Exploring the effectiveness of social media

Regular readers will know that I have become interested in the concept of messaging and language to help in the practical goal of widening the spread of Modern Monetary Theory (MMT) knowledge and putting really powerful tools into the hands of activists who build social and political movements. There are some great efforts underway (for example, Real Progressives in the US). On October 5, 2018, I will be launching the Gower Initiative for Modern Monetary Studies and running some workshops for them in London. This is another excellent activist group setting out and prepared to climb the hill and all the mainstream economics obstacles that are in their way. The aim is to build a network of these groups around the Globe (Italy, where there is already a solid network; Spain, similar; Germany – I will be there October 13); Finland, already solid activity; Scotland, I will be there October 10; Ireland, I will be there October 3-4, and elsewhere). On this theme, some current research, which Dr Louisa Connors and myself will unveil at the The Second International Conference of Modern Monetary Theory (New York, September 28-30), is the role that social media (among other things) plays in spreading knowledge. Regular readers will know I occasionally point to what I see as the futility of twitter firestorms where some MMT activists interact with some neanderthal-economics type who can’t get Zimbabwe typed quick enough and a drawn out back-and-forth of tweets, which can sometimes go for days, with increasing numbers of twitter addresses copied into the thread. They usually end in grief. The question is whether these social media platforms are suitable given what we know about effective framing and the type of language and strategy that is necessary to make that framing persuasive.

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Meet Australia’s new Prime Minister

It is Wednesday and only a short blog post. I am also ailing with the flu and my head hurts. As I noted in Monday’s blog post – The conservative polity is fracturing – an opportunity for the Left (August 27, 2108) – Australia now has a new prime minister, the former Treasurer. His elevation has been celebrated as a victory for the ‘moderates’, given that his main contender, the guy who attempted the coup in the first place and succeeded in getting rid of the incumbent PM, was rather obviously extreme right in his views. Some are saying we have been saved by the fact that he didn’t succeed. But to call the new PM ‘moderate’ is to lose all sense of meaning to our language. He is a dangerous neoliberal ideologue who has inflicted untold pain on many people as he has made his way to the top.

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Public infrastructure investment must privilege public well-being over profit

One of the principle ways in which so-called progressive political parties (particularly those in the social democratic tradition) seek to differentiate themselves from conservatives is to advocate large-scale public infrastructure investment as a way of advancing public good. You can see evidence of that in most nations. Nation-building initiatives tend to be popular and also are less sensitive to the usual attacks that are made on public spending when income support and other welfare-type programs are debated. Capital worked out long ago that public spending on infrastructure provided untold benefits by way of profits and influence. In the neoliberal era, the bias towards ‘competitive tendering’ and public-private partnerships has meant that private profit tends to dictate where and what public infrastructure is built. The problem is that large-scale projects tend to become objects of capture for the top-end-of-town. Research shows that these ‘megaprojects’ typically deliver massive cost overruns and significantly lower benefits than are first estimated when decisions are being made about what large projects to fund. Further, evidence suggests that this is due to corrupt and incompetent behaviour by private project managers (representing their companies) and empire-building public officials. They lie about the costs and benefits so as to distort the decision-making processes in their favour. Any progressive government thus must be mindful of these tendencies and behaviours. A progressive policy agenda needs to be more than just outlining a whole lot of nice sounding public infrastructure projects that the government will pursue. The whole machinery of public procurement that has emerged in this neoliberal era needs to be abandoned and replaced with decision-making processes and rules that privilege the advancement of public well-being over profit.

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Politicians think the public is more right-wing and conservative than it actually is

It is Wednesday and so a short blog. I am working on a number of things at present but getting the material sorted for my next book with Thomas Fazi is a priority at the moment. My snippet today though is about a study that has just come out in the American Political Science Review – Bias in Perceptions of Public Opinion among Political Elites – by two US academics. The title is indicative. They explore what they argue is a disjuncture between what the politicians think voters want and what the voters actually want. This lack of congruence is also biased towards right-wing views. So, the politicians “believed that much more of the public in their constituencies preferred conservative policies than actually did”. They trace this bias to biases in the way the politicians get their information. The takeaway is that the progressive side of the debate has to be more active in framing distinctive messages and using multiple ways and avenues to communicate those messages to the candidates seeking election and the politicians that have been elected. And it must refrain from using conservative frames which advisors think neutralise difficult concepts etc. I think this sort of research provides some hope. I will be writing more about this in the weeks to come. And after that listen to some really classic minimalism from the C19th, which you might suspect on listening is very contemporary such was the genius of the composer.

