Bill Mitchell — Britain continues to defy Project Fear

Regular readers will know that I have been following the path of the British economy post-Referendum in 2016 to see whether the doomsday that the Remainers predicted was likely. It became colloquially known as ‘Project Fear’ as mainstream economists, so-called progressive economists who had their snout in the Labour Party as advisors (and we know where that took the Party), institutions like the Treasury and the Bank of England, all pumped out a sequence of terrible predictions about what would happen to the British economy should the Leave vote succeed. The predictions started in the lead up to the June vote. Immediate recession was forecast. That didn’t happen. Then new forecasts came out – with longer term disasters predicted. As each prediction horizon passed without disaster, the predictions morphed, new horizons were introduced, more nuanced analysis was presented. And, as nothing much has happened to ratify their fears (and lies), the Project has abated somewhat. The latest data shows that the Project is as moribund as it ever was....

Bill Mitchell – billy blog
Britain continues to defy Project Fear

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 British government can avoid a recession from a No-Deal Brexit

A shorter blog post today (Wednesday). On Monday (July 29, 2019), the British Social Metrics Commission published their – 2019 Report – which reveals (staggeringly) “that 4.5 million people are more than 50% below the poverty line, and 7 million people are living in persistent poverty” in Britain. So around 22 per cent of people in the UK are living in poverty. In this day and age, poverty is like polio – it is completely avoidable if governments adopt the right policy mix. Persistent poverty means that a people “are in poverty now and have also been in poverty for at least two of the previous three years.” In other words, the policy failure is persistent....

Bill Mitchell – billy blog

The British government can avoid a recession from a No-Deal Brexit
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 austerity attack on British local government – Part 2

In – The austerity attack on British local government – Part 1 (April 30, 2019) – I examined the way in which the central government austerity had impacted on the major service areas in Britain and considered some of the motivations that have been driving this agenda. In this Part, I am examining the way in which these cuts have been distributed at the local government level. How their grants have been cut and how they have been forced to rely on their own income bases to maintain a semblance of service delivery. I also consider the shifting composition of service delivery in the face of these cuts from broader areas that define a sophisticated society to the raw essentials of human social care. I clearly cannot provide a complete account of what has been going on in two blog posts and that is not my purpose anyway. For example, I am not considering the controversial Universal Credit scheme and the way housing benefits, previously paid by councils have been rolled into that scheme. So bear that in mind when reading. Any reasonable person observing what has been going on in Britain would conclude that this period of Tory government has been a disaster for the well-being of citizens and regions....

Bill Mitchell – billy blog
The austerity attack on British local government – 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 — The austerity attack on British local government – Part 1

On Sunday, May 12, 2019, I will be presenting a workshop in London on – Local Government Funding: Challenging the Status Quo. Basically, I will be speaking about the way in which flawed understandings of the capacities of currency-issuing governments, combined with a vicious, ideological attack on working people from a government fully invested in neoliberal transfers to the elites, have ravaged the capacity of local government in the UK to deliver essential public services. See the Events Page for more details. It is a public event and I hope people support it. To prepare for that workshop, I have been digging deeply into the data to fully acquaint myself with how the ideological austerity push has been distributed across central and local government service delivery. It is no easy task. The data is a ‘dog’s breakfast’ and coming to summary positions is quite time consuming. There are also nuances in the way local government is structured (particularly since the Thatcher years where devolution and cost-shifting was accelerated), which mean that care must be taken in making sensible comparisons. Here are some of the things I found. I have learned a lot in this process, which is a good thing. This is Part 1 of a two-part series....

Bill Mitchell – billy blog
The austerity attack on British local government – Part 1
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Progressive political leadership is absent but required

One of the themes that has emerged in the discussions of the British Labour Party Fiscal Credibility Rule (which should be renamed the Fiscal Incredulous Rule) is when is the right time for a political party to show leadership and start educating the public on new ideas. The Modern Monetary Theory (MMT) project has been, in part, about educating people even if our ideas have been strongly resisted by the mainstream. The mainstream (New Keynesian) paradigm in economics is degenerative (meaning it has little empirical validation) and eventually it will fade into historical obscurity. For many of us that cannot come quickly enough.

The defenders of the Rule argue that progressive politicians have to tread carefully or else the amorphous financial markets will turn on them and destroy their initiatives. The problem is that by kowtowing to the City or Wall Street, the progressive political forces become captured and redundant. Witness the electoral demise of social democratic parties over the last several decades.

The conditions are ripe (see below) for a courageous head-on attack on these financial market elites and educate the public so that they allow elected governments to legislate for all rather than serving the interests of the elites, which has become the norm over the last several decades. The problem is that progressive political forces are also taking advice from mainstream economists who use the tools of neoliberalism. The upshot is that progressive political leadership is absent but desperately required....

