Bill Mitchell — Eurozone policy failures laid bare

On March 13, 2018, the OECD released its latest Economic Outlook with accompanying “Interim projections” as at March 2018) suggesting that the current growth phase will continue through to next year as consumer and business confidence improves and translates in higher investment rates. The OECD, however, forecasts that growth in the Eurozone will decline over the next two years. The major Eurozone nations (France, Germany and Italy) are not witnessing the growing investment expenditure. The Eurozone might be seeing a little sunshine creeping out from the very dark clouds. But it is far from recovered and the future is ominously black. Key cyclical indicators remain at depressed levels, which means that when the next cycle hits, the Eurozone will be in a much worse position than before. And the reason: the fundamentally flawed design of the monetary system with its accompanying austerity bias. The reform required is root-and-branch rather than a prune here and there....

Bill Mitchell – billy blog
Eurozone policy failures laid bare
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Michael Roberts — Boom or bust?

Review and critique of the latest OECD World Economic Outlook, from a Marxian POV. Useful.

The key for me, as readers of this blog know, is what is happening to the profitability of capital in the major economies. If profitability is rising, then corporate investment and economic growth will follow – but also vice versa. But if profitability and profits are falling, debt accumulated will become a major burden. Eventually the zombies will start to go bankrupt, spreading across sectors and a slump will ensue. Financial prices will quickly collapse toward the real value of their underlying productive assets.
Indeed, according to Goldman Sachs economists, the prices of financial assets (bonds and stocks) are currently at their highest against actual earnings since 1900!
What the OECD and IMF reports show is that if there is a downturn in profitability, the next slump will be severe, given that private debt (both corporate and household) has not been ‘deleveraged’ in the last nine years – indeed on the contrary.…

Michael Roberts Blog
Boom or bust?
Michael Roberts

Alex Grey — Universal Basic Income is no magic bullet against poverty, finds OECD

The OECD’s recent report on UBI compares the costs in four OECD countries – Finland, France, Italy and the UK – and concludes that it is no magic bullet for poverty.
For starters, the OECD says that a UBI that lifts people out of poverty will cost much more than countries currently spend on welfare.…

This means that massive increases in taxes – up to 10% of GDP in some countries – as well as a reduction in other benefits, would be needed to fund it.

The report also says that not everyone would benefit. The rich and the poor would gain the least, while people on middle incomes would gain the most. Early retirees also stand to lose out. Those currently on benefits would lose out, says the OECD, especially in countries where existing social protection is comprehensive.

The OECD concludes that, without targeted benefits, or much higher spending, the risk of poverty might actually increase, as people lose their existing benefits in favour of UBI.... 

World Economic Forum
Universal Basic Income is no magic bullet against poverty, finds OECD

Alex Grey

Bill Mitchell — Poor fiction from the OECD – the organisation should be abolished

In assessing the role of the multilateral international institutions such as the IMF, the World Bank, and the OECD, one has to have an idea of what their purpose is. The IMF was created to provide funding support to nations under the Bretton Woods system of fixed exchange rates when their trading accounts endangered their capacity to sustain the agreed parities. After the system collapsed in August 1971 (effectively), the IMF had no further purpose. It reinvented itself as a neo-liberal attack dog on government intervention, and, as such, has no progressive (productive) role to play and should be scrapped. Similarly, the World Bank. The OECD was created (as the Organisation for European Economic Co-operation (OEEC)) to manage the Marshall Plan funds that Canada and the US provided to reconstruct Europe at the end of World War II. It has similarly outlived its productive purpose and is now a major source of disinformation. Even in the realm of fiction, there are much better fiction writers than exist within the bowels of the OECD in Paris. Its latest entreaty, specifically – Using the fiscal levers to escape the low-growth trap – from the exemplifies the way in which the OECD chooses to perpetuate myths about government policy options, even when its message might appear reasonable to progressive eyes and ears. That is the problem really, by buying into the neo-liberal scam that mainstream economists have been running for the last 3 or 4 decades, progressive politicians and their apparatchiks have no room to move and will applaud the OECD’s current message, not realising how destructive that complicity becomes. That has been the problem all along and Trump, Brexit and the rising extremism in Europe is the outcome. Reap what you sow!

