It was only a matter of time I suppose but the IMF is now focusing…
Left-liberals and neoliberals really should not be in the same party
This week’s theme seems to be the about how the so-called progressive side of the economic and political debate keeps kicking ‘own goals’ (given a lot of this is happening in Britain where they play soccer) or finding creative ways to ‘face plant’ (moving to Europe where there is more snow). Over the other side of the Atlantic, as America approaches its mid-term elections, so-called progressive forces who give solace to the New Democrats, aka Neoliberal Democrats are railing against fiscal deficits and demanding that the left-liberals in the Democratic Party be pushed out and that the voters be urged to elect candidates who will impose austerity by cutting welfare and health expenditure and more. And then we have progressive think tanks pumping out stuff about banking that you would only find in a mainstream macroeconomic textbook. This is the state of play on the progressive side of politics. The demise of social democratic political movements is continuing and it is because they have become corrupted from within by neoliberals. And then we had a little demonstration in London yesterday of the way in which the British Labour Fiscal Rule will bring the Party grief. The Tories are just warming up on that one.
There were a number of things that caught by attention recently that demonstrated the point clearly.
The Neoliberal Democrats in the US
The first was from the so-called US-based Progressive Policy Institute, which markets itself as being “radically pragmatic” whatever that means.
It says it is the “the intellectual home of the New Democrats and earned a reputation as President Bill Clinton’s ‘idea mill'”.
It is about introducing “mold-breaking ideas”.
I suppose they might have thought the pernicious – Personal Responsibility and Work Opportunity Act – which was a signature Clinton initiative was ‘mould-breaking’.
That policy didn’t attack the real issue of welfare dependence – low-wage work and underemployment – but rather personalised those systemic failures and set about destroying the safety net in America.
Peter Edelman was a lawyer in the Clinton Administration but “resigned to protest Bill Clinton’s signing the welfare reform legislation”.
He noted in his 2001 Edward C. Sobota Memorial Lecture to the Albany Law School (New York) – Poverty & Welfare: Does Compassionate Conservatism Have a Heart? – the Law:
Let me say quickly what this 1996 law did … The message was cut the welfare rolls. The larger politics was, we’ve had too much welfare, and too much dependency and that is the reason why people don’t take responsibility for themselves, why they go out and have babies when they are not married.
The result was that a “huge decrease, well over fifty percent” in people on welfare rolls and “forty percent of those no longer on the rolls … have no job and no welfare”.
He said that this amounted to “over one million women and over two million children, neither have a job nor have cash assistance”. He called them “America’s disappeared”.
He noted that “homeless shelters for mothers and children in every city in America are overflowing”.
Many were pushed off the welfare rolls because they couldn’t attend interviews due to “child care or perhaps didn’t even know they had been summoned”.
The result was that “the bottom ten percent of single mothers … actually lost income over the last four years” and entered “extreme poverty”.
Those who managed to get jobs have such low wages that “they are still in poverty”.
That was a Democrat President claiming to be following a progressive policy line.
I don’t know what role the Progressive Policy Institute played in that shameless attack on the disadvantaged in America but they certainly influenced the policies adopted by the so-called New Democrats, which was a US analogue of the Third Way Blairite disasters that has severely compromised the British Labour Party and the Australian Labor Party.
New Democrats are just neoliberals.
They favour privatisation deregulation, free trade with investor dispute mechanisms, cutting welfare (as above), running fiscal surplus via public spending cuts and cutting taxes for high income earners.
In his 2013 book – Up from Conservatism – journalist and editor Michael Lind said that the rise of the New Democrats which he equated with Neoliberal Democrats had fractured the Democratic Party.
He said that the “left-liberals … are liberal both on economic issues … and on social issues”. The Neoliberal Democrats were conservative on economic issues but liberal on social issues.
He concluded that:
… left-liberals and neoliberals really should not be in the same party. Neoliberal Democrats have more in common with elite economic conservatives (if not with the populist far right) than they do with left-liberal Democrats.
He wrote that:
American overclass elites use their control of both the neoliberal Democrats and the conservative Republicans deliberately to weaken unions, slash entitlements, and raise taxes on working Americans – and then, when their victims notice what is going on, they blame the results of pro-overclass policies on ‘historical forces’ which are usefully vague and even more usefully unstoppable.
These explanations – globalisation, etc – are “not an explanation” but “an alibi”.
This is the theme of our current book- Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017).
These neoliberals who parade as something progressive are experts at depoliticising their compliance with the financial market elites who urge them to deregulate and privatise and introduce venal attacks on the welfare of the poor.