Bill Mitchell – billy blog
Progressive political leadership is absent but requiredBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — MMT is just plain old bad economics – Part 2

I am surprised at the hostility that Part 1 in this series created. I have received a lot of E-mails about it, many of which contained just a few words, the most recurring being Turkey! One character obviously needed to improve his/her spelling given that they thought it was appropriate to write along the lines that I should just ‘F*ck off to Terkey’. Apparently Turkey has become the new poster child to ‘prove’ Modern Monetary Theory (MMT) wrong. Good try! I also note the Twitterverse has been alight with attention seekers berating me for daring to comment on the sort of advice British Labour is receiving. Well here is Part 2. And because you all liked it so much, the series has been extended into a three-part series because there is a lot of detail to work through. Today, I revisit the fiscal rule issue, which is a necessary step in refuting the claim that MMT policy prescriptions (whatever they might be) will drive the British pound into worthless oblivion. And, you know what? If you don’t like what I write and make available publicly without charge, then you have an easy option – don’t read it. How easy is that? Today, I confirm that despite attempts by some to reconstruct Labour’s Fiscal Rule as being the exemplar of progressive policy making, its roots are core neoclassical economics (which in popular parlance makes it neoliberal) and it creates a dependence on an ever increasing accumulation of private debt to sustain growth. Far from solving a non-existent ‘deficit-bias’ it creates a private debt bias. Not something a Labour government or any progressive government should aspire to....

Bill Mitchell – billy blog
MMT is just plain old bad economics – 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 — Build it in Britain is just sensible logic

After my day in the sun as a poet, I am back to being an economist. I have been researching operational issues relating to how a society can take back control and Reclaim the State, as part of the work I am doing for our follow up book (with Thomas Fazi) that I hope to get out next year sometime. The current book Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017) is very conceptual. The Part 2 follow up will be conceptual in part but also operational. How to do it rather than what needs to be done. More specifically, I have been examining public procurement policies and how they have been captured by neoliberal interests to benefit capital at the expense of broader objectives (regional development, skill development, productivity growth, investment, employment, wages growth, etc). Over the last 3-4 decades, the way governments spend their money (contracting etc) has changed dramatically and governments have been bullied into acting as if they are ‘profit-maximising’ firms with no other agenda when making multi-billion dollar market purchases. However, in Britain this might change if British Labour are elected. Jeremy Corbyn announced this week that he was going to dramatically change the way the British government spends if he is elected. His ‘Build it in Britain’ strategy will scrap the narrow, neoliberal approaches to public procurement policies and instead use the spending capacity of government to advance broader goals. So while it might end up that a contract to a local firm requires higher government outlays, if that contract also delivers other benefits to the nation (as above) then the local firm would not be disadvantaged. Under the current ‘value for money’ hype local firms cannot ‘compete’ in many cases and these broader benefits are thus not generated. I see the ‘Build it in Britain’ strategy as an exercise in sensible logic and a major statement that the neoliberal command on British Labour is in retreat – for now anyway.

Dynamic efficiency instead of static efficiency. "Grow the pie" rather than "save money."

Bill Mitchell – billy blog
Build it in Britain is just sensible logic
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — How to distort the Brexit debate – exclude significant factors!

The Centre for European Reform, which must have little to do given the snail pace of so-called ‘reform’ that goes on in Europe, released a report over the weekend (June 23, 2018) – What’s the cost of Brexit so far? – which all the Europhile Remainers found filled their Tweet and other social media void for the day. I would of thought that they would have been happy, given England’s demolition of Panama in the soccer and 5-zip thrashing of Australia in the ODI cricket tournament. But no, they wanted to amplify the CER propaganda and makes themselves feel sad. Britain’s economy, apparently, is already 2.1 per cent smaller than it would have been had the vote to exit in June 2016 not won. And apparently, this has been a “hit to the public finances is now £23 billion per annum – or £440 million a week”. If you delve into the way the CER came up with these results you will quickly move on with a ho-hum and get back to the World Cup, which is infinitely more interesting (and that is saying something! read: I don’t enjoy soccer). The saying – Apples and Oranges – is relevant.

The CER start with the no-contest statement, which is intended to force the reader to accept the rest without question: 

Bill Mitchell – billy blog
How to distort the Brexit debate – exclude significant factors!
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Josh Ryan-Collins — Public budgeting for public purpose

Stephanie Kelton brings MMT to Great Britain.

UCL Institute for Innovation and Public Purpose | Rethinking how public value is created, nurtured and evaluated | Director @MazzucatoM
Public budgeting for public purpose

Josh Ryan-Collins

Editorial — The Guardian view on the NHS cash boost: pay for it with deficit spending

Stephanie Kelton figures prominently. Short read.

