We can do something about neoliberalism

It is Wednesday, so just a (relatively) short blog post today. I am using the time today to further scope out the material and logic for my next book with Thomas Fazi, which we hope to publish sometime in 2019. I will provide more details on that project soon but it is intended to be the followup to our current book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017). So, today, a bit of that sort of flavour. In 1977, the Young European Federalists, which has long campaigned for European integration, released its Manifesto, which coined the term “democratic deficit”. While they intended it to be a concept to advance their pan-European intentions, the idea resonates strongly in the current climate and can be used to support a return to grass roots democracy aimed at reclaiming the nation state from the neoliberals and the progressive pretenders who have become infested with neoliberal ideas. In the last week, we have seen two notable events. First, the entrenchment of the colonial status of Greece under the watchful eye and collaboration of so-called ‘socialists’. Second, the magnificent success in today’s New York Democratic Primary election by a truly progressive candidate. These events are diametrically opposed. The former tells you what is wrong with traditional progressive political parties. The latter tells us that we can do something about it.

Democratic deficit

Back in 1977, when the Manifesto was first released, the Young European Federalists wrote:

Looking at Europe today, it is clear that there is throughout our continent a “malaise”, a sense of alienation and a lack of confidence in the ability of the economic and political system to solve our problems …

Increasingly, these struggles are not only against the power of capital, but against the state itself or a branch of its bureaucracy. The state has had to take on an ever-increasing role that has historically developed parallel to the capitalist system, which itself has only been maintained by increased state support.

One would say that 41 years later, the situation has worsened.

This statement is also consistent with the central theme of our book Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017).

We argued that the nation state has been captured and reconfigured by capital and its technocracies (including the corporatist European Union bureacracy.

It is clear that (in the Young European Federalist’s own words) that “Democracy and participation at the local and regional levels have been stifled” and that “There needs to be a fundamental shift of power down to the lower levels, closer to the people and to the problems.”

Of course, the YEF fell into the trap that many progressives were caught up in and believed that “the highly industrialised nature of societies of Western Europe as well as political and economic interdependence have produced problems which are beyond the capabilities of a single nation state to control, let alone to solve …”

As a result, they advocated “handing over decision-making competences to the European level”. Their quibble was that the democratic processes at the European-level were weak and, as a result, they advocated, bolstering the European Parliament (for example).

The problem with their conception is the same problem that has led to the failure of the monetary union – there is no cultural Europe. There is no willingness to create a truly federal fiscal capacity to align with the currency-issuance capacity.

There probably never will be the necessary elements in place to allow the 28 EU nations (soon to be 27 – aren’t you glad Britain) to agree on a truly ‘European’ solution.

But the YEF point that there is a ‘democratic deficit’ in Europe remains relevant. It is just that their solution will not be deliverable and so the progressive action has to be at the national Member State level.

A nation and progressive political parties can expunge the neoliberal infestation whereas it will not be easy (possible) to do that at a ‘European’ level.

Fast track to the Eurozone and Greece

On July 24, 2017, I published the blog post – Germany fails to honour its part of the Greek bailout deal – which recounted how Germany was likely to receive 1.34 billion euros a year in profits from the funds loaned to the Greek government under the various bailouts and had reneged on a 412 million euro promised payment to Greece.

Well, the latest news on that front from Euractiv (June 21, 2018) – Germany earned €2.9 billion from Greece’s debt crisis – is that Germany has pocketed more than twice the initial estimates from the Greek bailout programs, but still runs the line that German taxpayers are footing the bill for Europe.

So while the Eurogroup was pontificating about how wonderful it was in altering the terms of the Greek bailout – see statement – Eurogroup statement on Greece of 22 June 2018 (June 22, 2018) – the Germans, meanwhile, in between telling everyone how they have been paying for Greek profligacy, were counting the cash profits, most of which was on amounts they reneged on paying back to Greece as agreed.

The revelation that Germany received a net amount of €2.9 billion between 2010 and 2017 from the Greek government came to light when the Greens asked a question in the Bundestag.

The German Finance Ministry revealed that the profits from interest received on the loans were paid into the Bundesbank and then transferred as fiscal revenue to the Ministry.

What did Greece get out of last week’s Eurogroup agreement – an agreement that the so-called Socialist Greek Prime Minister applauded – a measly 10-year extension for when they have to pay back the bailout debts.

The Eurogroup tried to claim that Greece has graduated from “eight years of financial dependence on its eurozone partners” and the European Finance Commissioner Pierre Moscovici said (Source):

This is not an ordinary moment. This is a magnificent moment … The Greek crisis ends here in Luxembourg tonight. This has been a long road … We’re talking about eight years of efforts coming to a close for Greece, and it is an important moment for the eurozone, too. We’re seeing an end to a crisis that had threatened our common currency.

