How to sell the Economy
Beyond all the programs and policies it takes to the next election, Labor’s biggest challenge will be selling its economic credentials. While their record in health, education and foreign affairs is admirable, future policies will always be threatened when the media and the Coalition ask the question: How will you pay for it?
Labor’s record of managing the economy from 2007 to 2013 was much better than most people think and they have every reason to be proud of what they achieved, particularly when the GFC is factored into that assessment. Their weakness, however, is public perception. For some inexplicable reason, the Coalition have been able to convince many that Labor were economic vandals.
As false as that was, and is, it remains an issue that needs to be addressed.
That means the next federal campaign must be planned in such a way that any repetition of that scare mongering which will, no doubt, be based on false premises, can be cast aside with superior economic arguments that treat it with the contempt that it deserves.
Various opinion polls, then and now, suggest that clever politicking by the Coalition has contributed to a misunderstanding of how successful that period was for Australia economically. We were the only OECD country not to experience a recession, yet the perception was one of impending doom.
When in opposition, Tony Abbott and Joe Hockey demonstrated how easy it was to attack a government’s credibility in economic matters, particularly when a compliant media gave them plenty of exposure. It didn’t seem to matter that their claims, e.g. ‘budget emergency’ and ‘debt and deficit disaster’, were false and misleading.
Mud tends to stick and polling today still shows that the Coalition is seen to be the better economic manager. This defies the comparative record of the two and says more about the myth than it does about the Coalition’s tactics, but, at the moment, the perception and the myth are one.
As many of us expected, over the past year the government’s own economic credentials have been put under the microscope and they have been found wanting. They are failing to produce the results they boasted of in opposition and failing to reduce the debt and deficit disaster they claimed was so damaging to the economy. They are now fending off criticism from nearly every neo-liberal economist in nearly every mainstream newspaper in the country.
Joe Hockey’s foolish claim that he would deliver a surplus budget in his first year and each year thereafter has come back to bite him. He is staring down his worst nightmare. He can cut as much spending as he likes but he will never deliver a surplus budget without an increase in revenues.
If he was any good at his job in opposition, he would have known that.
Worse still, he cannot see that the major stumbling block to sustained national growth, higher tax revenues, increased demand and a positive terms of trade, is unemployment and underemployment.
This is where his problem lies and where the real waste lies. It is a waste to the tune of $4.7 billion per month. Deficit spending is not the problem. Nor are ballooning health or education costs. It is the under-utilisation of the available work force that needs to be addressed.
Deficit spending on value-adding projects is good for the economy. Eighty-two of the last 100 years of Federation involved deficit spending, a body of fact that has contributed to where we are today. Are we burdened by those deficits? Are we cursing our parents and grandparents for making us the beneficiaries of this debt? I don’t think so.
This is where Labor needs to concentrate its efforts because when the public understand this, everything else becomes possible. When a nation’s workforce is fully or near to fully engaged, healthy GDP growth is assured. This enables proper funding for health and education. But to achieve near full employment job creation programs are required and that will require deficit spending.
To do this, they need to explain the nature of government debt, the issuance of bonds and treasury notes, the time frame over which these issuance’s are dealt with, how the interest is paid and where it comes from; that buying bonds from government is no different from opening up a term deposit account at your local bank.
They need to consign the ‘debt and deficit disaster’ to the garbage bin once and for all. But most importantly, they need to demonstrate in simple terms how deficit spending creates demand.
They might also take a serious look at tax expenditures like superannuation concessions and the private health insurance rebate, but that won’t create employment.
The Coalition will, of course, cry more debt and deficit disaster. They will demand to see it fully costed. It will be an utterly hypocritical cry but it will be loud and it will resonate. Labor has to make its case with vigour and conviction, but most of all, with facts.
They need to show how important deficit spending has been over the past 100 years and the importance of the workforce in realising a nation’s potential. The Coalition doesn’t understand this simple principle, or if it does, it is so beholden to its financial backers that it ignores it and won’t deliver what is best for the people.
It will only deliver for those who have the money and lobby the hardest.
If Labor could succeed in exposing the deceit that accompanies the government’s surplus objectives, they could render neo-liberal conservative governments extinct. To achieve this they need superior economic minds whose sympathies lie with social cohesion. It doesn’t involve any policy changes, just a simple explanation of how this system actually works.
They cannot do it alone.
Engaging the assistance of people like Bill Mitchell, Professor of Economics at the University of Newcastle, and director of the Centre of Full Employment and Equity would give them an enormous boost. Steven Hail is another from the University of Adelaide. These are individuals who can clearly articulate the fallacy of supply side economics.
The sheer simplicity and logic they demonstrate will silence the pseudo economists within government ranks and embarrass right leaning media economists into silence. The rest will follow and fall into line.
Those who have blindly followed outdated textbook theories and think as we did when sovereign economies were based on the gold standard will be forced to confront the reality that these theories no longer apply and have, in practice, been seen to fail time and time again. They are failing now, in Europe, the UK and the USA.
This is also where people like Joe Hockey and conservative think tanks like the Institute of Public Affairs can be made to look so far out date they are drowning in their own ignorance. The challenge for Labor is to articulate its credentials convincingly and do it with authoritative voices in support.
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Return to home pageThe challenge is doable, as John has explained – c’mon Labor, please, pretty please show some spine and get on with it. It is a total nonsense the claims of economic failure by the vested interests (LNP, IPA, Murdoch et al) and provable – so why aren’t you getting on with it?
Excellent article John. Again a lesson in common sense economics.
John Kelly makes so much sense. I hope Bill Shorten is reading his articles and taking up his suggestions!
“Those who have blindly followed outdated textbook theories…”
Umm… I think I get what you’re saying here, John, but you might recall that textbook macroeconomic principles were precisely what the Labor government applied so successfully during the GFC (and was commended for so doing by Nobel Laureate Joseph Stiglitz).
