Scottish-born economist - Angus Deaton - recently published his new book - An Immigrant Economist…
I wrote about the way the recent neo-liberal narrative in the UK, that constructs the unemployed as gaming the income support system and about how they need to be weeded out by harsher activity tests etc, is a theme Australians will be familiar with in this blog – The victims become the perpetrators – the neo-liberal smokescreen. The discussion touched on the way we abstract from the human suffering that accompanies mass unemployment and how the dominant paradigm seeks to construct the unemployed as an “Other” different to ourselves and accountable for their own state. Unemployment is not seen as a violent act deliberately perpetrated by us (through the agency we give our governments – the “mandate”) but rather as a chosen outcome, a rational end of an informed choice. Perhaps not one we would take ourselves but rational nonetheless and therefore of no further concern. I have been reading some relatively oblique philosophical literature lately centred on conceptions of ethics and the way historical temporality forces us to take a moral perspective whether we like it or not – that is, denial of past action is a particular moral perspective. It bears on some work I am doing in remote Indigenous communities in the Northern Territory at the moment as well as broader debates that exist in society. Here are some notes and thoughts that arise from this sort of reading and reflection.
There is a long-standing debate within the “founders” of Modern Monetary Theory (MMT) about how we should construct and present our own narrative. It should be understood that the value systems of the early writers (and I include Wray, Bell-Kelton, Mosler, Fulwiler, Forstater, Mitchell (me), among that group) vary and I won’t personalise that statement.
But the debate went along the lines of whether the narrative should be restricted to the operational realities of the monetary system – this so this – or whether it was important to situate the discussion in broader debates about ethics and morality.
In particular, I have heard statements like “X is a bleeding heart liberal” and invites criticism as a result, which diminishes (in some way that has never really been explained to me) the essential argument that, for example, mass unemployment is the result of a budget deficit being too low relative to non-government spending and saving decisions.
The “operational reality” is factual and sufficient is one view. Just the massive loss of national income is a sufficient political motivation to do everything possible to avoid mass unemployment.
According to this narrow view, no further discussion about the other personal and societal costs (damage to physical and mental health; family breakdown; increased incidence of alcohol and substance abuse; increase crime rates; skill loss, and the rest of it) is needed and only leads to the accusation that MMT is mired in a contest of values rather than being about the cold, hard operational reality.
The alternative view that is expressed is the tolerance of mass unemployment and the pain and suffering that accompanies it is immoral and unethical and is a significant extra dimension that should inform the policy debate.
Why should we disavow our “bleeding heart” views? Why should we be defensive about the fact that we seek to use our understanding of the cold, hard operational reality of the monetary system to truly expand human potential?
Why should we be uncomfortable with our view that we think full employment, for example, is good and moral and an expression of our view that suffering from unemployment, is bad?
Why is it politically naive to deny all of that and fail to educate the populate that when we think of the self (thereby denying the “other”) then we really, without knowing it, reduce our own capacity to grow as humans and prosper in a moral sense?
Some rabid opponents of our ideas will call us Socialists or Communists (the latter if they are really wanting to disparage us – although from my perspective the latter would be a higher complement than the former!) whatever we write and say. But knowledge has a way of getting out and no paradigm can maintain a dominant position indefinitely if it is degenerative – that is, losing empirical content to the point that is is devoid of such.
First, a little real world digression.
In the May 2013 – Budget – the Government said:
The outlook for the Australian economy is favourable, with solid growth, low unemployment and well‑contained inflation. GDP growth is forecast to be close to trend at 2¾ per cent in 2013‑14 and 3 per cent in 2014‑15, and the economy is expected to continue to outperform most other advanced economies over the forecast period.
The narrative that followed was all about how much larger the Australian economy was relative to 2007 (when this Government was first elected) and how much larger it would be in a few years.
More household consumption – “expected to grow solidly over the forecast period” – “growth in household wealth” and “a recovery in the housing sector”.
All these forward looking visions – to be celebrated and longed-for – despite the admission that the unemployment rate was still 1.5 per cent above the low-point of the last cycle in February 2008 and that:
… the unemployment rate is expected to rise by ¼ of a percentage point to 5¾ per cent in 2013‑14, but then stabilise at that level over the remainder of the forecast period and remain amongst the lowest in the developed world.
As if the developed world has become our benchmark given that a substantial swathe of it is comprised of nations that voluntarily surrendered their currency sovereignty and lost their capacity to defend their domestic economies from a major aggregate demand failure of the likes we saw in 2008 and 2009.
And a significant proportion of the rest of the developed world has deliberately introduced austerity policies which deliberately pushed their jobless rates up (or prevented them from falling from their high levels).
Why would we want to compare ourselves with these nations, especially when our terms of trade have been at record levels courtesy of the boom associated with China’s unprecedented urbanisation?
At the current labour force, the difference between the unemployment rate the current Government inherited and what it was forecasting in the May 2013 Budget as being associated with “solid real GDP growth … consistent with the fiscal consolidation underway at all levels of government” is some 216 thousand workers.
216 thousand more people without work.
