Bill Mitchell — The obesity epidemic–Massive daily losses incurred while the policy response is insufficient

The Brexit issue in Britain has been marked by many different estimates of GDP (income) loss arising from different configurations of the Brexit. The media is flush with lurid headlines about the catastrophe awaiting Britain. As regular readers will appreciate, I am not convinced by any of those predictions. But as I said the day after the Referendum in this blog post – Why the Leave victory is a great outcome (June 27, 2016) – that when I tweeted it was a ‘great outcome’ I didn’t say that good would come out of it. I also didn’t suggest that it would be a short-term recovery of prosperity or that the workers would benefit. I was referring to the fact that class struggle now has a clearer focus within the British political debate. There is now a dynamic for a truly progressive leadership to emerge and bring the disenfranchised along with them and wipe out the neo-liberal hydra once and for all.” I think that is lost in this debate. When the British Labour Party claim the latest agreement will irrevocably damage workers’ rights or environmental protections they seem to be implying that they will never be in power again. No legislation or regulation is irrevocable in a democracy. But being part of the EU will always tie a nation to the EU’s rules which usurp any national interests. That is why I maintain strong support for the concept of Brexit. But amidst all these predictions of gloom and doom, I was listening to the radio last week and heard some statistics that are truly alarming. The on-going GDP losses from the obesity epidemic in the UK, which will increase over time rather significantly, are significant when compared to the estimates of GDP loss arising from Brexit. I wonder why that fact isn’t part of the daily narratives coming out from the Remain crowd to justify their view that the 2016 Referendum result should be disregarded so they can have another go at getting their own way!...

Bill Mitchell – billy blog
The obesity epidemic – massive daily losses incurred while the policy response is insufficient
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Reclaiming our sense of collective and community – Part 1

My home town (where I was born and still spend a lot of time) is Melbourne, Victoria. It is a glorious place, at least the inner suburbs within about 3-4 kms of the city centre where I hang out mostly. It recently ‘lost’ its top place in the Economist Intelligence Unit’s Global Liveability Index (most pleasant place to live) to Vienna (Source). One wag thought it might have been because the Economist got confused between Australia and Austria. Economists are easily confused! But the reason I mentioned this is because it is symptomatic of how neoliberalism has reconstructed our realities and degraded our sense of community. The ‘competitive’ narrative, even though firms go all out to use power and deception to fix and rig markets in their favour, now dominates our perception. While I identify with Melbourne and would think a significant part of my identity is linked to that identification, the neoliberal narrative with its distinctive language, aims to reconstruct the community and communities of Melbourne, not as social and cultural artifacts, but as ‘products’ competing with other cities of the world for supremacy. I was thinking about this as I scope out the structure of the next book that Thomas Fazi and I will publish next year as a follow-up to our current book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017). Thomas and I have advanced our ideas and we will, in part, be focusing on how communities and the nation state work together to advance progressive outcomes. In our first book together, we set out how nation states can operate from a technical perspective and what they should do to provide for a progressive future. In the next book, we will dig deeper into the ways people and their communities have to re-empower themselves. Language, construction, vocabulary, and framing are all significant in this regard.

Bill Mitchell – billy blog
Reclaiming our sense of collective and community – Part 1
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Frank Sellers — SHOCKER: US sides with Moscow over Kiev in WTO case

Typically, Washington is against anything that benefits Moscow, and is for anything which bolsters the position of US puppet regime Ukraine. But, at ongoing cases before the World Trade Organization, that narrative isn’t applicable. This is so because if Washington slam Moscow for its actions relative to Kiev, it would provide a case against Trump’s metals tariffs. However, by standing with Russia on this issue, Washington thinks that it can save its own trade actions, namely Trump’s metals tariffs.…

National security trumps WTO regs. Both the US and Russia are claiming national security supervenes in their cases, and the US is supporting Russia on this.