The Progressive Policy Institute’s is urging the Democratic Party to avoid the “ultra-left’s ‘free for all’ agenda”.
In their Op Ed (October 16, 2018) – Kim for USA Today, “Socialists won’t be on many ballots this fall. Moderate Democrats are surging – we read that:
… the progressive left have pushed hard this cycle for a campaign agenda heavy on government giveaways, such as free health care (“Medicare for All”), free college, guaranteed jobs and perhaps even free money (“universal basic income”) … [but] … the insurgent left has been broadly rejected in one primary after another …
The PPI’s latest salvo (October 18, 2018) written by one Ben Ritz who is not long out of an undergraduate program – Defunding America’s Future: The Squeeze on Public Investment in the United States – is typical of the stuff the so-called ‘progressives’ are pumping out these days.
The Report opens with:
Policymakers who have chosen to slash critical public investments in future generations while simultaneously saddling these generations with a mountain of debt are jeopardizing the long-term economic health of the United States.
It goes on to talk about “America’s deteriorating fiscal condition” which must be addressed to “avoid fiscal ruin”.
The case is made by demonising the US public debt ratio and claiming that “all this borrowing comes at an enormous cost …”
He praises the previous “Clinton Administration” which “was in its fourth consecutive year of budget surpluses” but fails to mention that those surpluses precipitated the massive rise in private debt, which ultimately caused the GFC.
The PPI wants to rein in “spending on Medicare, Medicaid, and Social Security”.
At one point I got confused. I thought I might have been reading the absurd document put out earlier this week by the President’s Council of Economic Advisers (CEA) – The Opportunity Costs of Socialism.
That Report is hysterical by the way (funny and overwrought).
Talk about ‘own goals’ – it seeks to criticise single-payer health care but then presents evidence that shows it is superior.
At one stage it is shown that the ‘socialist’ states of Denmark, Norway, Sweden and Finland are inferior to the ‘free market’ Amercia because the “weekly cost of owning and operating a pickup truck” is higher in the former.
But you can see my confusion between it and the PPI tirade on fiscal deficits etc.
They want the Democrats to seize the day to topple the “king of debt” (Trump) but this will require significant increases in taxes and even larger cuts to “expensive health and retirement programs.”
It rails against those elements in the Democratic Party that “propose tens of trillions of dollars in new social spending on top of the unfunded promises the federal government already has made, without offering credible ways to pay for either.”
Perhaps young Ritz should read a bit more widely and understand the economics a bit better.
But, talk about doing the work for the conservatives.
Just as Michael Lind concludes that “left-liberals and neoliberals really should not be in the same party”, organisations such as the PPI should stop using the term progressive.
Socialists in Spain promise to push more austerity
Then we read that the recent news from Spain (October 15, 2018) – El Gobierno promete a Bruselas el mayor ajuste estructural de los últimos seis años y reducir el gasto hasta el 40,9% del PIB.
The coalition government in Spain which combines the Spanish Socialist Workers’ Party (PSOE), Podemos and Basque and Catalan nationalists was formed after the Conservative PP were thrown out in a no confidence vote in June 2018.
Podemos, which is notionally against austerity but spouts neoliberal economic ideas, had forced the Government to adopt some new spending measures – raising pension, improving paternity leave and raising the minimum wage.
But in drawing up the new fiscal statement for 2019 which it will send to Brussels for approval, the Sanchez government has foreshadowed cuts in public spending – to its lowest level against GDP since 2007.
The Government told the European Commission that:
Será el mayor ajuste estructural realizado en nuestro país en los últimos seis años …
In English (perhaps we should leave it in Spanish!): “It will be the biggest structural adjustment made in our country in the last six years …”
They also are increasing taxes.
The fiscal austerity plan was endorsed up by the Autoridad Independiente de Responsabilidad Fiscal (AIReF) or Independent Authority for Fiscal Responsibility – the unelected and unnaccountable technocrats, which is music to the European Commission’s ears.
Depoliticisation – in action.
And need I remind you that Spain’s unemployment rate is still 15.8 per cent and its youth unemployment rate is 33.8 per cent.
And also need I remind you that in 2016, the European Commission turned a blind eye to the rising and illegal deficits under the PP government because the growth that those deficits drove was good for the PP party coming into the national election later that year.
I wrote about that sordid illustration of European Commission hypocrisy in this blog post – Spanish government discretionary fiscal deficit rises and real GDP growth returns (April 12, 2015).
Now, the Socialist Party is doing the European Commission’s bidding. Typical.
Progressive think tank in Britain channels mainstream monetary myths
So from fiscal policy to monetary policy.
And the ‘progressive’ dilemma continues.
