In the latest IMF Finance and Development journal (March 2023), there is an interesting article…
The aftermath from my recent podcast on the Job Guarantee and UBI
Given I provided a detailed National Account analysis yesterday, I am using today as a blog lite day with just some snippets and then a musical offering – as per my usual Wednesday practice. I did an interview for Real Progressives last week and some of the social media reaction has been hysterical – claims that Modern Monetary Theory (MMT) has gone political and that MMT advocates abandoning the capitalist system and so on so forth. Some of this stuff is coming from self-identified ‘progressives’, which makes me wonder how much meaning term retains. In some cases, the attacks were really Trojan horses for the dislike of my Brexit stance or my attacks on the British Labour Party for pushing an unworkable and neo-liberal inspired fiscal credibility rule, which they had to change just before the election anyway because it was unworkable in its original form. So the resentment of those who hang onto the ‘European dream’ for the UK manifests as stupid, lying attacks on anything I say. Fine. More importantly, Switzerland is having a little ‘Brexit’ sort of move itesel, that has angered the European Union and is another chink in the now very depleted European ‘dream’. And if all that is a bit much, we can finish with some Jazz.
I am following the unfolding story in Switzerland at present which has seen the European Union place it on the so-called ‘third country’ list which means that Switzerland no longer has automatic rights to sell into the EU and has to follow the standard certification processes that non-EU nations are bound by.
This has arisen because the Swiss – Federal Council – fearing a backlash from its citizens, have refused to sign a new institutional agreement between the EU and Switzerland.
The detail is in this press release – No signing of Swiss-EU institutional agreement.
The Federal Council is the executive body of the federal Swiss government.
Essentially, on May 26, 2021, the Federal Council considered the proposal from the EU, which binds the two nations and gives Switzerland access to the single market.
It concluded that:
… there remain substantial differences between Switzerland and the EU on key aspects of the agreement. The conditions are thus not met for the signing of the agreement. The Federal Council today took the decision not to sign the agreement, and communicated this decision to the EU. This brings the negotiations on the draft of the InstA to a close …
The areas of disagreement include:
1. “wage protection and state aid provisions did not produce the outcomes Switzerland needed to sign the agreement”.
2. “Substantial differences remain, especially with regard to wage protection”.
3. “For Switzerland to incorporate the CRD into the Agreement on the Free Movement of Persons, explicit exemptions would need to be granted.”
4. “Adopting the CRD in its entirety would effectively constitute a paradigm shift in Switzerland’s migration policy – a policy which enjoys wide support among the Swiss population and cantons.”
5. In terms of the conditions around access to the single market, the Council determined that “market access agreements … would have introduced the dynamic adoption of developments in EU law. It would also have established a dispute settlement mechanism enabling both parties to refer disputes to an arbitration panel.The Court of Justice of the European Union would have been involved in all matters pertaining to the interpretation of EU law.”
Switzerland is also the EU’s fourth-largest trade partner – China, the US and UK are larger.
Around 6.9 per cent of its exports and 5.7 per cent of its imports go to or come from Switzerland. For Switzerland, 42 per cent of its exports go to the EU and 50 per cent of its imports.
Following the abandonment of the signing, the European Commission put out a statement – Commission Statement on the decision by the Swiss Federal Council to terminate the negotiations of the EU-Swiss Institutional Framework Agreement (May 26, 2021) – which said that:
We take note of this unilateral decision of the Swiss Government … Without this agreement, this modernisation of our relationship will not be possible and our bilateral agreements will inevitably age …
Soon after, the Commission issued another statement – Commission publishes information notice on the status of the EU-Switzerland Mutual Recognition Agreement for Medical Devices – informing us that the “the mutual recognition and related trade facilitating effects for medical devices between the EU and Switzerland ceased to apply on 26 May.”
Game on, that is.
This is being touted as the Swiss ‘Brexit’ – the issues of wage security, state aid and immigration were instrumental in the political decision to abandon the new agreement with the EU.
One of the motivations of the EU to finalise this deal was related to Brexit – they didn’t want Britain to use the Swiss case to retain access to the single market without having to engage with all the EU rules and conditions (as is the case for Switzerland based on 50 year old deals).
But after 7 years of negotiations, the internal politics in Switzerland has ruled. The people do not want EU style neoliberalism.
