It's Wednesday, and as usual I scout around various issues that I have been thinking…
Travelling across the world today to escape the famine that MMT will cause
I am travelling all day today and I will resurface, in blog terms, on Monday. A quiz will pop up tomorrow as usual. For now a brief excursion into the Dutch press, which has decided to join the wannabees attacking Modern Monetary Theory (MMT). The scenario outlined in the article I read earlier today takes the criticisms to a new level. We are no longer worried about hyperinflation, crowding out, sky high interest rates. No, things are likely to get much worse than that. If any government takes on MMT (noting it is not a regime that can be taken on) to operationalise a Green New Deal then tax rates will have to rise to around 100 per cent, households and firms will stop working and producing, and a massive famine in possible where millions die. Sort of Project Fear stuff that has marked the Remain position in the Brexit debate!
Dutch press join the wannabees
I was in Amsterdam earlier today and read de Volkskrant (after a tip from Ruud – thanks) article – Hoe is de Green New Deal van Ocasio-Cortez anders dan de centrale planeconomie onder Mao? (March 12, 2019).
The title was the warning: How is the Green New Deal from Ocasio-Cortez different to a centrally planned economy under Mao?
de Volkskrant is a daily Dutch newspaper that started life as a centre-left Catholic media source but has since moved to a centrist position in ideological terms.
Centrist is not a fixed position of course and what we might have called centrist 3 decades ago is firmly neoliberal Right these days.
If the Dutch readers took this article seriously then they will be victims of a organised global propaganda exercise designed to shore up mainstream macroeconomics as it bleeds to death in its own irrelevance.
The journalist decided to stake her claim in the ‘MMT is garbage’ campaign that has spread throughout the world in the last few weeks.
And it just gets more extreme as we move on.
In this article, the journalist provides some scary numbers for the Green New Deal – “voor het komende decennium tussen 51 en 93 biljoen dollar” – 51 to 93 billion USD over the next decade.
This is converted into a per capita number of $US600 thousand per person over the next decade and we are told that on average households only earn $US60,000 per year.
So what is what a reasonable economist would respond to these numbers.
The article calls on Paul Krugman and Ken Rogoff as authorities who are concerned (“om de noodklok te luiden” – sounding the alarm) with the way the the GND will be funded.
But apparently, AOC has become besotted with Modern Monetary Theory (MMT) and:
Volgens Ocasio-Cortez moeten we af van het beleid waarbij de overheid elk jaar een begroting opstelt en de inkomsten en uitgaven zo goed mogelijk in balans brengt.
That is, AOC thinks the government must abandon the practice of drawing up an annual budget which balances income and expenditure.
Which governments actually do that? Not many.
The journalist then claims that:
Aanhangers van MMT geloven dat begrotingstekorten er niet toe doen voor een overheid die in haar eigen valuta kan lenen.
The same old – “Supporters of MMT believe that budget deficits do not matter for a government that can borrow in its own currency.”
Misrepresentation continues.
And so it goes until it builds to the climax:
Maar hoe is de Green New Deal anders dan de centrale planeconomie onder Mao? Om de kosten van de enorme sociale plannen te kunnen financieren moet de overheid uiteindelijk bijna 100 procent van de inkomens afromen. Het belasten van bedrijfswinsten levert bij lange na niet genoeg op.
Yes:
1. The Green New Deal is really just central planning à la Mao’s China.
2. To finance the huge GND, the government will tax almost 100 per cent of incomes.
3. There is not enough company profits to cover the cost.
And then she predicts with near 100 per cent tax rates, companies and households will have no incentive to work or produce.
And … “de economie snel krimpen” – a quickly collapsing economy.
Which then gives us the finale:
Het verwijt aan Mao is niet dat hij met de Grote Sprong Voorwaarts genocidaire bedoelingen had. Het verwijt is dat Mao de grote hongersnood die naar schatting 35 miljoen Chinezen het leven kostte, op de koop toe nam.
Do you want me to translate that?
Summary: Mao’s Great Leap Forward killed 35 million people because it caused a massive famine.
Inference: GND will kill millions because all firms and households will stop working and producing and shelves will empty and supplies will dry up and all of us will, while clutching the new MMT Macroeconomics textbook (subtle advertising going on here) and chanting sections of it, curl up and die from starvation.
Conclusion: MMT is dangerous.
What could top that?
Enter: W.J. McKibbon predicting hyperinflation like an idiot.
All of this is redolent of the Project Fear stuff that has marked the Remain position in the Brexit debate!
Go on, get the Tweets going you lot!
