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UK Labour’s Fiscal Credibility Rule: Neoliberal Orthodoxy Dies Hard — Joe Emersberger interviews Bill Mitchell

MMT!

The problem is that when you just define these fiscal aggregates within their own financial terms you’re really losing the purpose and meaning of fiscal policy. The purpose of fiscal policy isn’t to achieve any particular fiscal outcome whether it be a balanced fiscal position, or a deficit of whatever percent or even a surplus of whatever percent. The purpose of fiscal policy as a tool is to advance wellbeing in the economy, to engage in government spending programs which are consistent with its electoral remit, and taxation to manage total expenditure in the non-government sector so that there is space – and what I mean by “space” is real resource space – for the government to basically buy those resources and conduct its programs. Taxation creates that space by depriving the non-government sector of the use of resources...

This is the purpose of fiscal policy. In a cyclical sense – in other words in the variation of economic activity – fiscal policy should play a very important role in being able to offset any fluctuations in non-government spending that would either cause unemployment if it were not offset, or would drive inflation if it were not offset. Fiscal policy has to be flexible enough to allow the government to meet that purpose. If you start imposing rules that are independent of purpose then you are likely to end up not meeting that purpose but also failing to meet your rules....

Excellent!

Counterpunch
UK Labour’s Fiscal Credibility Rule: Neoliberal Orthodoxy Dies Hard

Joe Emersberger interviews economics professor Bill Mitchell about the British Labour party’s fiscal credibility rule

See also

More MMT.

Arcade
The Unheard-of Center: Critique after Modern Monetary Theory

Scott Ferguson | Associate Professor and co-director of the Film & New Media Studies Track in the Department of Humanities & Cultural Studies at the University of South Florida. a Research Scholar at the Global Institute for Sustainable Prosperity), co-founder of the Modern Money Network: Humanities Division), and co-host of the Money on the Left podcast

Simon Wren-Lewis — Neoliberalism: How Seeing Markets as Perfect Turned into an Ideology Justifying Crony Capitalism

That idea, that the market ensures that only the most efficient prosper, is a central message of neoliberal ideology, and it has held UK and US governments under its sway since the time of Thatcher and Reagan. But that ideology contains a large and deep internal contradiction, which applies particularly to large firms like Carillion. To see what that contraction is, we need to talk about ordoliberalism and Ronald Coase.

Ordoliberalism is widely known as the German version of neoliberalism. It too celebrates the benefits of the market. It, like neoliberalism, ignores many of the failures of markets that Colin Crouch eloquently outlines and which economists spend a lot of time studying. But ordoliberalism does recognise one potential problem with their market ideal which neoliberalism ignores, and that is monopoly. Crouch makes a similar distinction in talking about market-neoliberals and corporate-neoliberals.

Asymmetrical powers enable rent extraction.

One of the paradoxes of liberalism is that limiting the power of government limits corruption. But corruption is not limited to people in government. As Adam Smith observed, business people have not only an incentive to collude but also a tendency toward it if not restrained.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. — The Wealth of Nations 1.10.82

Freedom entails responsibility, and responsibility depends on accountability.

Evonomics

Neoliberalism: How Seeing Markets as Perfect Turned into an Ideology Justifying Crony Capitalism
Simon Wren-Lewis | Professor of Economics, Oxford University

T.J. Coles — Out of Control: A Brief History of Neoliberal Deregulation in the USA

Backgrounder. Using government capture to favor special interests ("capital").

Truthout
Out of Control: A Brief History of Neoliberal Deregulation in the USA
T.J. Coles, Clairview Books | Book Excerpt

Daniel Lazare — How the Press Serves the Deep State

The New York Times has made it official. In a Sunday front-page article entitled “Trump Ruled the Tabloid Media. Washington Is a Different Story,” the paper gloats that Donald Trump has proved powerless to stop a flood of leaks threatening to capsize his administration.

As reporters Glenn Thrush and Michael M. Grynbaum put it: “This New York-iest of politicians, now an idiosyncratic, write-your-own-rules president, has stumbled into the most conventional of Washington traps: believing he can master an entrenched political press corps with far deeper connections to the permanent government of federal law enforcement and executive department officials than he has.”

