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Alas, the window seems to be closing

My MOOC is in full-swing (over 3000 participants) and I am quite busy getting Week 2 up and running and then Weeks 3 and 4. So, today, we have our regular guest blogger, Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. Today he is examining the creeping tendency in the political debate and media to start to focus on questions like when will the debt be paid back. Journalists have been asking me to estimate the quarter when Australia can return to fiscal surplus, as if that is a target to aspire to. Anyway, over to Scott …

Alas, the window seems to be closing

There is a ‘model’ in political science referred to as the – Overton Window – (named after its creator Joseph Overton) which relates to the way that ideas in society change and in-turn influence policy and politics.

From the many on-line resources, we understand that the Overton Window is based on the core concept:

… that politicians are limited in what policy ideas they can support — they generally only pursue policies that are widely accepted throughout society as legitimate policy options.

In the normal business of government what the public see as ‘legitimate policy options’ is influenced by the dominant ideological narrative, which in the case of most modern societies is neo-liberalism.

We get a constant feed through the mass media and other channels about small government, responsible budgeting, individual responsibility etc etc.

If we read a bit more, we also find out that according to the model:

These policies lie inside the Overton Window. Other policy ideas exist, but politicians risk losing popular support if they champion these ideas. These policies lie outside the Overton Window.

But we also find out that:

… the Overton Window can both shift and expand, either increasing or shrinking the number of ideas politicians can support without unduly risking their electoral support.

And that:

… often, the window moves based on a much more complex and dynamic phenomenon, one that is not easily controlled from on high: the slow evolution of societal values and norms.

One of the factors that is said to shift the window is the emergence of a crisis.

Indeed, as Maxwell Maltz observed in his 1969 book – Conquest of Frustration:

Close scrutiny will show that most crisis situations are opportunities to either advance or stay where you are

Now whether you buy into the ideas of the Overton window or not, there is no doubt that the health and economic crisis that appeared in 2020 has shaken things up.

And shaken them up significantly.

We are all aware of the size of the health emergency with millions of lives lost, significant suffering for those infected and their families, lost livelihoods as economies stumbled through 2020 and so on.

The events of 2020 have called for governments to step away, at least in some ways, from their business-as-usual approach understood in terms of neo-liberal frameworks of small governments, free markets and orthodox economics.

Politicians of all persuasions have readily admitted that the events of the past year have meant that they have had to look for guidance in different places.

To those observing from the sidelines in Australia, the Federal Government’s multi-billion-dollar rescue package is a far cry from earlier times when governments have been obsessed with reducing public spending to ‘bring the budget back into balance’.

It is certainly historically significant.

The Economist Magazine article (March 26, 2020) Rich countries try radical economic policies to counter COVID-19 – observed early in the crisis that:

Putting the economy on a wartime footing is supposed to be temporary. A look at 500 years of government power, however, suggests another outcome: the state is likely to play a very different role in the economy – not just during the crisis, but long after.

And, the UK Guardian article (April 4, 2020) – Australia can be a better, fairer place after the coronavirus, if we’re willing to fight for it = wrote that:

Whether a quick “snap back” is realistic is an open question, but it is clear that when this is over and the great fiscal and social reckoning comes, as it will, its form will be contested.

The author was referring to the debate as to whether we will revert to “pre-crisis normal”.

Bill talked about this early in the pandemic in his blog post – We need the state to bail out the entire nation (March 26, 2020), where he noted:

We are now hearing conservatives, who previously made careers out of claims that government deficits would send nations broke and more, appearing in the media now claiming “We need the state to bail out the entire nation”

Certainly during 2020 there were lots of calls to consider the new normal—a nod to the possibility of the Overton window shifting … perhaps.

Early in the pandemic in Australia, the Labour Opposition Treasury Spokesman Jim Chalmers wrote an Op Ed piece in the UK Guardian (April 1, 2020) – It’s not too early to start thinking about Australia after the crisis – where he joined the chorus and claimed a major rethink of what we as a nation need to focus on was required.

{Bill editorial note: Chalmers is constantly going on about the public debt problem in Australia and the need for fiscal surpluses – some rethink}

Often, I spoke to people who were beginning to understand that it was possible for the government to fund a raft of measures without the hand wringing that usually went with government fiscal arrangements.