The upshot – as the EU continues to go down the neoliberal route – the old agreements will become increasingly irrelevant and the gap between practice in Switzerland and the rest of Europe will widen.
A sort of Brexit is unfolding driven by the people.
Podcast with Real Progressives – The Case against a Universal Basic Income.
Last week, I recorded an extended interview with the US Real Progressives on the Job Guarantee and UBI.
The edited version is just on an hour long.
Upon the release of the podcast, Twitter went a bit wild with some people claiming MMT was advocating the abandonment of capitalism, and, that, finally, we had blown our cover – that it was now obvious that MMT was a political agenda.
I also note that almost always, these Twitter heroes hide behind pseudonyms and are too cowardly to identify themselves and take personal responsibility for their acrid opinions and nasty invective. Some of the fictional names make it look as though the person hiding behind these fictions has university level qualifications in economics. They wouldn’t dare say the things they write on Twitter to me face to face. Cowards and bullies.
Such gems were apparently distilled from the podcast as:
1. “A rare admission that MMT is an anti capitalist political agenda rather than some new original insightful understanding of how the monetary system works”.
2. “‘ending private enterprise’ is Mitchell’s political view”.
3. “Mitchell advocates for zero private enterprise/entrepreneurship, ie end what he defines ‘capitalism to be. So ~65% of GDP goes private>Gov/public ownership. Crazy.”
4. Mitchell’s “his political nous has been toxic”.
Some of this was just bile motivated by my position on Brexit and my attacks on the British Labour Party for endorsing a neoliberal-inspired fiscal rule that was unworkable.
Just before the 2019 election they quietly changed the ‘rule’ abandoning the bits I had pointed out, almost as a lone voice, would be unsustainable. That is, despite for several years before that sending their apparatchiks out on social media vilifying my position and calling me dumb.
5. “Mitchell also no nous either. Part of why he failed in UK Labour.”
I found that last quip very funny.
First, I was never in UK Labour so how can I fail if I am not ‘in’ something.
Second, I guess this character defines political nous as being when a political party, facing one of the worst Tory governments in history, with austerity policies that have significantly damaged the fabric of British society and impoverished tens of thousands, somehow has lost 4 general elections in a row, seen its primary vote collapse, lost many of its heartland constituencies to the Tories, and in recent local elections went further backwards.
Third, I am not a politician and don’t pretend to have any aspirations in that regard.
These critics flamed away for a few days then got bored.
They made fun about “my decrepit face” – ageing sucks doesn’t it?
They made disparaging statements about the name of my host at the Real Progressives – something about it being weird and not sounding Anglo. Et … f*ck*ng cetera.
I doubt that these characters actually listened to the Podcast.
Here is some relevant segments that may have instigated all this nonsense.
I was asked what is so good about private sector employment?
Well look it’s interesting really because you have grown up in America and I have grown up in Australia. Our understandings of the public sector are quite different. So, we have a much larger historial experience with public enterprise and public activity. Whereas the most that Americans interact with the public sector is probably through your postal service. Whereas we have got broad interactions with our public sector. So that’s a difference and that might condition what I say.
In a Capitalist system, and we should be clear on what a Capitalist system is. But in a Capitalist system, we shouldn’t be surprised that the private sector pursues profit. And, at the basis of the Capitalist system is conflict – between workers and bosses. Between the owners of capital and the owners of labour.
Because workers want to do as little as possible and get as much back in the form of wage and salary payment. And, of course, bosses want them to do as much possible and pay them as little.
Now that’s simplifying.
And obviously, more enlightened work places etcetera, and, different professional workplaces, the workers have broader concepts of work than other workers and bosses have broader concepts of their responsibilities.
But, by and large, the dynamic of capitalism is one of conflict between the classes – labour and capital.
And we shouldn’t be surprised … I find it humourous that we get this moral outrage that capitalist firms are pursuing profit. Well that’s their logic. That’s of course what they should be doing within the logic of capitalism. And if we don’t like that, then we should be advocating to abandon capitalism.
A lot of Left-wing people think that way, including myself.
But that then opens up then what’s our perception of the non-private sector, the government sector, the public sector. And we should always think of the government, the public sector, as us … its our agent.
