Bank of Japan shifts ground – just a little but there is no sign of a major adjustment any time soon
It's Wednesday and I use this space to write about any number of issues or…
I imagine we have all been keeping an eye on the evolving sham that is the British Labour Party election contest. When former leader Tony Blair, who will be forever remembered as being George Bush’s ‘poodle’ when he took Britain into the illegal invasion of Iraq and left a destabilised region, came into the fray urging party members to get a heart transplant if they thought supporting Jeremy Corbyn was an option, things turned really nasty. There has been a plethora of attacks on Corbyn alleging he is part of a sinister, return-to-Soviet control type candidate, an hysterical communist who wants to take Britain back to the dark ages, and more. What it tells me is that the Tories fear Corbyn as a candidate and would prefer the austerity-lite options like Liz Kendell to become leader because they know she won’t cause much trouble. What worries me is that Corbyn articulates a progressive set of values but might not yet have the macroeconomic understanding to defend them against a media attack primed to vilify anything that is not right-wing. British Labour must escape from its austerity lite prison but to do that they have to surround Corbyn with people who understand how the monetary system operates.
The British Independent ran an interesting story about Blair and Iraq earlier this year (January 25, 2015) – Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign.
It concluded that Blair lied about the evidence-basis of his decision to support the US invasion, which is described as “a strategic blunder”.
So while Blair supporters have been busy trying to rewrite history and mount a denial that his actions contributed to the chaos in the region that gave oxygen to the barbarous ISIS (or whatever they are called) (for example, Source), Blair, himself, took a break to enter the Labour leadership fray.
He gave a speech at the Labour ‘think-tank’ progress where he claimed that a “traditional leftist position” would not win a general election in Britain.
You can read the full speech here – HERE.
Blair was emphatic:
1. “radical leftism … [is] … outdated policy”.
2. “I wouldn’t want to win on an old fashioned leftist platform. Even if I thought it was the route to victory, I wouldn’t take it.”
He quickly descended into the argument of the so-called intellectual ‘progressives’, who are now virtually indistinguishable from the right-wingers, use to justify their move to pro-business, free market policy frames – globalisation. The world has moved on, allegedly, and people no longer value what they did, say 30 years ago.
They apparently do not value having well-paid and secure jobs – all the neo-liberal casualisation and the rise in precarious work is down to choice it seems.
They apparently prefer a society with increasing inequality where the poorest members are pillaried by austerity-biased governments and the high income earners make whoopee! Because, after all, trickle down tells us we can all be like the rich if we work hard enough.
The claim that increased openness of economies and larger financial flows has altered the capacity of currency-issuing governments to focus policy on domestic issues is plainly false.
Further, instead of seeking to address the emerging destructive dynamics of international financial capital, the New Labour government of Tony Blair, actually ensured these dynamics would mature – into the GFC.
He plainly followed lock-step in the path set by Margaret Thatcher with respect to financial deregulation
Remember the classic 2005 – Speech – by the Gordon Brown to the Confederation of British Industry (CBI):
The better, and in my opinion the correct, modern model of regulation – the risk based approach – is based on trust in the responsible company, the engaged employee and the educated consumer, leading government to focus its attention where it should: no inspection without justification, no form filling without justification, and no information requirements without justification, not just a light touch but a limited touch.
The new model of regulation can be applied not just to regulation of environment, health and safety and social standards but is being applied to other areas vital to the success of British business: to the regulation of financial services and indeed to the administration of tax. And more than that, we should not only apply the concept of risk to the enforcement of regulation, but also to the design and indeed to the decision as to whether to regulate at all.
The risk-based approach badly failed and was always going to fail.
Blair later said of the growing popularity with Corbyn during a press conference as part of his Progress Speech last week that (Source):
… well my heart says I should really be with that politics, well get a transplant because that is just daft …
He also said that Corbyn was the “Tory preference” and that Corbyn’s platform would take England “backwards”.
One of Corbyn’s replies was “I think Tony Blair’s big problem is we’re still waiting for the Chilcot Report to come out”. The Chilcot Report will report on the official enquiry into Blair’s role in the Iraq disaster.
But he also said that British Labour could no longer represent “austerity lite”.
There are two points which interest me in all of this.
First, the continual and increasingly desperate mantra from the Blairites that if it ‘isn’t right it isn’t right’ such that Corbyn is the Tories dream candidate for the Labour leadership would appear to be wrong.
The Tories would prefer the ‘austerity lite’ right-winger like the current, least popular candidate Liz Kendell. She is the Conservative’s dream candidate.
Austerity-lite can never beat the real thing and that was shown very clearly in the most recent election, where there was no real alternative articulated by the Labour Party, despite claims that its platform was too ‘left wing’.
There was an excellent article in the conservative The Times last week (July 25, 2015) – Labour knows its heart. Tony Blair doesn’t.
The author, a conservative to the hilt, argued that:
This month’s mutiny among the party membership – the surge of interest in the leadership bid of a good-hearted nobody with a beard – is not (as the squawks of every “new” Labour commentator you’d ever heard of, and some you hadn’t, would suggest) an alarming wobble in Labour’s Blairite march into the future: it is a direct consequence of it. Nobody bears greater responsibility for Jeremy Corbyn than Tony Blair.
His argument is that the “peasants’ revolt” is “against the takeover of our politics by retail theory”.
He wrote that “Our democracy has been infiltrated by an idea that owes too much to marketing and not enough to the competition of beliefs, values and interests that should fuel representative democracy.”
This is where the so-called progressive call to globalisation fails. Nothing much has changed in 30 years on the “beliefs, values and interests” front.
Sure we are all better connected (if you have income) and travel is easier. All sorts of things have changed. But in the heartland, nothing much has changed. We still want secure jobs with good pay. We still resent the top-end-of-town making off with the booty at the expense of the rest of us.