Thrush and Grynbaum add a few paragraphs later that Trump “is being force-fed lessons all presidents eventually learn – that the iron triangle of the Washington press corps, West Wing staff and federal bureaucracy is simply too powerful to bully.”

Iron triangle? Permanent government? In its tale of how Trump went from being a favorite of the New York Post and Daily News to fodder for the big-time Washington news media, the Times seems to be going out of its way to confirm dark paranoid fears of a “deep state” lurking behind the scenes and dictating what political leaders can and cannot do. “Too powerful to bully” by a “write-your-own-rules president” is another way of saying that the permanent government wants to do things its way and will not put up with a president telling it to take a different approach.

Entrenched interests are nothing new, of course. But a major news outlet bragging about collaborating with such elements in order to cripple a legally established government is. The Times was beside itself with outrage when top White House adviser Steve Bannon described the media as “the opposition party.” But one can’t help but wonder what all the fuss is about since an alliance aimed at hamstringing a presidency is nothing if not oppositional....

Consortium News
How the Press Serves the Deep State
Daniel Lazare

Thomas Frank — Forget the FBI cache; the Podesta emails show how America is run

WikiLeaks’ dump of messages to and from Clinton’s campaign chief offer an unprecedented view into the workings of the elite, and how it looks after itself.

But, but, but, Putin!

The Guardian
Forget the FBI cache; the Podesta emails show how America is run
Thomas Frank

James Hoover — Kochs Building their Version of America

Think US NGOs only operate abroad for regime change. Think again. The Powell memo laid out the plan and it's been implemented ever since.

The tile focuses on the Koch Bros. But it is hardly just them and this article just touches the surface. 

Conspiracy theory or conspiracy?

Dissident Voice
Kochs Building their Version of America
James Hoover

ProMarket — Is There a Crisis in the Economic Theory of the Firm? Participants at Harvard Business School Conference Agree: Firms Try to Change the Rules of the Game

A novel conference at Harvard Business School brought together top scholars in order to answer the question: Is Milton Friedman’s dictum that firms that maximize shareholder value maximize social value as well still relevant in a post-Citizens United world?

With "experts" like these, we are in trouble. Sounds like a theology conference to me.

ProMarket
Is There a Crisis in the Economic Theory of the Firm? Participants at Harvard Business School Conference Agree: Firms Try to Change the Rules of the Game

ht Mark Thoma at Economist's View

Can Capitalism and Democracy Coexist? (Parts 1, 2 and 3) — Chris Hedges interviews Sheldon Wolin

For many years now, Wolin has been perhaps Hedges’ most cited source in articles and lectures about the state and direction of American society. An intellectual peer of Noam Chomsky, albeit less well known, Wolin is the author of seminal books on contemporary political theory, including “Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism,” and “Politics and Vision: Continuity and Innovation in Western Political Thought.” He is an enthusiastic proponent of popular participation in government. 

In part two of the conversation, which was produced by The Real News Network, Hedges mentions that Wolin wrote that he “doesn’t believe we have any authentic democratic institutions left.” 

Wolin responds: “I don’t. That may be a bit of an overstatement, but I think—in terms of effective democratic institutions, I don’t think we do. I think there’s potential. I think there’s potential in movements towards self-government, movements towards economic independence, and movements towards educational reform, and so on, that have the seeds for change. But I think that it’s very difficult now, given the way the media is controlled and the way political parties are organized and controlled, it’s very difficult to get a foothold in politics in such a way that you can translate it into electoral reforms, electoral victories, and legislation, and so on. It’s a very, very complex, difficult, demanding process. And as I’ve said before, democracy’s great trouble is it’s episodic.”

Truthdig
Can Capitalism and Democracy Coexist? (Parts 1, 2 and 3)

Chris Hedges interviews Sheldon Wolin, Professor of Politics, Emeritus, at Princeton University
Posted by Alexander Reed Kelly

Yves Smith — Finance and Social Justice

How finance and social justice are joined at the hip.

It thus remains a subject of considerable frustration that it is hard to marshall reader interest in what are clearly problematic and in many cases fraudulent practices. Mind you, it isn’t just that lack of reader engagement is demotivating to us. It’s that it sends the wrong message to regulators and investigators. If they see few comments on posts describing certain types of bad conduct on a site geared towards smarter, savvier readers, they may well assume that the public doesn’t care about this issue and thus they have little reason to stand up to financial services industry demands. 

As Simon Johnson described in a seminal 2009 Atlantic article, The Quiet Coup, the financial crisis was not merely a massive transfer of wealth to financiers but allowed them to capture the US government. The banking industry also emerged more powerful in the Eurozone. 

It is not obvious how to break the stranglehold of elite financiers. But remaining ignorant about how they operate guarantees that they will be able to improve upon their already advantaged position. Remember, as much as debating news stories on Ukraine may sharpen your resistance to propaganda, you can’t influence that course of events. By contrast, you can have an impact on the banking front, in ways small and large, from warning friends and colleagues about the dangers of various borrowing and investment products, to writing regulators about why you are opposed to yet more concessions to a bloated financial services industry. This is a front where citizens like you can take ground back, but only if you go to the effort to arm yourself with information.

Naked Capitalism
Finance and Social Justice
Yves Smith

Bill Black — Will the Chilean People Save the U.S. by Electing Michelle Bachelet?

The effort by corporate CEOs to dominate the global economy and global government is reaching the end-game stage. Corporate CEOs view government and democracy as their gravest threats and are constantly seeking to discredit and hamstring government and democratic decision-making. CEOs are particularly eager to discredit, destroy, or capture regulation and they have enlisted enormous support in both major U.S. parties and many of the world’s dominant parties for these efforts. President Obama has continued and made worse the effort of President Bush to betray our nation, our democracy, and our people through the secret, draft Trans-Pacific Partnership (TPP) agreement. In this first column on TPP I explain that while there is no realistic chance of convincing Obama to repudiate the TPP, there is a chance that the people of Chile will save our democracy and our national sovereignty....

Once TPP is adopted, democratic rights and national sovereignty will be extinguished by corporate power which can be exerted, again in secret, before a tribunal run by private lawyers (what I call the “plutocracy panels”) with strong conflicts of interest that lead them to favor corporate interests.

New Economic Perspectives

Will the Chilean People Save the U.S. by Electing Michelle Bachelet?
William K. Black | Associate Professor of Economics and Law at the University of Missouri-Kansas City in the Department of Economics and the School of Law

Bill agrees that capitalism as economic liberalism and democracy as political liberalism are incompatible. Government of the people, by the people and for the people is not compatible with concentrated class power, which concentrated wealth and control of the means of production results in.

BTW, in case anyone missed this, Bill is becoming the (MMT-savvy) successor to aging Noam Chomsky as the public intellectual on the left, ranging over the social, political and economic spectrum of affairs and carefully crafting and documenting his arguments. His grasp and treatment of the dimension of issues and their interrelatedness is indeed impressive.

Bill Black — How to Prosecute the Elite Bank CEO that Led the Frauds that Drove the Crisis

Step one: Understand the three “control fraud” epidemics that drove the crisis....

There is no fraud exorcist, so fraudulently originated loans stay fraudulent and can only be sold to the secondary market through fraud....

Step 2: Restore the destroyed criminal referral process, restore the partnership with the banking regulatory agencies, and end the partnership with the “perps”....

To produce over 1,000 felony convictions in cases the Department of Justice (DOJ) designated as “major” during the S&L debacle, the Office of Thrift Supervision (OTS) made over 30,000 criminal referrals. In this crisis, which is over 70 times larger than the debacle in terms of losses and fraud, OTS made zero criminal referrals, as did the Office of the Comptroller of the Currency and the Federal Reserve. (The FDIC is smart enough to refuse to answer how many referrals it made.)