The Guardian — Editorial
The Guardian view on the NHS cash boost: pay for it with deficit spending

The London Economic — Almost half of all Brits now admit they struggle to make ends meet

A shocking survey of 2,000 UK adults revealed 43 per cent are short of the cash they need to pay the bills an average of seven months each year.

But one quarter said money is an uphill battle for them every single month.
The average adult is forced to turn to their credit cards or overdraft to get them through to payday four out of every 12 months, with one in 10 saying this is the case each month.
Six in 10 even went as far as to say they feel they are never going to make ends meet on their current salary.

Louise Harper-King, spokeswoman for OnePoll.com which carried out the research, said: “With rising costs and wages not following suit, it’s not a surprise so many people are struggling....

Welcome to the precariat. The article gets worse as it goes along.

The London Economic
Almost half of all Brits now admit they struggle to make ends meet

Related

Government "out of touch" as number of zero hours contracts creeps up to 2 million

See also

The UK is at the centre of global corruption: shell companies that launder dirty money can be set up with ease. But when a whistleblower showed just how easy it is, he faced the full force of the law

Welcome to the City of London and its global environs (tax havens) are notorious for their freewheeling style. But it is not just the City. All this "openness" is government policy.

The Guardian (22 April 2018)
Britain, headquarters of fraud
Oliver Bullough

Tim Wallace — UK economy ‘must get more efficient’, says IMF

Britain must make sweeping reforms to pensions, the planning system, infrastructure, education and training, and research and development if it wants to boost economic growth in the years to come, the International Monetary Fund has warned.

Productivity and GDP growth have been relatively weak since the financial crisis, compared to historical levels and relative to other rich economies.

They will stay that way unless serious action is taken....

The Telegraph
UK economy ‘must get more efficient’, says IMF

Tim Wallace

Bill Mitchell — Britain doesn’t appear to be collapsing as a result of Brexit

Do you remember back to May 2016, when the British Treasury, which is clearly full of mainstream macroeconomists who have little understanding of how the system actually operates released their ‘Brexit’ predictions? The ‘study’ (putting the best spin possible on what was a tawdry piece of propaganda) – HM Treasury analysis: the immediate economic impact of leaving the EU – was strategically released to have maximum impact on the vote, which would come just a month later. Fortunately, for Britain and its people, the attempt to provide misinformation failed. As time passes, while the British government and the EU dilly-dally about the ‘divorce’ details, we are getting a better picture of what is happening post-Brexit as the ‘market’ sorts what it can sort out. Much has been said about the destructive shifts in trade that will follow Brexit. But these scaremongers fail to grasp that Britain has been moving away from trade with the EU for some years now and that process will continue into the future. I come from a nation that was dealt a major trading shock at the other end of Britain’s ill-fated dalliance with Europe. It also made alternative plans and prospered as a result. The outcomes of Brexit will be in the hands of the domestic policies that follow. Stick to neoliberalism and there will be a disaster. But the opportunity is there for British Labour to recast itself and seize the scope for better public infrastructure, better services and stronger domestic demand. Then the nation will see why leaving the corporatist, austerity-biased failure that the EU has become was a stroke of genius....

Bill Mitchell – billy blog
Britain doesn’t appear to be collapsing as a result of Brexit
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — British Tories reject the ‘free market’ neoliberal myth

The conservatives in the British Labour Party are obviously worried. The UK Guardian article (December 2, 2017) – Labour faces subversion by Momentum and far left, says Roy Hattersley – reports the claim by former Deputy leader, Roy Hattersley that British Labour is “facing the biggest crisis in its history” because left-wingers are engaged “in a systematic takeover of the party”. Gosh. Sounds shocking. A traditionally left-wing political party slowly wresting it back to mission after being hijacked by the right-wing, neoliberal Blairites. That sounds like Armageddon. The Blairites tried to kill off Jeremy Corbyn several times as they continued to undermine him in the public eye and bleated about how he was going to destroy the Labour Party. They then fell silent when he nearly delivered the Party government in the recent national election and saved many of their jobs. Now, with a by-election in Watford, the conservatives are back to it although it has to be said that Hattersley cannot be called a Blairite. He represents the pre-Blairite right-wingers who backed Dennis Healey as he imposed Monetarist ideology on the Party in the mid-1970s. And this article came out soon after the Tory government announced a major ‘socialist’-style industrial plan. In its press release (November 27, 2017) – Government unveils Industrial Strategy to boost productivity and earning power of people across the UK we learn that the Tories are finally understanding that it can actually improve the fortunes of British workers

Bill Mitchell – billy blog

British Tories reject the ‘free market’ neoliberal myth
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity 

(CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Something is rotten in the state of … Britain

