanks Billy!

25. Hammond b3 hmmm,

    your thoughts on corey henry or brian auger , bill

26. Dear Mahish (at 2018/11/13 at 3:35 pm)

    Both great players. I loved Brian Auger and Trinity with Julie Driscoll.

    best wishes
    bill

27. @HermantheGerman
    “As for changing all of Europe’s mind, let’s be honest, the only ones that need convincing are the german sadomonetarists. I know, I know, people like Schäuble would rather have everybody jump off a cliff than incuring deficits, as long as they jumped off in an orderly manner”.

    For someone able to make comments as insightful (and funny) as this – and quite a few others – it surprises me a lot that you miss so much of the point of Brexit. Nicholas – an Australian living in Australia – gets it in one. I urge you to fully digest his comments if you want to know the answer to your question.

28. @HermanTheGerman

    As a rider to my previous comment on your question, I would dissent from this answer from Larry:-
    “The major problem is the incompetence of the government itself. It would have been a decent solution to show the way from within, as you put it, but this group of incompetents have alienated everyone, even many on their side”.

    I think Larry is falling (and maybe you are too) into the same trap as many left-wing Remainers who continue to believe – or claim to – that it would have been possible to reform the EU from within. There was never the slightest chance IMO for Britain to have “shown the way from within” (a pretension which reeks to my mind of condescension rather than of “decency”).

    The suggestion that the principal obstacle to realisation of that totally unrealisable ambition is the “incompetence” of the Tory government seems like a (not very successful) smoke-screen to me. I hold no brief for the Tories but, with respect, their competence or lack of it has nothing to do with your question one way or the other.

    Incompatibility always was, and has become more so with the passage of time, the fundamental factor. de Gaulle was right all along albeit for the wrong, Machiavellian, reasons. (It’s truly risible to picture what *his* reaction would have been to the idea of la France being “shown the way” by an ineffably “decent” Britain!)

29. Judging by the ‘deal’ the Tories are reported to have struck with the EU, both are fearful of a future ‘Corbyn’ type of government.

    Hoping to tie the UK to on-going restrictions on any activities that might ‘distort the market’ (re-nationalization, state aid etc.), both are clearly trying to protect the corporations they serve and calm the nerves of the massed lobbyists in Brussels.

    What was it Neil Wilson would always remind us? ‘…no parliament can bind a successor or be bound by a previous parliament…’. The EU and the Tories appear to want to change that before they are done with the UK. As I understand it, one of the things that attracted Ted Heath to Common Market membership was that it would cement in place measures to prevent future governments implementing socialist economic policies. No surprise that it still appeals the Tories.

    Hopefully, this will now clarify for many the fact that EU and Tory economic policies are perfectly aligned to adhere to Thatcher’s TINA mantra. The EU are not punishing the Tories for taking the UK out, they are punishing any future governments that might want to put the people before the corporations. The mask has well and truly slipped, but I see a lot of ‘progressive’ commentators on social media are describing the proposed deal as a ‘Tory stitch-up’ or similar. They seem willfully blind to the fact there are two parties to this deal and only one of those parties has the power structures required to impose on-going rules on a nation that constrain democratic choices around how the economy is run. The same commentators suddenly see these rules as unacceptable when applied to one nation outside the EU. So how can then be acceptable when applied across a continent? The Tories are now hoping to use the power of EU’s supranational governance to impose a permanent economic model on the UK. Conclusive evidence that you should never outsource such powers.