The title is my current working title for a book I am finalising over the next few months on the Eurozone. If all goes well (and it should) it will be published in both Italian and English by very well-known publishers. The publication date for the Italian edition is tentatively late April to early May 2014.
The title is my current working title for a book I am finalising over the next few months on the Eurozone. If all goes well (and it should) it will be published in both Italian and English by very well-known publishers. The publication date for the Italian edition is tentatively late April to early May 2014.
The title is my current working title for a book I am finalising over the next few months on the Eurozone. If all goes well (and it should) it will be published in both Italian and English by very well-known publishers. The publication date for the Italian edition is tentatively late April to early May 2014.
The title is my current working title for a book I am finalising over the next few months on the Eurozone. If all goes well (and it should) it will be published in both Italian and English by very well-known publishers. The publication date for the Italian edition is tentatively late April to early May 2014.
The title is my current working title for a book I am finalising over the next few months on the Eurozone. If all goes well (and it should) it will be published in both Italian and English by very well-known publishers. The publication date for the Italian edition is tentatively late April to early May 2014.
Last week, the Holden Motor Car Company, a division of General Motors announced it was intending to close its Australian operations down in 2017 after having operated on a continuous basis in one form or another since 1856. The decision has led to outbreaks of nostalgia, worries about our national identity (since when has a national identity been tied up with a foreign-owned capitalist firm?), and calls for more government subsidies to the industry that has been in decline for years. The problem is that thousands of jobs are directly and indirectly impacted by the closure (although there are some years before the full brunt will be experienced) and that is an issue that the government has to manage through appropriate policy interventions. The real issue is that the current thrust of aggregate (macroeconomic) policy does not provide one with much confidence that the government will introduce appropriate responses to the closures. I offer some thoughts by way of an introduction in this blog.
When the Committee on Economic and Monetary Affairs (ECON) of European Parliament considered the 2012 Report from the European Central Bank, the Rapporteur of the Committee and Deputy President of the EP, Gianni Pittela tendered the – Draft Report – on June 11, 2013. The ECB presented its – Annual Report 2012 to the Committee on April 24, 2013. The ECB is accountable to the EP and this Committee was exercising its political functions under that relationship. Under the heading Monetary Policy, the draft report contained two interesting items (9 and 10). By the time the amendments were finalised you learned a lot about politics in Europe and why the current system is unworkable.
Today our research centre – Centre of Full Employment and Equity – which is known as CofFEE, released the second version of our – Employment Vulnerability Index – which is an indicator that identifies the localities (medium-sized areas) in Australia that are most vulnerable to job losses when economic activity declines. The Australian labour market has not recovered the ground it lost in the downturn associated with the Global Financial Crisis. After showing signs of recovery as a result of the fiscal stimulus in 2009-10, the fiscal austerity that the Federal government imposed as it obsessively pursued a budget surplus has caused us to lose all the gains that were made. The Government failed in its quest because it overestimated the strength of private spending (which is still very flat) and its deficit was too low anyway when it started its austerity push. The new Federal government is finding out that all its tough talk before the September election about delivering bigger surpluses than its predecessors is just hot air and the slowing economy is pushing the deficit higher not lower. In this environment, the labour market is precariously balanced and likely to continue to deteriorate. The EVI provides a guide to where the on-going job losses are likely to be across the urban and regional space.
There was an article in the Atlantic yesterday (November 5, 2013) – How Washington Is Wrecking the Future, in 2 Charts – which reports in a related article in the UK Financial Times (November 3, 2013) – US public investment falls to lowest level since war. The essence of the articles is that the political landscape in the US has undermined the US President’s plans to spend more of public “infrastructure, science and education” which will undermine the future growth potential and prosperity of the US economy. A Bloomberg article (November 6, 2013) – Don’t Blame Congress for Cutbacks in Public Investment – criticised both analyses on the grounds that the cutbacks are relatively small and the culprit is state and local government in the US rather than the federal government. There is truth in both sides but neither really grasps the nettle and considers the cutbacks in government spending in the context of what is going on in the non-government sector. The cutbacks in public spending in the US over the last three years are unnecessary (financially) and the fiscal drag is keeping unemployment high and increasing the poverty rates.