If I recall correctly, our own John Quiggin may have had a few words to say about the matter, too…
While I like Bill Mitchell well enough (he can be a bit overbearing in person) the doctrine he subscribes to and advocates, Modern Monetary Theory (MMT) is controversial, to say the least- and some of us (including some very noteworthy progressive, “saltwater” macroeconomists) can’t get by the seignorage problem.
In any event, Labor (and progressives in general) do need to find a way to promote an accurate and responsible economic discussion and reframe the narrative.
How to do that effectively with a hostile (and frequently innumerate) media, in the face of certain counterintuitive concepts (e.g. a household budget IS NOT analogous to a federal government budget -or the paradox of thrift) is quite a challenge.
One can only hope that Labor has at least learned from the last go around what not to do, which is: buying into and repeating the Liberal party’s fabrications and memes.
Labor can turn it around, but they have a problem talking up their past economic credentials because they don’t want to mention Rudd and Gillard, Rudd might have been an ;)&:/@ but it was him and the labor gang that got us through when other countries were dropping like flies, because we are such an isolated island Aussies are so ignorant to what was happening around the world,
so didn’t really notice how good we had it through the GFC, and the Coal ition jumped on that ignorance,,, come on Labor it’s time to pull your socks up and give the truth of how economics work instead of this double speak bullshit about debt and deficit….
Thank you John. Great article
It seems to me that all Shorten and his mates need to do, and if they could get some expert advice to assist they would be far better off, is to explain to the Australian people how the LNP has got their economic policies all arse about.
Can I ask a couple of damn-fool questions please ?
1 Can we as a country afford to scrap the mining tax ?
To go back to the micro economics of running a household, the first thing we do is look at our income, and find ways to increase it. When they are exhausted we then decide what is unaffordable. But if we earn our money from selling pony rides, we don’t sell the horse because we want to save the money we spend on hay.
2. How does Free-Trade work, and why is it good for Australia ?
Australia is in every respect in a unique global position. Geographical, Geological, Economical, Ecological, and if we give ourselves half a chance, Political.
We are a huge chunk of dirt that is relatively underpopulated, far removed from the ecological disaster that is the Northern Hemisphere,(thank you equator) massively self sufficient in renewable natural resources like wind, sun, waves etc to say nothing of all of the other resources that we are rapidly giving away.
We have a skilled workforce that is in general quite comfortable if it knows that it is going to work again tomorrow and the next day, that is being assaulted by a perceived steady stream of imported expertise that is being used to undermine pay rates and work conditions.
Since the demise of Trade Protection we have seen our Car industry, Heavy Manufacturing, & General Production Manufacturing etc slowly disappearing. Foreign takeover & ownership of our successful businesses has robbed the country of both Tax income, and local expenditure. Un-controlled importation of cheaper products from anywhere, and by literally anyone has killed off a huge number of family run businesses.
3. Why has neither side of politics ever suggested taxing Revenue, particularly the money that is sent overseas by all and sundry. Surely somewhere around 30% duty on EVERY international transfer would just about give the Govt enough to look after the refugees properly, leave Medicare alone, and cover a few other things. Anyone with legitimate expenditures can claim it back. The rest of them, from illegal activities, to money laundering and tax evasion, to just plain CBF’ed, would have to go short or get caught.
Bill Shorten and his mates need to sit down, push their ideas around for a bit, and come up with a PLAN. A real, viable plan of action that they can take to the electorate. If BS (unfortunate initials maybe) is not the right spokesperson, get the right one.
Explain to us mortals why we are in the shit we are in. In detail.
Pick the right people for the right jobs, not just have a “jobs for the boys” mentality.
Give us an alternative course of action. In detail.
Justify it.
Have their defenses and responses ready.
Be prepared to stand by their promises.
4. In anyone else’s opinion, if bi-partisan politics is taken out of the equation, who should be our PM ? And who should be the various ministers ?
In my totally un-informed opinion, Julie Bishop would do a pretty good job.
The minister for women, if we have to have one, HAS to be a woman. The minister for indigenous affairs HAS to bean indigenous person (if we have one in Parliament) Etc Etc.
Over to you.
I’ll get back down off my soap box now.
John I think Bill Mitchell needs a media representative who can simplify his message and put it across with political and media acumen. There are certain skills that academics do not have and that is often the necessary media skills to present their research in a manageable and accessible way.
Scott Ludlum would be a good political choice however I wonder if he has been exposed to MMT.
Pickerings debt clock going backwards
Australian debt clock going forward
Pingback: How to sell the Economy | THE VIEW FROM MY GARDEN
deanyz1, while Pickering’s debt clock is acting quite bizarre, the Australian debt clock seems to be ahead of time. I follow the OAFM debt clock at: http://aofm.gov.au/ which at the moment sits between the two.
John, one of the best summations of the current political situation I’ve read to date, thank you. One extremely important crucial point overlooked by just about everybody, which you touched on it briefly here “When in opposition, Tony Abbott and Joe Hockey demonstrated how easy it was to attack a government’s credibility in economic matters, particularly when a *compliant media gave them plenty of exposure”.
Australia’s Mainstream media have completely locked the Labor party out of all network studios, they only let them in to in to answer carefully scripted gotcha questions, never allowed to go off topic to deliver their message.
Example, Mainstream TV/Radio media audiences were never told that the budget emergency was a political beat up as you have pointed out “carried out by a compliant media” this means the public are purposely not exposed anything critical or damming of the Abbott Government which is omitted from all network news bulletins and Breakfast/Talk shows.
