Professor Bill Mitchell wrote, in his daily blog this week, that, “the media input into our lives only reinforces the smokescreen of ignorance that we conduct our daily lives within.”
What a truism.
For most of us, our ignorance comes primarily from whatever media report we hear or watch and it either reinforces our existing bias, or we exclaim, “well, I wasn’t expecting that.”
There is also another smokescreen of ignorance; a document that is issued overlooking previous errors. It is generally a media release, parading as a truism, tweaked to become a foundation stone upon which so many other “truisms” are laid; even if it contradicts previous documents and stated positions.
For much of the last five years the International Monetary Fund (IMF), led by Madame Christine Lagarde, has been preaching austerity and savagely “bullying governments to run pro-cyclical fiscal policy (aka austerity) at a time when non-government spending was weak and weakening.”
During that time, millions of people around the world lost their jobs unnecessarily.
Now, it seems, there has been a change of heart. Now, in a carefully guarded statement that ignores the recklessness of the IMF’s previous gospel of austerity, Madame Lagarde is telling the world, “There is a strong case for domestic coordination across policies, with fiscal policy needing to do more in some cases.”
The document is, “The Managing Director’s Spring Global Policy Agenda Decisive Action, Durable Growth April 2016” and in it, Madame Lagarde tells us that the outlook for the world economy has weakened further, risks have increased, the recovery in advanced economies (like ours) is moderate, emerging and developing economies are slowing further, risks to global financial stability have increased and a durable recovery is becoming elusive.
She now recommends, “those with fiscal space should commit to ease fiscal policy further, which would benefit them, and support global demand.” Which, in English means, SPEND, SPEND, SPEND. The very organisation that was telling the world to stop spending five years ago is now telling the world to start spending.
And what is this “fiscal space” she refers to? In the words of Bill Mitchell, “The only ‘fiscal space’ that has any validity for a currency-issuing government is the idle productive resources that are for sale in that currency.”
There appears to be a disconnect between the language used by Scott Morrison and Malcolm Turnbull when juxtaposed with the new language of the IMF. Granted they may not have read the IMF document and we are hearing a lot about “jobs and growth”.
But we are still hearing plenty about living within our means and balancing the budget. It’s the sort of rhetoric that ignores the means by which jobs and growth are achieved.
The IMF have been ignoring it too, until now. But we have to give them credit for at least changing tack. It’s a pity they didn’t see the light back in 2010 when they ruined so many lives with their neo-liberal claptrap.
It’s a greater pity for the Australian economy that our dynamic duo in Canberra haven’t yet seen the light. Perhaps if they read the “The Managing Director’s Spring Global Policy Agenda Decisive Action, Durable Growth April 2016”, they might also change tack.
Would it make any difference if they had? One suspects not. What we are looking at is a Prime Minister and Treasurer ignoring the fiscal space available to a currency issuing government. That space, expressed in human resources, is the unemployed, the people currently out of work, those who could be employed if the government wanted them employed.
The Coalition rhetoric is like a broken record and the problem is that if we keep listening to these ignoramus’, pretty soon we will have the European disease on our doorstep; an entire edifice of utter nonsense that was accepted as fact. The rhetoric has begun in earnest. The most used expression over the past few days is the one about spending taxpayers money wisely.
It suits us to hear politicians talk about how “our taxes” are spent. We like to think it’s our money. The “how governments spend our taxes” myth fits very nicely into the nonsense that is perpetrated worldwide by the neo-liberal groupthink that commands the media’s attention.
But what do we do when that same groupthink realises that their advice was nonsense and recommends a reversal? Do we dismiss them as frauds? The wording in the IMF statement shows they cannot bring themselves to recognise their failed former economic approach.
One positive reference from Ms Lagarde is the recognition of the new Canadian government’s approach to increase deficit spending and so urges, “for a more growth-friendly composition of revenue and expenditure, particularly increased spending in infrastructure in some countries.” That’s what Canada is doing.
Perhaps there is time for our dynamic duo in Canberra to do an about face and take the advice of so many heterodox economists who have been pleading for increased deficit spending on infrastructure for the past five years, and which seems, finally, to have caught the ear of the now seriously damaged IMF.
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