We also know that underemployment and hidden unemployment rise when unemployment rises, so the change in the scale of the wastage would be far in excess of that 216 thousand workers.
Of-course, the Australian economy has slowed dramatically since then as a result of the declining private investment (as the terms of trade have fallen) and the fiscal drag coming from the significant austerity in 2012-13 finally catching up.
In its most recent – Economic Statement – which is couched in language such as “Investing in Australia’s Future” and “Ensuring rising Australian living standards” and “Sharing the benefits of a growing economy” and such, we learn that the Government will help us:
… in the longer term with new policy directions to lift productivity, economic growth, and therefore Australian living standards now and into the future.
Please read my blog – Australia – the good and bad of the Economic Policy Statement – for more discussion on the Economic Statement.
In the Statement, we are told that the Government is “Managing the transition” between the resources boom and a more balanced growth strategy but that this will take time and we can look forward to “relatively smooth growth” and “improving living standards”.
Forward-looking … lets not talk about the present too much otherwise some unattractive facts might become the focus – sort of stuff.
The language is all about being “committed to the medium-term fiscal strategy … which provides the basis for the Government’s decision to keep the budget on track to return to surplus and keep Australia’s fiscal position strong”.
On Page 1, we are told that unemployment is “moderate”.
On Page 2 we read that “the unemployment rate expected to increase slightly over the next year”. Moderate and slightly – no alarm necessary.
On Page 5, again we are reminded that we have “moderate unemployment”.
These are part of the “Overview” and the same assessments are repeated on Page 21 when a detailed discussion of the “Economic Outlook” are presented.
So after touting all this positive, future-oriented discussion, it is not until later in the Statement (Page 21) that the Government, without even blinking, informs us, that:
As the transition unfolds, the unemployment rate is expected to reach 61/4 per cent by mid-2014 and then stabilise at that level in 2014-15
So – don’t worry, this is just a transition to a better time even though the pain and hurt will remain with us for a while. Remember, the Government tells us that it is about “Sharing the benefits” but says nothing about sharing the costs!
At the current labour force scale, the Government is expecting the unemployment rate to rise to 6.25 per cent by June 2014. It then expects, that rate to persist for the next fiscal year ending in June 2015.
Compared to now (where unemployment is at 705.4 thousand, that amounts to an extra 67 thousand workers unemployed. Compared to the low-point unemployment rate of the last cycle (February 2008) the forecast outcome would mean 278.1 thousand extra workers will be unemployed by June 2014.
By 2016-17, that is nine years after the crisis began the unemployment rate is still forecast to be 1 per cent higher than the low-point that was achieved in February 2008. On the current labour force size, that would be 123 thousand workers extra who are without jobs compared to the situation that would prevail at a 4 per cent unemployment rate.
Of-course, with population growth that number will be much bigger in 2016-17.
That is the best the Government can offer in this glorious future world they are crafting – or so the narrative would have us believe.
So what is the Government proposing? Well, instead of its manic pursuit of a budget surplus, which pulled out at least 1.5 per cent of real spending growth from the domestic economy (the difference between trend growth that would have reduced the unemployment rate and the current pathetic growth rate which is seeing unemployment rate rise), the Economic Statement tells us that:
To ensure that unemployment remains relatively low, that households and businesses are not hurt by excessive cuts to spending and services, and that the transition away from the mining investment boom is as smooth as possible, it would not be prudent to offset the entire fall in revenues since the Budget in the near term.
So austerity flat-lining effectively, allowing the automatic stabilisers to put a floor in the decline in aggregate demand (and adding 0.75 per cent to spending growth). How magnanimous of them!
The clients or customers or job seekers or whatever strange nomenclature that we are now using to describe the unemployed are almost absent from this narrative. 5.5 to 6.25, forward estimates, who cares.
As an aside, the neo-liberals started this obfucation of mass unemployment by invoking “market-based” terminology to describe essentially non-market phenomena.
So the unemployed – denied access to work by a lack of aggregate demand – became customers of income support providers. In the textbook microeconomic models, students are taught about consumer sovereignty.
The “customer is always right” summarises the power consumers are meant to have and producers are just passive responders to these spending patterns. Even advertising is cast as being benign information rather than being a vehicle whereby supply-determined outcomes are pushed onto unwitting consumers.
Customers have power and make choices. The outcomes are the manifestation of these choices being exercised.
The terminology, when applied to the unemployed, changed our perceptions. The unemployment – as customers – are in some market relationship with the income providers (increasingly privatised). They exercise choice – the ultimate choice in the more extreme text book sections being between leisure and work.
Leisure is the code-term they use for joblessness in this context.
And then all the value-narratives are piled on to influence the policy debate. For example, the unemployed choose to be so. They prefer leisure -> they like lying around in the sun on the beach -> they are lazy -> they don’t deserve income support -> they are despicable parasites.
Each part of this logic train reinforces the last to the point that we allow our governments to dehumanise the unemployed and the media to represent them as some strange species, foreign to us hard-working souls who really care about our families etc.
This is all part of the neo-liberal agenda to seize increasing proportions of real income for the elites (in the corporate and non-corporate world) and to maintain a domination over the public debate that if informed differently would revolt and burn down Wall Street (and its ilk).
