Ceres event with Nicole Foss, Melbourne Sunday February 18
on February 18th, 2012 at 1:14 pm
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.
@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.
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
@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.
I am in full agreement with you there, Mr H.
@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.
Title: Hijacked by My Own Emotion
Steve,
You are my hero and I wish all politicians are like you.
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.
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.
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?
It’s either them or the Tooth Fairy.
“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.
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.