If something does slip through this very organised protective net, usually caused through social media uproar, it is then refuted by an array of Right wing commentators, (most of whom are linked to News Ltd) who by magic appear and are wheeled in and out of the different networks to control the narrative.
A good example of this gagging is how the mainstream media have colluded to collectively gag Climatologists and their crucial life/Planet saving messages, ask anybody to name a Climatologist or have they ever seen one on Television? this premeditated and very organised inter network action was part of the strategy successfully used to destroy the carbon price (now proved to be effective) and ended all action on Climate Change, largely, without public outcry.
Labor or anybody for that matter would never get any message out to the Mainstream media audience, all they can do now is use the old propaganda methods, which are mostly ignored by the general public, or they could use social media as they are now doing, although this usually goes around and around to the already converted?
My point is, what can be done to address this most important issue, Australian public are deprived of factually correct information and also deprived of important omitted information, for democracy’s sake, this very demonstrable media bias situation must be stopped. many call the public dumb, most aren’t dumb they believe the media they use is fact checked, which it isn’t, also the media failed to declare that it isn’t based on the truth or that they should research their news and information in future.
in closing, the public are being manipulated, in the past the public benefited from a competitive media network, calling attention to to a competitors bias or misinformation, those days are over, they are all on the same page now and very busy grooming audiences to believe Labor, carbon tax, Climate Scientists etc. are all bad.
stephentardrew – We have tried and tried to get the Greens interested in the facts about what has become known as modern monetary theory. So far, there has been a complete lack of interest from all the federal elected members of the party. The don’t want to be put into the position where they have to engage with this debate. I too think people like Scott Ludlam would be very effective at putting these ideas over, and that they would significantly increase the electoral appeal of the Greens. He cannot be unaware of MMT – none of them can. Bill spoke at their conference a few years back, I believe. I spoke at a small Greens conference in SA last year. They just don’t want to listen – thus far.
I did a forum for a local branch too –
The aofm debt clock is a truthful measure of CGS on issue and also gives the details like date of issue. It gives a lot of useful information like
Commonwealth Government Securities on Issue* $351,585m
Treasury Bond issuance in 2014-15 is expected to be around $68 billion. After accounting for maturities of $27 billion this represents net issuance of $41 billion.
Issuance of Treasury Indexed Bonds in 2014-15 is expected to be around $4 billion.
Steven, I am unable to watch your video at the moment as my comp sound is broken so forgive me if I ask questions that you have answered in it. Perhaps you, or one of the Johns, can answer something I don’t quite understand.
There must be some limit to injecting funds into the economy. Can you explain this to me? What are the limiting conditions to issuing more bonds? Is it when inflation starts to rise beyond desirable parameters? Will this only happen if demand outstrips supply?
Thanks for the Video Steven.
Just keep on keeping on.
All the best with your project you have my full support.
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@John Kelly
Good Article.
I note that in the Articles on The AIMN, Links open on the same Tab while a Reply from John Kelly with a Link opens a new Tab.
Opening a new Tab for both is a far better option as one can continue reading the Article and then go over to the Tab and read the Link.
Just a thought.
Kaye, a currency issuing government can never run out of money but that doesn’t mean it can go on a never-ending spending spree. As long as it’s total spending does not exceed the output value of what the country can produce, then the amount of the deficit doesn’t matter. I am not sure if the output value is the same as the GDP, but I’m sure we’ll find out here, together.
Inflation will always be a major consideration and influence the amount of spending, but that to one side, the total output is the limit. I cannot see how we would ever get to that point.
40 years since khemlani yet he is still the paramount bulls…t driving belief. 25 years since Keating yet his economic movements are still unheralded. 8 years since GFC and labor delivers no kudus to 2 year of hockey no ridicule or comparison with overseas praise for swan and his AAA. Why??? It is quite an amazing contrast to search
‘Overseas opinion of treasurer swan’ then hockey but little billy is not into the past he accepts that the liberals have the moral high ground on the economy and that Wayne Swan was not the best treasurer in the world nor did he save Aust in the GFB.
An excellent article John.
Labor deperately needs a charismatic leader like Whitlam or even Hawke or Keating THAT ALSO rejects current self destructive neo liberal – total free trade economic theory and can clearly construct and articulate a better alternative. None of our economically successful Asian neighbours practice total free trade neo liberal economics. In these countries governments work closely with their best and brightest and with industry, restrict access to their markets when needed while promoting healthy competition, provide numerous incentives, they play hard to win and in the end their citizens reap (some?) of the reward.
I also totally agree with Steven Hail and I think the Greens are out of their depth when it comes to economics and industrial policy and I also have found that no one wants to listen but I admit that I’m a mediocre communicator at best. They may suffer from too much environmental or progressive puritinism to delve successfully into non core issues like the economy and the art of making things. This weakness will probably leave them stuck at 14% max of the votes at election time. I still vote for them however as Labor has on many occasions betrayed its constituency and continues to do so by promoting and implementing the neo liberal mining is good, manufacturing is bad agenda perhaps because the mining industry carries a bigger stick and make much bigger electoral donations.
I’m not entirely on top of this but this is what I am reading….
Gross output is principally a measure of an industry’s sales or receipts, which can include sales to final users in the economy (GDP) or sales to other industries (intermediate inputs). Gross output can also be measured as the sum of an industry’s value added and intermediate inputs. Value added (i.e. GDP) consists of compensation of employees, taxes on production and imports, less subsidies, and gross operating surplus. Intermediate inputs refer to the value of both foreign and domestically produced goods and services which are used as energy, materials, and purchased services as part of an industry’s production process. Value added does not include intermediate inputs. Gross output does.
