mfioretti: austerity*

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  1. The last 40 years has seen a steady rise of deficit-hawking, in which the world's postwar social safety nets are shredded because the state "can't afford" them -- think of all the times you've heard of national debt being money that "the taxpayers" will have to pay back, and misleading comparisons between sovereign governments (who print their own money) to households and businesses (who don't), as though sovereign state finance was just a scaled-up version of balancing the family check-book.

    But a pushback has been quietly building against this trend, based in economic theories that treat money "not as a finite abstraction, but a limitless public utility that can be used to meet human needs." These ideas started to move outside of wonkish economic circles with David Graeber's Debt: The First 5000 Years, which became required reading during the Occupy Wall Street years. Graeber sets out the theoretical underpinnings of Chartalism, which holds that "money does not emerge from barter-based economic activities, but rather from the sovereign's desire to organize economic activity. The state issues currency and then imposes taxes. Because citizens are forced to use the state's currency to pay their taxes, they can trust that the currency will carry value in day-to-day economic activities."

    Chartalism became "Neo Chartalism," AKA "Modern Monetary Theory," whose core premise is that "The state can spend unlimited amounts of money. It is only constrained by biophysical resources, and if the state spends beyond the availability of resources, the result is inflation, which can be mitigated by taxation."

    MMT is the key to understanding how governments can pay for pensions, public education and universal healthcare, creating universal prosperity instead of brutal, wildly unequal, unstable states. It's gained so much currency that even archconservative economists are pushing its policies, even when they dare not speak its name.

    These ideas have been around since the early 1900s, growing up as a dissenting counterpoint to Keynesianism, pointing out that Keynes and the neoclassical economists assume that markets will be dominated by "active owners" -- companies run by the people who owned them. But the reality of corporatism is that the majority of companies are owned "passively," by investors whose interests are generally short-term and narrow, and who are willing to destroy the companies they invest in, provided they get a payday in the process.
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  2. Next Sunday, we get to see whether European centrism’s “double-or-quits” strategy will pay off. In Austria, where far-right populist Norbert Hofer is neck and neck with a Green candidate in the re-run of the election for the ceremonial presidency role, the left and centre are frantically trying to mobilise party-loyal working-class voters. They may fail.
    François Fillon is as big a threat to liberal values as Marine Le Pen
    Natalie Nougayrède
    Natalie Nougayrède
    Read more

    In Italy, on the same day, the centre-left government looks set to lose a referendum designed to strengthen the power of the executive over parliament. If the prime minister, Matteo Renzi, steps down and the markets crash, and Europe imposes a bank rescue plan that raids ordinary people’s savings, then you could get both a domestic banking and a eurozone crisis by Christmas.

    this grassroots culture of globalisation is breakable, if you try hard enough – because it can only exist in a space sealed off from official politics. At the typical European bar, beach or coffee shop, tolerance exists because educated people leave their nationality and religion at the door. The assumption among the young – implicit but strong – is that all politics is bullshit and does not matter.

    Now politics and nationality have begun hammering on the door. And initially they have produced mainly paralysis and fear.

    Fillon v Le Pen is not “good news for Europe”. Neither is Juncker’s promise to double down on all the mistakes that led us here; nor the IMF’s insistence that Greece should destroy its democracy some more; nor Renzi’s decision to play shit or bust with the Italian banking system.

    This is no longer a confident, transnational elite, revelling in Samuel Huntingdon’s famous description of national governments as “residues from the past whose only useful function is to facilitate the elite’s global operations”. And they are now up against a far-right international movement – Trump, Farage, the Breitbart media folks – whose coherence waxes as the globalists’ coherence wanes.

