Sunday, June 5, 2016

Bill Mitchell — OECD joins the rush to fiscal expansion – for now at least

In the last month or so, we have seen the IMF publish material that is critical of what they call neo-liberalism. They now claim that the sort of policies that the IMF and the OECD have championed for several decades now are damaging to the well-being of people and societies. They now advocated policy positions that are diametrically opposite their past recommendations (for example, in relation to capital controls). In the most recent OECD Economic Outlook we now read that their is an “urgent need” for fiscal expansion – for large-scale expenditure on public infrastructure and education – despite this organisation advocating the opposite policies at the height of the crisis. It is too early to say whether these ‘swallows’ constitute a break-down of the neo-liberal Groupthink that has dominated these institutions over the last several decades. But for now, we should welcome the change of position, albeit from elements within these institutions. They are now advocating policies that Modern Monetary Theory (MMT) proponents have consistently proposed throughout the crisis. If only! The damage caused by the interventions of the IMF and the OECD in advancing austerity would have been avoided had these new positions been taken early on in the crisis. The other question is who within these organisations is going to pay for their previous incompetence?…
Maybe some light at the end of the tunnel?

Bill Mitchell – billy blog
OECD joins the rush to fiscal expansion – for now at least
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

20 comments:

Matt Franko said...

SWL from Bill's whitewashed attribution: "What can I say? I have talked about MMT in two earlier posts. You will find much more wisdom in mainstream macroeconomics than you will find in MMT. One of things that I and other bloggers like Paul Krugman try and do is make that economics more accessible."

LOL ... SWL and PK are doing a very good job dumbing it down that's for sure...

Schofield said...

For Neo-Liberals/Neo-Conservatives to find "reciprocity" in human nature is going to take a lot more than flipping into Post-Keynesian MMT flavor monetary and economic theory!

Ignacio said...

Matt the paper mentions explicitly "neoliberalism", not a "conspiracy" any more? When half of the economics academe is throwing the term around...

Neoliberalism is now a consistent body of policy and thinking and being recognised as such, just like any other body of theory+policy. No conspiracy.

Tom Hickey said...

Then paper defines neoliberalism the same as Phil Mirowski — deregulation and privatization as the solution to all economic problems.

BTW, Mirowski warns people away from the Wikipedia article on neoliberalism as unprofessional and ill-informed.

Tom Hickey said...

Mirowski also distinguishes two types of economic liberalism — the classical liberalism or laissez-faire of early capitalism, and the neoliberalism of late capitalism.

Classical economic liberalism typified by laissez-faire is anti-government and for limited government intrusion in economic affairs.

Neoliberalism recognizes the institutional character of markets and therefore their legal basis that necessarily influences economic affairs.

Therefore, neoliberals are for strong active government that they control so that it acts chiefly in the interest of commerce and finance.

Neoliberalism advocates for government capture by the economic and power elite. See the Powell memo aka Powell Manifesto (takeoff on Communist Manifesto).

Difficult not to see conspiracy where so many organizations are funded by elites for that purpose, and media are held in very few hands.

Matt Franko said...

There is nothing wrong with figures of speech you just cant apply cause to them...

The "cause" of all of this cannot be explained as "neo-liberal policies!"... that's not explaining anything...

Matt Franko said...

What good does it serve for Bill to go back over all the old history of old policies and make a big deal out of all of that?

What good does any of that do?

imo NONE except continue stoking the fires of "conspiracy!" by the un-knowledged/un-informed

Tom Hickey said...

Neoliberalism is a high level of abstraction (set) and the lower levels (subsets) are clearly set forth in the literature, in particular by Mirowski.

Tom Hickey said...

What good does it serve for Bill to go back over all the old history of old policies and make a big deal out of all of that?

What good does any of that do?

imo NONE except continue stoking the fires of "conspiracy!" by the un-knowledged/un-informed


How do you think that the unknowing and uninformed are going to get informed.

It's a two step process.

1. Point out the mistake — Here's where things went wrong and why. (You added apples and oranges to get total apples).

2. Correct the mistake — Here's how to do it correctly. (Add apples and oranges to get total fruits)

Standard pedagogy.

Tom Hickey said...

I do agree that what is needed is a blueprint for going forward. Just criticizing the past and present isn't leading.

This is a problem on the left. Lots of diagnosis and analysis of the problem, but no well-worked out design solution that is compelling.

That's why I encourage focusing on vision in terms of living a good life in a good society, which integrates social, political and economic on a philosophical foundation of social, political and economic liberalism that harmonizes and integrates these three pillars.

Economics liberalism alone is incompatible with political liberalism based on individual liberty and popular sovereignty, and social liberalism as individual freedom in community with solidarity.

Neoliberalism is anti-democratic, being based on "meritocracy" and technocracy, but really on status, privilege and endowment.

Matt Franko said...

"Point out the mistake"

What do you think most people think things are just fine and dandy already?

Even Trump is out all weekend taking shots at as he calls it "phony unemployment numbers"...

Everybody already knows something is very wrong except for the most libertarian of the 1%... a VERY small % of people...

What are you saying? Trump is reading Bill????? That's where Trump is getting his ideas that something is wrong????

c'mon....

Ignacio said...

Don't blame it on policies... We will blame it on rain, the air and thunders then.

Tom Hickey said...

What do you think most people think things are just fine and dandy already?

People are being told either that TINA or the problem is government (there is a Democrat in the WH).

People are generally clue about the problem other than the effects they are experiencing, and they are clueless about what to do about other than change government and hope for better results.

Tom Hickey said...

Don't blame it on policies... We will blame it on rain, the air and thunders then.

The god, karma, whatever, but certainly not the policies. TINA.

Matt Franko said...

Ignacio youre making my point .... it would be like trying to explain the effects of lack of water on plant life by saying "the problem is caused by the lack of rain..."

No value added...

Matt Franko said...

ALL of this should be getting a "no shit Sherlock..."

Ignacio said...

Stating the obvious is sometimes a political necessity. IMO this is not as important for the layman as is within policy making circles.

Ignacio said...

Política is the art of persuading and creating perception. Changing the framing and breaking the group thinking is a necessary steep to change policy.

Tom Hickey said...

At this point, some staff at IMF and OEDC has published material that contradicts standing policy. Same with the Bank of England and BIS. But little indication yet that the people making the decision have been influenced to the degree of admitting past errors and misjudgments, and actually changing policy. Lots of work still to be done.

Bob said...

Plausible deniability?