Because gross output reflects double-counting — both the sales of intermediate and final products — it is often referred to as “gross duplicated output.” In contrast, industry value added is defined as the value of the industry’s sales to other industries and to final users minus the value of its purchases from other industries. Value added is a non-duplicative measure of production that when aggregated across all industries equals GDP. It provides a complimentary indicator to that of final sales. While gross output is a useful measure of an individual industry’s output, gross output for the economy as a whole double-counts sales between industries and is a less than reliable measure of aggregate business cycles or growth.
@Steven Hail/John Kelly,
Have watched your MMT video above – it all makes sense to me. Simplistically put, perhaps it could be described as management of sovereign currency supply in order to match service/product supply with domestic demand, with the overall objective of avoiding/limiting currency deflation/inflation.
I found the concept of MMT at first counter intuitive – difficult to get ones head around after a lifetime of conditioning through managing domestic budgets with limited money supply.
A query please – a simplistic answer is fine;
Would you outline the effect of trans-national corporate tax minimisation on Australia’s national budget.
Does it constitute only a loss of ‘foreign earnings’, or does it practically add to our budget deficit in other ways – such as increased govt domestic spending to compensate ?
How important is it for sovereign govts. to close down corporate tax avoidance?
Steven Hail wrote: ” We have tried and tried to get the Greens interested in the facts about what has become known as modern monetary theory. So far, there has been a complete lack of interest from all the federal elected members of the party. The don’t want to be put into the position where they have to engage with this debate.”
As alluded to in my post above, there are among progressive economists very good, evidence based and analytical reasons for that.
Of course, that’s not to say that there aren’t considerable areas of agreement in terms of public policy goals or preferred outcomes- or even specific policy prescriptions.
The mainstream media (Murdoch essentially) has the most significant and socially negative influence over public perception. I don’t think the critics of the MSM are giving enough weight to the MSM’s role in destroying what was until Abbott, a decent and progressive Australia.
The Australian MSM is the central perpetrator of the myth of conservative economic credibility – a myth that trumps reality even when the facts stare the public in the face as can be readily seen by todays regressive and vindictive policies from the LNP neocons.
Australia has a toxic, partisan and throroughly corrupt mainstream media, and until this LNP/media/business collusion is exposed and dismantled there will be no movement toward egalitarianism, justice or material progress in Australia.
JohnB, all Australian taxes due must be paid in Australian dollars. Tax avoidance through offshore minimisation schemes does not, to my knowledge, involve any foreign currency. The loss of tax revenue is a hit to the budget bottom line and the shortfall therefore would be made up by deficit spending. That’s really no big deal in the broader scheme of things but it’s a poor message from Hockey to simply not bother trying to close the loophole.
John Fraser, I don’t know why that happens although in my case it differs from article to article. Will pass it on to Michael.
John and John, I’m not sure if WordPress gives us that option.
We used to be able to do it with WordPress.com but we can’t now we are with WordPress.org.
I’m sure there’s a way to do it, however I would need to learn a few more tricks.
What device are you using John F? You as a reader may also have some control over how links are opened. On this Android device, holding on the link gives the option of where to open the link, right click gives similar options in Windows, and if you have IOS or other Apple OS, you’re paying too much 😀
I do concur your theory is more than likely correct John, but for the life in me i cannot see Bill Shorten selling the public any controversial financial measures which the country needs, sadly the man is a political nomad wandering in the desert. Iam sorry to say Bill Shorten is the biggest impediment to Labor’s return as an effective opposition, one that has the ability to capture the public’s confidence and vote.
Nevertheless we do live in hope …
Through all posts on this site runs a concensus of opinion that Bill Shorten does not have the guts to lead a strong and vibrant ALP in opposition. Just imagine if Julia Guillard was LOTO in Parliament today ,with a MSM ( unlikely ) behind her , she would tear our incompetent Tony Abbott apart.
Julia back, why not?
@John Kelly January 18, 2015 at 11:25 pm
“…That’s really no big deal in the broader scheme of things…”
John, I find that hard to accept – it goes against ‘real world’ observation of trans-national ascendancy to global wealth levels rivaling that of many sovereign nations.
Please consider this:-
While the lost trans-national corp. tax revenue may represent just so many more numbers added to the host sovereign nations deficit bottom line, the tax avoided is in fact ‘bonus profit’ when realised on the balance sheets of trans-nationals corps. in external economic jurisdictions.
These t-n corps. have in practice gained additional wealth (buying power) relative to ‘like industry’ local businesses that may be operating in the original host nation.
When these t-n corps re-enter the host nation to conduct further business, not only are they advantaged by having that additional ‘buying power’, they can afford to operate at lower profit levels than locals, as they well know that tax minimisation measures they have in place will allow them to recover much of the forgone profit as ‘tax savings’.
The t-n corps. have taken ‘wealth’ from the host nation, even though it is in the form of avoided taxes.
While an ideally MMT managed sovereign economy will compensate ‘nationally’ for the wealth extracted by t-n corps. by reinserting equivalent domestic stimulus funding, the t-n corps are laughing all the way to ‘their’ bank with externalised compounding wealth (profit) accumulation.
To sum up, it appears to me that t-n corps. operate in isolation to MMT, extracting and accumulating resources/wealth from those MMT managed nations while contributing minimally to national welfare/infrastructure.
Ace, Well said about Bill S and re Julia, what about Albo and Tanya now ?, the time is ripe.
Every negative comment about Abbott hides and deflects the shortcomings of Bill Shorten, and this itself may be part of a cunning LNP plot, use Abbott as a sacrificial lamb !
JohnB, the ‘no big deal’ comment was in reference to the amount of tax avoided as a percentage of the total revenue of the nation. However, in taking the matter off the table, Joe Hockey is sending a very bad message to the T/Ns literally giving them carte blanche to carry on and expand their avoidance if they want to, which then upholds all of your subsequent comments about their additional competitive trading edge. They are, in fact, acting in isolation to any sovereign nation’s economy (not just MMT), when they flaunt off shore minimisation schemes. The reasons Hockey gave not to pursue them was pathetic. I can only surmise that a number of them are major contributors to the LNP’s coffers.
