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The macroeconomic narrative continues to (MMT) evolve but the games not over yet

I think the general population are starting to get the message that my profession and the political class that uses it as an authority has been leading them down the garden path for decades now to cover up policies that have deliberately undermined our socio-economic prospects and allows a massive transfer of national income to the top-end-of-town. I am also watching, on a daily basis, the almost ludicrous way the mainstream economists and the politicians weave and duck as they change their story about fiscal deficits, public debt and unemployment. The paradigm shift that has been in play for a while now has accelerated in recent weeks, from a ‘6 in front of it’, to a ‘5 in front of it’, then last week a ‘4’ with some players urging a 3. That fancy talk the policy class use to talk about when the fiscal stimulus that has had capitalism on life support will start to be withdrawn and the numbers refer to the official unemployment rate that will tell the politicians the economy has recovered. Yes, I jest. And I shouldn’t because human tragedy is involved. But after years of being told I was crazy, it makes me laugh to watch the machinations unfold as the uncomfortable truth sets in that this lot had no authoritative model – it was hocus pocus all along designed to make us think they were on top of it and that TINA (prevails).

Last October, when the Australian Treasurer delivered the annual fiscal statement (aka ‘The Budget’), which had been delayed by some 5 months while the Government worked out what was happening with COVID-19, he said that they would start to deliberately cut the deficit to reduce the public debt ratio (debt to GDP), when:

Once the recovery has taken hold and the unemployment rate is on a clear path back to pre-crisis levels, comfortably below 6 per cent …

The benchmark for austerity to begin was set – an unemployment rate “comfortably below 6 per cent” – although it is not clear what comfortably actually meant.

The pre-pandemic unemployment rate was at 5.1 per cent in February 2020, but we should not see that as any reasonable benchmark on which to guage policy.

Prior to the GFC, for example, in February 2008, the unemployment rate was 4 per cent.

But then add in the fact that in February 2008, the underemployment rate was 5.9 per cent, meaning that the Australian Bureau of Statistics’ Broad Labour Underutilisation rate was 9.9 per cent (the sum of the unemployment rate and the underemployment rate).

So it was far-fetched even then to think the labour market was anywhere near full employment with nearly 10 per cent of all available and willing labour resources not working in one way or another.

Further the employment-population rate was at 62.8 per cent.

By February 2020, just before the pandemic forced the lockdowns and the rise in unemployment, the underemployment rate was 8.6 per cent and the Broad underutilisation rate was 13.7 per cent.

Hardly a benchmark to aspire to with some 1,896 thousand workers idle.

The employment-population ratio was just 62.6 per cent.

So while the Treasurer was talking about “pre-crisis levels” in terms of the pandemic, he should have, at least, been talking about pre-GFC as an aspiration for the Australian economy.

The difference between a 5.1 per cent unemployment rate and a 4 per cent unemployment rate (independently of the underemployment problem) is an extra 152 thousand jobs.

So “comfortably below 6 per cent” and “pre-crisis levels” would suggest the aspiration was in the low 5s rather than the high 5s.

The unemployment rate is now at 5.6 per cent (March 2021) but that will probably rise again as the impacts of the withdrawal of the wage subsidy (JobKeeper) at the end of March.

We will see the first impacts of that withdrawal in the April Labour Force data out in a few weeks.

So the Government has already started withdrawing its fiscal stimulus (which also included cutting the unemployment benefit back to impoverished levels).

The ‘pivot’ is now all the talk

It is no wonder that an ‘all announcement/not much action’ government would have snazzy terminology to mask its lack of doing much.

The Government has been dragged kicking and screaming to the position it now finds itself in – having to dramatically recast its rhetoric and speak an economic language that even 2 years ago it would not have even known the words to use.

Last week (April 29, 2021), the Treasurer gave a speech – Address to the Australian Chamber of Commerce and Industry – which carried the sub-title “Delivering more jobs and a stronger budget”.

The ACCI is one of those right-wing organisations that rarely support pay rises to workers and want all sorts of welfare cuts and regularly espouse the sort of deficit terrorism that has dominated the economic discussion over the last three or so decades.

The Treasurer told the audience that the Government needed “to stick to the Plan”, which meant that it wanted to “limit the damage to the labour market” that the pandemic would cause.

He said that “fiscal and monetary policy worked in tandem to support our economy”, referring to the “unprecedented levels of fiscal support” and the fact that the Reserve Bank has bought $A62 billion worth of government bonds (a significant proportion of those issued to match the rise in the fiscal deficit).