When I was trawling through the British fiscal statements in 2010 and 2011, hidden in all the detail (an obscure Annexe) was a very explicit statement that told me that the British government was inflicting austerity on the economy and relying largely on the growth of non-government indebtedness to offset the fiscal drag and restore the growth cycle. In the same documents but more visible (in the main fiscal statement), the Government was claiming that the non-government debt position that had deteriorated sharply in the lead up to the crisis was unsustainable as a growth strategy. The mainstream press didn’t pick up on the contradiction. Now, the same press seems alarmed with the latest data from the British Office of National Statistics that shows that the Government’s strategy has been working like a charm – the non-government saving ratio has plunged, household debt escalated sharply, non-mortgage debt has accelerated and to top of the impending disaster – real household disposable income growth has been negative for three successive quarters (the first time since the mid-1970s). None of these trends are surprising. I predicted them 6 or 7 years ago. I have been watching the results steadily unfold. But for the mainstream commentators it is all a big headline – ‘look at what we have discovered’ ….

Bill Mitchell – billy blog
Something is rotten in the state of … Britain
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Edward Harrison — Anarchy in UK politics means lower yields and ends austerity as we know it

My conclusion here is that the conditions that created underperformance in the first quarter are still in place and will pressure UK wages and growth. The result will be more accommodative monetary policy than otherwise expected, and probably more accommodative fiscal policy as well....

I see the vote for Brexit in 2016 and the vote this past Thursday both as expressions by middle class Britons for more economic opportunity. In 2016, the EU was the object of scorn. This past election, the UK’s own government suffered at the polls due to middle class disenchantment. The Prime Minister’s colleagues are backing her for now, because they want to avoid a messy leadership contest just as Brexit has started. However, if things don’t change once negotiations are underway, Theresa May could find herself out of a job. And this uncertainty adds additional downside pressure to the British economy.

Credit Writedowns
Anarchy in UK politics means lower yields and ends austerity as we know it

Edward Harrison

See also

The economics for populism no longer exist in Europe

Ellie Mae O'Hagan — Is there a magic money tree? Yes children, there is. But that’s the wrong question

The real question is why are we not using the money tree for public purpose rather than special interests.

Does anyone who has witnessed the pomp and circumstance of the Queen’s Jubilee, the funnelling of public money into Syrian airstrikes, or the systematic cutting of taxes for the rich really think we’re not paying nurses properly because we simply don’t have the money? Absolutely not: we don’t pay nurses properly because the government makes a choice not to.…

But the magic money tree is not a just daft expression in terms of how governments spend public money, it’s also misleading in terms of how the economy works as a whole. Since 2008, we’ve been encouraged to see the economy like a household budget: if households spend too much money, they need to cut down on living costs so they don’t get into too much debt. To that end, the magic money tree says that if we spend too much money, we can’t just simply grow more.
But actually, a country’s whole economy can grow more money if it needs to....
Growing money is possible because an economy is nothing like a household budget....

Get this coleen* a soapbox! And a megaphone.

The Guardian
Is there a magic money tree? Yes children, there is. But that’s the wrong question
Ellie Mae O'Hagan

* Gaelic cailín, diminutive of caile, girl, from Old Irish. — Free Dictionary

Neil Wilson — From Universal Credit to Job Guarantee

How Universal Credit in the UK already has the tools to support the Job Guarantee

Modern Money Matters
From Universal Credit to Job Guarantee
Neil Wilson

Tim Wallace — CBI: We need immigrants in the UK because young Britons won’t move to get jobs

I'm guessing the UK will get its Donald Trump soon enough. Nigel Farage?

Remind me, but in a market economy when there are idle resources available isn't price supposed to be the incentive that brings everything into equilibrium. Maybe they need to increase the wage where domestic workers available and needed.

The Telegraph
CBI: We need immigrants in the UK because young Britons won’t move to get jobs

Tim Wallace

Bill Mitchell — The British reality defying the ideologically-based gloom and doom

I last wrote about the aftermath of the June 2016 Brexit vote in this blog – Mayday! Mayday! The skies were meant to fall in … what happened?. Admittedly, it was written just a month after the vote and so the analysis could legitimately be considered as being tentative and was designed to refute the claims by the remainers that the UK would instantly sink into recession. It didn’t and it hasn’t. Despite the tentative nature of the blog (using the first data releases after the vote), I received a bevy of ‘hate’ E-mails, presumably from those ‘darlings’ that were miffed they didn’t get their way in the vote. Bad luck, that is the way ‘democracy’ works.

We are now at the end of June and we have more information and my conclusion in August is now more concrete. The doom and gloom that was meant to follow the vote outcome is not to be seen in the data. While we might dismiss the on-going strength of consumption expenditure as being short-termism (it might change quite rapidly), last week (November 25, 2016) we learned that private capital formation (investment) is growing strongly and a number of foreign companies have reaffirmed their commitment to on-going investment in the UK. That is forward-looking decision making – out years into the future. Doesn’t look like a Brexit calamity to me.

Bill Mitchell – billy blog
The British reality defying the ideologically-based gloom and doom
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia