The Corbynomics Thread

[stormymonday_2011]

How is Corbyn a challenge to the status quo? He's peddling the same old nonsense that middle-class malcontents have been pushing for the past 50 years and which has proven to be wrong time and again. He's a Tory wet dream of an opposition. All safely contained and useless.

Challenges in the UK are really not that hard to solve, but the public are presented with exactly two options, neither of which addresses the real issues -- hand over all you cash to rentier Tory scum, or hand over all of your cash to lazy Labour public sector scum. That's it. No more choices allowed, and Corbyn is right there restricting the debate to those two options.

I think that is rather the point I was making.

Perhaps I should have qualified my opening sentence by stating that Corbyn is a challenge to the Westminster status quo since he is not a mainstream politician so he is breaking the consensus in party politics and government that has existed in the 1990s and first decade of the current century. However, his ideas are not that original since he is essentially a proponent of old school big state socialism of the past which inevitably fails the poor not least because in a democracy socialists sooner or later end up out of office and no longer run the state. Moreover, having all capital in the hands of the state does not necessarily benefit those at the bottom of society as it still does not belong to them so that any future government can simply sell it off or give it away to their favoured group.

Edited July 26, 2015 by stormymonday_2011

[cock-eyed octopus]

Watched Corbyn on Marr's show. Found myself agreeing with most of what he said. However, he was mainly just demonstrating how badly the present arrangements are working (it certainly isn't a 'system', which is probably a good thing) but unfortunately the solutions he was suggesting are, in my judgement, doomed to failure.

For example: large organisations are inevitably poor at providing efficient outcomes as they always lose the feedback between client & producer & become ends in themselves, with all the participants attempting to feather their own nests. By contrast individuals & small companies have to produce stuff people want or need, or they're finished. They might have an advantage at first & do well, but competition will soon drive their profits down

The conundrum is how to get proper customer feedback into things like the utilities. Corbyn is quite right to say the present pathetic pretence is pants. But I hardly think that, say, strengthening the unions would improve the service.

I do not relish the thought of Sir Humphrey driving government funded science & technology projects either. Oh no. 'The white $hite of technology' would be the likely outcome.

i do find myself hoping he does become leader, though, because it's a debate we need to have. If any of the other contenders were to win then there would be general acceptance things are just fine, just need a bit of tweaking one way or the other. Hell in a handcart springs to mind.

[richc]

That is what I was saying is the wrong viewpoint. Issuance of government debt backed by a printing press also reduces the value of currency and drives up import prices. Taxation is I agree different - financing via taxes generates a different dynamic to financing with money or debt.

If a government is able for whatever reason, to issue debt at negative rates, is that debt or tax?

6 years of QE with less effect on inflation increase than the previous 10 years of deficits ought to be a clue.

The means of financing - monetary or public debt is the wrong focus for debate. The correct focus is what deserves financing and how much, and by who.

Yeah, well, good luck on having that debate.

[scepticus]

I really hope Corbyn's been reading Martin Armstrong's blog.

• Corbyn talks about printing money for public works.
• He was vague on Andrew Marr as to the exact nature of any nationalisation.
• He said he saw the leader's job to be to encourage ideas and debate, and the development of practical solutions.

I wonder if this could be the time to start looking seriously at ideas like Positive Money and Martin Armstrong's Solution. Positive Money seems to have a lot of support on the left, and a lot of finance types and those on the right see merit in Armstrong's solution.

And they're basically very similar ideas!

Well worth a look for anyone not familiar with Armstrong.

http://www.autonozone.com/2015/04/07/key-points-of-martin-armstrongs-solution-conference/

Thanks for the link - it makes the point I have been making the government debt and cash are in the most general sense equivalent. However the rest of the solution falls foul of Stormy Monday's valid point that societies based on social transfer schemes (a.k.a. tax/redistribution) always tend to end up being subverted by special interest groups across the social spectrum. There is no reason to believe that Corbyn's programme or the Positive Money one will be any different.

I prefer a "solution" that generates a more radically level playing field based on a mix of markets, simple monetary policy and a social transfer scheme with constitutionally defined scope (which might or might not feature land taxes), offset to some degree with a practical level of small c conservatism that confers some stability on the whole (after all, a society with truly massive social mobility upwards and downwards, and/or with continual political tinkering is probably not a stable entity).

Edited July 26, 2015 by scepticus

[scepticus]

i do find myself hoping he does become leader, though, because it's a debate we need to have.

