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British Labour must escape from its austerity lite prison

I imagine we have all been keeping an eye on the evolving sham that is the British Labour Party election contest. When former leader Tony Blair, who will be forever remembered as being George Bush’s ‘poodle’ when he took Britain into the illegal invasion of Iraq and left a destabilised region, came into the fray urging party members to get a heart transplant if they thought supporting Jeremy Corbyn was an option, things turned really nasty. There has been a plethora of attacks on Corbyn alleging he is part of a sinister, return-to-Soviet control type candidate, an hysterical communist who wants to take Britain back to the dark ages, and more. What it tells me is that the Tories fear Corbyn as a candidate and would prefer the austerity-lite options like Liz Kendell to become leader because they know she won’t cause much trouble. What worries me is that Corbyn articulates a progressive set of values but might not yet have the macroeconomic understanding to defend them against a media attack primed to vilify anything that is not right-wing. British Labour must escape from its austerity lite prison but to do that they have to surround Corbyn with people who understand how the monetary system operates.

The British Independent ran an interesting story about Blair and Iraq earlier this year (January 25, 2015) – Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign.

It concluded that Blair lied about the evidence-basis of his decision to support the US invasion, which is described as “a strategic blunder”.

So while Blair supporters have been busy trying to rewrite history and mount a denial that his actions contributed to the chaos in the region that gave oxygen to the barbarous ISIS (or whatever they are called) (for example, Source), Blair, himself, took a break to enter the Labour leadership fray.

He gave a speech at the Labour ‘think-tank’ progress where he claimed that a “traditional leftist position” would not win a general election in Britain.

You can read the full speech here – HERE.

Blair was emphatic:

1. “radical leftism … [is] … outdated policy”.

2. “I wouldn’t want to win on an old fashioned leftist platform. Even if I thought it was the route to victory, I wouldn’t take it.”

He quickly descended into the argument of the so-called intellectual ‘progressives’, who are now virtually indistinguishable from the right-wingers, use to justify their move to pro-business, free market policy frames – globalisation. The world has moved on, allegedly, and people no longer value what they did, say 30 years ago.

They apparently do not value having well-paid and secure jobs – all the neo-liberal casualisation and the rise in precarious work is down to choice it seems.

They apparently prefer a society with increasing inequality where the poorest members are pillaried by austerity-biased governments and the high income earners make whoopee! Because, after all, trickle down tells us we can all be like the rich if we work hard enough.

The claim that increased openness of economies and larger financial flows has altered the capacity of currency-issuing governments to focus policy on domestic issues is plainly false.

Further, instead of seeking to address the emerging destructive dynamics of international financial capital, the New Labour government of Tony Blair, actually ensured these dynamics would mature – into the GFC.

He plainly followed lock-step in the path set by Margaret Thatcher with respect to financial deregulation

Remember the classic 2005 – Speech – by the Gordon Brown to the Confederation of British Industry (CBI):

The better, and in my opinion the correct, modern model of regulation – the risk based approach – is based on trust in the responsible company, the engaged employee and the educated consumer, leading government to focus its attention where it should: no inspection without justification, no form filling without justification, and no information requirements without justification, not just a light touch but a limited touch.

The new model of regulation can be applied not just to regulation of environment, health and safety and social standards but is being applied to other areas vital to the success of British business: to the regulation of financial services and indeed to the administration of tax. And more than that, we should not only apply the concept of risk to the enforcement of regulation, but also to the design and indeed to the decision as to whether to regulate at all.

The risk-based approach badly failed and was always going to fail.

Blair later said of the growing popularity with Corbyn during a press conference as part of his Progress Speech last week that (Source):

… well my heart says I should really be with that politics, well get a transplant because that is just daft …

He also said that Corbyn was the “Tory preference” and that Corbyn’s platform would take England “backwards”.

One of Corbyn’s replies was “I think Tony Blair’s big problem is we’re still waiting for the Chilcot Report to come out”. The Chilcot Report will report on the official enquiry into Blair’s role in the Iraq disaster.

But he also said that British Labour could no longer represent “austerity lite”.

There are two points which interest me in all of this.

First, the continual and increasingly desperate mantra from the Blairites that if it ‘isn’t right it isn’t right’ such that Corbyn is the Tories dream candidate for the Labour leadership would appear to be wrong.

The Tories would prefer the ‘austerity lite’ right-winger like the current, least popular candidate Liz Kendell. She is the Conservative’s dream candidate.

Austerity-lite can never beat the real thing and that was shown very clearly in the most recent election, where there was no real alternative articulated by the Labour Party, despite claims that its platform was too ‘left wing’.

There was an excellent article in the conservative The Times last week (July 25, 2015) – Labour knows its heart. Tony Blair doesn’t.

The author, a conservative to the hilt, argued that:

This month’s mutiny among the party membership — the surge of interest in the leadership bid of a good-hearted nobody with a beard — is not (as the squawks of every “new” Labour commentator you’d ever heard of, and some you hadn’t, would suggest) an alarming wobble in Labour’s Blairite march into the future: it is a direct consequence of it. Nobody bears greater responsibility for Jeremy Corbyn than Tony Blair.

His argument is that the “peasants’ revolt” is “against the takeover of our politics by retail theory”.

He wrote that “Our democracy has been infiltrated by an idea that owes too much to marketing and not enough to the competition of beliefs, values and interests that should fuel representative democracy.”

This is where the so-called progressive call to globalisation fails. Nothing much has changed in 30 years on the “beliefs, values and interests” front.

