Tonight with Vin­cent Browne 18.04.12

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Steve took part in a dis­cus­sion on the state of the Eurpean Union econ­omy on Tonight with Vin­cent Browne on the 18 April while in Ire­land. The con­ver­sa­tion explores the flaw of the Maas­tricht Treaty and poten­tial eco­nomic solu­tions for the Euro­pean Union. A short 10 minute fea­ture of Steve is avail­able from the below YouTube clip or you may click here from to view the full length show.

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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  • Uno Cualquiera

    There are more peo­ple in Spain writ­ing about elec­tronic-only par­al­lel “closed” cur­rency.
    It would have the same value as euro, but it would only be valid in Spain and could not be swapped for euros. Only elec­tronic: all trans­ac­tions with notes and coins would be in euros, as well as exter­nal trans­ac­tions.
    Pub­lic staff and pen­sion­ers would receive part of their salary in new europe­se­tas, reduc­ing pres­sure on pub­lic debt. Spain could buy toxic assets in banks with new europe­se­tas, which banks would use to pay part of their expen­di­tures like salaries and lend cred­its to the enor­mous amount of ail­ing bussi­nesses in europe­se­tas (they’re dying right now with­out credit). Taxes would be par­tially paid in europe­se­tas. Pro­posal in Span­ish:
    http://www.rebelion.org/noticia.php?id=140527
    http://www.farodevigo.es/opinion/2012/03/11/moneda-paralela-senor-vigo-tres-madrid-polemica-lecciones/631387.html

    That’s why I don’t under­stand those com­ments show­ing fears about fixed or float­ing exchange rates. The new cur­rency can­not be exchanged. 

    Ran­dall Wray gives a hint of the same idea applied to a Job Guar­an­tee scheme for Ire­land in the penul­ti­mate page of this paper:
    http://www.levyinstitute.org/pubs/wp_707.pdf

    The first would be to develop a new currency—let’s call it the punt—to be used for gov­ern­ment pay­ments of wages in the JG. All lev­els of gov­ern­ment would agree to accept the punt in pay­ment of taxes, fees, and fines. Assume that at gov­ern­ment pay offices the punt is accepted at par for euro tax debts. Let us fur­ther pre­sume that punts would be sup­plied only through gov­ern­ment pay­ment of wages to JG work­ers. Since JG work­ers as well as any­one with a tax due could use the punts to pay taxes, they would soon cir­cu­late widely. The gov­ern­ment would not make the punt con­vert­ible to euros—it would not sup­ply euros when punts are presented—but in pri­vate trans­ac­tions they would trade at close to par because in pay­ment of taxes they are equiv­a­lent.”

  • daniel clarke

    the maas­tricht treaty and eu is only part about eco­nom­ics, hold­ing one part up and advo­cat­ing break­ing the treaty is throw­ing the baby out with the bath­wa­ter.

    it’s maybe not obvi­ous to non euro­peans, but there have been mas­sive social gains and sol­i­dar­ity brought about through euro­pean inte­gra­tion and solu­tions that put that at risk should not be triv­ially advo­cated. eco­nom­ics doesnt exist in a vac­uum, what­ever we do to solve this medium term cri­sis should not dam­age long term social coher­ence. break­ing up the euro would be a loss socially, the euro is not sim­ply an eco­nomic propo­si­tion.

    regards the spe­cific idea to me it appears that Steve has maybe not con­sid­ered if all his assump­tions are real­is­tic. apart from any­thing else (and there are many things jump­ing out such as how can the pri­vate sec­tor finance imports payed in euro when it sells to cus­tomers for unex­change­able punts), human nature alone means it cant work 

    so at least one of the unre­al­is­tic assump­tions is that every­body would act in the best inter­est of the greater good even when it doesnt align with their own inter­est. in prac­tice every­body would be in favour of every­body else exchang­ing their euro for punt while keep­ing their own euro for the flex­i­bil­ity, enhanced guar­an­tee of value

    We clearly need help to find some solu­tion to employ­ment, endebt­ment and any­one who’s taken the time to under­stand Steve’s side of the argu­ment will want his ideas to be part of an even­tual solu­tion. How­ever, advo­cat­ing rip­ping up maas­tricht as if that’s some­thing pre­dictable, man­age­able and desir­able is sim­ply throw­ing away cred­i­bil­ity

  • it’s maybe not obvi­ous to non euro­peans, but there have been mas­sive social gains and sol­i­dar­ity brought about through euro­pean inte­gra­tion and solu­tions that put that at risk should not be triv­ially advo­cated”

    There may very well have been, but there are very few Euro­peans who want a United States of Europe. 