Coal Seam Gas, converted to LNG (Liquified Natural Gas) has been shipping out of Queensland since December, headed for hydrocarbon hungry Asia.
Expect local gas prices to skyrocket, while more land is rendered barren.
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@CMMC
Actually it was only this year that the first shipment left Gladstone.
You're going to love this :
"Treasurer Tim Nicholls' said Queensland was suffering hits delivered by the falling price of coal and gas, and economic uncertainty around the world." …………. http://www.sunshinecoastdaily.com.au/news/lnp-under-attack-jobless-rate-29-above-normal/2514988/
And this, just a month earlier :
""We will see schools and hospitals, great roads and all sorts of community infrastructure, being built on the back of these projects."
http://www.abc.net.au/news/2014-02-18/qld-premier-talks-up-lng-industry/5267920
Here's what Fairfax media (and many others are saying) :
http://www.smh.com.au/business/comment-and-analysis/local-gas-prices-set-to-soar-as-exports-to-asia-get-under-way-20150118-12rl6c.html
The newman LNP …… unlike the W.A. government ….. has not put aside any LNG for domestic purposes.
@John Kelly January 19, 2015 at 8:57 am
Thanks John for that reply.
Regrettably corporations are in de-facto charge of capitalism and most world democratic governance.
In my opinion there will be little change even when the ALP displace Abbott’s rabble in 2016 – sufficient ALP careerist politicians have been insidiously infiltrated/compromised to ensure only a brief lull in consolidation proceedings.
LNP lite is thriving under Shorten’s cronies, and unless the ALP ‘left’ get off their backsides and agitate for some proper democratic rank & file participation and a return to early Labor egalitarian values, I think we have little chance of fixing that unfortunate situation before 2016.
MMT won’t get a guernsey in that environment.
That’s my ‘beef’ for today.
All governments that pursue growth will fail. EROEI mates, EROEI. Physics trumps economic and political ideologies every time. Debt fueled growth is failure.
I follow this debt clock.
http://www.nationaldebtclocks.org/
More economic and business stuff.
http://sgtreport.com/2015/01/countries-are-isolating-themselves-as-the-western-central-banking-system-collapses/
Energy makes money, money does not make energy.
http://www.businessinsider.com/the-great-american-oil-bust-is-only-just-beginning-2015-1
http://www.businessinsider.com/how-dangerous-is-the-oil-crisis-2015-1
http://oilprice.com/Energy/Crude-Oil/Energy-Crisis-As-Early-As-2016.html
Since I have been visiting this site, the contributors have consistently shown their ignorance. Too much time spent writing and not enough spent reading.
Harquebus, I probably read as much as you, and similar articles too. The thing is, I don’t necessarily believe it all. The “oil” story is the most interesting at the moment. Russia’s decision yesterday to shut off the gas pipeline to Ukraine and the rest of Europe is potentially very serious, but no one is threatening to nuke anyone, yet. The debt clock you linked to is also interesting if for no other reason than to demonstrate that the debt is so high it will never be paid back; at least not in the next 500 years anyway. We are not ignorant of these developments and neither are our readers. But, speculating on their outcome is not the only interest on our radar. Our readers are, for the time being, more interested in matters that directly effect them today. As these other issues develop they will be commented on, but to ignore local issues in favour of them is not what we do.
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The new sales pitch :
http://www.theage.com.au/federal-politics/political-news/joe-hockey-raises-prospect-of-australians-living-until-150-to-justify-budget-cuts-20150119-12t3m1.html
Trumps stupidity with bullshit.
Something that Hockey has an abundant supply of.
In addition to the profoundly stupid statement, notice that Hockey is trying to further Ms. Ley’s attempt to craft or co-opt some sort of fairness “argument” about rich people. That it’s “not fair” that they’re not paying more for situations like his kid’s emergency care.
The implication being that ergo, everyone else can afford the Liberal Party’s Medicare co-payments.
Kaye Lee,
I’d strongly recommend you beg borrow or steal a computer with working sound – that video is well worth an hour of your life (plus another ½ hour for questions).
Steven Hail does indeed answer your questions in the video.
From my limited ability to communicate this stuff, the limit to injecting funds into an economy is the capacity of that economy – as long as there are people available to work and physical resources necessary to produce what a government wants to buy, the government can spend as much as it likes. The MMTers put this as, “A sovereign government is not revenue constrained, it’s capacity (or resource) constrained.” When the capacity of the economy is exceeded, we run into inflation problems. That’s the limit reached.
As far as issuance of bonds goes, this is monetary policy – the aim is to keep the cash rate within the range set by the RBA. Deficit spending injects extra funds into the system – issuing bonds withdraws the extra cash from the system. It’s really not so much a case of a limit to the bonds on issue, but rather that the bonds on issue support the RBA’s desired interest rate range. Steven covers this at about the 30 minute mark of the video and Bill Mitchell also covers this in his blog, Deficit spending 101 – Part 3 (which has this really good graphic explaining the flows).
http://bilbo.economicoutlook.net/blog/wp-content/uploads/2009/02/deficits_and_money.jpg
@John Kelly.
Worry about today because, in the future there will be no one too worry.
All that I have read here is superficial and echoes the BS statistics put out by our lying governments.
