If it quacks!

If it quacks then it is a duck! If it uses neoliberal frames, narratives, language and concepts then it is neoliberal. Framing a lie just privileges the lie – and we get nowhere. The Progressive Economic Forum purports to bring “together a Council of eminent economists and academics to develop a new macroeconomic programme for the UK”. Their goals have some overlap with what I consider to be reasonable – reducing economic insecurity and inequality, climate action, etc. Some of their policies approaches are anathema (for example, UBI). Many of their council have been close advisors to the Labour Party at various times, including most recently. And they promote a macroeconomics that is not only incorrect but dangerously coincident with the mainstream thinking that has been part of the problem they claim eager to solve. And the failure of the Labour Party to win the December election against a Tory government that had inflicted awful austerity on the people is testament to the fact that their progressive narrative is in need of a radical change. The latest example of how this ‘progressive narrative’ really just reinforces the neoliberal frames they rail against is an Op Ed from a senior PEF council member (January 24, 2020) – – which was a promotional piece for his latest book. I do not recommend anyone purchasing the book.

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Tax the rich to counter carbon emissions not to get their money

Wednesday snippets follow. Tax the rich! That has become a misguided progressive Left mantra. The intention is to maintain public services including health, education and income support which are core issues for progressives. But then the neoliberal indoctrination that has infested this group intervenes. They seem to think the government needs the money of those with lots of it before it can provide essential and progressive public services and fight the climate emergency. They support political parties that set as their primary macroeconomic target the achievement of a bigger fiscal surplus than the conservatives at a time when there are more than 13.5 per cent of available and willing labour resources not working (either unemployed or underemployed) and households are carrying record levels of (unsustainable) debt. And these parties keep losing elections – it is a global phenomena, most recently observed in Britain. One of the reasons we need to tax the rich is to deal with their (grossly) disproportionate impact on carbon emissions. That is one of many reasons. But you should never include among those reasons a need by government for their cash in order to facilitate spending. Any progressive who articulates that argument is just reiterating neoliberal frames.

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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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US Labour Market – not yet at full employment despite low unemployment

On January 10, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – January 2019 – which reveals a labour market that that is still adding jobs, albeit at a slower rate than it was last year. The December performance showed that this moderation has not yet impacted on the unemployment rate – meaning that the employment growth is keeping pace with the underlying population growth with participation steady as indicated by the steady employment-population ratio. The Broad labour underutilisation ratio (U-6) remains high (but fell in December by 0.2 points) and the official unemployment is now hovering around levels not seen since the late 1960s. The U-6 indicator fell because underemployed workers are finding low-wage jobs in the service sector. Wages growth fell below the 3 per cent level for the first time since mid-2018 and real wages growth failed to match annual productivity growth. The worry is that the jobs being added represent a significant hollowing out of jobs in the median wage area (the so-called ‘middle-class’ jobs), which is reinforcing the polarisation in the income distribution and rising inequality. There is no hint, yet in the data, that a recession is coming any time soon or that that US labour market is at full employment despite the low unemployment rate.

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Introduction – The Last Colonial Currency: A History of the CFA Franc – Part 3

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 3 and the final part, which I will edit down to my preface for the book.

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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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Discredited academic dinosaurs continue to seek relevance

As many mainstream macroeconomics try to reinvent themselves after their reputations were trashed during and in the aftermath of the GFC, some are still trying to stay relevant by recycling the usual trash about deficits, public debt and bond yields that defines the New Keynesian orthodoxy in macroeconomics. That approach has been emphatically exposed as fake knowledge by the fact that none of the predictions that can be derived from that framework have proven to be accurate. On December 9, 2019, the UK Guardian took a rest from imputing anti-semitist motives to Jeremy Corbyn and published a sort of dinosauric-type article from Kenneth Rogoff – Public borrowing is cheap but ramping up debt is not without risk. Yes, the same character that claimed during the crisis that there was a public debt threshold of 90 per cent of GDP, beyond which, governments would face insolvency. When it was discovered the spreadsheet they had used to come up with that conclusion had been incompetently (or fraudulently) manipulated and that the actual data did not show anything of the sort, Rogoff should have slunked off and shut his mouth forever. But that is not the way these characters operate. Memory is short. Their position as an agent for their elites is well paid. And so they keep recycling the nonsense. Eventually, their influence will decline. But as Max Planck noted in 1948 “Die Wahrheit triumphiert nie, ihre Gegner sterben nur aus”, which has been reduced to ‘science advances one funeral at a time’, which is not a verbatim translation but an accurate depiction of how change is slow to come to the academy.

