Ceres event with Nicole Foss, Mel­bourne Sun­day Feb­ru­ary 18

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Nicole Foss, the sys­tems ana­lyst and biol­o­gist behind the blog Auto­matic Earth, is speak­ing tomor­row at A Com­pass for Tur­bu­lent Times, organ­ised by Ceres.

I’m on the bill too, which I’m told will pro­ceed roughly as fol­lows:

9–11 Nicole (inc Qs)
11–30 Morn­ing tea
11.30 — 12.30 Steve (inc Qs) — focus on aust con­text
12.30 — 1.30pm Lunch
1–30 — 2pm Oppor­tu­nity for fur­ther Qs to both
2pm — 3.30 — Work­shop ses­sion — smaller groups come up with
hypo­thet­i­cal scenarios/strategies (30mins) to put back to Nicole/Steve
for response / dis­cus­sion (1hr).

Nicole is an excel­lent thinker and speaker; we’ve spo­ken twice together now at events organ­ised by Local Futures in Michi­gan, and I have great respect for her com­bined eco­nomic-eco­log­i­cal per­spec­tive (in which ecol­ogy dom­i­nates!).

If you’d like to attend, book­ings are still avail­able from Ceres; tick­ets cost $150, or $110 for con­ces­sions and Ceres mem­bers. Ceres is a not-for-profit organ­i­sa­tion, and the fees are cov­er­ing the costs of bring­ing Nicole out to Aus­tralia.

The event is being held at CERES Com­mu­nity Envi­ron­ment Park Cnr Roberts and Stew­art East Brunswick VIC 3057.

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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  • alain­ton

    @NeilW

    Most of the cap­i­tal flight from Greece has been in cash because non greek banks wont act as coun­ter­par­ties to Greek Banks

    I have read one of Har­veys papers and my thought thought was what b******ks , but ill need to exam­ine his book with fresh eyes. The issue is build­ing insta­bil­ity which you cant really use regres­sion on. 

    New devel­op­ment
    New paper on house­hold debt dynam­ics by Mason and Jayadev
    http://repec.umb.edu/RePEc/files/FisherDynamics.pdf

    changes in bor­row­ing behav­ior has played a smaller role in the growth of house­hold lever­age than is widely believed. Rather, most of the increase can be explained in terms of “Fisher dynam­ics” — the mechan­i­cal result of higher inter­est rates and lower infla­tion after 1980. Bring­ing lever­age back down will sim­i­larly require con­tri­bu­tions from fac­tors other than reduced bor­row­ing.’

    Com­ments — Mike Konz­cal — after Steve and Anne Pet­ti­for the major pro­moter of Debt Jubilee

    http://rortybomb.wordpress.com/2012/02/23/guest-post-by-jw-mason-the-dynamics-of-household-debt/

    ’ it seems clear that, just as the rise in lever­age was not the result of more bor­row­ing, any reduc­tion in lever­age will not come about through less bor­row­ing. To sub­stan­tially reduce house­hold debt will require some com­bi­na­tion of finan­cial repres­sion to hold inter­est rates below growth rates for an extended period, and larger-scale and more sys­tem­atic debt write-downs.’

    And sur­pris­ingly Karl Smith gets very Min­skian http://networkedblogs.com/upJXI

    One of the things I think these means – but I haven’t worked it out – is that low infla­tion cre­ates a fun­da­men­tally more pre­car­i­ous econ­omy, even with­out think­ing about the zero lower bound.

    In short when a lot of your pay­ment is inter­est then the “price of debt” is less sticky. When lots of your pay­ment is prin­ci­ple then the “price of debt” is very sticky.

    The cur­rent reces­sion has a weird extra stick­i­ness because the falling price of land now means that lots of folks can’t refi­nance or sell out.’

