Posts tagged politics
Things to think about #5

There’s been a lot of talk about the political center* in Europe in the past few weeks, in the wake of the French parliamentary elections and the landslide victory for Labour in the UK. Is it reinvigorated, complacent, or perhaps just lucky? I offer two thoughts on this.

Firstly, sometimes a long-in-the-tooth incumbent is sacrificed on the altar of change no matter how reasonable or uncontroversial he or she is. In the context the most recent elections in Europe, this applies mostly to France, where the people has a tendency to throw their leaders under the bus, for no other reason that they’ve been in power for a bit too long. But I think it applies to England too, to an extent. Rishi Sunak and his cabinet weren’t that bad, or more specifically, the Sunak government was a lot of less controversial and risk-seeking than its Tory predecessors. But in the end, the weight of dissatisfaction and disillusion with previous iterations of Conservative cabinets were too much to bear. The Tories received the drubbing they deserved, having put their faith in a toxic mix of volatility and incompetence under Boris Johnson and Liz Truss. The doomed political and economic project of Brexit looms large in this story too. Whatever Labour decides to do with this smelling carcass of a political legacy, it brought the destruction of the Conservative party, and the right in UK politics, as we know it. Perhaps for that reason, Starmer will be inclined to leave it smelling for a bit longer, to remind people of what they’ll get should they consider jumping back into the Tory fold.

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Politics and society, US politics and society, European politics and society, UKclaus vistesenHedgehog Review, European politics, US politics, Anton Barba-Kay, centrism, Joe Biden, Donald Trump, Ben Hunt, Epsilon Theory, politics, U.S. elections, U.S. politics
Woke economics

The chancellor of the Exchequer had sobering news for the UK public last month when he unveiled that the Treasury is on track to borrow almost 20% of GDP this year to plug the hole in the economy created by the virus, a move that will see the public debt-to-GDP ratio zoom past 100%. In a world governed by the rules of the now-defunct work by Rogoff and Reinhart—famously discredited by a spreadsheet error—these numbers would send chills down the spine of economists and public policymakers, but we’ve moved from on then, significantly. We now understand that the government does not operate under a budget constraint, and that it can, in fact, create as much (sovereign) money it wants to buy as much debt that it wishes to issue—via primary market purchases by the central bank—to finance whatever level of spending and investment—ostensibly to generate jobs for every able man and woman—that it wants. I treated these issues in a long-form essay on fiscal policy, but the elevator pitch is simple enough. Under the auspice of MMT, governments have the ability and duty to create jobs for everyone and to prevent financial and economic distress and harm. It must do so because the economic costs and constraints hitherto associated with such a policy strategy are figments of Neo-Classical economists’ imagination.

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Economics, Business, and Finance , Fiscal Policy, US Economy, US politics and societyclaus vistesenwokeness, woke economics, fiscal policy, politics, MMT, modern monetary theory
On Patriotism in Europe, in the U.K. and Brexit

I this video I discuss patriotism and nationalism in Europe and in the U.K., using the Brexit referendum as a case study. I open the video by reading an excerpt from a recent article in the Point magazine, in which editor Jon Baskin interviews Princeton professor George Kateb about his writings, ideas and thoughts on patriotism. The views expressed here are mine and mine alone, and as I say in the introduction, I am using Mr. Kateb’s arguments out of context, which is to say, I am using the very specific points he makes to Baskin as an amouche bouche for my discussion. I am not familiar with Mr. Kateb’s writings at large. Though I don’t mention him directly, I have also been inspired by recent comments by Douglas Murray, and conversations between him and other interviewers, relating to the oddness of being ashamed of one's history and heritage. I apologise for the cover of my notebook protruding annoyingly in the bottom of the frame.

Thanks, as always, for watching.

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European politics and society, Politics and societyclaus vistesenpatriotism, nationalism, Brexit, UK, Europe, the EU, the Second World War, politics, society, Douglas Murray
Fiscal Policy

The idea of government intervention and demand-side fiscal stimulus was born by Keynes, eradicated by neoclassical economics, lazily reintroduced by the new Keynesians, and is now enjoying a renaissance. It’s fiendishly difficult to judge history in real time, but I would bet that the current shift has momentum, a position that has been strengthened by the response to the Covid-19 crisis. It is perhaps unfair to insist on a marriage between this story and MMT, but it serves as an introduction to the issues at hand. The idea that governments with sovereign Chartalist currencies can’t run out of money, and that this power should be used to achieve full employment, is enticing. It is also, however, naive. MMT easily dodges the main theoretical critique, at least in the current environment. The Phillips Curve probably still exists, but it has also flattened significantly, making it difficult to attack MMT armed with the traditional trade-off between unemployment and inflation. If MMT passes this first test, however, it fails the subsequent trials. The implementation of MMT in today’s economy requires significant shifts in the relationship between fiscal and monetary policymakers and an end to the free flow of capital. My sense is that about half the proponents of the theory don’t have a clue about any of this. The other half understands that MMT requires an end to central bank independence, and a significant reduction in capital mobility. The problem is that this latter group aren’t being honest, and for that reason, I am skeptical about their true motivation. If you want to dial back globalization, the least you can do is to be honest about what this means for households and firms. If you think that an independent central bank is a suboptimal institution, how will the alternative look, and how will it be held accountable?

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Economic Theory and Acadmics, Global Economy, Writingclaus vistesenfiscal policy, MMT, modern monetary theory, Keynes, John Maynard Keynes, fiscal stimulus, fiscal multiplier, capital flows, monetary policy, interest rates, politics, geopolitics