Monday, June 5, 2017

Patricia Pino — The Tory campaign relies entirely on your economic ignorance


MMT.

The Pileus
The Tory campaign relies entirely on your economic ignorance
Patricia Pino

23 comments:

Kaivey said...

Two thirds of old people are going to vote Tory. But I thought they needed social services and good health care more than anyone else. They bought their houses when they were cheap (they weren't actually cheap, but they are much dearer now). So they are sitting pretty, but their grandchildren are stuck living with their parents, or are renting, or are buying a tiny place and working excessively long hours for it.

How can they be happy with 30 years of neoliberalism? The country's run down. They believe the lie about austerity: ' We've run out of munnie'. But the bankers took it all when they bailed themselves out.

Andrew Anderson said...

How can they be happy with 30 years of neoliberalism?

Because the only alternative offered to them is tried and rejected socialism?

How about a new alternative based on reforming the fiat and credit creation system? Since that should require a huge amount of new fiat to be equally distributed to all citizens? To ethically abolish government-provided deposit insurance?

What else is left to try, that hasn't been tried, but true reform?

John said...

Tory campaigns always rely on your economic ignorance...

Kaivey said...

I can see your position Andrew. Some people view the government as something that rules them. Governments tax, have mighty armies and can force conscription, have a tough police force. Some conservatives believe the less government the better. I see their point of view.

I was brought up in poverty as my dad was very ill and we relied on welfare. I went to state schools, was treated by the NHS and a state GP. And as a young lad in London, I loved the red buses, the Underground, the Post Office, the Bobbies on the beat, etc. So I have much admiration for the state.

What is socialism, is it communism? Well, modern democratic socialism isn't. It's about the government running some sectors of industry to produce energy and transport at cost, lowering the price to private business and households. It's about social welfare to the needy; it's about not leaving very important and difficult to work out stuff like, pensions, healthcare, old age care, education, to the market where people can be easily ripped off and their life savings taken.

It's easy to figure the value of food, cars, and TV's but tricky to understand pensions and healthcare. And private education can be a con too unless you can afford the best schools. And the government can bring the cost of these down by wholesale purchasing. It could even work out excellent state pensions by using a small body of top advisors who can get the best deal for everyone. People can still buy private pensions on top. This is not communism.

There's nothing wrong with the system you describe. Indeed, the system you advocate sounds rather good. But there's nothing wrong with Corbyn's democratic socialism either. It's just down to personal preference and culture. In fact Corbyn's socialism would be good for private enterprise. And most of the economy would be private anyway.

It's about getting our hospitals, public transport, and possibly our utilities and Post Office back into public ownership for the general good.

But more so, socialism is about stopping the rich from starting wars; selling arms to regimes like Saudi Arabia; offshoring all the jobs to China; stashing all their money in tax havens and not paying their fair share; using market forces - i.e., their enormous power - to force wages into the ground, etc.

The ruling elite tends to be brutal and needs to be controlled. Only a democratic government run by the people will be able to take them on. It won't be perfect, but Corbyn's Scandinavian type socialism could work - especially if it takes MMT onboard.

Andrew Anderson said...

The ruling elite tends to be brutal and needs to be controlled. Kaivey

One thing we should all agree on is ethics, i.e. you won't find many who will outright defend injustice including the elites.

But the problem is that many Progressives see nothing wrong with government privileges for private credit creation.

I have a fondness for government provided services myself, having grown up where the neighborhood park showed free movies at night, provided free lessons, etc (in Amarillo, TX of all places!). But that's just a personal preference. But what we all should DEMAND is justice and I see few, if any, Progressives who can even grasp that banks should not have government privileges.

Kaivey said...

'progressives who can even grasp that banks should not have government privileges.'

Can you explain. It doesn't have to be lengthy. I understand that the government protects bank deposits.

I was a Positive Money guy, but Werner has won me over to the idea of small private banks that serve the local communities. Those small German banks seem pretty good.

Andrew Anderson said...

I understand that the government protects bank deposits. Kaivey

Where is the need since government itself or its central bank can provide inherently risk-free accounts and transactions in fiat for all its citizens, their businesses (including banks as is now the case), etc.?

Thus government provided deposit insurance is a favor to the banks, and by extension, the more so-called credit-worthy at the expense of the less so-called credit-worthy whose deposits are trapped within the banking cartel, nonetheless. But they get interest, you might say. Yes, but not true market rates and, in any case, welfare (the deposits are risk-free up to the insurance limit hence positive interest on them is welfare) should not be proportional to account balance!

has won me over to the idea of small private banks that serve the local communities. Kaivey

We would still have banks, credit unions, etc. and they could extend as much credit as they dared. Nor need interest rates rise since equal fiat distributions to all citizens could lower those.

Ralph Musgrave said...

Good article by Patricio Pino. Just a couple of quibbles. First, it’s not just the Tories who spout “balanced budget” nonsense: Labour does as well unfortunately.

Plus it’s not just politicians who spout the above pro-austerity nonsense. So called “professional” economists do as well. E.g. there’s a list of about 20 of these professional twits here:

https://www.project-syndicate.org/blog/unrepentant-economists-by-robert-skidelsky

Ralph Musgrave said...