  • it should take the form of paid atten­dance in education/training of some form rather than as cheap labour on low-skill jobs. ”

    That’s a bit cen­tral plan­ning. Unskilled labour learns best by doing and the para­dox of pro­duc­tiv­ity demon­strates that you already have more than enough labour for what is nec­es­sary for pro­duc­tion.

    The MMT design JG only pays the wages of those engaged in the pub­lic and non-profit sec­tors. Ulti­mately the job is pri­mar­ily there to give them some­thing to do and make them feel bet­ter about them­selves — as it is for most of us really. The eco­nomic effect is from them spend­ing the money you give them. If you get any real pro­duc­tion out then that should be seen as a bonus.

  • RJ

    I wish MMT would drop their silly job cre­ation idea. It might have worked 50 or so years back but not today

    The key is a larger Govt deficit. Prefer­able from large TAX CUTS not even more Govt spend­ing. Except for increased ben­e­fits and esp pen­sions.

    Increase pen­sions and ben­e­fits and the extra spend­ing would flow through and cre­ate more work. With­out Govt being involved in addi­tional waste­ful spend­ing

  • Steve Hum­mel

    @Derek R

    I think that many more jobs are needed and likely, with gov­ern­ment sup­ply­ing the money for pri­vate busi­nesses, because of the infra­struc­ture dete­ri­o­ra­tion in many west­ern nations, but the only way we’ll ever kill the deadly cycle of boom-bust is to essen­tially elim­i­nate CONSUMER finance with a citizen’s div­dend.

  • Derek R

    I am in full agree­ment with you there, Mr H.

  • Derek R

    @RJ, I think that you have to be care­ful with tax cuts. It’s an inter­est­ing point that there’s a strong cor­re­la­tion between high taxes and a strong econ­omy. Take a look at this blog for some inter­est­ing graphs and sta­tis­tics on the topic. So I’m not so sure that we should be low­er­ing taxes too far. 

    An alter­na­tive method which leaves taxes high but gives the effect of reduc­ing them for the aver­age per­son is to com­bine taxes with a citizen’s div­i­dend. This has the same effect as intro­duc­ing an income tax with a high Per­sonal Allowance. Or intro­duc­ing a land value tax with a high Per­sonal Exemp­tion. That’s the route I’d be inclined to take.

  • koonyeow

    Title: Hijacked by My Own Emo­tion

    Steve,

    You are my hero and I wish all politi­cians are like you.

  • bar­ry­thomp­son

    Steve, you are going main­stream. See this paper at Rorty­bomb:

    http://rortybomb.wordpress.com/2012/02/23/guest-post-by-jw-mason-the-dynamics-of-household-debt/

    They take your analy­sis even fur­ther, decon­struct­ing the rise in house­hold debt:income ratio. They find that increased bor­row­ing behav­iour is only recent — in the big US hous­ing bub­ble of the 2000s — while rel­a­tively slow income growth and rel­a­tively high inter­est rates have been respon­si­ble for the grad­ual rise in pri­vate debt:GDP since 1950.

  • Philip

    Fol­low­ing on from Derek R, if one wants to increase an economy’s pro­duc­tiv­ity and effi­ciency, then our cur­rent tax sys­tem acts in the oppo­site man­ner. The dead­weight losses stem­ming from the impo­si­tion of 125 taxes on Aus­tralia must be extra­or­di­nary. If they impose a dead­weight loss of, say, 30c to the dol­lar, then we are loos­ing around $100 bil­lion a year.

    Stud­ies have shown that tax­a­tion of land and nat­ural resources pro­vides a immo­bile tax base large enough to elim­i­nate at the very least cor­po­rate and per­sonal income taxes, and per­haps all 125 of them, whilst inflict­ing min­i­mal to no dead­weight losses. The LVT also has the pos­i­tive effect of con­strain­ing the growth of the FIRE sec­tor as well.

  • alain­ton

    George Osborne — The most eco­nom­i­cally igo­rant chan­cel­lor we have ever had in the uk said today

    “The British Gov­ern­ment has run out of money because all the money was spent in the good years…The money and the invest­ment and the jobs need to come from the pri­vate sec­tor.’