He reaffirmed that the Government would not withdraw the fiscal support “prematurely” while “businesses and sectors are still doing it tough”.

Then he dropped the bomb while referring to what the Government was planning in the upcoming fiscal statement.

He outlined a series of good economic signs but concluded that:

Despite the strength in our domestic economic recovery, the unemployment rate is not yet ‘comfortably below 6 per cent’.

So while the October 2020 fiscal statement had outlined two phases: (a) emergency support; then (b) fiscal consolidation, the Treasurer concluded that with external borders closed and interest rates at zero:

… we remain firmly in the first phase of our Economic and Fiscal strategy … [and] … We need to continue working hard to drive the unemployment rate lower.

So they are not going to “move to the second phase of our fiscal strategy” because:

1. Australia can support a lower unemployment rate.

2. Monetary policy cannot do it (“heavily constrained”) – finally buying the call by the central bank governor for the last several years to use discretionary fiscal policy as a primary policy tool.

3. The NAIRU is now estimated to be lower – meaning they think inflation is not a problem.

Which all means:

In effect, both the RBA and Treasury’s best estimate is that the unemployment rate will now need to have a four in front of it to deliver this outcome.

We want more people in jobs and in better paying jobs.

This is what our fiscal strategy is designed to achieve.

Functional finance!

And, of course, the RBA is now suggesting that to get wages growth up so that firms face scarce labour, the fiscal strategy will have to keep pushing the unemployment lower and lower until the labour markets tightens sufficient.

That should require unemployment rates well below 4 per cent and a significant reduction in underemployment.

There is some way to go.

But the point is that the narrative sounds very different to just a year ago.

Progress is being made.

The Sydney Morning Herald economics writer Ross Gittins latest column (April 30, 2021) – New economic rule: The budget’s the only game in town – seems to think what is going on is a rational response to changed rules of the game.

He seems to think there are exogenous (external) circumstances that are beyond the control of government and tie the hands of the government.

He wrote that:

What used to be the right thing to do becomes wrong, and now the right thing is something we’ve long believed was not the way to go.

Note the reference to “believed” = religion.

His claim is that the shift to a monetary policy dominance in the late 1970s was sensible because:

But by the late 1970s, the rich economies realised that high inflation – caused by the demand for goods and services running ahead of the economy’s ability to supply them – was the key problem, and the best instrument to control inflation was monetary policy. This would leave fiscal policy free to be used to keep budget deficits down and limit the build-up in government debt.

What a contrivance that is.

First, in the paragraphs before the quoted section he talks about “stagflation” which tells you that demand (overspending) was not the problem.

The inflation of the 1970s which persisted into the 1980s was not because there was excessive nominal demand coming up against finite productive capacity.

Rather it reflects the ‘battle of the markups’ as bosses and unions slugged it out (in the ‘distributional’ arena) as to who was going to bear the real income losses associated with the OPEC oil price hikes that cut national income for Australia as a whole.

I decided to refresh my memory and went back into my data archives for an old series on capacity utilisation that we used to use in our econometric modelling at the time.

This series is scaled at 1 to coincide with GDP peaks (so doesn’t have to be at a full capacity point) and shows the extent of departure from the most recent peak.

The movement in the 1970s up until the 1982 recession (a period of fiscal austerity) was definitely not a period where “demand for goods and services” outstripped productive capacity.

There was plenty of spare capacity.

Gittins is just reinventing history to suit his story.

Second, the decision to jettison fiscal policy and adopt monetary policy was not scientific in any way. It was an ideological move driven by the growing Monetarist dislike for discretionary fiscal intervention.

It started with the introduction of monetary targetting following Friedman’s claim that inflation was the result of excessive monetary growth and when that failed they morphed the preference for non-accountable, non-elected policy makers into inflation targetting via interest rate management.

This was never very effective.

The only thing that wiped out the inflation that was introduced by the oil supply price hike was the 1991 recessions, which reset inflationary expectations.

There was never a scientific case made for reducing fiscal deficits or reducing public debt.

These narratives were always part of the fictional world that economists invented to justify privatisation, deregulation and welfare cuts – driven by their ideological preference for ‘small’ government.

Apparently now in Gittins speak, with inflation gone, this bias towards monetary policy is no longer needed and with:

… weak growth in the advanced economies since the global financial crisis means unemployment has remained high – well above anything that could be called full employment. It’s clear the basic problem we face has switched from excess demand relative to supply to insufficient demand relative to supply.