    We can stop this. But only if we reject the incessant demand for austerity, privatisation, longer hours, lower wages and the theft of a young generation’s future. That’s why the centre-left, in the short time available, must find the French people somebody better than Fillon.
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  3. E’ quindi essenziale per de Castries, “costruire una unione politica e fiscale e trasformare la Bce in una banca prestatrice di ultima istanza”. L’ostacolo contro cui si infrange questo ragionamento, ovvero il vero elemento di novità nella crisi persistente dell’Europa, è che non è più solo il Sud Europa a soffrire la pressione delle politiche europee, ma anche il Nord Europa guidato dal blocco tedesco, il quale inizia anch’esso a mostrare segni sempre più palesi di insofferenza verso l’Unione, e la conferma di questa tendenza ci viene proprio dalle ultime elezioni tedesche che hanno premiato il partito anti-UE, Alternative Für Deutschland .

    Non regge nemmeno più la spiegazione offerta dall’establishment europeo che attribuisce la colpa della situazione alla mancanza delle riforme strutturali che, se realizzate, consentirebbero una volta per tutte di guadagnare quell’auspicata crescita economica che fino ad ora è stato impossibile ottenere. Se si legge l’ultimo contributo di Vitor Constâncio, vice-presidente Bce, si troverà una spiegazione chiara dell’inefficacia delle riforme strutturali rispetto alla crescita economica e alla mancata ripresa dell’inflazione, dal momento che queste portano con sé una riduzione dei salari e conseguentemente nessuno vero stimolo alla crescita dei prezzi. Le politiche dal lato dell’offerta non sortiscono alcun risultato e l’effetto Pigou, tanto caro agli economisti classici, non trova nessun riscontro con l’economia reale. Cosa aspettarsi dunque dal persistere di questa situazione? Se c’è disaccordo con il professor Monti sulle cause della crisi europea, altrettanto non può dirsi degli effetti. L’Ue è destinata al crollo, ed è questa certamente una considerazione di buon senso. L’edificio europeo non è stato costruito per durare nel tempo, o per assicurare la pace tra i popoli europei. Esso è stato pensato per perseguire gli interessi tedeschi, e in minor misura quelli francesi
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  4. So, is this a coup? Has the Greek government surrendered its national sovereignty to a group of foreign politicians?

    The short answer is yes. Greece elected its Syriza government with a very clear mandate to reject demands for austerity. It then held a nationwide referendum which delivered a resounding NO to very specific demands for austerity. The Greek people have spoken – and yet, somehow, all those demands for austerity have now been accepted, and Greek prime minister Alexis Tsipras is being described as “a ‘beaten dog’ whose only remaining option was to submit to the creditors’ will”.

    The demands being made of Greece are almost laughably granular – they cover things like “Sunday trade, sales periods, pharmacy ownership, milk and bakeries”, alongside much bigger issues like pension reform. If national sovereignty means anything, it surely means that countries get to make their own decisions on things like bakeries. So clearly Greece has given up its national sovereignty, and when you give up your sovereignty to a group of leaders who were not elected by your own people, one entirely apposite word for that is “coup”.

    Tsipras was faced with a choice between two unacceptable outcomes, and he picked the one which would allow Greece’s banks to reopen, and allow the country’s arrears to the IMF to be repaid. In other words, Greece is at least going to have a functioning economy, now.

    The real problem with this deal is not that Greece is being asked to sign on to certain conditions before it can receive billions of euros in new money. The European single currency has always had conditions. The problem, rather, is the nature of those conditions. The euro was conceived as a single European currency – something which would bring the continent together, both economically and politically. Now, however, the euro is tearing its constituents apart.

    As Wolfgang Münchau explains in the FT, the euro has not been economic good news for pretty much any of its constituents bar Germany. Something designed as a one-size-fits-all currency has become a one-size-fits-Germany currency. Every other country in the eurozone has been forced to live with some combination of an overvalued currency and/or austerity, while the Germans, where the euro is undervalued, have happily been exporting their way to prosperity.

    In the early years of the euro, that was OK, because politics trumps economics. Political unity in Europe – the whole reason why the European Union exists in the first place – was seen as the ultimate goal. And when countries started suffering economically, Europe’s politicians and central bankers stepped up to loan them cash at below-market rates.