    So do the under­pants gnomes cre­ate the money for the pri­vate sec­tor?

  • Derek R

    It’s either them or the Tooth Fairy.

  • mahaish

    My point is just that there is some crowd­ing out, not on the money side but on the resources side, since the sup­ply of domes­tic labour is fixed in the short term”

    well again mmt would have no quible with this .

    the prob­lem is that the right wing are scream­ing blue mur­der based on non sen­si­cle the­o­ries that assume away full employ­ment to argue that high or even hyper infla­tion is on our door step.

    when we are at 10 to 15 to 20% umem­ploy­ment in some economies, we arent with­ing a bulls roar of full resource util­i­sa­tion.

  • Derek R

    Under­stood, Mahaish. MMT would not have a quib­ble with that. That’s why I con­sider MMT to be a fairly non-aligned pol­icy. In other words it would be per­fectly pos­si­ble to run a right-wing or a left-wing gov­ern­ment while still stay­ing true to MMT prin­ci­ples.

    For a right-wing gov­ern­ment imple­ment the infla­tion con­trol mech­a­nism via sales tax on all pur­chases, includ­ing food and other essen­tials; imple­ment the Job Guar­an­tee via ser­vice in the Armed Forces; reduce all other taxes and gov­ern­ment pro­grams.

    For a left-wing gov­ern­ment imple­ment infla­tion con­trol via a pro­gres­sive income tax/corporation tax plus any other taxes deemed nec­es­sary or appro­pri­ate; imple­ment the Job Guar­an­tee via employ­ment in infra­struc­ture projects such as road maintenance/construction, dam-build­ing, rail­way elec­tri­fi­ca­tion, and so on; spend on pro­grams to tackle social prob­lems as required.

    The fact is that either set of poli­cies would prob­a­bly avoid dis­as­ter as long as MMT prin­ci­ples are fol­lowed to avoid deflation/inflation and to keep the macro econ­omy an even keel. How­ever I also think that the micro eco­nomic out­comes would be very dif­fer­ent in the two cases. In par­tic­u­lar I would expect the first gov­ern­ment to pre­side over a much more unequal dis­tri­b­u­tion of wealth than the sec­ond. And I wouldn’t expect either of them to do very well over­all, since the first encour­ages rent-seek­ing and the sec­ond dis­cour­ages pro­duc­tive activ­ity out­side the gov­ern­ment sphere.

    But we don’t just have to con­sider right ver­sus left. Other MMT-com­pat­i­ble social mod­els are cer­tainly pos­si­ble. For a theo­cratic soci­ety use tithing as the tax­a­tion ele­ment; Job Guar­an­tee via monasteries/religious orders; spend­ing via church con­struc­tion, social pro­grams and large-scale reli­gious events. For an “envi­ron­men­tal” soci­ety use carbon/resources taxes; Job Guar­an­tee via recycling/waste dis­posal work; spend­ing on pro­grams to enhance urban den­sity and oth­er­wise reduce envi­ron­men­tal impact. And my par­tic­u­lar favourite: the Geor­gist solu­tion using MMT prin­ci­ples. So a high LVT but no other taxes for tax­a­tion; Job Guar­an­tee imple­mented as an educational/work expe­ri­ence pro­gram; spend­ing mainly as core gov­ern­ment func­tions plus a citizen’s div­i­dend.

    But you get the idea. The point about MMT is that it focuses on mon­e­tary pol­icy. How­ever our soci­eties are shaped by other forces too. And while I think that an MMT approach is a good approach to take for finan­cial sta­bil­ity, I don’t think it has much to say about the non-finan­cial aspects of our soci­ety. This is not nec­es­sar­ily a bad thing since it implies that most rea­son­able peo­ple should be able to sup­port MMT, no mat­ter what their under­ly­ing views on the nature of a “good” soci­ety might be.