Sunday, July 7, 2019

Bill Mitchell — ‘Sound finance’ prevents available climate solution with massive jobs potential

When the governments in the advanced nations abandoned full employment as an overarching macroeconomic objective, and instead, starting pursuing what I have called full employability, they stopped seeing unemployment as a policy target (to be minimised) and began using it as a policy tool to suppress inflation. As mass unemployment rose, the politics were massaged by the mainstream of my profession who claimed that the level of unemployment that constituted full employment had risen (this was the NAIRU era) and so there was really no problem. Governments adopted the neoliberal line that they ‘didn’t create jobs’ and had to target fiscal surpluses to ensure their position was ‘sustainable’. The costs in lost income and human suffering have been enormous – most people would not have any idea of the massive scale of these losses that accumulate day after day. Now, it seems, the ‘sound finance’ school is going a step further. We are probably facing an environmental emergency in the coming period (years, decades) but the question commentators keep asking is not what we can do about it but ‘how can we pay for it’? So ‘sound finance’ has already destroyed the lives of millions of people around the world as a result of mass unemployment and poverty, now it is turning its focus on the rest of us. Madness. Paradigm change has to come sooner rather than later.
No lack of funds for military, tax cuts for wealthy, corporate bailouts and donor pork.

Bill Mitchell – billy blog
‘Sound finance’ prevents available climate solution with massive jobs potential
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia


Ralph Musgrave said...

For the umpteenth time Bill Mitchell trotts out his bizarre idea that governments (in the 1960s as I understand it) “….. abandoned full employment as an overarching macroeconomic objective, and instead, starting pursuing what I have called full employability, they stopped seeing unemployment as a policy target (to be minimised) and began using it as a policy tool to suppress inflation.”

OK: so what tools did governments use to “suppress inflation” prior to when they “abandoned full employment”? Price controls or something? Bill never tells us, and for the simple reason he can’t. I.e. he’s talking nonsense.

The reality is that prior to the 1960s (or whenever the alleged “abadonment” took place) governments saw the relationship between inflation and unemployment much as they do now: i.e. they saw high levels of employment as a desirable objective, but one that is in danger of exacerbating inflation if taken too far.

AXEC / E.K-H said...

MMTers are false Progressives and false Friends-of-the-People
Comment on Bill Mitchell on ‘”Sound finance” prevents available climate solution with massive jobs potential’

Economists are known to have dabbled in virtually every discipline: Psychology, Sociology, Political Sciences, Geopolitics, Law, History, Anthropology, Social Philosophy, Philosophy, Theology, Pedagogic, Biology/ Evolution, and what not. This somewhat perverse habit has been called Economics Imperialism.#1, #2, #3 The perversity consists of the fact that economists have utterly failed in their own discipline. Since Adam Smith, economics has not risen above the proto-scientific level.#4 Economists do not know to this day how the monetary economy works.

The greatest scientific losers cannot hold their mouths when genuine scientists are solving real-world problems. Something, economists have never done, just the opposite.#5 As Napoleon summarized: “… he had always believed that if an empire were made of granite the ideas of economists if listened to, would suffice to reduce it to dust.” (Viner)

History seems to repeat itself. Bill Mitchell quotes an article in the latest edition of Science#6: “The authors note at the outset that: Photosynthetic carbon capture by trees is likely to be among our most effective strategies to limit the rise of CO2 concentrations across the globe.” and “The restoration of trees remains among the most effective strategies for climate change mitigation.” and “We could restore 1tn trees for $300bn”.

Now, Bill Mitchell chimes in with good advice: “Clearly tree planting is not rocket science and the skills necessary to undertake these reafforestation projects would be within the reach of most workers. A progressive editor or commentator should never be questioning how we can pay for a tree planting project. They should be lobbying at every chance governments to end their ‘sound finance’ mindsets.”

A progressive editor would simply propose to shift the government’s budget from military spending to reforestation. The problem is NOT budget balancing a.k.a. sound finance but budget allocation which is known under the old slogan guns vs butter. The USA can very easily save the environment and improve social conditions by reallocating the given budget.#7, #8 This, however, is NOT what “progressive” MMTers propose. Instead, they propose to increase deficit-spending/money-creation.

Accordingly, Bill Mitchell does not talk about reallocation of a given budget but prophylactically mows down all budget balancers: “The neoliberals continually drown the populace in a swathe of austerity myths:

• The government has run out of money.
• Deficits will drive up interest rates.
• Deficits will cause hyperinflation.
• Deficits will rack up unsustainable debts on our grandchildren.
• Bond markets will punish governments who run continuous deficits.
• Deficits undermine growth because the private sector thwarts their intent by increasing saving to pay for higher implied taxes in the future.
• Direct job creation creates unreal jobs that are worthless.
• A Job Guarantee would undermine the capacity of private employers to attract labour and drive down productivity.
• ETC, the list goes on.

Bill Mitchell never talks about the profit effect of deficit-spending/money-creation. The macroeconomic Profit Law, i.e. Q=Yd+(I−S)+(G−T)+(X−M), tells everyone that Public Deficit = Private Profit and that MMT is a free lunch program for the Oligarchy and that financial wealth and public debt grow in lockstep and that fabulous financial wealth in the USA is roughly equal to humongous public debt (22 trillion).#9, #10

MMT is NOT a scientific theory but a dishonest political farce. MMTers are not Friends-of-the-People but the useful idiots of Wall Street.

Egmont Kakarot-Handtke