{"id":13520,"date":"2011-02-17T16:03:17","date_gmt":"2011-02-17T05:03:17","guid":{"rendered":"https:\/\/billmitchell.org\/blog\/?p=13520"},"modified":"2011-02-17T16:03:17","modified_gmt":"2011-02-17T05:03:17","slug":"the-oecd-should-close-and-its-staff-redeployed-into-productive-activities","status":"publish","type":"post","link":"https:\/\/billmitchell.org\/blog\/?p=13520","title":{"rendered":"The OECD should close and its staff redeployed into productive activities"},"content":{"rendered":"

\t\t\t\tThe now totally discredited OECD has started a special section of their WWW site which they call – Restoring public finances<\/a>. Many person-hours of labour have gone into its construction and the documents and “analysis” (so-called) that you can access there. They even have an article from ECB boss Jean-Claude Trichet which would be laughable if it wasn’t so damaging (given his influence). The OECD is another of those organisations (such as the IMF) that promoted policy agendas (deregulation etc) which not only entrenched persistently high unemployment during the growth year but also set in place the conditions that ultimately led to the crisis. But like a drunk who sneaks a drink then denies it, the OECD seems incapable of introspection and acknowledging that it is part of the problem not the solution. Its policy agenda caused the crisis. Now it is lecturing the world in aggressive tones about how its policy agenda (unchanged) should be ramped up even more vigorously. My view is that OECD should just close its doors and its staff should be redeployed into productive activities.
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\nI loved the heading on this OECD page on its Restoring public finances<\/em> pages – OECD Factblog<\/a> – which had an article entitled Defying fiscal deficits<\/em>.<\/p>\n

The article was full of misnomers such as:<\/p>\n

1. “Government budgets are under pressure as the recession and economic crisis continue to take a toll”<\/p>\n

2. “The crisis has pushed public deficits and debt to unsustainable levels for many countries”.<\/p>\n

Apparently that is the assessment of “OECD experts” which note that “weak economic activity causes tax revenues to dwindle, forcing crisis-embattled governments to borrow in a cautious market to pay for services and welfare, and in some cases, still limping banking sectors”.<\/p>\n

We could have a Modern Monetary Theory (MMT) quiz to separate the facts from the fiction here. I remind people that this is a major international institution and not some well-funded personal toy – like the Peter G. Peterson Foundation Foundation or the Cato Institute – which we expect to pump out lies according to the misguided and devious agendas of their masters.<\/p>\n

The OECD began life as as the Organisation for European Economic Co-operation (OEEC), which administered the Marshall Plan funds aimed at the reconstruction of Europe after World War II. In 1961, this organisation became the OECD. It was a solid Keynesian-based organisation that well understood the role that activist fiscal policy played in promoting stable growth and full employment.<\/p>\n

Just like the IMF has been taken over by neo-liberals (PhDs trained at right-wing US academic factories) so has been the fate of the OECD. It is now one of the foremost institutions promoting mis-perceptions and lies about the way the monetary system functions and the operational realities that governments can exploit (via fiscal policy) should they have the will.<\/p>\n

The OECD Jobs Study agenda has been the principle policy framework since the early 1990s and has promoted privatisation, deregulation and massive welfare changes all aimed at weakening trade unions and making the most disadvantaged workers more desperate.<\/p>\n

Their endorsement of inflation-first macroeconomic policies where monetary policy plays the prominent role and uses unemployment to discipline the inflation generating process and fiscal policy is largely contractionary has left a legacy of persistently weak growth, entrenched high unemployment and rising underemployment.<\/p>\n

Last week I wrote a blog – The IMF – incompetent, biased and culpable<\/a> – which reported on the “independent” evaluation of the IMF and demonstrated how badly it had performed leading up to the crisis. The IMF helped cause the crisis we are enduring at present.<\/p>\n

The same could be said of the OECD. It only started to acknowledge that its policies were failing and based on wrong modelling in 2006 – but by then things had gone too far.<\/p>\n

Over the last 20 years or so, many academic studies sought to establish the empirical veracity of the orthodox view that unemployment rose when real wages and workplace protections increased. This has been a particularly European and English obsession. There has been a bevy of research material coming out of the OECD itself, the European Central Bank and various national agencies, in addition to academic studies. The<\/p>\n

overwhelming conclusion to be drawn from this literature is that there is no conclusion. These various econometric studies, which have constructed their analyses in ways that are most favourable to finding the null that the orthodox line of reasoning is valid, provide no consensus view as Baker et al (2004)<\/a> show convincingly.<\/p>\n

In the last 10 years, partly in response to the reality that active labour market policies have not solved unemployment and have instead created problems of poverty and urban inequality, some notable shifts in perspectives are evident among those who had wholly supported (and motivated) the orthodox approach which was exemplified in the 1994 OECD Jobs Study.<\/p>\n

In the face of the mounting criticism and empirical argument, the OECD began to back away from its hard-line Jobs Study position. In the 2004 Employment Outlook, OECD (2004: 81, 165) admitted that “the evidence of the role played by employment protection legislation on aggregate employment and unemployment remains mixed” and that the evidence supporting their Jobs Study view that high real wages cause unemployment “is somewhat fragile.”<\/p>\n

Then in 2006, the OECD Employment Outlook entitled Boosting Jobs and Incomes<\/em>, which claimed to be a comprehensive econometric analysis of employment outcomes across 20 OECD countries between 1983 and 2003 went further. The study sample for the econometric modelling included those who adopted the Jobs Study as a policy template and those who resisted labour market deregulation. The Report revealed a significant shift in the OECD position. OECD (2006) found that:<\/p>\n