Is capitalism a positive-sum or zero-sum game? The answer is: both: Smith and Marx both had a point. However, the extent to which it is either varies from time to time....Stumbling and Mumbling
The news that the new International Development Secretary is about to slash development spending and channel Britain's aid budget into defence spending is yet another major slip of the new government's centrist mask.
Theresa May has tried to pitch her policy agenda as prioritising social justice and a “Britain that works for everyone” but the reality is that this announcement is the true right-wing colours of her government shining through.
The appointment of the most right-wing Cabinet for decades was a major warning sign, with figures such as David Davis, who said he was “very worried” about sexual discrimination legislation, and Liam Fox, who said equal marriage was “social engineering”, now at the highest level in government.
Those of us passionate about development were horrified when Priti Patel, who has previously called for the Department for International Development to be scrapped, was appointed as the department's new Secretary of State, but few of us would have imagined such a dramatic break with Britain's strong development legacy so soon.…More Thatcherism from Theresa and the Tories.
The NHS has been thrown into even more turmoil, after plans have been revealed to conduct huge cuts across England’s NHS.
According to the BBC, who have been able to access a draft planning document, the NHS will see ward closures, cuts in bed numbers and alterations to GP and A&E care across the country.
Many will see these cuts as the end of free health care as we know it, as services are cut and shortfalls may well be picked up by private sector care providers.
These plans are supposedly required to achieve efficiency savings of around £22 billion by 2020-21.…
Chris Hopson, chief executive of NHS Providers, which represents hospitals, believes “we are at breaking point: he said: “We’ve got this absolutely massive financial deficit which is the biggest in NHS history and then at the same time … we’ve got major shortages in key areas like nurses and doctors which effectively are meaning people are having to shut services.
“We are seeing more and more pressures on staff trying to run harder and harder.”
What’s simply whack-o is that, while voting “No” to austerity, many Greeks wish to remain shackled to the euro, the very cause of our miseries....
Sorry, Alexis, if you want to use the Reich’s coin you have to accept the Reichsdiktat....
The imposition of the euro had one true goal: To end the European welfare state....
It would be refreshing to hear political leaders say the honest economic truth: “Workers of Europe unite! You have nothing to lose but the euro—and your chains.”
This gives us two problems that occur for the left and not the right. However the right has two problems of its own when it comes to getting good policy advice. The first comes from a key difference between the two: the right has an ideology (neoliberalism), the left no longer does. The second is that the resources for the right often come with strings that promote the self interest of a dominant elite. So although the right has more resources to get good economic advice, these strings and their dominant ideology too often gets in the way. But what this ideology and these resources are very good at is providing simple sound bites and a clear narrative.Thatcherism has been successful in framing the debate in terms of TINA — there is no alternative (to neoliberalism), when there is actually, but the left is unable or unwilling to mount the argument. The result is that there is no left, and bad advice dominates the policy debate owing to ideological bias based on ruling class interest.
George Osborne used his first speech of 2014 today to warn that a further £25bn of cuts in public spending is required after the 2015 general election. £12bn in Welfare cuts will be made in the first two years of the next government.
According to the Financial Times: “The chancellor’s comments are intended to frame the political debate leading into the 2015 election, as he tries to portray the Tories as the only party capable of taking tough decisions on the deficit.” Austerity isn’t necessary of temporary, it’s ideological and permanent so long as these people are in charge.
Austerity is Ideological
On arrival in government, the Conservative section of the Coalition government were keen to present austerity as temporary, necessary and purely practical. Back in 2010, Cameron claimed that he “didn’t come into politics to make cuts”[1], and that austerity was simply temporary spending restraint based on a necessary effort to cut the deficit, not “some ideological zeal”.[2]
What we can now see, is that ‘Austerity’ is delivering the half century long ambition of the Conservative party: to revoke the post-war social contract of the United Kingdom.
The modern welfare state: decent pensions, affordable and decent social housing, a publicly funded and managed healthcare system, a reliable and low cost transport system, the guarantee of a decent education regardless of circumstances of birth. This was the social contract the UK public signed up to in the post war period. Why? Because these generations had lived through the horrific consequences of unrestrained capitalism; enormous inequality, widespread poverty and destitution, starving and malnourished children, an entrenched class system, the benefits of the hard work of the many enjoyed by a privileged and undeserving few.
David Cameron is taking the country back to those dark days….
John Boehner, Speaker of the House, revealed why it's politically naive for the president to offer up cuts in Social Security in the hope of getting Republicans to close some tax loopholes for the rich. "If the president believes these modest entitlement savings are needed to help shore up these programs, there's no reason they should be held hostage for more tax hikes," Boehner said in a statement released Friday.
House Majority Leader Eric Cantor agreed. He said on CNBC he didn't understand "why we just don't see the White House come forward and do the things that we agree on" such as cutting Social Security, without additional tax increases....
"I'm encouraged by any steps that President Obama is taking to save and preserve Social Security," cooed Texas Republican firebrand Ted Cruz. "I think it should be a bipartisan priority to strengthen Social Security and Medicare to preserve the benefits for existing seniors."...
