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@ApostateEnglishman@mastodon.worldFor there to be too many dollars, or pounds sterling or whatever, chasing too few goods and services - skewing "supply and demand" and causing runaway inflation - national spending has to exceed productive capacity. That's why every nation that has ever experienced hyperinflation, had to have the supply side of its economy destroyed first. That hasn't happened here in the UK, nor (yet) in America.
There's no reason to cut spending, it's a political choice by the wealthiest.
For whose who want to point out that inflation is already serious, e.g. price of eggs (for American readers), what we're actually experiencing is "cost-push" inflation, caused by higher production costs and higher costs of raw materials or imports of goods or manufacturing components (for British readers...another "Brexit benefit"). Higher oil prices are often a factor. The extermination of 10 million chickens due to bird flu will also do it, of course.
Nothing to do with government spending.
Once again copying in @ChrisMayLA6 and @GeofCox to this thread, because the fedi is all about collaborative information-sharing and engagement, and I ain't no economist, just a rando who's read way too many (or perhaps not enough?) books.
What I know, is that even Iain Duncan Smith resigned over fears that growing public understanding that austerity was politically-motivated and "ideological", might destroy his party.
This "Labour" government seems to have no such concerns, and ploughs ahead.
yes, I'd agree, that the current inflationary period is cost-push, but its also distorted in the UK at least by two key areas of inflation - housing & shares - being treated as outside the inflation data - so actually in this areas, fuelled by easy credit, what we see is a more monetary form of inflation....
As regards, the fiscal rules & Reeves (new) austerity; again you're right; this is a political choice, not a 'necessity'
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MMT would argue that the state could create significant extra credit - as it did in 2008 via QE - to re-organise how the state spends its money; the thing needs when credit is created is a viable source of repayments (the asset must perform); it would seem likely that markets could take more credit creation, especially if managed for infrastructure & welfare, as it (should) contribute to growth, thereby safeguarding repayments... but we're not there (yet?)
@ChrisMayLA6 @ApostateEnglishman
Agreed. The UK's vampirish financial industry - in which I include rentiers like its enormous number of private landlords - is a huge problem, extracting money from local circulation (where it would be taxed) into largely unproductive elite spending or more inflationary (largely tax-free) asset investment.
An interesting comparison for UK government strategy (Tory or Labour - there's little difference) is with Spain, 'Europe's star performer' in terms of the economic measures Labour favours (growth, etc). The 3 pillars of the socialist Spanish government's policies have been
Increasing government spending (especially investment in green initiatives and small businesses)
Increasing immigration, and
Increasing foreign visitors
- all precisely the opposite of core UK government policies (not reversing brexit being the biggest obstacle to increasing UK visitor numbers).
yes, the current Spanish model does look attractive, but as you say not even near the table, let alone on it... but perhaps more important, the Spanish Govt. seems to have relatively pragmatic mindset about what needs to be done, rather the ideological capture of the Labour party...
@ChrisMayLA6 @GeofCox Thanks for these excellent and well-informed responses, gentlemen. In all honesty, I don't think I have a great deal to add as I pretty much agree with you both!
I do have a short reply for Chris, which I'll hopefully get to later today or over the weekend.
An interesting thing about the current Labour Party leadership is that it is completely imprisoned by ideology, but it understands this as pragmatism. Apart from the 'City of London' aspect (which now funds it) the core of the Starmer project is accepting 'public opinion' as a given, the overton window as moving in mysterious ways, and the success of a political party as therefore dependent on how well it aligns itself with these.
Starmer likes to say he's telling hard truths (because that's what people say they want politicians to do) - but it's inconceivable that he would stand up, as Pedro Sanchez has done, and tell the public that increasing immigration is essential to European prosperity.
yes, I'd agree; pragmatism is a mask in the UK for ideological commitments, presented as 'common-sense' - I did a lot f my pre-retirement work on the construction of commons sense in IPRs and latterly in the Rule of Law, so I'm completely on board with your comment
@GeofCox @ChrisMayLA6 @ApostateEnglishman
An interesting thread. I’d just add that although I am intrigued by MMT and what it suggests is possible, the size of an economy is a commitment to near future resource extraction and power generation. And since those activities are overwhelmingly carbon intensive, it’s also a commitment, in the UK’s case, to emit hundreds of thousands of tonnes of GHG a year at the expense of the biosphere. Which we tell ourselves is ok but isn’t
@GeofCox @ChrisMayLA6 @ApostateEnglishman
…and MMT or any other monetary lens has no answers to that at all, because our cultural notions of “productive capacity” are entirely unconstrained by ecological boundaries. They are nonetheless constrained by thermodynamics that will not negotiate and will hold us in check eventually
https://mastodon.social/@urlyman/111102122433355977
Yes - that's why I was careful to point out Labour's failure in it's own terms (growth, etc) - but it's also true that Spain is being lauded in these same terms, not in a broader sustainability framework (although Spain is doing a little more there too - eg. government investment in public transport, renewables, etc).
