COVID-19 myopia – it actually costs more to have no acute care protocols in place and more people die as a result

I regularly scan research output from disciplines other than economics that I think impacts on economic matters. On April 17, 2024, a new study from medical researchers at the Burnett Institute in Melbourne, working with staff at the Department of Health and Human Services, in Victoria published a pre-print in The Lancet – Admission Screening Testing of Patients and Staff N95 Masks are Cost-Effective in Reducing COVID-19 Hospital Acquired Infections – which continues to show that public health policy in Australia is failing and part of that failure is the myopia that ‘sound finance’ principles engenders. I have written before about this myopia where governments think they need to cut back on spending because they are ‘short’ of funding and end up having to spend more over time because the initial spending cuts cause massive (and predictable) problems. We have seen this phenomenon in many situations (several cases are cited below). This new research puts an end in my view to the debates about hospital and more general health practices in the Covid era and exposes how the lack of political leadership, a refusal to fund public education, and poor hospital practices – mostly due to alleged funding shortfalls – have turned Australian hospitals into death zones. And while the authorities are telling the public they are ‘saving taxpayers’ money’ the reality is that the pubic outlays to deal with the problems they are creating by this austerity will be multiples of what would be required to implement sound policy now and avoid those longer-term problems.

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The green growth paradigm has a long tradition – which has never been supportable

In October 1987, the United Nations published a report – Our Common Future – (aka Brundland Report) which was the work of the then World Commission on Environment and Development (WCED) – that was chaird by the then Norwegian Prime Minister Gro Harlem Brundtland. It laid out a multilateral approach to dealing with climate change and establishing a path to sustainable development (growth). While the Report was published by Oxford University Press, you can access it via the UN – HERE. It is the foundation of the more recent ‘green growth’ and ‘green new deal’ movements that have besotted the progressives in the advanced nations. The problem is that the framework presented implies that we can maintain the capitalist market system with some tweaks and continue prioritising the pursuit of private profit as the main organising principle for resource allocation. I disagree with that approach and my current research is building the case for system change and the abandonment of the ‘growth paradigm’.

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IMF now claiming that Japan has to inflict austerity when the government’s current policy settings a maintaining stability

It was only a matter of time I suppose but the IMF is now focusing its nonsensical ‘growth friendly austerity’ mantra on Japan. In a recent interview, the former Portuguese Finance Minister now in charge of the IMF’s so-called ‘Fiscal Affairs Department’, Vitor Gaspar claimed that Japan is now in a precarious position and must start to impose austerity. Recall last week that I concluded that – The IMF has outlived its usefulness – by about 50 years (April 15, 2024). The current interventions from senior officials such as Gaspar only serve to reinforce that assessment. The problem is that they are still able to command a platform and a significant number of people in policy making circles actually believe what they say. It would be a much better world if the IMF and its toxic ideology and praxis just disappeared off the face of the Earth. Then we could send all the highly educated officials to thought reassignment camps to allow their considerable intellectual capacity to search for cures to cancer or whatever.

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Why is Brussels supporting Ukraine?

It’s Wednesday, and as usual I scout around various issues that I have been thinking about rather than write a consolidated analysis on one topic. Today, I consider the question of why the EU elites are spending billions supporting the Ukraine government against Russia. They claim that Russia poses a major threat to European freedom but given the superior Russian military machine has not taken much territory after 783 days of war I conclude that such narratives are fanciful and deliberately being advanced to hide true motives. I also consider the situation in the Middle East and then offer today’s music segment to restore our peace of mind.

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The IMF has outlived its usefulness – by about 50 years

The IMF and the World Bank are in Washington this week for their 6 monthly meetings and the IMF are already bullying policy makers around the world with their rhetoric that continues the scaremongering about inflation. The IMF boss has told central bankers to resist pressure to drop interest rates, even though it is clear the world economy (minus the US) is slowing quickly. It is a case of the IMF repeating the errors it has made in the past. There is a plethora of evidence that shows the IMF forecasts are systematically biased – which means they keep making the same mistakes – and those mistakes are traced to the underlying deficiencies of the mainstream macroeconomic framework that they deploy. For example, when estimating the impacts of fiscal austerity they always underestimate the negative output and unemployment effects, because that framework typically claims fiscal policy is ineffective and its impacts will be offset by shifts in private sector behaviour (so-called Ricardian effects). That structure reflects the ‘free market’ ideology of the organisation and the mainstream economic theory. The problem is if the theory fails to explain reality then it is likely that the predictions will be systematically biased and poor. The problem is that the forecasts lead to policy shifts (for example, the austerity imposed on Greece) which damage human well-being when they turn out to be wrong.