Music to travel with
I have always liked this song – Famous Blue Raincoat – which was on his third album – Songs of Love and Hate (1971).
The switch from minor key (A) in the verse, to the major key (C) in the chorus is very nifty.
I always wondered what it was about and often imposed situations on the lyrics as they arose in life.
And while we are at it, and given my proximity in the last few days, I thought this was apposite and terrific.
First We Take Manhattan – from his 1988 album – I’m Your Man.
Leaonard Cohen was asked about the song during an Interview before a show in Toronto in November 1988.
He said:
I’m not sure of what it means right now because I had this long voyage from Chicago. I think it means exactly what it says. It is a terrorist song. I think it’s a response to terrorism. There’s something about terrorism that I’ve always admired. The fact that there are no alibis or no compromises. That position is always very attractive. I don’t like it when it’s manifested on the physical plane – I don’t really enjoy the terrorist activities – buy Psychic Terrorism. I remember there was a great poem by Irving Layton that I once read, I’ll give you a paraphrase of it. It was ‘well, you guys blow up an occasional airline and kill a few children here and there’, he says. ‘But our terrorists, Jesus, Freud, Marx, Einstein. The whole world is still quaking…
I think of that in the context of the recent attacks on MMT from senior members of my academic profession and all the wannabees who are now lining up to join them, thinking they had better declare which side they are on.
The profession is “quaking”.
I will resurface Monday.
That is enough for today!
(c) Copyright 2019 William Mitchell. All Rights Reserved.
It is interesting, Bill, that you have chosen two of my favorite Cohen songs, especially the second one, particularly the repeat of the chorus with the higher note — it seems to be only on the original recording. He chose Manhattan and Berlin, I think, because at the time they were centers of social and cultural change. I have never bought his own ‘explanation’ of this song, given that one of his ‘weapons’ is a plywood violin. I think he might have been winging it for the interviewer.
The now infamous Phil Spector produced Death of a Ladies Man, an album Cohen did not much like. I don’t much care for it either.
Have a good trip. I thought the Dutch would be better than this. But, then, I am biased.
Given the simultaneous nature of the attacks and their uniformativity, one might be tempted to see them as evidence of a conspiracy. The conspiracy that I see as being the cause for the fact that Neo-liberalism took over so fast. It didn’t need all the experts to die [as the quip goes] before everyone got on the bandwagon.
. . . As I see it. Inflation started being a little problem around 1970. Then Nixon took the whole world off the gold standard. I can understand how this fact by itself could lead to more inflation because people might not think that a fiat currency would hold its value like a gold backed one had. Then came OPEC and the oil price spike. This led to a system wide jump in inflation as oil is included in the price of everything.
. . . The rich took advantage of the crisis to begin to impose Neo-liberalism on the world. They funded university depts. if they would just teach Austrian economics, if they would not teach the history of economics so they could redefine economic jargon like ‘free markets’ as being free of Gov. interferance instead of Adam Smith’s original meaning of ‘free of retiers sucking cash out of the economy in return for nothing’.
. . . Capitalists could set the prices to some extent because they owned all the corps. So, they could keep inflation going until they wanted it to stop, after the structural reasons for it had ended. I’m told that inflation ended in the early 90s after another recession. By then the new Dems were in control of the Dem Party and nominated Clinton who was a Neo-liberal through and through. He got TARP passed and even ran a surplus for 4 years in the end of his term.
. . . Neo-liberalism led directly to the GFC/2008, because real wages were flat so workers needed to borrow, workers hoped inflation or wage growth would return so they could pay the payments. Neither did, so they borrowed more and more until they could not make the payments.
. . . When this happened, the private debt bubble burst and the world discovered the bankers’ frauds and interconnectedness. We had to bail them out, but we could have broken them up afterwords and jailed some of the bankers. Obama chose not to do either. Instead, he reinflated the bubble and imposed austerity on the people of America. Remember the sequestration. In Europe the austerity was much harsher.
. . . So, the flat wages continued to squeeze the workers, while the rich saw their situation improving. They workers saw the rich getting richer while their own economic situation and hope for the future was going down, not up. They got angry. There was no political party that gave a damn about how the workers were doing. The Repuds love the rich and the Dems became the party of the non-filthy rich but successful anyway. The Dems saw the workers as loosers who should have gone to an Ivy League school like they did.
. . . So, some of the angry workers voted for Trump because he [at least] said he would do something for them. And he did do a few things for the workers like his trade policy and ending TPP talks. But, mostly he is another Neo-liberal out for the rich and super-rich.
