Post Brexit UK is seeing higher skilled labour entering from non-EU countries to support a range of services (public and other) – success
It's Wednesday and so before we get to the music segment we have time to…
I saw a Tweet overnight suggesting the so-called progressive British Remainers had been a little quiet in recent days following the comical display of anti-democratic, corporatism aka filling leadership positions in the EU and the Eurozone. Where are they? Why aren’t they out there in the media (social or otherwise) extolling the virtues of their much-loved European Union, where progressive policies are the norm and the peoples’ interests are held above the narrow corporate interests? The problem is that they cannot show up at present. The EU has managed to appoint a cabal of new leaders, many of whom are plagued by past scandals, allegations of nepotism, convictions for negligence in public office, and the Presidential nominee is under investigation in the Bundestag and has been acknowledged as a failure in her management of the German defense department. Come to think of it they seem perfect for the top jobs in the EU. And how was this motley lot selected? By denying even the limited sense of democracy that has been present in this process in the past. It is beyond a joke. But then this is the Europhile cosmo left’s vision for the future. One could not dream all this stuff up one they tried.
The accepted method of selecting candidates for the EU’s top administrative and political jobs was the so-called Spitzenkandidat (lead candidate) system.
It gave a semblance of democracy to the process.
The process is that voters in each Member State elect people to the European Parliament. The political parties that are represented in the European Parliament have what is called a ‘lead candidate’ for the European Commission Presidency.
Remember that the European Parliament parties are hybrids of the political parties that contest national elections. They form among elected representatives from different Member States who share similar ideological positions.
The ‘lead candidate’ is then elected from these created coalitions in the European Parliament.
The norm is that the majority European party (or coalition) would usually expect their lead candidate to be the next European Commission President.
An interaction with the European Council then follows and the Spitzenkandidat is confirmed if a majority of the European Parliament assents.
Mandred Weber from the European People’s Party (EPP), a right-leaning coalition, was the Spitzenkandidat this time around.
Under this system, the European Parliament also, nominates the other candidates for the remaining top positions – ECB President, EU Foreign Affairs head, and European Council President.
So a semblance of democracy.
But the system failed dramatically in the recent choices. The totally unelected European Council dominated the process and the semblance of democracy vanished.
Welcome to the EU 2019-style.
The cabal is firmly entrenched and is now openly scathing of any pretensions to democratic processes.
Further, the characters the cabal has assembled have been plagued by scandals, incompetence, nepotism or sheer ignorance of international affairs.
So not only do the nominations violate any sense of linkage to what people might have voted for, they are also demonstrative of a further shift towards austerity and corporatism.
They entrench the domination of the large nations in Western Europe and ignore the new accessions.
However, there has not been much said about any of this from those British remainers who just love the EU.
This Al Jazeera article (July 4, 2019) – The new rulers of Europe – provides some insight into the candidates which must now be ratified. It is somewhat incomplete but gives some guide.
This report (in German) – Wehrbeauftragter beklagt „Überorganisation” in der Bundeswehr (January 29, 2019) – documents the problems that the German Defence Department had under the leadership of the new nominee for the European Union Presidency, Ursula von der Leyen.
The Report published by the Military Commissioner of the Bundestag (I am translating) assesses the peformance of the Defence ministry in Germany in 2018.
It concluded that:
1. There were daily shortages in materials and equipment faced by the German military due to under spending.
2. The department was over administrated by bean counters – a ‘bureaucratic monster’.
3. Funding was grossly wasted on cost overruns and mishandling of public money.
4. Equipment choices have been poor.
5. A lack of spare parts – lengthy delays in provisioning and gaining repairs.
6. A lack of personal safety equipment – boots, helmets etc. A lack of warm clothing for winter operations.
7. “Lamentable” state of military buildings which have been neglected for decades.
8. Growing right-wing extremism and sexual harassment in the ranks.
9. Lack of helicopters to evacuate troops in action from dangerous situations.
As the Al Jazeera article notes:
In Germany, her stewardship of the defence ministry is widely regarded as a failure and she currently faces a parliamentary investigation on consultancy scandals
She has demonstrated “nothing that qualifies her for leading an administration of 33,000 people”.
And she is “blank” when it comes to a “vision for the future … to reform the integration project in a way that responds to its citizens’ problems and interests”.