Sure we are all better connected (if you have income) and travel is easier. All sorts of things have changed. But in the heartland, nothing much has changed. We still want secure jobs with good pay. We still resent the top-end-of-town making off with the booty at the expense of the rest of us.

When Tony Blair says that Labour members should get a heart transplant he is really calling on them to abandon these ‘heartland’ concerns which define the left of politics.

Jeremy Corbyn, is the first leadership aspirant to connect with the souls of the members – to talk about their values and needs, which are not represented by ‘pro-business, austerity-lite’ mantras that the other candidates wheel out to impress.

The Times’ article concluded that:

The story of New Labour is the story of a heart transplant gone horribly wrong. How horribly, we are only learning this summer.

It is clear that the worst nightmare for the Tories would be the Corbyn leadership of the Labour Party. It would break the little ‘not right if it is not right’ club that has emerged as progressive parties the world over abandoned their hearts and souls to play the ‘austerity-lite’ dance with the conservatives.

What the Tories will have to face is a credible alternative that resonates with the values that people hold but have been disabused off by the TINA mantra delivered by both sides of politics.

A few weeks ago I wrote a short blog – Friday lay day – Job Guarantee becomes a mainstream preference – where I analysed the results of American research which showed that there are vastly different policy preferences held by high income Americans (in this case the top 1 per cent of the income distribution) relative to the general public.

The mainstream public clearly prefer less inequality, jobs for all, good pay and a strong state intervention to achieve those ends.

The results are exactly the opposite to what we assume about US society based on the continual outpouring of the media, fed by the conservative think tanks and their media bully boys and owned by the 1 per cent.

In other words, our stereotype of American public opinion is nothing to do with the majority view but rather the self-interested view of the top-end-of-town masquerading as American viewpoint.

The same applies elsewhere.

There have been some scandalous attacks on Corbyn in the last few weeks. The best one I thought was this Telegraph article (July 25, 2015) – I’ve lived under Jeremy Corbyn’s rule – it turned me into a Tory – which predicts that Britain would return to the Soviet-style government if he was elected to office.

The extent of the shrieking from the right of the Party tells us that they know the austerity-lite mantra is not cutting it anymore and their vacuous policy platform is doomed.

The second point of interest is that Corbyn, if properly informed provides the British Labour Party with the opportunity to completely redefine the debate to become – austerity or not – rather than how much.

That would be a game-changer because progressive ideas are best promulgated by large institutions that already have the infrastructure to reach the nation.

I say “if he is properly informed’ because I have been searching for any information that might tell me that Jeremy Corbyn has a superior understanding of how the monetary system operates and that it is this understanding that informs his rejection of austerity-lite.

I haven’t really found anything that would invoke any confidence in that regard.

His articulation at the values level – full employment, reduction of inequality, environmental sustainablity, place for trade unions – is all spot on and represents the backbone of a progressive stance.

But being able to argue that in macroeconomics terms is another matter.

The British Labour party has not learned the lessons of its failure. It is still entwined with their neo-liberal lust and still somehow think that it is sensible to advocate the same sort of policy ambitions that represent the core of that ideology.

They clearly haven’t realised that taking a ‘hard line’ on fiscal policy (austerity-lite) is exactly the same mindset that drove them into ‘light regulation’ both of which undermined the capacity of the economy to create full employment and stable growth.

To have full employment and stable, equitable growth the government has to be prepared to maintain aggregate demand and ensure markets are tightly regulated and the distribution of income is more equitable.

Capitalist economies cannot go on redistributing real income away from wages towards profits. There has to be a fundamental realignment in the relationship between real wages and productivity such that they grow together. I suspect the British Labour party hasn’t put the pieces together.

The rising income inequality led to a need for more private debt to maintain growth at a time where the government was praising fiscal drag. It was a cocktail that was always going to explode and so it did.

The better way has to address those endemic conflicts in the current policy mix and reverse the regulative environment to dramatically reduce the size of the financial sector, force banks to be banks rather than casinos, and force employers to pay higher real wages.

But above all, British Labour has to run a campaign of education that reverses the elevation of fiscal surpluses to virtue and responsibility and informs the electorate that with a large current account deficit the only way the private sector can avoid repeating its debt escalation is for the public sector to maintain a steady and larger fiscal deficit than now.

Conclusion

That is the challenge for Corbyn. He has to first educate himself on these matters. I am looking at ways to meet within him later in August when I will be in London.

I am operating on about 1 cylinder today. I realise the total number of available cylinders is questionable but one cylinder would appear to me to be a long way off capacity.

Yesterday was the first day in memory that I was unable to work. I thought, in my feverish delusion, that this little ‘break’ would give me a chance to catch up on reading etc. But with the words floating across the pages, blurred and undecipherable, I gave up on that plan pretty quickly and have spent the last two days moving between states of sleep and aching. Today – a bit better.

So thanks to all the well-wishers on the comments and by E-mail. I appreciate the thoughts. I won’t let it happen again (-:

Book launch event – advance notice

The official book launch for my new book – Eurozone Dystopia – Groupthink and Denial on a Grand Scale – will be held on Monday, August 31, 2015 at the University of Maastricht, the Netherlands.

The event will run from 13:00 to 15:00 and there will be two excellent speakers:

1. Dr László Andor, former Commissioner for Employment, Social Affairs and Inclusion in the Barroso II administration of the European Commission.

2. Professor Arjo Klamer, Professor of Economics of Art and Culture at Erasmus University in Rotterdam, The Netherlands. He “holds the world’s only chair in the field of cultural economics”.

The public is welcome to the event and there will refreshments available.

I am also to offer a Special 35 per cent discount to readers to reduce the price of the Hard Back version of the book.

