One of the ways in which the neoliberal era has entrenched itself and, in this case, will perpetuate its negative legacy for years to come is to infiltrate the educational system. This has occurred in various ways over the decades as the corporate sector has sought to have more influence over what is taught and researched in universities. The benefits of this influence to capital are obvious. They create a stream of compliant recruits who have learned to jump through hoops to get delayed rewards. In the period after full employment was abandoned firms also realised they no longer had to offer training to their staff in the same way they did when vacancies outstripped available workers. As a result they have increasingly sought to impose their ‘job specific’ training requirements onto universities, who under pressure from government funding constraints have, erroneously, seen this as a way to stay afloat. So traditional liberal arts programs have come under attack – they don’t have a ‘product’ to sell – as the market paradigm has become increasingly entrenched. There has also been an attack on ‘basic’ research as the corporate sector demands universities innovate more. That is code for doing the privatising public research to advance profit. But capital still can see more rewards coming if they can further dictate curriculum and research agendas. So how to proceed. Invent a crisis. If you can claim that universities will become irrelevant in the next decade unless they do what capital desires of them then the policy debate becomes further skewed away from where it should be. That ‘crisis invention’ happened this week in Australia.
Australia is currently being shocked on a daily basis with the revelations in our Royal Commission on Banking, which show that our financial services sector (banks, insurance companies, financial planning, etc) is deeply corrupt, with criminal behaviour clearly rife. Hopefully, many of the top executives and board members of these firms will be prosecuted and do time. Another ‘bank’ that has totally lost any sense of moral compass, not to mention effectiveness, is the World Bank. Its behaviour over the years has been scandalous. Earlier this year we learned that its so-called ‘Doing Business’ strategy deliberately manipulated its reporting to undermine a democratically elected government (Chile). And, last week (April 26, 2018), the World Bank released the Working Draft of its upcoming – World Development Report 2019: The Changing Nature of Work – where it attempted to pressure governments into widespread labour market deregulation, which if carried through would further disadvantage workers and further redistribute national income towards profits. The World Bank has outlived its purpose. It is now a seriously dangerous international institution and progressive governments should set about defunding it.
Over the last few years, it is clear that Modern Monetary Theory (MMT) is achieving a higher profile and the attacks are starting to come thick and fast. I see these attacks as being a positive development because it demonstrates that recognition has been achieved and a threat to mainstream ideas is now perceived by those who desire to hang on to the status quo. Hostility and attack is a stage in the process of a new set of ideas becoming accepted, ultimately. Clearly, some new interventions never receive acceptance because they are proven to be flawed in one way or another. But I doubt the body of work that is now known as MMT will be discarded quite so easily given my assessment that is is coherent, logically consistent and grounded in a strong evidence base. As part of this evolution there are now lots of what I call ‘sort of’ contributions coming from mainstream commentators. One of the ways in which mainstreamers save face is to claim they ‘knew it all along’ and that the existing body of practice can easily accommodate what might be considered ‘nuances’ or ‘special cases’. We are seeing that more now, with the more progressive mainstream economists claiming there is nothing ‘new’ about MMT that it is just what they knew anyway. Even though that approach is disingenuous it is part of the evolution towards acceptance. People have positions to protect. These ‘sort of’ contributions demonstrate a sort of half-way mentality – a growing awareness of MMT but with a deep resistance to its implications. A good example is the UK Guardian’s editorial (April 15, 2018) – The Guardian view on QE: the economy needs more than a magic money tree.
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.
Here are a couple of Wednesday snippets on my (alleged) no blog post day. I have a great tip for the Remainers in Britian who are struggling to make any sense in their quest to hang on to the European dream (nightmare!). It is not a new argument but it has resurfaced in the US recently. Apparently, “the top US intelligence official” (words have meaning and intelligence usually means having some brain power) has told the US Congress that “the ballooning national debt … posed a ‘dire threat’ to … national security”. He told the Congress that the “fiscal crisis … truly undermines our ability to ensure our national security”. Truly used to mean something also. So here’s the thing all you so-called British Remainers. This will top your claims that Brexit will increase the rate of cancer in the UK. Just start raving on about threats to national security. A sure winner. It is the argument you introduce when you have run out of any semblance of an argument. Meanwhile, we now know that the British government, while in the EU, helped the right-wing forces (including the CIA) to kill the democracy in Chile in 1973, in what should be considered one of the more disgusting historical episodes. But then Salvatore Allende was clearly a threat to national security. What with all those Chileans that were improving their material standards of living under Allende and all!