See also the Politico article (July 2, 2019) – The inconvenient truth about Ursula von der Leyen.
The article concludes that Germany’s “weakest minister” thus “has enough qualities to be Commission president”. Tongue firmly in cheek!
Welcome to that progressive paradise – EU 2019.
Madame Lagarde needs no introduction. Austerity minded. Part of the crushing of Greece.
No past experience in central banking. Not even trained in economics.
And in December 2016, she was convicted by a French court of negligence in her role as French finance minister for negligently awarding €404 million to a businessman – a rather euphemistic description (Source).
A normal person would have gone to prison for the offense which carried a year’s imprisonment and a large fine. She was let off without penalty.
So a right-winger, untrained in the job she is getting, and convicted by a court – perfect choice for the progressive paradise.
Not to mention Charles Michel, the right-wing Belgium Prime Minister who was the youngest elected premier since 1840 and with a daddy among the European elites.
Nepotism comes to the fore. EurActiv concluded that:
Michel’s career would hardly be the same if his father hadn’t been a Belgian minister and EU Commissioner.
Which is polite!
And finally, the Spaniard nominee for Foreign Affairs head – Spain’s Josep Borrell.
He dislikes any “decentralised regional authorities amassing greater autonomy”
A great team to take Europe forward into the progressive future. Britain’s progressive aspirations will be well situated if it can just get rid of that pesky democrative vote in June 2016 to leave the EU.
While the Remain camp is mostly silent in this latest demonstration of EU ‘democracy’, there are still some supporters waxing lyrical.
The UK Guardian article (July 3, 2019) – Boris Johnson’s cash splurge is totally reckless. Yet it could win an election – from Aditya Chakrabortty was tangentially promoting the EU as some sort of progressive paradise.
While his brief was to attack Boris Johnson and is fiscal announcements designed to improve his appeal as a future Tory Prime Minister, the underlying current is to situate the progressive stance as anti-Brexit.
The old canard.
First, his attacks on Johnson’s economic plans are not well established. He insinuates that Johnson is splurging money that even Theresa May knew (in her “no magic money tree”) comments was not there.
That somehow promising “pay rises for public-sector workers”, reducing “national insurance” payments, “tax cuts for the rich”, unleashing “the biggest public-works programme seen this decade”, or providing “high-speed rail and superfast broadband” is beyond the capacity of the British government as the currency issuer.
That it is madness to announce “an emergency budget in September” to stimulate the economy by October 31 “just as the government bellyflops out of the EU”.
The article then suggests that while this all suggests that “Britain is finally entering a post-austerity era” the “the contrast will be so sharp as to be painful”.
What does that mean?
That a progressive government has to softly, softly, catchee monkey in its unwinding of austerity in case people get a shock from improved wages, or better transport and health care, or whatever?
And does it mean that major public infrastructure projects which are targetted to degraded areas (for example, in water supply etc) cannot attenuate any losses in employment that might arise from a Brexit withdrawal of capital?
Apparently, the Guardian article believes:
Whatever the Conservatives spend on Sunderland will dwindle into insignificance on the day Nissan finally follows Honda and Ford and announces it will halve the size of its plant there.
Where is the evidence for the “insignificance” conclusion?
And how much of the motor vehicle disinvestment going on in areas such as Sunderland is related to “Brexit” anyway?
And how much is due to the decline in demand for diesel cars and the emissions scandal, which reflects poor forward thinking and corrupt lawbreaking on the part of the car manufacturers?
And how much is due to the credit binge promoted by lax oversight of the financial sector which lead to a boom in car sales – dominated by so-called personal contract purchases – aka ‘on the hock’?
I am not defending Boris Johnson. Or Hunt. Spare the thought. But the progressive claims that their plans to spend more government currency to stimulate the British economy is economic madness is ridiculous.
They should be arguing about the composition of the much-needed stimulus, not about whether it will shock people who have been anaesthetised by the cruel years of austerity.
I wonder if the same article would have been written if Jeremy Corbyn had have come out with the same sort of expenditure quantum and said he was for remaining? You can guess my conclusion.
The UK Guardian’s economic correspondent Richard Partington also attacked the spending announcements in this article (July 1, 2019) – Do spending plans of Boris Johnson and Jeremy Hunt add up? .