It does not seem to bother you and others that your grandchildren are going to die premature deaths.
http://grist.org/living/life-on-earth-now-officially-at-risk-scientists-say/
http://truth-out.org/news/item/28490-the-methane-monster-roars
http://phys.org/news/2014-12-methane-leaking-permafrost-offshore-siberia.html
http://www.news.com.au/technology/environment/david-attenborough-why-humans-could-die-out/story-fnjww010-1227171301676
http://www.greenpeace.org/international/en/news/Blogs/makingwaves/are-limits-to-growth-real/blog/51820/
Then we have Kaye Lee and others who think that “renewable energy” is real. Good grief!
http://physics.ucsd.edu/do-the-math/2012/01/the-motion-of-the-ocean/
http://theenergycollective.com/gail-tverberg/330446/ten-reasons-intermittent-renewables-wind-and-solar-pv-are-problem
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
I can not, in all seriousness, take you and others here seriously. While we have people like you, oblivious to the real situation, we are doomed. Wake up man! The economy is already doomed so, forget it. We can not shop our way to sustainability. It is our survival now that is at stake.
http://www.businessinsider.com/the-great-american-oil-bust-is-only-just-beginning-2015-1
http://www.peakprosperity.com/blog/90662/keep-your-eyes-prize
BTW: I’d like to know, just exactly, what is it that you read? My reading list is large and varied.
As alluded to in my post above, there are among progressive economists very good, evidence based and analytical reasons for that.
Would you mind listing a few Jexpat, starting perhaps with the “seigniorage problem”?
From my limited ability to communicate this stuff…
I haven’t heard any better Bacchus!
The world owes 61 trillion dollars…who the f*** to? Mars? Jupiter?”
Thank you to the far wiser folk than I who share their information and opinions here regularly.
I apologise for getting carried away yesterday.
I still have one un-answered question, which has been bothering me for a while.
How is free trade supposed to be better for Australia than the protected-trade industrial situation O grew up with and started working under in 1980 ?
I just can’t make the numbers stack up.
thanks to anyone with an answer
The dirty little secret about free-trade is that those countries who preach it to the rest of us built their wealth and their industrial might behind huge tariff walls, China recently and the US in the late 1880’s.
The growth of developing nations has been lower when they have adopted free-trade policies.
If there was any truth in the free-trade rhetoric China would still be a basket case.
That hyper-link to Peter Martin’s blog on the debt doesn’t seem to have worked. This should…
Another one for the economy.
“A collection of nearly one dozen of the world’s top economists and other geopolitical observers believe that the world is close to financial collapse, because so much of what passes for “the global economy” is built on false or otherwise conjured pretenses.”
http://www.naturalnews.com/048322_financial_collapse_Federal_Reserve_global_economy.html
Since the economy is going to die anyway, why is society trying so hard to save it?
Why do psychopaths govern societies and control corporations? Answer: Fools never listen, idiots never learn.
Fools and idiots I am surrounded by.
@gangey1959
“How is free trade supposed to be better for Australia than the protected-trade industrial situation?”
Answer: It’s not.
The 1%ers, in their relentless pursuit of cheap labour, love them.
Those with the paper gold, they make the rules. Those with the real gold, China and Russia, will rule next.
Cheers.
Thank you all.
I just needed to know that I am not as stupid as I was starting to believe I am.
Therefore. TA’s wafty bits of paper upon which he has the signatures of the various foreign leaders to whom he has sold Australia’s soul are about as beneficial to the millions of (ex) working people of our mighty nation as old chip wrappers and seagull crap at the beach.
Cheers.
Can the FTA’s not be just torn up, and all of the various foreign Govt’s told that we are sorry, but it was just a bad idea and that although we realise it may cause them a bit of short term inconvenience, they will get over it just like us ?
“Can the FTA’s not be just torn up….”
Never in the history of humankind, from time immemorial, has there been a contract that cannot be “torn up,” broken or breached.
Or rescinded, repudiated, renegotiated, or renunciated.
The propriety or probable results of doing so is quite another and a considerably more complicated matter.
Jexpat,
You seem reluctant to add substance to your claim that MMT is “controversial”.
I’m particularly interested in the “seigniorage problem”.
You seem to imply the Greens are steering clear of MMT because they know something we don’t.
“Deficit spending on value-adding projects is good for the economy. Eighty-two of the last 100 years of Federation involved deficit spending, a body of fact that has contributed to where we are today. Are we burdened by those deficits? Are we cursing our parents and grandparents for making us the beneficiaries of this debt? I don’t think so.
Here’s a quote from Bill Mitchell, John, to emphasise the point:
“There has never been an empirical relationship shown between tax level changes and debt level changes lagged however many years you like. The notion is ridiculous. “
“Intergenerational fairness improved by fiscal deficits”
http://bilbo.economicoutlook.net/blog/?p=28597
And a quote for you Harquebus on your favourite subject:
Isn’t it about time that we learned this simple truth? Is it so hard to understand that when an individual owes money he generally owes it to another individual, but when a nation owes money it owes it to itself? When an individual pays a debt, he pays it to someone else. When a nation pays a debt, it pays it to its own people
Marriner Eccles, former Chair of the US Fed (1938)
The obsession with the national debt is not new, but what’s amazing is that there are folk today who still don’t understand it.
Peak oil will destroy trade. No need to tear up agreements. Trade depends on transport depends on oil.
The collapse of the fracking bubble will result in a supply crunch from which, because of massive debts, we will not recover. Our populations will reduce to sustainable numbers only to be wiped out by climate change.
Modern agriculture is the process of turning fossil fuels into food.
From seeding, weeding, harvesting, processing, warehousing, to market and to plate, all depend on oil.
It is not if the future will be bad, it is how bad will the future be? Very bad. Voluntary population reduction was an option. Now nature will do it for us and it won’t be pretty.
MMT is an abstruse concept to the vast majority of the population – their main concern with economics is limited to their personal finances.
Any politician attempting to educate electors on the intricacies of national finance regulation would find it an impossible task as the general public’s attention span on such esoteric topics likely less than 15 seconds.