I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to publish the text sometime in 2013. Our (very incomplete) textbook homepage – Modern Monetary Theory and Practice – has draft chapters and contents etc in varying states of completion. Comments are always welcome. Note also that the text I post here is not intended to be a blog-style narrative but constitutes the drafting work I am doing – that is, the material posted will not represent the complete text. Further it will change as the drafting process evolves.
At the weekend I watched Ken Loach’s latest film (documentary) – The Spirit of ’45 – which was a classic – interesting and disturbing. After watching it I cannot understand how anybody could not achieve a score somewhere well into the south-west quadrant of the – Political Compass. It emphasised how societal values have changed and undermined the collective will that emerged in the early Post World War 2 period which garnered the political process into delivering structures that would never again see the mass unemployment and hardship that the Great Depression created. It was a hopeful period and politicians reflected that hope and acted as a mediating force in the underlying class conflict between workers and capital. The film traces how that “spirit” has broken down and what is required to once again make economies work for people rather than subjugating the needs of people to the economy – which really means allowing a small proportion of people to extract the benefits arising from the hard work of the rest of us. The film influenced today’s blog.
Over the weekend, I was reading the new report from the British Social Mobility and Child Poverty Commission – State of the Nation 2013: social mobility and child poverty in Great Britain – which has just been presented to the British Parliament (October, 2013). The conclusions from the Report are not good. They find that the “falls in poverty seen over the last 15 years may be be reversing” and that “(a)bsolute poverty is rising”. The UK will likely miss its “2020 target to end child poverty”. The other shocking statistic is that poverty rates among those who work are rising and “(t)wo in three poor children are now in families where someone works”. There are now “5 million adults and children in working poor households” in Britain. This puts the skiver/bludger/welfare criminal narrative that the neo-liberals in Britain have been running into a different light. It cannot be said that workers are skivers – they get up in the morning (or sometime) and sacrifice the best part of their lives working for some capitalist or another. They are increasingly getting paid such that they cannot live above the poverty line. That is a failed state if ever there was one.
So the American conservatives wimped out again after a month or so of mindless bluster and hot air. The only problem is that their posturing, in itself, causes damage to the economy. It’s interesting that the conservative economists keep harping on about their belief that the existence of a budget deficit causes uncertainty among private firms who are then reluctant to invest because they fear higher tax rates to pay back the deficit. While this flawed narrative is not theoretically robust, defies history, and is empirically bereft, uncertainty is a problem for firms and the ridiculous behaviour of the American conservatives in the Congress in recent times has dramatically increased it. The world is moving now into a second phase of the retrenchment of the state. The first phase required the neo-liberals to redefine the crisis, which was clearly an issue of excessive private debt, as crisis of sovereign debt. They have been successful in achieving this step. Our ignorance and obsequiousness has allowed this mindless narrative to dominate the public debate. The second phase is now well underway way where the victims of the austerity become the focus of attention for the Conservative politicians. The unemployed are vilified as lazy and welfare cheats (their benefits are targeted – for example, in Ireland now); single mothers are accused of strategic pregnancies; and the old furphy – benefit migration – is wheeled out into the public debate to engender an increasing resentment of the presence of ethnic minorities who is simply trying to do what all of us want – to improve the lives of their families and themselves. All of these campaigns are designed to divide and conquer the populace, segment this into conflictual factions (“them and us” mentality), and justify further unwarranted cuts to government spending.
I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to publish the text sometime early in 2014. Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.
The UK Chancellor George Osborne told the delegates at the 2013 Conservative National Conference in Manchester yesterday that he was ending the culture of getting “something for nothing”. In his – Speech – the Chancellor claimed that “no one will get something for nothing” from now on, in reference to the “Help to Work” program, dubbed a new approach, that would see “(f)or the first time, all long term unemployed people who are capable of work will be required to do something in return for their benefits, and to help them find work”. We should immediately challenge the claim that the unemployed are doing nothing. An appreciation of the function that unemployment buffers plays in the capitalist system would tell one that the people who are forced to be in that buffer are certainly very active and protect the rest of us from the damaging consequences of poorly crafted macroeconomic policy. But beyond that, the evidence is clear – workfare schemes are not effective ways to provide pathways to more permanent employment. They are poorly disguised compliance programs designed to let the most disadvantaged workers in our society know that we resent their existence and, like the usurer in the Merchant of Venice, we want our “pound of flesh” in return for the pittance we provide by means of income support. These programs shine a dirty light on how mean-spirited and ignorant we are – in believing that mass unemployment is anything other than a systemic failure of the economy, in the face of deficient aggregate spending, to produce enough jobs and working hours. They are the means by which we indulge in our neo-liberal delusions – until, of-course, the times comes for you or I to face the sack next!