Bill Mitchell – billy blog
Poor fiction from the OECD – the organisation should be abolished
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Reforming the international institutional framework – Part 2

This blog is the second part (now of three) where I discuss how the international institutional framework has to be reformed to serve a progressive agenda where rich countries (and the elites within them) do not plunder then pillory poor countries. In this blog I detail why we should dissolve the World Bank, the OECD, and the BIS, all of which have become so sullied by neo-liberal Groupthink that they are not only dysfunctional in terms of their original charter but downright dangerous to the prosperity and freedoms of people. The third part will consider what a new international institution might look like and the role it can play in aiding poor nations, particularly those who are reliant on imported food and energy. We will also discuss reforming the foreign aid system…

Bill Mitchell – billy blog
Reforming the international institutional framework – 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 — OECD joins the rush to fiscal expansion – for now at least

In the last month or so, we have seen the IMF publish material that is critical of what they call neo-liberalism. They now claim that the sort of policies that the IMF and the OECD have championed for several decades now are damaging to the well-being of people and societies. They now advocated policy positions that are diametrically opposite their past recommendations (for example, in relation to capital controls). In the most recent OECD Economic Outlook we now read that their is an “urgent need” for fiscal expansion – for large-scale expenditure on public infrastructure and education – despite this organisation advocating the opposite policies at the height of the crisis. It is too early to say whether these ‘swallows’ constitute a break-down of the neo-liberal Groupthink that has dominated these institutions over the last several decades. But for now, we should welcome the change of position, albeit from elements within these institutions. They are now advocating policies that Modern Monetary Theory (MMT) proponents have consistently proposed throughout the crisis. If only! The damage caused by the interventions of the IMF and the OECD in advancing austerity would have been avoided had these new positions been taken early on in the crisis. The other question is who within these organisations is going to pay for their previous incompetence?…

Maybe some light at the end of the tunnel?

Bill Mitchell – billy blog
OECD joins the rush to fiscal expansion – for now at least
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Trickle down economics – the evidence is damning

The condition known as – Schizophrenia – describes “a mental disorder often characterized by abnormal social behavior and failure to recognize what is real”. Then again, the condition known as – Dissociative identity disorder – describes a condition where a person has “at least two distinct and relatively enduring identities or dissociated personality states that alternately control a person’s behavior”. If these states can be applied to institutions, then the OECD needs urgent medical attention. The OECD released a working paper yesterday (December 9, 2014) – Trends in Income Inequality and its Impact on Economic Growth – by Federico Cingano. It provides evidence that destroys the basic tenets of neo-liberal economics and supports a wider social and economic involvement of government in the provision of public services and infrastructure, particularly to low income groups. The fiscal implication is that deficits need to be higher.

I wonder whether the OECD has bothered to check the message in the paper against its other ideologically-motivated public stances relating to the need for fiscal surpluses, deregulation, structural reform, etc. 

As an organisation, the total ‘product’ doesn’t add up.…

Bill Mitchell – billy blog
Trickle down economics – the evidence is damningBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

OECD — Does income inequality hurt economic growth?

Widespread increases in income inequality have raised concerns about their potential impact on our societies and economies. New OECD research shows that when income inequality rises, economic growth falls.…

Key findings
 The gap between rich and poor is now at its highest level in 30 years in most OECD countries.
 This long-term trend increase in income inequality has curbed economic growth significantly.
 While the overall increase in income inequality is also driven by the very rich 1%
pulling away, what matters most for growth are families with lower incomes slipping behind.
 This negative effect of inequality on growth is determined not just by the poorest income decile but actually by the bottom 40% of income earners.
 This is because inter alia people from disadvantaged social backgrounds underinvest in their education.
 Tackling inequality through tax and transfer policies does not harm growth, provided these policies are well designed and implemented.
 In particular, redistribution efforts should focus on families with children and youth, as this is where key decisions on human capital investment are made and should promote skills development and learning across people’s lives.  

OECD
Focus Inequality and Growth 2014 Report
Does income inequality hurt economic growth?

See also, Brian Keely, Is inequality good or bad for growth?, at OECD Insights.

Bill Black — Deflation: The Failed Macroeconomic Paradigm Plumbs New Depths of Self-Parody

Waiting for the patient to turn blue before acting.

New Economic Perspectives
Deflation: The Failed Macroeconomic Paradigm Plumbs New Depths of Self-Parody
William K. Black | Associate Professor of Economics and Law, UMKC

OECD pessimistic on global outlook

None of the world's major economies will escape a slowdown, the Organization for Economic Co-operation and Development said on Monday, highlighting increasing signs that growth momentum is dwindling across the board.The Paris-based organization's composite leading indicator (CLI) for its members fell for the seventh straight month to 100.4 in September, down from 100.9 in August and hitting the lowest reading since December 2009.

Readings for individual countries and big developing world economies were broadly lower at levels indicating slowdowns, and were in many cases below their long-term averages.

"Compared to last month's assessment, the CLIs point more strongly to slowdowns in all major economies," the OECD said in a statement.

Read the rest at The Huffington Post (via Reuters)

OECD: All Major Economies Headed For Slowdowns

It's the demand, stupid.

Richard Koo: "The IMF and the OECD are people who know nothing about anything."

Couldn't have said it better myself!