    There­fore the sin­gle cur­rency and the strait­jacket sur­round­ing that can­not work. 

    The com­mon mar­ket is a decent enough idea, but it doesn’t need ever greater cen­tral­i­sa­tion and removal of local democ­racy to func­tion. We can sell stuff to each other cleanly with­out all that.

    Sug­gest­ing that it will all dis­ap­pear if we change direc­tion is a Slip­pery Slope log­i­cal fal­lacy.

  • Great stuff, Pro­fes­sor Keens. What is amaz­ing is that this analy­sis and these charts fit closely to the nar­ra­tive his­tor­i­cal evi­dence on the cur­rent cri­sis pre­sented in a vari­ety of recent works rang­ing from Dean Baker’s recent works to a num­ber of works by eco­nomic jour­nal­ists like Gretchen Mor­gen­son, Michael W. Hud­son, Kevin Phillips, Nomi Prins, and oth­ers. I am busy plow­ing through the lat­est edi­tion of Debunk­ing Eco­nom­ics, an excel­lent review of where most of the flawed or fal­la­cious eco­nomic notions came from and how they were devel­oped over the years, decades and cen­turies. One addi­tional thing that I believe needs to be built into our eco­nomic think­ing in order for us to achieve a coop­er­a­tive and pos­i­tive sum world order is an account of glob­al­iza­tion, trade, and zero sum forms of glob­al­iza­tion that have led to the mas­sive trans­fer of pro­duc­tive capac­ity and jobs in some advanced coun­tries to rapidly devel­op­ing giants of man­u­fac­tur­ing like China. I believe there now needs to be a for­mula for accel­er­ated devel­op­ment of coun­tries like China and India that is based on much higher wages and ori­en­ta­tion towards inter­nal mar­kets plus poli­cies to dis­cour­age the trans­fer of pro­duc­tive capac­ity by multi­na­tional cor­po­ra­tions. Also the nature of cor­po­rate orga­ni­za­tion or gov­er­nance needs to be addressed at the micro level. I can’t go into all of these issues here, but I think that they need to be worked into our the­o­ret­i­cal mod­els as well as poli­cies and insti­tu­tions. I think that the de-indus­tri­al­iza­tion prob­lem is more acute in the United States than in some other smaller coun­tries that rely more on min­ing and agri­cul­tural exports than the US. I believe that glob­al­iza­tion in one major fac­tor which in addi­tion to regres­sive fis­cal and mon­e­tary pol­icy that has con­tributed to long run imbal­ances in the US econ­omy and increas­ing dis­par­ity in income dis­tri­b­u­tion. The con­cen­tra­tion of income and wealth that results from trade poli­cies of the US and China feeds the pool of spec­u­la­tive cap­i­tal and to imbal­ances between sup­ply and effec­tive pur­chas­ing power. I believe there is sub­stan­tial sta­tis­ti­cal end empir­i­cal evi­dence that a com­bi­na­tion of “mer­can­til­ism” and free trade fal­lacy has con­tributed to the cur­rent cri­sis. Here is a link to a select bib­li­og­ra­phy, I have com­piled on United States and global eco­nomic dis­or­ders.
    http://globalgeopolitics.net/wordpress/bibliography/
    Any com­ments on how to work glob­al­iza­tion, automa­tion, tech­nol­ogy insti­tu­tions and orga­ni­za­tiona forms into a mul­ti­di­men­sional eco­nomic analy­sis that includes geo­graphic dis­tri­b­u­tion would be most wel­come.
    Thanks for your great blog and your valu­able book.

  • Thanks Alan,

    I’ve tweeted your bib­li­og­ra­phy. Hope­fully that will help it’s expo­sure.

    Cheers, Steve