Well not quite actually!

The terms of the agreement include that Greece must continue to run primary fiscal surpluses for … wait for it … the next 41 years – that is, until 2059.

The 2059 date is when it will have finally paid off the loan to the European Stability Mechanism.

From now until 2022, it must take out 3.5 per cent of GDP in surpluses to repay the loans. Then, after 2022, this requirement drops to 2.2 per cent.

Which nation has ever run primary surpluses for 41 consecutive years? Answer: None.

Each year until 2059, it must also “submit to strict supervision on the execution of its budget” by Brussels technocrats.

Democratic deficit in action. And strengthening the European Parliament would do nothing to arrest these crazy and unworkable demands on the Greek economy.

Greece’s economy has shrunk by around 24 per cent with more than 30 per cent of profitable business bankrupted.

National unemployment remains over 20 per cent and will remain at those sort of levels for decades to come.

Youth unemployment is astronomical at 45 per cent.

There is a strong exit of young people from the nation as its population shrinks by around 30,000 per year..

Pay has been cut around 15 per cent on average.

Over the course of the Troika bailouts (from 2010), state pensions have been cut by up to 70 per cent.

It is no surprise that the poverty rate is around 22 per cent (European average is 7 per cent) whereas, before the crisis , Greek poverty was around 10 per cent.

There is an urgent need for substantial fiscal deficits – not primary surpluses.

And then … the next crisis will come.

There will be at least 3-5 major cyclical downturns before 2050 which will hit Greece.

The only solution for them is to exit. There is no other way of restoring prosperity.

Fast track across the Atlantic to New York

It was a magnificent outcome in the Democratic Primary for U.S. House District 14 today, with Alexandria Ocasio-Cortez, a member of the Democratic Socialists of America, polling 57.5 per cent of the vote to oust the long-standing candidate and machine man Joseph Crowley.

In January 2018, as President Trump unveiled plans to spend big on (Source):

… infrastructure, job training, child care and the opioid crisis – Rep. Joseph Crowley kept rubbing his fingers together in the universal signal for “show me the money”.

In the Reuters Report on January 1, 2018 – As U.S. budget fight looms, Republicans flip their fiscal script – Crowley was reported as saying:

… the Republican tax bill would require the United States to borrow $1.5 trillion, to be paid off by future generations, to finance tax cuts for corporations and the rich.


This is one of the least … fiscally responsible bills we’ve ever seen passed in the history of the House of Representatives. I think we’re going to be paying for this for many, many years to come

On April 10, 2018, Crowley put out the following press release – Chairman Crowley Statement on Federal Budget Deficit Projection – which is representative of many of his statements on this issue:

Republicans have no one but themselves to blame for driving our debt to dangerous levels.

In today’s Democratic Primary he was up against a candidate who advocated (Source):

Medicare For All
Housing As a Human Right
A Federal Jobs Guarantee
Gun Control / Assault Weapons Ban
Criminal Justice Reform, End Private Prisons
Immigration Justice / Abolish ICE
Solidarity with Puerto Rico
Mobilizing Against Climate Change
Clean Campaign Finance
Higher Education for All
Women’s Rights
Support LGBTQIA+
Support Seniors
Curb Wall Street Gambling: Restore Glass Steagall

It was a no-contest on policy.

It was big money against grassroots democracy.

It was establishment corrupt Democratic machine against the progressive future of politics.

This was a true Reclaim the State moment.

The message for Social Democratic movements around the world is that there has to be a massive clean out of the neoliberal elements that have slowly taken over progressive political parties.

Any so-called progressive that mouths the neoliberal macroeconomics should be ignored and if they are desiring to stand for public office the grass roots party supporters should ensure they are not selected.

If they are incumbents, they should be deselected at the next available opportunity.

This is about major changes rather than tinkering around the edges.

For Jeremy Corbyn, there is a message.

Expunge all the Blairite/New Labour elements as soon as possible. Let the younger MMT-oriented activists take strategic positions in the British Labour Party.

Deselect Blairites before any upcoming election.

For the Australian Labor Party there is a message.

Trying to be cute with incremental changes while claiming economic credibility by mouthing of neoliberal terms such as ‘budget repair’, ‘fiscal consolidation’, ‘we will get back into surplus more quickly’, ‘AAA credit ratings’ and all the rest of it is not progressive.

You might gain office this way, given the appalling state of the conservative side of politics at present, but you won’t do anything progressive at all.