Please go to the – Elgar on-line shop and use the Discount Code VIP35.

Front_Cover

That is enough for today!

(c) Copyright 2015 William Mitchell. All Rights Reserved.

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    This Post Has 43 Comments
    1. Hi Bill,

      Sorry to be a nitpicker but it should be “the Tories fear Corbyn…. “.

      The Labour leadership used to understand that the British economy wasn’t like a household economy. I can remember Michael Foot taking Margaret Thatcher to task on this. But gradually their collective wisdom seems to have been forgotten. Jeremy Corbyn has been around long enough to remember all this so I’d be surprised if his economic knowledge was that poor. But, he does say things which aren’t at all MMT compliant so it would be good if you could meet with him.

      He’s the bookies favourite to win now. Thye don’t usually get it wrong!

      I hope you’re feeling better. Flu jabs are the way to go. Worth every penny!

      Regards

      Peter

    2. I have had the same thoughts regarding Corbyn’s macroeconomic knowledge.
      I have mentioned to my local Labour MP about the idea of Corbyn aligning with a progressive economist who understands modern money. However, it turns out my local MP supports Liz Kendall, so will have no interest in the idea.
      I do hope the meeting can be arranged though. Even if he does understand modern money the “how are you going to pay for it?” favourite media question is a difficult one to answer politically when the entire nation has been duped into the household budget narrative.

      It’s great to hear that you’re on the mend.

    3. Dear Bill, feel better! We need all your 12 cylinders! :-)

      They asked Margaret Thatcher what was the greatest achievement of Conservative party. Shy replied: “Tony Blair!”

      On the other hand, the progressive candidate for president in US, Bernie Sanders, gathers the biggest crowds everywhere he goes to speak, no matter if it is red or blue state. And his leftist language sounds pretty normally and appealing to American people.

    4. Great article. I have written to Jeremy myself – but no reply. I hope you can meet him and give him some powerful ammunition!
      Hope you’re back to full fitness soon.

    5. Bill it seems does not get it – The Iraq war was a wild success for the capitalists.
      Today we have millions of displaced refugees crossing the Med.
      People without hearth or village connection.
      Individuals who can be shaped more easily by the money power rather then the now questioning residents of truly broken capitalist countries.

      I think we have all drank the liberal materialism wine of labour and found it wanting.
      Another corporatist drone of the banks is the last thing we need.
      The lack of a social credit force within the landed section of the conservative party is more surprising in my opinion.
      The Venetian party rules both sides of the house.

    6. Glad to hear you are back on your feet.
      If you manage to meet with corbyn and fill him in on the monetary realities that would be great.it is very frustrating when I even hear him talk about deficit reduction.

    7. If you could organise such a meeting in the House of Commons and invite other interested parties via the People’s Parliament that would be excellent.

    8. The chaos that exists in much of the middle east today is the legacy of the muddle-headed and ill-informed decision by Blair and Bush to invade Iraq. In regard to that invasion, the citizens of both the U.S. and the U.K. had the wool pulled over their eyes by well-funded spin and propaganda machines — along with citizens of other (largely english-speaking) satellite states who have always marched in lockstep with them. Clearly, Blair is in total denial about his role in creating this catastrophe.

    9. There is no doubt the American point of view is hugely disparate, but one wouldn’t know it if only the MSM, or better-PSM [partisan media network] is heard. Many MMT adherents are Americans and many more are despairing of their government. I have just discovered a book “Hormegeddon” by Bill Bonner, which while not being MMT cognisant has a great deal to offer in analysis of our civilization. He takes it beyond the pure economics perspective of MMT to the consequences of our continuing energy and resource consumption, which “Dork of Cork” seems to allude to here.
      What I am saying is that we are now living in a ‘Global Deflationary Depression’ [Nate Hagen’s term] He says started “by a continual money machine that creates principal out of thin air- but not interest- and which has to be paid back with growth based on energy and non renewable resource flows…”

      Bonner describes The Declining Marginal Utility of Energy. “Rich countries seem to have reached the point where additional inputs of fossil fuel energy do not produce substantially higher levels of output. It is hard to put new machines into service profitably. That’s why energy use is now declining in the US, Japan,” etc. It doesn’t pay!

      IMO we are in terminal decline. Hiding it with false use of GDP which Bonner calls a deceit, a total fraud. The cost of GDP growth is More Debt! Hagens writes that the economy is a heat engine using 7.1 milliwatts of energy per dollar. But we live in a world where financial claims far outweigh the natural resource and energy ability to service them.
      Any Company or Nation that reduces energy use [and that cannot print their own currency] will be severely disadvantaged. 90% of the global work force is carbon co-workers. “we” want to fire them. It doesn’t make any sense.

      So whomever the UK Labour party wants as leader really needs to understand all these trials we will face and many of which are doing damage now. If you do meet Corbyn, Bill, Give him an ear full!