A better demonstration of neoliberal, sound finance analysis you will struggle to find.
1. It privileges the nonsensical lies of the current Chancellor when it writes “Philip Hammond has warned the two Conservative leadership candidates their tax and spending plans would be impossible under a no-deal Brexit.”
I discussed that issue in this blog post – British Chancellor and his Shadow – arm in arm promoting fiscal myths (June 24, 2019).
2. He privileges the ridiculous concept of “fiscal headroom”.
He asks: “How much “fiscal headroom” does the UK have?”
And then claims it is the “the gap between government income and spending – of 1.2% of GDP and a level of 2% of GDP, which is worth £26.6bn.”
Where does the 2 per cent come from? It is the Office of Budget Responsibilities’ estimate of the “structural budget deficit” target, which is part of the aim to get back into surplus by 2025-26.
So, first, we have a spurious ‘structural budget’ estimate from the OBR – which relies on the statisticians trying to net out cyclical impacts on the fiscal outcome – which means it must define some potential GDP (and full employment) which is flaky at best.
Second, then we have some spurious target for that flaky ‘structural budget’ estimate of 2.2 per cent of GDP by 2020-21 – along the road to the equally spurious benchmark of a balanced fiscal state (zero deficit) by 2025-26.
Third, we then come up with some £ estimate of the difference between the flaky spurious target and the actual fiscal state as representing how much the British government has at its disposal in net terms to spend.
Why is the Guardian holding out that sort of framework as the benchmark for assessing the fiscal promises made by the Prime Ministerial contenders?
3. He talks about a rising fiscal deficit as being a “negative” event – in part, because it would “mean higher public borrowing”.
But is silent on the fact that, under current institutional arrangements, more public borrowing means greater non-government wealth and more income to allow households to reduce their precarious debt levels.
Aditya Chakrabortty concluded after all this Guardian neoliberalism that:
The left can’t expect that pointing out Johnson’s racism or his past will sway voters – those tactics didn’t stop him grabbing City Hall. Remainers can’t carry on pointing out the madness of leaving the EU to turn this country into Singapore with jumpers – that didn’t work in 2016. We need to get much more serious and imaginative, show that staying in the EU is the best way to end austerity, and come up with policies to improve living standards here and now.
There it is – Britain must stay in the EU to end austerity – despite Johnson and Hunt announcing policies that would effectively end austerity if implemented – and in total silence to the farce that has just transpired across the Channel.
It is hard to actually imagine all this stuff it is so bizarre and comical.
I remain with the view that Britain should get out of the EU mess asap (which means October 31, 2019 now) and then the parties can fight it out and be mediated by the democratic choice of the people of Britain.
At least then the top jobs will go to the people that the voters, in their wisdom or madness, put into office.
That is enough for today!
(c) Copyright 2019 William Mitchell. All Rights Reserved.
This Post Has 26 Comments
About Josep Borrell you can watch his “diplomatic” skills at its best. EU institutions is a circus plenty of scary clowns . https://www.dw.com/en/josep-borrell-on-conflict-zone/av-48086918?fbclid=IwAR2LeUgbvCwfKl-r2Eh8KKho2VbhTtRhJ29SD64Gzj8Wp711HJ08DyqIh9Q
I’ve added this in comment to Aditya’s Facebook post on his article. Wonder if he responds. Will he unfriend me like Richard Murphy for smuggling your blog into his online world?
Pedro Silva Pereira – who has been chosen as one of the vice-presidents of the European Parliament – is known in Portugal as one of the closest associates with José Sócrates, a former blairite-style prime-minister which has been accused of 31 corruption-related crimes. His wife is also being investigated in a judicial operation against corruption ( https://jornaleconomico.sapo.pt/noticias/pedro-silva-pereira-alma-gemea-de-jose-socrates-chega-a-vice-presidencia-do-parlamento-europeu-463211 ; https://sol.sapo.pt/artigo/662706/-premio-imoral-para-pedro-silva-pereira )
Dear Bernardo (at 2019/07/04 at 8:15 pm)
Another candidate with excellent qualifications and perfectly suited to join the European elite.
It is looking better each day!
