An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Tuesday, November 22, 2011
Good News: US Debt Talks Collapse
Finally some good news is being reported out there, perhaps an early "thanksgiving" is in order. Story at Yahoo! here.
It continues to be amazing how the mainstream media reports this in the context of "bad news", while we in the MMT paradigm look at this as "good news".
I think people have become incapable of being optimistic for now. No matter what government does, no matter what banks do, no matter how the world changes, what technologies come along, what economic reports say, people want to think the worst for the future and be austere. Above all else avoid the warm holiday cheer.
Maybe I'm just a naive optimist but I'm hoping Obama's veto threat is just a way to cajole the Republicans to back extending UE and payroll tax cuts (i.e. you do this and I won't veto you guys undoing the DoD cuts). Also, I have long since stopped believing anything politicians say.
But you are right, Obama is clueless when it comes to the economy.
The biggest plus of the super-committee fail is political rather than economic. Lawrence O'Donnell, former CoS of Pat Moynihan when Moynihan was chair of the Senate Finance Commmittee and very savvy about senate workings, observed that if the super-committee had been successful, it would quickly have become institutionalized, allowing the senate to avoid voting in toto on politically "difficult" legislation, giving the others member plausible deniability since they would not be on record.
This would have been terrible for American democracy, further concentrating power in fewer hands, since parties would only appoint committee members with safe seats.
I think that what we are seeing being played out is the contradictions between representative democracy and late-stage capitalism, as an oligarchy captures the representatives. The political jockeying now is about concealing this from voters through various subterfuges.
This is a large part of what the Occupy - 99% movement is about.
I think we have to recognize that most of what is going on is political rather than economic. Even if everyone understood MMT, the same political problems would be with us. The right is committed ideologically to "small government, low taxes, strong military, and traditional values." The left is committed to human rights, fairness, social justice, environmental sustainability, and so forth. I say, "an so forth," because the left doesn't have a simple mantra like the right.
What this boils down to economically is that the right represent capital (owners) and the left represents labor (workers).
Even if MMT were the order of the day, these deep divisions would not go away.
What would happen is that the affordability issue would disappear. This would take away the favorite slogans of the right and left, "cut spending" and "tax the rich" respectively.
There is a lot of cognitive-affective attachment behind this on both side, both of which see these issues as moral.
So what we are witnessing is the conflict between two age-old ideological positions on the stage of contemporary history.
It will be very difficult for MMT proponents to talk sense to these people in this kind of charged environment, where the battle is for political power rather than economic prosperity.
This will be the last super committe, instead of governance by super committee. That is a huge political plus because all members will have to take the consequences of actually voting on bills.
O'Donnell explains the budgetary machinations here.
Alex Blumberg at N.P.R. is obsessed with Government Debt. He does a piece at least once a month for All things considered on some facet of The Looming Debt Problem & How Poor America is. Today's addition: The National Debt: What The Left And Right Agree On.
He is going to be the lucky recipient of a brand new copy of Mosler's 7DIF at his Columbia University Office next week.
Is It really good news or will the automatic destabilisers start kicking in?
ReplyDeleteOk how about some good old fashioned 9th grade induction methodology :
ReplyDelete1. Debt ceiling was not important event earlier this year.
2. Debt ceiling part II was not even on the radar this past fall.
3. Debt committee is not important and the markets don't care.
Therefore, because of 1, 2 and 3 we can see that it's not the debt it's the derivative machines of big big finance monsters who need to be shut down.
How about instead of shutting down the government, shut down the derivative markets for 1 week and see how everything goes back to 1996.
ReplyDeleteI think people have become incapable of being optimistic for now. No matter what government does, no matter what banks do, no matter how the world changes, what technologies come along, what economic reports say, people want to think the worst for the future and be austere. Above all else avoid the warm holiday cheer.
ReplyDeleteAnd Obama now says he will VETO any bill that blocks sequestration (automatic spending cuts). He has totally drunk the austerity Kool Aid.
ReplyDeleteexactly... He said we have joined the ASEAN group of mercantilist nations and are there to stay
ReplyDeleteMike,
ReplyDeleteMaybe I'm just a naive optimist but I'm hoping Obama's veto threat is just a way to cajole the Republicans to back extending UE and payroll tax cuts (i.e. you do this and I won't veto you guys undoing the DoD cuts). Also, I have long since stopped believing anything politicians say.
But you are right, Obama is clueless when it comes to the economy.
Ben,
ReplyDeleteAs a political ploy, I could see that. I just really think he believes we need to make big cuts. His advisers have been telling him that all along.
The biggest plus of the super-committee fail is political rather than economic. Lawrence O'Donnell, former CoS of Pat Moynihan when Moynihan was chair of the Senate Finance Commmittee and very savvy about senate workings, observed that if the super-committee had been successful, it would quickly have become institutionalized, allowing the senate to avoid voting in toto on politically "difficult" legislation, giving the others member plausible deniability since they would not be on record.
ReplyDeleteThis would have been terrible for American democracy, further concentrating power in fewer hands, since parties would only appoint committee members with safe seats.
I think that what we are seeing being played out is the contradictions between representative democracy and late-stage capitalism, as an oligarchy captures the representatives. The political jockeying now is about concealing this from voters through various subterfuges.
This is a large part of what the Occupy - 99% movement is about.
James Galbraith says Supercommittee not a failure
ReplyDeletehttp://media.bloomberg.com/bb/avfile/News/Surveillance/vx9EIW1drjoo.mp3
I think we have to recognize that most of what is going on is political rather than economic. Even if everyone understood MMT, the same political problems would be with us. The right is committed ideologically to "small government, low taxes, strong military, and traditional values." The left is committed to human rights, fairness, social justice, environmental sustainability, and so forth. I say, "an so forth," because the left doesn't have a simple mantra like the right.
ReplyDeleteWhat this boils down to economically is that the right represent capital (owners) and the left represents labor (workers).
Even if MMT were the order of the day, these deep divisions would not go away.
What would happen is that the affordability issue would disappear. This would take away the favorite slogans of the right and left, "cut spending" and "tax the rich" respectively.
There is a lot of cognitive-affective attachment behind this on both side, both of which see these issues as moral.
So what we are witnessing is the conflict between two age-old ideological positions on the stage of contemporary history.
It will be very difficult for MMT proponents to talk sense to these people in this kind of charged environment, where the battle is for political power rather than economic prosperity.
@ money4nothingchicks4free
ReplyDeleteI promoted the Galbraith story to a post.
Why is this good news politically?
ReplyDeleteGood news is that it means the political system works because It stopped the deficit hysteria madness and is forcing more debate on the topic.
ReplyDelete@ Laura
ReplyDeleteThis will be the last super committe, instead of governance by super committee. That is a huge political plus because all members will have to take the consequences of actually voting on bills.
O'Donnell explains the budgetary machinations here.
That clarifies it, thanks!
ReplyDeleteAutomatic stabilizers only work so long as they exist.
ReplyDeleteThe supercommittee was explicitly designed to destroy as much of the stabilizers as they could. That's what we're dealing with here.
The supercommittee will be back. It's too convenient a form for ducking responsibility.
Alex Blumberg at N.P.R. is obsessed with Government Debt. He does a piece at least once a month for All things considered on some facet of The Looming Debt Problem & How Poor America is. Today's addition: The National Debt: What The Left And Right Agree On.
ReplyDeleteHe is going to be the lucky recipient of a brand new copy of Mosler's 7DIF at his Columbia University Office next week.
@ TomatoBasil
ReplyDeleteThumbs up!
What Tom Hickey said is pretty funny. A committee of 12 people and it is the last super.
ReplyDelete