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US labour market – quantitative gains but qualitative losses

On Friday (December 6, 2019), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – November 2019 – which reveals a labour market that that is still adding jobs. The November performance was very strong in quantitative terms. The payroll employment change was well above the year’s average and the official unemployment rate remains at very low (relative) levels. The employment-population ratio is steady indicating that the labour market is producing jobs growth in line with population growth. The Broad labour underutilisation ratio (U-6) remains high (but fell in November by 0.1 points) even though the official unemployment is now hovering around levels not seen since the late 1960s. The worry is that the jobs being added represent a significant hollowing out of jobs in the median wage area (the so-called ‘middle-class’ jobs), which is reinforcing the polarisation in the income distribution and rising inequality. There is no hint, yet in the data, that a recession is coming any time soon.

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Puzzle: Has real wages growth outstripped productivity growth or not? – Part 2

Inspector Commissionaire Bill is back on the case today for Part 2 and the solution of the puzzle we posed in – Puzzle: Has real wages growth outstripped productivity growth or not? – Part 1 (November 20, 2019). The puzzle was relatively easy to understand. The RBA (Australia’s central bank) published analysis in its most recent – Statement on Monetary Policy (November 2019), which showed that since the early 2000s, real earnings per hour have been above hourly labour productivity. Yet, National accounts data and earnings-productivity data trends that I regularly publish show the opposite. So the puzzle is: How can the RBA say that workers enjoyed real wage increases above labour productivity growth in the early 2000s up to around 2012, when we know the wage share has been falling more or less over the entire period? In Part 1, we laid out the conceptual framework to help us understand what I am writing about today. The resolution is that both sides of the puzzle are correct in their own way. The issue comes down to measurement and this two-part series demonstrates, very powerfully, how perceptions that are shaped by the presentation of data (graph, tables, etc) rarely come to grips with the underlying methods used to construct the presentations. We have all heard the phrase – There are three kinds of lies: lies, damned lies, and statistics. By becoming more educated about how to use statistics, we can all break that nexus and deploy data more reasonably to advance our cases. That is what this two-part blog series is about.

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The evidence from the sociologists against economic thinking is compelling

One of the stark facts about the academic economics discipline is its insularity and capacity to deliver influential prognoses on issues that affect the well-being of millions with scant regard to the actual consequences of their opinions and with little attention to what other social scientists have to say. The mainstream economists continually get things wrong but take no responsibility for the damage they cause to the well-being of the people. A 2015 paper – The Superiority of Economists – published in the Journal of Economic Perspectives (Vol 29, No. 1) by Marion Fourcade, Etienne Ollion and Yann Algan is scathing in its assessment of the economics discipline. They say that mainstream economists largely ignore contributions by other social scientists and consider them inferior in technological sophistication, have a “predilection for methodological and theoretical precision over real-world accuracy”, largely ignore”the basic premise of much of the human sciences, namely that social processes shape individual preferences”, and parade an arrogance and superiority that masks the sterility of their analysis. In this context, I thought the 2015 Report from the Joseph Rowntree Foundation – Sociological perspectives poverty – was a breath of fresh air in its approach to understanding poverty. The empirical base it presents refutes most of the major assumptions and conclusions of economists who work in the field of poverty. A mainstream professor who was supervising my economics graduate program once said to me: “Bill you are a bright boy but you should be doing sociology”, which was an example of the negative control mechanism designed to weed out dissidents (like me). It didn’t work. But I always considered the disciplines of sociology and anthropology (not to mention psychology, political science, social welfare etc) to be important in my journey to become ‘well read’. Most economists, however, do not think that. Perhaps that is why I was able to be part of the development of Modern Monetary Theory (MMT).

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Q&A Japan style – Part 3

This is the third part of a four-part series this week, where I provide some guidance on some key questions about Modern Monetary Theory (MMT) that various parties in Japan have raised with me. Today I am in Tokyo and doing a day of press interviews and some TV filming to promote MMT within the Japanese media. I had been very clear in press interviews already (yesterday) that I hope they they represent our ideas correctly to the people of Japan. For example, at yesterday’s press conference, after my lecture in the Japanese Diet (Parliament), I said that I didn’t want any of the many journalists present to leave the room and write that ‘MMT thinks that deficits do not matter’ or that ‘MMT was about governments printing money and spending it’. I hope the message gets through. As I noted in Parts 1 and 2, many people have asked me to provide answers to a series of questions about MMT, and, rather than address each person individually (given significant overlap) I think that answering them in some depth is the more efficient way to help them to better learn and understand the essentials of MMT and real world nuances that complicate those simple principles. These responses should not be considered definitive and more detail is available via the referenced blog posts that I provide links to. Today, the question is another one about the Green New Deal and the Job Guarantee with a diversion into basic income.

