Here are the answers with discussion for this Weekend’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.
Sometimes there is clarity. Like when the Koch brothers-funded report on US health care came up with the ‘wrong’ conclusion – that is the right conclusion – $US2 trillion dollars worth of right conclusion. And like when a hard-core German economist breaks ranks and lays out the case for scrapping the Eurozone. Clarity. In the past week there have been some notable contributions to the debate about the viability of the Eurozone. Two German academics, coming from opposite directions, basically reach the same conclusion – the EMU is dysfunctional and prone to crisis and poor outcomes. And then in the same week, a third German, an economist basically breaks ranks with the Europhile reform lobby (neoliberal though it is) and sets out in fairly clear terms how the distrust between Member States is so high that reforms will always be cheated on and the intent derailed. He opposes the creation of a federal fiscal capacity because weak nations would overstate the extent of recession to get more money. Further, more money would be forthcoming to these nations as a perverse ‘reward’ for failing to deregulate their labour markets. His arguments demonstrate without doubt why functional reforms will not be possible in the EMU. It is time (way past that) to dissolve the disastrous experiment in an orderly manner.
Here are the answers with discussion for this Weekend’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.
After my day in the sun as a poet, I am back to being an economist. I have been researching operational issues relating to how a society can take back control and Reclaim the State, as part of the work I am doing for our follow up book (with Thomas Fazi) that I hope to get out next year sometime. The current book Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017) is very conceptual. The Part 2 follow up will be conceptual in part but also operational. How to do it rather than what needs to be done. More specifically, I have been examining public procurement policies and how they have been captured by neoliberal interests to benefit capital at the expense of broader objectives (regional development, skill development, productivity growth, investment, employment, wages growth, etc). Over the last 3-4 decades, the way governments spend their money (contracting etc) has changed dramatically and governments have been bullied into acting as if they are ‘profit-maximising’ firms with no other agenda when making multi-billion dollar market purchases. However, in Britain this might change if British Labour are elected. Jeremy Corbyn announced this week that he was going to dramatically change the way the British government spends if he is elected. His ‘Build it in Britain’ strategy will scrap the narrow, neoliberal approaches to public procurement policies and instead use the spending capacity of government to advance broader goals. So while it might end up that a contract to a local firm requires higher government outlays, if that contract also delivers other benefits to the nation (as above) then the local firm would not be disadvantaged. Under the current ‘value for money’ hype local firms cannot ‘compete’ in many cases and these broader benefits are thus not generated. I see the ‘Build it in Britain’ strategy as an exercise in sensible logic and a major statement that the neoliberal command on British Labour is in retreat – for now anyway.
You know, an Italian won the British Open golf championship yesterday (the first Italian to ever win a golf major) because of the uncertainty surrounding Brexit negotiations. The causality is impeccable. I am sure about that, although it might take me a while to work it out. But if a British golfer cannot win their Open Championship (Rose tied for second, two shots back) then it must be because of Brexit. Everything else that goes wrong is, so why not the golf? It is the same when three former US policy makers, central bankers, Wall Street-types, claim that the US no longer “have to tools to counter the next financial crisis”. They know full well that that statement is a blatant lie. But they say it. To remain relevant as their stars dim? To do service to their conservative mates? All of the above and more. But the media grab the headline and the American public and the public in general is dealt another piece of neoliberal misinformation that helps entrench the hold on power by the elites. But things are changing, and these entrenched elites and the vested interests they serve don’t like it a bit.
Here are the answers with discussion for this Weekend’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.
Wednesday and a relatively short blog post after two rather long posts in the preceding two days. The first topic concerns the limits to government spending. The second brief topic reports on research where it was found that the music of AC-DC confounds Lady Beetles and soybean aphids. Who would have thought! Which was by far the most interesting research paper I have read this week after dealing with the likes of Stuart Holland on Monday and Tuesday. And then some music from around the world to smooth out the day.
This is the second and final part in my response to the Social Europe article by Stuart Holland (July 11, 2018) – Not An Abdication By The Left – where he attempts to eviscerate various writers who have dared to suggest that the “social democratic Left in Europe … has run out of ideas” or that “there has been an intellectual abdication by the Left”. He uses his experience as an advisor to Harold Wilson in the 1960s and to Jacques Delors in the early 1990s as an ‘authority’ for his rejection of the claims that the Left has abandoned its social democratic remit. He holds the likes of Delors and António Guterres has shining Left lights. In Part 1, I showed that the view that Delors and Guterres are beacons of Left history and that the social democratic Left has not sold out to the neoliberal orthodoxy (particularly at the political level) is unsustainable. Holland distorts history to suit his argument and is in denial of the facts. In Part 2, I trace the argument further by examining the 1993 Delors White Paper, which was meant to be the European Commission’s response to the mass unemployment that was bedevilling the Continent at the time (and remains, by the way) and later propositions that Holland was associated with in relation to Greece during the GFC. They further demonstrate that Stuart Holland is attempting to maintain an indefensible position.