The reason I have taken some time over the Economic Statement and related discussion is that it fits nicely (or awfully!) with the literature I have been reading covering suffering and denial.
A good starting point to this literature is Emmanuel Lévinas’s article “Useless Suffering”, which is contained in a 2006 collection (first published 1998), entitled – Entre Nous (Chapter 8).
You can download a copy of the article (translated by Richard Cohen) – HERE, which appeared in another volume as Chapter 10.
Levinas’s work developed a coherent challenge to what we might consider to be the dominant Western thought paradigm. His critique of what he constructs as a dialectical process towards a Utopian good where suffering is eliminated.
Emmanuel Lévinas writes that:
Suffering is surely a given in consciousness, a certain ‘psychological content’, like the lived experience of colour, of sound, of contact, or like any sensation. But in this ‘content’ itself, it is in-spite-of-consciousness, unassumable.
For Lévinas, suffering and violence go together.
Suffering is made rational by dominant paradigms. In noting that suffering is a scandal, Lévinas says that:
Western humanity has none the less sought for the meaning of this scandal by invoking the proper sense of a metaphysical order, an ethics, which is invisible in the immediate lessons of moral consciousness. This is a kingdom of transcendent ends, willed by a benevolent wisdom, by the absolute goodness of a God who is in some way defined by this super-natural goodness; or a widespread, invisible goodness in Nature and History, where it would command the paths which are, to be sure, painful, but which lead to the Good. Pain is henceforth meaningful, subordinated in one way or another to the metaphysical finality envisaged by faith or by a belief in progress.
We are seduced by “grand ideas” – the path to goodness – which allows us to depersonalise suffering. There is a plan. It will eliminate suffering. Don’t worry.
This leads to conclusions, such as, the Germans didn’t embrace Nazism because they liked the suffering that it brought. They were seduced by a rational narrative that divided the world into the super and sub-races on the path to Utopia.
The Germans were encouraged to believe that the suffering of the sub-races (organised slaughter) was a developmental process – on the way to a higher order for the super-race. That cohort we the deserving.
It was about the future – the path to Utopia – to happiness where suffering was eliminated and everyone was white-haired, resolute, prosperous and beautiful.
Suffering was part of this deterministic historical path – it was inevitable – but everyone would be happy as a consequence of it.
Somewhere along the way some 14 million people didn’t get to see that future.
Lévinas noted that “double bind” becomes evident when the future developmental state of utopia is defined in terms of violence and suffering of a few people who form the excluded.
He considers that suffering goes beyond notions such as restricting our freedom for spontaneous action. Rather:
The evil which rends the humanity of the suffering person, overwhelms his humanity otherwise than non-freedom overwhelms it; violently and cruelly, more irremissibly than the negation which dominates or paralyzes the act in non-freedom … The evil of pain, the harm itself, is the explosion and most profound articulation of absurdity.
In this context, suffering becomes “useless” – it is “for nothing”.
In the current debate, we are led to believe that the suffering of unemployment is avoidable if we are motivated, look for jobs in earnest, and when there is just “moderate” unemployment in a climate of “strong real GDP growth” it will only last until 2015-16, and that is within the “forward estimates”, which is a current construct despite it pointing to the future.
That is, suffering is a category that can be mostly avoided and ephemeral anyway.
The deliberate generation of unemployment is an act of violence because it creates suffering. The government could immediately announce a Job Guarantee and end this violence but chooses not to because that scheme is not part of its developmental vision.
The problem is that we never get to where they want to go (there are cycles) and in the meantime we conveniently abstract from the people who suffer, who have the violence inflicted on them by the rest of us.
I will write more another day on how violence leads to suffering but also generates a moral burden on those who inflict the violence. When we are violent we are behaving as if there is no relationship between us and the sufferers of that violence. We deny that the unemployed are part of us. They are different and we invent nomenclature to reinforce that difference.
But in denying the others we effectively deny ourselves.
In his 1996 monograph – Proper Names – Lévinas writes:
… the self is not a substance but a relation. It can only exist as an I, as taking an interest in a Thou or as an I grasping an It …
Which relates his idea that we cannot comprehend ourselves independent of all others. And our conception of others, inherently involves the concept of responsibility and the ethics of connectivity.
When we inflict violence on others, we are ultimately immoral.
In Useless Suffering Lévinas writes:
For an ethical sensibility – confirming itself, in the inhumanity of our time, against this inhumanity – the justification of the neighbour’s pain is certainly the source of all immorality. Accusing oneself in suffering is undoubtedly the very turning back of the ego to itself. It is perhaps thus; and the for-the-other – the most upright relation to the Other – it is the most profound adventure of subjectivity, its ultimate intimacy.
This is an interesting literature and allows us to see why the so-called “bleeding hearts” want to elevate our MMT understandings beyond meagre issues of operational reality.
We can have that operational reality but still deny ourselves if we don’t see the violence and suffering that accompanies, for example, mass unemployment.
That is enough for today!
(c) Copyright 2013 Bill Mitchell. All Rights Reserved.