    10. The attacks on Corbyn, from the Blairites, are already getting personal and very nasty

      This, in the torygraph
      http://www.telegraph.co.uk/news/general-election-2015/politics-blog/11677715/Jeremy-Corbyn-is-not-a-serious-politician.-I-should-know.html

      And this sort of stuff across social media

      http://discussion.theguardian.com/comment-permalink/56644282

      But he’s not difficult to get in touch with. Try his constituency office. They handle his ‘diary’

    11. Sorry that you’ve not been well – speedy return to full cylinders.

      Richard Murphy of Tax Research blog has been co-opted by the Corbyn team and he compares Jeremy Corbyn’s Peoples’ QE as being identical to Nef’s Green New Deal.

      http://www.taxresearch.org.uk/Blog/2015/07/22/technical-support-to-jeremy-corbyn/
      http://www.taxresearch.org.uk/Blog/2015/07/08/jeremy-corbyn-renames-green-qe-as-peoples-qe-but-thats-fine-by-me/

      He wrote in March ’13 ‘It took me a little while to realise I am what is now called a Modern Money Theorist.’ – See more at: http://www.taxresearch.org.uk/Blog/2013/03/13/modern-monetary-theory-means-we-need-never-tolerate-unemployment/#sthash.pKJGFued.dpuf

      In addition, you probably already know Ann Pettifor who is a member of the LP, but there are also a number of Labour MPs close to Jeremy Corbyn, like Kelvin Hopkins, Michael Meacher and Richard Burgon, who are ‘Keynesian’ in outlook. Unfortunately, many are likely to be away at the moment but I am related to one of the above and will see if I can message him.

      I hardly dare hope that Jeremy Corbyn will win the LP leadership but regardless, the genie is out of the bottle and either sooner or later the madness of austerity-based economics will be exposed as simply a means to redistribute wealth upward and offshore.

    12. Hi Bill
      In a recent Labour Party leadership speech, Jeremy Corbyn was quoted as saying that ‘austerity was a political choice, not an economic necessity’. Must have been reading one of your blogs!!
      Best wishes for a full recovery.

      Steve

    13. Sue, great that you included the link to Richard Murphy. It is unfortunate that he is quoting Dale Pierce rather than Bill or Randy Wray directly. Pierce is quite quotable. Perhaps that is why Murphy selected that particular article. I personally would have selected Bill’s How to Discus MMT post of November, 2013. Nevertheless, perhaps any road that takes someone to MMT should be encouraged.

      Hope you are successful in getting in touch with the relevant relative, as the campaign is becoming all too predictably rather nasty, bringing all kinds of people out of the woodwork.

    14. The stories about Corbyn being the Tories choice are nonsense.
      Maggie T said her greatest legacy was New Labour.
      They want a safe second eleven to send in on a sticky wicket if necessary.
      The other drawback apart from his understanding of monetary mechanics is
      a far from charismatic media presence and although it shouldn’t it will
      lose him votes.

    15. The problem with the progressive left in the UK is that they are very fond of the Benevolent Dictatorship of the central bank.

      They love the idea of a ‘higher power’ that they can appeal to so that if those Nasty Tories ever do get the reins of power there will always be a progressive father figure they can appeal to and override the government choices – whether the central bank and its ‘QE’ benevolence, or the EU and its ‘community law’.

      And then they seem surprised when the ‘higher power’ is taken over by the Tories and keeps any progressive government from achieving anything.

      This ‘central bank decides how much money’ is the same Very Clever People game that led us to the financial collapse and the destruction of Greece.

      The government should decide what needs to happen financially and, if that is passed by parliament, all organs of the state should be required to support it.

      There is absolutely no need for this silly marketing game of ‘QE for the people’. It’s just the Ways and Means account at the central bank dressed up in marketing gloss.

      Time to be honest.

    16. Corbyn is very classic socialist in his financial approach – if the published rhetoric is accurate.

      Tax the rich and redistribute to the poor. Spend on infrastructure projects that can be classed as ‘capital’. ‘Reform’ the unreformable EU, and whatever you do don’t restrict immigration.

      All of which suffer from the usual problems of old style Keynesianism. You can’t bring skilled people and capital goods into existence via the Holy Power of Taxation. If you over spend them, you just cause inflation.

      And you can’t introduce a Job Guarantee unilaterally into the UK in an EU with open borders, since it would flood the country with immigrants that simply could not be housed or serviced by the available public institutions, or fed from the controlled land area.

      So you end up with the usual shuffling things around a bit, scratching heads as projects fail because of lack of redeployable real resources and more slums and complaints over public institutions as they get clobbered with excess immigration in a small country.

      Corbyn is probably the best thing available at the moment, and my £3 is in the voting pot, but there is no evidence of an advanced understanding of monetary economics. The people mentioned on this thread are very much of the ‘altering liquidity preference’ mindset. To which I would add Wren-Lewis as the British answer to Paul Krugman who is a dyed-in-the-wool New Keynesian.

    17. Neil, Richard Murphy doesn’t appear to be in this New Keynesian mindset, if we can believe what he has written. While I agree about Wren-Lewis, I remain uncertain about ALL the others mentioned. What they have said in the past may not be what they will say now in every respect. And that goes for Corbyn. While subtle nuances can be used to confound, nevertheless, they may well matter here. Corbyn is going to have to change his views a little to be in accord with economic reality, for instance, in how the monetary system actually works, which I don’t think he completely understands. Personally, I don’t see him as antediluvian as you seem to.

    18. All Labour need to do is attack the Bank Of England.

      They need to challenge it day after day after day. They need to expose the simple double entry book keeping for what it is. They need to remove the smoke of mirrors so the British public can see it in all its glory.

      It is not a hard task. The fraud potrayed by the Bank Of England is easily exposed with the right questions and attacks. This is where Bill comes in. Bill could remove the smoke and mirrors in no time.

      As soon as the BOE is reduced to the reality. Fiscal Conservatism and neoliberalism is dead and they’ll never be able to reverse it once everyone knows the tricks they use.

      Corbyn is going to get alot of air time. He needs to use it wisely and tear the BOE apart in full view of BBC viewers. He needs to destroy it and say out loud it has been hijacked by vested interests and then say who he would put in charge of it.

      It’s imperrative he gets the public asking questions about what it is the BOE does.