Quoted from the Poitico article:-
“Though von der Leyen is an engaging speaker and a favorite on Germany’s talkshow circuit, the perpetual whiff of scandal surrounding her and her ministry has eroded her ratings among voters. Once one of Germany’s most popular politicians, she fell out of the top 10 last year.
That’s just one reason her party would be more than happy to see her go to Brussels. Another is that her departure would open up a key slot in Merkel’s Cabinet. If all goes according to plan, the chancellor would fill the post with her hand-picked successor, Annegret Kramp-Karrenbauer, who succeeded Merkel as CDU leader in December. Von der Leyen’s departure would offer Kramp-Karrenbauer a perfect opportunity to prove herself in a big job.”
So now we know why – thanks to Merkel’s behind-the-scenes manipulation – von der Leyen got the job.
But hey! she’s a woman so that was a good enough reason in itself. Stands to reason:- 4 jobs to be filled -> 2 of each gender “selected”.
Coincidence? LOL. Democracy? What’s that? A proven track-record? You’d have to be joking; this is the EU, remember.
I had to google who Leyen was that day, found the same Politico article and had to laugh as well. It would be hysterical if it wasn’t a disaster for nearly everyone on the continent.
Be careful with what you think of Silva Pereira. While Sócrates is likely to have defrauded Portuguese citizens, the prosecution has been a farce, with deadlines ignored and plenty of leaks to make him guilty in the public opinion; not to mention the initial discoveries are quietly absent in the convoluted accusation. I never had intentions of voting for the man (even long ago where I was an ignorant europhile), but, even then, it’s easy to have suspicions that the vitriol directed at him here is very prejudiced by his actions against capitalists and the justice system, not to mention his reluctance in applying austerity and calling the IMF. And anyone wanting a slight return to social-democratic policies is quickly associated with him, either because of “dangerous” spending or because recouping power for the state is a way of increasing corruption.
What does this have to to with Pereira? Nothing, but neither does a criminal process that resembles a witch hunt to end the Socialist Party. There are plenty of reasons, especially progressive reasons, to dislike them, but it’s suicide to jump on the bandwagon filled with europhile reactionaries.
This article seems to beat up a strawman. Most EU supporters would agree that the EU should be more democratic. Former President of the European Parliament Martin Schulz was on TV yesterday voicing similar criticisms as your article.
But the main problem of the EU is not one of democracy. In fact, what you call a cabal are representatives of democratically elected governments. The real conflict is about the balance of power between the EU and the nation states. Currently, most of the power is with the EU commission, that is, with the nation states.
Essentially, what you are criticizing is that the (democratic!) nation states assume a power that should be with the EU parliament.
This may be a fair point, but the process of devolving more power to the EU parliament is a difficult one. As we see in Britain, the nation states are reluctant to do this.
Of course, one conclusion of all of this could be that the EU can’t work. Fair enough, if that is your opinion.
But there are strong arguments that the EU has to work.
For once, the European wars of the past centuries are a strong argument in favour of European integration. Another is that in order to survive in a world economy dominated by the US and China, a strong common European market will benefit the European states in the long run. In fact, much of what is often seen as undue and undemocratic rules of EU bureaucrats simply follows from the constraints that a common market imposes. It is impossible to benefit from a common market and not keep to the rules that define the market. It is impossible to be part of a common market without loss of sovereignty.
Apart from these general considerations, there also some particularities of the current situation. One is that the Spitzenkandidat Manfred Weber is supremely unqualified for such an important position. Timmermans was unacceptable to some of the nation states. Von der Leyen … I agree with your criticisms. So we need to fight it out. After all the EU parliament does not need to agree to von der Leyen. A mess, I agree, but democracy is always messy.
The bankers ( city economists) responsible for the growth comission that are advising the SNP want to be at the heart of it.
The Scottish think tanks that call themselves progressives along with Neoliberal Nicola just can’t get enough of the EU.
They are liberals the lot of them. Parading around calling themselves left wing socialists as they parade countries around Europe like pets in a zoo. Globalists that turn countries into waste lands and call it peace.