They were beginning to understand that sovereign currency issuing governments such as the one in charge of Australia didn’t need to borrow to finance anything.

On more than one occasion people mentioned to me that neither the Prime Minister nor the Treasurer ever seemed to fret over the large sums of money they were committing, they just did it.

Lots of these people were already embracing some of the basic Modern Monetary Theory (MMT) thought without realising it.

In Overton window speak, for many of these people the window may have been shifting as they began to see a different way of doing things.

They were more willing to support policy ideas, that in the past seemed to be impossible.

While many are now becoming comfortable with the idea that governments can, if they make the political decisions to do so, finance massive programs that benefit those most in need, this will not result in the change that a shifting Overton Window might suggest.

Old habits will be hard to change and those with the most to lose will dig in.

From the very start of the government’s response to the pandemic there was clear indications that any diversion from the normal would be short lived. Australian Prime Minister, Scott Morrison said in a Media Release (March 12, 2020) that:

.
The measures are all temporary, targeted and proportionate to the challenge we face. Our actions will ensure we respond to the immediate challenges we face and help Australia bounce back stronger on the other side, without undermining the structural integrity of the Budget.

On another occasion, he was quoted in the Sydney Morning Herald article (April 2, 2020) – Free childcare for all, but Morrison vows to go back to old ways – as saying that:

There is a snap-back there, a snap-back to the previous existing arrangements on the other side of this,

And there was a necessity for:

… an intensity of expenditure during this period. And then we have to get back to what it was like before. And then we have to deal with the burden that will be carried out of this period of time.

So clearly, while Australian PM Morrison and others left their ideologies at the door, they haven’t forgotten where they left them and will want them back soon.

I suspect that it won’t be too long until we hear more and more from the neoliberal doomsayers running around like Henny Penny shouting that the sky is falling, and we need to get back to responsible fiscal governance with budget surpluses, austerity and all the misery that it brings

NOT good!

Recently I was reading a paper by geographer, Manuel B. Aalbers titled – Neoliberalism is Dead …Long Live Neoliberalism! – which was published in the International Journal of Urban and Regional Research (Volume 37, Issue 3, May 2013).

He made the interesting observation:

Considering the many blows neoliberal ideology has received in this crisis, it should already be dead, but like a creeping cancer neoliberal practice is able to resurface and show up in both new and unexpected, and old and predictable, ways

He was talking about a different crisis, but his observation has significant resonance to where we find ourselves today.

Despite the crisis, despite the observations by many that a new normal is both needed and possible and despite the constant criticism of the business-as-usual approaches, that is exactly what we are going to get, business-as-usual.

Bill likes to talk about the fight continuing and it will.

Through blogs such as these and through ideas such as our Just Urgent and Sustainable Transition (JUST 2030) blueprint and through the spread of education on MMT such as the current MOOC – Modern Monetary Theory: Economics for the 21st Century being taught by Bill and rolled out on the edX platform we will slowly see a shift in ideas, Overton window style.

We have seen it happen in the past and looking back at one writer in particular gives us some hope that perhaps our ramblings will make a difference.

Conclusion

I was cleaning out my office the other day in readiness to move to a new building at the university.

I also came across my copy of John Maynard Keynes’ 1931 book – Essays in Persuasion.

In the preface he wrote:

… it was in the spirit of persuasion that most of these essays were written, in an attempt to influence opinion. They were regarded at the time, many of them, as extreme and reckless utterances. But i think that the reader, looking through them today, will admit that this was because they often ran directly counter to the overwhelming weight of contemporary sentiment and opinion …

Thus the author of these essays … still hopes and believes that the day is not far off when the economic problem will take the back seat where it belongs, and that the arena of the heart and the head will be occupied, or re-occupied by our real problems—the problems of life and of human relations …

Like Keynes suggests, we need to refocus on the real problems. The fight continues.

MOOC Modern Monetary Theory: Economics for the 21st Century

Our edX MOOC – Modern Monetary Theory: Economics for the 21st Century – is about to enter its second week (tomorrow, Wednesday, March 10, 2021) and will run for the next three weeks with new material being added each Wednesday as the weeks progress.

When I last checked there were 3008 total learners (as edX calls the participants), which is a really good sign that people are interested in learning more about Modern Monetary Theory (MMT) in an educational environment.

