Thursday, February 2, 2017

Bill Mitchell — There is hope – neo-liberalism is an historical aberration

Another lesson from history coming up. People of my generation studied the great books by Charles Dickens, which apart from their literary form, left an indelible impression of life in England during the period covered by the 1834 Poor Law. We also read George Orwell’s account of working class life in Northern England in the pre-World War 2 period. 
These impressions meant that we heralded in the creation of comprehensive welfare states in the Post World War 2 period as evolutionary innovations made possible by increasing national prosperity. We formed a common belief that this prosperity allowed us to escape the sort of conditions that Dickens was describing in early industrial England. And if prosperity fell, we would have to rein in some of the generosity that the welfare state systems provide. 
How many times have you read or heard some politician or corporate lobbyist claim that advanced nations, with fiat currencies, can no longer ‘afford’ to fund comprehensive welfare states that protect the poorest citizens in their societies. Many of these speeches are made at glittering functions where business types enjoy sumptuous lunches with plenty of wine and fine food and listen to politicians talk about running out of money and the need to pull our belts in.
The arguments are used to attack the comprehensive welfare systems that emerged in the post World War 2 period as governments took responsibility for improving the plight of the poor. But, an understanding of history allows us to appreciate that the modern welfare state was nothing particularly new. 
There had been a comprehensive welfare support system in place in Britain for 300 years before the 1834 Poor Laws ended that system. This should give us hope – 1601 Poor Law (comprehensive welfare system) -> 1834 Poor Law Amendment (demolished it and blamed the poor for their plight) -> Modern Post World War 2 welfare states (comprehensive welfare system recognising systemic failure rather than individual blame) -> neo-liberalism (back to the 1834 mentality) -> ???? – hopefully another progressive reaction to the greed driving the current system.... [paragraphing added for online readability]
Bill Mitchell – billy blog
There is hope – neo-liberalism is an historical aberration
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

19 comments:

Matt Franko said...

"The first that springs to mind is single motherhood. These are women too lazy to attract and hold a mate, undoing the work of possibly 3 million years of evolutionary pressure. This will result in a rapid rise in the portion of the population that is lazy and ugly."

Pretty strong arguments via Darwin here..... 3 million years is a long time.... yet these females can just undo it all like that! How dare they!... this is dangerous to allow to happen to the human species...

Matt Franko said...

"But our tolerance does have limits and the same forces that led to the Welfare State reintroduction in the 1940s will eventually lead us to reject the neo-liberal indecency and a new more inclusive system will evolve."

This is a very stochastic view of the situation.... vice a deterministic view....

You can't both argue against Darwinism and then at the same time say Darwinism is going to get you out of it in the same blog....

Footsoldier said...

Look at this graph

https://fred.stlouisfed.org/series/T10YIE

Just wait and see what happens once the mainstream economists notice it and then come out on TV and say it

:)

Six said...

We have laws to counter certain aspects of "Darwinism". Otherwise, you have law of the jungle. Systems usually have more than one moving part, Matt. Try to keep up.

Matt Franko said...

"Systems usually have more than one moving part,"

Well tell that to the MMT elites... "free floating!" yeah right...

Matt Franko said...

They think that when they drive under a wide overpass and they have the AM band on the radio and the radio goes out and then when they have the FM band on and it keeps playing that the radio reception is "free floating!".... sometimes it works, and sometimes it doesnt... flip a coin.... its their inner Darwin...

Footsoldier said...

Here's something I think Trump should think about when cutting corporate taxes.

The Dark and Light Sides of Debt

http://aswathdamodaran.blogspot.co.uk/2017/02/january-2017-data-update-8-dark-and.html

The video is interesting at the bottom of the page.

"That 2017 is likely to be a year of change, at least for the US tax code and almost every version of tax reform that is being talked about will reduce the marginal tax rate and therefore the tax benefits of debt. In fact, there are some versions where the entire tax benefit of debt will be removed. While I believe that this will be healthier in the long term for businesses, it will be a seismic shift that will have massive effects not just on corporate borrowing but on the corporate bond market"

Ignacio said...

"progress" is also an historical aberration...

Tom Hickey said...

We have laws to counter certain aspects of "Darwinism". Otherwise, you have law of the jungle.

Right. This is what social "Darwinists" ignore. It's the basis of economic liberalism.

John said...

Hindsight's a great thing, ain't it? Darwin wrote a lot of things. To imagine that he would have to be right about everything is to demand omniscience. And because he was wrong here and there it apparently proves his key insights are wrong! Darwin said some racist things too, but the difference is that if Darwin were alive today, knowing the developments that have been made since his breakthroughs on evolutionary biology, he's be an anti-racist.

In hindsight, Newton said some extraordinarily stupid things, do we claim his laws of motion are wrong because of his numerology and writings on Atlantis?