There are things that we can’t do individually that we want done for each other that require the scale and the organisational capacity of a much larger institution and that’s what our governments are for.
And so the way we measure what a government does should be fundamentally different to the way we measure what a private sector firm does.
And one of the elements of the neoliberal period of our history, the privatisation, the key performance indicators, and the users pays and all these elements, that go into that system of thinking and practice has been to try to render the government like a corporation and all of our attitudes about the efficiency of government programs – this is what users pays is about – we’ve got to pay for it, its got to return a monetary return.
Now all of those things, those concepts are applicable to a private firm in a capitalist system but not to a government.
And the way we conceive of productivity – that is, output per unit of input – has to be different when we think of government activity relative to private activity.
Now, the last thing we want in any activity is wasted resources because that’s environmentally damaging.
But the way we think of what’s sensible for a public sector to be doing should be different, and, should reflect the goals of what we want our agent – the government – to be doing.
And we want it to be advancing generalised well-being however you want to define that – in terms of access to resources, access to work, access to health, education, and upward mobility, and security and all of those things – a good retirement when you’re too old to work, safety nets when you’re too sick to work, and protection of children and all of these things.
And so, once we start thinking like that, then what we should expect from government employment is quite different to what we might expect from private employment.
And so, one of the things that we can get away from, in terms of thinking about Job Guarantee employment, is that’s going to be a narrow reflection of what low-skilled work in the private sector might look like.
And so I always think of the Job Guarantee as being a multi-dimensional thing. In the short-run it solves poverty and gives workers job security and income security.
But over time, as we evolve social attitudes through educatuon – that is what education does – it makes us more sophisticated in our thinking – then we can evolve the concept of meaningful work. That its not just about working for a private boss to make profit.
Its about generating social returns, and generating happiness, and generating inclusion …
This idea that the Job Guarantee is just workfare in disguise is just a put down that’s based on no information at all.
We can dream big on what these jobs might look like and expanding peoples’ opportunities and ability to contribute.
I see the Job Guarantee as being an incredibly evolutionary concept to radicalise our notion of what productive work is.
First, my personal views on things are not MMT.
I support the Melbourne Football Club.
It would be ridiculous to say that MMT supports the MFC.
To try to connect my personal views and preferences to my economics work in order to denigrate the economic ideas on how monetary systems work, which I have contributed to, is chicanery.
Second, if you consider the transcript segment I provide above, which is the only part of the one hour podcast where I really mention capitalism you will appreciate that I was conducting an if-then type narrative:
IF you don’t like system primarily driven by the needs to make private profit for a small number of people, THEN it is logical that you would suggest changing that system.
Anyone on the Left of politics would agree with that.
I agree with that.
That doesn’t say that the body of knowledge we now know as MMT advocates abandoning the capitalist system. It doesn’t say anything about that – one way or another.
Third, to suggest that anything I said in the podcast could be construed as revealing that the body of knowledge we now know as MMT is essentially concerned with political science is also absurd.
To further understand all this, consider the remarks I made during the podcast on poverty:
A much better way of dealing with that is through employment guarantees …
My view of society is that everybody who can’t work for whatever reason, age, or informaty or whatever is entitled to a guaranteed standard of living by society.
And anybody who can work should be given the opportunity to work by the government in one way or another, either in jobs they can secure themselves through the private sector, or the mainstream public sector, or if that’s not possible, given the circumstances for that individual, they they should always have a guaranteed job in the public sector.
And that, that’s the way, we can resolve poverty rather than allowing or buying into a position where people who are able to work, don’t work and don’t contribute to society and rely on the productive enterprises of others for material goods and services.
Nothing there about advocating abandoning capitalism.
Note that I specifically talk about a mixed economy where jobs are and can be created in various areas of the economy, which by meagre reflection on existing proportionalities, would mean most of them would be created in the private sector.
That doesn’t sound like a rabid call to arms to abandon capitalism.
My actual position on system change was not revealed in that podcast and has nothing to do with MMT anyway.
In any modern monetary system, regardless of the political ideology in place and the ownership rules pertaining to the means of production, the analytical framework provided by MMT would be relevant.
Music – from Canada
This is what I have been listening to while working this morning.
I dug this out of my archives yesterday and I am glad I did. I thought I had lost some records in my travels (moving houses, states, countries etc) but to my surprise the particular ones I was thinking about were there.