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Book review: Fiat Socialism by Carlos García Hernández

When I was in London recently, I caught up with my good friend Carlos García Hernández, who is a Spanish radical and has a book publishing business – Lola Books – in Berlin, which publishes in English, German, Spanish and Italian. He gave me a copy of his own recently published book (2023) – Fiat Socialism – to read on the way home. It carries the sub-title ‘Achieving the goals of socialism through modern monetary theory’. I promised him that I would write some comments about it once I had taken it all in, even though I had read and sent him comments on earlier drafts. So today that is what I am going to do. At the outset, it is an important book because it addresses many of the misconceptions that Marxists and socialist-leaning people have regularly demonstrated about Modern Monetary Theory (MMT). I am in accord with much of the content but depart critically from his endorsement of nuclear energy as a solution to the climate crisis.

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Rinse and repeat – Truss chaos – the new benchmark

For years, those who want selective access to government spending benefits (like the military-industrial complex and other parasitic sectors), while claiming the government cannot afford to provide adequate income support to the most disadvantaged citizens have used various ruses to give an air of authority or legitimacy to their claims. So in the UK, the lie in 1976 by the then Labour government that it was going to have to borrow from the IMF to stay solvent has been regularly wheeled out. In Europe, it was the ‘tournant de la rigueur’ (austerity turn) introduced by the French government of François Mitterrand in 1983 that effectively cancelled the commitment to the progressive – Programme commun – that is often cited as a demonstration of the limited capacity of governments to resist the global power of the financial markets. The fact that it was progressive governments that instigated these events made it more emphatic – the Left essentially swallowed the fictions introduced by the Right and the corporate elites that governments were now powerless against the power of the financial markets. The macroeconomic contest was essentially ceded to the conservatives and it has been that way since. There is now a new ruse that the elites are using that the progressives are also spreading – the Liz Truss Ruse. This apparently tells us that governments must appease the financial markets or face currency destruction and rising bond yields. Like its predecessors, there is no validity to the claims. But the Left is so bereft that it cannot see through the smoke and mirrors. And that is why the world is in the parlous state that it is – the contest of ideas is non-existent. It is a case of rinse and repeat – except all is happening is lies and posturing is being recycled.

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Claims that mainstream economics is changing radically are far-fetched

I have received several E-mails over the last few weeks that suggest that the economics discipline is finally changing course to redress the major flaws in the curricula that is taught around the world and that perhaps Modern Monetary Theory (MMT) can take some credit for some of that. There has been a tendency for some time for those who are attracted to MMT to become somewhat celebratory, even to the point of declaring ‘victory’. This tendency is not limited to the MMT public who comment on social media and the like. My response is that we are probably further away from seeing fundamental change in the economics profession than perhaps where we were some years ago – after the GFC and in the early years of the pandemic (which continues). My answer reflects the incontestable fact that the make up of faculties within our higher education systems has not changed much, if at all, and the dominant publishing and grant awarding bodies still reflect that mainstream dominance. There is still a lot of work to be done and a lot of ‘funerals’ to attend (à la Max Planck).

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Latest US inflation data is no cause for alarm – the trend is down

It’s Wednesday and I have looked at the US CPI release overnight that has set alarm bells off in the ‘financial markets’ and among mainstream economists. My assessment is that there is nothing much to see – annual inflation less volatile items is still falling and the lagged impact of shelter (housing) is still evident even though that component is also in decline. I also examine an argument that the trend towards increasing self-reliance among nations is likely to precipitate renewed global conflict. My own view of this trend is that it must accelerate to allow us to shift to a degrowth trajectory. And I finish with some fine concertina music.

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Not trusting our political class is no reason to avoid introducing progressive policies

There is a consistent undercurrent against Modern Monetary Theory (MMT) that centres on whether we can trust governments. I watched the recent Netflix documentary over the weekend – American Conspiracy: The Octopus Murders – which reinforces the notion I have had for decades that there is a dark layer of elites – government, corporations, old money, criminals – that is relentlessly working to expand their wealth and maintain their power. Most of us never come in contact with it. They leave us alone and allow us to go about our lives, pursuing opportunities and doing the best we can for ourselves, our families and our friends. But occasionally some of us come into contact with the layer and then all hell breaks loose. The documentary started with a journalist being killed because he had started penetrating an elaborate conspiracy which began with the US Department of Justice stealing software from a company and then multiplied into money laundering scams (Iran contra), murder of various people who got in the way, and went right up to Ronald Reagan, George Bush and other senior politicians. It was a sobering reminder. I will write more about this topic in the upcoming book we are working on (with Dr L. Connors) but I was reading some articles over the weekend (thanks to Sidarth, initially) about the way the MGNREGA in India, which is a public job guarantee-type scheme has been corrupted as the ideology of the government shifted and it bears on this question of trust.

