Bill Mitchell — If it quacks!

A debate is set by the way it is framed, along with the parties acceptance or rejection of key assumptions of the framework. These initial conditions determine the course of the debate and the likely winner.

Accepting the assumptions of conventional political economy as the application of macroeconomics to policy issues all but guarantees defeat in policy debates since it is an uphill fight against entrenched forces to which one has needlessly and foolishly ceded the advantage.

Bill argues that progressives should beware of falling into this trap.

Progressive politicians are likely looking at the polling and concluding that the defenders of the status quo are in the position of having already convinced the public that their framework is the only correct one. Most progressive politicians seem to think that challenging widely held public views, even though erroneous, is a recipe for loss.

So far, few progressive politicians have been able to muster the courage to tackle the challenge even if they have the smarts to see through the false assumptions. 

Bill Mitchell – billy blog
If it quacks!
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

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 — British Labour surrenders to the middle class and big business interests

More UK politics than MMT, but worth reading for Bill's take on British democracy. He also has some interesting words on Edmund Burke and his contemporary applicability.

Bill Mitchell – billy blog
British Labour surrenders to the middle class and big business interests
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Craig Murray — Bought Politicians

"Low-level corruption" at high levels. What is "low-level corruption"? No illegal but unethical owing to conflict of interest and principal-agent problem, the principal being the public and the agent being their representative in government.

Craig Murray Blog
Bought Politicians
Craig Murray, formerly British ambassador to Uzbekistan and Rector of the University of Dundee

Richard Murphy — The political economy of Labour’s fiscal rule

Good one. Worth reading in full. Richard Murphy gives his summary of the state of the his argument with Jonathan Portes and Simon Wren Lewis.

Tax Research UK
The political economy of Labour’s fiscal rule

Richard Murphy

Richard Murphy — Why the left and Labour really do need to adopt the core ideas of modern monetary theory

Important for those interested in MMT. It is a must-read if British or interested in the UK affairs.

Richard Murphy takes Jonathan Portes (and Simon Wren-Lewis) to task for betraying Labor and the left, while misrepresenting MMT.

The issues that MMT addresses in terms of political economy are social, political and economic, as well as cultural and institutional. A lot of different expertise needs to be brought to bear in addition to theoretical economists. Academic economists don't own this debate. Neither do financial professionals. While both these areas of expertise are required, they are not the only necessary ones. Given the broad context, many inputs are relevant in addition.

One of these areas is the so-called Green New Deal. The issues involved are fundamentally economic but they are also fundamentally social as an existential threat and fundamentally political in that a political solution is required. Moreover, it's a huge engineering problem, since the energy system is involved. It's also a global challenge that in which all will have to cooperate.

Any viable solution will require changing institutional arrangements, e.g., legal requirements, and it will also require a cultural shift that involves mass education, since the low-hanging fruit is conservation in an environment where consumption is promoted. It is a huge undertaking, which is a big reason that it is a hot potato that few are brave enough to pick up — not to mention, smart enough.

What MMT has to offer in particular is the knowledge that the only constraint on currency sovereigns addressing issue of public purpose is availability of real resources. The financial constraint is inflation and inflation is a consequence of resource scarcity relative to demand. Governments can address this by controlling demand through taxation or increasing availability of real resources through public investment. 

This being a finite world there are physical limits. Knowledge is potentially unlimited, however, limited only the ability to tap potential. Ignorance limits potential, and willful ignorance and dissimulation are culpable.

Richard Murphy broaches these issues skillfully. Good job — although I don't agree with everything he says, notably, about the job guarantee.

Tax Research (UK)
Why the left and Labour really do need to adopt the core ideas of modern monetary theory

Richard Murphy

Also

Tax justice and MMT

See also

Labour’s chief economic adviser [James Meadway] confirms it is committed to the thinking that will deliver yet more austerity (6 Aug 2018)

* Demand is the term that economists use to describe the ability and willingness of buyers to purchase a product or service. … 

This general idea of demand is often called notional demand, which is composed of both latent demand and effective demand.

Even if a buyer needs or would be willing to purchase a particular product or service, he cannot do so if he lacks the necessary funds or if he does not know about that product or service. This portion of market demand is called latent demand.

Effective demand is a representation of the actual amount of goods or services that buyers are purchasing in a given market. Effective demand is the difference between notional demand and latent demand. Effective demand is a reflection of the extent to which buyers' income, perceptions and needs combine to result in an actual purchase rather than a mere desire to purchase.

— Ronald Kimmons, What Is the Difference Between Demand and Effective Demand?

Bill Mitchell — Left-liberals and neoliberals really should not be in the same party

This week’s theme seems to be the about how the so-called progressive side of the economic and political debate keeps kicking ‘own goals’ (given a lot of this is happening in Britain where they play soccer) or finding creative ways to ‘face plant’ (moving to Europe where there is more snow). Over the other side of the Atlantic, as America approaches its mid-term elections, so-called progressive forces who give solace to the New Democrats, aka Neoliberal Democrats are railing against fiscal deficits and demanding that the left-liberals in the Democratic Party be pushed out and that the voters be urged to elect candidates who will impose austerity by cutting welfare and health expenditure and more. And then we have progressive think tanks pumping out stuff about banking that you would only find in a mainstream macroeconomic textbook. This is the state of play on the progressive side of politics. The demise of social democratic political movements is continuing and it is because they have become corrupted from within by neoliberals. And then we had a little demonstration in London yesterday of the way in which the British Labour Fiscal Rule will bring the Party grief. The Tories are just warming up on that one....

