The Great Paradox: Liberalism Destroys the Market Economy —Heiner Flassbeck

Another paradox of liberalism arising from equation of economic liberalism with capitalism and of economic liberalism as equatable with political liberalism as representative democracy. The rise of interest in social democracy now no accident of history but rather a logical progression of the historical dialectic?

Flassbeck Economics
The Great Paradox: Liberalism Destroys the Market Economy

Heiner Flassbeck

The Dangerous Myth of 'Taxpayer Money' — Raúl Carrillo & Jesse Myerson

“There is no such thing as public money, only taxpayer money.” — Margaret Thatcher, 1983

Not only is the “taxpayer money” frame damaging, it doesn’t reflect how public spending actually works.…

Margaret Thatcher’s mantra was backwards: There is no such thing as “taxpayer money,” only public money....

Splinter
The Dangerous Myth of 'Taxpayer Money'
Raúl Carrillo & Jesse Myerson

Brad DeLong — Margaret Thatcher Against Friedrich von Hayek's Pleas for a Lykourgan Dictatorship in Britain: Hoisted from the Archives

Instructive. Margaret Thatcher may have been a neoliberal but she was not a fascist.

Grasping Reality
Margaret Thatcher Against Friedrich von Hayek's Pleas for a Lykourgan Dictatorship in Britain: Hoisted from the Archives
Brad DeLong | Professor of Economics, UCAL Berkeley

Ben Waite — A battle for the meaning of British Conservatism

There are several types of conservatism. 

There is traditional conservatism that favors an authoritarian state (monarchy), a state religion and an established order as guardians of tradition and custom and bulwarks against innovation and change. This is called Traditionalism. It's chief opponent is Liberalism. Traditionalism is reactionary, and it regards Liberalism as radicalism.

The other type of conservatism is actually an aspect of Liberalism. This sort of conservatism tends to be  economically liberal but politically and socially traditional. This is the conservative-liberal divide in US and UK politics for example.

Within the conservative aspect of Liberalism there are several approaches. One is neoliberalism and the other compassionate conservatism. This article explores this dichotomy in UK politics, specifically the differences in approaches of David Cameron and Theresa May. 

While the Cameron government espoused the neoliberal principals of fiscal consolidation and austerity economically and globalism and open borders politically, the May government has jettisoned that approach in favor of a more inclusive capitalism, declaring the age of Thatcherism over in favor of nationalism and using the power of the state for public purpose including promoting the general welfare. 

The post suggests that instead of abandoning of conservatism, this can be viewed as returning to the policy approach of Benjamin Disraeli's One Nation Toryism.

Longish, but worth the read. Although it is about the UK specifically, the issues are similar in the US. A good summary of conservatism within the Liberal political tradition.

Open Democracy
A battle for the meaning of British Conservatism

Ben Waite

Zero Hedge — Ray Dalio Praises Trump: Predicts "Huge" Changes; It Will Be "Glorious To Be Rich"

In one of the most euphoric praises for Donald Trump and the president-elect's fledgling administration to date, overnight Bridgewater founder Ray Dalio said economic changes under the Trump administration may be more dramatic than shifts from “the socialists to the capitalists” in the U.K., U.S. and Germany from 1979 to 1982, and predicted that "we are about to experience a profound, president-led ideological shift that will have a big impact on both the US and the world."

Comparing Trump to Margaret Thatcher, Ronald Reagan and Helmut Kohl, Dalio said the incoming administration may have a much bigger impact on the U.S. economy than can be measured by tax changes and fiscal spending. The Trump era could “ignite animal spirits” and attract productive capital.

In his summary of Trump's economic policies, Dalio urges readers to read Ayn Rand "as her books pretty well capture the mindset. This new administration hates weak, unproductive, socialist people and policies, and it admires strong, can-do, profit makers. It wants to, and probably will, shift the environment from one that makes profit makers villains with limited power to one that makes them heroes with significant power."…

By and large, deal-maker businessmen will be running the government. Their boldness will almost certainly make the next four years incredibly interesting and will keep us all on our toes.