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Apparently the bond vigilantes are saddling up – on their ride to oblivion

When I was in London recently, I was repeatedly assailed with the idea that the Liz Truss debacle proves that the financial markets in Britain are more powerful than the government and can force the latter to comply with lower spending and lower taxes. It seems the progressives have a new historical marker which they can use to walk the plank into conservative, sound finance mediocrity. For decades it was the alleged ‘IMF bailout of the Callaghan government in 1976’ when Chancellor Dennis Healey lied to the British people about running out of money and needing IMF loans to stay afloat. They, of course, never needed any loans but Healey and Callaghan knew the people wouldn’t know that and they used the fiction as a vehicle to keep the trade unions in a subjugated position. That lie has resonated for years and has been a principle vehicle for those advocating smaller government, more privatisation, and more handouts to the top-end-of-town while at the same time cutting welfare payments to the poor, killing the national health system, degrading public utilities, transport and education and all the rest of it. Well now that gang, which now rules the Labour Party in Britain has a new fiction – the ‘Truss surrender to the markets’. And the logic is spreading elsewhere with lurid claims emerging that the so-called bond vigilantes are saddling up to force the US government broke.

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Moving to a sustainable system of food production within a degrowth paradigm

I read an interesting report in the last few days – The Economics of the Food System Transformation – published on January 29, 2024 by the – Food Systems Economics Commission (FSEC) – which “is a joint initiative that brings together 21 commissioners from 19 global institutions”. The topic is very relevant to research I am engaged in at present as part of my upcoming book release on Degrowth and Capitalism. It is also relevant to my lived experience which I will briefly touch on.

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Lower British fiscal deficit gives the central government no more or no less capacity to net spend to reduce unemployment

It’s Wednesday and I am bound for London later today. We will see how that turns out having not travelled there since the beginning of the pandemic. I will take plenty of precautions to avoid Covid. But it will be good to catch up with friends in between several engagements, including my teaching responsibilities at the University of Helsinki, which I have been acquiting for the last few years via Zoom. Today, I reflect on the latest public finance data released by the British Office of National Statistics which shows the fiscal deficit is smaller than expected. Even progressive journalists have written this up as providing more scope for pre-election largesse to be provided. The fact that the fiscal balance is lower provides no more or no less scope for the government to net spend. The relevant questions that should be answered before such an assessment can be made are ignored by the journalists, including the fact that the unemployment rate is rising and the supply-driven inflation is falling fast. After some announcements of events in London and Europe, we have some violin music to end today’s post. There will be no blog post tomorrow as I will be in transit.

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British Labour Party running scared of the usual shadows

This is an election year in the UK and unless something dramatically changes, the Labour Party will be in power for the next term of Parliament and will have to manage a poly crisis that they will inherit from 40 or more years of neoliberalism. Note, I don’t confine the antecedents to the Tory period of office since 2010 because the decline started with James Callaghan’s Labour government in the 1970s and then just got worse during successive periods of Labour and Tory rule. During that long period, there has been no shortage of economists and public officials predicting that the financial markets would soon reap chaos as a result of the public debt levels being ‘too high’ (whatever that means). The most significant chaos came in 1992 when Britain was forced out of the European exchange rate system, which it should never have joined in the first place. While all these economists are now pressuring the likely next British government to pull back on their promises to ‘assuage’ the financial markets, there is not even a scintilla of evidence to support their predictions of doom. And the Labour party leaders are too stupid to realise that.