There was a research paper published by the Greenwich Political Economy Research Centre (at the University of Greenwich) – Macroeconomic Evidence and Policy Proposals Beyond Unconventional Monetary Policy (June 13, 2018) – which purported to examine the divergences in prosperity among Eurozone Member States.
The analysis of unemployment and output gap divergences was fine.
But then things became a bit tricky when it started talking about the ECB’s Quantitative Easing program.
It aims to “analyse whether QE-led expansion of the money base has effectively triggered an expansion of lending activity to the real economy”.
And my first question when I read that is why would you seek to analyse that issue?
Well, they have bought the mainstream line that among other things QE stimulates a “bank lending channel” because it allegedly “allows banks to concede new loans more easily”.
Where did they get that from? A mainstream textbook that says loans are reserve-constrained?
After a graph and some further writing, they conclude that:
By the end of 2017, almost 40 percent of ECB-created liquidity was kept idle on credit institutions’ deposit accounts at the ECB itself rather than being fruitfully utilised for the extension of new loans to the real economy. This is an astonishing amount. It goes without saying that this fact considerably diminishes the alleged capability of QE to stimulate the provision of loans to the real economy from the supply side by injecting new money into the economy.
The “alleged capability” was always a figment of the mainstream economists and the journalists who blindly parroted the textbook narratives.
In this blog post – Quantitative easing 101 (March 13, 2009) – which was written very early in the GFC and at a time when QE was in vogue – I demonstrated that:
1. QE is just an asset swap – reserves for bonds.
2. The asset swap drives up prices of the bonds, which lower their yields, and this might stimulate borrowing under some circumstances.
3. Banks do not loan out reserves (except overnight to each other).
4. Loans create deposits and are not reserve constrained.
5. Reserves are added later if necessary.
6. Loans are restricted by the demand from credit-worthy borrowers.
So why is a heterodox economics research unit still publishing stuff that is based on pure mainstream myths about how the banking system works.
Their graph entitled – “Excess reserves-money base ratio” does not provide any information about the “the will or capability of credit institutions to provide credit to the real economy in order to finance investment (or consumption) expenditures and induce economic recovery.”
It is no surprise that the demand for credit slumped dramatically in the Eurozone during 2008 and is yet to fully recover.
No-one was wanting to borrow when governments were imposing fiscal austerity and unemployment was rising.
The ECB could do very little about that using the sort of instruments that could get through the scrutiny of the European Commission. QE was, in fact, a breach of the Treaty but the Council turned a blind eye because they knew that it was the only thing keeping governments solvent.
What the ECB could have done to stimulate activity was to directly fund government spending on job creation and infrastructure building and give euro-denominated handouts to citizens.
But that would have been a step too far and it would be a fiscal operation anyway.
The Greenwich Paper is correct to say though that:
There are some good reasons to believe that even ultra expansionary unconventional monetary policies, if not coordinated with other policy measures, cannot be the optimal policy recipe in order to revitalize fast, sustained and sustainable economic development in the eurozone.
That insight applies generally – not just to the Eurozone.
Monetary policy is an inferior tool for counter-stabilisation.
It is indirect, non-targetted, and ambiguous in impact.
The Greenwich Paper lists alternative policies to help combat divergence but only considers fiscal policy reform in the context of the European Investment Bank being given more funds and a new agenda (to fund new businesses and innovation processes). More subsidies to private business in other words.
And, back to the Labour Party Fiscal Rule
And, finally in this trip across ‘progressive’ policy space, we end up in Britain and the Fiscal Credibility Rule. Yes, I haven’t given up on that topic just yet.
Yesterday, we saw a classic example of how the Rule can be used (vicariously or not) to politically bash the Labour Party.
On September 18, 2018, Verso published a new book – Economics for the Many – that the Shadow Chancellor and his staff put together as a result of his New Economics conferences.
There is a pot-pourri of offerings in the book from various writers and Verso (the publisher) claims that the “essays … lay out a vision for a new economics”.
Except it is hard to distinguish the economics in the book from old mainstream approach that has helped create the problem the book is meant to be addressing.
The problem facing British Labour, if this collection is anything to go by, is that there is a confused policy message coming out.
The Financial Times, which channels the sentiments of the corporate and financial sector, picked this up in their review (September 24, 2018) – Economics for the Many, edited by John McDonnell.
The FT captures the tension that is evident in the book:
One chapter presents a pretty orthodox macroeconomic grounding with sensible budgetary rules. Another complains about the “disastrous consequences” that have arisen from “those who worry endlessly about ‘fiscal rules'”.
I don’t need to tell you who wrote the “orthodox macroeconomic grounding with sensible budgetary rules”.