So, @Kurz, let me get this straight, the common market, despite mandating permanent austerity and beggar-thy-neighbour socioeconomic realities, is a good thing in the long run (after many more decades of austerity, then) because it’s the only way to defend against economic domination by the US and China? How does that apply to a country that had a Troika mandated (discount) sale of an electrical monopoly (along others), exactly? And how are the mandated (discount) sales of national banks to other too-big-to-restrain european banks supposed to help, exactly? (Over otherwise using WTO rules, of course).
As for avoiding war, even if it remains true, completely ignores: foreign interventions just on the outskirts – Kosovo and the Ukraine, for a start; the non-people dying in the Mediterranean at best, in Libya or Turkey at worst; doing fuck-all about the biggest threat to life on earth ever; and, of course, having to accept that we’d rather have the likes of Orban and Salvini, with all that implies, than to have a deficit anywhere.
You wrote in that last post, “It is impossible to benefit from a common market and not keep to the rules that define the market.”
With all due respect, I’ve been told by MMTers I trust that Germany has not been following the rules for many years or a few decades now. That is, they export too much. This is a problem because the buyers need euros to buy Ger, stuff. This means that Ger. needs to loan them euros. Then they can’t make the payments. Then there is another huge problem.
. . . There must be a way for other nations to buy the Ger. exports without Ger. loans.
. . . Can you see that?
. . . Why are the borrowers punished but not the stupid lender who made a loan that can never be paid back?
Also, even if I agreed with the above statement, I can still say that the rules currently in place are not the best rules. MMT says that the rule about deficits is just stupid. As are the rules that took all the ways that a nation can defend its economy from foreign “looting”. EU nations can’t raise tariffs or devalue their currency. They can’t impose capital controls. They can’t default on the loans they can’t pay. And austerity is not going to let them pay someday in the future. To pay they must increase tourist visits and exports, or attract a boat load of German retired people who move into their nation and bring their pension payments with them. These things will increase their GDP which can then be taxed to get money to make payments.
. . . Greece will never be able to pay the 68 billion euros it was loaned, never.
. . . The loan went through Greece straight to Ger. and Fr. banks so they would not go bankrupt. It would have been far better for the ECB to have just given those banks the euros and not created the fiction that Greece would pay it someday.
. . . And again, the stupid Ger. and Fr. bankers decided ALL ON THEIR OWN to buy boatloads of Greek bonds from the Greek people and comps. They did it because they paid higher interest. They thought there was no risk. That thought was incorrect, there was risk as they eventually learned. It was the bankers’ fault not the fault of the people of Greece. And yet the banks were bailed out and the Greek nation & people punished. Please tell me how the rules that did that were the correct or best rules to have in place. Please!!
So, I claim that your sentence there is wrong in 2 huge ways.
My sources for my facts are youtube videos by Pro. Mark Blyth and a few MMTers and Bill’s blog here.
Ever the gentleman and in order to avoid further tarnishing the reputation of “Uschi” van der Leyen, surely, Bill omitted pointing out how she is the daughter of a former Ministerpräsident (governor) which must have been… helpful… while climbing the ranks of her party.
There is a well established tradition in Germany of disposing “problematic” politicians by assigning them to European duties and selling the whole thing as a promotion instead of a demotion.
@Paulo Marques: There is no reason why the EU has to stick to austerity and can’t adopt MMT. Maybe the EU will learn that dropping austerity and adopting MMT will strengthen the EU wrt the USA and China … simply because it will allows us to better use our local (human and other) resources.
@Steve_American: One possibility to solve the problem of excessive German exports in the EU, could be to adopt the model that is used inside Germany. The different German regions have very different economic powers, some are exporters, others are not. It still works reasonably well in Germany. So why should sth similar not be workable in the Euro zone?
I think that Ger mans have repeatedly said that they will not send money to other nations. If the states in the US took this attitude than the poor states would slowly be ground down into poverty. As of now states like NY and Calif. send far more tax money to Washington than they get back in spending inside their states. Germany does it inside Germany because the recipients are Germans and they will not do it for Greeks because they are not Germans.
On your point to Paulo, actually this is a reason why the EU can’t adopt MMT. The treaties don’t allow it and it takes every nation to agree to change them. This will never happen.