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Australian inflation rate falls sharply as supply pressures ease

Today’s post is a complement to my post on earlier this week – So-called ‘Team Transitory’ declared victors (January 8, 2024). Yesterday (January 10, 2024), the Australian Bureau of Statistics published the latest – Monthly Consumer Price Index Indicator – for November 2023, which showed another sharp drop in inflation. The data are the closest we have to what is actually going on at the moment and it is clear that the falling inflation that began in September 2022 is continuing at a fairly brisk pace. The annual rate is now down to 4.3 per cent from 4.9 per cent in October 2023. The main driver of inflation over the last few years has been fuel prices and automotive fuel inflation has fallen from 19.7 per cent in September 2023 to 2.3 per cent in November 2023, due to global factors quite independent of domestic monetary policy. In fact, as the time passes we get a much clear reinforcement of the transitory narrative driven by supply factors rather than demand factors. This narrative has also been given weight by a recent research paper from the ECB – What drives core inflation? The role of supply shocks (published November 13, 2023). Overall, the data is now exposing the folly of the New Keynesian macroeconomic policy approach which prioritises monetary policy as the counter stabilising tool and has considered the inflationary episode to be due to excessive government spending.

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GIMMS London Event – Friday, January 26, 2024

As I previously indicated I am returning to Europe and the UK in a few weeks for the first time since the Covid pandemic began. I will provide further details in due course, but for now, here is a link to the first event I will be speaking at in London on Friday, January 26, 2024 that is organised by the wonderful women from GIMMS. See over for details and how you can get tickets to the event.

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No discernible negative Brexit impact on British tourism so far

If you cast your mind back to 2016 and after in Britain, there were a series of shock horror predictions being made about the impact on the nation of leaving the European Union. The scaremongering didn’t dissaude the voters and the Referendum was determined in favour of leaving. It seems I lost some friends as a result of my support for the Yes vote – although in saying that one has to question the basis of the relationships in the first place. Most of the doomsaying predictions have not materialised although it is very hard to conduct research convincingly on this topic given that the Tory government has been so incompetent and that the World has lived through one of the greatest disruptions in human history (aka Covid). But I was looking at the most recent data released by the British Office of National Statistics on December 19, 2023 covering – Overseas travel and tourism, provisional: September 2023 – and it reminded me of the predictions that tourism from Europe would collapse and British people would find it hard having holidays on the Continent after Brexit. The data says that the prediction was like many – guff.

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The shift to the Right among the weak and powerful is a sign that mainstream economic thinking has failed

The – Australian Election Study (AES) – is the “leading study of political attitudes and behaviour in Australia” and has been running for 35 years. It provides a great time series for investigating electoral trends. The most recent analysis covers the period of the most recent federal election (May 2022). The data shows that Labor Party, which is currently in government has dramatically lost primary vote support over the period covered by the data and in particular among the younger voters. A similar trend is observed for the Coalition conservative parties. There is also strong evidence that ‘rusted on’ is no longer a thing among young voters. The proportions of ‘lifetime voting’ for either major party has fallen dramatically. While the Greens have benefitted from this shift in young voting patterns, there is evidence, which is also resonating globally, that young people are increasingly being attracted to what we term ‘far right’ political voices. That is, where the organised Left has failed. Young progressive minds are deserting the traditional progressive political institutions. Part of this reflects the failure of mainstream economics. The other part reflects the insecure being lured by influential characters who are increasingly embracing right agendas (for various reasons).

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Central banks and climate change

Today, I discuss a recent paper from the Bank of Japan’s Research and Studies series that focused on how much attention central banks around the world give to climate change and sustainability and how they interpret those challenges within their policy frameworks. The interesting result is that when there is an explicit mandate given to the central bank to consider these issues, the policy responses are framed quite differently and are oriented towards solutions, whereas otherwise, the narratives are about how climate change will impact on inflation. In the latter case, the central banks do not see their role as being part of the solution. Rather, they threaten harsher monetary policy action to deal with inflation. I also consider the most recent US inflation data. Finally, some live music from my time in Kyoto this year.

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Prosperity of Australian households going south, while Keir Starmer praises Margaret Thatcher

I am covering a few topics today, given that I used yesterday’s post space to analyse the national accounts release. There is a further point I wish to make about the latest national accounts data. A focus on real household disposable income shows the full extent of the impacts of monetary policy (rate hikes) and fiscal policy (tax bracket creep) on household prosperity. The Australian government is overseeing one of the largest falls in household prosperity in recent history aided and abetted by the RBA. And the only thing the Treasurer has announced this week is his intention to alter the RBA Act to rescind his power to change monetary policy if it acts against the national interest. Meanwhile, the British Labour Party leader was out there praising Margaret Thatcher and equating her shock therapy to his own purges within the Labour Party of anything that resembles a progressive voice. After all that, I have some spiritual jazz for our listening pleasure.

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