In effect, this is the recognition that the national sovereignty supersedes international agreements in certain cases. The nation state is not dead yet.
The Duran
SHOCKER: US sides with Moscow over Kiev in WTO case

Frank Sellers

Eric Zuesse — Vladimir Putin’s Basic Disagreement with The West

In summary, Putin advocates national sovereignty and opposes liberal internationalism and liberal interventionism based on as another form of imperialism. The West, the reverse.

More broadly, Russia is traditional while the West is liberal.

This basis of the broader conflict between the East and West, Global North and Global South. 

This conflict is dialectical.

The economic basis is capitalism versus socialism.

Both capitalism and socialism are internationalist.

This indicates that the historical dialectic at this point is about the determining the type of globalization in terms of ideological framework and political control.

Will the future be dominated by global capital or something else more along traditional lines.

The present from of capitalism is neoliberalism, which implies neo-imperialism and neocolonialism.

If this is not to become the dominant framework, what is?

I don't see Putin or anyone else very being clear on this. As a Russian Orthodox traditionalist and Westphalian nationalist, he seems to be looking backward rather than forward. 

The Chinese leadership has the most articulated and nuance alternative that combines elements of traditionalism, nationalism, globalism, socialism, and capitalism.

We probably won't know much about this until the fog of war clears and the dust begins to settle.

The Vineyard of the Saker
Vladimir Putin’s Basic Disagreement with The West
Eric Zuesse

See also

As US President Donald Trump and Russian President Vladimir Putin prepare to meet in Helsinki, all eyes are on what generally are regarded as the “usual” political issues that divide the world’s two foremost military powers: Ukraine, Syria, sanctions, claims of election interference, and so forth. This reflects the near-universal but erroneous view that this current, second Cold War is not ideological, as opposed to the first Cold War that pitted atheistic Soviet communism against America’s “in God we trust” capitalism. (Leave aside whether “capitalism,” an anarcho-socialist term popularized by Marxists, is the proper description of contemporary neoliberal corporatism.)…

Such a view totally dismisses the fact that following the demise of communism as a global power bloc there has been an eerie spiritual role reversal between East and West. While it’s true that during original Cold War the nonreligious ruling cliques in Washington and Moscow held basically compatible progressive values, ordinary Christian Americans (mainly Protestants, with a large number of Roman Catholics) perceived communism as a murderous, godless machine of oppression (think of the Knights of Columbus’ campaign to insert “under God” into the Pledge of Allegiance). Conversely, today it is western elites who rely upon an ideological imperative of “democracy” and “human rights” promotion to justify a materialist global empire and endless wars, much like the old Soviet nomenklatura depended on Marxism-Leninism both as a working methodology and as a justification for their prerogatives and privileges,. In that regard, promotion of nihilist, post-Christian morality – especially in sexual matters – has become a major item in the West’s toolkit.…

This has a special importance with regard to Russia, where under Putin the Orthodox Church has largely resumed its pre-1917 role as the moral anchor of society. This elicits not only political opposition but a genuine and heartfelt hatred from the postmodern elites of an increasingly post-Christian West, not only for Putin personally and Russia generally but against the Russian Orthodox Church – and by extension against Orthodox Christianity itself....

 The article is longish and somewhat detailed, but it relates to the Zuesse article posted above. Many Americans would likely regard it as somewhat arcane and irrelevant in today's world as they experience it. Well, wait for what's coming in the political tussle over the Donald Trump's nomination of Judge Brett Kavanaugh to the US Supreme Court.

These issues are already hot-buttons in the US. In the argument over what "religious freedom" means in the text, context and historical intent of the US Constitution, The liberal side argues it means freedom from religion and the traditionalist (conservative) side argues it means freedom to practice one's religion without government interference. Stay tuned.

Strategic Culture Foundation
The two-pronged attack on Orthodoxy and Russia

James George Jatras | Analyst, former U.S. diplomat and foreign policy adviser to the Senate GOP leadership

See also

More traditionalism vs. liberalism.

The fact that the Catholic Church is strong in Poland makes a difference, because it gives us a mental and spiritual access to ideas and sensibilities that have evaporated in the secular West.…

Is liberalism on a collision course with Christianity as well as Islam?