Which was not an accident that governments have to adjust to.

Governments created the weak growth because they pursued their obsession with fiscal surpluses at the expense of jobs, wages growth and other material benefits for citizens.

It was always the case that a reliance on monetary policy would lead to this malaise.

The external circumstances have not changed.

Since the mid-1970s, Australia has endured, like nearly every other nation, elevated levels of unemployment, and, in our case, shockingly high levels of underemployment.

The only thing that has driven growth has been a massive credit binge by Australian households and a once-in-a-century mining boom.

Neither sources of growth – inadequate though it has been – provide a sustainable basis for prosperity.

And with the anti-establishment revolt growing as citizens realise they have been dudded by this neoliberal fiction the governments around the world are shifting.

Conclusion

But let’s not get ahead of ourselves

I have already written enough today and I have been quite occupied on other commitments in Melbourne all day.

But one just has to read the latest stuff coming out from Janet Yellen in the US to know that the mainstream is not conceding defeat any time soon.

For those who think that MMT is ‘winning’ – they should think again.

The struggle will continue for some years yet.

That is enough for today!

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

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    This Post Has 49 Comments
    1. It will be interesting to see if Saul Eslake actually has a point when he argues that the pandemic has – at least for now – caused a profound shift in the environment in which the Australian labour market operates: we are no longer importing hundreds of thousands of people to compete with locals for available jobs and in combination with Australians now spending what they used to spend abroad into the domestic economy instead (being unable to leave) and government insisting that it will not be driving for austerity any time soon (make what you will of that rhetoric)…..will unemployment actually spike seriously now that Jobkeeper has been removed and unemployment benefits have been returned to poverty level? Or might it even possibly drift somewhat lower?

      While it is true that new arrivals bolster demand with their need for housing, goods and services etc, I cannot say that I have ever been sold on the argument that this completely offsets competition for local jobs. Bringing in outside labour to circumvent the wage and condition demands of local labour is a time-honoured tactic of capital.

      The next few months will probably tell if he has a point or not.

    2. The struggle will continue and if the west fails they will evoke more nationalist fervor and that usually means a war!

    3. Inflation stops beeing na issue to the corporate media, when the “printers” are working to feed the oligarchs with the so-called “stimulus”.
      Whithout stimulus, most of them would be out of business by now.
      Most of them would be out of business back in the GFC days.
      Back then, “stimulus” were called “bailouts”.
      I wonder when we will call it its rightful name: ROBBERY.

    4. The Establishment have let ‘the 1970s’ become a stand-alone phrase for economic awfulness. No setting the 1970s in the context of over two decades of remarkable post-war recovery and achievement, no mention of oil price hikes if they can get away with it, no mention that there were two sides trying to preserve income share and that, for instance, the miners in the UK did a job which few would want to do even with a 100% wage rise and that their comparative earnings had declined in the 60s, and certainly no mention that for the unemployed, of which in the UK, there were officially over 3 million for over 6 years, the 1980s were far bleaker. And for a much larger share of the population, now of generation rent and job instability and the prospect of even bleaker retirement years, the 1970s would be altogether preferable.
      William Keegan’s Observer Brexit rant column demonstrated again how out of touch he and those with power are. Apparently Jean-Clude Juncker, former president of the European Commission, recently revealed that ‘knowing how distorted the British view of “Europe” had become … he had offered to explain to the public the advantages of the EU and how it really worked.’ Cameron turned the offer down because he could handle it and as a result J-C J says, ‘no one told the British public what we agreed on, say, the free movement of workers.’ Hahaha, ‘No’ voters were only ever concerned about EU regulations on the shape of fruit and the amount of money handed over to Brussels. Today’s Guardian reminds us that this is the same J-C J who as prime minister of Luxembourg, told Amazon’s head of tax (dodging) ‘If you encounter problems which you don’t seem to be able to resolve, please come back and tell me. I’ll try to help.’ UK PM Johnson and Cabinet have competition in the nationalism and corruption stakes.