It extols the virtues of the Labour’s Fiscal Credibility Rule along the lines that we are now familiar with.
In the “orthodox” macro chapter, Simon Wren-Lewis muses about whether the estimates of tax revenue will be sufficient to match the spending proposals in the Manifesto and some fiscal dynamics – all couched in the language of the Rule – with the accompanying neoliberal framing.
He mused about what would happen if “given the Brexit slowdown, interest rates would have remained at their lower bound.”
As I pointed out on Tuesday in my blog post on Tuesday – The British Labour Fiscal Credibility rule – some further final comments (October 23, 2018) – his assumption that the British policy rate was at the zero-lower bound, upon which a lot of the confidence in the viability of the Fiscal Rule is based, is flawed.
Even when rates went as low as 0.25 per cent in August 2016, the Bank of England’s Monetary Policy Committee did not consider the lower bound had been reached.
And that was after the worst recession in decades.
He also tried to dismiss concerns that the estimates of tax revenue growth provided by the Institute of Fiscal Studies would force the Labour Party to violate the Fiscal Rule.
It was a tortured sort of analysis – defensive and missing the point entirely that the purpose of fiscal policy is not to hit a particular set of fiscal (financial) targets, but, rather, to ensure that there is full employment, price stability and sustainable growth, which is equitably shared by all citizens rather than being overwhelmingly captured by the top-end-of-town.
Yesterday, in the context of the Tory promise to end austerity, the British Prime Minister verballed him to put pressure on Labour in Parliament.
She held the book up in the House of Commons and said:
I actually have a book here that’s edited by the Shadow Chancellor … And in article by an economic adviser to the Labour Party he says about their last manifesto: ‘The numbers did not add up’ … [and concluded] … that this was a welcome feature and largely irrelevant.
The PM also said the Fiscal Rule would return the British fiscal situation to “square one” (that is, bad).
The reality, if you have read the chapter, is that Wren-Lewis actually wrote that the IFS had said the numbers didn’t add up but if that was to be the case then it didn’t really matter anyway.
Why?
Because the fiscal stimulus would be good for the economy
So while the PM was crudely misinterpreting the text in the chapter yesterday, the Fiscal Rule was still used as a battering ram. And as time passes, the Tories will refine their attacks for sure.
The problem is obvious.
By couching the Labour Policy in this ‘fiscal straitjacket’ (the Rule), all sorts of erroneous claims will be made about it.
The political focus will be on tax estimates, spending overruns, etc all of which are largely incidental.
When this was pointed out, the Shadow Chancellor’s staff claimed that those making these statements were just doing the work of the Tories.
That is not true at all.
The Fiscal Rule, given its construction and language, is already doing the work for the Tories. And they will use it to crucify Labour whenever they can.
If the Fiscal Mission was rewritten to talk about full employment, price stability and sustainable growth, which is equitably shared by all citizens and the public was continually re-educated to understand how all of this is possible via the deployment of real resources without a focus on largely irrelevant ‘financial ratios’ then the Tories would be unable to mount crude attacks like the one the PM tried on yesterday.
This is not to say that within the Government, economists would not be interested in estimating tax revenues and spending patterns. Of course, policy effectiveness requires that any government has an idea of the quantitative outcomes of its policy interventions.
But all of that doesn’t have to become a public sideshow.
Further, regular readers will know I hate democratically elected governments outsourcing key policy analysis to so-called ‘fiscal commissions’ and I consider technocracies that have political status to be anti-democratic and dangerous.
That should not be read to mean there is no role for technocrats. Clearly, politicians are usually not qualified to generate detailed policy structures with appropriate forecasts etc.
So they always are reliant on those with technical skills to do this work.
The difference is that the work is contained within the Government and in the service of the government mandate. It should never be privileged to have a ‘political’ voice where some CEO of a fiscal commission makes press statements and releases public reports on their own bat.
Academics are there to hold governments to account – although mostly they don’t these days.
The public bureaucracy (where the technicians) are is there to serve the political process.
Conclusion
This blog post has traversed a number of issues which can all be linked to the one conclusion – a progressive politics needs to free itself from neoliberal language, constructs and economists.
The demise of social democratic political parties is largely due to their co-option by neoliberal economic forces which makes them indistinguishable from the conservatives on most issues that attract attention.
As Michael Lind concludes: “left-liberals and neoliberals really should not be in the same party”.
That is enough for today!
(c) Copyright 2018 William Mitchell. All Rights Reserved.