Zero Hedge
Polish Politician Warns Of Europe's "Degenerate Liberalism"
Tunku Varadarajan, originally published op-ed at The Wall Street Journal

See also

Zero Hedge
The End Is Near? Pope Decries Governments Turning Earth Into Vast Pile Of "Rubble, Deserts, & Refuse"

Tyler Durden

Bill Mitchell — Governments should not issue debt under foreign law

In examining the implications for an exit from a currency union, one of the issues that arises is the proportion of public debt that is issued under foreign law. This is a separate issue to the implications of foreign-currency denominated debt. Both issues are problematic and compromise a government’s capacity to remain solvent. I covered the former issue to some extent in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale – when I was considering different strategies for exit. There has been some further research on the question of foreign law debt issuance by the ECB and its Working Paper No. 2162 – Foreign-law bonds: can they reduce sovereign borrowing costs? – published June 2018, has relevance. It is clear that a government reestablishing its sovereignty has the upper hand, especially if it has issued debt under its own legal system. Which is why the likes of the IMF and the European Commission has been keen to increasingly pressure governments to issue debt under foreign laws under the ruse that this is a show of faith to the private bond markets. Once again the increasing bias towards foreign-law debt is all about privileging private capital over the interests of citizens in national states. What is absolutely clear is that a sovereign government should never issue debt instruments under any legal system other than their own. What is even clearer – such a government has no need to issue any debt at all.

Bill Mitchell – billy blog

Governments should not issue debt under foreign law
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — The Left propaganda that the state is powerless – continues

When we published our latest book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World – last September, Thomas Fazi and I approached the UK Guardian to see if they would publish an Op Ed by us summarising the main arguments presented in the book. We received no response. Pluto tell us that the book is one of their better sellers since it was published. And it is not as if the topic is irrelevant in the Guardian’s assessment. That is clear from the fact that on April 5, 2018, they published one of their ‘long read’ articles by Rana Dasgupta – The demise of the nation state – which is a direct refutation of the ideas advanced in our book. This ‘long read’ also falls into the same traps and analytical errors that we point out has besotted the Left side of politics since the 1970s. The article is clearly part of the Guardian’s agenda to appear progressive but, in fact, be anything of the sort. As I have noted previously, the Guardian seems content to publish a torrent of anti-Brexit articles and criticisms of Jeremy Corbyn rather than provide any semblance of balance.

In the US, we call them "limousine liberals" and "latté liberals." They pretend to be progressives on the side of the people, but their real mission is to support the power elite in their push for transnational corporate totalitarianism in the name of "liberalism" and "Western values." The fact is that they are fascists. Fascism is aligned with capital being the chief political factor. In a representative democracy, this occurs through corruption of the political process and state capture. Is the Guardian in the category of promoting this?

Bill Mitchell – billy blog
The Left propaganda that the state is powerless – continues
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Latest Europhile advocacy beggars belief – surrender sovereignty to regain it

Today, I have a lot of travelling coming up. So time is tight. Regular readers will know my views on the Eurozone. I have held those views since the late 1980s when I was a young lecturer. Nothing has changed to change my opinion. It is an unmitigated disaster. And, in the face of all evidence to the contrary, the Europhiles on the Left and the Right continue to put out propaganda trying to defend their monstrosity. Here is a selection of the latest input from the elites on how the EU is the salvation of democracy and sovereignty and yet Eurozone Member States are to be treated like high risk car drivers – paying more for a pittance of fiscal protection from the technocrats. It really beggars belief....

Bill Mitchell – billy blog
Latest Europhile advocacy beggars belief – surrender sovereignty to regain it
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Dani Rodrik — The great globalisation lie

Third way evangelists presented globalisation as inevitable and advantageous to all. In reality, it is neither, and the liberal order is paying the price....

