Saturday, September 26, 2015

UK Labor Faction: "We are not deficit deniers"


Wow...

“We accept we are going to have to live within our means and we always will do – full stop,” the shadow chancellor said ahead of the Labour conference, which opens in Brighton on Sunday. 
He added: “We are not deficit deniers."  
It commits the government to delivering an overall surplus by 2019-20 and to running an overall budget surplus in “normal times”. 
The shadow chancellor said: “We will support the charter. We will support the charter on the basis we are going to want to balance the book, we do want to live within our means and we will tackle the deficit.




Meanwhile, over here in the US on the right we read perhaps just the opposite policy is emerging within the GOP faction:



Maybe the best advice for the left is to just follow the lead of the right on fiscal policy.

Anyways, looks like Dan is getting his wish.

19 comments:

Ignacio said...

Nightmarish ...

I hope this is just playing politics and telling the people whatever idiocy they want to hear, otherwise it's just hopeless.

So much for challenging the neolib consensus.

Matt Franko said...

Well most if not all of the MMT left thinks the problem is that the left is naive and is being duped by the right... so if the right is starting to de-emphasize debt/deficits over here, and it catches on globally, then perhaps the left will be reverse duped again by the right and eventually reverse this policy... I guess this could work in theory....

Dan Kervick said...

Well surpluses are a bad idea.There is almost never any good reason for the government to tax more than it spends. government should aim to run a very modest deficit.

The important thing about the public debt is who owns it, and what the interest rates are. If it is owned mainly by the affluent, then it is primarily a way of redistributing income from the taxpaying middle class to bondholders. If it is more evenly owned across wealth classes, then it is mainly a way of redistributing income from younger to older.

Random said...

Dan,
If it requires 10 percent surpluses then so be it. 20 percent deficits? So be it. All depends on the context.
The deficit is a *red herring*
"There is almost never any good reason for the government to tax more than it spends. "
Nonsense. In Norway for instance the government needs to run surpluses continuously. There is no magic around zero.
"government should aim to run a very modest deficit."
Dan I strongly disagree. The budget balance should never be a goal.

Ignacio said...

Matt IMO that is naive.

In Europe pretty much all the governments who have gone crazy on austerity and started it all and balancing budgets are neolib right governments, the 'leftist' governments have been co-opted into following the dominant neolib group think (in France who was more pro-growth initially for example, was forced into Germany insane austerian policies).

Hell Corbyn comment here is IN RESPONSE to conservative policy. They are not going to do a 180% shift now on what they started years ago, why should they?

Is insanity what we are dealing with here... It's a nightmare. If the current iteration of idiots in power or contending idiots in power cannot do it though in the end it may be the nationalist right who will (but that is not the one in power right now, which is neolib/internationalist right).

Matt Franko said...

No they shouldnt do the shift now, youre correct .... wait for the right to do it first is what I am saying... then they would again just be complying with the right... but less emphasis on debt/deficits as a result which would be better...

Matt Franko said...

iow the right would be duping the left again, but in this case it would be the right way...

John said...

Abandon all hope ye who enter here.

When asked what should the 99% do, Joseph Stiglitz got it right when he jokingly replied: "You should have chosen different parents, or find a way to join the 1%."

Unknown said...

Matt,
My reading of the statement is somewhat different than Neil's. One has to read between the lines. The way that Corbyn/McDonnell plan to accomplish this feat, is by more or less by keeping the fiscal spending off the government's books, and onto the BoE's books. It is a sleight of hand, but given the current political environment, not an unreasonable tack to take. In some ways, it is like the trillion dollar coin - except that the trillion dollar coin is being created by a government owned bank, that is being backstopped by the BoE. Richard Murphy, the brains behind the idea is an accountant, and is well versed in MMT, and has appeared besides Bill Mitchell.

Thus the government will be spending only for the bureaucrats and what can be accomplished in a "balanced" budget. I think that there is some merit to this, as long as the spending by the new "Bank" has some degree of accountability to the elected officials (though in practice it is unclear to me whether the elected officials are in anyway behaving responsibly, and whether the electorate is holding them accountable!)

mikehall said...

I'm very disappointed to hear this from McDonnell.

He may be hoping his infrastructure spending can make up the demand gap, but with the typical long time constants and other lack of precision, it's likely to be of little improvement.

If he's playing a long game politically, it's still a mistake imo, as it just reinforces the deficit hysteria in the mean time.

I'd like to know what Murphy and esp. Ann Pettifor think about this. They should both know better :(

mikehall said...

.. and the language McDonnell uses is straight out of the neoliberal propaganda book. Really crap :(

Tom Hickey said...

Corbynism is stillborn. Or better, aborted.

Tom Hickey said...

Of course, the UK could start making stuff and becoming a chronic net exporter like Germany and China to offset the fiscal surpluses that are planned.

Bob said...

There won't be an election in years, perhaps the corpse can be resuscitated in time.

Joe said...

"Nonsense. In Norway for instance the government needs to run surpluses continuously."

This *must* have something to do with how they do their accounting. Norway, I believe, is a net exporter, so they are running a surplus of dollars. They must do something with the accounting, using dollar/krone conversions. Something like they run a deficit of 20 Krone, but a surplus of 30 dollars, so they say they have a surplus. But I don't know how they do their accounting.

Because it is impossible for a government to run a perpetual surplus in its own currency. Eventually there'd no more of that currency left circulating.

Why would Norway *need* a continuous surplus? Sounds strange to me.

Image a brand new country, new govt and new currency, "We need to tax back some of that currency we haven't created yet so we can spend. Gotta balance the books ya know."

Dan Kervick said...

In Norway for instance the government needs to run surpluses continuously.

Why?

Dan Kervick said...

You know, the concept of austerity deals with a lot more than the size of the deficit.

Neil Wilson said...

"Richard Murphy, the brains behind the idea is an accountant, and is well versed in MMT, and has appeared besides Bill Mitchell."

Yes he has, but that doesn't mean anything.

And I explained the flaws in the 'balance the current budget' idea several days ago. God only knows why this ancient idea is still current in Labour.

It's not big. It's not clever and it has already failed at an election once before. It will fail again - because it is still in the Tory frame.

Unknown said...

Neil,

I hope that you have seen news about the formation of a policy group that will be advising the Labour party on economic policy. It consists of (among others) Joe Stiglitz (you have to have a Nobel laureate!), Picketty, Mazzucato (MMT), Pettifor (MMT).

So they are going down that path. The problem for Corbyn and McDonnell is not the Tory economic framework, but rather the need to keep half the PLP (Parliamentary Labour Party) from bolting. If they came out with an MMT framework at this particular moment, the PLP will disintegrate, and that my well prevent Labour from regrouping for half a generation. The policy group is there to change the minds of the PLP MP's. Labour is not in the government right now. So Corbyn and McDonnell have the time to engage in the slow process to change the thinking. I am sure (make that certain) that the public pronouncements of Corbyn and McDonnell have little to do with what they actually believe.

As you well know, that if an MP does defect, he/she does not have to resign as an MP. So there will be no by-elections. So it is a hard task keeping the PLP together while you re-educate. The process requires time, and being in the opposition allows for that to happen.