Australia – inflation still falling while the RBA governor keeps inventing ruses to keep hiking rates
It's Wednesday and there is a lot going on in the data release sense -…
It’s Wednesday and I load up other things to do on this day and thus write less here. I also am in the process of moving offices at the University – and after some 18 years in different locations, I am now returning to the Social Sciences Building where I first had an office when I came to the University from Adelaide. Which feels sort of okay, given by opposition to economics being treated as a business discipline. But thanks to a deal I made with the University in 2007, my research centre left the ‘business faculty’ and went out on our own. Hence, my office doesn’t have to be with the other economists, which I am happy about. This morning, I read the most stupid thing I think one could ever read about economics. It came from a UK Guardian article (December 14, 2021) – Sunak warns over multibillion cost of booster programme – where the Chancellor basically disqualified himself from office. Once we get through the trauma of that sort of news, I promise there is some great music to finish with.
I read a lot of stupid things about currencies, government policy, economic theory and that sort of stuff.
On a daily basis, I am assailed with nonsense parading as expertise.
But this morning I read the most stupid statements this year.
The UK Guardian article (December 14, 2021) – Sunak warns over multibillion cost of booster programme – tells us that the Chancellor thinks the advice coming from the UK Department of Health about the need for regular booster vaccine shots will be too expensive and require offsetting spending cuts and/or tax rate increases.
He apparently told NHS officials that:
These doses do not grow on trees.
Well he got that right.
They are produced in some laboratory.
But to introduce into the public debate the idea that the British government cannot afford an extra £5 billion a year in the currency it issues in order to save lives and prevent the health system being overwhelmed is a step to far in the ‘sound finance’ idiocy.
The only ‘cost’ of the vaccines are the actual labour and raw material inputs involved in production.
Whether this number is £5 or £50 billion is not the point.
Those sort of numbers are just entries on a bit of paper.
The true cost can only be measured in real resource terms not numbers in fiscal accounts.
If we dig a bit deeper we realise that the vaccine companies, Pfizer, Moderna etc are making big profits from the government contracts.
What Sunak should be saying is that the British government will only pay resource cost for the supply, which would take the profits out of the equation.
He should also be lobbying other advanced nations to eliminate the patent on these vaccines so they can be distributed for free around the world.
Pfizer and Moderna are both pushing up their profit margin as governments queue up to get booster shot supply.
The pandemic is far from over and the only thing between getting through it as best we can and total chaos is government support.
Once governments start, either, imposing a user-pays mentality on vaccine access, or, cutting spending elsewhere to ‘pay’ for the vaccines, we are on the slippery slope to chaos.
I have been asked why I haven’t responded to the Das article in the UK Guardian.
That article reeks of incompetence and untruths.
For example, where has any credible Modern Monetary Theory (MMT) economist ever advocated a UBI.
I suspect he read Mankiw’s attempt at a put down last year who made a similar false assertion about MMT and UBI.
Anyway, I wrote to the UK Guardian editors (the article was sourced out of the Australian office) requesting the right to reply.
They didn’t even have the decency to respond to my E-mail.
That is why I haven’t responded to the article in any way to date – I was waiting for them to open the door.
I noted last week that we would probably be able to offer the edX course – Modern Monetary Theory: Economics for the 21st Century – again in early 2022.
I can now confirm that that will happen and the 4-week course will commence on Wednesday, February 9, 2022.
I expect enrolments will open in early 2022.
The course is free and there are no enrolment limits.
The first offering had around 3,600 participants.
We have also improved security this time to filter out trolls – a few gave us a lot of trouble last time and were not intent on learning. All they wanted to do was destroy and undermine the educational experience for others.
I will post more details of enrolments once they open at edX.
On other – MMTed news, we are nearly finished with the production of a short course on Monetary Sovereignty which we had hoped to offer before the end of the year but it will now come out early 2022.
It will be a week-long course only (compared to the 4-week edX course) and we might be able to offer it in March to follow up on the edX course.
More details when I know them.
We continue to thank very much those who have provided financial support for MMTed. Your contributions are really appreciated.
If anyone else wants to help out so that we can get material out more quickly please send me an E-mail.
This is what I have been listening to while working this morning.
When I was very young, the sounds of – Bobby Womack – were everywhere although most people would not have associated them with him.
He was a master guitarist in the soul tradition, song writer, and producer and he was the backing guitarist for Sam Cooke.
Some of his songs are legend – for example, the Rolling Stone’s first UK hit – It’s All Over Now was written by him.
He grew up in abject poverty in a religious household and he played in the family band – the Womack Brothers – from 10 years of age.
A bit later (in the mid-1960s) after a move to Memphis, he teamed up with Wilson Pickett and wrote some of that singers best songs.
A huge presence – his guitar style was one of the few that shaped the way R&B and soul guitarists played. I learned a lot by listening to his phrasing and patterns.