Their high standards are unacceptable, intolerable, insufferable. We demand godlike standards of the scientists who had little evidence to work with but still made discoveries that shake the world. Omniscience or nothing. Omniscience or living in caves!

MRW said...

Well tell that to the MMT elites... "free floating!" yeah right...

Matt, you seem to have a major beef against MMT. What exactly is your position with respect to it. I am genuinely interested in knowing. I can never figure it out from your drive-by comments. Thx.

MRW said...

Matt, your top quote from Mitchell's article here are not Mitchell's. He's quoting an Australian politician.

----------------
QUOTE
In Dicken’s time, the same arguments were used:

– government needs to cut spending.

– the poor are just bone lazy.

– welfare makes them lazier.

– the poor have less rights to familial structures than the rich.

Just this week, a candidate for the Western Australia State election – who represents the right-wing One Nation party – published an article in the leading right-wing magazine Quadrant about “lifestyle choices that could be defunded” by government.

He wrote:

The first that springs to mind is single motherhood. These are women too lazy to attract and hold a mate, undoing the work of possibly 3 million years of evolutionary pressure. This will result in a rapid rise in the portion of the population that is lazy and ugly. We know what causes pregnancy these days, so everyone who gets pregnant outside of marriage is a volunteer. This is an easy one for defunding.

He then talked about defunding disability support pensions and childcare for the poor working mothers.

And, the US thinks it has it bad with its new President. In Australia, this sort of discourse is increasingly common among those who attack the poor and the income support systems that protect them, notwithstanding how inadequate that protection is in real terms.
END QUOTE

Jeff65 said...

I'm with MRW, Matt. You're a lousy explainer. Take it as constructive criticism. Spell it out for us.

You like to talk about systems, but if you're as expert as you say you are you know you wouldn't hold any sort of systems or engineering job for five seconds communicating via drive by. Lay it out for us.

If you're doing it intentionally, you're a troll.

John said...

Matt, I too with MRW wouldn't mind understanding your divergence from MMT thinking. Clearly MMT has been important in developing your intellectual thought, but somewhere you diverged.

It'd be interesting to understand any detailed disagreements because, although we may disagree on a lot of politics, your economics and financial knowledge is extremely impressive, to say the least. I don't follow the markets - little real interest and zero money - but, as far as I can tell, you seem to call them very well. Anyone who can call markets evidently has a sound grasp of real world economics. Write a book. One guaranteed sale!

John said...

Jeff65, come on, man. Matt's a tough guy, but take it easy. We're all friendly here!

Jeff65 said...

Troll is too strong a word. I do get valuable insights from some of his posts. But certainly sometimes he seems to enjoy others' misunderstanding what he's trying to say only to clarify after many posts back and forth. That's trolling!

Greg said...

Matt has gotten a bit trollish at times I must say and he really does like using his own unique nomenclature like "acquisitors" or "stochastics" but he is obviously a smart guy with a lot to add at times.

I too wish he'd be less opaque/cryptic with some of his comments and just lay it out there. He seems to have something critical to say about ALL views but he does reserve his harshest jabs for what he thinks are "Darwinists" or intellectuals.

So as not to just talk about Matt..... @ Matt

I suspect what you like about MMT is that it acknowledges that currency, munnie, numisma is a human invention, not a discovery. Moreover its comes about form some "authority" some entity has legal right to issue/determine value/create said financial asset.
And this is light years ahead of RBCers and many others who like to think money evolved to solve the double coincidence of wants problem...... in spite of the fact that there is NO evidence of any sort of thing. Money as a credit/debt issued by a state/authority (with a power to tax) is simply the only way money has had any sort of stable value AND wide use.

You like authority. Thats why you like Trump. He is not shy about being a boss..... but he's not a leader...at all. Leaders go with you, bosses send you on your way with your orders. There is a place for both but there are no leaders in Trumps circle and he is the least leader like of the pack. Theres a part of me that wants someone like Trump to take on the neocons and neoliberal and parts of the deep state/MIC but while his medicine might be needed, he is not the right doctor nor does he seem to know anything about dosage. He's like a guy that thinks if a gram of something is good an ounce is 28 x better.

But I like that he is demonstrating to all economists that there is no such thing as free trade or markets, they all have a manager. We just need to choose our managers wisely

Penguin pop said...

I like a lot of what Matt has to say. He provides an interesting take on a lot of issues and is on the same page as a lot of what Mike talks about, but in a more technical fashion. I too have been wondering when this divergence from some of these main MMT people began with him and why? It would clear up a whole round of misunderstanding people have been having with some of his statements.

intajake said...

@tom throw this up the blog http://www.huffingtonpost.com/entry/donald-trump-wall-street_us_5894ca9ee4b0c1284f25ce8d -helping out wall street asswholes has surprised me a little

@matt.....yeah how is a free floating currency not free floating? it means it is not fixed to gold at $35 an ounce like back before '72