The fundamental thing to grasp is that globalisation is—and always was—the product of human agency; it can be shaped and reshaped, for good or ill. The great problem with Blair’s forceful affirmation of globalisation back in 2005 was the presumption that it is essentially one thing, immutable to the way that our societies must experience it, a wind of change which there could be no negotiating or arguing with. This misunderstanding still afflicts our political, financial and technocratic elites. Yet there was nothing preordained about the post-1990s push for hyper-globalisation, with its focus on free finance, restrictive patent rules, and special regimes for investors. 

The truth is that globalisation is consciously shaped by the rules that the authorities choose to enact: the groups they privilege, the fields of policy they tackle and those they lay off, and which markets they subject to international competition. It is possible to reclaim globalisation for society’s benefit by making the right choices here.…

A world economy in which these alternative choices are made would look very different. The distribution of gains and losses across and within nations would be dramatically altered. We would not necessarily have less globalisation: enhancing the legitimacy of world markets is likely to spur global commerce and investment rather than impede it. Such a globalisation would be more sustainable, because it would enjoy more consent. It would also be a globalisation quite unlike the one we have at present.

Longish article with lots of history. Worth reading all of.

Dani Rodrik's Weblog
The great globalisation lie
Dani Rodrik | Ford Foundation Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University

Simon Wren-Lewis — Dani Rodrik talks straight on trade

Short review of Dani Rodrik's latest book, Straight Talk on Trade: Ideas for a Sane World Economy.

In that sense the title of the book is rather misleading. Although it is discussed a lot, this is hardly just a book about trade. Indeed the subtitle “Ideas for a sane world economy” conveys a better picture of what it is about. The book is based on a collection of articles written for Project Syndicate and elsewhere, and occasionally the joins show. But that feeling quickly gets lost in a wealth of stimulating arguments and ideas that I defy anyone to find dull. This is a fascinating book to read, and I cannot think of anyone who would not learn a great deal from reading it.

It sounds like this book is in the right ball park, dealing with the global economy as a closed system in terms of the social, political and economic issues this involves owing to national boundaries and regional affiliations. Addressing these issues successfully is the challenge of the age in order to avoid dysfunction and conflict above all, but also to aim at distributed prosperity along with fostering political stability and promoting social harmony.

Mainly Macro
Dani Rodrik talks straight on trade
Simon Wren-Lewis | Professor of Economics, Oxford University

Zero Hedge — China Slams White House For Latest Sanctions On "Close Ally" VenezuelaChina Slams White House For Latest Sanctions On "Close Ally" Venezuela

Shortly after the White House unveiled new sanctions last Friday against Venezuela while prohibiting U.S. trading in various bonds issued by the country (while exempting the notorious Goldman "Hunger Bonds"), Venezuela’s "close ally" China slammed the latest diplomatic crackdown and said on Monday that external interference and unilateral sanctions only make things "more complicated and will not help resolve problems."

Asked by reporters about the new U.S. measure, Chinese Foreign Ministry spokeswoman Hua Chunying said China’s position had consistently been to respect the sovereignty and independence of other countries and not to interfere in their internal affairs. "The present problem in Venezuela should be resolved by the Venezuelan government and people themselves."

“The experience of history shows that outside interference or unilateral sanctions will make the situation even more complicated and will not help resolve the actual problem,” Hua told the daily news briefing.

Short version: China accuses US of meddling.

Zero Hedge
China Slams White House For Latest Sanctions On "Close Ally" Venezuela

Tyler Durden

Alastair Crooke — How Trump Defines the Future

President Trump has defined the future as a battle between old-style nationalism and neoliberal globalism, a challenge that the West’s elites mock at their own peril, as ex-British diplomat Alastair Crooke describes.

As the world globalizes, there is a dialectic going on over which factors should predominate — international v. national, sovereign v. subject, unipolar v. multipolar, liberal v. traditional, capitalism v. democracy, etc.

Alstaire Crooke observes that this is no longer largely a difference between power blocs — East and West, or North and South — but rather involves fierce in-house political disputes among contending factions and vying political constituencies within countries.

The outcome is uncertain and it is already involving considerable conflict domestically and internationally. 

