Lord Skidelsky knocks the ball out of the park, as one would expect of Lord Keynes's biographer. BTW, "Lord" is not merely an honorific. Lord Skidelsky is a working member of the House of Lords. If only the British government listen to him, as well as other governments driving their countries over the cliff with "expansionary fiscal austerity."
Skidelsky concludes with an ominous warning.
As with “the specter of Communism” that haunted Europe in Karl Marx’s famous manifesto, so today “[a]ll the powers of old Europe have entered into a holy alliance to exorcise” the specter of national debt. But statesmen who aim to liquidate the debt should recall another famous specter – the specter of revolution.This is an allusion to Keynes's project to develop a theory of macroeconomics that would save capitalism from the rising tide of socialism during the Great Depression. The UK, US, and EZ are facing a similar situation at present, which if not dealt with intelligently will result in regime change in those countries as the population tires of grinding under economic repression and failed economic policy.
Read it at Project Syndicate (short)
Does Debt Matter?
by Robert Skidelsky | Professor Emeritus of Political Economy, Warwick University
(h/t Clonal Antibody via email)
20 comments:
He could have left it with number one. The UK can never go broke. Does no one understand that the government (ex Euro members) is not like a houshold? I grow weary of hearing words like unsustainable, bankrupt and the king of all: "every family knows that we have to tighten our belts. So too the government must reduce its spending. " I also love the word "consolidation". Sounds very impressive.
"…A government of a country with its own central bank and its own currency can simply continue to borrow by printing the money which is lent to it…"
This sentence, although understood by MMT and enlightened people in general will mislead the vast majority of readers.
@ paulie46
Right. As they say, "economics is hard." Boiling it down to something that ordinary people can understand is the challenge. In general, Skidelsky does pretty well with this, I think.
"So this is how liberty dies: With thunderous applause."
Unemployment matters. A lot. Which way it goes, nobody knows.
@Tom
All he needed to do was leave the last four words off the part I quoted.
Of course then the word "printing" would have scared them to death, because everyone knows money has just always "been here".
@ Tom
See? I can't even count. five words.
Paul,
"will mislead the vast majority of readers."
Agree here. To use the word "debt" or "printing" is a big mistake for our side in this. Neither is true.
Dan Kervick is on to this lately in his writings imo.
It's not "debt".
And it is a waste of time and effort to argue with people (morons) who dont see this.
Resp,
Matt
Dan has been making a Herculean effort IMO.
Certain members of the MM? wing are all a-flutter with his line of argument.
MMT needs a marketing plan for the intertubes because reality is going to be obscured with dazzling layers of bulls*** that appeal to the authoritarian followers - the ones that have no real understanding of anything so they must pick a team.
Know anyone with those skills?
Almost all the public needs to get is that the government as big household is just wrong in that the government is the issuer of currency and doesn't need to get its funding elsewhere, which implies that government has unlimited resources therefore unlimited policy space. The question is why not just fund utopia, and the answer is availability of real resources, first, secondly, that limited resources imply inflation if too much demand results from excessive liberality relative to ability to produce resources, so there is also a financial constraint, and thirdly, that the distribution of real resources between the public and private sector involves political choices.
Then we could have an intelligent political discussion on economic policy. Details can then be filled in as needed. But the basic message has to be, as Michael Hudson expressed it in Italy, "There is an alternative."
It may also help to point out that the existence of unemloyment means we aren't spending enough.
Not "tina" but rather "ti'n'a"
There is 'n' alternative
Paul,
"Know anyone with those skills?"
Yeah.... our Mike!
and he is being suppressed imo... f-ing sucks!
Resp,
Matt, that's the next point. What if effective demand lags the ability to produce using resources available. The obvious answer is economic underperformance resulting in unemployment. This leads into the role of effective demand, demand leakage to saving, and the appropriate size of the deficit being determined by what is required to offset the leakage to saving.
The conclusion is simple: Either provide the appropriate deficit for full employment without creating excessive demand that leads to inflation. They show how functional finance is used in fiscal policy and how the JG mops up any residual.
Of course it is overly simplified, but it's put in a way that anyone can get the basic idea of. and it introduced the key fundamentals, monetary ops, sectoral balance approach, functional finance, and Jg to achieve FE & PS, two of the public's principal economic concerns. And it shows how "affordability" is not the issue.
The basic idea is to show people how simple and straightforward it is to create the policy space needed for the prosocial programs that the public desires but are being told are unaffordable, hence unrealistic.
Then it become a political choice about the desired ratio of private to public, which is the important issue in "size of government."
But people should also be told that this is a bird's eye view, and there are many other details that come into play in the process.
However, the result is that people come to realize that TINA is a self-serving line of BS spun by other who want to increase the private v. public share at the expense of prosocial programs that are actually affordable without raising taxes or borrowing money to pay for this, as they are erroneously being told.
Tom,
Agree, truth seekers will be able to see this as it is really so simple... hang the rest.
Resp,
We need to have some of the MMT economists lectures in a RSA Animate form.
Right. TPTB are terrified of this geting out. It's politically incendiary, so they will do everything in their power to prevent it from getting traction. That's why the Internet is so important in this endeavor.This knowledge is destined to go viral internationally. It's just waiting for the vehicle.
While he lacks Mike's fiery delivery, Warren Mosler gave what I thought was a phenomenal plain-english explanation of MMT in a Q&A he did with the Norwich Bulletin while campaigning in 2010.
It's a five-part set about 15 mins each. The middle three have the good stuff:
Debt and deficits
Trade and JG
Health care
With good stuff on taxes, social security and the breakup of the soviet union scattered through there.
In an ideal world I'd love to see Warren's delivery remixed into a presentation along the lines of what David McWilliams is doing in his brilliant Punk Economics series.
Agreed geerussell re: Punk Economic series.
Robert Reich has a similar format:
http://www.youtube.com/watch?v=JTzMqm2TwgE
Summarizes our current economic condition (hint: it has NOTHING to do with public school teachers) in 2 mins with 1.5M hits. Very powerful in its simplicity.
I kind of hate to say it, but how about an internet "sales letter" type of format?
Find out WHY:
America can NEVER go bankrupt!
We don't owe the Chinese anything but a Bank Statement!
America can NEVER be like Greece!
They LIED to you about "The Debt" (hint: it's all about the polls)
et cetera.
There are many factors on why people are borrowing money from lending companies. But one must be sure about the loans that they are dealing with.
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