That inability to comprehend, and known impossibility for the masses to ever adequately understand national finances is the very reason that conservative forces find it such fertile ground for fear mongering.
When it is all said and done, the vast majority of people (generally) don’t owe debt directly to their government, they owe it to commercial lenders/private establishments and corporations owned by the wealthy – who themselves are indebted/subservient to the financial elite 1%.
What implication or direct connection to the average citizens personal debt does MMT have?
If MMT can be linked to an electors personal debt perhaps some traction could be achieved in countering ‘politically useful’ misinformation.
When hard financial times impact, citizens are very aware of the threat of personal loss; with foreclosure on their un-affordable personal debt obligations to finance companies, banks etc. hanging over them and their families like the sword of Damocles.
No matter what ‘theory’ applies to national finance systems, in hard times, the poor /common middle-class lose their needed homes/possessions and are left holding practically unpayable debts.
Can MMT change, or be meaningfully linked to Joe/Jane Citizens everyday financial world?
JohnB, you ask,”Can MMT change, or be meaningfully linked to Joe/Jane Citizens everyday financial world?”
I’m sure there could be a way. MMT’s full employment principle might be a good start. People in fear of losing their jobs might find the job guarantee quite comforting. It would certainly take the pressure off finding the money to pay the mortgage.
There may be other ways as well. It requires some thought and input from the experts.
Can MMT change, or be meaningfully linked to Joe/Jane Citizens everyday financial world?
Deficits, JohnB.
Aggregate private sector debt can only be reduced through fiscal deficits, an insight that flows from an understanding of MMT.
Or external surpluses. But the last time we had one of those was when Gough was PM, IIRC.
“Then we have Kaye Lee and others who think that “renewable energy” is real. Good grief!”
Harquebus, you have linked to this article countless times.
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
As I have tried to point out to you, that article is written by Lewis Page, a climate change denier.
Based on a large number of articles published by Lewis Page in The Register, Page has promoted a range of views regarding climate change including that:
• Global warming may actually be caused by the sun.
• Global warming is part of a natural cycle.
• Reducing soot is more important than curbing CO2 emissions.
• Global warming may be beneficial.
• Sea ice is not melting.
• If sea ice is melting, it may absorb CO2, which would be a good thing.
• Geo-engineering is an easier method of curbing global warming than reducing emissions.
• We need to fight an impending ice age by releasing as much CO2 into the atmosphere as possible
When you show no discernment about the credibility of your sources it makes me very sceptical about your information.
The Federal Reserve is private banking cartel. What to they lend? Fiat currency and throughout history, all fiat currencies have fallen to their intrinsic value of zero. A debt to the banks is your time and effort. That is all. Reserve banks create fiat from nothing and lend it in order to keep the debt slaves slaving.
Ever wondered why we need inflation which, is actually the inflating of the money supply? QE anyone? It’s how the banking cartels keep this ponzi scheme going. There is no other reason. Without inflation, debts can not be repaid and is why banks and governments are blowing like mad to avoid deflation which, is good for the debt slaves. They want to enslave us forever. Fortunately, the physical limitations of our planet is unraveling this evil system and is why governments are militarizing their police forces and confiscating weapons. They fear the backlash when, not if, the system collapses which, is coming soon. Peak oil mates, peak oil. Grow some veggies, raise some chickens and buy a horse.
Cheers.
@Kaye Lee
You still don’t get it. Renewable energy generators do not return the total energy used in their manufacture, construction and maintenance. If they could and then some, the “then some” would be free energy and could be used to create more renewable energy generators. Our planet would soon be covered in them and our energy problems solved. The fact is, they can’t. They wear out long before the precious fossil fuel energy used in this task is returned. EROEI (Energy Returned On Energy Invested). Look it up and study it.
The usual economic argument in favor of these devices do not factor physics nor our environment. The maximum theoretical energy return from renewable generators is, from memory, sixty something percent. It is this law of diminishing energy returns which makes these inefficient devices non viable. If our oh so great journalists would consult with physicists, they would know this.
Things to consider when factoring energy invested include the transport of everything throughout the extensive supply chain, the smelting of ores and silicon, the manufacture of consumables, plant and machinery, sustaining a workforce and the building and maintenance of associated infrastructure, education and training, etc., etc., etc. Without the still relatively cheap fossil fuels available to us, these devices would never be built. I say “still relatively cheap” because, a litre of fuel is approximately the energy equivalent of two weeks manual labour.
Sunlight might be free but, it is diffuse. That means that it has to be collected over a large area like hydro electricity which, scrapes the energy from millions of kilometers of ocean and concentrates it through a turbine or to collect it over a long period of time like trees. Hydrocarbons are concentrated and stored solar energy. Wind harnessing devices can be used to polish glass but, they can not melt it.
http://thebulletin.org/myth-renewable-energy
http://theenergycollective.com/gail-tverberg/330446/ten-reasons-intermittent-renewables-wind-and-solar-pv-are-problem
The only solution to energy and water scarcity, pollution, climate change and the destruction of our environment is population control. A “hard decision” not even contemplated by our growth dead head politicians nor MSM (Main Stream Media).
It is not up to me to prove that renewable energy devices do not produce more energy than used in production, it is up to the renewable advocates to prove that they can which, they can’t and is why they use economic arguments. Economic arguments do not count. It is energy that must calculated.
Convert your mega and kilowatts from renewables to boe (barrel of oil equivalent) here. You will see just how very little renewable energy is produced.
http://www.convert-me.com/en/convert/energy/
Looking forward to your proof.
Cheers.
<
@Harquebus
Why bother with "Looking forward to your proof" ?
You haven't to date.
Harquebus,
Is renewable energy preferable to burning fossil fuels?