Presently, the world is realigning geopolitically and geostrategically as countries rethink their future and lay track for a path to it. As a result the world is becoming more precarious.

Consortium News
How Trump Defines the Future

Alastair Crooke | founder and director of the Conflicts Forum, and former British diplomat and senior figure in British intelligence and in European Union diplomacy

Daria Dugina — France: Globalism Vs Patriotism

Professional analysis of French politics from the POV of geopolitics and geostrategy.

Geopolitica.ru
France: Globalism Vs Patriotism

Daria Dugina (daughter of Alexander Dugin)

Diana Johnstone — The Main Issue in the French Presidential Election: National Sovereignty

The confusion is due to the fact that most of what calls itself “the left” in the West has been totally won over to the current form of imperialism – aka “globalization”. It is an imperialism of a new type, centered on the use of military force and “soft” power to enable transnational finance to penetrate every corner of the earth and thus to reshape all societies in the endless quest for profitable return on capital investment. The left has been won over to this new imperialism because it advances under the banner of “human rights” and “antiracism” – abstractions which a whole generation has been indoctrinated to consider the central, if not the only, political issues of our times.

The fact that “sovereignism” is growing in Europe is interpreted by mainstream globalist media as proof that “Europe is moving to the right”– no doubt because Europeans are “racist”. This interpretation is biased and dangerous. People in more and more European nations are calling for national sovereignty precisely because they have lost it. They lost it to the European Union, and they want it back.

That is why the British voted to leave the European Union. Not because they are “racist”, but primarily because they cherish their historic tradition of self-rule.…

The Trotskyites so-called "leftists" aka have blown themselves up by self-identifying with the neo-imperialists globalists. Charles De Gaulle is laughing in his grave.

Another illustration of the paradox of liberalism involving social, political and economic liberalism in which social liberalism is being used as tool to target economic liberalism at the expense of political liberalism. This is another instance illustrating how difficult it is to integrate social, political and economic liberalism. As result, many are losing confidence in liberalism as a viable social, political and economic theory and are looking for alternatives. This is freaking out the liberal establishment, which views the only alternatives to liberalism as being either fascism or communism. As a result debate has become irrational.

Good backgrounder on French politics going to the presidential election, too.

Counterpunch
The Main Issue in the French Presidential Election: National Sovereignty

Diana Johnstone

Richard N. Haass — World Order 2.0

Richard N. Haass is president of the Council on Foreign Relations, the public face of the "Masters of the Universe." What he says about is therefore significant as the public agenda of the plutocrats and technocrats.

He begins with describing the old world order as that following the Peace of Westphalia in 1648, which made national sovereignty the priority. Haas asserts that this order is no longer appropriate for a globalizing world and the new world order needs to be founded on internationalism.

Guess who wants to write the rules for international obligations of states?

Haas bemoans that this view is antithetical to Donald Trump's America First policy.

Battle brewing.

Project Syndicate
World Order 2.0

Richard N. Haass, President of the Council on Foreign Relations

Sputnik International — China Warns It Won’t Allow Anyone to Use Hong Kong for Rebellion

On Sunday, the director of China's liaison office in Hong Kong, Zhang Xiaoming, said in an interview with state broadcaster CCTV that Beijing will not tolerate attempts to use Hong Kong as a base for rebellion.

"Hong Kong should never allow anyone to do any forms of activities that are harmful to China's sovereignty and security, to challenge the powers of the central government and the authority of the HKSAR Basic Law, or to take advantage of the HKSAR to engage in infiltrative and subversive activities to sabotage the social and political stability of the Chinese mainland," Zhang said. "These are the three bottom lines."

Drawing the (red) lines. Target? US and UK.