A change can theoretically happen. It would require that 28/29 independent governments simultaneously agree after being elected, since any dissent has been met with “independent” ECB interference. From European institutions, to the press, to expert panels, shame rains down on anyone suggesting restricting and taxing capital. even when recognizing the need for state intervention. It flows down to the public, including leftist and green parties, into ineffectual ideas reliant on the good will of capitalists. It leads to blaming the unemployed, the disabled, the public worker, the foreigner, the elder, the young, the other members, the banks, politicians, anything but the “common sense” rules of living within your means.
Two lost decades with no meaningful eurozone reform, despite being widely recognized as needed, have left at least one generation permanently poorer and scores of older workers unemployable for the rest of their lives (gigs aren’t employment). The decaying infrastructure doesn’t wait for the reforms, and neither does earth’s climate, which will bring conflicts even the mighty ideal of the EU can’t prevent.
I may be ignorant on this, but it seems to me to be much the same in Germany itself (not that German politicians are that unique in their guilt). From the regional slurs to the Hartz reforms, it’s only a small amount of trickle down that gives some semblance of prosperity. But that begs the big, uncomfortable question, are Germans really that inherently racist that they think the AfD is a good idea or is the vote for anyone with a semblance of an alternative socio-economic model that would finally allow their children to be better? Because if they really are racist despite supposedly living on the success of the country, and I don’t believe it for a second even with a small amount disdain for the culture, and they really believe they must win a zero-sum monetarist game, how will they ever support solidarity with the dirty slavs, the lazy southerners and the wasteful baguettes?
So, yes, it can happen. And I could win the Euromillions as well. Neither is any likely to happen.
@ Alexander Kurz
“One possibility to solve the problem of excessive German exports in the EU, could be to adopt the model that is used inside Germany. The different German regions have very different economic powers, some are exporters, others are not. It still works reasonably well in Germany. So why should sth similar not be workable in the Euro zone?”
That model led to the decrease of the population in the Bundesländer of the former DDR to the level of 1905 despite a record high population for Germany as a whole. Especially the young leave for greener pastures in the west. I think it’s safe to say the model doesn’t “work reasonably well” and should definitely not be emulated. Anyway, the part about the emigration out of economic despair is already ongoing in Europe. If one would insist in sticking to this approach, then adhering to this model would at least require a fiscal union (Länderfinanzausgleich), a concept the Germans emphatically reject at a European level.
As you say, there is nothing stopping the EU from embracing the insights of MMT and adjust its policy in accordance. Except nearly all relevant European treaties, the “growth & stability pact” being just the most prominent of them, that are conveniently almost “unreformable”. One could almost think, it’s by design and not by accident.
“But that begs the big, uncomfortable question, are Germans really that inherently racist that they think the AfD is a good idea or is the vote for anyone with a semblance of an alternative socio-economic model that would finally allow their children to be better?”
There is undoubtedly “low-key” racism at work here, too, but it was the precarization of the worker class that made the xenophobic message of (actually neoliberal) conservatives more attractive. Nevertheless, a frighteningly high percentage of Germans see the problems of Europe as “cultural”, which isn’t much more than thinly veiled racism: “The southerner ARE a bit more lazy and would profit from some good calvinist/protestant discipline!”
Once you are in this mindset, change is all but impossible. Austerity is “tough love” and real relief would be “spoiling undisciplined brats”. Debt relief is against honour and leads right down the slippery slope of immorality and all that. Since the effect of the policies that result of this mindset is that those punished (sorry, those “helped”) don’t improve but get even worse and the richer remain rich, the belief in the own superiority is reinforced.
I actually don’t even mind conservative and moderate people expressing this or similar views becasue that’s what I expect from them, it’s that many a progressive becomes the most ardent deficit hawk and authoritarian strongman when it comes to justify the misdeeds of the troika or anything EU that worries me the most.
When i was younger I didn’t know how much suffering people in general cause themselves with their ideologies.
Overcoming the innocent thought that ideologies are harmless is easy; the hard part is acknowledging that you will always have one even when you really think you don’t. And one inevitably flawed as any human thought is.