    5. Patrick B: Jean Claude Juncker was the PM of Luxembourg, an outstanding tax haven in the middle of the EU.
      Luxembourg, Holand and some British islands, are permanent magnets for stimulus money, dirty money and every other form of money whe can(‘t) find out there.
      That’s one of the reasons for the decline of the economy of Italy, for example (the third largest economy of the union).
      The same happens with most of the others.
      Well, maybe with the exception of some former soviet satellites, including ex-east Germany, which are growing at the expenses of the Greeks, the Italians, the Spaniards, the Portuguese, the majority of the French and the working people of Germany too.
      The goal is clear: to push them further away from the strong arm of “mother”-Russia.
      You’re right to say the Brits were swindled.
      The tories are masters (like Trump was too) in harnessing the lower classes discontent.
      They got centuries of practice, but Labour helped a lot, when they commited suicide, supporting the remain side.

    6. Superb post from Bill, a cut above his usual excellence. Normally, as many have observed, new ideas don’t get implemented because old thinking changes, but rather because old thinkers die off and are replaced by new. The pandemic seems to have sped up this natural process of change by forcing immediate action according to new paradigms like MMT. In essence, new thinking had to be applied before it was intellectually accepted, which helps explain the confusing and conflicting statements about MMT by mainstream economists, especially their insistence that its application is only temporary. No doubt they will try to go back to TINA neoliberalism at the first opportunity. Yet now that so many have seen that there IS an alternative, one wonders how long that desperate move backward will last? Bill’s quite right that MMT has not yet prevailed and much work remains to be done by its proponents, but the smart money IMHO is on it prevailing sooner than would normally be expected.

    7. Isn’t the increase in cost of a basic input cost ( that’s imported)like oil,a reduction in an economy’s spare capacity??

      Oil is such a fundamental good that any price increase, will increase cost structure across the economy.

      Thats a real reduction in the real resource space of the economy.

      While measures should be used to increase oil usage efficiency and reverse the price increase by increasing the supply of oil(invade an oil producing country)

      Surely in the face of a real resources reduction demand suppression is entirely appropriate.

    8. @ Paulo Rodrigues re: ‘former soviet satellites, including ex-east Germany, which are growing at the expenses of the Greeks, the Italians, the Spaniards, the Portuguese…’. I would say that growth is due to them starting from a low base, thus providing a willing pool of migrant labour, as well as being more conveniently linked in to serving German industry than Greece or Portugal which are more peripheral.

    9. In my opinion we cannot interpret Frydenberg without looking into the words of Dutton and General Findley about engineering a new Gallipoli in Taiwan. There is a major paradigm shift going on, back to the cold war and, in the end, to “military Keynesianism”. The Western world cannot afford disunity which could lead to internal struggle like under Trump. The global domination of the West and the Western culture – first Christian and then “liberal” and “democratic”, but always based on absolute individual property rights, like in ancient Rome, started around 1492, the year of “discovery” of America and the expulsion of Jews from Spain. For the very first time this global domination is seriously threatened by China (USSR was also mostly a “Western” country in terms of the culture). Trump was given 4 years to play his dirty tricks with the trade war, it did not work. Now Biden is trying even harder, a military conflict (often a war of attrition) has been the usual way of sorting out similar issues over the last 500 years or so. But if he nukes Shanghai, Los Angeles is gone, therefore I believe the conflict will be a cold, not hot war, with possible small flareups. The main tool of global domination of America (apart from nukes and aircraft carriers) is the global financial system, generating credit and imposing usury on developing countries. Another aspect of the domination is the system of exchange rates, pricing labour in developing countries (the periphery) at the 1/3rd or less of the cost of labour at the centre of the empire. A dialectical contradiction has emerged, due to this imbalance the West is enjoying a higher level of consumption while simultaneously undergoing deindustrialisation. This is how globalisation was “hacked” by China but nowadays the Chinese do not need to export any more cheap stuff to the US. This early engine of growth has already been obsoleted. The Americans want to preserve the global monopoly in the international financial system. At the same time, an American company cannot compete with a Chinese, Mexican or Vietnamese one due to different costs of labour. But if the Americans cut off the Chinese and the Russians, the global domination of American dollar is gone with the wind as the alternative system will emerge sooner rather than later. Trying to bully the world and spread “liberal democracy”, the Americans will be left with a rusting fleet of aircraft carriers which are as obsolete as the Maginot line in 1940. Modern missiles and drones, even these made in Iran, can easily sink them. At this stage the Americans are trying to destabilise China and create a new Donbas in Taiwan. Then, after the initial flareup, to build a united front of countries to contain and strangle China. They hired again Victoria Nuland who has been confirmed as the Under Secretary of State for Political Affairs. She has a great experience in meddling in Ukraine in 2014. The Chinese are more than happy to play this game with the US because it is a distraction from the real struggle, which is purely on the economic front. To build a “moderately prosperous society” based on “socialism with Chinese characteristics”.

