It is Wednesday so music and some snippets. I have updated the US unemployment claims data with a new map and state table. Shocking. We are working on updated estimates of what the Australian government would need to invest to run a Job Guarantee. We haven’t done that for a while because I didn’t want the press to get obsessed with dollar amounts. But as I am currently talking a lot about the Job Guarantee in the media, I thought some numbers would be useful as a comparative exercise against the JobKeeper wage subsidy, which is the central stimulus plank of the Australian government. The current estimates suggest that to create around 685 thousand jobs might require an outlay of $34 billion over the course of a year. That got me thinking. The main response of the Australian government is the $A133 billion over 6 months JobKeeper wage subsidy scheme. The Treasury claims it will be the difference between an unemployment rate of 10 per cent and 15 per cent. That difference is 685 thousand jobs. Then start doing some division and multiplication and you start to see that this doesn’t make sense as I explain below.
It is quite amusing really watching the way orthodox economists who know the game is up work like gymnasts to avoid actually spelling out directly what the facts are but spill the beans anyway. Last week (April 23, 2020), an ‘external member’ of the Bank of England’s Monetary Policy Committee, one – Gertjan Vlieghe – gave a speech – Monetary policy and the Bank of England’s balance sheet. If the message was taken seriously, then the way monetary economics and macroeconomics is taught in our universities should change dramatically. At present, there is only one textbook that seriously caters for the message that is inherent in the speech – Macroeconomics (Mitchell, Wray and Watts). The speech leaves out important insights but essentially allows the reader to appreciate what Modern Monetary Theory (MMT) has been on about, in part, for 25 years.
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.
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.
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.
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.
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.
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.
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!
Last week, the British Labour Party released its election – Manifesto 2019 – which they describe as “the most radical, hopeful, people-focused, fully-costed plan in modern times”. There is a lot to like about that Manifesto from a progressive perspective. However, in my mind, there were two unresolved tensions that I think damage the Party’s credibility. The first, is its, yes, continued embrace of neoliberal macroeconomic frames, epitomised by its so-called Fiscal Credibility Rule that has already had to be changed because so-called independent analysts agreed with my assessment that the manifesto and the ‘Rule’ were inconsistent. The second, is the Party’s position on Brexit, which I believe continues to hamper its chances of election and also brings into focus the inconsistencies in the Party’s stance and behaviour over the last 2 years. Elections are not won by counting votes up. Rather, they are won by winning seats, which means that votes are counted in specific constituencies (electorates). I have maintained the view that the Labour Party’s meandering position on Brexit, to satisfy the Europhile urban members, would damage them, given that the majority of their members of parliament were elected by Leave majority constituencies. Seats not votes win elections. It doesn’t matter if the majority of Labour voters are Remainers, if their are spatial disproportionalities in the vote spread. The latest YouGov MRP estimates of voter intention for the upcoming election indicate that my assessment may, in fact, turn out to be accurate.