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.
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.
There are times when so-called progressives outdo themselves with their (usually self-styled) ‘genius solutions’ to the ravages of neoliberalism. They come up with elaborate ‘solutions’ that people on the Left get feverishly excited about yet fail to see how obviously ridiculous these strategies are when all the options are allowed. They, in fact, step further into the mirky neoliberal world by trying to be progressive because they fail to see what the basic issue is. One recent example of this was the proposal by Britain’s Big Innovation Centre to divert the private sector into doing good for society in general. Apparently, the British government could resume control of the failing (privatised) essential services without laying out a single penny. This would apparently allow them to avoid running foul of Treasury borrowing limits yet satisfy the overwhelming desire by the British public for a restoration of quality services. It is clear that the British public are sick to death of the privatised services and are ready for a large revival of public sector activity. In that environment, why would the government, with such a powerful mandate and plenty of political cover, maintain the economic myths that were advanced to justify the (unjustifiable) sell-offs of public enterprises? Once we cut through these economic myths, it becomes apparent how lame these ‘solutions’, which perpetuate profit-seeking, corporate ownership of the essential services in Britain, really are.
I have been reading several reports in the past week – ranging from studies using dodgy input-output tables to claim the regions that voted most enthusiastically for Brexit will suffer the most – part of the never ending ‘modelling’ of the alleged disaster – to reports by the historians tracking the impact of austerity on the rise of the Nazis in pre-war Germany. All interesting. I am particularly researching the way in which the Common Agricultural Policy impacted on Britain and why it will be good to be free of it. But one report struck me as fundamental to the way in which neoliberalism has led societies astray and damaged the most defenseless citizens of the world. On December 13, 2017, the World Bank and the World Health Organisation (WHO) published its latest – Tracking Universal Health Coverage: 2017 Global Monitoring Report. This is an audit report to keep track of the progress towards the UN’s 17 Sustainable Development Goals, which were agreed upon in September 2015. One of those goals is health and well-being and within that ambit comes, among other targets, universal health care provision. We learn that “at least half of the world’s population cannot obtain essential health services” and health care service deficiencies are chronic at the poorer end of the income and wealth distribution. The reason is not a lack of real resources to be deployed. Rather, these appalling results are persisting because governments apply neoliberal ‘sound finance’ principles to their spending choices (with the IMF bullying them to do so). So we find major cuts to health care service provision in nations because they claim they cannot raise enough revenue to pay for the provision. In currency-issuing nations, no matter how low the average income levels are, that sort of claim is always spurious.
A cursory glance at the World’s leading tax havens illustrates the hypocrisy of politicians getting wound up about the revelations in the recently released Paradise Papers and the Panama Papers before them. Many of the havens are within the direct legislative jurisdiction of nations such as the US (which is itself a tax haven) and the UK, for example. And we should not forget that Luxembourg, Switzerland are key European homes of tax avoidance. Remember that the current President of the European Commission “spent years in his previous role as Luxembourg’s prime minister secretly blocking EU efforts to tackle tax avoidance by multinational corporations” (Source) ably supported by the Netherlands, another nation engaged in the practice. If the politicians were truly worried about this issue they could do something about it directly with the stroke of a legislative pen. Britain could, for example, eliminate Jersey, the Isle of Man, and its Overseas Territories from this corporate scam. The US could do similarly. The EU could bring in new rules to stop Luxembourg. But they don’t stop it, which tells you everything. But, the problem of tax avoidance and evasion is not fiscal. Progressives get stuck on that point. It is largely irrelevant. The real issues are inequality, power and macroeconomic stability. That is what this blog is about.