We have worked hard to provide a diversity of content and allow for a lot of interaction between students in real time.

Further Details:

NewcastleX page.

edX page.

It is not too late to become involved.

The course is self-paced learning with some interaction from myself. But all the material is there and you just have to invest some time each week to get through it.

It is designed for the beginner without any prior economics training. That is, it is meant to be as inclusive as possible.

I would note that this is an educational venture to help people learn about Modern Monetary Theory (MMT) from one of the co-founders.

It is not the place for participants to vexatiously claim everything that is provided to students by way of learning material is incorrect, followed by a restatement of mainstream macroeconomics.

There is enough of that stuff elsewhere.

This is our first – MMTed – venture and the experience of putting together a digital on-line learning course will help us in our next ventures – a more advanced course in the coming months.

And I continue to be grateful to those who have donated amounts to help get MMTed off the ground.

The MOOC is a sort of demonstration case of what we think can be achieved.

That is enough for today!

(c) Copyright 2021 William Mitchell. All Rights Reserved.

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    This Post Has 12 Comments
    1. I’ve been following Bill’s blog for some time now and have bought a copy of his textbook ‘Macroeconomics’ so I’m not a complete beginner where MMT is concerned. None the less I have found week 1 of the MOOC very useful as a concise and clearly explained background to the subject.
      Rather like riding a bicycle, once you understand and absorb the new way of thinking you will wonder how you could have not understood this all along.

    2. The first session of the MOOC MMT course is so impressive. Great to hear it’s not too late for people to join. Advice: Join!!!
      Taking a perspective from different standpoints (humanities, linguistics) in the first session is inspirational.
      I bought ‘Macroeconomics’ at the launch and have dipped in now and again. This first session of the MOOC has spurred me on to use it systematically.
      Access to the textbook is not necessary, its just that this first session underlined what a waste not to make full use of it.
      Looking forward to the rest of the course and hoping my miserable ‘score’ improves!

    3. I’ve never heard of the Overton Window. If it’s a model used to teach students about “political science” (whatever that is) and that those students are expected or expecting to become the seemingly ubiquitous “political advisors” that seem to surround and dominate our elected representatives and “guide” their policy thinking, then it sounds to me like it should be thrown out of the window.

    4. Bob, I think the ‘Overton Window’ just refers to concepts accepted by the mainstream at any given time.
      A crisis offers the opportunity for the mainstream view to change; but at this stage of the crisis it might be feared that the ‘window is closing’ again, as the false mainstream narrative appears to be reasserting itself.

      The virus wasn’t strong enough….

    5. In the European Union, the threats from the deficit terrorists have never really stopped.
      People like Valdis Dombrovskis, Executive Vice President of the European Commission for “An Economy that Works for People” (it’s on the European Commission’s website!), regularly threaten countries about the deficit!
      And I read people like newspapers editors saying that “we” have to suffer due to all this debt that is being created… It’s not these privileged ones who suffer with the continuation of Neoliberalism. These people will, as always, be protected from austerity.

    6. I think the framework outlined by Prof Scott has relevance to the situation I observe in the UK. Politicians can both influence and are limited by social narratives – the policies that they are able to present to the public are very much limited by an “Overton Window”.

      The genius of Blair and Campbell was to understand this – The New Labour manifesto exhibited the largest right ward swing of any Labour manifesto in pretty much ever. They also benefitted from a very unpopular Conservative Government and a swing from Conservative to Liberal Democrat in the election. They also managed the Murdoch Press machine, by convincing Murdoch that they were not a threat to his media empire – Murdoch apparently liked to do unofficial deals.

      The interesting thing is how debate changes – for instance the idea of the Government finances being likened to household finances didn’t exist in common usage prior to 2010. At the time Government debt was discussed in terms of “crowding out investment” which is what George Osborne repeated in both his Mais Lecture and also later on news media. It was David Cameron who started using household debt analogies, most infamously his “maxed out the credit card”.

      Prior to 2010, as an ordinary citizen, budgets were only of interest to find out how much tax you would have to pay on a packet of fags, there were of little interest otherwise. Governments spent money, they also taxed you. Governments who wanted to spend more, had to tax more. That was how Government finances were understood, very few people even knew what a deficit was, and what’s more prior to 2010, nobody cared, least of all in Government.