They're already characterizing the president's plan as a way to "save" Social Security -- even though the cuts would undermine it -- and they're embracing it as an act of "bi-partisanship."AlterNet
We typically honor the convention to refrain from to speak ill of the recently departed. But Margaret Thatcher probably would not object to an epitaph focusing on how her political legacy was to achieve her professed aim of “irreversibly” dismantling Britain’s public sector. Attacking central planning by government, she shifted it into much more centralized financial hands – the City of London, unopposed by any economic back bench of financial regulation and “free” of meaningful anti-monopoly price regulation.
Mrs. Thatcher transformed the character of British politics by heading a democratically elected Parliamentary government that permitted financial planners to carve up the public domain with popular consent. Like her actor contemporary Ronald Reagan, she narrated an appealing cover story that promised to help the economy recover. The reality, of course, was to raise Britain’s cost of living and doing business. But this zero-sum game turned the economy’s loss into a vast windfall for the Conservative Party’s constituency in Britain’s banking sector.
By underpricing her privatization of British Telephone and subsequent vast monopolies, she made it appear that customers would be the big gainers, rather than large financial institutions. And by giving underwriters a windfall 3% commission (formerly based on floating the stock of much smaller start-up companies), Mrs. Thatcher oversaw the start of Britain’s Great Polarization between the creditor 1% and the increasingly indebted 99%.
Attacking rent-seeking in government, she opened the floodgates to economic rent-seeking in its classical sense: land rent in real estate (with debt-inflated “capital” gains) to make British property so high-priced that employees who work in London must now live outside it, taking highly expensive privatized railroads to work. Privatization also created vast new opportunities for monopoly rent for privatized public utilities, along with predatory financial takings by increasingly predatory banking.Michael Hudson
The variant of this [longer Max Planck quotation] is “Science advances one funeral at a time.”
Margaret Thatcher passed away today but Thatcherism still survives and dominates policy debates. So perhaps Max Planck doesn’t seem to apply to economics yet in a straightforward way.
The best opposition to Thatcherism came from Cambridge. In a small book based on speeches in the House of Lords (1979-1982) The Economic Consequences Of Mrs Thatcher and devoted entirely to pin-pointing the fundamental errors of Thatcherism, Nicholas Kaldor wrote in this in a chapter titled The Economics of the Primitive....The Case for Concerted Action
In reality, though, the coalition government isn't as stupid or stubborn as it appears. It is sticking to its plan A because spending cuts are not about deficits but about rolling back the welfare state. So no amount of evidence is going to change its position on cuts.The Guardian
Lost in this cross-wired debate is the issue of the long-term future of the economy. Britain has been finding it difficult to recover from the financial crisis not just because of its austerity policy but also because of its eroding ability to engage in high-productivity activities. This problem is most tellingly manifested in the country's inability to generate a trade surplus despite the huge devaluation of sterling since 2008.
John Maynard Keynes once famously said that in the long run we are all dead. But a lot of us have to live for a while yet. A series of short-run policies, whether based on the coalition policy of spending cuts and loose monetary policy or on the opposition policy of increased government spending, isn't going to address the challenges facing the British economy. It is time to think for the long term.Keynes was actually criticizing the assumption of economic equilibrium being automatically achieved in neoclassical mechanics by the working of the invisible hand absent interventions. Keynes knew, of course, that the neoclassical model is time-independent, and the adjustment could come quickly — or not. Even presuming the correctness of the model, why wait when policy tools are readily available to bring about a return to full employment and optimize output by acting now.
While there are pretty stark dissimilarities between the current quantitative easing (QE) policies of many governments and the old monetarism that prevailed in the late-70s and early-80s, the reason that these both policies were ineffective is because they were based on the same flawed ideas. The key difference between the two is that where monetarism was implemented as a deflationary and contractionary policy, QE is currently being implemented as an inflationary and expansionary policy. As a result, examining the failure of monetarist policies thirty years ago provides important lessons considering QE and its offshoots.
Before looking at the similarities between these two doctrines, we will explore the actual historical trial of monetarism. We will focus on the British experience since the doctrine was applied there with far more zeal than in the United States. Indeed, Paul Volcker – Fed chairman at the time of the monetarist experiment in the US – has recently stated that he never believed in the doctrine and simply used the monetarist ‘fad’ of the day to push for unpopular interest rate hikes. By contrast, those working in the Bank of England at the time were true followers of the monetarist faith.
Before looking at the similarities between these two doctrines, we will explore the actual historical trial of monetarism. We will focus on the British experience since the doctrine was applied there with far more zeal than in the United States. Indeed, Paul Volcker – Fed chairman at the time of the monetarist experiment in the US – has recently stated that he never believed in the doctrine and simply used the monetarist ‘fad’ of the day to push for unpopular interest rate hikes. By contrast, those working in the Bank of England at the time were true followers of the monetarist faith.Read it at Naked Capitalism
...I think they've [Labour Party] made the biggest financial mess that any government's ever made in this country for a very long time, and Socialist governments traditionally do make a financial mess. They always run out of other people's money. It's quite a characteristic of them. They then start to nationalise everything, and people just do not like more and more nationalisation, and they're now trying to control everything by other means. They're progressively reducing the choice available to ordinary people....Read it at Margaret Thatcher Foundatio