The difference between Trump and Thatcher/Reagan seems to be populism. The US and UK are not emerging from a previous period of social democracy (New Deal) or democratic socialism (Old Labour). The US and UK are reacting politically to the inequality resulting from Reagan and Thatcher that goes under the rubric of neoliberalism. Bill Clinton and Barack Obama were more like Ronald Reagan than FDR, or even Nixon. Tony Blair was much more in the mold of Margaret Thatcher than Harold Wilson. Trump realizes that he has two years to do something significant for the middle class workers that voted him in, or his power base will crumble. If there is not significant economic improvement for workers in the 2020 campaign, he will lose his bid for reelection. Moreover, he will face a vicious opposition that will try to stymie his every move. Theresa May is in a similar position in the UK.

Zero Hedge
Ray Dalio Praises Trump: Predicts "Huge" Changes; It Will Be "Glorious To Be Rich"

Tyler Durden

George Monbiot — Neoliberalism: the deep story that lies beneath Donald Trump’s triumph

Contra Hayek.

The Guardian
Neoliberalism: the deep story that lies beneath Donald Trump’s triumph
George Monbiot

Sam Ben-Meir — The Failed Dogma of Neoliberalism

During her political prime in the 1980s, Thatcher said she was out to change the soul, to change the conceptual universe in which people live, and her idea that “there is no alternative” (TINA) became so deeply embedded in our psyches and in our consciousness that it seems we could no longer imagine that there is an alternative to capitalism.

The neoliberalism of Thatcher was characterized by deregulation (especially in the financial sector), the suppression of labor, attacks on trade unions, and the privatization of state-owned corporations. Both Thatcher and Ronald Reagan oversaw the shift toward a more laissez-faire version of capitalism, which in effect reversed the post-1929 movement towards increased state-intervention and social-democratic capitalism.

It is long overdue that we lay this TINA concept to rest.…

Consortium News
The Failed Dogma of Neoliberalism
Sam Ben-Meir | Professor of Philosophy, Eastern International College

Joe Mellor — Mrs Thatcher’s son’s “corrupt” Middle Eastern secrets hidden until 2053

Corruption coverup? Hardly believable that this is to protect the innocent.

The London Economic
Mrs Thatcher’s son’s “corrupt” Middle Eastern secrets hidden until 2053

Joe Mellor

Bill Mitchell — Rejecting the TINA mantra and the second ‘Gilded Age’

Cuts to the core of it. Confronting neoliberalism.

Bill Mitchell – billy blog
Rejecting the TINA mantra and the second ‘Gilded Age’
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Alex Little — That joke isn’t funny anymore: from #Tories4Corbyn to a Very British Coup

The joke is on the Tories as the people come to their senses.

ALittleEcon
That joke isn’t funny anymore: from #Tories4Corbyn to a Very British Coup
Alex Little

Bill Mitchell — Corbyn should stop saying he will eliminate the deficit

The New Labour group are clearly getting desperate in Britain and Blair himself has come out again to vilify Jeremy Corbyn and predict a Labour annihilation at the next general election. Clearly Blair and his cronies haven’t understood that their time in the sun is over. They recreated the Labour Party into a Tory mirror image on key issues and the grass roots of the Party is now reclaiming the lost ground. The UK Guardian article (August 12, 2015) – Syriza’s Greece: the canary in the cage for Corbyn’s Britain? – illustrates how stuck in the neo-liberal mud the British economic debate has become. It tries to claim that Corbyn is a throwback to the past and the policies that old Labour tried in the 1970s failed and would fail again. Clearly, the writer and most of the commentators which resonate the same message haven’t really understood the difference between a currency-issuing government and one bound by a mania for fixed exchange rates and fiscal surpluses. Increasingly, the attempts by Corbyn’s support base to appear to be ‘fiscally responsible’ tells me that he will not succeed in altering the debate if he continues to promote ideas that equate fiscal responsibility with deficit elimination. Fiscal responsibility is equated with achieving full employment with price stability – and in the current climate that would require a fiscal deficit some percent of GDP larger than what it is at present. Corbyn’s camp should be talking about that rather than deficit elimination, which is a ridiculous policy target to aspire to.

In 2002, at a dinner in Hampshire, Margaret Thatcher replied to a question about her greatest achievement. She said:

Tony Blair and New Labour. We forced our opponents to change their minds.
That about sums it up when we read statements from the modern Blairites that electing Jeremy Corbyn would be the best thing for the Tories.