Andrew, I don't see anything wrong with deposit insurance, as long as it pays for itself. What's wrong with the existing bank system I think is that private banks can effectively print money, and that constitutes a subsidy of private banks, aka money lenders. I set out detailed reasons for thinking that here:

https://mpra.ub.uni-muenchen.de/78896/1/MPRA_paper_78896.pdf

Kaivey said...

I'm not an economist, and I hadn't read much economics. I read books by Michael Hudson and Ann Pettifor, etc.

Like a lot of people, I believed that banks lent out savings, so I was completely surprised that they just invented money. After that I would argue online that this was a force outside of market forces. As there are not enough houses, and everyone needs somewhere to live, then desperation kicks in. Also, unless you get in quick, the price might shoot out of reach. House buying is stressful and madness. Then people want to get a house because they see it as an investment, which is really a bubble.

A shortage of housing drives this, but also the banks can create money out of nothing. If two people bid for a house, there is no shortage of money, so it's sky's the limit. So person A says he will work Saturdays overtime, so person B says he will work Saturdays and two hours a night. Then person A says he will work four hours night extra, etc. Some people might get a second job, and others rent rooms out. The price of property goes sky high and the nation gets maxed out. But the bankers can just create as much money as they like. And weird, economists ignore this.

In the end bankers make serious money while the population gets maxed out. This affects the economy because people have no spending money. New Labour's mass immigration didn't help.

Penguin pop said...

Speaking of mass migration, does anyone have a good counterpoint to this comment I saw:

"Oh, I see... well I think that's total hogwash. The reason that some countries/parts of the world became sources of slave labour was because neoliberalisation freed capital but not labour. When capital can move wherever but labour can't, you end up with a situation where some countries' competitive advantage is the very fact that they will do the work the cheapest and most environmentally destructive way. Also, developed nations rely on exploiting cheap immigrant and migrant labour to thrive. People never seem to grasp that. I'm for open borders for sure, it means labour actually has a choice and can leave exploitative situations."

It was a response to this question I asked this left-winger who I think leans towards Marxism:

"What is your solution to what some perceive as a problem that comes with mass immigration? I've seen a lot of divisions on the left on this topic and wanted to know your take on things here."

Also this was another response I got from the same person:

"Sorry, what problems are you talking about? You mean right wingers who think mass immigration leads to the total decay of society? lol"

Bob said...

Open borders would lead to the end of capitalism, according to theory. Wages in developed countries would be driven down until they were equal (adjusted for differences in productivity) with the third world. It would result in economic and social chaos.

I can assure you that globalists have no plans for open borders.

Penguin pop said...

Bob, when you put it that way, it gives me plenty to think about here. I personally didn't think it was feasible for the US to take in too many people from other parts in the world at some point, but when you brought up how open borders is off the menu as far as what globalists want, it is a point of consideration I missed.

Ralph Musgrave said...

Kaivey,

The house price bidding up process shouldn’t be quite as dramatic as you suggest. E.g. if someone says they’ll work Saturdays and Sundays every week, their bank (if it had any sense) just wouldn’t believe it.

Of course banks got seriously stupid leading up to the 2008 crisis (NINJA mortgages etc). But they’ve learned their lesson – till in a few years time they forget the lesson, as they always eventually do.

Also, given a properly functioning market, if house prices are bid upwards, that should make it profitable for builders to build more. That’s been the case in Germany over the last 25 years where house prices in real terms have not budged. In the land of the idiots where I live (the UK), government has failed to make enough land available for housing, and house prices have risen a good 200% in real terms over the last 25 years. (See The Economist house price index.)

Calgacus said...

Bob:Open borders would lead to the end of capitalism, according to theory.

Well, then get a new theory. MMT / FF is/are dandy ones. The whole world had open borders til a century ago. Unless I am misinformed, this did not lead to the end of capitalism. Nor to economic and social chaos, nor to socialist utopia.

Some of Penguin Pop's respondents are basically right. The answer is "what problem?". The problem is like usual, people waste their time arguing about irrelevant side issues like immigration, using preposterous assumptions and unexamined, wacky theories while guess who picks their pockets.

In realistic, current situations, there is no particular problem with immigration. The USA could throw its borders open to everyone, like it was in the old days, and not much would change. What is important is the internal policies.

The wages and welfare of the current and immigrating populations would depend, within wide limits, on the decisions of these populations. Not on magical forces causing unemployment or wage declines. Most people immigrate to work. Let them work, say in a JG and in most situations their work will benefit everyone, the natives, the immigrants and the folks back home who get remittances.

While arguing about this at billyblog a couple years ago, I noted that Lerner's analysis of foreign trade in his Economics of Employment should be able to be extended to cover immigration. A year or so ago, I came across an old paper of Lerner in an IEA (International Economic Association) conference around 1960, where he did just that. As far as I know, it is the only realistic, trustworthy analysis of the macroeconomics of immigration. Basically, he was a bit more cautious than I was, but then the "supply" constraints back then were much more binding - e.g. there had been rationing in Britain not too long before. Worrying about immigration as a threat to the US working class on the other hand, is a complete joke. The US chattering & managerial & ownership class & their manipulation of government for their idiotic and contemptible purposes is the threat. Nothing else.

