Bill Mitchell — Of course governments will be fiscally stretched if they define large surpluses as the norm

Wednesday and a short blog post. I regularly work for unions as an expert analyst/witness in their struggles to achieve wage justice with employers who are intent on paying as little as possible. Often these are private employers but at the moment I am helping a union with their campaign to win a reasonable wage increase against a state government. The logic deployed by the government in relation to their fiscal affairs and their wage setting behaviour is a classic demonstration of how neoliberalism has distorted any sense of reason and created self-fulfilling problems. So today, I will just introduce this issue – given how fascinating it is....

Bill Mitchell – billy blog
Of course governments will be fiscally stretched if they define large surpluses as the norm
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Madness on both sides of the Atlantic

Its Wednesday and some snippets only today. I was reviewing some data on public investment in the European Union the other day and up popped an article in Barrons that covered the same issue. The data reveals the stark failure of the Eurozone and the European Union, in general. The consequences of the European Union’s ideological obsession for rules over reality is now clearly undermining the future prosperity of the Member States. While the fiscal austerity has created elevated and persistent levels of mass unemployment, increased poverty rates, widening disparities between wealth and income, divergences in living standards across the Member States, what hasn’t been focused on much is the intergenerational consequences of the austerity. The data makes it clear that public investment in infrastructure has ground to a halt and in many cases, nations are not even replacing existing capital as it wears out. The quality and quantity of public infrastructure in place is crucial for general material prosperity and the future productivity of nations. While starving such expenditure may not have political consequences in the short-run – and this is why the austerity is partially focusing on cuts to investment spending – over times as the extant infrastructure deteriorates the the nation and the future generations lose out badly. Just another day in Europe! And across the Atlantic, the Democrats are proposing a ‘Balanced Budget Amendment’ to the US constitution. Madness on both sides of the sea!…

Bill Mitchell – billy blog
Madness on both sides of the AtlanticBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Jeffrey Bartash — And now for something different: Democrats call for balanced-budget amendment

A bevy of lawmakers in Congress alarmed by soaring deficits are calling yet again for a constitutional amendment to balance the federal budget — but this time it’s Democrats.

The so-called Blue Dog Coalition of moderate Democrats on Tuesday endorsed an amendment that would require Washington to balance the budget except in case of war or recession....

Are they for the return of the gold standard, too?

Market Watch
And now for something different: Democrats call for balanced-budget amendment
Jeffrey Bartash

Bill Mitchell — Forget European reform – the Germans have anyway

Germans will be Germans, it seems — fiscally conservative.

Bill Mitchell – billy blog
Forget European reform – the Germans have anyway
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bradley W. Bateman — What Would Keynes Think of Trump's Infrastructure Plan?

Interesting view of Keynes as a fiscal conservative.

Atlantic Business
What Would Keynes Think of Trump's Infrastructure Plan?
Bradley W. Bateman

Amir Fleischmann — The Myth of the Fiscal Conservative

Austerity measures don’t actually save money. But they do disempower workers. Which is why governments pursue them in the first place.

Jacobin
The Myth of the Fiscal Conservative
Amir Fleischmann

Erik Wasson — Conservative groups: Balanced budget plan is price for debt hike

The Club for Growth and Heritage Action said that establishing a path to a balanced budget within 10 years will be their demand in the looming fight between congressional Republicans and President Obama.

The Hill
Conservative groups: Balanced budget plan is price for debt hike
Erik Wasson
(h/t Kevin Fathi via email)

I guess conservatives are tired of US global hegemony and want to cede the field to China, or convert US labor to slave labor to "compete."

Ramanan — … One Funeral At A Time?

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
… One Funeral At A Time?
Ramanan

Bruce Bartlett — Revenge of the Reality-Based Community

My life on the Republican right—and how I saw it all go wrong.

The American Conservative
Revenge of the Reality-Based Community
Bruce Bartlett

This is a "confessional" setting forth how Bruce Bartlett  came to the unsettling (for him) conclusion that Keynes was right after all. Its the demand, stupid.