Será el mayor ajuste estructural realizado en nuestro país en los últimos seis años …
In English (perhaps we should leave it in Spanish!): “It will be the biggest structural adjustment made in our country in the last six years …”
In my own poor version of english I think that you have nailed the translation Bill. Podemos es simplemente patético ( Podemos is simply pathetic) .
The cynical misuse of an out of context phrase by May is yet another example of her use of oral flatulence to mislead the public (alongside ‘Labour will make the U.K bankrupt’ and ‘Planet Venezuela’ etc). Wren Lewis asked the Tories for an apology on twitter but got none).
But as Bill points out so well, Labour are digging their own grave with the ‘rule’ nonsense and extending the life of neo-liberaliism for some years.
What is disturbing is the way in which people like May can brazenly lie and misrepresent, blurting something out that an adviser had told her to say without even looking at a full sentence! Depoliticisation is so deep and established that ‘barefaced bollocks’ from these mendacious homonculi is barely noticed and passes without undue concern.
It brings one (me anyway) to my knees with despair. The stories of suffering in the U.K (homelessness, Universal Credit disasters, disabled denied support etc) multiply yet the mental wallpaper of neo-liberalism has not begun to fade or look even slightly flaky yet.
And even if Labour manages to be elected without Anti-Brexit voters their time in office will be short due to the fact that their stated goals will be undeliverable. Corbyn would be 76 years old? McDonnell and Mr. Wren-Lewis have very rigid viewpoints. So even if MMT were somehow not the “perfect” answer not being flexible enough to realize that “go for broke goals” are what are required here. It could not be worse than Tory policies. With climate change we are in apocryphal period might as well try something else?
The spectacle of a once-(purportedly)-progressive party eagerly laying its bone (cuts in public spending plus tax increases) before the feet of its master in Brussels whilst ingratiatingly wagging its tail is nauseating.
Anyone who uses the term “budget repair” or “fiscal deterioration” disqualifies themselves from talking sensibly about federal fiscal capacity.
The federal government’s fiscal statement of expenditures and receipts cannot break down or get sick. It is simply a record of dollars spent into existence and dollars taxed out of existence.
Unemployment hurts people. Inadequate public infrastructure and public services hurts people. An inadequate material standard of living hurts people. Trashing the environment hurts people. Social exclusion hurts people. High levels of stress caused by unemployment or precarious employment hurt people.
In other words, it is the functional purposes served by fiscal policy that matter. Not the fiscal statement (fiscal statement is the technically correct term because the word “budget” brings up household connotations that are completely irrelevant to a currency-issuer with a floating exchange rate).
It is impossible for a government to borrow its own currency. When the central bank sells Commonwealth Government Securities in exchange for reserves, it is merely swapping one non-government sector asset for another. Reserves get converted into bonds of equivalent value. Bond issuance is a portfolio reshuffle for the non-government sector. It does not net add financial wealth to the non-government sector.
A related point is that it is impossible for a government to stockpile its own currency. A federal government surplus is not something that the government holds or that adds to the federal government’s capacities. It just names an amount of non-government financial wealth that has been deleted by taxation.
What the political parties need is simple straight forward solutions that work under MMT, not excessive writing on all aspects of the situation, which simple leads to loss of patience with those promoting MMT.
I would suggest that one simple easily grasped solution (already suggested by Warren Mosley) is in introducing a Treasury Debit Card that card holders could use in education, employment, and in gaining health. This would provide the necessary means by which money would be created, as well as enrich the lives of those using these TDCs. People would feel free to explore what their needs were at any time in their life. When they were ill they would have the means of obtaining it, when they need employment they could easily enroll in some government or private sponsored course of training, and even consider the possibility of continuing their higher education, acquiring a degree late in life. I know no better way of making money for the national interest than TDCs. The point I am making is that MMT has to be shown how it will work out in practice. Possibly we should call this MMP.
Is it too basic to point out that as far as applied economics goes, MMT’s application of fiscal tools is vastly superior to the monetarist paradigm?
Bill I take heart that you speak with people of power and some of your message get through uncorrupted.
Yok, the transmission may be uncorrupted but whether it is cognitively ingested in a non-corrupt fashion, by McDonnell in the present case, is something else again. I am doubtful, unless he is engaging preposterously in deceit, that is, lying on a grand scale. I am tending to think that he believes what he says, which means that he corrupts what he hears regarding MMT. Yok, I guess I am skeptical that much if any of it is getting through.
There is a myth in the UK that the liberal party suffered a decline during the 20th century
It’s not true. Liberals are alive and kicking having infected the Tory Party and Labour.
Maggie T was a Liberal
So was Mr call me Tony
Oh look how a Tory barbarian prime-minister quickly had the Simon Wren-Lewis defence strategy in tatters! Simon Wren-Lewis is no political strategist and neither for that matter is John McDonnell or his boss the mostly absent “People’s Friend”!