      We don’t know what will happen over the next few years, I believe the West will have to concede the end of global domination but not without a struggle. Let’s hope not too many lives will be lost, one is already too many. This is in my opinion the correct historical context of the changes in macroeconomic framing. The Western globalist plutocrats don’t want to lose the ideological struggle even before the real cold war has begun for good. We need to believe in “liberal democracy” and capitalism as the best possible system and hate the Chinese regime, violating human rights by modernising Xinjiang. Some of us need to be stupid enough to join the ranks of cannon fodder and be ready to die for Diaoyu Islands. Above all, we all need to believe in the propaganda and feel that it is our common struggle, that a migrant from Eastern Europe, Latin America, India or China, has to defend the Anglo overlords because “they” are “us”. That’s why bread crumbs from the master’s table have started arriving. The quickest way is to run budget deficits but a limited income redistribution (or rather the reversal of what happened since the 1970s) is also on the cards, at least in the US. From an “average person” point of view this competition between systems is exactly what the doctor has prescribed. As long as no missiles are fired…

    10. Great post, Thanks Bill! Some great comments too esp. by Patrick B on how the 1970s are spun by neolibs.
      This blog and associated work is the intellectual cutting edge in Australia.
      We need some politicians, movements, union leaders to starting back these ideas but things are already turning MMT’s way, as seen by Aussie Reserve Bank buying big time in the secondary market.

    11. @’Eugenio Triana’ (post May 4, 2021 at 18:54)
      do pray tell what Charlie Munger thought was, “more confident than they need to be”?
      That is to say, spare me the agony of listening to that clip.

      If I am chasing down all neoliberal zombies with my MMT laser axe, does this mean I am confident I am running way too fast such as to catch the critters well before climate warming melts the ice caps and beautifies and greens the sahara [sarcasm], and that if I just slowed down I could still get the job done with ample leisurely coffee breaks? (I can’t imagine that’s what Munger mean.)

    12. Adam K, a good read, thanks

      Welcome relief after listening to fools like Peter Jennings bang on about “western values”, when China is the only country actually implementing the Job Guarantee, by sending CPC officials to every last remote village to implement income generating employment for every family, plus infrastructure and housing upgrades funded by the government.

    13. “The only thing that wiped out the inflation that was introduced by the oil supply price hike was the 1991 recessions, which reset inflationary expectations.”

      The recession (induced by tight US fiscal) helped by deregulation caused a dramatic drop in the price of oil and CPI.
      And in the US Global competition helped President Reagan removed pricing power from the large corporations braking the unions and real wages have stagnated ever since.

    14. Are we talking about that Charlie – people who are in economic distress should “suck it up and cope” and “thank God for bank bailouts” – Munger?

      Lovely guy!

    15. @ Neil Halliday,

      Ah yes, that may well be, but China is an evil and authoritarian foreign threat with a one party system and some German obsessive who is the sole media source for the story says that they keep a million Uyghurs in concentration camps and they are mean to petrol-bomb throwing CIA-backed students in Hong Kong and are suppressing the precious democracy that the British occupiers never actually allowed them to have and just this week it turns out that they are responsible for an uncontrollable space rocket that is right now about to fall down to Earth…etc, etc, etc

    16. Bill aid:

      “The only thing that wiped out the inflation that was introduced by the oil supply price hike was the 1991 recessions, which reset inflationary expectations.”

      The 1982-1984 recession (induced by Volcker’s handiwork I would say) was pretty horrible. There was constant talk of depression.

      There were three big kickdowns in the inflation rate – one during the 1975 recession, one during the 1984 recession and one during the 1991 recession.

      “The Government has been dragged kicking and screaming to the position it now finds itself in – having to dramatically recast its rhetoric and speak an economic language that even 2 years ago it would not have even known the words to use.”

      There’s an election in the offing. I don’t think there is much dragging going on.

      The intriguing thing is Dutton’s latest hardline comments on China. Looks like he’s trying to up his public profile. Maybe he’s positioning himself for another tilt at the leadership prior to the election which would suggest that there is dissatisfaction with Morrison in the ranks. And perhaps I am drawing a very long bow.