Metaphors! They are more than a fancy way of emphasising some point – that is, their power goes beyond meagre linguistic construction. The research suggests they are part of our deep mental or neural capacity, which we draw on to sort out facts and ideas. They are conceptual devices intrinsically linked to the way we think abstractly. Metaphorical language reinforces our ideology (worldview) and so it is no surprise that political parties have become very interested in framing their messages using simple and common metaphors which resonate with the way we feel about things. George Lakoff, a cognitive linguist, considers we do not make our political choices on the basis of rational dissection of competing facts and arguments but rather respond to central (or grand) metaphors with reinforce our worldview. We thus consider facts or argument within that framework of thought. I am doing a bit of work in this area as a way of understanding why central Modern Monetary Theory (MMT) propositions (which are so patently obvious and have strong explanatory capacity) evade acceptance among people, even those who express liberal perspectives (in this context meaning – are open to new ideas).
Here are the answers with discussion for yesterday’s quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
Japanese economist Richard Koo recently (July 9, 2013) published his latest report on the world economy – Japan, US, and Europe face different issues – which updates some of the latest data available from the economies listed in the title. I am sorry that I cannot link to the Report as it is a subscription service (thanks to Antoine for my copy). I discussed some of Richard Koo’s ideas and how they sat with Modern Monetary Theory (MMT) concepts in this 2009 blog – Balance sheet recessions and democracy. While the basic concept of a balance sheet recession is important to grasp and the policy prescriptions that flow from it clearly point to the need for more fiscal stimulus, once you dig a little deeper into Koo’s conceptual framework you realise that he is very mainstream – more insightful than the average mainstream economist, who typically fails to even grasp the reality of the current situation, but mainstream nonetheless. And that means there are some things in his theoretical framework that are plain wrong when applied to a modern monetary economy
I wrote about the way the recent neo-liberal narrative in the UK, that constructs the unemployed as gaming the income support system and about how they need to be weeded out by harsher activity tests etc, is a theme Australians will be familiar with in this blog – The victims become the perpetrators – the neo-liberal smokescreen. The discussion touched on the way we abstract from the human suffering that accompanies mass unemployment and how the dominant paradigm seeks to construct the unemployed as an “Other” different to ourselves and accountable for their own state. Unemployment is not seen as a violent act deliberately perpetrated by us (through the agency we give our governments – the “mandate”) but rather as a chosen outcome, a rational end of an informed choice. Perhaps not one we would take ourselves but rational nonetheless and therefore of no further concern. I have been reading some relatively oblique philosophical literature lately centred on conceptions of ethics and the way historical temporality forces us to take a moral perspective whether we like it or not – that is, denial of past action is a particular moral perspective. It bears on some work I am doing in remote Indigenous communities in the Northern Territory at the moment as well as broader debates that exist in society. Here are some notes and thoughts that arise from this sort of reading and reflection.
The latest Eurostat public finance data for Europe on July 22, 2013 – Euro area government debt up to 92.2% of GDP demonstrates the failure of the Euro policy agenda on its own terms. It is clear the indecency of the policy elites is reflected in the way they use nomenclature. Massive rises in unemployment and poverty is called modernisation or labour market reform. The argument bifurcates at that point. How can you argue with someone who thinks like that? But we all know what a financial ratio is. They are without nuance. A public debt ratio is what it is. And when the leaders say they are doing everything they can to reduce them and the cost all this “modernisation” is a price worth paying to reduce the public debt ratios we can conclude that they are failing if the debt ratios continually rise as they impose harsher austerity (sorry, increase the degree of modernisation). That is what the hard numbers are shouting. And that means that someone in Europe should just blow the whistle and call time is up and get rid of the whole swathe of policy leaders.