This song – I’m in Love – was written by him in 1968 and first recorded by Wilson Pickett in that year.
It was written to counter the critics who were unhappy that he married Sam Cooke’s widow soon after Cooke was killed.
In 1974, Aretha Franklin recorded the song with great success.
This version was released on a 1969 Bobby Womack album – Fly Me to the Moon – which is one of my favourite albums.
Appearing on the song are the – Memphis Boys – which were studio players at the American Sound Studio in Memphis:
1. Bobby Womack – vocals, guitar.
2. Bobby Emmons – organ.
3. Reggie Young – guitar.
4. Mike Leech – bass.
5. Bobby Wood – piano.
6. Gene Chrisman – drums
A fabulous song and some of the sweetest guitar riffs you can play.
Jimi Hendrix was clearly influenced by Bobby Womack’s playing – all those double stops and 6ths that you hear in this song were taken to a new level by Jimi Hendrix.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.
This Post Has 8 Comments
Both the Graun and the Independent are not members of any press regulator (along with the Financial Times).
The Graun is, in the words of the immortal Jim Hacker, read by people who think they ought to run the country, and the FT by the people who own the country.
But importantly they don’t believe they should be answerable to anybody else for their thoughts or actions. One of the reasons they are such big fans of the EU.
Given that BoE Asset Purchases (QE) entirely equal the UK Government’s net cash requirement, the response to the pandemic has not “cost” the UK anything at all in money terms, and to imply otherwise, as the UK Chancellor does, is an outright lie
Plenty of blood, sweat and tears have been spent by healthcare and key workers, and whoever has been kept busy typing numbers into a BoE computer, but that’s another story.
Glad you drew attention to the ‘doses not growing on trees point’; that was the only bit Sunak got right, albeit unintentionally.
“You can only have the vaccine boosters if you pay more tax”
Bill, there is no additional ‘c’ in Sunak, as spelt in your headline. Might I suggest you save it to re-use in another word that appropriately describes him?
I saw the headline yesterday, but didn’t bother to read. Posted with the comment that RishiRich just ruled himself out of the leadership contest.
We’re stuck with the tories for at least another 5 years because Doris is toast, they’ll get a shiny new leader, then call an election before the s**t hits the fan. It’s unbearable here.
“The pandemic is far from over and the only thing between getting through it as best we can and total chaos is government support.” YES. Although the pandemic has brought misery and hardship to so many, has it not also brought home, to thinking people, the indispensable role of government as the only thing, in a crisis of this magnitude, which stands literally between life and death? And is it not the fundamental mission of MMT to (1) restore the legitimacy and necessity of government (reclaim the state), and (2) reveal its immense agency (constrained only by resources) to meet pressing needs unmet by the private sector? The pandemic, for all the suffering it has brought and continues to bring, is a more effective teacher of this two-fold truth than any economic or political argument.
It is the equivalent of brainwashing ( nudging) their readers to believe that debt fueled bouts of asset price increases have NEVER happened when interest rates have been high. That it is simply a low rate phenomenon.
Months they have been trying to make this sink in. Unfortunately, many have been taken in by the Orwellian trap.
When all you have to do is go to the trading economics website and look at the real data graphs. The facts not the fiction. Quickly release bouts of asset price inflation has happened thousands of times when rates have been high. That it is not a low rate phenomenon.
That it is merely a policy failure not a market one.
Bank lobby TV and the bank lobby press at its finest. Lie to the public and convince them black is white and white is black.
Re: ‘the Chancellor basically disqualified himself from office.’ If only. And if only we could say the same for the other detestable Cons. who could replace the buffoon. And those opposite who basically go along with this nonsense. What gets me more than the neo-liberal parties’ propagandists pumping out this rot, is the ‘intelligent’ press repeating it without calling it out as rot. Therein we see the joint interest and groupthink which binds them as the Establishment and rules out any critical thinking, in the face of the two massive government interventions of recent years which have kept economies afloat with zero future overhang.
Small beer (can of Fosters?) by comparison, but selling off the UK’s Vaccine Manufacturing and Innovation Centre is still very stupid.
“The government has put at least £215m into the project through UK Research and Development, a state funding agency, and could now look to recoup some of that investment through the sale process.” – https://weownit.org.uk/act-now/stop-vaccine-research-centre-sell-off
Richard Burgon MP @RichardBurgon:
The Financial Times says that while he was in California this week Rishi Sunak failed to attend a roundtable discussion with the UK hospitality sector. Treasury insiders said – and I kid you not – that the meeting clashed with a scheduled call with *US healthcare bosses*.
Rishi Sunak is on a mid-December working trip to sunny California. Which – as luck would have it – is where he happens to own a luxury beachside house, which is just one of his 12 homes.