      Now it’s impossible for a political party to campaign for an election without being asked absurd questions like how will they pay for the policies, meanwhile semi-maths literate journalists pour over manifestos, and get confused by ideas like improving retention rates as well as training more nurses, can end lead to more nurses at the end.

      Not that it matters – you can be obviously drunk, and make a an idiot of yourself in front of a bunch of police cadets, hide in a fridge to avoid being asked any questions, and then get filmed trying to take a reporter’s phone off of him because you didn’t like what was on it, all the while barely able to coherently to string more than one sound bite together… and still get elected.

    7. As I recall things from my own Canadian perspective, the neoliberal narratives and ideology were not circulating widely within society until certain politicians, Conservatives and then Liberal’s following them began that conversation in the 1970’s, creating and controlling the narratives all along the way.

      So it appears certain, to me at least, that inception did not occur as the result of any organic movement taking place within broader society at all. Most people were experiencing big improvements in all the important ways prior to the introduction of these ideas to society; so it appears if there was an open “Overton Window” , it was a purely manufactured one, and that is a wrong that needs to be righted.

    8. Re Mark Redwood…
      “The interesting thing is how debate changes – for instance the idea of the Government finances being likened to household finances didn’t exist in common usage prior to 2010. ”

      In the UK that’s exactly what Margaret Thatcher did – liken the Government to a household, and that it should “live within its means”. I understood that very clearly in the 1980s as it was her Govt’s primary message. And as (with 20-20 hindsight) the whole western world was slowly working out what abandoning gold pegging meant (Nixon, 1971; rampant stagflation in the late 1970s; the UK’s Prices and Incomes policies under both Tory and Labour (Heath and Callaghan), and more), the “live within your means” mantra was a compelling argument. It was common usage.

      It’s only later that some, like Bill (maybe Bill at the time), have realised that a government (like the UK) is not fiscally constrained in the same way as a household. Our elected politicians have yet to work out out what that means; and if there’s one big conspiracy in the world, it’s that central bankers want to make sure that politicians don’t work out what that means.

    9. Hi Bob,

      I guess we remember things differently… although not that much, I think my point is more about the focus on debt, and the way that is imagined to be like a household debt, specifically through the use of metaphor. (so my phrasing could have been better I guess)

      With Thatcher I guess you are referring to this quote,

      “My policies are based not on some economics theory, but on things I and millions like me were brought up with: an honest day’s work for an honest day’s pay; live within your means; put by a nest egg for a rainy day; pay your bills on time; support the police.”

      What’s interesting is you can see how a household metaphor is being developed, although specifically here Thatcher is setting out the moral framework her policies are based on. She isn’t saying that Government is a household, rather she is saying she is going to treat it like one. It’s a subtle yet distinct difference. I remember much being made of her being the daughter of a greengrocer at the time.

      For me, the battle ground between Labour and Conservatives was on taxation and spending – for which we have this quote also from Thatcher.

      “The state has no source of money, other than the money people earn themselves. If the state wishes to spend more it can only do so by borrowing your savings, or by taxing you more. And it’s no good thinking that someone else will pay. That someone else is you.”

      She isn’t describing a household here either, there is no earned income, or expenditure in this description, rather she invokes the idea of a body spending your money on your behalf, which very much fits wthin a Ayn Randian framework – the best person to decide how your money is spent is you.

      But Cameron does invoke Thatcher, and living within your means in his 2008 speech, where he described the UK as reaching the “limits of acceptable taxation” Again very much in line with traditional conservative ideals around taxation and spending. The financial crisis is framed in terms of taxation, not in terms of excessive debt, that comes later.

    10. A democracy can be successful only if there is a well informed and well intentioned demos to choose and support their representatives in the government. The government members need to look through their “Overton window” to see what their electorate need and desire. On the other hand, the government should consist of leaders of the society who are willing and able to guide their electorate in the right direction when the society falters.

      I have some sympathy with our government (Australian) in their lack of direction in economics because the “experts” in society, in the main, reject the principles of MMT. I am referring here particularly to academics and commentators in the news media. The academics in particular, with some notable exceptions, have let us down.

      We have an additional problem here in that there is not a strong membership in the political parties. The government tends to serve more the people who pay them, i.e. their donors, rather than the people who elect them.

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