May 30, 2020 – we remember the release of the 1945 White Paper on Full Employment

Some Wednesday snippets today. Tomorrow, I will write about what I have been thinking about the Eurozone. There has been a lot of hot air about the Franco-German accord that Emmanuel Macron and Angela Merkel came to recently. Hot air is the operative term. The fault lines in the Eurozone continue to widen and the policy dissonance is becoming more acute as they deal, not only with the health crisis, but also the 19 economies that have been starved of investment and infrastructure development. This Saturday (May 30, 2020) marks the 75th Anniversary of the release of the famous ‘White Paper on Full Employment’, which outlined the responsibilities that the Australian government took on to ensure there were jobs for all workers who were wanting work. This White Paper really defined the Post-WW2 consensus and began a period of low unemployment, upward social mobility, the development of public education and health, declining income and wealth inequality and stable wage shares as real wages kept pace with national productivity growth. It wasn’t nirvana because lots of issues were still in need of solutions (for example, gender attitudes, indigenous inclusion, etc). But it was a blue print for an inclusive society with growing material prosperity. The vision was abandoned sometime in the 1970s as neoliberalism took centre stage and political parties on both sides of the fence gave up talking about full employment. To restore full employment as a primary social goal and government responsibility is an agenda I have pursed all my career. We should all read the ‘White Paper’ and recast it in modern terms and fight like hell for a similar vision that is apposite for the times and crises we now face.

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Britain confounding the macroeconomic textbooks – except one!

Remember back just a few months ago. We are in Britain. All the Remainers are jumping up and down about Brexit. We hardly see anything about it now as the UK moves towards a no deal with the EU. Times have overtaken all that non-event stuff. Now the developments are confounding the mainstream economists – again. There will be all sorts of reinventing history and ad hoc reasoning going on, but the latest data demonstrates quite clearly that what students are taught in mainstream macroeconomics provides no basis for an understanding of how the monetary system operates. All the predictions that a mainstream program would generate about the likely effects of current treasury and central bank behaviour would be wrong. Only MMT provides the body of knowledge that is requisite for understanding these trends.

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BVerfG decision once again exposes the sham of the Euro system

It is Wednesday and I have a lot of commitments and deadlines hanging over me today. But I thought I would briefly comment on the yesterday’s – Decision – by the Bundesverfassungsgericht (German Federal Constitutional Court) (May 5, 2020) on the legality of the ECB’s Public Sector Purchase Programme. The BVerfG concluded that the ECB has been operating ultra vires and made orders as appropriate, which bind the German government and the Bundesbank and demonstrate once again the myth of central bank independence. There is all sorts of angst being expressed out there about this decision and progressive Europhiles are almost apoplectic. But it won’t surprise you to know that I think the Court made the correct judgement by exposing the complete sham that the European Union and the Eurozone, in particular, has become – an illegal, look-the-other-way, neoliberal cabal that the Union has become.

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Progressives should never work within the mainstream macroeconomics straitjacket

There was an interesting article posted on Alternet (April 12, 2020) – Leftist policy didn’t lose. Marxist electoral theory did – in response to the dismal showing by Bernie Sanders in the current Democratic Primaries. I think it summarises the confusion that is now abundant on the progressive side of the political struggle. The arguments presented highlight the dilemma facing the progressive side of politics. Should Leftists compromise with centrists to get more traction? Compromise with what? If you read between the lines, there is no argument being made for Leftists to challenge the basic macroeconomic myths of neoliberalism that social democratic politicians around the world have adopted and straitjacket by. Rather, Leftists should accept these constraints and work at local levels to make small gains for better housing etc. It is a defeatist agenda – a surrender to the main game. I reject it.

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EMU Member States should ignore Brussels and do whatever it takes

Last Thursday (March 26, 2020), the European Council met to discuss the way in which the European Union would deal with the coronavirus crisis. Not much happened. Well that is not exactly true. A lot happened in the sense that even when faced with the worst health crisis in a century that is already devastating the populations in Italy and Spain and creating economic havoc throughout, the leadership split along familiar lines and failed to come up with any solution. There was a lot of talk about solidarity and all the buzz words that the European leadership frequently outputs in their wordy statements. But very little action and lots of acrimony, division and back to form behaviour. My view is that the Member States should now just do whatever they consider it takes to bolster their health systems and protect their economies, which will involve significant fiscal deficits (multiples of the allowable limits under the Stability and Growth Pact), and trust that the ECB’s unlimited bond buying spree will back them. And when the Brussels technocrats start talking about Excessive Deficit Mechanisms and the rest of the blather, they should just show them the door. And if push comes to shove, they just should exit the whole rotten structure. But now is the time for defiance and disobedience. Now is the time that democracy fought back and told the elites to be quiet.