Agreed - it would be the best service Labour could possibly deliver to the UK at the present time. I suspect the current smugness of the tory press won't last long if he wins.

[richc]

I think that is rather the point I was making.

Perhaps I should have qualified my point by stating that Corbyn is a challenge to the Westminster status quo since he is not a mainstream politician so he is breaking the consensus in party politics and government that has existed in the 1990s and first decade of the current century. However, his ideas are not that original since he is essentially a proponent of old school big state socialism of the past which inevitably fails the poor not least because in a democracy socialists sooner or later end up out of office and no longer run the state. Moreover, having all capital in the hands of the state does not necessarily benefit those at the bottom of society as it still does not belong to them so that any future government can simply sell it off or give it away to their favoured group.

Not to be confrontational, but Corbyn is entirely a mainstream politician. He's never held a real job, other than as a politician. He's only gaining publicity because the unions are behind him.

I hate Corbyn because he's taking what could be a viable opposition and turning into a useless, self-serving and self-indulgent talking shop for middle-class losers. The Labour Party desperately needs new ideas and new people. Corbyn is anything but that.

Edited July 26, 2015 by richc

[ManVsRecession]

However the rest of the solution falls foul of Stormy Monday's valid point that societies based on social transfer schemes (a.k.a. tax/redistribution) always tend to end up being subverted by special interest groups across the social spectrum.

I don't think Armstrong's solution neccessarily implies that. He proposes debt free money being spent into the economy instead of borrowed money, or money raised through national taxes. There would still be local taxes, but potentially no income or corporation tax, or VAT.

Business is still free to operate within the ethical / social / environmental / safety / fairness laws set down by government. It's still free to be capitalist, borrow money, raise funds, invest how it likes. It can still make a profit.

The major threat is that they print too much.. there would have to be proper safeguards - set percentages of GDP for example, but that shouldn't be an impossible obstacle.

I'd certainly love to see these ideas properly debated. Positive Money did get an airing in parliament once, and there are some MPs who support it. If it isn't the right solution, maybe some better ideas will come out of the debate.

Edited July 26, 2015 by ManVsRecession

[interestrateripoff]

I really hope Corbyn's been reading Martin Armstrong's blog.

• Corbyn talks about printing money for public works.
• He was vague on Andrew Marr as to the exact nature of any nationalisation.
• He said he saw the leader's job to be to encourage ideas and debate, and the development of practical solutions.

I wonder if this could be the time to start looking seriously at ideas like Positive Money and Martin Armstrong's Solution. Positive Money seems to have a lot of support on the left, and a lot of finance types and those on the right see merit in Armstrong's solution.

And they're basically very similar ideas!

Well worth a look for anyone not familiar with Armstrong.

http://www.autonozone.com/2015/04/07/key-points-of-martin-armstrongs-solution-conference/

Started reading it and he's got the wrong problem, government debt isn't the "only issue" it's private debt. When private debt expansion stops government debt needs to pick up the slack.

[bankstersparadise]

-Labour is supposed to be a left Wing party, so should have a proper left Wing leader.

The Conservatives are supposed to be a right wing party and should have a proper right wing leader....

[bankstersparadise]

It clearly did work in China since it pulled masses of people out of poverty. However, its fair to say that what worked in the past won't necessarily work as well in future, and vice versa.

Long lived communist centralist societies fail because their approach works against human nature, and the same can be said about far right regimes.

For me what is interesting about the Corbyn thing is that its a vehicle for raising the reach of debate about our monetary systems. Syrizia is another example.

Most people understand that stuff has to be paid for some way or another, and the out and out appropriation of assets doesn't really count as 'paying', and they also understand, if only subconsciously, that someone has to play the role of debtor.

Check out the Gini coefficient in China. Of course when a few thousand people have a billion slaves and allocate all the resources it is only a subset of society that benefits. That will always be the failure of socialism/Marxism/communism.

http://www.theguardian.com/world/2014/jul/28/china-more-unequal-richer

[bankstersparadise]

but the public are presented with exactly two options, neither of which addresses the real issues -- hand over all you cash to rentier Tory scum, or hand over all of your cash to lazy Labour public sector scum. That's it. No more choices allowed, and Corbyn is right there restricting the debate to those two options.

+1

Which is why 12% of the electorate voted for the libertarian party. The only real alternative.