While I am skeptical about the PSOE (and about Podemos Unidos, to be honest) I think the situation is not as bad a Prof. Mitchell believes.
Podemos Unidos and the Basque and Catalan nationalists are not part of a governing coalition with PSOE. The PSOE government is a minority government. The Cabinet is entirely PSOE.
Pablo Iglesias, from Podemos Unidos, tried to convince Sánchez to form a coalition, but Sánchez refused.
Podemos Unidos and the Basque and Catalan did support Pedro Sánchez’s no confidence vote on Mariano Rajoy’s government, only that. In exchange Sánchez gave Podemos Unidos what Prof. Mitchell said. The Catalan insisted on the new austerity package, which is what Sánchez gave them.
Unless I’m very mistaken, neither the nationalists nor Podemos Unidos have pledged support for any other PSOE legislative initiative.
My understanding (and I’m not too clear about this particular point) is that the Sánchez government is supposed to be only a kind of caretaker and general elections should follow in the near future.
While I am skeptical about the PSOE (and about Podemos Unidos, to be honest) I think the situation is not as bad a Prof. Mitchell believes.
Podemos Unidos and the Basque and Catalan nationalists are not part of a governing coalition with PSOE. The PSOE government is a minority government. The Cabinet is entirely PSOE.
Pablo Iglesias, from Podemos Unidos, tried to convince Sánchez to form a coalition, but Sánchez refused.
Podemos Unidos and the Basque and Catalan did support Pedro Sánchez’s no confidence vote on Mariano Rajoy’s government, only that. In exchange Sánchez gave Podemos Unidos what Prof. Mitchell said. The Catalan insisted on the new austerity package, which is what Sánchez gave them.
Unless I’m very mistaken, neither the nationalists nor Podemos Unidos have pledged support for any other PSOE legislative initiative.
My understanding (and that may be just wishful thinking) is that the Sánchez government is supposed to be only a kind of caretaker and general elections should follow in the near future.
Here you go Larry Labour’s flakey excuse for rachetting up austerity:-
https://www.theguardian.com/uk-news/2018/oct/26/difference-between-soft-brexit-and-no-deal-worth-30bn-analysis
Bill wrote: “That should not be read to mean there is no role for technocrats. Clearly, politicians are usually not qualified to generate detailed policy structures with appropriate forecasts etc.
“So they always are reliant on those with technical skills to do this work.”
———
Indeed, politicians should have the courage to stand on their own, to take the advice of experts–ideally competent ones–and present those to the public as the ideas they endorse as their representative. Any politician unwilling to do this is a politician willing to let other forces lead the country instead of herself/himself. The current leadership of the Labour party needs to step up. They are severely underestimating the desire for a paradigm shift within the general public. The ruling class is discredited, and McDonnell and Labour are nevertheless still pandering to it.
Larry – I hear Derby North M.P Chris Williamson say that the public are not in a place to yet appreciate MMT and Labour had to present things in ‘sound finance’ terms in order to get into power and only THEN could the education of public begin. he referred to Beardsley Ruml and MMT, so obviously has some knowledge here.
Is this his personal view, or does it extend to McDonell and the Fiscal Rule stuff is just a way of keeping the media off their backs? I don’t know, but it raises questions about whether it is all a smoke screen. I suspect it is Williamson’s own view but still leaves a small window open that McDonell is indeed playing with the media and when they get in it will simply be a case of deficit spending and sod the rule stuff!
How does one know?
Simon, I hear you. I am hoping not. That said, McD is not above bullshitting. I’d like to know what evidence Williamson has for his remark. I’ll bet he doesn’t have any, or it is so anecdotal as to be worthless.
Larry, Williamson is clearly risking talking about Ruml and taxes not funding spending at a public meeting (albeit local Labour groups) but he’s clearly willing to risk his comments getting out into a wider arena. Why would he do this? He’s reasonably high profile now as a shadow minister.
On the other hand Meadway is outright hostile to MMT and Wren Lewis is not too kind either – so I can’t conclude anything. Maybe Williamson is making a bid as a future leader? -he’s a good communicator , very fluent speaker with a gritty Derby accent. AN MMT conversant leader in the future could bode well but it’s by no means clear that Labour will win an election.
Apologies to non-UK readers for the UK focus here!
Williamson is not a member of the shadow cabinet anymore i don’t think – he was sacked/resigned a few months ago. I think McDonnell is lying, but i don’t think he has any intention of educating the public after an election victory either. Yes they’ll be progressive in government, but they’ll fudge the economic stuff, until one day it blows up in their faces and we are back to square one.