My view, from afar, is that the Tories would be terrified of a modern left leader and a progressive labour policy platform. That is, as long as the change translates into a re-framing of the debate and challenges the basic macroeconomic myths that go through to the keeper too often these days without scrutiny.

That was one of the legacies of Blair. New Labour propagated the neo-liberal economic myths too and gave the Tory narrative credibility when it had (and has) none.…

Between Margaret Thatcher and Tony Blair, the UK is flushed down the tubes.

Bill Mitchell – billy blog
Corbyn should stop saying he will eliminate the deficit
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 damage of the Thatcher sea-change

When socio-economic historians reflect back in the decades to come, they will what insanity ruled the economic policy choices that have been taken in the last three or so decades. They will conclude that arrangements such as the Eurozone was the work of lunatics who systematically undermined the prosperity of millions of people and polarised their societies as a consequence. There is no possible way that the Eurozone can be constructed as a successful monetary arrangement.

The deeply flawed design of the common currency in Europe, was, in part, the product of the shift towards Monetarism and its microeconomic analogue (deregulation, privatisation, outsourcing etc) that surged back into dominance in the 1970s, after its main ideas had been thoroughly discredited and dismissed during the Great Depression. While Margaret Thatcher was not the first Monetarist government (that title goes to the government of President Giscard d’Estaing who appointed Raymond Barre as the Prime minister and Minister of Economy and Finance in 1976), her regime certainly influenced the spread of neo-liberal thinking among policy circles, particularly in the Anglo world.

What is still not acknowledged is the damage done by that swing to so-called free-market policies, which would be better called pro-business capture given there was no real market forces unleashed, just an industry of parasitic, rent-seeking profiteers closely followed by the massive growth in the unproductive, wealth-shuffling financial sector. A recently released report (June 10, 2015) – The Macroeconomic Impact of Liberal Economic Policies – from researchers at the University of Cambridge lets us know more closely how damaging this period was and challenges the view that the best way forward is even more austerity and deregulation.…

[I have introduced paragraphing for readability. The original is one introductory paragraph.]

Bill Mitchell – billy blog
The damage of the Thatcher sea-change
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Lee Brown — Hugo Chavez Helped Overturn Neoliberalism in Latin America

Puncturing the myths about neoliberalism (Pinochet) and Bolivarianism (Chavez).

telesur
Hugo Chavez Helped Overturn Neoliberalism in Latin America

Lee Brown

Ann Pettifore — Is there no such thing as public money, only taxpayers money, as PM asserts? Was £375bn of QE raised from taxpayers?

Lump of money fallacy.

We disagree with the ‘there is no money’ mantra. Within a sound financial and monetary system, there need never be a shortage of money to meet society’s needs. There may be limited resources, and limited brainpower but there need never be a shortage of money. In this briefing I set out to explain why.....

Debtonation
Is there no such thing as public money, only taxpayers money, as PM asserts? Was £375bn of QE raised from taxpayers?

Ann Pettifore

Also put up by Ann today:

Eurozone QE: Better ways to boost the economy and employment

New Publication on Islamic Finance

Alex Little — Cameron channels Thatcher to remind us what the Conservatives really stand for

“Let us never forget this fundamental truth: the State has no source of money other than money which people earn themselves. If the State wishes to spend more it can do so only by borrowing your savings or by taxing you more. It is no good thinking that someone else will pay – that ‘someone else’ is you. There is no such thing as public money; there is only taxpayers’ money.” – Margaret Thatcher, Speech to Conservative Party Conference, 1983

I was six months old when Thatcher gave this speech. It was nonsense then and it is still nonsense now. That hasn’t stopped David Cameron from channeling the spirit of his hero in a speech given on the campaign trail today saying: 

“We know that there is no such thing as public money – there is only taxpayers’ money. And we know how we’d rather see it spent: Not on bureaucracy or bloat or the latest crackpot Government scheme but on you, your family – your future.
“Quite simply, it’s your money – you earned it. And we believe it’s people – not politicians – who know best how to spend their own money. And that’s what today is all about.”....

The UK government is the issuer of pounds. They don’t come from anywhere else, so in order for us to have money to pay our taxes, government must spend the money into the economy first, and it must generally spend more than it taxes back in order for the supply of money to increase sustainably.