    Then those loans started coming due, and everything went to shit.

    This time is different in one big respect, however: involuntary Grexit was very much on the table. The Germans made it abundantly clear that they were both willing and able to kick Greece out of the euro, even if the Greeks themselves wanted to stay in. Up until now, exit from the euro has been unthinkable; from now on in, it’s going to be top of mind, whenever internal tensions start rearing up within the eurozone. The impossible has become – clearly, obviously – possible, which means that all of Europe’s sovereigns, especially Spain and Portugal, are going to see more volatility than ever in their borrowing costs every time they start pushing back against German demands.

    Tsipras was forced to accept Germany’s humiliating demands because he had no other choice. Next time – and you can be sure that there will be a next time – Greece will have its very own Grexit plan, and the Germans will be very happy to call the Greeks’ bluff and tell them to go ahead and use it. (That said, France, Italy, and Spain will all want to keep the eurozone intact, so Grexit is far from being a foregone conclusion.)

    One possible lesson from the latest round of Greece negotiations is that the technocrats were right. Previous Greek governments might have agreed too easily to Europe’s harsh terms, but Syriza’s fight was ultimately self-defeating. All that Tsipras achieved, through his belligerence, was even tougher terms – and an even deeper recession.

    But there’s another lesson to be drawn, which is that Europe has now reached the absolute limits of how far it can violate the will of the people. Greece has said NO, and it will say NO again, and the echoes of that vote will be heard across Spain in December.

    In a sense, it doesn’t matter what Tsipras agreed to in the early hours of Monday morning, because there’s absolutely no way that Greece is going to be able to actually deliver on those promises.
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  5. Some of the basic laws demanded by the troika deal with taxes and expenditures and the balance between the two, and some deal with the rules and regulations affecting specific markets. What is striking about the new program (called “the third memorandum”) is that on both scores it makes no sense either for Greece or for its creditors.

    As I read the details, I had a sense of déjà vu. As chief economist of the World Bank in the late 1990s, I saw firsthand in East Asia the devastating effects of the programs imposed on the countries that had turned to the I.M.F. for help. This resulted not just from austerity but also from so-called structural reforms, where too often the I.M.F. was duped into imposing demands that favored one special interest relative to others. There were hundreds of conditions, some little, some big, many irrelevant, some good, some outright wrong, and most missing the big changes that were really required.

    Back in 1998 in Indonesia, I saw how the I.M.F. ruined that country’s banking system. I recall the picture of Michel Camdessus, the managing director of the I.M.F. at the time, standing over President Suharto as Indonesia surrendered its economic sovereignty. At a meeting in Kuala Lumpur in December 1997, I warned that there would be bloodshed in the streets within six months; the riots broke out five months later in Jakarta and elsewhere in Indonesia. Both before and after the crisis in East Asia, and those in Africa and in Latin America (most recently, in Argentina), these programs failed, turning downturns into recessions, recessions into depressions. I had thought that the lesson from these failures had been well learned, so it came as a surprise that Europe, beginning a half-decade ago, would impose this same stiff and ineffective program on one of its own.

    Whether or not the program is well implemented, it will lead to unsustainable levels of debt, just as a similar approach did in Argentina: The macro-policies demanded by the troika will lead to a deeper Greek depression. That’s why the I.M.F.’s current managing director, Christine Lagarde, said that there needs to be what is euphemistically called “debt restructuring” — that is, in one way or another, a write-off of a significant portion of the debt. The troika program is thus incoherent: The Germans say there is to be no debt write-off and that the I.M.F. must be part of the program. But the I.M.F. cannot participate in a program in which debt levels are unsustainable, and Greece’s debts are unsustainable.

    None of this makes sense even from the perspective of the creditors. It’s like a 19th-century debtors’ prison. Just as imprisoned debtors could not make the income to repay, the deepening depression in Greece will make it less and less able to repay.

