Wednesday , January 22 2020
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My brief comment on the British election

Summary:
It is Wednesday and I am travelling a lot today. So just a collection of short snippets today that I have collected over the last week or so. First, the British election is tomorrow and the Tories have been successful in confining the focus to Brexit. My view on the EU and Britain’s decision to exit is well known. Labour should have been leading that process given the majority of their elected MPS come from Leave majority seats. Instead, they gave out a mixed message, with many senior Labour politicians claiming they would vote remain in another referendum. This is despite both major parties guaranteeing to the people in June 2016 that they would implement the vote to leave. The information we have at present is that that position on Brexit is probably going to cost them office. Which

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It is Wednesday and I am travelling a lot today. So just a collection of short snippets today that I have collected over the last week or so. First, the British election is tomorrow and the Tories have been successful in confining the focus to Brexit. My view on the EU and Britain’s decision to exit is well known. Labour should have been leading that process given the majority of their elected MPS come from Leave majority seats. Instead, they gave out a mixed message, with many senior Labour politicians claiming they would vote remain in another referendum. This is despite both major parties guaranteeing to the people in June 2016 that they would implement the vote to leave. The information we have at present is that that position on Brexit is probably going to cost them office. Which means the Tories survive when they should not but finish the Brexit process which they should. Then Labour will have to reinvent itself to take advantage of the renewed sovereignty that Brexit will bring. To do that it has to expunge its ranks of the neoliberals. One other matters, Leonard Cohen’s last album was released recently. We hear a song from it.

British election

I do not get to vote in tomorrow’s British election nor bear the direct consequences of the outcome. So how I would vote is not a point of interest here.

I also note that the opinion polls are not foolproof but the consensus as of yesterday was that the Tories will win.

Something weird might happen, but as a statistician, I doubt it.

The Guardian report (December 9, 2019) – Corbyn plays all the old favourites in Bristol but no one’s dancing – was a sadly evocative account of how things have changed for Jeremy Corbyn since the 2017 election.

And as Larry Elliot opined (December 8, 2019) in his article – Economic conditions favour the left, so why is Labour not expected to win with ease? – everything about Britain at present should have given the Labour Party a massive shoe-in majority.

Except one thing.

Brexit.

I have been making the point regularly, see – Impending British Labour loss may reflect their ambiguous Brexit position (November 28, 2019) – that the Labour Party’s meandering position on Brexit, to satisfy its Europhile urban members, would damage them, given that the majority of their members of parliament were elected by Leave majority constituencies.

Remember all the predictions from the middle-class, cosmopolitan Labour pundits about the City selling off the pound if there was thought of Brexit materialising?

As the polling suggests the Tories will win and Brexit will finally happen, why hasn’t the pound collapsed instead of strengthened?

Seats not votes win elections. It doesn’t matter if the majority of Labour voters are Remainers, if there are spatial disproportionalities in the vote spread.

Both major parties committed to honouring the outcome of the 2016 Referendum. The Labour Party has reneged on that commitment.

The Tories are the Brexit Party and have narrowed the election down to that issue – largely.

They have to do that because, as Larry Elliot says, on every other issue Labour win hands down, given the appalling way the Tories have managed the economy and government.

I have been critical of Labour’s Fiscal Credibility Rule, but most people don’t understand that argument anyway and it is not a factor in the election.

While not a voter in the election, I am very informed of the issues given the flood of information we get in Australia on matters British (ex colony, shared head of state, history, culture, etc guarantee that).

My perception is that the Tories have been fairly successful in the campaign in keeping the focus on Brexit.

And in doing so, the typical Labour voters who are also Leavers are feeling disenfranchised by the Labour position on Brexit.

I sense the election tomorrow is really, implicitly, the second vote on Brexit.

And if the Tories win (as they should not), the UK will leave the EU (as it should) and the natural anti-neoliberal Party, Labour will wonder why they are not in office.

They should start with their Brexit position, which will lead them to the Blairites and the cosmopolitans, and that should cause the Party to take action and clean out this element.

They wont and as a consequence will stay out of office while blathering on about fake news, BBC bias and all the rest of it.

And when the UK doesn’t fall into the North Sea after leaving the EU, then it might become clear to them what all this was about.

And good luck to Chris Williamson in Derby North and Claire Jackson-Prior in Sutton and Cheam. Two great candidates.

Increasing MMT coverage in Australia

There has been increasing coverage of MMT in Australia in recent weeks.

1. In case you haven’t seen it, the UK Guardian article published an interview with me over the weekend:

Turning the economic tide: could a radical monetary theory fix Australia’s woes? (December 7, 2019).

2. An ABC program about MMT:

Modern Monetary Theory and its challenge to Neoliberalism (December 1, 2019).

Download – Audio.

3. Related ABC analysis:

Modern monetary theory is gaining traction. But can it knock out free market capitalism? (December 2, 2019).

