\t\t\t\tMy MOOC is in full-swing (over 3000 participants) and I am quite busy getting Week 2 up and running and then Weeks 3 and 4. So, today, we have our regular guest blogger, Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. Today he is examining the creeping tendency in the political debate and media to start to focus on questions like when will the debt be paid back. Journalists have been asking me to estimate the quarter when Australia can return to fiscal surplus, as if that is a target to aspire to. Anyway, over to Scott …
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There is a ‘model’ in political science referred to as the – Overton Window<\/a> – (named after its creator Joseph Overton) which relates to the way that ideas in society change and in-turn influence policy and politics.<\/p>\n From the many on-line resources, we understand that the Overton Window<\/a> is based on the core concept: <\/p>\n \n… that politicians are limited in what policy ideas they can support – they generally only pursue policies that are widely accepted throughout society as legitimate policy options.\n<\/p><\/blockquote>\n In the normal business of government what the public see as ‘legitimate policy options’ is influenced by the dominant ideological narrative, which in the case of most modern societies is neo-liberalism.<\/p>\n We get a constant feed through the mass media and other channels about small government, responsible budgeting, individual responsibility etc etc. <\/p>\n If we read a bit more, we also find out that according to the model:<\/p>\n \nThese policies lie inside the Overton Window. Other policy ideas exist, but politicians risk losing popular support if they champion these ideas. These policies lie outside the Overton Window.\n<\/p><\/blockquote>\n But we also find out that:<\/p>\n \n… the Overton Window can both shift and expand, either increasing or shrinking the number of ideas politicians can support without unduly risking their electoral support.\n<\/p><\/blockquote>\n And that:<\/p>\n \n… often, the window moves based on a much more complex and dynamic phenomenon, one that is not easily controlled from on high: the slow evolution of societal values and norms.\n<\/p><\/blockquote>\n One of the factors that is said to shift the window is the emergence of a crisis.<\/p>\n Indeed, as Maxwell Maltz observed in his 1969 book – Conquest of Frustration<\/em>:<\/p>\n \nClose scrutiny will show that most crisis situations are opportunities to either advance or stay where you are\n<\/p><\/blockquote>\n Now whether you buy into the ideas of the Overton window or not, there is no doubt that the health and economic crisis that appeared in 2020 has shaken things up.<\/p>\n And shaken them up significantly.<\/p>\n We are all aware of the size of the health emergency with millions of lives lost, significant suffering for those infected and their families, lost livelihoods as economies stumbled through 2020 and so on. <\/p>\n The events of 2020 have called for governments to step away, at least in some ways, from their business-as-usual approach understood in terms of neo-liberal frameworks of small governments, free markets and orthodox economics.<\/p>\n Politicians of all persuasions have readily admitted that the events of the past year have meant that they have had to look for guidance in different places.<\/p>\n To those observing from the sidelines in Australia, the Federal Government’s multi-billion-dollar rescue package is a far cry from earlier times when governments have been obsessed with reducing public spending to ‘bring the budget back into balance’.<\/p>\n It is certainly historically significant.<\/p>\n The Economist Magazine article (March 26, 2020) Rich countries try radical economic policies to counter COVID-19<\/a> – observed early in the crisis that:<\/p>\n \nPutting the economy on a wartime footing is supposed to be temporary. A look at 500 years of government power, however, suggests another outcome: the state is likely to play a very different role in the economy – not just during the crisis, but long after.\n<\/p><\/blockquote>\n And, the UK Guardian article (April 4, 2020) – Australia can be a better, fairer place after the coronavirus, if we’re willing to fight for it<\/a> = wrote that:<\/p>\n \nWhether a quick “snap back” is realistic is an open question, but it is clear that when this is over and the great fiscal and social reckoning comes, as it will, its form will be contested.\n<\/p><\/blockquote>\n The author was referring to the debate as to whether we will revert to “pre-crisis normal”.<\/p>\n Bill talked about this early in the pandemic in his blog post – We need the state to bail out the entire nation<\/a> (March 26, 2020), where he noted:<\/p>\n \nWe are now hearing conservatives, who previously made careers out of claims that government deficits would send nations broke and more, appearing in the media now claiming “We need the state to bail out the entire nation”\n<\/p><\/blockquote>\n Certainly during 2020 there were lots of calls to consider the new normal-a nod to the possibility of the Overton window shifting … perhaps. <\/p>\n Early in the pandemic in Australia, the Labour Opposition Treasury Spokesman Jim Chalmers wrote an Op Ed piece in the UK Guardian (April 1, 2020) – It’s not too early to start thinking about Australia after the crisis<\/a> – where he joined the chorus and claimed a major rethink of what we as a nation need to focus on was required.<\/p>\n {Bill editorial note: Chalmers is constantly going on about the public debt problem in Australia and the need for fiscal surpluses – some rethink}<\/p>\n Often, I spoke to people who were beginning to understand that it was possible for the government to fund a raft of measures without the hand wringing that usually went with government fiscal arrangements.