Regular readers will know that I have spent quite a lot of time reading the…
Full video – University of Helsinki lecture, October 9, 2015
Here is the video of the lecture I gave at the University of Helsinki on Friday, October 9, 2015. There were around 450 people in attendance, which the organisers indicated was an exceptional turnout for a cold Friday late afternoon (the presentation started at 17:00). The size of the audience was a demonstration of the concern that Finnish people have for the future of their nation given that the conservative government is signalling it wants to impose an extreme form of economic austerity in an economy that is already in recession. The economics profession in Finland is ultra conservative and as far as I can detect supports the austerity despite, of course, their own jobs not being in the direct firing line of the public spending cuts.
There were two discussants following my talk: Dr Jaakko Kiander (who is a senior executive in a large Finnish pension company Ilmarinen) and researcher Lauri Holappa (University of Helsinki).
The filming and production was done by Jaakko Tiikasalo (www.panoptik.fi) and the second camera was handled by Antti Ronkainen.
Thanks to all concerned.
That is enough for today!
(c) Copyright 2015 William Mitchell. All Rights Reserved.
This Post Has 12 Comments
Bill, I loved the talk. Great content. Very succinct and a lot of general information to take out not just Euro zone focussed. I’ll be using this to send in to people.
Shout out to the videographers there was great sound and editing of the slides while you spoke. Great work.
Superb talk Bill
One of your best.
I’m going to send a link to John McDonnell.
In it’s completement and clearness, a top speech.
It’s no criticism of it to say that, while Bill’s exposition of the roots of today’s eurozone crisis is exemplary, he offers no solution. Neither does anyone else, probably because there doesn’t seem to be one available, given that things are (regrettably) as they are.
The alternatives would seem to be either full-out federalism which – given the overwhelming economic dominance of Germany – would feel like German hegemony, and which is for that reason anathema to the French in particular but others as well – or break-up, of the EZ initially but with the risk of affecting the whole EU (especially considering the fissiparous nationalist/chauvinist tendencies that are already giving rise to great strain).
The other alternative is continuing with fudging all the issues while extemporising, hoping that sanity will prevail eventually. It’s a tall order, but considering how successful they’ve been with it so far despite having lumbered themselves with an unworkable (technically-speaking) institutional structure, maybe they can pull it off. Makes walking a tightrope across a pool-full of crocodiles look like a walk in the park.
It would seem that Bill, if he can’t have federalism (which almost certainly isn’t attainable in our time) would prefer break-up, and if so he’s in good company. I on the other hand believe it’s worth persevering-with in its existing botched form for the sake of the ideals which gave birth to it to begin with, despite their flawed execution. I think its Nobel Peace Prize was well-deserved, if only for its founders’ intentions.
Robert, I’m pretty sure the solution is obvious. Eventually the EU will break up as its unworkable as is. Or they need to get political unity as well as currency unity. Either that happens or it will eventually break up I believe. It’s just a matter of how much suffering there is until the changes happen. I think Britain may hopefully start of the split I hope. Unless a Southern European country can get their act together first.
Well for something that’s “unworkable” it hasn’t worked all that badly to date. If it’s REALLY unworkable it ought logically-speaking to have stopped working already. Somehow it’s been kept going, with bits of string and sticking-plaster.
The view seems to be wholly dependent on one’s predisposition. If like me you haven’t abandoned the ideals it originally embodied you will be predisposed to see it succeed, and you will wish the project well meanwhile. If you’re already disenchanted (or never were on board) you’ll predict that it will break up – and will be campaigning for the referendum to result in a British withdrawal to boot.
Chacun à son goût.
Continuing the musings stimulated by Bill’s Helsinki lecture…
Again I stress without casting any aspersions on the incisiveness of its critique of the mainstreams’s glaring deficiences, I do nevertheless feel that the lecture overdoes the rosiness of the picture it paints of the world of the pre-nineteen-seventies’ “Keynesian” consensus. Granted that it did contain in some degree most or all of the merits Bill attributes to it (progress towards greater equality through improvement in real earnings keeping in step with improvement in productivity, and so on), it also contained less attractive or even downright negative features which are not mentioned, such as (in “half-time Britain” anyway) restrictive practices maintained by the closed-shop leading – in conjunction with ineffective management – to industrial decline through inability to compete in world markets. The entire British motor-industry for instance fell victim to that. The power wielded by organised labour was not always used wisely or prudently but often misused for their own political ends by anti-democratic elements bent on winning the class-war. Moreover even when not used for sectarian ends it was still essentially undemocratic and unaccountable in nature.
Furthermore, Germany’s “economic miracle” – which was in full swing during the same era – was impelled by the concept of the so-called “social market” which intellectually was a forerunner, master-minded by German neo-liberal thinkers chiefly Ludwig Erhardt, of what we now see as the (post-1970) “neo-liberal revolution”, so the division between the pre- and post-1970 economic and political reigning orthodoxies was not as neat and clear-cut as is suggested in the lecture.
There is an understandable propensity for advocates of collectivist solutions to down-play collectivism’s weaknesses. But not everyone who felt the call of the kibbutzes remained so starry-eyed after experiencing for real their inherent petty tyrannies, backbiting , etc (see Tony Judt for example). Neither do all of us who actually experienced living through that post-war period of British history now being bathed in nostalgia for its purportedly unalloyed egalitarianism and social justice recall it having felt like that at the time. Rather, my own recollection is of widespread demoralisation (at Britain’s seemingly unstoppable decline into senility), disillusionment, selfishness on the part of massed special-interest groups, disruption of everyday life through constant strikes both “official” and (especially) “unofficial” (ie mostly incited by political activists, many of them hardline communists, in their capacity as shop-stewards), and a whole litany of other symptoms of collective anomi. That too may be a distorted picture but I nevertheless feel that a modern audience deserves to be given a more nuanced account than Bill supplies in his lecture – or indeed than the one many other adversaries of neo-liberalism (which I am myself) give.
