Monday, July 10, 2017

Bill Mitchell — EU clones itself in West Africa and then tries to ransack the region

In a recent blog – If Africa is rich – why is it so poor? – I considered the question of why the resources that make Africa rich have not been deployed to the benefit of the indigenous people who reside there. We saw that poverty is rife in Africa, when it is obvious to all and sundry that these nations possess massive resource wealth. The answer to that paradox is that the framework of development aid and oversight put in place by the richer nations and mediated through the likes of the IMF and the World Bank can be seen more as a giant vacuum cleaner designed to suck resource and financial wealth out of the poorer nations either through legal or illegal means, whichever generates the largest flows. So while Africa is wealthy, its interaction with the world monetary and trade systems, leaves millions of its citizens in extreme poverty – unable to even purchase sufficient nutrition to live. The ‘free trade agreement’ (EPA) between the EU and the West African nations is one such ‘vacuum’-like device. In fact, the West African states are still mired in post-colonial dependency not because they lack the resources available to set out their own development path, but, rather, because of the post-colonial institutions that have been set up to maintain control by the former colonialists of those resources. Not content to ruin the prosperity in the Eurozone, the EU is pressuring some of the poorest nations in the world to adopt the same sort of failed monetary and fiscal arrangements and then go further – and sign ‘free trade’ agreements with reciprocal access. The rest of the West African states should follow Nigeria’s example and abandon these arrangements.…
Neoliberalism, neo-imperialism, and neocolonialism in Africa. Bill suggests how to employ MMT in the attempt to overcome this and set the region on a course to distributed prosperity.

Bill Mitchell – billy blog
EU clones itself in West Africa and then tries to ransack the region
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia


Kaivey said...
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Kaivey said...

I watched this presentation of MMT by a German student at a British university. I think she got some serious stuff wrong. She said it can only be applied in some countries like the US, but not in poorer countries or some EU countries. I emailed Warren Mosler and asked him about the UK and he wrote back and said MMT would work in the UK.

I felt sad, though, because I felt MMT would be superb for poor countries. So it looks like it can work for poor countries.

I text my friend today about my despair about Africa. After reading some of the stuff here I came to believe that the place was full of bandits and mercenaries all fighting over those diamonds and minerals. Let's hope we can sort this out.

Also, the way interest works seems kind of wrong to me. A person can get in debt and things go wrong and then compound interest takes over and the person can end up in debt for the rest if their life, and the same for countries. These people, and countries, can then become almost slaves while the bankers who created the money out of nothing can live a life of luxury. Debt should be written off at some point. Especially when the money paid back maybe several times what was originally borrowed.

Tom Hickey said...

MMT "works" everywhere since it is based a description of the prevailing monetary arrangements.

MMT points out that the choice of monetary system determines fiscal space. A fixed rate system has more limited fiscal space than a floating system. Limitations on currency sovereignty also limit fiscal space just as limitations on national sovereignty may limit economic space by opening market to foreign competition. Creating obligations in a currency that the monetary authority doesn’t issue also currency sovereignty.

MMT shows the tradeoffs among different monetary regimes.

MMT is not a case specific description of particular operations. Rather it recommends a particular configuration (generalized case) in order to balance growth, employment and prices, namely full currency sovereignty.

For example, member states of the EZ are limited currency sovereigns since they have central banks, unlike US states which do not. But EA nations central banks are subordinate to the ECB and the treaties that regulate monetary authority and operations.