Tom Hickey said...

Btw, conventional economics is based on domestic "immigration/emigration" as part of the assumption of flexibility in labor markets as part of the explanation of general equilibrium of goods, labor and financial markets.

Under the assumption, for instance, there is no involuntary unemployment if there are jobs in the country and qualified workers are unwilling to relocate in order apply for them, or to reduce their wage demand.

This is a silly assumption in that it ignores transaction costs and other real world factors.

Bob said...

Are you a Trotskyist, Calgacus?
That is part of their theory, their plan, their ethics.

TPTB won't allow it. Nationalists won't allow it. But sure, lets try it. Leave a note for Santa.

Neil Wilson said...

"The answer is "what problem?"

The destruction of the existing society.

I never take open borders lines from anybody with a lock on their front door - because by doing that they show that they are not for open borders. They are for open borders that affect somebody else - usually somebody poorer.

Similarly very few open border fans are fond of the idea of Nepal being over run by Chinese. But what is sauce for the goose is sauce for the gander surely?

You need closed borders so you can create a differential to the rest of the world, manage the natural resources that you control politically, and maintain the culture and homeland you want.

Nobody has the right to force their way into a group without the permission of that group. Neither has anybody the right to leave a group until they have paid their dues to that group. And money isn't a sufficient recompense. (For example if a society trains you as a doctor they have given up scarce doctor time to do that. Time that can never be recovered no matter how much gold is provided. So if you want to leave you are duty bound to train your replacement. If you don't then the society eventually stops training people. Which funnily enough is exactly how businesses responded in the same situation).

Extreme individualism is as much a damaging philosophy as the other extreme philosophies. It's a form of toddler rules which most people grow out of by the age of three. You have duties to others as well as rights granted by them. You didn't turn up as a fully formed entity. You got there with the help of others.

If you want to fix things in other countries go there and fix them. Stop thinking that the way to fix lives is to import everybody to the West.

Neil Wilson said...

"developed nations rely on exploiting cheap immigrant and migrant labour to thrive."

I always find that line funny, because they are saying that Japan isn't a developed nation.

Yet GDP per head continues to rise - because they invest in automation and have respect for the elderly.

Andrew Anderson said...

You need closed borders so you can create a differential to the rest of the world, manage the natural resources that you control politically, and maintain the culture and homeland you want. Neil Wilson

Ancient Israel appears to have had open borders and why not since most* Hebrews were landowners and benefited from cheap foreign labor rather than were threatened by it?

So it would be if assets in developed countries were roughly equally owned by the citizens - foreign goods and labor would be a universal blessing and not a curse for most citizens.

So why aren't assets in developed countries roughly equally owned by the citizens? One reason is surely government privileges for private credit creation - a means by which the richer exploit the poorer, ultimately producing the very rich and the very poor.

* the remainder belonged to a hereditary priest class; inherently closed to non-Hebrews.

Calgacus said...

Unfortunately, Bob & Neil - you are reading things into what I said that are not there, that I do not support. Tom (thanks, good points) & even AA got what I said accurately.

Bob:Are you a Trotskyist, Calgacus?
That is part of their theory, their plan, their ethics.


No, I am not. What is their theory, their plan, their ethics, that you think I proposed? I proposed no plan. If anything, "my" position - neither international trade nor immigration will necessarily cause the sky to fall is vaguely anti-Trotskyite.

Minsky first met Lerner upon the latter's return from meeting Trotsky, where he had tried to splain to him that FF showed that trade etc would not cause the sky to fall, in other words, that Uncle Joe's "Socialism in One Country" was possible. Needless to say?, Mr. T was not convinced. I read T's book "Socialism in One Country" recently to see if there was any substance to his position, and imho there is not: The book is pure polemics that should have been directed in a better cause, & has no rational argument.

TPTB won't allow it. Saying "they won't allow it" is hard to understand. There is wide agreement, a consensus that they, TPTB are the ones that are "doing it". This leads to common & justifiable complaints. "Neoliberal" TPTBs are for immigration, but under their conditions. That's why "nationalists" oppose it. That's one reason Brexit is a good idea. But opposing it with "preposterous assumptions and unexamined, wacky theories" is not a good idea. The Bad Thing is not the "immigration", but the "under their conditions."

More in day or two.

Bob said...

What is their theory, their plan, their ethics, that you think I proposed?

Open borders. They believe the aftermath would usher in socialism. They believe in the necessity of a worldwide revolution. The ethical argument is that it is unfair to allow capital but not labour to travel the world. We don't stop birds from migrating across borders; why prevent human beings?

The Bad Thing is not the "immigration", but the "under their conditions.

Open borders means there are very few to no conditions. No quotas, no passports, no restrictions to migrating from one country to another. Like the birds. TPTB are not proposing we go that route. (Trotskists dream about it, and Maoists fantasize about accomplishing it through the use of force.)

Bob said...

We could say that Maoists have a plan for dealing with nationalist objections. A forceful plan.