Collectivist solutions do not merit being presented as any more of a panacea than other kinds. MMT falls into just this trap in my view with its insistence on the indispensability of a JG, which strikes me as doctrinaire.
To play the wind-up merchant effectively you have to know when to shut uo.
Robert:Well for something that’s “unworkable” it hasn’t worked all that badly to date. If it’s REALLY unworkable it ought logically-speaking to have stopped working already. Somehow it’s been kept going, with bits of string and sticking-plaster.
The view seems to be wholly dependent on one’s predisposition. If like me you haven’t abandoned the ideals it originally embodied you will be predisposed to see it succeed, and you will wish the project well meanwhile.
But workable for whom? Which ideals? Whose ideals? As Mosler et al have pointed out, as long as the ECB writes the check, or even just credibly says so, this wacky Euro contraption is “workable” indefinitely. The Euro has proven to work very badly to date for the poor and the unemployed, for the periphery, for anyone but the wealthy, particularly financial elites. It has proven to be a mighty machine to destroy welfare states which were the causes, not the consequence of European prosperity. Yes, the EU treaties embody many lofty ideals. But these ideals – and even the ideals and principles and purposes of the UN Charter & fundamental international law – are contradicted both in theory and in practice by the actions of the monetary authorities under the pretense of naturality & TINA.
R. R. Fennessy: Burke, Paine, and the Rights of Man: A Difference of Political Opinion, Martinus Nijhoff (1963)
The problem is not materially different from those days. Such societies of the lower orders were organized for the radical idea of universal suffrage, which is precisely what is at issue again, whether the EU will be democratically run for the benefit of its people(s) or for a tiny, tiny fraction of them. Although all or most of the MMT thinkers originally urged the first option of fiscal union since the EU already exists, the fact that it has been run for the “benefit” of a tiny elite against the interests of the 99%, against whole nations, has led them to suggest monetary dissolution more recently as the only just option because the elite’s depraved and tyrannical behavior has made it so.
As to the superiority of the postwar era, for all its faults, basically everywhere, a ton of statistics demonstrate its superiority across the board to the subsequent neoliberal “Great Moderation” = “Great Stagnation” era.
It is not a matter of compassion or collectivism or being doctrinaire. The JG, full employment, works both in theory and in practice everywhere, because working works. Not working doesn’t work. Simple as that.
The success of the post war era was partly due to the investment rates of the war time era. The war time investment rates created a well of technical opportunities that was already running dry by the mid 1960s. Keynes and Kalecki both thought that private investment was the main cause of capitalist instability. Private investment tends to cause overcapacity or asset bubbles. A new golden era would require not only nominal macro stabilisers but micro opportunities created by R&D spending. This wouldn’t necessarily work as a stabiliser but would at least create a positive growth offset.
Hi Robert sorry for slow reply I’ve been busy.
In regards to the EU project I like most people who didn’t understand money at the time loved the idea. backpacking throughout Europe during the early 2000s was a great experience and having a single currency for most countries made it very easy. I did notice the big disparity in pieces for example in Czech Republic prior to the Euro it was incredibly cheap. So I did wonder at the times out that but just thought the benefits out weighed the disadvantages. Mind you I could buy a half litre of beer in Germany for less than a Coke so it had benefits in other ways.
After the GFC hit I started to try and learn about macroeconomics. It was then I started to see how bad the Euro zone was setup when the countries couldn’t respond like other countries mostly from reading Krugman’s blog.
It was only a year and a bit ago I was lucky to stumble upon Bill Mitchell’s by recommendation. Once I understood MMT from this blog the whole Euro project became so clearly wrong to me as it currently is setup. I’ve posted many times on here that I honestly think it will lead to another war, the very thing it’s supposed to prevent. I hope I’m wrong but as the years go on and far right parties get more powerful particularly when Germany is having to use mass immigration to try and pump up their economy I think we’ll likely see more social upheaval.
Yes it may be possible to improve and fix the euro project but the fact it’s been over 5 years of suffering in the south and no mention of even trying to change it I’m not holding out a lot of hope. I hope I’m wrong but the only Keynesian solution to get out of their mess is probably going to be war. The ideological obsession with austerity is too far gone and no one wants to admit how wrong they got it especially Merkel.
Robert in regards to MMT and the JG being the magic solution I think you make some valid points.
I recently went to a book launch on inflation in Australia: http://www.palgrave.com/page/detail/inflation-and-the-making-of-australian-macroeconomic-policy-1945%E2%80%9385-michael-beggs/?isb=9781137265982
It gave me a really good insight into the history of inflation and start of Neo-liberalism. There will always be the fight between interests of workers, capitalists and politicians all fighting their own fights. No matter how perfect a JG is implemented it’s likely to be eroded and fought against. I’m not saying it’s not a fantastic idea and one I am super lasso ate about implementing but the reality is it will need to constantly be fought to keep it operating as it should do. The fight to make sure wages don’t go over productivity too much will also need to be fought.
The presentation explained the huge wage growth way above inflation that occurred in the early 70s with union power. Combining that with the oil embargo it’s clearer to me why we are where we are with Neo-liberalism. The book is priced for libraries and I’m hoping to be able to read it soon.
I think a JG linked to wages rising with productivity is the best bet we have to fixing our problens using MMT but it won’t always be easy with other competing interests to contend with.