    19. The left / Labour needs to be much bolder in their approach.

      Frankly, there is a lot of low hanging fruit in my humble opinion.

      For example, why not slate a VAT cut of 50% if elected, just for starters?

      Who would be against such a thing?

      Consumers and of course High Street would be overcome with glee at the obvious benefit to both sectors. Granted, the public response may well be muted from the ruling elite, however, they know full well that their bottom line would improve as the great unwashed masses possessed more purchasing power.

      Labour / the Left doesn’t need to place any focus on monetary or such voter abstract issues as the deficit or sovereign debt, they really do not. If any of these numbers were not published for a decade or so who would notice the difference? Not the voter, that’s for certain.

      They should take a page or two from the right and accept that facts don’t matter in the political arena debate.

      Of course I have simplified things, however, the main thrust is that Labour / Left has to be brutally blunt in the formation of their platform.

      Being a cheap knock-off of the Tories etc. is or should be a non-starter as the polls have demonstrated.

    20. Neil Wilson: And you can’t introduce a Job Guarantee unilaterally into the UK in an EU with open borders, since it would flood the country with immigrants that simply could not be housed or serviced by the available public institutions, or fed from the controlled land area.

      Neil, as I have said before, this problem is imaginary. The UK is not Liechtenstein or even Luxembourg.
      That the modern UK would be unable to house or feed any credible immigrant population is ludicrous. Yes, it would have a problem if every damn person in the EU moved to the UK. Is this likely?

      The UK has a forgotten tradition of openness. There were no restrictions in the 19th century UK, or most other places. The 19th century UK & many other countries were able to house and feed immigrants – but the 21st century UK isn’t?
      See Migration: Britain’s hospitable past

      Not a few parliamentarians proclaimed Great Britain as the last bastion of freedom because it had no immigration restriction policy. Conversely, the US could not, or should not, proclaim itself the land of the free, because it did. British nationalism was thus defined by a commitment to open borders; a stunning reversal of the current situation.

      and

      Of all the global locations where race-based immigration restriction laws proliferated c. 1900, it was in the British parliament, behind the scenes in Whitehall, as well as in the East End, that resistance was strongest and clearest.

      I suspect the heart of such mistaken thinking is residual getting things backward. For a JG is not “state-subsidized employment”. It is the state & society being subsidized by the workers, in return for a state-determined payment, a state promise. A small fraction of the new workers can build the housing for them all, if need be.

    21. Derek, could you elaborate, if you have time, what you mean by the fraud perpetrated by the BoE? I am uncertain quite what you are referring to.

    22. Daniel d the Labour Party will not be able to avoid the deficit question.
      It is the staple question of all media politics.
      Best to meet it head on .Best to avoid the historic government compromise with the
      wealthy and not rely on take up of bond issues to ‘fund’ the deficit.
      We need to move to open monetary transfers and QE for the people can be an
      effective political tool to undermine the household debt analogy which has captured
      the centre ‘left’ so not surprising,y the population as well.

    23. Kevin Harding says:
      Friday, July 31, 2015 at 16:22


      The deficit question is a fabrication, it is a self serving construct by the right. It has NO basis in reality other than a function of national book keeping.

      There is no reason that Labour or anyone else needs to play the same game, period.

      Even acknowledging that the “deficit” is somehow a real concern renders the Left useless.

      Again, I ask, what does any individual actually care one way or another about some fictional deficit or sovereign debt number? It does not affect them in any way personally.

      How long has Britain been a sovereign nation and how long has it been broke ?

      The argument that the deficit and sovereign debt is an issue is laughably bankrupt. The Labour movement / party isn’t filled with total morons, so why do they act that way?

      You like the current Labour / Left supporters miss the greater point, which, goes a long way to explaining why the election results are as they are.

      If Labour continues to let the Tories and the right wing define who they are, they will never be successful. No surprise, see the election results, which even the thickest of the thick cannot deny.

    24. “Yes, it would have a problem if every damn person in the EU moved to the UK. Is this likely?”

      Of course it is likely that every *unemployed and underemployed* person in the EU will move to the UK, if the UK is offering a guaranteed job to anybody who turns up at the living wage – which is how a Job Guarantee has to run if it is to discipline the private sector job offers.

      What you forget is that in an open EU, it is the entire unemployed of the region that is the unemployed of the UK. Have you not heard what is happening in Greece?

      We’ve already got the situation where there is a housing shortage, and a education shortage because of immigrant populations. Now that can be fixed to a certain extent, but it depends upon the flow rate.

      You are talking about millions of people in a world where travel is much easier and where agricultural productivity has not improved sufficiently to maintain the population. It’s near impossible with the land area we have.

      So the illusion is in the minds of those who would rather have open borders to ‘save’ people from abroad rather than ‘save’ the people who are actually still here.

      The UK cannot provide work for every unemployed person on the planet. It is not a large country.

      And that’s before we get onto the morality of stealing skilled people from other countries. Exactly where in the world do they have a medical system so good that they have a surplus of doctors and nurses that the UK can steal?

      Nobody is suggesting migration should be banned – although the open borders people imply that everybody else is suggesting that in the most disingenuous way. It means moving from a completely open border to one with a visa restriction along the lines of Canada, Australia, New Zealand, etc, and if there is open borders it is only with other countries implementing the same Job Guarantee, national health and national education systems that the UK should have.

      It’s time for the open borders believers to decide whether stealing skilled staff from other countries in a beggar-thy-neighbour fashion is appropriate.

      And whether it is more important to allow completely open immigration than it is to eliminate poverty completely and immediately amongst the people who already live in the country. Because you can’t do both.

