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.
When we published our latest book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World – last September, Thomas Fazi and I approached the UK Guardian to see if they would publish an Op Ed by us summarising the main arguments presented in the book. We received no response. Pluto tell us that the book is one of their better sellers since it was published. And it is not as if the topic is irrelevant in the Guardian’s assessment. That is clear from the fact that on April 5, 2018, they published one of their ‘long read’ articles by Rana Dasgupta – The demise of the nation state – which is a direct refutation of the ideas advanced in our book. This ‘long read’ also falls into the same traps and analytical errors that we point out has besotted the Left side of politics since the 1970s. The article is clearly part of the Guardian’s agenda to appear progressive but, in fact, be anything of the sort. As I have noted previously, the Guardian seems content to publish a torrent of anti-Brexit articles and criticisms of Jeremy Corbyn rather than provide any semblance of balance.
Today, I have a lot of travelling coming up. So time is tight. Regular readers will know my views on the Eurozone. I have held those views since the late 1980s when I was a young lecturer. Nothing has changed to change my opinion. It is an unmitigated disaster. And, in the face of all evidence to the contrary, the Europhiles on the Left and the Right continue to put out propaganda trying to defend their monstrosity. Here is a selection of the latest input from the elites on how the EU is the salvation of democracy and sovereignty and yet Eurozone Member States are to be treated like high risk car drivers – paying more for a pittance of fiscal protection from the technocrats. It really beggars belief.
This is the third (and final) part of my response to an article published by the German-language service Makroskop (March 20, 2018) – Modern Monetary Theory: Einwände eines wohlwollenden Zweiflers (Modern Monetary Theory – Questions from a Friendly Critic) – and written by Martin Höpner, who is a political scientist associated with the Max-Planck-Institut für Gesellschaftsforschung (Max Planck Institute for Social Research – MPIfG) in Cologne. Today, we will discuss inflation and round up the evaluation of his input to the debate. The overriding conclusion is this. As a researcher, I am instinctively driven to dig deep before I make public comment. It is easy to think you have an idea that is novel and then venture forth with it. One usually finds, fairly quickly, once you start digging into the literature, that the idea is anything but novel. Modern Monetary Theory (MMT) has been around for around 25 years now (give or take) but has really only gained traction in this era of social media (blogs, tweets, YouTube, etc). Many of the issues raised in the Makroskop article have been covered extensively over the last 25 years. Many academic and non-academic articles have been written by us on these issues. Thus, if my response here is not sufficient, then I urge readers to consult the massive literature we have built up for further clarification.
This is the second part of my response to an article published by the German-language service Makroskop (March 20, 2018) – Modern Monetary Theory: Einwände eines wohlwollenden Zweiflers (Modern Monetary Theory – Questions from a Friendly Critic) – and written by Martin Höpner, who is a political scientist associated with the Max-Planck-Institut für Gesellschaftsforschung (Max Planck Institute for Social Research – MPIfG) in Cologne. In this part we discuss bond yields and bond issuance. I had originally planned a two-part series but the issues are detailed and to keep each post at a manageable length, I have opted to spread the response over three separate posts. In Part 3 (next week) we will discuss inflation and round up the evaluation of his input to the debate.
It is Wednesday and just a brief comment on current affairs today. Tomorrow I will have Part 2 of my response to the German attack on Modern Monetary Theory (MMT). Nations more often and not claim to identify with a value system that is intended to bind the citizens together. It is a fine line between this and nationalism. The US for example, claims to be the land of the free, although that is a patently ridiculous thing to hold out given the nature of its society. Australia has long traded on the claim that it elevates sportspersonship, fairness, honesty above all else. In a sports’ obsessed nation, we hold ourselves out to be ‘fair but tough’. We play very hard – competitively – but honour sporting traditions. At times, this claim is at the sanctimonious extremes and we regularly criticise other sporting nations for what we perceive to be rule breaking – even rule stretching doesn’t escape our ‘holier than thou’ media and commentators. That myth has now been exposed. In fact, our most elevated national team – the Australian cricket team – has demonstrated that it stoops to deliberately conceived cheating (not spur of the moment) in order to win. And now these revelations are obvious, the national scandal that has followed, reveals how out of touch we have become with what has happened to our Society in this neoliberal era.
It is Wednesday so only a couple of snippets today. I was going to write about the BBC’s ridiculous attempt to portray Jeremy Corbyn as a sort of Russian-spy-type-dude in its Newsnight segment last Thursday (March 15, 2018). They manipulated his peaked hat (via Photoshop or through lighting) to make it look like a typical Lenin-type “Soviet stooge” hat and presented him against a red Kremlin skyline of Red Square (Source). The BBC denied they had altered the hat but then admitted the BBCs “excellent,hardworking) graphics team … had the contrast increased & … colour treated) but it was only accidental (not!) that he was made to look as Leninesque as possible. Amazing how deep the anti-neoliberal Groupthink has penetrated. This is the public broadcaster! But Groupthink is alive and well in Europe and doing its best to pervert, distort, stifle and suppress debate on important matters relating to democratic freedoms and the failure of the EU.
It is Wednesday, so only a few snippets only today, while I am working on six lectures I have to give in Helsinki over the next two weeks. The first of those lectures will be a public event. And looking at the weather I am about to undergo around a 45 degree Celsius turnaround from where I am today in Australia to where I will be next week! That is what happens when you go to Finland in the early part of the year. Anyway, here are some items of interest I hope.
A few things came up late last week which demonstrate the neoliberal Groupthink is alive an well at the highest levels of policy in Australia (and elsewhere). First, there was a story that a report from an Australian Broadcasting Commission (ABC) journalist on the Australian government’s corporate tax cuts was withdrawn after publication by the ABC after receiving several complaints from senior government ministers including the Treasurer and the Prime Minister. The story was not even radical. The journalist who I have had dealings with is a neoliberal herself when it comes to understanding macroeconomics. Second, one of the claims that the neoliberals make is that central banks are now firmly independent and not part of the political process. This is all part of the depoliticisation process whereby governments absolve themselves of political responsibility for policies that harm the citizens by appealing to ‘independent’ external authorities (such as the IMF, or central banks). Well we know that the claim about central bank independence is not true both in terms of the way the monetary system operates but also in the conduct of various central bankers over the last few decades. Last week, the Reserve Bank of Australia governor once again demonstrated how politically independent he is NOT by invoking key mainstream neoliberal myths about deficits and grandchildren. And then an old hack and largely failed British Labour politicians got in on the act. The Groupthink is powerful but becoming increasingly desperate under the increasing pressure from citizens for more accountability.
Last Friday (February 8, 2018), the Reserve Bank of Australia issued its latest – Statement on Monetary Policy – February 2018 – which in its own words “sets out the Bank’s assessment of current economic conditions, both domestic and international, along with the outlook for Australian inflation and output growth.” Of interest to me (apart from all of it) was the discussion of domestic economic conditions, in particular the discussion concerning wages growth. Workers around the world are struggling to gain any semblance of decent (if any) wages growth, are facing real wage cuts, and seeing national income redistributed to profits (even as investment ratios fall). They are observing increasing gaps between real wages growth and productivity growth, which means the workers’ share of output gains is falling. With sluggish investment ratios, it isn’t rocket science to realise that the redistributed national income is being pumped into the financial markets casino, which delivers little or no productive benefit to society and provide for continued economic instability. It is clear that major shifts have to occur in wage setting mechanisms to redress these imbalances. That should be a major focus of progressive activists. It is a global problem.