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US labour market – muddling along and real wages growth goes negative

On July 6, 2018, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – June 2018 – which showed that total non-farm employment from the payroll survey rose by 213,000 and the unemployment rate rose by 0.2 per cent to 4 per cent in June 2018. The employment-population ratio was unchanged in June at 60.4 percent and has been largely stable since February 2018. The Labour Force Survey data, however, showed that employment only rose just 102 thousand in June 2018 and was accompanied by a substantial rise in the labour force (601 thousand) on the back of a surge in participation (up 0.2 points), which meant that total unemployment rise by 499 thousand. The broad labour underutilisation measure (U-6) also signalled weakness, rising by 0.2 points. There is still no evidence of a wages breakout going on although wages growth for blue-collar occupations has surpassed the white-collar occupations over the last 8 quarters. However, the data shows that real wages fell in June 2018 by 0.4 points. Taken together, the US labour market is showing no definite trend up or down at present and it is still some distance from being at full employment.

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Brexit propaganda continues from the UK Guardian

Its Wednesday, so a relatively short blog post today. We are just about finished the final responses to the editors from Macmillan on the manuscript for the next Modern Monetary Theory (MMT) textbook, which I am now reliably informed will be published in February 2019. Today, two short topics. First, the disgraceful and on-going propaganda from the UK Guardian about the “Brexit process”. Second, a report released today in Australia showing the damaging effects of a financial sector that is not properly regulated. And then some event announcements and then some music to restore our equanimity.

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Real resource constraints and fiscal policy design

There is an interesting dilemma currently emerging in Australia, which provides an excellent case study on how governments can use fiscal policy effectively and the problems that are likely to arise in that application. At present, the Australian states are engaging in an infrastructure building boom with several large (mostly public sector) projects underway involving improvements to road, ports, water supply, railways, airports and more. I travel a lot and in each of the major cities you see major areas sectioned off as tunnels are being dug and buildings erected. Not all of the projects are desirable (for example, the West Connex freeway project in Sydney has trampled on peoples’ rights) and several prioritise the motor car over public transport. But many of the projects will deliver much better public transport options in the future. On a national accounts level, these projects have helped GDP growth continue as household consumption has moderated and private investment has been consistently weak to negative. But, and this is the point, there have been sporadic reports recounting how Australia is running out of cement, hard rock and concrete and other building materials, which is pushing up costs. This is the real resource constraint that Modern Monetary Theory (MMT) emphasises as the limits to government spending, rather than any concocted financial constraints. If there are indeed shortages of real resources that are essential to infrastructure development then that places a limit on how fast governments can build these public goods. The other point is that as these shortages are emerging, there is still over 15 per cent of our available labour resources that are being unused in one way or another – 714,600 are unemployed, 1,123.9 thousand are underemployed, and participation rates are down so hidden unemployment has risen. So that indicates there is a need for higher deficits while the infrastructure bottlenecks suggest spending constraints are emerging. That is the challenge. Come in policies like the Job Guarantee.

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The ‘if it is bad it must be Brexit’ deception in Britain

The UK Guardian has its ‘Brexit Watch’ page, which is regularly updated with commentaries from this and that ‘expert’, purporting to provide a sort of on-going scorecard of what is happening on that front. Many commentaries usually include some statement to the effect that “Brexit is a disaster”. That particular opinion appeared in the header of the most recent ‘Brexit Watch’ update (May 29, 2018) – ‘Brexit is a disaster’ – experts debate the latest economic data – which followed the release by the British Office of National Statistics (ONS) of the – Second estimate of GDP: January to March 2018 (released May 25, 2018) – which showed that the British economy (based on the latest updated data) increased by 0.1 per cent in the first-quarter 2018 and ONS said that “we see a continuation of a pattern of slowing growth, in part reflecting a slowing in the growth of consumer-facing industries”. One contributor to the ‘Brexit Watch’ article (David Blanchflower) had his wind-up ‘Brexit is Bad Doll’ working overtime blaming the Referendum vote and the uncertainty that has followed for the poor GDP performance, particularly the decline in business investment. So if its bad its Brexit is the repeating message. If its good, just wait, it will be bad again soon and then it will be Brexit. That is the repeating message. However, if you read the New York Times article (May 28, 2018) – In Britain, Austerity Is Changing Everything – you get a very different narrative. You can guess which one I think is more accurate.