      Labours obsession with open borders is the same as their obsession with the EU. It plays them right into the hands of the free marketeers once the reality that they can’t actually square the circle hits home.

    25. I think Jeremy is in the deficit dove position, because I heard him say that we should not be considering reducing the deficit until we have got people back to work, and repaired damage to public services etc. I may have the exact wording wrong but I am confident of the dove nuance.

      There are a range of issues here that I think Jeremy would benefit from. (So would I!).

      There are the constraints caused by the Maastrict and Lisbon Treaties which the UK signed even though we are not in the Eurozone, I believe may restrict government spending. The Maastrict Treaty limits deficit spending to 3% GDP, and an article in the Lisbon Treaty restricts government monetising debt through the central bank.
      This means the Central bank buying government debt, I believe.

      Would Jeremy even after an education in MMT, need to work with the EU to reform these treaties, to make a Keynesian style recovery possible?

    26. @ Some Guy and Neil Wilson,

      1. I don’t see how it would be possible economically for one entity in an economic zone with open borders to offer substantially higher benefits without fiscal transfers to offset, especially when the country with more attractive benefits has a much higher standard of living than many other entities. It seems the only block to migration to the more economically beneficial conditions would be some other obstacle like lack of affordability of transportation.

      2, There are also social factors, which are probably more significant than economic ones when there is a great deal of social asymmetry in the zone in addition to economic.

    27. At the risk of becoming a brown noser :

      The book is superb.
      I’m in about 230 pages. The French and the Germans are getting round the SGP rules.
      And I’ve learnt a ton of stuff.

    28. Bill:

      I do agree with your concern about how much Jeremy really understands about modern monetary theory, I put a statement to him and asked him to clarify to an audience in Bristol why it was true.

      Knowing he refuses to be negative towards his adversaries and rather prefers to answer from his own perspective, and win peoples trust that way, I said this:

      “Any politician that tells you that we have run out of money, that the country is broke, that we can’t afford our public services, is actually lying to you.”

      To which I received no answer, unfortunately my statement came at the end of the proceedings and he answered everybody’s except mine, although after my point a right wing trade unionist may have thrown him by attacking his stance on defence as Bristol was and still produces Aircraft parts and engines, he remarked that Rolls Royce depended on government contracts to the military. Whether that threw him or whether he did not fully understand my statement was not clear to me.

      I have talked to him on two occasions, the first time I stated openly that we should use debt free money to spend into the economy and public services, where I said that “we can’t afford to wait for some multi billionaire to come along thinking that he will create jobs in order to make more profit for himself”. We have been waiting for that over the past forty years, and all that has happened is that they have migrated to the far east.

      He agreed with that though, but I am not sure whether he fully understood the Bank of England could be the vehicle to achieve that.

      On another matter, I wonder whether you have a view on a theory that we should not nationalise the Banks, which I feel is essential to control the economy, but that we should just nationalise money, by stopping the Banks from issuing it through debt.

      In my view we need to nationalise the banks, because they will always undermine government in order to maximise their profits for themselves. We just can’t trust them. Fred The Shred asked why when he was CEO of HBOS, why he did not see the crash coming, he said, “he did not really understand banking, he was trained in marketing”. which most CEOs are, but again whether he knew or not, can we believe him?

    29. I’m with Daniel D. on his above posts (except when he said ‘period’ instead of ‘full stop’ :-D )

      Also, to Some Guy earlier in the thread, I’m afraid you couldn’t be more wrong about the UK’s capacity. And I’m also afraid that comparisons with previous centuries just don’t apply for the most obvious of reasons, as well as more complex ones.

    30. The Left do have some measure of understanding of the monetary system I think.
      Always important to remember Corbyn is part of a collective.
      If you check out John McDonnell’s speech in Parliament on Youtube where he gives a tribute to Tony Benn, he mentions the importance of ‘taking back control of the Bank of England. and making it work for people’

    31. Daniel d of course people should be concerned with the deficit because as MMTers know
      this is their surplus.If people want to save and there is every indication that they do
      then they should be for government sector deficits.
      I think at every opportunity progressive politicians should point out the other side
      of the macro accounts but I repeat there is no way in the current media driven political
      debate for any political party to ignore the deficit/surplus question.That being the case they
      have to meet the debate head on .Whether Corbyn has the knowledge and the
      presentation skills to head such a debate is very questionable but I am heartened by
      his references to people’s QE he is saying sovereign monetary power can be used to
      plan for citizens long term benefit.

    32. Look, everybody wants open borders. It is a wonderful ideal. All we are saying is you restrict *open* immigration from countries will full employment and universal healthcare. Otherwise you go through a points based system (and everyone from everywhere is treated the same, not like current EU and non-EU split.) This is the pragmatic way to open borders. As the open currency area expands, it eventually reaches a tipping point where the whole world has not only open borders but full employment and universal healthcare! Although this may be utopian thinking on my part.

    33. Some guy:

      ” it would have a problem if every damn person in the EU moved to the UK. Is this likely?”

      How about every unemployed person in the EU moved to the UK? That would be about 23 million people. There would be a problem for the simple reason that the average person in the UK would insist it to be a problem. What you or I might think wouldn’t matter.

      So if we were to have a JG program in the UK then it would have to be on a reciprocal basis. French people would be welcome to take up a JG in the UK if British people were able to do that in France.

      Politically, it couldn’t work any other way. It’s just not possible.

    34. Neil: Of course it is likely that every *unemployed and underemployed* person in the EU will move to the UK, if the UK is offering a guaranteed job to anybody who turns up at the living wage – which is how a Job Guarantee has to run if it is to discipline the private sector job offers.