New Economic Perspectives
How to Prosecute the Elite Bank CEO that Led the Frauds that Drove the Crisis
William K. Black | Associate Professor of Economics and Law at the University of Missouri-Kansas City in the Department of Economics and the School of Law

Like Sen. Durbin said, "The banks own the place."

system failure — An example of how the banking cartels control countries — the Greek case

Sounds like pretty much the same system as the US. Looks like the global banking cartel has a lock on government finance worldwide, capturing governments in its net, and the same bad actors are still at it, only this more consolidation at the top.

the unbalanced evolution of homo sapiens
An example of how the banking cartels control countries — the Greek case
system failure

Sam Adler-Bell And David Segal — Why NSA Surveillance Should Alarm Labor

If unions are not speaking out against PRISM, it is because they have short memories.

Good history lesson. You don't have to be libertarian to understand that government often either colludes with the wealthy and powerful, or is captured by vested interests. There is along history of government being used to go against labor.

In these times with liberty and justice for all
Why NSA Surveillance Should Alarm Labor
Sam Adler-Bell And David Segal

David Ruccio — Who framed inequality?

More on economics and power.


OCCASIONAL LINKS & COMMENTARY on economics, culture and society

Who framed inequality?

David Ruccio | Professor of Economics, University of Notre Dame

In the neoliberal "market state," who has market power and why?

Paul Krugman — Perspective on the Deal

So, what are the two sides really fighting about? Surely the answer is, the future of the welfare state. Progressives want to maintain the achievements of the New Deal and the Great Society, and also implement and improve Obamacare so that we become a normal advanced country that guarantees essential health care to all its citizens. The right wants to roll the clock back to 1930, if not to the 19th century.

The New York Times | The Conscience of a Liberal

Perspective on the Deal

Paul Krugman | Professor of Economics, Princeton University

Interview With Mike Lofgren, Author of "The Party Is Over"

Mike Lofgren spent twenty-eight years working in Congress, the last sixteen as a senior analyst on the House and Senate Budget committees, which gave him ringside seats on the Troubled Asset Relief Program, Hurricane Katrina disaster relief, debates on the Pentagon budget and the amazing antics of various deficit-reduction commissions. His "coming out" article as a citizen, "Goodbye to All That: Reflections of a GOP Operative Who Left the Cult," garnered over a million views on Truthout. Lofgren has expanded on the insights of that article in his just-issued book, "The Party Is Over: How Republicans Went Crazy, Democrats Became Useless, and the Middle Class Got Shafted." Lofgren talked about the current situation with Truthout's Leslie Thatcher in a recent email exchange

Read it at Truthout
An Interview With Mike Lofgren, Author of "The Party Is Over"
Leslie Thatcher, Truthout | Interview
(h/t Yves Smith at Naked Capitalism

Randy Wray — Why We’re Screwed

We are so screwed. These people did not act out of ignorance but greed, and they are winning. Randy lays out the gory details and explains why. It's the F-word. Fraud. And it leads to feudalism.

Randy nails it:

...they are not planning and conspiring for the restoration of feudalism. Still, that is the default scenario—the outcome that will emerge in the absence of action.

 In the second, the 99% occupy, shut down, and obliterate Wall Street. Honestly, I have no idea how that can happen. I am waiting for suggestions.

Read it at Economonitor | Great Leap Forward
Why We’re Screwed
by L. Randall Wray

Daron Acemoglu and James Robinson — Who Are the Extractive Elites?

Key to our argument in Why Nations Fail is the idea that elites, when sufficiently political powerful, will often support economic institutions and policies inimical to sustained economic growth. Sometimes they will block new technologies; sometimes they will create a non-level playing field preventing the rest of society from realizing their economic potential; sometimes they will simply violate others’ rights destroying investment and innovation incentives.

An interesting article in The Economist’s Buttonwood column asks: Who are these rapacious elites in today’s Western economies?

Read it at Why Nations Fail

Who Are the Extractive Elites?

by Daron Acemoglu, Killian Professor of Economics at MIT, and James Robinson, David Florence Professor of Government at Harvard University

(h/t Mark Thoma)