Former Austrian Chancellor Bruno Kreisky was quoted as saying during the 1979 Austrian election campaign that: “I am less worried about the budget deficits than by the need for the state to create jobs where private industry fails”. That is the statement of a social democrat. That is a progressive Left view. In June 1982, with French unemployment at 7.2 per cent (having risen from 2.4 per cent in 1974 after a near decade of austerity under the right-wing Prime Minister Raymond Barre), the French Minister of Economy and Finance cut 30 billion francs from government spending so that the fiscal deficit would remain below 3 per cent. In March 1983, the same Minister pressured his colleagues including President François Mitterrand, into imposing a further bout of austerity, cutting another 24 billion francs and increasing taxes by 40 billion francs. These were very deep cuts. The austerity under the so-called ‘Barre Plan’ had failed to reduce inflation. When the turn to austerity was repeated under Mitterand’s so-called Socialist government, France was already in a deep recession. Under the Socialist austerity period unemployment rose sharply to further to 9.3 per cent by 1987. By then the architect of that austerity, one Jacques Delors, was European Commission President and starting work on his next exercise in neoliberal carnage – the Eurozone. None of his behaviour during that period remotely signals a position we could call progressive or Left. Like his austerity turn (“tournant de la rigeur”), Delors had turned into just another neoliberal obsessed with fiscal surpluses, free markets (he oversaw the 1987 Single European Act), and privatisation (which he claimed was necessary to attract foreign direct investment) (Source). This is Part 1 of a two-part series on the abdication of the Left, which some still choose to deny.
Here are the answers with discussion for this Weekend’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.
Here are the answers with discussion for this Weekend’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.
Last week, the Eurogroup met in Brussels and given all the Macron-Merkel buildup – see my blog post – The Meseberg Declaration – don’t hold your breath waiting (June 26, 2018) – the Europhiles were tweeting their heads off building themselves up into a ‘reform’ frenzy. If we were to believe half of it, then Germany was rolling over and about to agree to reforms that would put the Eurozone on a sound footing. Even progressive Europhile commentators held out hope of some big changes. Well not much happened did it. Like virtually nothing of any substance emerged from the meeting and matters were deferred (again) to December. Ho Hum! This is the European Union after all. At the same time, new voices encouraging an Italian exit appeared in the last week. Regular readers will know that in lieu of some unlikely turn of events in Europe where the elites about face and set in place effective reforms, I maintain that unilateral exit remains the superior option for an individual nation such as Greece or Italy. I am on the public record as arguing that given the size of the Italian economy in relation to the overall Eurozone economy, Italy should demonstrate leadership by finalising a negotiated exit with Brussels that minimises the damage for all parties. That would become the blueprint for other nations to regain their currency sovereignty and escape the Eurozone madness. Another voice joined that line in the last week.
Here are the answers with discussion for this Weekend’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.
On June 24, 2018, the Bank of International Settlements (BIS) released their – Annual Economic Report 2018 – which contains their latest analysis of the global economy including the risks they think the current growth process faces. It is full of myth and like previous statements from the BIS it only serves to perpetuate the policy mentalities that caused the global financial crisis. These multilateral organisations (including the BIS, IMF, World Bank, OECD etc) have become the harbingers of the neoliberal ideology. In doing so, they have breached their original charter. They should be dissolved and replaced with new institutions within a revised international framework. We sketched that framework in our current book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017).
The Centre for European Reform, which must have little to do given the snail pace of so-called ‘reform’ that goes on in Europe, released a report over the weekend (June 23, 2018) – What’s the cost of Brexit so far? – which all the Europhile Remainers found filled their Tweet and other social media void for the day. I would have thought that they should have been happy, given England’s demolition of Panama in the soccer and 5-zip thrashing of Australia in the ODI cricket tournament. But no, they wanted to amplify the CER propaganda and makes themselves feel sad. Britain’s economy, apparently, is already 2.1 per cent smaller than it would have been had the vote to exit in June 2016 not won. And apparently, this has been a “hit to the public finances is now £23 billion per annum – or £440 million a week”. If you delve into the way the CER came up with these results you will quickly move on with a ho-hum and get back to the World Cup, which is infinitely more interesting (and that is saying something! read: I don’t enjoy soccer). The saying – Apples and Oranges – is relevant.
Here are the answers with discussion for this Weekend’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.
The Europhiles have been tweeting their heads off in the last week or so thinking that the corner has been turned – by which they mean that Germany is about to get all cuddly with France and agree to fundamental shifts in thinking which will make the dysfunctional Economic and Monetary Union (EMU) finally workable, without the need for the ECB to break Treaty law by propping up the private bond markets. The most recent incarnation of the ‘saviour’ is a few words that the new German Finance Minister, Olaf ‘Wolfgang Schäuble'” Scholz said during an interview with Der Spiegel (June 8, 2018) – ‘Germany Has a Special Responsibility’ – about his support for a new unemployment insurance scheme for the Eurozone. It seems even the smallest things excite those who remain in denial about the long-term viability of the common currency. The proposal that Scholz was advancing has been out in the public debate for some years and is nothing like an effective solution to the terminal design flaws in the EMU. It is just an application of the same thinking that led to the creation of that flawed architecture in the first place and reinforces the conclusion that the main players in Eurozone policy setting have no intention of creating an effective federated monetary system. Just more of the same. Tomorrow, the tweets will be extolling the virtues of some other erroneous plan that some Europhile has come up with to save the system. And so it goes.
Here are the answers with discussion for this Weekend’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.
Here are the answers with discussion for this Weekend’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.
This is Part 2 in my two-part series analysing the 354-page report from the Scottish Growth Commission – Scotland – the new case for optimism: A strategy for inter-generational economic renaissance (released May 25, 2018). In Part 1, I considered their approach to fiscal rules and concluded, that in replicating the rules that the European Commission oversees as part of the Stability and Growth Pact, the newly independent Scotland would be biasing its policy settings towards austerity and unable to counter a major negative shock without incurring elevated levels of unemployment and poverty. In Part 2, I focus specifically on the currency issue. The Growth Commission recommends that Scotland retain the British pound, thereby surrendering its independence. Moreover, while it is part of the United Kingdom, the British policy settings have to consider the situation in Scotland. Once it leaves, it will still be bound by British fiscal and monetary settings but those settings would be designed to suit the remaining British nations. So if the British government continues with its austerity obsession, Scotland would be forced to endure that end. Hardly, the basis for an independent nation with progressive aspirations.