      No, so far from being “of course”, this is preposterous. People just don’t move that much! They don’t even move that much for jobs inside the USA, with far fewer social barriers of the type Tom mentions. The open borders EU has seen differences in unemployment without “every unemployed & unemployed person moving”. Spain, saw ca 500,000/yr immigration during its housing bubble, boom years, because of its location and other factors, many arriving from outside the EU. (Interestingly about 1 million Britons live in Spain. Open borders work both ways.) This was a rather extreme case, so it is unlikely immigration to a UK with a JG could normally exceed that.

      What you forget is that in an open EU, it is the entire unemployed of the region that is the unemployed of the UK. Have you not heard what is happening in Greece?
      So in the 19th century, the unemployed of the whole world, not merely Europe’s unemployed were the unemployed of the UK. Have you not heard of the famines in India & elsewhere, the pogroms in Eastern Europe back then? Again, this is hard to take seriously.

      You are talking about millions of people in a world where travel is much easier and where agricultural productivity has not improved sufficiently to maintain the population. It’s near impossible with the land area we have.
      No, travel for immigration is not all that much easier. The real jump in mobility was during the 19th century – railroads. Agriculture is far more productive now than in the 1900 UK- the big jump over a Malthusian constraint was after mobility increased- during WWI with the discovery of the Haber process.

      Worrying about food scarcity due to immigration is ridiculous. People don’t move to get jobs – however well paid they are – if they are informed they will starve on arrival. Like every other imaginary “problem” caused by prosperity = the JG – it solves itself. It is a tribute to how well fed the rich “first” world is, how far out of touch with hunger it is that sane people can say such amazing things. E.g. Yves Smith says that Greece exiting the Euro will cause a famine! Worrying about the UK, even flooded by the highest believable number of immigrants – indeed every unemployed person in the EU – being unable to feed itself because of a lack of agricultural productivity is only a degree less absurd.

      A convenient source of facts is the Economist Intelligence Unit Global Food Security Index The UK is #15 / 109 in the world in food security overall – and next door to #3 Ireland. Compare it to Japan #21, with over twice as many people over only 50% more area – much less of it arable. So Japan has only 2/3 of the arable land of the UK. That gives a rough idea of how much room the UK has to get to where Japan is now – decades of very high immigration. Since the UK imports a sizable amount of food already, about twice what it exports, it is not “fed from the controlled land area” already – though it probably could satisfy this artificial, ad hoc criterion, even with substantial immigration, with a dietary change. (WWII era rationing actually improved British health.) In any case, the UK population has not even doubled in 115 years from ~36 million to 63 million. Agricultural productivity has far outstripped that, so the UK is far more food-secure than it was in 1900.

      We’ve already got the situation where there is a housing shortage, and a education shortage because of immigrant populations.
      The main cause of housing shortage is the state stopping building since Thatcher: Why can’t the UK build 240,000 houses a year? In other words it got rid of its Keynesian / MMT JG approach & returned to austerian lunacy. Return to common sense with a JG, the state building, and the problem solves itself. Workers, including immigrants, can build houses for themselves and many others now ill-housed.

      Discussion about morality & “stealing” people, while it is better in seeing these immigrants as a benefit, contradicts the predominantly fearful-thinking thread of the main argument. In any case, if other country’s want to solve this problem, they will simply adopt a JG themselves. They most certainly will, for many reasons, if only a country as big and prominent as the UK came to its senses. See also my reply to Tom below covering more properly economic / MMT / FF reasoning. The JG is one form of, one instantiation of FF, and as Lerner emphasized – an argument against FF – prosperity is an argument against prosperity caused by any reason- an argument against prosperity, period. So if immigration – fears are valid, the UK should work hard to wreck its economy!

      I am not pro-open immigration or anti-open immigration, least of all for a country I don’t reside in. I don’t really care much either way. It is ultimately not such an important issue. I am opposed to specious arguments using wildly unrealistic assumptions. That is the only kind of argument I have ever seen against immediately instituting a JG in any realistic, actual conditions. The idea that open borders in the EU makes a JG impractical is just another tendentious argument for a can’t-do attitude based on scaring people with imaginary problems.

    35. Tom Hickey:1. I don’t see how it would be possible economically for one entity in an economic zone with open borders to offer substantially higher benefits without fiscal transfers to offset, especially when the country with more attractive benefits has a much higher standard of living than many other entities. It seems the only block to migration to the more economically beneficial conditions would be some other obstacle like lack of affordability of transportation.

      “Benefits” is the kind of pernicious getting-things-backwards thinking I suspected. The JG is not “a benefit”. It’s a job, with a wage. As I said, the “benefit”, the subsidy goes the other way. Why should the UK resist people trying to subsidize it? Not sure what you mean by “offsetting fiscal transfers”. I’ll keep quoting Wray until people stop using the misnomer “fiscal transfer”: “They’re fiscal, but they’re not transfers.”

      You and Neil neglect the positive effects of the JG on both the UK economy AND the EU austerity zone, and therefore several stabilizing negative feedback effects on the UK. MMT/FF/JG prosperity in the UK will raise UK demand and production and incomes, and therefore will increase import demand. This will boost the rest of EU’s export industries and employment. Prosperity, like depressions are contagious, so there will be less “push” to immigration. This increased demand for imports may make the pound decline- remember floating rates – and the UK become a less attractive destination, as might increased prices due to immigration to the UK and general prosperity. So the “pull” of a JG wage effectively declining with respect to the roEU will lessen too. In any case, there is also a further, major negative feedback / automatic stabilizer – a direct, natural “fiscal transfer” – remittances. Abba Lerner’s Economics of Employment is invaluable for describing such international effects of FF, still great against dispelling these imaginary monsters, imaginary problems.