I’m with Bill on this, don’t privilege the lie – start with the truth and move forward from there.
Politically i think both McDonnell and Corbyn reached their apogee in 2017 in my opinion (although i hope i’m wrong). The sad truth is everyone else in the party are just as bad or worse for drinking the neoliberal kool-aid. Next generation of MP’s has to be the aim – target the PPC’s.
Anyway i suspect another leadership challenge will happen some time in summer 2019 post-Brexit, the neolibs won’t give up on that one.
Jeff- I largely agree. I get the impression from Williamson that he is serious about making people aware of MMT (why, otherwise, would he have spoken about it in public?). I suspect he is positioning himself as a future leader. He’s a better speaker than most of them (not saying much there!). He spoke about economics education and wants to broaden the influence of members who want a more progressive Labour Party.
I might be wrong but I think he’s serious and worth watching.
What’s amazing is the current Labour Party leadership has an Oxford University professor, Simon Wren-Lewis, as their principal economics advisor yet this professor turns out to be too dumb to recognise he’s been easily hoist by his own petard through the actions of a mendacious Tory prime-minster! Doesn’t say much for the party’s leadership nous does it!
@ Schofield
“Doesn’t say much for the party’s leadership nous does it!”
To be fair, the current left-leaning leadership were rather thrust into their current position by the unexpected level of popular support amongst the membership, and newly enfranchised ‘supporters’ in the 2015 and 2016 leadership elections, thanks to Miliband’s rule changes (intended, of course, to achieve the opposite, but anyway…)
Don’t forget that Left-wing confidence had/has been globally shattered after more than four decades of prevailing and ubiquitous Neo-liberal hegemony, and the lack, so far, of clearly successful exemplars that can be easily followed as an alternative, so I can appreciate their fear (cowardice?) in the face of a well-entrenched political opposition (across the floor, and in their own PLP), dominant financial markets, and both the liberal and right-wing corporate media – and their consequent reluctance to want to rock the boat too far (even though I don’t personally support that approach whatsoever).
This might, therefore, explain the caution with which they have chosen their economic advisors, or perhaps they have themselves been so brainwashed by the “TINA” narrative that they’re simply not intellectually equipped to see beyond that narrative without exhibiting the suspicion, ridicule, or scathing condescension that the mainstream demonstrates when faced with alternative economic narratives – especially wrt groundbreaking ones, such as MMT.
It’s highly doubtful that Corbyn or McDonnell ever expected to be party leader and shadow chancellor, so their lack of leadership credentials and capabilities are to some extent understandable – but they are now, and they’ve had plenty of time to learn on the hoof, so it’s time to do the job properly and be prepared to meet the high expectations, and most importantly, deliver the policies, that their supporters understandably expect – especially when someone (Bill!) hands them the tools on a plate, by which to achieve those policies!
But if they’re not prepared to do that job properly, then pass the baton to those who can. I don’t know a great deal about Chris Williamson, but I’ll look out for him in the future – which is where, sadly, I now think resolution lies – with the next generation; I just hope we’re all still around to see it.
Mr . Shigemitsu, I agree with you that it probably a ‘next generation thing.’ Although Williamsom must be 60 ish, he is looking ahead and there some younger economists like Grace Blakey who are the new generation asking questions and have some MMT awareness.
I remember Bill saying, at his talk in Brighton last year, that it could take another 20 years before the economics profession is rid of the neo-liberals. Was it Einstein who said ‘science progresses one death at a time’?
Problem is, we’ve not got time because of climate change and due to the social democratic so-called ‘Left’ failure we’ve got Trumpish clones popping up (Brazil being the most egregious case at the moment).
It soean’t look good but then I’m a pessimist and given to a dark view of things : (
Mr Shigemitsu. Thanks for your comment. Usually I value the insight and incisiveness in your comments but this time I feel you’ve been writing a list of apologies on behalf of the UK Labour Party leadership.
Apart from determining policies relevant for their country’s circumstances politicians need to be able strategise how to implement them. Simon Wren-Lewis was very quickly hoist by his own petard in the strategy he advised and the Labour Party leadership failed to recognise this vulnerability! This was a major error given the state of the country’s economic problems. It should be viewed as a lack of strategising competence and good reason for their replacement.
Schofield says:
“It should be viewed as a lack of strategising competence and good reason for their replacement”.
By whom, and by what means? The most probable replacements now would likely be Blairites, and I hardly think that’s who you have in mind. The rest of us might be interested in knowing how you propose your own choices (whoever they are) might be catapulted to becoming leader/shadow chancellor.