    17. China is indeed an authoritarian and cruel regime, but isn’t it a superb example of a state successfully commanding the allocation of its resources, using the power of the public purse – unlike other communist states past and present? The USSR lacked the technical knowlege which is available today. Cuba is too weak. Venezuela too.

    18. Mr Shigemitsu,

      Living in the UK you might not have an appreciation of the sensitivities Australians (well, except perhaps Neil Halliday :-) ) have about China.

      The Chinese, as you would know, have claimed all of the South China Sea – that is, all the way down to Indonesian archipelago.

      The Chinese have been progressively building bases in Australian Antarctic territory for decades with nary a please or a thank you.

      The Big Squeeze is on.

    19. @ MrShigemitsu,

      Evil AND authoritarian? Note: your ‘sovereignty of the individual” ideology is delusional in a world with more than one individual, since we are all driven by self-interested, competitive survival instincts, requiring rule of law, whether liberal of Marxist.

      Now I contend YOU are complicit in the ongoing slaughter of children in wars since WW2, because the veto was forced onto the UNSC by your “individual sovereignty ” delusion which supports the obsolete concept of absolute *national* sovereignty, thereby rendering the UNSC incapable of defending an international rules based system.

      Just so you are aware of the consequences of your Western “freedom’ values…when throwing accusations of evil, don’t forget to look in the mirror.

    20. @ Carol Willcox, Exactly.
      And to the “freedom” ideologues here, the CCP has 95% satisfaction rating among the mainland Chinese themselves (poll by Harvard Research – google it; Tiananmen Square was 3 decades ago, the world and China has changed massively since then, so don’t even think of going to war with China). Just sit back and watch the next decade unfold as China surpasses the US economy., via intelligent and productive management of all its resources (the MMT proposition) while the US is still arguing about how to pay for some bridge repairs. .

    21. “Now I contend YOU are complicit in the ongoing slaughter of children in wars since WW2…”
      Alright Neil H., maybe it is time to lighten up a bit.

      Henry, I was not aware that Australia had claimed Antarctica.

    22. Jerry B.

      You mean… ignore what’s happening around the globe and sleep comfortably at night, courtesy of the Western “individual sovereignty” delusion?

    23. No Neil. I mean stop accusing individual people of slaughtering children unless you know they did that. Saying someone is ‘complicit’ in some atrocity that they had no part of is wrong.

    24. Thanks Henry. I knew the US sends several teams of masochistic scientists down there to Antarctica, either as a reward or punishment, or perhaps just in a search for knowledge. But I didn’t know we had staked out a claim to territory there.

    25. Jerry. you need to understand the meaning of complicit. Do you support ….or at least understand, Doc Evatt’s original insistence on a UNSC without veto? Be careful how you answer, otherwise you too are complicit in the ongoing slaughter of children, even after our fathers destroyed Europe (and the children in Dresden who had said their prayers on that fateful night…). And then Hiroshima…the task was clear to all in 1946, and yet still the ‘individual sovereignty’ delusion of the powerful states destroyed the UNSC’s capacity to keep the peace (because of the veto which the powerful states insisted on).

      I have absolutely no doubt I could have a more intelligent conversation with Xi Jinping re abolishing the veto, than Biden (don’t even mention Trump), because Marxists (collectivists) are naturally more willing or able to accept an international rules-based system than Western ‘liberal’ (individualist) ideologues.

    26. “..because Marxists (collectivists) are naturally more willing or able to accept an international rules-based system than Western ‘liberal’ (individualist) ideologues.”

      And the Chinese have been paragons of virtue when it comes to international rules (well, there’s odd minor slip up, such as laughing off the ruling on the South China Sea activities of China by the independent arbitral tribunal established under the UN Convention on the Law of the Sea).

      Nobody is perfect, eh?

    27. Jerry,

      “But I didn’t know we had staked out a claim to territory there.”

      I apologize. The US has no claim, just bases.

    28. Henry R.

      Chinese SCC intransigence is likely related to the Taiwan separatist push (for obvious reasons – in the event of a war to settle the issue, China needs control of the area). If the US kept its delusional “freedom” ideology out of China’s internal affairs including Taiwan, China would possibly be more ready to accept international rulings on the SCC.
      By the way, an international rules-based system would defend article 23 of the UN UDHR – which would mean the collapse of the neoliberal NAIRU dogma…..

      Meanwhile the question i posed to Jerry re an international rules-based system remains to be answered. Doc Evatt was a former High Court judge of Australia, he knew something about law.

