Sarrera
(Bill Mitchell — The New Keynesian fiscal rules that mislead British Labour – Part 1, 2 & 3)
The British Labour Party is currently leading the Tories in the latest YouGov opinion polls (February 19-20, Tories 40 per cent (and declining), Labour 42 per cent (and rising). They should be further in front, given the disarray of the Conservatives as they try to negotiate within their own party something remotely acceptable about Brexit. When there is this degree of political capital available, in this case for the Labour Party, a party should use it to redefine policy agendas that have gone awry. To build a narrative that will advance their cause for the future decades. British Labour has a chance to break out of its recent Blairite neoliberal past and present a truly progressive manifesto to the British people that will force the Tories to move closer to the centre and squeeze the extreme right-wing elements. In part, under Jeremy Corbyn and John McDonnell, Labour is making progressive noises on a number of fronts. But ultimately, where it really matters – the macroeconomic narrative – they are remaining firmly neoliberal and this will blight their chances of pursuing a truly progressive agenda. One of the glaring mistakes the Labour Party has made is to accept advice from neoliberal economists (so-called New Keynesians) who have instilled in them a need for fiscal rules. This is a three-part analysis of the sort of advice that Jeremy Corbyn and John McDonnell are getting and why they should ignore it….
Alderdi Laborista eta neokeynesianismoa (1)
The New Keynesian fiscal rules that mislead British Labour – Part 1
(http://bilbo.economicoutlook.net/blog/?p=38776)
Part 1 considered the applicability of so-called New Keynesian models to determining what is best policy practice in the real world.
We concluded that the approach is incapable of serving that type of function and any specific, concrete policy advice that commentators claim is derived from ‘optimising’, ‘micro-founded’ New Keynesian models is really just an assertion of their ideological perspectives and the deductions they draw from that Outlook.
Alderdi Laborista eta neokeynesianismoa (2)
The New Keynesian fiscal rules that mislead British Labour – Part 2
(http://bilbo.economicoutlook.net/blog/?p=38779)
In Part 2 of the discussion, I examined more specifically, how the authors attempted to use the New Keynesian theory as an authority for specific policy conclusions, which they essentially admit (not in those words) cannot, in fact, be derived from the ‘optimal’ theory.
(…)
The reality is that each generation chooses its own tax and public spending profile via the political process. The way in which intergenerational inequities occur is via real resource utilisation. (…)
Alderdi Laborista eta neokeynesianismoa (3)
The New Keynesian fiscal rules that mislead British Labour – Part 3
(http://bilbo.economicoutlook.net/blog/?p=38796)
Please read my blog posts (among others) for more discussion …:
1. The sham of central bank independence (December 23, 2014) – for more discussion on this point.
2. The consolidated government – treasury and central bank (August 20, 2010).
3. Central bank independence – another faux agenda (May 26, 2010).
(…)
The purpose of fiscal policy is to promote well-being of the people, which includes sustaining full employment.
That is what I discussed in this blog post – The full employment fiscal deficit condition (April 13, 2011).
(…)
Imagine a government decides to introduce a Job Guarantee.
How long would it be before the ‘fiscal council’ started pumping out reports and press releases claiming it would ‘cost’ too much, the government would be ruining the prosperity of future generations, that bond markets will see that it runs out of money, that the workers employed in the program would be doing nothing productive, that …, that …, that …, that!
(…)
I was talking to someone this morning about the sales tax increases in Japan in 1997 that pushed it back towards recession. The government then was pressured by the sort of characters that would be appointed to fiscal councils to introduce a sales tax hike to bring down the deficit.
The deficit was fine and doing its job to support growth and non-government saving. Attempting to cut it was the worst thing the government of the time could have done. And sure enough the obvious happened.
Another point that interests me here is the role of academia. Historically, our role was to bear witness to governments and their behaviour. To provide ‘independent’ scrutiny. That role was one of the reasons that tenure was introduced – to allow us security of employment no matter what we said about governments or other powerful entities.
It didn’t guarantee a pluralism of view being expressed but it made it more likely.
These days, academics have largely lost tenure (in many nations) and are bullied by managerial bosses into virtual silence for fear that Government Ministers will ring up their institutions and damage their prospects if they speak out openly.
It is far better to restore the security of employment in universities and require a diversity of employment in departments such as economics, to ensure this scrutiny continues.
That is a far better way to improve the political debate than creating a fiscal council and stack it with like-minded neoliberals.
Conclusion
Anyway, Wren-Lewis was out on Twitter last week claiming I was not a serious economist and was ideologically resistant.
Then he got all precious claiming he was being attacked personally by various MMT tweeters (not me) when one of them told him to take three years off and actually put in the hard yards to get a PhD! He somehow gained a chair without one.
I laughed at his inconsistency. Maybe he needs an ‘independent’ council to advise him of when he is losing it!
Gogoratu ondoko hauek:
Britainia Handia eta alderdi laborista: defizita aztergai
Britainia Handiko alderdi laborista atzera joan da, bere erro monetaristetara (i)
Britainia Handiko alderdi laborista atzera joan da, bere erro monetaristetara (ii)