. . . So, here we are now. AOC is calling for a GND and other programs for the mass of the people. She will worry about paying for them later. Just like the Repud party has done with what it wants to spend money on [this includes ‘spending’ by cutting taxes]. So, now Neo-liberals are smearing MMT to try to save the power of their patrons the super-rich. I think they fear that America will begin Trust Busting again and break up the big banks and big corps, like Teddy Roosevelt did 115 years ago. And return to the top tax rates of FDR, Truman, and Eisenhower, =90%. There is no limit to greed.
The fattest leaches in Wall Street, Frankfurt, the City and so on that now run our nations probably do understand and accept the validity of MMT, I suspect even Trumpet and Bannon ‘get’ MMT and have used it to achieve priority no. 1 – to further enrich the already obscenely rich with massive tax cuts and to hell with all that deficit and debt bull shit, that’s just a weapon to bludgeon naive Democrats with.
I suspect even Milton Friedman knew Monetarism and the neoliberal ideology was a scam to serve the wealthy and those underlings like him that expected their cut. Friedman may even have thought that that’s the right thing to do for humanity as his core ideology was probably Social Darwinism like most of those parasites, and those that can’t be rich can just go fuck themselves.
All that hot air from 99% of the journalistic profession attacking MMT, its proponents and especially any politician ‘deranged’ enough to consider taking advantage of MMT’s insights is quite simply just total hypocritical crap. The true opinions of these dispensers of journalistic crap is that MMT may or may not be valid, for that they are too stupid or ignorant to assess, but WHAT THEY CANNOT ACCEPT IS MONEY BEING WASTED ON COMMON PEOPLE OR OTHER IRRELEVANCIES LIKE SAVING THE EARTH FROM CATASTROPHIC CLIMATE CHANGE. Money, at least most of it, is after all for rich people and that is just the natural order of things!
As far as I know, the critics of MMT have not yet accused it of causing Global Warming and AIDS, but it can surely only be a matter of time…
Meanwhile, I was trying to think of the well-known quote about new ideas, first being ignored, then being mocked…etc. I know there was more than one variation, but there are more than I realised:
https://quoteinvestigator.com/2017/08/13/stages/
Of course we can discuss among ourselves whether MMT is in fact a “new” idea or not.
That’s not 51-93 billion. “51 en 93 biljoen dollar” translates to “51 to 93 TRILLION dollars.”
So, how does it feel to be “unfairly” attacked by the media? Hmm. With all those hateful statements floating around about President Trump and “fake” news, there seems to be an interesting parallel when you are on the outside looking in.
Ah-ha! Bill Mitchell does not deny that his theories will cause mass Starvation! Instead he flies around the world in an attempt to escape criticism! To think I have read his blog for so many years and been duped all along by some kind of sociopath…
I can’t evaluate your translation, but if it is accurate, that might be the stupidest article that was ever translated to me. I hope you have a good trip home and that your quiz answers are not too objectionable this time (if that is even a word). Even if they aren’t, I will find a way if my answers don’t square with yours.
Dear Bill
Biljoen in Dutch means trillion.
English: million, billion, trillion, quadrillion
Dutch: miljoen, miljard, biljoen, biljard
Even so, the journalist of the Volkskrant got it wrong. If we divided 93 trillion by the 320 million Americans, we get 290,625, not 600,000.
Regards. James
The Jennifer Warnes covers are also fabulous…
https://www.youtube.com/watch?v=tNYiMxHbcE4&list=OLAK5uy_l28mlj5ar5uBES1E1rHSSNGB5dt1Vwa7w
Steve_American. I left something to help you with your friend on yesterdays blog comments.
Hi Bill. Bernie Sanders supports the JG so please contact him. What is John McDonnell position on JG we can reopen borders with EU when it is implemented EU Common Treasury and EU Job Guarantee
So mainstream people still think its valid to not do anything concrete to combat human extinction?
Apparently so Tom, serving the master is even more important than life itself even if the master also dies?
The latest comedy on Wall Street: ‘The Three Stooges’ starring: Kenny (as Curly), Larry (as himself) and Paul as Moe. With Cameo roles by Oli as Hardy and Warwick as Stan.
Watch them get into another mess! Good for a laugh but that’s about all they can do.
With no disrespect to the real stars.
Congrats on MMT reaching dangerous, Bill! It’s a definite step forward according to this Tony Benn quote: “It’s the same each time with progress. First, they ignore you, then they say you’re mad, then dangerous, then there’s a pause and then you can’t find anyone who disagrees with you.”