    Consider the case of milk. Greeks enjoy their fresh milk, produced locally and delivered quickly. But Dutch and other European milk producers would like to increase sales by having their milk, transported over long distances and far less fresh, appear to be just as fresh as the local product. In 2014 the troika forced Greece to drop the label “fresh” on its truly fresh milk and extend allowable shelf life. Now it is demanding the removal of the five-day shelf-life rule for pasteurized milk altogether. Under these conditions, large-scale producers believe they can trounce Greece’s small-scale producers.
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  6. They said, in effect: “If you, the IMF, want to be a part of all of this debt restructuring, we want to pay off all the private bond holders so that they don’t lose money. We want to let the speculators gain because that’s our constituency.” But the IMF economists pressured the head of the IMF at that time, Dominique Strauss-Kahn, to write down Greece’s debt.

    The problem is that Strauss-Kahn wanted the IMF to be a player in the European Central Bank and the European Union, the main financial interests. He also wanted to run for the presidency of France, and most of Greece’s debts were owed to French banks. So Strauss-Kahn had to essentially operate in the interest of France, and his own political fortunes rather than what IMF economists recommended. Basically, he agreed to have the Central Bank and IMF lend Greece enough money to pay the bondholders.

    It turned out that the IMF economists were quite right, and Greece couldn’t pay. The result is that the leading economists in the IMF’s European division resigned in anger. They’ve written a series of reports.
    Tags: , , , , , , , by M. Fioretti (2015-07-27)
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  7. l’ex professore del Mit lascia dopo aver portato a termine una rivoluzione copernicana, che ha completamente rovesciato l’approccio del Fmi alle grandi scelte di politica economica.

    Soprattutto negli ultimi quattro anni, gli economisti del Fmi hanno smantellato, uno dopo l’altro, tutti i pilastri del “Washington Consensus”, il manifesto neoliberale che, sull’onda reaganian-thatcheriana, aveva ancorato, dagli anni ’90, il Fondo alle ricette delle privatizzazioni, dell’abbattimento preventivo di tutte le barriere commerciali e finanziarie, della flessibilità del lavoro. E’ singolare che, mentre Blanchard e i suoi economisti, a Washington, provvedevano a seppellirlo, il “Washington Consensus” abbia trovato l’ultimo bastione a Berlino e fra i profeti dell’austerità. Fatte salve le buone maniere, dell’austerità Blanchard è stato il critico più feroce: con la sua uscita di scena, Varoufakis e Tsipras perdono un alleato prezioso, anche se, nel caso greco, la diplomazia ha impedito al Fmi di smarcarsi esplicitamente dalle autorità europee.

    L’attacco di Blanchard all’austerità inizia,
    come ricorda sul suo blog Francesco Saraceno, nell’ottobre 2012, quando, nel documento più importante del Fmi, il World Economic Outlook si svuota e si contesta la premessa stessa dell’austerità. E’ il primo mea culpa: ci siamo sbagliati, dice in sostanza Blanchard, non avevamo calcolato che, quando la politica monetaria è impotente, perchè i tassi sono già vicini a zero e molti paesi tirano contemporaneamente la cinghia gli effetti delle politiche d’austerità sulla crescita sono maggiori del previsto, lo sviluppo rallenta e il debito, inevitabilmente, aumenta: il risultato, insomma, è il contrario di quello che si vuole. Non è l’unico gancio alla mascella delle politiche di austerità alla europea: se austerità deve essere, dicono gli economisti del Fmi, fa meno danni aumentare le tasse che diminuire la spesa pubblica, al contrario di quanto predicano, in quei mesi, il governo Monti e la Commissione di Bruxelles.