The ridiculous dishonesty of neoliberalism – NZ style

There was a story in the New Zealand media last month (November 19, 2019) – Crown company borrows money for infrastructure from Crown entity at rate of 5.37% for the sake of keeping debt off government books, when the Government could’ve issued bonds at 3% – that epitomises the dishonesty of neoliberalism.

The article starts with a sensible statement “New Zealand needs infrastructure, as much as it needs more houses”.

Then loses the plot about how are these essential needs going to be paid for – there is no consensus for higher taxes or deficit spending.

Why, well for a start there is the “aesthetically pleasing surplus” that would have to be foregone.

Aesthetics is the study of the nature and appreciation of beauty.

How far have we descended into meaningless when we ascribe a fiscal surplus as a thing of beauty.

It might be an essential anti-inflation stance if the external sector is delivering so much revenue to the nation that it can provide first-class public services and infrastructure and generate enough income growth to allow the private domestic sector to meet its desired overall saving ambitions.

But that position hardly applies to New Zealand – even by dint of the opening statement – not enough infrastructure, not enough houses.

It also runs an external deficit, which means that there is a drain of income leaving the nation and not being recycled back into domestic production.

And when we consider that around 23 per cent of children in New Zealand live in poverty after housing costs are deducted (Source), it isn’t rocket science to conclude that fiscal surpluses are the anathema of responsibility and sense.

But the NZ lunancy gets worse.

The article reports that the government has come up with a plan to raise:

… money to pay for infrastructure, which keeps debt off local and central governments’ books, and therefore hidden from voters.

The plan?

They are going to set:

… up a company that takes out a loan to pay for infrastructure in a new subdivision, which is repaid by levies charged to property owners in the area.

And even by mainstream standards this would appear to be a daft proposition.

1. The new ‘off-the-books’ company will borrow long-term at 5.3 per cent via an arrangement with a government-owned development company.

2. The facilitating development company, of which the ‘off-the-books’ company will be a subsidiary, will also get equity in the subsidiary.

3. A private development company will then be contracted to build houses in Auckland.

4. “The loan and equity investment will be repaid using levies charged to property owners in Milldale over 30 years.”

5. The levies will increase annually at a rate above the expected inflation rate.

6. Overall, “roughly $159m will be collected to cover the cost of a $48.9m infrastructure investment.”

7. Meanwhile, back at Government HQ, it could issue debt to the tune of $48.9m at less than 3 per cent over the 30 years.

The article asks the obvious question:

But one has to ask whether it’s worth a Crown-owned company taking out a loan from a Crown entity at 5.37%, for the sake of keeping debt off local/central governments’ books, when the Government could issue bonds at a much lower rate.

While the New Zealand government could fund this without issuing any debt at all, the arrangement the Government is taking is complex, lacking in transparency, and pushes a massive and unnecessary cost onto those who will ultimately live in the dwellings created.

Even if one believed the taxpayers fund government spending myth, one should realise this arrangement rips the ‘taxpayers’ off to by more than 80 million dollars.

Dishonest and ridiculous – but demonstrates how far neoliberalism has gone to hide its failure.

Call for financial assistance to make the MMT University project a reality

If I am to get the – MMTed Project (aka MMT University) – up and going to provide formal courses to students in all nations to advance their understanding of Modern Monetary Theory then I need financial assistance.

We have established the – Foundation for Monetary Studies Inc. – aka The MMT Foundation to serves as a legal vehicle to raise funds and provide financial resources for the MMTed Project.

The Foundation is a non-profit corporation registered in the State of Delaware as a Section 501(c)(3) company. Its legal structure allows people can make donations without their identity being revealed publicly.

Some sponsors have already offered their generous assistance.

We need significantly more funds to get the operations off the ground.

Please help if you can.

We cannot make the MMTed project viable without funding support.

Leonard Cohen’s last album

I was entranced by Leonard Cohen as a teenager in the late 1960s and bought all his albums, learned all his finger style patterns on nylon guitar, and read all his books.

In the meantime, I have seen him perform and bought all his records.

He is one of the common threads in my life to date.

And last week, I purchased his last album (released November 22, 2019) – Thanks for the Dance – and immediately started working out the piano parts this week.

The album was recorded in 2016 in the last days of his life. Some of the songs had him sitting in an invalid chair he was so sick.

Here is the first song off the album – Happens to the Heart.

Beautiful and sad to think this is the last of him.

That is enough for today!

(c) Copyright 2019 William Mitchell. All Rights Reserved.

Bill Mitchell
Bill Mitchell is a Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW, Australia. He is also a professional musician and plays guitar with the Melbourne Reggae-Dub band – Pressure Drop. The band was popular around the live music scene in Melbourne in the late 1970s and early 1980s. The band reformed in late 2010.

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