” Renewable energy generators do not return the total energy used in their manufacture, ”
I have refuted this too many times to bother again since you absolutely refuse to accept the facts so let’s just stick with the first question.
I know you are interested in EROCI.
http://reneweconomy.com.au/2014/why-100bn-invested-in-wind-or-solar-will-produce-more-energy-than-oil-18002
@Kaye Lee.
As I said. I don’t have to. If you want society to invest the $billions in renewable energy, it is you that needs to prove.
As I also said, economic arguments do not count. That is why renewable advocates use them. EROEI not ROI.
I forgot about this one.
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
BTW: How does one get one’s picture up on this site.
@Kaye Lee
Also, reports that say renewables can never factor far enough up the exponentially expanding supply chain. All energy used everywhere for just about everything must be included.
“I forgot about this one.
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/”
Since that is the 50th time you and mikestasse have posted that link, and since I have replied several times about it which you have totally ignored, I see no point in continuing to post things you won’t read or acknowledge.
Wind comes in at an EROI of 18; photovoltaics at 6.8. In other words, you get 18 times more energy out of the wind turbine than you put invest in it during manufacturing, installation, operation, and dismantling.
http://energytransition.de/2014/09/renewables-ko-by-eroi/
<
@Harquebus
Give it a go :
http://www.instructables.com/id/How-to-make-a-small-wind-generator-In-celebration/
Come back in 12 months and report your findings in relation to cost.
Bye now.
@Kaye Lee.
When are you going to forget about costs. Economic argument is a losing argument. It is energy that must be calculated.
“manufacturing, installation, operation, and dismantling” is only a small fraction of the energy used.
Renewable energy will not make trucks and it will not move them. No trucks, no renewables. Imagine all the energy used to extract, transport and transform raw materials, manufacture and maintain all required machinery, sustain a workforce and infrastructure, bring all the pieces together just to produce a truck. Then use the truck to transport sand to a furnace which, uses fossil fuels, to make the silicon or whatever that is required and you have only just started factoring the energy required. Then add all the other requirements that our modern society needs.
@John Fraser
How much energy went into producing and transporting the materials used in your small generator.
You make laugh, the pair of you. You do not think far enough when considering energy. When you wake tomorrow, start adding up the energy that just you use in one day.
Everything must be able to be manufactured, transported, operated and maintained by renewable energy, including humans, for it to be viable.
Google’s PhD’s, people probably smarter than me even, can’t make renewables viable. What makes you think that others can?
Okay, I’ll wait twelve months. We’ll see how well your renewables fair in the meantime.
“You make laugh, the pair of you.”
When you come up with any form of a practical suggestion (and I do not consider the entire world becoming subsistence farmers overnight practical) then we could have a discussion. People who want to just post over and over and over “the end is nigh” are, to me, a waste of time.
<
@Harquebus
All you need to make your wind generator you can find … for free … at the dump.
Now toddle off and start building your wind generator and come back with your cost benefit analysis.
"You make me laugh the pair of you."
Here you can get the help you so desperately need :
https://www.sane.org/snapshots/cameron2/187-schizophrenia
I am doing this as a community service because I have been following your posts and have seen how your behaviour has changed since you first started posting.
@kaye Lee.
You are using economic argument again. Fail. Products from a dump were made and transported using energy and I don’t need help, you need an education.
Here are my suggestions:
1: Forget economics. It is “fatally” flawed. It has polluted the planet, poisoned us all, does not factor physics nor the environment and is what has got us into this mess in the first place.
2: Implement national and encourage international population reduction strategies. One way or another, nature will drag us back to sustainable levels and it won’t be pretty.
3: Properly manage our finite resources which, are currently being pillaged.
4: Reduce consumption using quotas and not with unfair taxation. We can not shop our way to sustainability.
5: Plant lots and lots of trees. Massive scale reforestation will help the climate, rainfall and be a valuable renewable resource for future generations.
Reducing populations voluntarily is our only viable option. If we don’t, nature will. We don’t have time to waste on fairy tales like renewable energy. That is for fools only.
You may doing a community service, I am trying to save humanity. You know, preserve some sort of functioning society. Now stop dreaming and come up with something practical yourself.
Harquebus,
You might want to glance up and check your aim and target identification. You appear to be blasting at the wrong barn.
Harquebus,
Your suggestions are idealistic rather than practical. You might LIKE to forget the economy but that isn’t going to happen so it is unrealistic to keep harping on about it. I have asked you before how you would intend to “implement population reduction strategies”. Your answer of “one woman one child” sounds so simple until you actually start discussing the reality of implementing such a strategy.
I understand that you want to “save humanity” but until you become a little more realistic about what CAN be achieved you are just the man with the sandwich board saying “the end is nigh”.
And as for your constant ignoring and dismissal of all things that don’t fit into your narrative, you are becoming endlessly repetitive. You don’t discuss, you lecture. “Google’s PhD’s, people probably smarter than me even…I don’t need help, you need an education”. Self belief is a good thing, thinking you are omniscient isn’t. I have been educating myself all my life and will continue to do so for as long as my mind keeps working. To date, you have taught me nothing.
PS I agree about planting trees but, as cb has explained, that too is not as simple as it sounds.
I think my comment made on Jan 18 was way too hard on the Greens in regard to their expertise with economics and industrial policy, especially when one looks at the other political parties. I must have been in one of my black moods. The Greens do have the required valid expertise easily at hand, they have an excellent moral compass and they believe in consensus decision making and will easily outperform any of the other political parties in government. A few days ago I read the current Australian Greens policies and was pleasantly surprised by how well most of it ended up after their recent review. There is a lot of substance in those words and it is such a contrast to our current federal government and also the ALP.
http://greens.org.au/policy-platform
In regard to the FTA’s, how soft is the paper they’re printed on?