Now I don’t think Cameron wants to shrink the size of government to nothing (I don’t think he really believes in anything really), but this section of his speech shows a willingness to gently lie to people in order to push policies which seem to benefit all, but are really squarely aimed at benefiting those at the top. Those at the top can afford the best of everything. They don’t need public services. Everyone else though doesn’t have that luxury though, which is why pooling our resources makes sense in so many areas. Cameron also talked about the “immorality” of government spending, but providing useful public services is not immoral, it’s just common sense!

alittleecon — There is an alternative

Cameron channels Thatcher to remind us what the Conservatives really stand for

Seumas Milne — Pinkoes and Traitors by Jean Seaton review – my father, the BBC and a very British coup

This was a No 10 coup by any other name – and one from which the BBC has never fully recovered. 

The Guardian
Pinkoes and Traitors by Jean Seaton review – my father, the BBC and a very British coup

Seumas (shay-mus) Milne

Also

Sir John Sawers, who recently retired after five years as chief of the Secret Intelligence Service, told BBC Radio 4's Today programme that Russia poses a "state to state threat". 

Sir John said dealing with such threats would require more defence spending.

Anyone see a pattern here? If not, refer to above.

BBC
Sir John Sawers, ex-MI6 chief, warns of Russia 'danger'

Patrick L. Smith — Neoliberalism is our Frankenstein: Greece and Ukraine are the hot spots of a new war for supremacy

We should be considering the Greece and Ukraine crises together. If only the news media would allow that…

There is something tragically irrational driving both of these crises. The genesis of each, at least nominally, is the question of whether markets serve society or it is the other way around. Economic conflict, then, has been transformed into humanitarian disasters. This is what Greece and Ukraine have most fundamentally in common. 

It is in search of a logical explanation of the illogic at work in these two crises that something else, something larger, emerges to bring them into a coherent whole. Washington has so many wars going now, none declared, one can hardly keep the list current. But the most sustained and havoc-wreaking of them is unreported. This is the war for neoliberal supremacy across the planet. Greece and Ukraine are best viewed as two hot fronts in this war, a sort of World War III none of us ever imagined.

Neoliberalism is our Frankenstein. The thought holds for two reasons. At its core it is profoundly undemocratic, never mind that the English and American variants of democracy are the mulch from which it arises. It is also unrelentingly absolutist: Because it is intimately related to the myth of America’s providential exception, neoliberalism can tolerate no alternative. Were another idea of political economy to flourish it would expose premodern myth as premodern myth.…

Good snapshot of the birth and development of liberalism from classical to progressive on one hand and neoliberal on the other. Smith is well-informed both about history and current affairs, and he summarizes the essentials.

Salon

Neoliberalism is our Frankenstein: Greece and Ukraine are the hot spots of a new war for supremacy
Patrick L. Smith | International Herald Tribune’s bureau chief in Hong Kong and then Tokyo from 1985 to 1992.

Greg Palast — Trojan Hearse: Greek Elections and the Euro Leper Colony

The horror of austerity is not the consequence of Greek profligacy: it was designed into the euro’s plan from the beginning. 

This was explained to me by the father of the euro himself, economist Robert Mundell of Columbia University. (I studied economics with Mundell’s buddy, Milton Friedman.) Mundell not only invented the euro, he also fathered the misery-making policies of Thatcher and Reagan, known as “supply-side economics” – or, as George Bush Sr. called it, “voodoo economics.” Supply-side voodoo is the long-discredited belief that if a nation demolishes the power of unions, cuts business taxes, eliminates government regulation and public ownership of utilities, economic prosperity will follow. 

The euro is simply the other side of the supply-side coin. As Mundell explained it, the euro is the way in which congresses and parliaments can be stripped of all power over monetary and fiscal policy. Bothersome democracy is removed from the economic system. “Without fiscal policy,” Mundell told me, “the only way nations can keep jobs is by the competitive reduction of rules on business.”…

Greece’s ruin began with secret, fraudulent currency swaps, designed a decade ago by Goldman Sachs, to conceal Greek deficits that exceeded the euro zone’s 3%-of-GDP limit. In 2009, when the truth came out, Greek debt holders realized they had been cheated. These debt buyers then demanded usurious levels of interest (or, if you prefer, a high “spread”) to insure themselves against future fraud. The compounding of this interest premium brought the Greek nation to its knees. In other words, the crimes committed to join and stay in the euro, not Greek profligacy, caused the crisis. 