When Tony Blair says that Labour members should get a heart transplant he is really calling on them to abandon these ‘heartland’ concerns which define the left of politics.
Jeremy Corbyn, is the first leadership aspirant to connect with the souls of the members – to talk about their values and needs, which are not represented by ‘pro-business, austerity-lite’ mantras that the other candidates wheel out to impress.
The Times’ article concluded that:
The story of New Labour is the story of a heart transplant gone horribly wrong. How horribly, we are only learning this summer.
It is clear that the worst nightmare for the Tories would be the Corbyn leadership of the Labour Party. It would break the little ‘not right if it is not right’ club that has emerged as progressive parties the world over abandoned their hearts and souls to play the ‘austerity-lite’ dance with the conservatives.
What the Tories will have to face is a credible alternative that resonates with the values that people hold but have been disabused off by the TINA mantra delivered by both sides of politics.
A few weeks ago I wrote a short blog – Friday lay day – Job Guarantee becomes a mainstream preference – where I analysed the results of American research which showed that there are vastly different policy preferences held by high income Americans (in this case the top 1 per cent of the income distribution) relative to the general public.
The mainstream public clearly prefer less inequality, jobs for all, good pay and a strong state intervention to achieve those ends.
The results are exactly the opposite to what we assume about US society based on the continual outpouring of the media, fed by the conservative think tanks and their media bully boys and owned by the 1 per cent.
In other words, our stereotype of American public opinion is nothing to do with the majority view but rather the self-interested view of the top-end-of-town masquerading as American viewpoint.
The same applies elsewhere.
There have been some scandalous attacks on Corbyn in the last few weeks. The best one I thought was this Telegraph article (July 25, 2015) – I’ve lived under Jeremy Corbyn’s rule – it turned me into a Tory – which predicts that Britain would return to the Soviet-style government if he was elected to office.
The extent of the shrieking from the right of the Party tells us that they know the austerity-lite mantra is not cutting it anymore and their vacuous policy platform is doomed.
The second point of interest is that Corbyn, if properly informed provides the British Labour Party with the opportunity to completely redefine the debate to become – austerity or not – rather than how much.
That would be a game-changer because progressive ideas are best promulgated by large institutions that already have the infrastructure to reach the nation.
I say “if he is properly informed’ because I have been searching for any information that might tell me that Jeremy Corbyn has a superior understanding of how the monetary system operates and that it is this understanding that informs his rejection of austerity-lite.
I haven’t really found anything that would invoke any confidence in that regard.
His articulation at the values level – full employment, reduction of inequality, environmental sustainablity, place for trade unions – is all spot on and represents the backbone of a progressive stance.
But being able to argue that in macroeconomics terms is another matter.
The British Labour party has not learned the lessons of its failure. It is still entwined with their neo-liberal lust and still somehow think that it is sensible to advocate the same sort of policy ambitions that represent the core of that ideology.
They clearly haven’t realised that taking a ‘hard line’ on fiscal policy (austerity-lite) is exactly the same mindset that drove them into ‘light regulation’ both of which undermined the capacity of the economy to create full employment and stable growth.
To have full employment and stable, equitable growth the government has to be prepared to maintain aggregate demand and ensure markets are tightly regulated and the distribution of income is more equitable.
Capitalist economies cannot go on redistributing real income away from wages towards profits. There has to be a fundamental realignment in the relationship between real wages and productivity such that they grow together. I suspect the British Labour party hasn’t put the pieces together.
The rising income inequality led to a need for more private debt to maintain growth at a time where the government was praising fiscal drag. It was a cocktail that was always going to explode and so it did.
The better way has to address those endemic conflicts in the current policy mix and reverse the regulative environment to dramatically reduce the size of the financial sector, force banks to be banks rather than casinos, and force employers to pay higher real wages.
But above all, British Labour has to run a campaign of education that reverses the elevation of fiscal surpluses to virtue and responsibility and informs the electorate that with a large current account deficit the only way the private sector can avoid repeating its debt escalation is for the public sector to maintain a steady and larger fiscal deficit than now.
That is the challenge for Corbyn. He has to first educate himself on these matters. I am looking at ways to meet within him later in August when I will be in London.
I am operating on about 1 cylinder today. I realise the total number of available cylinders is questionable but one cylinder would appear to me to be a long way off capacity.
Yesterday was the first day in memory that I was unable to work. I thought, in my feverish delusion, that this little ‘break’ would give me a chance to catch up on reading etc. But with the words floating across the pages, blurred and undecipherable, I gave up on that plan pretty quickly and have spent the last two days moving between states of sleep and aching. Today – a bit better.
So thanks to all the well-wishers on the comments and by E-mail. I appreciate the thoughts. I won’t let it happen again (-:
Book launch event – advance notice
The official book launch for my new book – Eurozone Dystopia – Groupthink and Denial on a Grand Scale – will be held on Monday, August 31, 2015 at the University of Maastricht, the Netherlands.
The event will run from 13:00 to 15:00 and there will be two excellent speakers:
1. Dr László Andor, former Commissioner for Employment, Social Affairs and Inclusion in the Barroso II administration of the European Commission.
2. Professor Arjo Klamer, Professor of Economics of Art and Culture at Erasmus University in Rotterdam, The Netherlands. He “holds the world’s only chair in the field of cultural economics”.
The public is welcome to the event and there will refreshments available.
I am also to offer a Special 35 per cent discount to readers to reduce the price of the Hard Back version of the book.
Please go to the – Elgar on-line shop and use the Discount Code VIP35.
That is enough for today!
(c) Copyright 2015 William Mitchell. All Rights Reserved.