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When the idea of a fiscal surplus becomes a talisman

It is Wednesday and I am travelling a lot today with limited opportunity to write. I am reading a lot though. Highly significant political debates with far reaching effects on the well-being of citizens once policies are implemented are conducted on a daily basis in our national Parliaments and in the media with little correspondence to reality. This is the norm for debates on macroeconomics, which dominate political news every day. There is this fictional world that has been created to keep citizens in check. When the painful policies the neoliberals haul out inflict pain, the solution is to blame something erroneous, attack it, which then just causes more pain. This is the norm these days when it comes to macroeconomic policy. And for the rest of us we suffer in the real world but reason in this fictional world, which is why it persists.

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US labour market slower but unemployment reaches lows not seen since the late 1960s

In last week’s blog post – Leading indicators are suggesting recession (October 3, 2019) – we saw some conflicting signals about the state of the US economy. The PMI data was looking quite awful whereas another composite index was telling a different story. On Friday (October 4, 2019), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – September 2019 – which reveals a slowing labour market, but, one that is still adding jobs. The commentators claim it is operating below expectation but the current trend is fairly predictable given the slowdown in overall economic growth. The US labour market is still adding jobs, albeit at a slower pace than last year. The Broad labour underutilisation ratio (U-6) remains high (but fell in September by 0.3 points) even though the official unemployment is now hovering around levels not seen since the late 1960s. The worry is that the jobs being added represent a significant hollowing out of jobs in the median wage area (the so-called ‘middle-class’ jobs), which is reinforcing the polarisation in the income distribution and rising inequality. There is no hint, yet in the data, that a recession is coming any time soon.

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Is the British Labour Party aboard the fiscal dominance train – Part 1?

As I type this (Sunday), I am heading to Brighton, England from Edinburgh. We had two sessions in Edinburgh yesterday (Saturday) and it was great to share ideas with some really committed people. We had to dodge a Hollywood closure of the streets (‘Fast and Furious 9 had commandeered the inner city to film a car or two swerving out of control or whatever, and I hope the city received heaps for the inconvenience to its citizens. But, with the direction now south, and tomorrow’s two events (more later), I am thinking the place of the British Labour Party in the progressive struggle. It doesn’t look good to me. The news overnight has been that the Party’s “head of policy and the author of the party’s last election manifesto” (quoting the Times today) has quit the Party claiming “I no longer have faith we will succeed”. The blame game starts and, as usual, Jeremy Corbyn’s leadership is in focus. The Times cartoon had the caption “They’ve got what it takes to form a government” with two ducks (in Brighton) looking at a sign against a wall saying “Labour Civil War Chaos”. What should we make of all this? My take is this: there is a clear paradigm shift going on in macroeconomic policy thinking. Every day (it seems) a new article pops up with someone claiming monetary policy has run its course and a new era of fiscal policy dominance is the only viable way ahead. That means that the central bank imprimatur on policy – determining whether such policy can continue to be effective and relying on interest rate adjustments etc as the primary counter-stabilisation policy – is over. That means that New Keynesian economics is over. That means that fiscal credibility rules that are neoliberal central are over. And that is why I think British Labour are looking poorly in the polls. They have taken advice from a number of characters who have pushed them into a ‘New Keynesian’ mindset and they are now ‘yesterday’s news’. They have missed the boat on these major shifts that have been going on. That is why they need a major shift in macroeconomic thinking. Only Modern Monetary Theory (MMT) offers a consistent and credible path for them to make that shift.

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US labour market – weaker than 2018 with occupational polarisation evident

Last week’s (August 2, 2019) release by the US Bureau of Labor Statistics (BLS) of their latest labour market data – Employment Situation Summary – August 2019 – reveals a labour market performance that is below the performance achieved in 2018 although there has been considerable month-to-month volatility. The US labour market is still adding jobs, albeit at a slower pace than last year. The Broad labour underutilisation ratio (U-6) remains high even though the official unemployment is plumbing new (recent) lows. And there has been a significant hollowing out of jobs in the median wage area (the so-called ‘middle-class’ jobs), which is reinforcing the polarisation in the income distribution and rising inequality.