      But perhaps the most important effect is a political business cycle even older and more important than the one Kalecki described. Once the UK decided to stop economically sabotaging its own society through unemployment, stop cutting off its nose to spite its face, the roEU will see that nothing succeeds like success. Monkey see, monkey do. Politicians will either decide to end unemployment or they will be tossed out for ones that do it.

    36. “This increased demand for imports may make the pound decline- remember floating rates – and the UK become a less attractive destination, as might increased prices due to immigration to the UK and general prosperity. So the “pull” of a JG wage effectively declining with respect to the roEU will lessen too”
      Try selling this to UK voters.

    37. “Politicians will either decide to end unemployment or they will be tossed out for ones that do it.”
      I seriously doubt that in the EZ. Read Bill’s book.
      And if this is true, why not limit immigration to full employment countries, since it will happen anyway and gives an additional incentive to do so.
      The people in The Middle always gets stick from both sides. Reality intrudes on your idealism. Sorry about that.

    38. Bob – again I am not arguing for open immigration. I am not being idealistic, but skeptical. “Limit immigration to full employment countries”. Make the UK as closed to immigration as North Korea – OK with me. Politics is the art of the possible. Superstitions make people -including me, including everyone – indulge in many odd habits which might not do any good, but not any real harm either. The harm is in rationalizing them, identifying superstitions and customs and tastes with rational necessities.

      My point is an abstract, scientific one. A JG in the UK or any other EU nation of reasonable size, like Greece, is perfectly compatible with open immigration from the EU. Arguing that it would make the sky fall are fallacious & based on absurd ahistorical assumptions. I was merely citing historical evidence and factors that Lerner had discussed, which would stabilize immigration, just as they would stabilize imports.

      Lerner gave a worst case analysis of functional finance led expansions. He noted that it might “devalue”, “depreciate” the currency. The answer is “so what”? “Who cares?” As FDR said, the soundness of a country’s domestic economy is far more important than exchange rates with this or that country. If UK voters are obsessed with the fx value of the pound, then they absolutely must be educated that this is an insanely, colossally destructive obsession. MMT basically can’t work without natural, floating rates and the more time goes on, the wealthier the world becomes, the more MMT, the JG is necessary to not have poverty amidst plenty. The best way to make a currency strong – is to not care about it. For while importation, trade can have a depressing effect on fx value, this is usually dominated by investment attractiveness, which MMT / FF / JG will greatly increase.

      For natural population increase, a country has to dedicate real resources to get the next generation of workers. Immigrant workers come “for free” comparatively. They come to subsidize the native population, to be exploited by them. An open immigration JG would not stick it to the middle class – it would much more likely make the immigrants hewers of wood and drawers of water, while the native poor and middles would tend to become middles and Lords of the Manor.

      “Politicians will either decide to end unemployment or they will be tossed out for ones that do it.”
      I seriously doubt that in the EZ. Read Bill’s book.

      It is important that there be no threatening good example in the EU. A UK or another non-EZ EU country experiencing robust prosperity by flouting the absurd rules of austerity would be a tremendous argument for the forces of reason in every EU state. While the Eurocrats work hard to turn back the clock, the EU states are still independent, still democracies where the voters ultimately rule.

    39. SG, there is a points based system. *open* immigration is limited.
      Australia, US, Canada all old world have rational immigration policies. Nothing suggesting UK can’t.
      You will have to prepare for it with rationing etc but I guess it is theoretically possible.
      My question is, why is it the UK’s problem to deal with all these people?

    40. “They come to subsidize the native population, to be exploited by them. ”
      Look, there is a difference between high value immigrants and low. The right wing trick is to conflate the two.
      There needs to be Marshall Plan style investment in these countries from the US and UN.

    41. My question is, why is it the UK’s problem to deal with all these people?
      It isn’t. One could argue that the UK was the leading imperialist power etc so it might have a duty to the imperialized. But the argument here has been basically about immigration from the (rich) countries of the EU, not from former UK colonies or the rest of the world.

      The UK as a member of the EU has basically open immigration, from the EU. Some here claimed this is an obstacle to the UK instituting a Job Guarantee. I was just trying to refute this claim. It is based on wild, ahistorical overestimates of how many people would immigrate to the UK, and not correctly considering – via MMT / FF – on the one hand the major positive effects of the JG & immigration both on the UK & the rest of the EU, and on the other hand not considering the negative feedback / automatic stabilization / buffer stock effects, some of which are just the other side of the above positive effects.

      “They come to subsidize the native population, to be exploited by them. ”
      Look, there is a difference between high value immigrants and low. The right wing trick is to conflate the two.

      No, the right wing tends to not conflate the two. High-value immigrants are good because they are rich, and that measures goodness. “Low value” immigrants are bad because they are poor and only have their labor to sell. And the rich, right-wing etc work hard to strangle economic development by enforcing the not-buying of labor, by putting into effect a ludicrous price of zero for the scarce and valuable commodity called (“unskilled”) “labor”.

      There needs to be Marshall Plan style investment in these countries from the US and UN.
      Again, this really seems to be talking about non-EU countries. Basically what they need is a stronger and more active UN that stops the rich countries from attacking the poor ones- militarily, economically and worst of all, by exporting nonsense-economics to them, suckering them into cutting their own throats. Sure, a Marshall Plan would be nice, too.

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