The left-liberal voters in the US, have figured that out. Send a message by either not voting or voting third party. The Democratic establishment is poised to lose a portion of its base if it doesn't wake up. The straw that broke the camel's back was sabotaging Bernie Sanders to give Hillary Clinton the nomination.

Bill Mitchell – billy blog
Left-liberals and neoliberals really should not be in the same party
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 — 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

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 2

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

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

Jeremy Corbyn — The Corbyn Doctrine

British Labour Party leader Jeremy Corbyn addressed United Nations officials in Geneva this Friday in a speech outlining his vision for a twenty-first century internationalism.

The speech, scheduled to mark International Human Rights Day, examined the roots of global economic inequality, the developing climate crisis and the impact of war across the world. These “threats to our common humanity,” it argues, can only be overcome with “a global rules-based system that applies to all and works for the many, not the few.”

Quoting from late socialist leaders Salvador Allende and Thomas Sankara, Corbyn offers a blueprint for a fundamentally different world order based on international cooperation and solidarity.

The speech is reproduced below in full.

A shot across the bow of neoliberalism and Thatcher's TINA ("there is no alternative").

There is an alternative to this damaging and bankrupt order. The world’s largest corporations and banks cannot be left to write the rules and rig the system for themselves. The world’s economy can and must deliver for the common good and the majority of its people. But that is going to demand real and fundamental structural change on an international level.

Awesome speech. American progressives should familiarize themselves with it.

Jacobin

The Corbyn Doctrine

Jeremy Corbyn

See also

Have you heard of SLAPP lawsuits? You soon will.

SLAPP stands for “Strategic Lawsuit Against Public Participation.” It is a lawsuit brought by big corporations intended to censor, intimidate, and silence critics by burdening them with the overwhelming costs of a legal defense until they’re forced to abandon their criticism or opposition. And it may be the biggest threat to the resistance you’ve never heard of.

The Evil Empire strikes again.

AlterNet
Robert Reich Reveals the Biggest Threat to American Democracy You've Never Heard Of

Robert Reich

also

Truthout
Trump Takes a Stand for Corruption -- by Withdrawing the US From Anti-Corruption Pact

Emily Ludolf, Occupy.com | News Analysis

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

Patricia Pino — The fringe event that promises to empower Labour’s Progressives against neoliberalism

Professor Bill Mitchell – a major proponent of Modern Monetary Theory (MMT) – will attend a Labour Conference fringe event this September, it’s a rare opportunity progressives must seize.…

Through the mass misinformation that is the neoliberal doctrine, the elites created a set of economic rules which presents them and only them as the indispensable saviours of society, and thus the only entity that must directly benefit from economic policy. They then dressed this fantasy as common sense, aided by their media sycophants whose very positions depend on the continued support from the wealthy classes. Dissent against this destructive order is presented as madness. Obedience is absolute: the poor think they must protect their masters, even at the expense of their own wellbeing.

In fact, every ill of society, every injustice, every incident of exploitation and systematic cruelty, finds its justification in some false economic dogma that goes unquestioned. And that is why the fight for social change goes hand in hand with economic reform....

If this movement belongs primarily to the young, then it is time for them to take the lead. Until millennials arm themselves with strong economic arguments, they will be defenceless when the establishment blames their money troubles on indulgence, their growing personal debt on irresponsibility and their joblessness on laziness. Until millennials can explain why these societal issues are a direct result of economic policy, the establishment will continue to promote them as individuals’ problems. The difficulties presented by a population that has endured 40 years of neoliberal indoctrination cannot be underestimated....

Help the organisers: visit the Crowdfunding page for this event. 

The Pileus

The fringe event that promises to empower Labour’s Progressives against neoliberalism

Patricia Pino

also by Patricia Pino:

Recently, I had the opportunity to discuss MMT at length with Professor Bill Mitchell himself. My objective was to find a way to explain its fundamentals in a way which could be easily understood by anyone, without the requirement of an academic background. He was kind enough to help me in this task.

To understand MMT, it is best to start by comparing it to Neoliberalism.…

It should now be evident why the neoliberal model presents a destructive path. Immediate environmental and human concerns (namely climate change and destitution) are relegated to issues of secondary importance. But to replace this model with that proposed by MMT a number of challenges remain.…

The following are a few basic principles of MMT which must be understood in order to challenge the neoliberal myths:

Labour’s economic alternative to neoliberalism

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

Patricia Pino — The Tory campaign relies entirely on your economic ignorance

MMT.

The Pileus
The Tory campaign relies entirely on your economic ignorance
Patricia Pino

Neil Wilson — The Magic Money Tree Exists

The quality of debate in the 2017 UK General election has been generally terrible. The Tories have been trying to push the “There’s no such thing as a Magic Money Tree” line, and falling straight into the “Don’t think of a pink elephant” problem.

This line is known in economic and political circles as The Noble Lie. The Magic Money Tree does exist. They all know it does. When there is a bank to bail out, does anybody ask where the money is coming from? When there is a nuclear missile system that needs building? How about when a foreign nation needs bombing?

Like the elephant in the room The Tree cannot be mentioned, because then the electorate might start asking awkward questions about public services — perhaps we should have some? — and taxation — are we overtaxed for the size of government we have, given that we still have people without work?...

Modern Money Matters
The Magic Money Tree Exists
Neil Wilson

See also

Ollie McAninch — This Facebook comment about Jeremy Corbyn is going viral

You will like this.

The London Economic
This Facebook comment about Jeremy Corbyn is going viral
Ollie McAninch