MMT opens up fiscal possibilities for a green transition despite the tremendous cost. The real problem is this may only usher in an era of "eco-colonialism", as most of the minerals needed for electric batteries, wind turbines, solar panels etc. are in Latin America and Africa. We need lithium, nickel, copper and cobalt, and more than 54% of these resources are on or near indigenous lands. Nothing to do with MMT which is merely a description if how money works.
By the way this is not me disagreeing, as rare earth minerals are just as much finite resources as hydrocarbons, and will still run out eventually. There are also still significant emissions associated with the manufacturing of "green" technologies, which advocates often downplay, so your point stands. It's just not an issue with MMT per se. I guess I'm actually agreeing with you that no monetary lens will change the fact that infinite growth is unsustainable.
@ApostateEnglishman cheers. Glad we’re on the same page
@ApostateEnglishman @urlyman @GeofCox
I'd just add that while MMT is descriptive, it is also a prompt to a different politic-normative position on state credit creation.... which is why it was often coupled with calls for a 'people's QE' a while back...
@ApostateEnglishman
I’m just pointing out that growth in WEIRD economies is extreeeemely problematic so let’s be very careful to define “productive capacity” otherwise we remain lost at the same speed we’re already travelling.
The reality is that transition has never happened and is not likely to happen. Which requires wholly different strategic approaches than are even on the table
@urlyman @GeofCox @ChrisMayLA6 @ApostateEnglishman
GDP is a measure of how much energy an economy is using, but that energy doesn't need to come with GHG emissions.
Combine off-shore windfarms in the North Sea with hydrocarbon manufacturing and we've got the stable use of energy without the additional CO2.
@BillySmith I don’t see any possibility of carbon removal (for hydrocarbon manufacture) reaching anywhere even close to the scale of operation that is banked upon within the time that it needs to be operational.
I know it’s just 1 plant but *up to* 150 tonnes per year is ~0.0000004% of global emissions. IPCC plans for 6GT removal require 40,000,000 equivalent plants built in 25 years. That’s about 4,400 opening every day. So that’s a plan for failure
@BillySmith
renewables are for sure part of us slowing down and therefore buying time to step onto a very different cultural path, but only if we actually choose to slow down. And we’re accelerating instead
I don't think there's any necessary link between GDP and energy use - after all, since energy use varies in different economic activities, it must in principle be possible to break any such link. But that's not to say it won't require very fundamental changes.
GDP is just a record of market activity - or activity attributable to market values (in the UK, for example, a big chunk of GDP is the supposed market value of people living in their own homes). A lot of activity - perhaps that most highly valued by most people - such as unpaid work in the home and garden, sharing things, people helping and caring for each other, for their children - is not counted, while a lot of what is counted is either invented (like those attributed rents) or useless (like most financial services, or that latest gadget or dress or car or cosmetic that promised to make you happy).
Also, we have to bear in mind that, even to the extent that it might be possible, decoupling economic activity from energy use is not enough, because the crisis of over-exploitation and over-consumption has many other aspects beyond energy use and climate change - eg. other forms of pollution, land use, soil degradation, etc, etc...
@GeofCox @urlyman @BillySmith @ApostateEnglishman
Yes, GDP really is not fit for (contemporary) purpose, and even when suggesting are made for re-working it, these suffer from the problem that as a global measure (albeit done a bit differently in different countries), getting agreement on na substantive globally comparative shift would be just about impossible.... but the ONS is giving it a go in any case... see:
https://northwestbylines.co.uk/politics/economy/rethinking-how-we-measure-economic-activity/
@urlyman @GeofCox @ChrisMayLA6 @ApostateEnglishman
There are seven pilot plants being rolled out for the next iteration, but it isn't the carbon capture that is most important.
It's the fact that hydrocarbons are no longer a scarce resource, but a manufacturable form of energy storage that does not involve releasing extra CO2 into the atmosphere. :D
It's the FOSSIL fuel part of the hydrocarbon use that is obsolete. :D
It cuts our CO2 emissions by cutting the FOSSIL out of the picture. :D
@GeofCox @ChrisMayLA6 @ApostateEnglishman
In my view, Starmer is not driven by "public opinion" at all. Rather decisions are set by the financial industry and what keeps the rightwing media on side.