Sputnik International
China Warns It Won’t Allow Anyone to Use Hong Kong for Rebellion

Bill Mitchell — The case against free trade – Part 3

This blog continues my mini-series of free trade. In Part 1, I showed how the mainstream economics concept of ‘free trade’ is never attainable in reality and so what goes for ‘free trade’ is really a stacked deck of cards that has increasingly allowed large financial capital interests to rough ride over workers, consumers and undermine the democratic status of elected governments. In Part 2, I considered the myth of the free market, the damage that ‘free trade’ causes’. The aim of this mini-series is to build a progressives case for opposition to moves to ‘free trade’ and instead adopt as a principle the concept of ‘fair trade’, as long as it doesn’t compromise the democratic legitimacy of the elected government. This is a further instalment to the manuscript I am currently finalising with co-author, Italian journalist Thomas Fazi. The book, which will hopefully be out soon, traces the way the Left fell prey to what we call the globalisation myth and formed the view that the state has become powerless (or severely constrained) in the face of the transnational movements of goods and services and capital flows. In this blog (Part 3 and final) I consider the concept of ‘fair trade’ as an alternative to the current situation where modern democracies demonstrate an unwillingness to resist the ever-increasing demands of global capital to cede democratic legitimacy in favour of corporate profits....

Bill Mitchell – billy blog

The case against free trade – Part 3

Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Thomas Piketty — We must rethink globalization, or Trumpism will prevail

Let it be said at once: Trump’s victory is primarily due to the explosion in economic and geographic inequality in the United States over several decades and the inability of successive governments to deal with this.…

Judging from Piketty's analysis and proposals, Trumpism gonna win.  Economic liberalism is not going to bridle itself and neither are government that have been captured by it.

The Guardian
We must rethink globalization, or Trumpism will prevail
Thomas Piketty | professor (directeur d'études) at the École des hautes études en sciences sociales (EHESS), associate chair at the Paris School of Economics and Centennial professor at the London School of Economics new International Inequalities Institute

Bill Mitchell — The case against free trade – Part 2

This blog continues my mini-series of free trade. In The case against free trade – Part 1 – I showed how the mainstream economics concept of ‘free trade’ is never attainable in reality and so what goes for ‘free trade’ is really a stacked deck of cards that has increasingly allowed large financial capital interests to rough ride over workers, consumers and undermine the democratic status of elected governments. The aim of this mini-series is tobuild a progressives case for opposition to moves to ‘free trade’ and instead adopt as a principle the concept of ‘fair trade’, as long as it doesn’t compromise the democratic legitimacy of the elected government. This is a further instalment to the manuscript I am currently finalising with co-author, Italian journalist Thomas Fazi. The book, which will hopefully be out soon, traces the way the Left fell prey to what we call the globalisation myth and formed the view that the state has become powerless (or severely constrained) in the face of the transnational movements of goods and services and capital flows. In Part 2, I consider the myth of the free market, the damage that ‘free trade’ causes and move towards a discussion of fair trade. I will complete the series in a third part soon.…

Bill Mitchell – billy blog
The case against free trade – Part 2
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — An optimistic view of worker power

An overriding theme of our new book is that the idea that the nation state is powerless, which appears to have become absorbed within the mainstream Left narrative is false at the most elemental level.

We argue that while they Left has seemingly become beguiled by the idea that amorphous capital markets need to be assuaged by policies that increase their capacity to gain increasing proportions of the real income produced around the world, the Right has understood all along that they had to work through the state to gain advantage for their constituents, notably the top-end-of-town and capital, in general.…

Bill Mitchell – billy blog
An optimistic view of worker power
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Michael Hudson — Review of James Galbraith, Welcome to the Poisoned Chalice (2016)

Galbraith expressed his “epiphany” already in 2010 that a “market-based” solution was a euphemism for anti-labor austerity and a reversal of political democracy. “In a successful financial system, there must be a state larger than any market. That state must have monetary control – as the Federal Reserve does, without question, in the Untied States.” 