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Timor-Leste – challenges for the new government – Part 3

This is Part 3 (and final) of my mini-series analysing some of the challenges that the newly elected majority government in Timor-Leste faces. In Part 2, I discussed the progress of the Strategic Development Plan and the challenges ahead in terms of poverty, unemployment, and other indicators relating to the development process. In Part 2, I focused more on the currency debate – documenting how the IMF and World Bank had infused its ideological stance into the currency arrangements that Timor-Leste set out with as a new nation. I made the case for currency sovereignty which would require Timor-Leste to scrap the US dollar, convert the Petroleum Fund into its stock of foreign exchange reserves, and to run an independent monetary policy with flexible exchange rates, mediated with the capacity to use capital controls where appropriate. In this final discussion I consider specific policy options that are required to exploit what is known as the ‘demographic dividend’ where the age-structure of the nation generates a plunging dependency ratio. To exploit that dividend, which historically delivers massive development boosts to nations, the shifting demographics have to be accompanied by high levels of employment. That should be policy priority No.1.

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The Europhile Left use Jacobin response to strengthen our Brexit case

Regular readers will recall that Thomas Fazi and I published an article in the Jacobin magazine (April 29, 2018) – Why the Left Should Embrace Brexit – which considered the Brexit issue and provided an up-to-date (with the data) case against the on-going hysteria that Britain is about to fall off some massive cliff as a result of its democratically-arrived at decision to exit the neoliberal contrivance that the European Union has become. There was an hysterical response on social media to the article, which I considered in this blog post a few days later – The Europhile Left loses the plot (May 1, 2018). In recent days, two British-based academics have provided a more thoughtful response in the Jacobin magazine (May 18, 2018) – Caution on “Lexit”. Here is a response which was co-written with Thomas. As a general observation, I noted some prominent progressive voices citing their attack on us enthusiastically, one even suggesting it landed “some good punches” after taking “a while to warm up”. Well, I can assure Andrew that my face (nor Thomas’s) was the slightest bit puffy after reading the critique.

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Timor-Leste – challenges for the new government – Part 1

The citizens of Timor-Leste went to the polls on Saturday in an effort to elect a government. The reports last night indicate that Xanana Gusmao’s Party, in a three-party coalition Parliamentary Majority Alliance (AMP, which includes Taur Matan Ruak’s group) have toppled the incumbent Fretilin leadership. At the last election (July 2017), the Fretilin Party led by Mari Alkatiri was able to form minority government (with Democratic Party support) after a third party (KHUNTO) pulled out. A stalemate emerged. Some commentators called it a ‘constitutional crisis’, in that, the minority government could not function effectively. After some years of stable politics, Timor-Leste has been going through a period of political volatility as a new generation of politicians enter the scene and replace the older stagers who were dominant at the formation of this tiny island state in 2002. I won’t go into the politics of the election battle but both major parties promised to fast-track economic development to make some dent into a growing poverty problem. This is a country that has been enduring decades of foreign occupation and before that more than 250 years of colonial servitude. The latter (Portugal) imposed Catholicism on the people while the former (Indonesia) spat-the-dummy when they were finally forced out in 1999 and destroyed vital public and private infrastructure as they marched back across the border.

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The Europhile Left loses the plot

Regular readers will know that I have delved into social psychology in the last decade or so as a way of educating myself on why ideas survive when their logical consistency is lacking and their empirical content is zero. I have gained a good understanding of this phenomenon by exploring the literature on patterned group behaviour and the work by Irving Janis in the early 1970s on Groupthink. While I usually demonstrate instances of this destructive group behaviour on the part of the Right, it is also clear that that the Europhile Left is riddled with the problem. To the point of not even valuing debate anymore. At the weekend (April 29, 2018), the excellent Jacobin magazine published an Op Ed piece by myself and Thomas Fazi – Why the Left Should Embrace Brexit – which considered the Brexit issue and provided an up-to-date (with the data) case against the on-going hysteria that Britain is about to fall off some massive cliff as a result of its democratically-arrived at decision to exit the neoliberal contrivance that the European Union has become. The article was rather moderate in fact and considered the on-going failure of the apocalyptic arguments that have been introduced against Brexit, both before and after the Referendum. But the social media response (negative) has been at elevated levels of hysteria. Inane claims. Groupthink in action. And it is why the progressive cause is such a push over by the organised Right.