@Paulo Marques “Neither is any likely to happen.” I agree, it certainly does not look likely at the moment. But I don’t understand why you blame the EU for this. For change to happen, there need to be problems to solve, new ideas for solutions, and pressure from the people on their governments. In addition to the problems you mentioned there is also climate change. I think there is growing awareness everywhere, even among politicians, that we face serious problems and that the capitalists are not the ones that have a solution. MMT is a new idea. What is lacking is the will for people to campaign. But I can see many small movements in the moment. Thus, much will depend on how they evolve in the future. What will be the role of the EU in this? I dont know, but I dont see the EU as a particular obstacle. It may even by that the EU can make change more likely to happen as the EU parliament provides a forum that can oppose the power of the nation states.
@Steve_American “The treaties don’t allow MMT”. I am not an expert, but apparently the treaties do allow massive amounts of quantitative easing … so why not MMT?
Also, isn’t it the case that MMT could be adopted by the EURO zone, as opposed to by the EU?
@ HermannTheGerman “If one would insist in sticking to this approach, then adhering to this model would at least require a fiscal union (Länderfinanzausgleich), a concept the Germans emphatically reject at a European level.” You are right, but again, politics can change. In the long run, a EURO zone can only work with a common fiscal politics and that needs to include a Länderfinanzausgleich for all of the EURO zone. In the long run, we either have to abolish the EURO or go all the way to a fiscal union. I would be in favour of going all the way.
@ Paulo Marques “are Germans really that inherently racist”
It is my impression that levels of racism are pretty uniform all over Europe and also over time. For example, if you compare recent election results in Germany with those of 20 or 30 years ago, I think you will find that the left/right divide stayed the same over the years.
The new phenomenon is that the far right used to feel reasonably happy as part of the conservative party and did not (openly) question the values of a liberal democracy. This changed because many of the capitalists see that their monopoly on public opinion is shrinking and so they decided to team up with the far right in order to propagate culture wars that are meant to distract from the real problems that society faces and for which the capitalists have no solutions (climate change, inequality, etc).
Does this mean that authoritarianism/fascism is our future, or does it mean that capitalists are loosing the propaganda war and progressive change will happen?
I think it really depends on all of us … the future is still open …
Dear Alexander Kurz (at 2019/07/06 at 9:04 pm)
Since you have joined in the commentary here you have regularly said things like “isn’t it the case that MMT could be adopted” or expressions to that effect.
You need to realise that MMT is not a policy regime that a nation adopts or moves to or abandons for that matter. MMT is a superior understanding of the way the monetary systems operate and the choices governments have within those monetary systems.
It allows us to see clearly the consequences of adopting various policy structures and choices.
Please read a little more if you want a full picture. It will make your participation here more effective.
“@Steve_American “The treaties don’t allow MMT”. I am not an expert, but apparently the treaties do allow massive amounts of quantitative easing … so why not MMT?
Also, isn’t it the case that MMT could be adopted by the EURO zone, as opposed to by the EU?”
Well, as Bill said nations already use MMT, at least if they have their own fiat currency.
Nations in the eurozone do *not* have their own fiat currency. They must borrow to deficit spend and they can go bankrupt. So, they may have to pay higher interest rates on what they borrow.
Until the ECB finds a way to back the nations up, the nations don’t really qualify to be able to take advantage of MMT.
By “back up” I mean find a way for the ECB to act as if it were the central bank of each nation in the eurozone.
Also, the ECB is currently breaking the treaties with QE. The powers that be in the EU are letting the ECB and Germany break the rules but nobody else. IMHO, Germany should be made to pay retroactively for all the years it has flaunted the rules on total exports allowed. Maybe not all at once but over a few years.
For the nations of the eurozone to take advantage of MMT, the powers that be would also have to ignore the yearly deficit and total debt rules, i.e. let all the other nations break the rules too. This seems very unlikely.
> I dont know, but I dont see the EU as a particular obstacle.
Then you completely missed my first paragraph. Unless all governments realize that they’ve been completely wrong at the same time and change the whole single market, nothing can change, since any whiff of dissent is strongly clamped down.
There is no lack of very serious commentators and politicians claiming that TINA is bad, while wanting more of it with different clothes and loudly proclaiming anything else is irresponsible.
There are no compromises, the single market can only work with a common currency which can only work with fiscal transfers between equals. Since barely any european considers himself an equal with every other european, a federation is a pipe dream. And completely irrelevant for peace, as demonstrated by Russian oligarchs – why ruin your foreign investments when trade makes them safe and profitable?