Wednesday, February 28, 2018

Bill Mitchell — The New Keynesian fiscal rules that mislead British Labour – Part 1, 2 & 3

The British Labour Party is currently leading the Tories in the latest YouGov opinion polls (February 19-20, Tories 40 per cent (and declining), Labour 42 per cent (and rising). They should be further in front, given the disarray of the Conservatives as they try to negotiate within their own party something remotely acceptable about Brexit. When there is this degree of political capital available, in this case for the Labour Party, a party should use it to redefine policy agendas that have gone awry. To build a narrative that will advance their cause for the future decades. British Labour has a chance to break out of its recent Blairite neoliberal past and present a truly progressive manifesto to the British people that will force the Tories to move closer to the centre and squeeze the extreme right-wing elements. In part, under Jeremy Corbyn and John McDonnell, Labour is making progressive noises on a number of fronts. But ultimately, where it really matters – the macroeconomic narrative – they are remaining firmly neoliberal and this will blight their chances of pursuing a truly progressive agenda. One of the glaring mistakes the Labour Party has made is to accept advice from neoliberal economists (so-called New Keynesians) who have instilled in them a need for fiscal rules. This is a three-part analysis of the sort of advice that Jeremy Corbyn and John McDonnell are getting and why they should ignore it....
Bill Mitchell – billy blog
The New Keynesian fiscal rules that mislead British Labour – Part 1

The New Keynesian fiscal rules that mislead British Labour – Part 3Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia


Footsoldier said...

Wren Lewis went on the attack yesterday on his blog

“Even worse are Lexiters who have listened to too much MMT type rhetoric, and think that ‘taxes do not finance spending’ and that therefore slow growth and less taxes put no constraint on what Labour can spend. This is nonsense even in an MMT type world, because trade destruction would mean inflation would become a constraint on spending much more quickly . In the real world where the Bank of England controls inflation, ignoring a lower tax take would result in higher deficits and borrowing which is ruled out by Labour’s very good fiscal credibility rule. Labour will try to stick to this rule, which means government spending will be much tighter after Brexit than without Brexit.”

Don't you just hate aupply side monetarists.

Matt Franko said...

“supply side monetarists”

Moron cocktail....