Today we have music from the Canadian jazz guitarist – Ed Bickert – who died in 2019.
The defining features of his playing were that he used a Fender Telecaster, which many associate with a rather cutting sound and is used by many country musicians rather than being a mellow jazz instrument.
He did modify the traditional Telecaster though and installed a Gibson Humbucker pickup close to the neck which gave him a really thick sound.
Apparently he eschewed the traditional use of archtopped, hollowbody guitars that were the instrument of choice for jazz guitarists because in his early days he had to make a living as studio musician playing all sorts of music and he found the modified Tele (as a solid body guitar) to be the most flexible.
He also was an expert at harmonisation where he would play a single note motif and then repeat it in harmony form elsewhere on the neck. I learned a lot from trying to replicate this technique.
His work with Paul Desmond in the 1970s, was particularly good in the music they produced. It is where I first encountered his playing and starting collecting his albums.
His most recognisable trio was with – Don Thompson – playing bass and – Terry Clark – on drums.
This group morphed out of the ‘Toronto Quartet’ lead by – Paul Desmond.
In this video, from 1977 apparently, the Ed Bickert Trio has Don Thompson and Canadian drummer – Barry Elmes – starting off playing the song written and made famous by saxophonist – Hank Mobley – “Funk in Deep Freeze”.
The second number in the video is Hoagy Carmichael’s ‘One Morning in May’.
Canada sure had some great players.
Here is an obituary written on March 6, 2019 – Remember Ed Bickert and his Fender Telecaster.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.
This Post Has 15 Comments
Ed Bickert is one talented guitarist.
‘IF you don’t like system primarily driven by the needs to make private profit for a small number of people, THEN it is logical that you would suggest changing that system’. Exactly. And even with the reality of the GFC, lived austerity for an increasing number of ‘developed world’ people and the covid-19 pandemic, it’s incredible how little many of progressive heart don’t want to apply a progressive mind to the reality of capitalism, it’s dependence on government and explore anything but miniscule change. By contrast, neo-liberal rulers, while putting out a conserve and be cautious of change propaganda, are much less afraid of using government to make big interventions masquerading as less regulation which in reality is regulating on the side of existing wealth. Conservative means doing everything to preserve and increase power and wealth. Bill, I think autocorrect fouled up again: ‘installed a Gibson Humbucker pickup on the next..
Thanks for providing the podcast- I thought it was great! And I don’t think you are in much danger of being considered a right-winger anytime soon.
I loved when you brought up the contrast between viewing the economy as something people must always struggle to adapt to and viewing it as something society has constructed to serve people. Of all the many, many things I have learned here on your blog- that is probably the most important and fundamental. It really enabled or caused a shift in how I understand things. Thanks.
JM Keynes, in his 1926 essay on National Self Sufficiency, wrote: “I believe that the cure for these things is partly to be sought in the deliberate control of the currency and of credit by a central institution, and partly in the collection and dissemination on a great scale of data relating to the business situation, including the full publicity, by law if necessary, of all business facts which it is useful to know.” Poor guy, he didn’t have MMT to explain exactly how to do what he desired. But hey, that was almost a century ago. Time to put MMT to work.
As Carl Lewis the Olympic track and field athlete put things: “Any press is good press, so keep on ragging me!”
Apparently, a lot of people, mainly younger still don’t see that their governments, following the wishes of neo liberal ideologues, are making an unstated , therefore undemocratic, yet deliberate, and mean spirited choice when they gear the economy in a way that fails to support full employment within the capitalist framework, so capitalism itself has become the object of ire, and there is a desire by many to see it euthanized.
They are too young to remember or didn’t live in a place that ever had a mixed economy. That in addition to misunderstanding the meaning of Thatcher’s oft repeated phrase “there is no alternative” , which they take as: all the other options were tried and failed, rather than the impudent edict it was and the boldface lie it really is.
🙂 speaking of private sector employment, back in the ’60s and ’70s, Toronto had a booming TV-commercial-jingle industry that employed hordes of musicians. Paid for a lot of musicians’ houses. And when they weren’t recording TV jingles, they did these other beautiful things.