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You lost! Badly! Humility not hubris is needed in order for British Labour to regenerate

When the Remain vote lost the June 2016 Referendum there was a sense of denial. They had lost but only because of the ingrates that voted the Leave. And sooner, rather than later, those dolts would soon have the so-called Bregrets and another vote would be held and the Remainers would win. That sense of denial persisted past the 2017 General Election, which should have consolidated Jeremy Corbyn’s leadership, but didn’t. The biting sense of privilege that the Remain camp seemed to construct for itself slowly but surely ate into the Labour Party leadership, regularly feeding news stories to the press and social media about the impending doom facing the British economy (Project Fear), and pushing the myth (supported by all sorts of interpretable public polls) that a ‘peoples’ vote’ (I am not sure what they thought the Referendum was) was inevitable and would reverse the 2016 choice and restore equanimity. And the Labour leadership crumbled in the face of this onslaught from within and abandoned their previous commitments to their constituencies, which the majority of their elected MPs represented, and went along with this ‘peoples’ vote’ nonsense. The Tories, meanwhile, realised that the underlying sentiment that drove the Brexit choice was consolidating and pushed through a General Election which categorically demonstrated that the Labour Party were nowhere near the mark. That was a disastrous loss in any one’s estimation for Labour. But, still in denial, the apparatchiks in the Party, the hangers on, the wannabees, whatever you choose to call them are out there on social media now claiming that, in fact, despite the humiliating devastation at the December 15 polls, that the Labour Party’s agenda has been accepted as the norm – ‘we won the argument’ – and that they as good as won the election. And meanwhile, the leading contender for the leadership is suggesting they will campaign to be readmitted to the European Union. It is hard to make this sort of stuff up. A lost generation for Labour coming up unless it gets real.

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The EU outdoes itself in the madness stakes

One of the themes I exercised when speaking in Europe recently, particularly when presenting at the French Senate Commission and the Ministry of Finance, was that by pushing European integration into an unworkable currency union and refusing to budge, the European political class was undermining the valid aspects of the ‘European Project’, which the likes of Jean Monnet and Robert Schuman saw as a way of bringing peace to the Continent after several attempts by Germany to usurp the rights of citizens in other European nations through military endeavours. Research released by the The PopuList Project, which is a UK Guardian motivated attempt to bring together academics and journalist to study shifts in European voting sentiment since 1989, is rather alarming for those who hang on to hope that the European Union is capable of progressive reform. And the latest shenanigans in the European Commission and the Council over the ‘Budget’ is indicative of why the PopuList Project is generating such results. If there was foresight among the leaders in Europe they would take a step back and restore national currencies and restore the quality of European democracy, which has been significantly compromised since the 1990s.

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Our sequel to Reclaiming the State in now in progress

As parat of my recent European speaking engagements, I went to Rome on February 5, 2020 to speak at the Italian Senate on Modern Monetary Theory (MMT) and the dysfunctional state of the European Union. The next day I had long discussions with one of my co-authors, Thomas Fazi, who I wrote – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017) with. We have been working on the sequel to that book for some time, and, in the process, have had to work through some difficult issues on which there has been some degree of difference in our viewpoints. While I was in Rome, Thomas and I also recorded a video of a conversation where we talk about our sequel. We provide that video here as well as a brief discussion outlining some of the major issues that the book will address.