    Neanche un mese dopo, il Fmi manda in soffitta un altro pilastro del “Washington Consensus” con un rapporto che nega l’utilità, sempre e comunque, di una liberalizzazione a tappeto dei movimenti di capitale, riconoscendo che possono creare volatilità, vanno liberalizzati solo in economie in grado di gestirli e con una mano pronta sul freno. Ma presto, la squadra di Blanchard torna a rimettere nel mirino l’austerità, contestando la sua neutralità sociale. Uno studio di Laurence Ball spiega che “tipicamente i consolidamenti fiscali sono associati ad un aumento della povertà”. Le distanze sociali aumentano dallo 0,4 al 3,4 per cento, la disoccupazione di lungo periodo di mezzo punto percentuale. Le vittime sono i lavoratori: la quota dei salari sul reddito nazionale scende di quasi un punto di Pil per un tempo indefinito. E dal Fmi viene, con uno studio di Florence Jaumotte, una inattesa difesa dei sindacati. Non è vero, dice lo studio, che sindacati forti comportino salari troppo alti e, dunque, un aumento della disoccupazione: i dati non lo dicono. Contemporaneamente, una bassa sindacalizzazione coincide con un forte aumento dei redditi della fascia più ricca della popolazione.

    L’ultima bordata è di un paio di settimane fa. Un rapporto che rivaluta l’importanza degli investimenti pubblici in infrastrutture: aumentano il Pil e tanto più quando - come ora in Europa - l’economia ristagna. Un consiglio esplicito (capace di creare incubi a Berlino): finanziati con il debito, hanno effetti più positivi sulla crescita e fanno diminuire il rapporto debito-Pil nella stessa misura di investimenti finanziati senza fare debiti.
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  8. la propaganda con cui Cameron spaccia per merito suo, e della sua politica di austerità, la debole ripresa economica che recentemente dà qualche sollievo ai sudditi della regina Elisabetta II, non è altro che, appunto, propaganda politica. La realtà è che il miglioramento dell’economia deriva da ben altri fattori, che stanno persino all’opposto della politica di austerity imposta da Cameron e dal suo governo alla Gran Bretagna.

    un premio Nobel dell’economia di fama internazionale come Krugman non si limita a denunciare l’inconguenza e persino la falsità di certe dichiarazioni che i politici fanno per sostenere le proprie tesi (o per nascondere i propri fallimenti), ma spiega con esempi, studi, tabelle e citazioni la ragione per la quale, facendo calcoli seri invece che semplici affermazioni non verificate (e soprattutto, non verificabili dalla gente comune), i risultati portano a disegnare un quadro economico molto diverso da quello illustrato. Anzi, Krugman dice proprio (riferendosi direttamente a quanto già accaduto in Usa solo un paio d’anni prima): “Allegedly factual articles would declare that debt fears were driving up interest rates with zero evidence to support such claims. Reporters would drop all pretense of neutrality and cheer on proposals for entitlement cuts.” – Articoli falsamente realistici vorrebbero far credere che la paura del debito spinge verso l’alto i tassi d’interesse, senza fornire evidenza a supporto di queste affermazioni. Consentendo ai cronisti di abbandonare ogni pretesa di neutralità e inneggiare alle proposte dei tagli al welfare.

    Udite, udite! Ma non vi sembra di aver già sentito anche voi questa stessa musica? Era il novembre 2011 e, dopo aver ricevuto dal presidente Napolitano l’incarico di formare il nuovo governo, il neo-senatore a vita Mario Monti faceva il suo discorso programmatico al Senato. Musica che in America ormai nessuno suona più (ovvio: serviva ai repubblicani per danneggiare la politica di Obama e dei democratici, ma adesso che nelle elezioni del 2014 hanno riconquistato sia la Camera che il Senato, continuando si farebbero del male da soli!).

    In Europa però la partita è ancora aperta, e per vincere in modo “democratico” la menzogna è ancora necessaria.

    MORALE: in democrazia (se si ha il sostegno di Mediamacro) si può vincere anche raccontando semplici verità di parte, tanto quei pochi (tra il popolo) che non si lasciano incantare e che non sono disposti a votare dall’altra parte, si annullano da soli decidendo di non andare a votare.
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  9. nearly half the country is owned by 40,000 land millionaires, or 0.06% of the population, while most of the rest of us spend half our working lives paying off the debt on a patch of land barely large enough to accommodate a dwelling and a washing line.”