The USA, Brazil and China escaped from depression by controlling their money supply, government spending and currency exchange rates—crucial tools Greece gave up in return for the euro. 

Worse, once the Trojan hearse of the euro entered Athens, tourism, Greece’s main industry, drained to Turkey where hotels and souvenirs are priced in cheap lira. This allowed Dr. Mundell’s remorseless wage-lowering machine, the euro, to do its work, to force Greece to strip all its workers of pensions and power. 

Greece fell to its knees, with no choice but to beg Germany for mercy.
But there is no mercy. As Germany’s Schäuble insists, democracy, this week’s vote, means nothing. "New elections change nothing in the accords struck with the Greek government,” he says. “[Greeks] have no alternative.”

Greg Palast

Trojan Hearse: Greek Elections and the Euro Leper Colony

h/t Dan Lynch in the comments

Palast had already explained this in greater detail in Robert Mundell, evil genius of the euro, linked to at MNE on June 29, 2012.

This is all by neoliberal design to bring Thatcherism-Reaganism to Europe and convert the welfare states there to market state like Thatcher's plan for the UK and Reagan's plan for the US. It would become more effective in the EU by denying currency sovereignty and making the EZ nations dependent on the new DM euro. The eurocrats knew exactly what they were doing — imposing TINA.

This is not conspiracy theory, but a an actual conspiracy as Palast explains.

Bill Mitchell — Privatisation failure – the micro analogue of fiscal surplus obsessions

Our business leaders are amusing themselves at the moment sailing large and expensive yachts in various summer regattas and races and lecturing us on how our democratic choices (to elect parliamentarians) is holding back the country – “ill-equipped for life after the mining boom” is the code words used (Source). Apparently, we should not elect parliamentarians that oppose their conservative agenda to transfer increasing volumes of real income to the top-end-of-town (that is, them). Their mantra never changes – its all about them not us. This article in the New York Times (September 26, 2014) – The Benefits of Economic Expansions Are Increasingly Going to the Richest Americans – not only promotes the excellent work of MMTer Pavlina Tcherneva but is apposite to the message of today’s blog. Which brings me to a recent decision by the UK government to allow rail fares to rise well in excess of the inflation rate and the growth in wages. 

The UK Guardian article (January 2, 2015) – Fare rises show why British railways should be renationalised – was one of those recurring narratives that tell us about the on-going damage that the early stages of neo-liberalism wrought.… 

Privatisation, franchising, outsourcing, PPPs, PFIs, and all the rest of the devious transfers of public wealth and funds to the private sector have systematically failed to deliver on the promises made by the consultants. 

The stockbroking and legal companies and economists who advised governments in these public robberies have all done very well. 

Many private firms have done very well – enjoying the best of both worlds – a captive infrastructure, ability to gouge consumers via excessive fares, no real need to keep the quality of service up to acceptable standards, and increasing public subsidies. 

The microeconomic failures that have accompanied neo-liberalism are the analogues to the macroeconomic failures that I normally write about. 

The two are linked of course. One of the principle justifications for the sell-offs was the alleged need to resolve fiscal crises. 

Both the claims about fiscal crises (the need for fiscal surpluses) and the promise of superior services etc are erroneous. 

Attacking both levels of myth-making has to be a core part of the progressive agenda.

Bill Mitchell – billy blog

Privatisation failure – the micro analogue of fiscal surplus obsessions

Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

Peter Radford — Stagnation

The downscaling is said to fit with the empirical evidence, and in particular with the trends that seem to have set in since around 1980. 

In other words, a sputtering economic performance over the past few decades is seen as proof that we now live in more constrained times, where limited growth puts a cap on our latitude in dealing with economic issues. People drawing this conclusion almost inevitably then jump into discussions of how this reduced latitude implies a more austere role for government, and – naturally – that everyday folks just will have to manage on less. 

I have a slightly different perspective. 

The onset of the downward shift coincides quite neatly with another great beginning. That of an era of economic policy focused on supply side initiatives, giveaways to the rich, and of corporate welfare. Is it simply a strange coincidence that the entire post-Reagan era is exactly that we are now describing as one of lower growth? Or is it that the right of center free market policies that have dominated policy making throughout the west since the early 1980′s, are to blame?

The Radford Free Press
Stagnation
Peter Radford