That was what many Europeans a generation ago expected – for the EU to sponsor a mixed public/private economy in the progressive 20th-century tradition. But instead of an emerging “European superstate” run by elected representatives empowered to promote economic recovery and growth by writing down debts in order to revive employment, the Eurozone is being run by the troika on behalf of bondholders and banks. ECB and EU technocrats are serving these creditor interests, not those of the increasingly indebted population, business and governments. The only real integration has been financial, empowering the ECB to override national sovereignty to dictate public spending and tax policy. And what they dictate is austerity and economic shrinkage.…

“Europe has devoted enormous effort to create a ‘single market’ without enlarging any state, and while pretending that the Central Bank cannot provide new money to the system.” Without monetizing deficits, budgets must be cut and the public domain sold off, with banks and bondholders in charge of resource allocation.

As long as “the market” means keeping the high debt overhead in place, the economy will be sacrificed to creditors. Their debt claims will dominate the market and, under EU and ECB rules, will also dominate the state instead of the state controlling the financial system or even tax policy.

Galbraith calls this financial warfare totalitarian, and writes that while its philosophical father is Frederick Hayek, the political forbear of this market Bolshevism is Stalin. The result is a crisis that “will continue, until Europe changes its mind. It will continue until the forces that built the welfare state in the first place rise up to defend it.”

To prevent such a progressive policy revival, the troika promotes regime change in recalcitrant economies, such as it deemed Syriza to be for trying to resist creditor commitments to austerity. Crushing Greece’s Syriza coalition was openly discussed throughout Europe as a dress rehearsal for blocking the Left from supporting its arguments. “Governments from the Left, no matter how free from corruption, no matter how pro-European,” Galbraith concludes, “are not acceptable to the community of creditors and institutions that make up the European system.” …

Galbraith’s month-by-month narrative describes how the IMF and ECB overrode Greek democracy on behalf of creditors and privatizers. They sought to undermine the Syriza government from the outset, making Greece an object lesson to deter thoughts by Podemos in Spain and similar parties in Portugal and Italy that they could resist the creditor grab to extract payment by a privatization grab and at the cost of pension funds and social spending. By contrast, conciliatory favoritism has been shown to right-wing European parties in order to keep them in power against the left.…

The arena of conflict and rivalry has shifted from the military to the financial battlefield. Along with the IMF and ECB, central banks across the world are notorious for opposing democratic authority to tax and regulate economies. The financial sector’s policy of leaving money and credit allocation to banks and bondholders calls for blocking public money creation. This leaves the financial sector as the economy’s central planner. 

The euro’s creation can best be viewed as a legalistic coup d’état to replace national parliaments with a coterie of financial managers acting on behalf of creditors, drawn largely from the ranks of investment bankers. Tax policy, regulatory and pension policies are assigned to these unelected central planners. Empowered to override sovereign self-determination and national referendums on economic and social policy, their policy prescription is to impose austerity and force privatization selloffs that are basically foreclosures on indebted economies. Galbraith rightly calls this financial colonialism.…

At first glance the repeated “failure” of austerity prescriptions to “help economies recover” seems to be insanity – defined as doing the same thing again and again, hoping that the result may be different. But what if the financial planners are not insane? What if they simply seek professional success by rationalizing politics favored by the vested interests that employ them, headed by the IMF, central bankers and the policy think tanks and business schools they sponsor? The effects of pro-creditor policies have become so constant over so many decades that it now must be seen as deliberate, not a mistake that can be fixed by pointing out a more realistic body of economics (which already was available in the 1920s).…

The EU cannot be “fixed” by marginal reforms. Greece’s treatment shows that it must be recast – or else, countries will start leaving in order to restore parliamentary democracy and retain what remains of their sovereignty. The financial sector’s ideal is for economies centrally planned by bankers, leaving no public infrastructure unappropriated. Privatized economies are to be financialized into opportunities to extract monopoly rent.

The gauntlet has been thrown down, posing a question today much like that of the 1930s: Will the alternative to austerity, debt deflation and the resulting economic breakdown be resolved by a pro-labor socialist alternative, or will it lead to a victory by anti-European right-wing parties?….

Not difficult to see where this is headed. The Left and it's chance and blew. Now it the Right's turn.

Michael Hudson
Review of James Galbraith, Welcome to the Poisoned Chalice (2016)