The current leadership might not be the cat’s whiskers but they did after all manage to achieve an entirely unpredicted, surprisingly large, share of the vote in the last GE which was a highly creditable performance under the circs.
I think that Mr Shigemitsu had it about right, as usual.
Schofield,
Whilst I agree with you we are on the horns of a dilemma in the UK:
1) Terrible persecution of the ill, homeless, vulnerable.
2) A stressed out populace drowning in debt and running around like blue-arsed flies trying to make ends meet with no headspace to debate or question things.
3) Crumbling infrastructure.
4) Climate change issues going ignored while they wait for the market to invest (Godot?)
5) House prices constituting a permanent wealth transference and perpetual rentier economy.
Labour’s framing is still neoliberal but what are we to do? Not vote for them and let this crap continue? Or vote for them and get some improvements to a desperate situation? It has to be the latter, doesn’t it? An easing of the appalling stress that people are under is surely worthwhile even with poor language framing?
People like us have to keep haranguing them. At least Labour have one M.P who is MMT aware. If the best we can do at present are improvements that are framed in mainstream language then we have to go for that rather than no improvement in neo-liberal framing, surely?
It’s not great but it may take a new generation to get the message.
Schofield, engage with your Constituency Party, keep chiseling away, that’s all we can do!
If Chris Williamson wants to become leader, then I wish him well. But he needs an MMT-aware (shadow)Chancellor as well. In fact, if he cannot convince a goodly proportion of the parliamentary Labour party of the virtues of MMT, then what chance does he have of convincing the wider public?
I think if the fight for MMT is to be won, then it will be from the ground up. That is the job of MMT activists, inspired of course by intellectual leaders like Bill.
Hi Mike,
You say ‘In fact, if he cannot convince a goodly proportion of the parliamentary Labour party of the virtues of MMT, then what chance does he have of convincing the wider public?’
Actually, I’d say he has a BETTER chance of convincing the wider public and he is trying to do that by advancing the influence of the membership. This means the change can be from the ground up if Labour create a structure that allows it. Let’s face it, many Labour M.P’s are an utter waste of time in terms of economic change, they won’t change and have shut up because of the last election and the largest swing since’45.
People like us have to keep chipping away!
“but this time I feel you’ve been writing a list of apologies on behalf of the UK Labour Party leadership.”
Yes, you’re probably right. Beggars can’t be choosers I guess; there’s sod else that’s any better on offer at the moment – and, thinking about it, never has been, at least in my lifetime.
How wonderful it must be to have a party leadership that fully represents and defends your interests, proposes and delivers policies that consistently benefit you and your class, and who will not trim, or cower in fear of a hostile media.
But you’d have to be a Tory to know how that feels.
@Simon Cohen
“Was it Einstein who said ‘science progresses one death at a time’?”
Actually it was Max Planck. Depressingly true.
@ Roberth
I’m sure if Donald Trump can flatly tell American voters it’s nonsense pretending the Federal government should permanently and automatically balance its budget like a household why hasn’t Corbyn got the balls to do the same? I know the American people well and believe there’s even more monetary illiteracy there than in the UK
‘why hasn’t Corbyn got the balls to do the same? ‘
The answer, if reliable, seems to be what I heard Chris Williamson say: ‘the public isn’t there yet, let’s get in power first and then do the reeducation.’ (Paraphrase). It’s partly fear of the Press. In the States there is a lot of Republican leaning media. Trump can also get away with more because he’s got this larger than life gobshite image and persona. Trump saying that hasn’t really made any difference and it wasn’t followed up with anything meaningful. It’s not as if anyone is joining any dots and Trump has almost certainly forgot he said it and did it to nick stuff from the Bernie campaign-he says anything to please whatever crown he speaks to including the Evangelical Right.
@ Simon Cohen,
“Trump has almost certainly forgot he said it…”
Massive tax cuts to the already wealthy are not the most effective use of a burgeoning deficit by any means, but, even if he forgot he said that about dollar creation, which I doubt he would have done actually, actions speak louder than words, and he’s obviously quite happy to greatly increase the budget deficit to achieve his political aims – like ’em or loath ’em.
Would/will Corbyn/McDonnell have the balls to do the same? We can only hope.
@ Schofield
You avoided answering my questions.
Admittedly they were (partly anyway) rhetorical. But your silence confirms my suspicion that you don’t have answers.
I don’t blame you: there are no candidates (viable ones anyway) to be found. But doesn’t that inevitably lead to the conclusion that no question of deposing Corbyn/McDonnell foreseeably arises?
Simon, it was Max Planck who said that science progresses one funeral at a time.