    Such consolidated land ownership also engenders the uniform, large-scale, mechanised agriculture that is gradually becoming our mental image of “a farm.” Yet with the UK population having swelled by four million over the past decade, it becomes ever more pertinent that this model has long been known to produce far less food per acre than traditional smaller holdings—quite apart from its oil dependence and wider environmental impacts.

    Meanwhile, many dream of using land truly sustainably by developing small-scale agroecological smallholdings that provide satisfying livelihoods, healthier ecosystems and not just more food, but healthier food. Some even purchase land and start planning to build their home before being blocked and frustrated at every turn as they engage with the legal intricacies and often perverse rulings of the planning permission system; the same system that is all too happy to give land over to a proliferation of supermarkets and identikit housing estates.

    It is this sorry state of affairs that has given birth to the Reclaim the Fields movement and activist groups such as Grow Heathrow and the Diggers 2012 (still going strong in 2015!). Inspired by the example of Gerrard Winstanley’s seventeenth-century Diggers, these peaceful, practical radicals have moved onto disused UK land in order to cultivate it, build dwellings and live in common “by the sweat of our brow.”

    In other words, they have asserted their right to simply exist on nature’s bounty, seeking neither permission from anyone nor dominion over anyone; a right that they believe people should still share with the other animals. A right, indeed, that was enshrined in UK law in the 1217 Charter of the Forest. More recently, however, the strange young notion of owning exclusive rights to land has pushed back hard.

    Our basic approach is to buy land that has been, or is at risk of being, intensively managed, then use our expertise and experience to oversee the process of securing planning permission for low-impact residences on site. Once this is achieved, the land is made available at an affordable price to people who have the skills to manage it ecologically but who could not otherwise afford to do so. The money received from our residents via the low rent or purchase price is reinvested in purchasing another intensively managed site, where the same process can begin again, allowing more land to be “rescued” from industrialised agriculture.

    Our smallholders are thus insulated from arduous planning battles and can focus on growing their livelihoods, but they do have to sign up to a strict management plan that requires that the land is always managed so as to maintain and enhance habitats, species diversity and landscape quality, and to facilitate the provision of low-impact livelihoods. There are also conditions stipulating that if they ever want to sell up and move on, the land must be sold on at an affordable price to ensure that the land is never priced out of reach. Beyond that, the land is theirs to run as they see fit.
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  10. On the other side of the ledger, the benefits of improved confidence failed to make their promised appearance. Since the global turn to austerity in 2010, every country that introduced significant austerity has seen its economy suffer, with the depth of the suffering closely related to the harshness of the austerity. In late 2012, the IMF’s chief economist, Olivier Blanchard, went so far as to issue what amounted to a mea culpa: although his organisation never bought into the notion that austerity would actually boost economic growth, the IMF now believes that it massively understated the damage that spending cuts inflict on a weak economy.

    Meanwhile, all of the economic research that allegedly supported the austerity push has been discredited. Widely touted statistical results were, it turned out, based on highly dubious assumptions and procedures – plus a few outright mistakes – and evaporated under closer scrutiny.

    It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media.

    I don’t know how many Britons realise the extent to which their economic debate has diverged from the rest of the western world – the extent to which the UK seems stuck on obsessions that have been mainly laughed out of the discourse elsewhere. George Osborne and David Cameron boast that their policies saved Britain from a Greek-style crisis of soaring interest rates, apparently oblivious to the fact that interest rates are at historic lows all across the western world. The press seizes on Ed Miliband’s failure to mention the budget deficit in a speech as a huge gaffe, a supposed revelation of irresponsibility; meanwhile, Hillary Clinton is talking, seriously, not about budget deficits but about the “fun deficit” facing America’s children.
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