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British Labour seems to think that HM Treasury can dominate the elected politicians

It is Wednesday in Australia and my usual blog-light day to give me more time to write other things. Although, today (in Europe as I type) I had a long flight from Athens to Paris where I am speaking to the French Senate Commission at a reception this evening. I also had to leave Athens early, so when I reached Paris and found my hotel, I took off to the Jardin du Luxembourg for a 10kms run (laps of the grounds). My trip to Athens was very successful and I will be in a position to talk about that in the weeks to come once some work has been finalised and the plan developed. But today, I want to briefly comment on a story from the Guardian’s Larry Elliot (February 14, 2020) – PM’s Treasury power grab doomed to fail, warn former insiders – which reported that some Labour Party ‘insiders’ (aka gutless morons who won’t publicly take responsibility for spreading rumours) had determined that the current government ministers would not be able to win a power struggle against the powerful H.M. Treasury, who would withhold crucial information from the government to maintain their hegemony. What? The inference was that “the Treasury’s independence” – that is, in other, more accurate words, the right of unelected and unaccountable technocrats to impose their right-wing, neoliberal austerity ideology on the democratically-elected government – was a Labour ideal that should be preserved and that those awful Tories were trying to assert democratic control of its public service institutions.

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Japan national accounts – sales tax rise, growth collapses – as night follows day

In my blog post – Japan about to walk the plank – again (September 30, 2019) – I predicted that the decision by the Japanese government to increase the sales tax from 8 per cent to 10 per cent on October 1, 2010 would undermine non-government spending and growth and was totally unnecessary anyway. The government had fallen prey to the deficit terrorists who have been consistently bullying them into believing that their fiscal position is about to collapse and the bond markets would desert them. Funny that! The Bank of Japan has been buying the bulk of the public debt issued over the last several years anyway. The reality is that, given the instability of world conditions (US-China trade, European slowdown, Brexit, and, more recently, the Corona virus impacts), the Japanese government should have been increasing its fiscal deficit. Yesterday (February 17, 2020), the latest national accounts data from Japan tells us the damage that this policy folly has inflicted. Every time the Japanese government has hiked the sales tax (1997, 2014, 2019) real GDP growth has plummetted and pushed the economy into recession. In the final quarter of 2019, Japan’s growth rate slumped by an annualised 6.3 per cent, driven by a massive 11.1 per cent decline in consumption spending and capital investment decline of 14.1 per cent. Sure enough, Typhoon Hagibis was also a factor but it is undeniable that the sales tax hike was instrumental. The Spanish philosopher George Santayana had it in one when in his first volume (1905) of his book – The Life of Reason: The Phases of Human Progress – said: “Those who cannot remember the past are condemned to repeat it”.

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The old guard trying to stay relevant and failing

I am doing the Thursday is Wednesday trick again today, given that I posted Part 2 of my detailed response to enquiries about MMT and what I term the MMT Project yesterday, and that I have promised myself to use Wednesday’s for other writing. I am also quite busy in Helsinki today with commitments so only a short post today. So just a brief comment on the latest fiasco from ‘Mr Spreadsheet’ Kenneth Rogoff as he stares into the abyss of irrelevance and is trying to hand on like grim death to any shred of credibility. He has none. If he ever did, the spreadsheet scandal finished it. But he never did anyway.

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Britain continues to defy Project Fear

Regular readers will know that I have been following the path of the British economy post-Referendum in 2016 to see whether the doomsday that the Remainers predicted was likely. It became colloquially known as ‘Project Fear’ as mainstream economists, so-called progressive economists who had their snout in the Labour Party as advisors (and we know where that took the Party), institutions like the Treasury and the Bank of England, all pumped out a sequence of terrible predictions about what would happen to the British economy should the Leave vote succeed. The predictions started in the lead up to the June vote. Immediate recession was forecast. That didn’t happen. Then new forecasts came out – with longer term disasters predicted. As each prediction horizon passed without disaster, the predictions morphed, new horizons were introduced, more nuanced analysis was presented. And, as nothing much has happened to ratify their fears (and lies), the Project has abated somewhat. The latest data shows that the Project is as moribund as it ever was.

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Work not UBI – the hopeful not the surrender

I have long disagreed with Guy Standing about the solutions to unemployment. 20 years ago we crossed paths on panels and in the literature where he would argue that UBI was the way forward and I would argue that it was a neoliberal plot and that, instead, we needed to push for job creation. My view has always been that to surrender to the neoliberals on their claim that governments cannot generate sufficient jobs to satisfy the desires for work of the unemployed was a slippery slope. Standing continues to publish his fiction. In his latest Social Europe article (January 15, 2020) – Building a progressive alliance in Britain – he seeks to integrate UBI proposals with a recovery plan for British Labour. My view is that would not help Labour recover from the shots they fired into their own feet in the period before the December election by listening to the likes of Standing and those who advocated the Fiscal Credibility Rule and the reneging on the Brexit commitment. Standing’s aversion to job creation is in contradistinction with a recommendation from the Wetenschappelijke Raad Voor Het Regeringsbeleid (WRR or in English, The Netherlands Scientific Council for Government Policy) to the Dutch government to deal with the challenges of achieving “good work”, in part, by introducing a ‘basic job’ which in my parlance means by introducing a Job Guarantee. They are motivated by a deep vein of social science and medical research that extols the virtues of work beyond its obvious income generation qualities. Pushing a UBI in the light of that research is just a pitiful bailout.