And then you will be relatively quickly dispatched to a long period in Opposition (again) having just paved the way for more pernicious anti-people policy shifts.

Start calling all this nonsense out.

Why say you will run fiscal surpluses when there is 15 per cent or more labour underutilisation (as in Australia at present)?

Why not step up as Alexandria Ocasio-Cortez did and call for a Federal Job Guarantee along MMT lines.

It is a small step, but perhaps her victory today is a sign that we can clean out the corruption that has infested the ‘progressive’ political parties and start winning the big contest.

Musical retreat

And after all that heavy stuff I have suspended my weekly (serious) Wednesday music feature for these two gems.

I really laugh a lot when James Corden, of the Late Late Show, has his guests on his segment Carpool Karaoke.

The most recent one (published June 21, 2018) features Paul McCartney and is a gem.

I was not and am not a Beatles fan (far from it), but Paul shows a generosity of spirit in this segment that is really endearing. I imagine he was paid well for it but the final scenes in the hotel are something else.

This was one of the best Carpool Karaoke segments in my assessment and it should brighten your day up along with the victory by Alexandria Ocasio-Cortez in the New York Democratic primary today.

And then there was this one with the mighty Stevie Wonder from 2015. I wondered how this one would go but it was also magical.

That is enough for today!

(c) Copyright 2018 William Mitchell. All Rights Reserved.

This Post Has 8 Comments

  1. “In this context the Eurogroup welcomes the commitment of Greece to maintain a primary surplus of 3.5% of GDP until 2022 and, thereafter to continue to ensure that its fiscal commitments are in line with the EU fiscal framework. Analysis of the European Commission suggests that this will imply a primary surplus of 2.2% of GDP on average in the period from 2023 to 2060.”

    Smart EU experts are predicting primary surpluses for Greece until 2060. This makes even the neoliberals wonder.


  2. Whoa! I haven’t read the last one yet. Though I have bought a copy. 🙂

  3. Bill, I am a Beatles fan and so I thank you for this clip. It brought back many fond memories. It was also quite funny.

  4. This quote from a Vox write up shows the classic neoliberal claim they are the serious adults in the room and the progressives are the childish dreamers who have no power but will say anything to get elected, like the kid trying to become class president by claimimg they will abolish homework, lengthen breaks, and deliver free ice cream. They come across as screechy, scared hall monitors fixated on maintaining the current structure of power. From Vox ” As a member of the DSA, her website is a laundry list of every blue-sky progressive policy: Medicare-for-all, housing and jobs guarantees, gun control, ending private prisons, abolishing ICE, and investment in post-hurricane Puerto Rico.” “Blue sky”! It is satisfying in the same way as watching one of those petty scholl power tyrants go down in the flames of their own hypocrisy, or the hope one gets from witnessing naive justice!

  5. And here in NZ we have a Labour government who holds “fiscal responsibility” aka constant surpluses as the holy grail. Meanwhile growth slows, families struggle and incomes stagnate. Increasingly working families just manage to subsist and pay for basics (rent, power, petrol) rather than support a more vibrant economy. And depressingly Labour does not seem to be willing to really promote any alternative economic thinking for fear of scaring the ratings agencies. Meet the new boss. Same as the old boss.

  6. CS

    I have to agree about Labour. A real let-down.
    But as Michael Hudson said recently: the Australian bankers are running the New Zealand economy.

  7. Well no more Mr Nice Guy for me as far as New Zealand is concerned.

    When Grant Robertson, Bill English and Michael Cullen refuse to include a job guarantee, free healthcare, social housing, sustainable energy, free tertiary education, and infrastructure modernisation in the nation budget, they are blatantly admitting to all Kiwis that they do not find these things to be a priority.

    It never has anything to do with affordability in terms of NZ dollars. When Finance Ministers tell Kiwis that these things are unaffordable, they are flagrantly lying to your face. They are just moral cowards all of them.

  8. Yes, but is Alexandria Ocasio-Cortez actually economically literate? Has Stephanie Kelton reached her yet? (If not, somebody who has her number please call her and tell her to set up a meeting ASAP.) I fear that, if she is not educated, Ocasio-Cortez may lapse into the same anti-deficit/anti-debt rhetoric as Crowley did as a means of opposing Trump’s policy agenda. Because of the “default” state of understanding the monetary system throughout the West (government is a household), it is impossible to predict how even the most otherwise progressive person will respond to challenges to their own agenda based on “affordability” (or what rhetoric they may deploy into to oppose a political opponent’s agenda). Don’t get me wrong, I think Ocasio-Cortez was the superior candidate. But I’m afraid we still don’t yet know whether she understands the monetary system.

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