    29. Neil,

      “Chinese SCC intransigence is likely related to the Taiwan separatist push (for obvious reasons – in the event of a war to settle the issue, China needs control of the area).”

      There are both strategic and economic matters of interest to China. This does not make their behaviour legitimate. You seem to be very willing to excuse them of their obligations to abide by international law.

      ” If the US kept its delusional “freedom” ideology out of China’s internal affairs including Taiwan”

      What about the legitimate wishes and concerns of the Taiwanese people? You totally discount those. It seems to me you would justify the murder of 10,000s even 100,000s of Taiwanese if the Chinese invaded.

      “Doc Evatt was a former High Court judge of Australia, he knew something about law.”

      Apparently, the Chinese don’t.

    30. Neil,

      “I have absolutely no doubt I could have a more intelligent conversation with Xi Jinping re abolishing the veto, than Biden (don’t even mention Trump), because Marxists (collectivists) are naturally more willing or able to accept an international rules-based system than Western ‘liberal’ (individualist) ideologues.”

      This is just another falling off my chair laughing moment.

    31. Henry agreed: “Doc Evatt was a former High Court judge of Australia, he knew something about law”.

      So you need to answer the question I posed to Jerry, if you are serious about an *international rules based system* which is in fact based in law, not US (or maybe Chinese within a decade) global hegemony.

    32. Neil, why would I answer your question if you are all set to call me complicit in slaughtering children?

      Get a grip on reality man.

    33. Neil,

      I didn’t agree to anything.

      I have no idea what Evatt had to say but I think I can see where you are going. There are 5 countries in the Security Council with a veto, the US being only one of them. China being another. If you are arguing the US controls the UNSC then you are nuts.

    34. Jerry:

      1. Children are still being slaughtered in wars, even after the 1946 San Francisco conference gathered to end such wars…especially noting the image of that cloud over Hiroshima, just recently seared into everyone’s brains.
      2. The veto was forced onto the proposed UNSC, because of the delusional concept of ‘individual sovereignty’…in this case individual *national* sovereignty.
      3. Given the fact the veto has rendered the SC incapable of dealing with international conflict and preventing war, who do you think is responsible for the ongoing slaughter of children in all the wars since 1946?

      African warlords? US presidents eg Bush in his illegal invasion of Iraq? CIA backed coups in Latin America? Proxy wars between Russia and the US in Syria, Yemen, Palestine etc etc etc. ?

      Or all of us?

    35. Henry R.

      “Doc” Evatt, Doctor of Laws LLD, (Uni of Sydney) resisted adoption of the UNSC veto….you can see where I am going…..but apparently you can’t see far enough, no doubt BECAUSE of your (Western) ‘sovereignty of the individual’ delusion.

      I am arguing the UNSC was rendered incapable of carrying out its peace-keeping mandate, BECAUSE the veto was forced onto the UNSC by the US, and the USSR (the latter because it would only get one vote, despite consisting of many nations), against the wishes of the delegates from the smaller nations present at founding of the UN in 1946, at San Francisco, who – under the leadership of Evatt – knew the veto was an oxymoron.

      Hence the assumed role the US ever since (and still even after the demise of the USSR), the premier military power with all its vested interests, acting as ‘world policemen’…an untenable situation, certainly nothing to do with ‘an international rules based system’.

      And I am also arguing China is already more philosophically aligned to the CONCEPT of an international rules based system, owing to its collectivist ‘Marxist” ideology.

      But whether I am right or wrong on that point, the facts as I have outlined above irrefutable, you either accept an individual rules based system or you don’t …and must therefor be prepared to accept responsibility for outcomes including the ongoing slaughter of children, in the absence of said international law.

    36. Neil,

      International, or otherwise, law doesn’t necessarily solve anything. As far as I understand it, laws existing doesn’t prevent the apartheid state from having a reasonable *legal* argument, or anyone doing anything about the climate. Laws are written to have flaws.
      The fact of the matter is that, no matter how much we may like China to kick the US’s false rhetoric into the ground, they genocide their own population and use them for spare parts. Tell me where that fits with Marxist ideology, along with the social credit system, which, again, like any other law, is designed to have flaws so the panda bear isn’t questioned.

    37. Neil,

      “.you can see where I am going…..but apparently you can’t see far enough, no doubt BECAUSE of your (Western) ‘sovereignty of the individual’ delusion.”