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Racial prejudice in Britain rises with unemployment

When I was a relatively junior academic, one of the things I was interested in was how labour market prejudice is influenced by the state of the economic cycle. This was a period when Australia was undergoing a deep recession (early 1990s) and it was clear that hostility to immigrants had risen during this period. I was interested to see whether this was related. The interest goes back to my postgraduate days when I was studying labour economics and we considered labour market discrimination in some detail. Then, it was clear from the literature, that employers who used racial profiling to screen job candidates would lose out if the labour market was strong, but could indulge their negative views about different racial groups without loss in times of recession. But we didn’t do much work on supply-side attitudes – that is, what do other workers think? In more recent times, I have done detailed research projects with mental health professionals studying the best way to provide job opportunities for young people with episodic illnesses. The research revealed that one of the problems in placing these workers in conventional workplaces is the prejudice that other workers displayed towards them. We worked on ways to attenuate that resistance. So I have had a long record of studying and being interested in these matters. In this blog post, I consider whether prejudice is counter-cyclical. In the UK, for example, the British Social Attitudes survey found that in 2014, around a third of British people were racially prejudiced and this ratio spiked during the GFC. Clearly, there are many factors contributing to this rather distasteful result, but if austerity is exacerbating the underlying factors, then we have another reason to oppose it. This research also bears on the Brexit debate.

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The Tories in Britain have a clear way forward – thanks to the Labour Party hacks

How things are changing. After the British election in December, the policy terrain in the UK has shifted such that the Tories are now being lectured to about the dangers of a stimulus package, while British Labour seems to be promoting leadership candidates that mostly were part of the problem that led to their failure. In the latter context, we are seeing King or, should I say Queen makers, who I would have thought were unelectable trying to influence the leadership choice. And former Labour advisors tweeting and what have you about what Labour should be doing when it was their advice that got the Party into the mess it is currently in. Meanwhile, the Tories have an almost open field to finish the first stage of the Brexit process off, and, secure the ongoing support of the voters that abandoned Labour in the election. The Tories will have restored sovereignty to Britain and freed themselves from the restrictive, neoliberal environment of the European Union. Now don’t get me wrong, I have no truck for the Tories. And all along, I considered that Brexit would deliver great outcomes for Britain in the hands of the Labour party as long as they simultaneously abandoned their neoliberal obsession with fiscal rectitude, as expressed by their ridiculous Fiscal Credibility Rule. Labour will now have to rue their ill-conceived abandonment of the Leave voters in favour of the cosmo Remainers. For now, the Tories have open slather – the worst of the outcomes possible. However, the only attenuating factor is that Boris Johnson is a smart operator and will be keen to ensure that the voters in the Midlands and the North remain Tory on an ongoing basis. That means he will have to do abandon the Tory austerity bias and invest billions into the regions that have been torn apart by his parties obsession with fiscal surpluses. That might, for a while, provide some good news for Britain.

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Introduction – The Last Colonial Currency: A History of the CFA Franc – Part 1

I have been commissioned to write the Introduction (Preface) to the upcoming book – The Last Colonial Currency: A History of the CFA Franc – by Fanny Pigeaud and Ndongo Samba Sylla, which is an English version of the original 2018 book, L’arme invisible de la Françafrique. It will soon be published by Pluto Press (UK) – as soon as I finish this introduction. The book is incredibly important because it shows the role that currency arrangements play in perpetuating colonial oppression and supporting the extractive mechanisms that the wealthy have used for centuries to further their ambitions. It also resonates with more recent neoliberal trends where these extractive mechanisms, formerly between the colonialist (metropolis) and the occupied peripheral or satellite nation, have morphed into intra-national urban-regional divides. I am very appreciative for the chance to write this introduction for these great authors. This is Part 1. Part 2 follows tomorrow. And then you can all rush out and purchase the book.