Ripe for MMT?

Jeffrey Frankel — Four Magic Tricks for Fiscal Conservatives

You know this already, but its funny.

By the time the crowd realizes that it has been conned, the magician has already pulled off the greatest trick of all: yet another audience that came to see the deficit shrink leaves the theater with the deficit bigger than before.

Project Syndicate
Four Magic Tricks for Fiscal Conservatives
Jeffrey Frankel | Professor at Harvard University's Kennedy School of Government, previously served as a member of President Bill Clinton’s Council of Economic Advisers

AFP — China calls on U.S. and Japan to fix their finances

China said Saturday the failure by Washington and Tokyo to fix their fiscal problems was hurting the global economy, as it called for “bold, swift and decisive action” to reverse a slowdown.

Deputy central bank governor Yi Gang warned the absence of a “credible, medium-term fiscal consolidation in some of the major advanced economies such as the United States and Japan” is unsettling for the world economy.

“Uncertainties related to fiscal sustainability weigh on sentiment and confidence, negatively affecting consumption, investment, and hiring decisions,” Yi said in a statement to a key International Monetary Fund committee.

“The slow recovery in these major advanced economies poses costly spillover effects to the rest of the world,” he added.
Yi said it “remained to be seen” whether monetary easing measures touted by central banks as an elixir for growth would live up to their billing.

“The slowing global recovery suggests that fundamental constraints to economic growth and financial stability remain unresolved,” he said.

“The need for bold, swift, and decisive action to arrest the global slowdown and preserve financial stability is more urgent than ever.”

The statement credited Europe for efforts to fix its debilitating debt crisis, calling it a step in “the right direction”, but added that policymakers must follow through on promised reforms.
“A durable solution to the Euro area crisis would provide a much-needed boost to global recovery,” the statement said.

The Raw Story
China calls on U.S. and Japan to fix their finances
Agence France-Presse

China joins the Moron Club, calls for "fiscal consolidation." Unless this is deception being used as a strategic ploy to get the US, UK, EZ, and Japan to flush themselves down the toilet so that China can take center stage.

James Hamilton — "Why not abolish the Fed and return to the gold standard?"

James Hamilton recites the facts and figures and provides charts showing that the gold standard doesn't ensure either financial stability or price stability, as gold bugs advertise it does. Gold is deflationary and favors creditors. In economic downturns it results in debt deflation and depression.

See it at Econobrowser
Why not abolish the Fed and return to the gold standard?
by James Hamilton

I recommend reading Pennies from heaven: How Mormon economics shape the G.O.P by Chris Lehmann (Harper's Magazine, Oct 2001) in conjunction with this. Explains a lot of what otherwise may seem somewhat mysterious. Combine Mormon economics with Murray Rothbard's Libertarian Austrian economics and traditional fiscal conservatism, and one sees how contemporary GOP economics is constructed. It's just about the opposite of MMT.

Dueling wings of the GOP

Newsmax, a nutritional supplement sales organization and expensive email list with a right-wing news website attached, is hosting a Republican presidential debate, “moderated” by fictional television clown tycoon Donald Trump, set to air on a television channel you probably don’t actually know you have that spends most of the broadcast day airing paid programming. Historical fiction author Newt Gingrich — a disgraced serial adulterer with a still-unexplained $500,000 credit line at Tiffany and Co. who is also for some reason the current frontrunner for the party’s nomination — could not be happier. For some crazy reason, Republican campaign strategist Karl Rove is not particularly thrilled with all of this.

Read the rest at Salon
Rove v. Trump: The Unlikely War for the Soul of the GOP
by Alex Pareene

From the economic point view, this is a duel between two wings of the GOP, the tradition fiscal conservative wing that regards debt as immoral and seeks to balance budgets and the Bush/Cheney/Laffer "deficits don't matter" wing that Poppy Bush called "voodoo economics" when running against Reagan for the nomination. Fiscal conservatives believe that it was Bush's extravagance that lead to the election of Barack Obama, whom they regard as a Kenyan Marxist/Keynesian socialist.