My 11 year old this morning told me that governments “should do communist stuff like make sure animals and humans have a good enough life. But they shouldn’t go around spying on people and locking them up like the Uighurs in China”. Previously she has said “people should all get enough not to be poor but you need to pay people who work really hard a bit more so that they can be bothered to make cool new stuff…”. I think she has pretty much intuitively understood the tensions to negotiate within political-economy around the power of the state and the role of the market, the virtues of competition and collectivism. The mastery of nuance and getting beyond black and white thinking cannot be found in many adult commentators on MMT however. Kneejerk and ad hominem reactions abound. From people who should know better.
Having been on the receiving end of character attacks by psudonymn Twitter accounts that accuse me of all manner of things, I too have to chuckle. Attacks from people who I suspect have economic degrees and have careers at stake.
My prayer these days is that I live long enough to hear “a rabid call to arms to abandon capitalism.” That call can’t come from a lens, of course, which merely shows how capitalism operates. No, the call must come from those who gaze through the lens and are appalled by what they see.
“”I believe that the cure for these things is partly to be sought in the deliberate control of the currency and of credit by a central institution”
Keynes did. Unfortunately it doesn’t work. The “control of credit by a central institution” bit is what became New Keynesianism, and control of currency is what gave use the Eurozone.
Keynes monetary adventures were a dead end, which is why he was moving towards where Lerner was at the time when Keynes died.
Unfortunately Lerner drifted as well to try and remain relevant.
There is a tendency for economists, like politicians, to be weathervanes, not signposts. Like most people they like to be popular, and feted – and then they tone down the difficult things that need doing, and concentrate on the nice stuff.
I had a one time contact with the music of Ed Bickert in the Rob McConnell record “Jive 5”.
It’s mainstream jazz (not to be confused with economics though), halfway between a small group and a big band.
It’s on my favourites list.
The Telecaster is one of the instruments usually played by Mike Stern too and maybe some people dislike it because of the high speeds it can be played (many people kind of get lost in the middle of the torrent, when the player gets too excited – and no one wants to scare listeners).
When accused of “decrepit face” take it as a complement and think of Sir Mick Jagger, who has a face like that but still singing beautifully at 74 and making women go wild. Maybe this is because once attended the conservative LSE and ran away when exposed to neoliberal stuff!
MMT proponents are now in the stage of being fought, having passed successfully the first stage of ignoring. I sense that you MMTers are approaching full speed the next stage of whispered acceptance, and I believe when the next crisis strikes hard the paradigm shift would have shaken the ground of neoclassical macroeconomics.
We the participants in your blog are very fond of you, and grateful for transfusing your immense knowledge and energy to us.
Please keep up with this awesome work, and God bless you!
From the iAfrikan Daily:
“43,0% of young people aged between 15 – 34 years old are not only unemployed according to Statistics South Africa, but they are also not in “education or training.” That’s right, they are not employed as well as not being educated or trained in any skills they can use to be employed in the future.”
“South Africa has a serious youth unemployment problem. Beyond being a problem, it is a ticking time bomb as young able people grow more frustrated with each passing day as they are unable to make ends meet. The data is also quite clear, a lot of the youth do not even complete high school, making them not only unemployed but unemployable.
Thus, as much as South Africa has a youth unemployment problem, the solution is relatively available – get youth to first complete high school and then be equipped with skills they can use to earn a living.
With that in mind, you have to ask: why isn’t the South African government putting all their energy into this?”
Or more importantly why isn’t the South African government guaranteeing everybody a job given they have the currency sovereignty to do so.
The Covid catastrophe was brought about by the U.S. government, not the private sector. The disasters in Iraq and Afghanistan were brought about by the U.S. government, not the private sector. Yet, a number of your “supporters” constantly berate the private sector in favor of the great public sector solution. As I drive around the U.S. I see enormous numbers of signs indicating companies needing to hire workers. Wages are going up. The surge in employment is occurring in the private sector as the U.S. recovers from the government shutdown. For those of your supporters who denigrate the private “capitalist” system in favor of the so called benefits of the government doing everything, I think they have a problem.
Tom Nugent, you are not wrong that the US Government has failed many times. At the same time, at least this reader believes that the government could actually do some things right, and needs to do some things right- and that some of the things it could and should do right can only be done by the government. So we need a better government than what we have had for a long time.