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Two films to watch which won’t make you happy …

Best wishes to all for 2020. It is a public holiday today in Australia and I have to catch a plane to travel North. And it is Wednesday anyway and I am training myself off writing blog posts for that day. Earlier this week, I saw the Ken Loach’s latest movie – Sorry We Missed You – which I can attest is a very harrowing experience of life in Britain under neoliberalism. I was going to say under the Tories, but then life under the previous Labour government was also made harder for those in the regional areas, particularly as fiscal rectitude became the norm. You will find the movie hard going that is for sure. I also saw the newly released movie – Where’s My Roy Cohn – which is also a rather difficult movie to watch, given the way it resonates with the way the modern political classes behave in most nations.

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Bregret eh!

Just a few snippets for Wednesday. The post British General Election wash-up continues and the urban Remainers who support Labour are now coming out of their holes to speak forth on why it all went wrong. There is lots of regret but little real reflection and responsibility is being exhibited. And, it is now a fair proposition to argue, that given it was this group that so distorted Labour Party policy and drove the ‘optics’, that they they should now just shut up and do some serious review of their own positions and why they lacked understanding and foresight. Some are proclaiming it was the toxity of Modern Monetary Theory (MMT) for the Left that was somehow involved. One cannot get more desperate than that. But mostly it was their disdain for those less educated and less privileged that sealed the deal. You cannot continually label people fools and racists and claim they were so ill-informed that within a few days of the Referendum result that they were clearly experiencing ‘Bregret’ and expect them to play ball with the cosmopolitan dream. Especially when that dream had created such havoc in areas where the majority of Labour MP represented and had voted Leave. We found out how much Bregret there was last Thursday.

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An evolving 6-point plan for British Labour

In the last few days, since the British General Election last Thursday, I have seen the rising denial of so-called progressives trying to come up with all sorts of excuses for Labour’s devastating defeat. I have seen various aggregations of the votes presented on Twitter and elsewhere attempting to claim that, in fact, the vote was a vote for Remain rather than Brexit. The line being spun is that the Tories do not have a mandate to implement Brexit, that the strong majority of British voters want to remain in the European Union and that, and that Labour’s defeat was about other things. Other things certainly impacted – such as the UK Guardian’s relentless and ridiculous campaign against Jeremy Corbyn which gave air to the anti-semitism ruse. And, the continued passive insurgency within the Parliamentary Labour Party from the Blairites who could not move beyond the past. And, the neoliberal framing that John McDonnell insisted on using to disseminate his economic plan, as a result of being advised poorly by a bunch of economists who couldn’t even get their studid Fiscal Credibility Rule right (given they had to change it at the last minute when it was obvious to all that it would fail). And John McDonnell himself, who told the British people in the months leading up to the election that he would support Remain. And the Deputy leader, who should have been expelled long ago from the Party. And those who conspired to ditch Chris Williamson for the most spurious reasons and thus cost Labour the seat of Derby North. And on it goes. But the result that transpired has been staring the Labour party in the face since the June 2016 Referendum and the Party chose to ignore the warnings. And the so-called progressive apparatchiks, economists and others, who were advising the Labour Party, not only told the Party leaders to ignore the warnings but actively set about vilifying those on the Left, including yours truly, every chance they could. The egg is … as they say!

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My brief comment on the British election

It is Wednesday and I am travelling a lot today. So just a collection of short snippets today that I have collected over the last week or so. First, the British election is tomorrow and the Tories have been successful in confining the focus to Brexit. My view on the EU and Britain’s decision to exit is well known. Labour should have been leading that process given the majority of their elected MPS come from Leave majority seats. Instead, they gave out a mixed message, with many senior Labour politicians claiming they would vote remain in another referendum. This is despite both major parties guaranteeing to the people in June 2016 that they would implement the vote to leave. The information we have at present is that that position on Brexit is probably going to cost them office. Which means the Tories survive when they should not but finish the Brexit process which they should. Then Labour will have to reinvent itself to take advantage of the renewed sovereignty that Brexit will bring. To do that it has to expunge its ranks of the neoliberals. One other matters, Leonard Cohen’s last album was released recently. We hear a song from it.

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