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Critics of the Job Guarantee miss the mark badly … again

My blog post last week – On the path to MMT becoming mainstream (April 17, 2018) – discussed the way in which the language and concepts that have been developed by the Modern Monetary Theory (MMT) authors are now permeating mainstream narratives and the media. While this has increased the pushback and hostility from both the Right and Left opposition to MMT, it is also a sign that the public understanding of the way in which the monetary system works and the policy options available to currency-issuing governments, is improving. Most recently, there is been a flurry in the US media discussing employment guarantees, which is a welcome relief from the previous saturation coverage of impoverished UBI ideas. It is fabulous, that at the policy level, the idea that the state can eliminate mass (involuntary) unemployment if it so chooses is becoming more acceptable. That’s down, in part, to the great work being done there by my MMT colleagues. There are also derivative public sector job creation proposals getting ‘airplay’ which I do not consider to be MMT-inspired nor are what I would call Job Guarantee initiatives, but which are still, to their credit, raising awareness of the need for the state to ensure there are sufficient jobs for all rather than dispatch citizens who are unable to find work to the unemployment queue. The push back is increasing and that is a sign that dissonance is being felt by the neoliberals who oppose the state taking responsibility for mass unemployment and using its fiscal capacity to render it a thing of the past. Many of the critics from the Left do not have the courage to come out and say they prefer the alternative to a Job Guarantee, which is entrenched unemployment. That leaves them carping away with no legs to stand on. The Right objections are venal as they always are – they want mass unemployment to persist to dampen wages growth and allow more real income to be captured by the top-end-of-town.

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Corporate Australia – the mendicants who want more!

Over the last few months, we have had the Australian Treasurer clogging up the media with his relentless claims that Australia has no choice but to cut corporate tax rates to keep up with the rest of the world (this is after Donald Trump started the ball rolling). The Federal government is trying to eliminate the resistance in the Senate (Upper House) to their proposal to cut corporate rates from 30 to 25 per cent. The Treasurer is a really pathetic figure – a non-economist, mouthing platitudes over and over about matters that he has little understanding and which the research evidence doesn’t support anyway. Then, last week, the ultimate public purse dependents, big business sent the members of the Senate a letter (a sort of blackmail letter) claiming if the Senators stopped blocking the legislation, then their corporations would go on an investment, wage increasing, employment creating binge. It was sickening to read and listen to. These mendicants are trying to convince us that the only thing stopping an investment boom or wage increases is a 5 cents in the dollar tax impost that tax data reveals many of them don’t pay anyway. It was hypocrisy parading as blatant self-interest. These characters have no shame.

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Donald Trump’s tariff hikes are not good policy

I am generally not in favour of trade protection. I grew up in a country that had very extensive protection (tariffs, import quotas) on manufacturing goods, which was justified on a number of grounds – capacity to shift to defense industries; stable employment; and more abstractly, an expression of becoming a ‘modern’ nation, leaving our agrarian roots behind. The initial move to impose high tariffs was that a young industry would take time to develop – the so-called infant industry argument, which goes back to the 1790 Report on Manufactures written by American economist Alexander Hamilton. The problem is that the infant never really grew up and the tariffs just became a cosy rent-sharing margin for unions and multinational corporations. Meanwhile consumers paid excessive prices for deficient-quality motor vehicles (among other products). It is clear that as trade opens up there are workers and regions that lose – and lose badly. The answer is not try to reinvent the past through protection. Rather, it is to use the government’s fiscal capacity to create new opportunities in these regions to ensure that workers disadvantaged by import competition can transit into new jobs with stable incomes. That option is often overlooked because modern governments have become obsessed with austerity. And, as I argue below, that obsession will in the context of Donald Trump’s tariff hikes, work against the European nations that are running ridiculously large current account surpluses.

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Poverty among the unemployed now close to 50 per cent in the EU

Last week, Eurostat released it updated data covering people who are at risk of monetary poverty. In the press release/news page (February 26, 2018) – Almost half the unemployed at risk of monetary poverty in the EU – we learn that 48.7 per cent of unemployed persons in the EU “were at risk of poverty” in 2016, even “after social transfers” were taken into account. The situation has deteriorated significantly since 2005 as a result of the impacts of the GFC and the policy response taken by the European Commission and the Member States (under the EC’s thumb). While the usual suspects perform badly on these indicators (Spain, Greece, Italy), a stark result is that 70.8 per cent of German unemployed persons are at risk of poverty. This proportion has jumped from 40.9 per cent in 2005 (a 29.9 percentage point shift). So, even in the strongest Eurozone economy, the policy frameworks are delivering terrible outcomes. Increasing divergence and inequality and rising social exclusion are the most striking characteristics of the 13 years of European Union history since 2005. It doesn’t look like a policy bloc that any sensible nation should aspire to be part off (or remain within).