      You can’t see far enough to see that China exercises its own interest irrespective of international law and in the interests of a regime drunk with the notion of state sovereignty.

      It has unilaterally annexed Xinjiang and Tibet, numerous islands, 80% of the waters of the South China Sea and even territory on the Moon!

      Since 1982 it has used the veto just about as much as the US and Russia. Russia has used the veto more often than the US.

      As Jerry said, get real, stop deluding yourself.

    38. Neil,

      “And I am also arguing China is already more philosophically aligned to the CONCEPT of an international rules based system, owing to its collectivist ‘Marxist” ideology. ”

      CONCEPT……..!!!

      What a joke. Even you know China stands for nothing else other than its own interest.

    39. Paulo M writes: “The fact of the matter is that, no matter how much we may like China to kick the US’s false rhetoric into the ground, they genocide their own population and use them for spare parts”

      I’m sure that statement is mainly ideological rhetoric rather than fact; but lets get back to the basics;

      You said: “law doesn’t necessarily solve anything……laws are written to have flaws”.

      Well that last bit is wrong; laws are written to to be enacted and followed, not to have flaws. What you are trying to say is law can very well be *bad* law.

      BUT: I contend law which is consistent with the UNUDHR will be *good* law, because such law will enable the universal prosperity of ALL peoples, in an absence of war.

    40. Henry R.

      It is more accurate to say China exercises its own sovereign interests BECAUSE international law is indefensible as long as the UNSC veto exists. That’s what Doc Evatt understood.

      Fact: nature has endowed all creatures with survival instincts, but nature is unconcerned about (human-created) “rights”. Therefore humans must create law to make the world a better place to live in (see my comments to Paulo).

      But conservatives make up concepts such as “inherent individual rights” which don’t exist in nature, because nature doesn’t give two hoots about such *human* constructs. That’ why humans are driven to create law…whether good or bad…….

      Btw, the Qing dynasty, apparently the 4th largest land empire in history, incorporated Tibet, Xinjiang, Taiwan, and of course Hong Kong. So rather than annexing these territories, China is reclaiming them.

    41. “So rather than annexing these territories, China is reclaiming them.”

      And in the process practiced incarceration, torture, murder and total subjugation of indigenous peoples. It also practiced cultural genocide.

      Nice friends you have.

    42. Not much nicer than yours, I’ll admit: speaking of which: CIA backed overthrow of democratically elected governments in Iran (1953), Chile (1973) and illegal invasion of Iraq (2003).

      While China has to face backward Islamist terrorists in Xinjiang.

      Btw, everything changed in 1946: “occupation of territory by force is impermissible” (UN res 242)…but actually nothing changed…. because of that veto.

      We both better lift our game…and fast. Ill go with the nation that demonstrates eradication of poverty while creating a clean green sustainable environment. The contest between ideologies should be clearer in a decade….and you have to face the prospect of Trump’s re-election in 2024…

    43. Neil,

      “Btw, the Qing dynasty, apparently the 4th largest land empire in history, incorporated Tibet, Xinjiang, Taiwan, and of course Hong Kong. So rather than annexing these territories, China is reclaiming them.”

      Mongolia was also part of the empire. So you would happily support China if it walked into Mongolia and “reclaimed” sovereignty over the country?

      It is an absurd argument.

    44. Henry,
      Mongolia itself in fact ruled China and much of the Eurasian continent in the 13th century.

      Stop denying reality and face the fact: your “individual sovereignty” ideology is delusional, and is THE barrier to an international rules-based system.

      Humans are on the verge of conquering space; the idea that war must forever remain a means of dispute settlement between nations on planet earth is the ultimate absurdity.

    45. Neil,

      “Humans are on the verge of conquering space; the idea that war must forever remain a means of dispute settlement between nations on planet earth is the ultimate absurdity.”

      Tell that to the Chinese who are planning an invasion of Taiwan.

      If the British decided to revive their glorious imperial past and rebuild their empire let’s say by invading Canada, Australia, South Africa and India, on your logic, you would approve.

      China invaded Xinjiang and Tibet whose peoples are ethnically, culturally and religiously entirely different to the Chinese.

      It was a pure land grab.

    46. Dear Neil Halliday and Henry Rech (and others) at various times

      I think we have done the China discussion. It has long passed the irrelevance status for this blog post and my blog in general.

      I will delete any further comments on this theme.

      best wishes
      bill

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