Wednesday, November 23, 2016

Bill Mitchell — The case against free trade – Part 4

A major point of difference between Post Keynesians (in the New Cambridge tradition – Cripps and Godley etc) and the original proponents of MMT (which includes this author) is that a currency-issuing government is not constrained in its capacity to generate full employment through appropriate fiscal policy settings....
Bill Mitchell – billy blog
The case against free trade – Part 4
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia


Ramanan said...

Mitchell in this post:

"There is no financial constraint on such a government who desires to achieve that desirable policy goal."

Mitchell's own admission from a previous post:

"... all nations should maintain sovereign currencies and float them on international markets but at the same time recognising that capital flows may be problematic at certain times and that some nations require more or less permanent assistance due to their export capacities and domestic resource bases."

Ryan Harris said...

I think what he misses is the issue of sovereignty of democracy.

When a country allows unilateral "free trade" competitors get to decide what will be produced in their country and your country. The outside gets to pick and chose which industries their country has and your country has.

A real, credible threat of protectionism prevents negative sum behavior. But everyone in the trading system needs to believe, that punitive measures will be enacted.

The problem in the west, was that economists subverted the system by creating a system where some markets were open, profit constrained, and guaranteed to never label any behavior as cheating, while other markets were closed and are never profit constrained, and arbitrarily label behavior cheating.

Western Economists weren't the sharpest tools in the shed when it comes to playing games. They thought they had it nailed but got beat over and over and over again.
But they insisted they were winning.

Tom Hickey said...

When a country allows unilateral "free trade" competitors get to decide what will be produced in their country and your country. The outside gets to pick and chose which industries their country has and your country has.

Exactly. This is the basis for imperialism and colonialism, where industrial countries had a comparative advantage in technology and colonies had an advantage in cheap labor and natural resources. The colonizers uses their colonies to enrich themselves by importing raw goods from the colonies and exporting finished goods.

The was not only a matter of comparative advantage, either. The British forbade India from spinning cotton into thread and using the machinery to manufacture cloth. India was forced to supply cotton to British factory owners that hired British workers to run the machinery to manufacture cloth and clothing, some of which was exported by to India to purchase the raw cotton. Factory owners pocketed the difference between the import cost and domestic production cost as profit, doing nothing themselves other than owning the means of production.

This continues under neoliberalism, neo-imperialism and neocolonialism, e.g., John McCain's "Russia is only a gas station," and Barack Obama's "Russia doesn't make anything." And that’s the way that the US wants.

Ignacio said...

It also allows for suppression of your own working class through 'race to the bottom' while keeping certain positions protected (as Ryan says) and the renter classes benefiting from it.

Is pure class warfare both against your "own" country working class and others working classes. Not shit there is an ongoing nationalist-populist backlash against it. Only a moron wouldn't see this coming.

OFC the western elites and professional suburban classes are terrified, as they expect working class to just "go and die", how rude of them to just complain instead of continue the path of drug abuse and breaking social order.

This is what Matt qualifies as "living in a Libertarian paradise" ("just go die").

Tom Hickey said...

That's what Marx and Engles's analysis showed based on the world they saw up close in England. Colonies exporting raw materials that cheap labor had extracted to British factories that were staffed with workers who were formerly tenant farmers and yeomen that were forced into the factories through enclosure rather than preference. The unearned gains above the cost of production when to profits just as land rent had gone to the landlords in feudal times, which is why Marx and Engels considered profit from operations to be economic rent similar to land rent, that is, due to class-based property ownership rather than economic contribution.

Matt Franko said...

The currencies don't float they are still regulated but by the fiscal agents that have fixed capital over short time periods ... while prices can vary instantaneously....