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Australia’s broadband disaster has lessons for a Green New Deal strategy

I am working on a manifesto (‘White Paper’) linking Modern Monetary Theory (MMT) with a Green New Deal (GND) concept. I will announce an important strategic coalition I am forming to advance this agenda in the coming period and some great events to present the framework. As part of that process, I have been sketching some of the important guiding principles that I consider to be essential if a massive socio-economic transformation like the Green New Deal (or whatever we want to call the strategy) is to be successful. Lessons from history are a good starting point to understand why things go awry. In that respect, the largest national infrastructure project that Australia has embarked on for decades – the National Broadband Network (NBN) – is a object lesson in how not to conduct government policy when nation building. The Green New Deal is about nation building – creating a framework of infrastructure, education, skills development, employment, distributive mechanisms and more to take nations into the next century while reversing the environmental degradation that industrialisation and mass consumerism has wrought. The central role of the government as the currency issuer will be paramount. The whole transformation will not be successful while policy makers hang onto mainstream macroeconomic views about government financial capacities, which manifests into obsessions about achieving fiscal surpluses. This is why an understanding of MMT is central to any proposal to advance a GND. Without that understanding, we will always encounter the nonsensical issues that have plagued the NBN development and left it in a state of chaos and near-redundancy, when it should have underpinned our technological network for decades to come.

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‘Sound finance’ prevents available climate solution with massive jobs potential

When the governments in the advanced nations abandoned full employment as an overarching macroeconomic objective, and instead, starting pursuing what I have called full employability, they stopped seeing unemployment as a policy target (to be minimised) and began using it as a policy tool to suppress inflation. As mass unemployment rose, the politics were massaged by the mainstream of my profession who claimed that the level of unemployment that constituted full employment had risen (this was the NAIRU era) and so there was really no problem. Governments adopted the neoliberal line that they ‘didn’t create jobs’ and had to target fiscal surpluses to ensure their position was ‘sustainable’. The costs in lost income and human suffering have been enormous – most people would not have any idea of the massive scale of these losses that accumulate day after day. Now, it seems, the ‘sound finance’ school is going a step further. We are probably facing an environmental emergency in the coming period (years, decades) but the question commentators keep asking is not what we can do about it but ‘how can we pay for it’? So ‘sound finance’ has already destroyed the lives of millions of people around the world as a result of mass unemployment and poverty, now it is turning its focus on the rest of us. Madness. Paradigm change has to come sooner rather than later.

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How social democratic parties erect the plank and then walk it – Part 1

There is now a procession of wannabee Modern Monetary Theory (MMT) critiques coming out of the woodwork all around the place seeking cover from the criticisms coming from the likes of Larry Summers, Paul Krugman, and Kenneth Rogoff, who are regularly referred to as “the world’s leading economic thinkers” or “Nobel Prize-winning economists” as if any of that established authority. These ‘Nobel Prize’ winners are not Nobel Prize winners at all – the economics prize is not part of the original Nobel gift and was instead invented by a bank because economists were feeling left out (inferior). But in recent days, across two jurisdictions, where the so-called party of the workers – the Labour Party in the UK and the Labor Party in Australia – are struggling to gain electoral traction, and in the Australian case, just lost an election against one of the worst governments we have ever had, we have seen two erroneous attacks on MMT that really sums up the existential crisis facing social democratic parties – the loss of identity and revolutionary zeal. This is Part 1 of a two-part series examining how ‘walk the plank that you erect yourself’ strategies play out within our so-called progressive social democratic parties and deliver abysmal results.

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Talking of elephants – plain old, garden variety fiscal policy

If there were two lessons that can be taken from the GFC among others then we should know, once and for all, that, first, monetary policy (in all its glorious forms these days) is not a very effective tool for influencing the level of economic activity nor the price level, and, second, that fiscal policy is very effective in manipulating total spending and activity. Of course, those lessons provided the evidence that turned macroeconomics on its head because for several decades, as the Monetarist surge morphed into all manner of variants, tried to eulogise the primacy of monetary policy and rejected the use of fiscal policy. There were all sorts of justifications – time invariance, lags, politicians cannot be trusted, etc – but at the heart of the shift towards supposedly independent central banks was the political desire to neuter the capacity of governments to use their currency capacity to advance the well-being of the many, while at the same time, using that same capacity to advance the interests and real income shares of the few. Depoliticisation worked a treat for the top-end-of-town. The problem is that the lessons have not been learned and all manner of commentators still think that monetary policy is the king. Eventually, we will move beyond that but the pain of holding on to the myth is damaging for people, especially those who are without work, are underemployed or have been forced into early retirement by the poor economic performance in this austerity-biased era.

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Shorter hours might send us broke

It is Wednesday and just a short blog post today (short is relative I know). There was a proposal published recently (April 2019) by the British-based Autonomy Research Ltd – The Ecological Limits of Work. Autonomy pushed basic income and shorter working weeks with a healthy the ‘robots are coming’ agenda to boot. In its most recent ‘report’, Autonomy is claiming we have to dramatically cut working hours – like dramatically – but seems oblivious to the link between nominal and real. I think we will make more progress if we construct Green New Deal solutions within the current institutional realities. And, I just got my flame suit out of the cupboard where it sits on constant standby!

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