<\/p>\n They were beginning to understand that sovereign currency issuing governments such as the one in charge of Australia didn’t need to borrow to finance anything. <\/p>\n On more than one occasion people mentioned to me that neither the Prime Minister nor the Treasurer ever seemed to fret over the large sums of money they were committing, they just did it.<\/p>\n Lots of these people were already embracing some of the basic Modern Monetary Theory (MMT) thought without realising it.<\/p>\n In Overton window speak, for many of these people the window may have been shifting as they began to see a different way of doing things.<\/p>\n They were more willing to support policy ideas, that in the past seemed to be impossible. <\/p>\n While many are now becoming comfortable with the idea that governments can, if they make the political decisions to do so, finance massive programs that benefit those most in need, this will not result in the change that a shifting Overton Window might suggest.<\/p>\n Old habits will be hard to change and those with the most to lose will dig in.<\/p>\n From the very start of the government’s response to the pandemic there was clear indications that any diversion from the normal would be short lived. Australian Prime Minister, Scott Morrison said in a Media Release<\/a> (March 12, 2020) that:<\/p>\n . On another occasion, he was quoted in the Sydney Morning Herald article (April 2, 2020) – Free childcare for all, but Morrison vows to go back to old ways<\/a> – as saying that:<\/p>\n \nThere is a snap-back there, a snap-back to the previous existing arrangements on the other side of this,\n<\/p><\/blockquote>\n And there was a necessity for:<\/p>\n \n… an intensity of expenditure during this period. And then we have to get back to what it was like before. And then we have to deal with the burden that will be carried out of this period of time.\n<\/p><\/blockquote>\n So clearly, while Australian PM Morrison and others left their ideologies at the door, they haven’t forgotten where they left them and will want them back soon. <\/p>\n I suspect that it won’t be too long until we hear more and more from the neoliberal doomsayers running around like Henny Penny shouting that the sky is falling, and we need to get back to responsible fiscal governance with budget surpluses, austerity and all the misery that it brings<\/p>\n NOT good!<\/p>\n Recently I was reading a paper by geographer, Manuel B. Aalbers titled – Neoliberalism is Dead …Long Live Neoliberalism!<\/a> – which was published in the International Journal of Urban and Regional Research<\/em> (Volume 37, Issue 3, May 2013).<\/p>\n He made the interesting observation:<\/p>\n \nConsidering the many blows neoliberal ideology has received in this crisis, it should already be dead, but like a creeping cancer neoliberal practice is able to resurface and show up in both new and unexpected, and old and predictable, ways\n<\/p><\/blockquote>\n He was talking about a different crisis, but his observation has significant resonance to where we find ourselves today.<\/p>\n Despite the crisis, despite the observations by many that a new normal is both needed and possible and despite the constant criticism of the business-as-usual approaches, that is exactly what we are going to get, business-as-usual. <\/p>\n Bill likes to talk about the fight continuing and it will.<\/p>\n Through blogs such as these and through ideas such as our Just Urgent and Sustainable Transition (JUST 2030) blueprint and through the spread of education on MMT such as the current MOOC – Modern Monetary Theory: Economics for the 21st Century<\/a> being taught by Bill and rolled out on the edX platform we will slowly see a shift in ideas, Overton window style. <\/p>\n We have seen it happen in the past and looking back at one writer in particular gives us some hope that perhaps our ramblings will make a difference.<\/p>\n I was cleaning out my office the other day in readiness to move to a new building at the university.<\/p>\n I also came across my copy of John Maynard Keynes’ 1931 book – Essays in Persuasion<\/a>.<\/p>\n In the preface he wrote:<\/p>\n \n… it was in the spirit of persuasion that most of these essays were written, in an attempt to influence opinion. They were regarded at the time, many of them, as extreme and reckless utterances. But i think that the reader, looking through them today, will admit that this was because they often ran directly counter to the overwhelming weight of contemporary sentiment and opinion …<\/p>\n Thus the author of these essays … still hopes and believes that the day is not far off when the economic problem will take the back seat where it belongs, and that the arena of the heart and the head will be occupied, or re-occupied by our real problems-the problems of life and of human relations …\n<\/p><\/blockquote>\n Like Keynes suggests, we need to refocus on the real problems. The fight continues.<\/p>\n Our edX MOOC – Modern Monetary Theory: Economics for the 21st Century<\/a> – is about to enter its second week (tomorrow, Wednesday, March 10, 2021) and will run for the next three weeks with new material being added each Wednesday as the weeks progress.<\/p>\n When I last checked there were 3008 total learners (as edX calls the participants), which is a really good sign that people are interested in learning more about Modern Monetary Theory (MMT) in an educational environment.<\/p>\n We have worked hard to provide a diversity of content and allow for a lot of interaction between students in real time.<\/p>\n Further Details:<\/p>\n NewcastleX page<\/a>.<\/p>\n
\nThe measures are all temporary, targeted and proportionate to the challenge we face. Our actions will ensure we respond to the immediate challenges we face and help Australia bounce back stronger on the other side, without undermining the structural integrity of the Budget.\n<\/p><\/blockquote>\nConclusion<\/h2>\n
MOOC Modern Monetary Theory: Economics for the 21st Century<\/h2>\n