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The New Keynesian fiscal rules that mislead British Labour – Part 2

This is Part 2 of my Three Part exposition of how the standard New Keynesian approach to the specification of fiscal rules will generate poor advice for politicians desiring to achieve progressive socio-economic goals. The paper I am using to represent the New Keynesian approach has, by all indications, been somewhat influential in the formation of the macroeconomic approach currently being espoused by the British Labour Party. In that sense, the critique aims to disabuse the Labour politicians and their apparatchiks of building policy options based on fake economic knowledge, and, instead, embrace the principles of Modern Monetary Theory (MMT), which provides an accurate depiction of how the monetary system actually operates and the policy options for a currency-issuing government such as in Britain, and the likely consequences of deploying these options. The one major lesson that comes out is that the New Keynesian approach is an elaborate fraud. It plays around with so-called ‘optimising’ models asserting human behaviour that no other social scientist believes remotely captures the essence of human decision-making, and then derives conclusions from these models that are claimed to apply to the world we live in. Prior to the GFC, these ‘models’ didn’t even consider the financial sector. The fact is that nothing of value in terms of specifying what a government should do can be gleaned from a New Keynesian approach. It is barren.

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The bond vigilantes saddle up their Shetland ponies – apparently

Last week (February 8, 2018), we witnessed the US Senate spectacle with Rand Paul embarrassing himself with his lack of economic knowledge but also embarrassing both major parties – the Republicans for their gross hypocrisy and the Democrats for their gross idiocy. The – Congressional Record – of Paul’s speech (starting S817) is a classic. Also, last week, the stables were stirring apparently, as the ‘bond vigilantes’ were strapping on their saddles and getting ready to make the US government suffer for its so-called fiscal ‘ill discipline’. These characters apparently emerge out of the darkness of fiscal profligacy to defend our interests and force the government to run surpluses. Fantasy stuff all round. In fact, Rand Paul should resign and get a job he is more suited for (which would be?) and the bond vigilantes should make sure their Shetland ponies are not to wild for them. These bond traders play this elaborate game of bluff and pretend they have the power over the government. In fact, they are mendicants queuing up for their daily dollop of corporate welfare and the government could play them out of the game anytime it chose to. The problem is that the bluff works because governments are captive to the neoliberal nonsense that my professsion preaches.

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The blight of the visitor economy

One of the large funded projects that I have been involved in over the last few years concerns regional equity (in part). Our planning involves the completion of a new book (to be published sometime 2019) on the way in which regional development has become biased to the economic settlement (where jobs are created) at the expense of the social settlement (where people live). This might sound reasonable until you realise that it is another aspect of the way in which governments have abandoned their remit to ensure general prosperity, and have, instead, ‘allowed the market to work’ – which is neoliberal code for tilting the playing field in favour of corporations and global capital. One of the more recent neoliberal ruses in this context, that undermine the lived experience of local residents and boost the profits of large corporations is the concept of the ‘visitor economy’, which is the new buzzword for Tourist-led growth. Governments who claim they have run out of money are quick to hand out massive subsidies to large-scale events to promote the ‘visitor economy’. The same governments also subvert their own planning rules, encourage multi-national corporations to exploit loopholes in labour laws to cut wages and conditions, and privatise valuable public assets to ensure corporations can extract as much profit from activities as possible. Local residents’ rights are trampled in this process as corporations turn their suburbs into ‘global playgrounds’ while pocketing massive public subsidies into the bargain.

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The IMF and the Germans wreaking havoc in Northern Africa

Some years ago, I started collecting information about the so-called Maghreb countries, which typically refers to the region spanned by Algeria, Morocco, and Tunisia, although sometimes Libya and Mauritania are also included in the aggregation. You will find it referred to as the Barbary Coast in English literature. I was interested (as a long-term project when I get old :-)) to write a book about how nations broke away from the yoke of colonialism only to fall into the hands of the IMF and the World Bank, which over time were becoming the leading attack dogs for the neoliberal domination of governments. That book is coming in the future. But I have also been interested in the way the Eurozone Member States have moved into Northern Africa to extract as much surplus as they can from exploiting the resources these African nations have. You know a nation is in trouble when there are nightly riots which were motivated by economic desperation and a pernicious new (so-called) Finance Law, which became law on January 1, 2018. I am, of course, talking about Tunisia. With high levels of unemployment and underemployment and a lack of job opportunities particularly severe in the interior regions, the IMF decided, in its infinite neoliberal stupidity, to force the Tunisian government to impose a harsh austerity program including pushing up value added taxes which have had the effect of driving up medicine, food and energy prices and impacting on those most affected by the lack of jobs. Smart thinking! The riots have now followed.

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