[ManVsRecession]

Started reading it and he's got the wrong problem, government debt isn't the "only issue" it's private debt. When private debt expansion stops government debt needs to pick up the slack.

that's how it works under the current system, but that's the problem. Under his solution there is no need for central government debt because they don't borrow money, they print it.

Private debt is a matter for private individuals and those who lend to them. It's not covered in this article, but part of the solution also involves stopping the selling on of debt by banks and mortgage lenders. They would have to keep their loans on their books rather than securitise them and sell them on. This would force them to be more careful about who they lend to. There would be no bailouts.

[bankstersparadise]

that's how it works under the current system, but that's the problem. Under his solution there is no need for central government debt because they don't borrow money, they print it.

Private debt is a matter for private individuals and those who lend to them. It's not covered in this article, but part of the solution also involves stopping the selling on of debt by banks and mortgage lenders. They would have to keep their loans on their books rather than securitise them and sell them on. This would force them to be more careful about who they lend to. There would be no bailouts.

In this system you still have money and rely on price signals, those signals are very heavily regulated and not free market driven. The idea that the government is the only source of money creation and wuuld defacto control the price of money even more so than the current systemis so beyond absurdly scary I don't even know where to begin. The fact this is dressed up as some benevolent happy clappy politics is sick especially when it is in effect it an evil Communist power grab to control everything. I don't understand how many more Socialist/Marxist/Communist states need to fall before arrogant lefties realise they are not better at allocating reseources than the market and stop believing this nonsense.

[ManVsRecession]

In this system you still have money and rely on price signals, those signals are very heavily regulated and not free market driven.

The key here would be to clearly define what is within the sphere of public services, and what isn't. Anything that would be better left to the market, IS left to the market.

Most sensible people agree that certain services shouldn't be left to the market. The police, the fire service etc. Most people would agree the NHS, rubbish collection, education etc should also be publicly provided.

Rather than just dismiss this idea as happy-clappy socialism, maybe you could explain exactly why it's OK to fund these things through unrestricted government borrowing and QE, but not through carefully restricted debt-free money creation?

[R K]

Can't believe you linked a Moneyweek critique of Corbyn Sceppy.

I refuse to click on a Bill Bonner rag on principle.

[interestrateripoff]

http://www.theguardian.com/politics/2015/jul/26/joseph-stiglitz-jeremy-corbyn-labour-leadership-contender-anti-austerity

A Nobel prize-winning economist has said it is unsurprising that an anti-austerity figure such as Jeremy Corbyn has emerged as a contender for the Labour leadership.

Speaking in London on Sunday, Joseph Stiglitz warned that policies from centre-left governments such as Tony Blair’s had undermined the middle-ground message, partly by entrenching wealth for the very few.

Asked about the emergence of Corbyn against more moderate candidates, Stiglitz said young people were the most likely supporters as they felt badly let down by more mainstream politics.

“I am not surprised at all that there is a demand for a strong anti-austerity movement around increased concern about inequality. The promises of New Labour in the UK and of the Clintonites in the US have been a disappointment,” said the former World Bank economist who is a professor at Columbia University in the US.

[R K]

Umm, you do know that median real wages fell by more than 10 percent after 2008, largely due to QE boosting import prices and the cost of living? "QE for the People" would simply be worse, as it would have even less credibility in the markets, would drive down the pound even more, and would raise the cost of living by an even a greater margin. But hey, it sounds good, so what else would you expect from the intellectually, morally and electorally bankrupt Labour Party.

You've obviously never looked at a chart of sterling & QE. Sterling was devalued before QE started. So you should be making the empirical argument that QE led to a strenghtening of sterling.

But hey, it sounds good.

[scepticus]

that's how it works under the current system, but that's the problem. Under his solution there is no need for central government debt because they don't borrow money, they print it.

The money is still a government liability (like 'debt').

Just because there is no interest paid on it doesn't mean they don't have to redeem the notes when present (for tax mainly, but not just tax).

And sometimes the money would need to be removed from circulation thus reducing government spending power, which to all intents and purposes is the same as 'being in debt'.

[scepticus]

Can't believe you linked a Moneyweek critique of Corbyn Sceppy.

I refuse to click on a Bill Bonner rag on principle.

I know - but - its interesting to see from the viewpoint of his avowed enemies.

[smiley]

QE for the people is now mainstream - it's not nonsense. It just involves generating money electronically (like normal QE), but instead of giving it to the banks, giving it to people.

Some details if you google: Guardian lonergan QE for the people (I can't do links)

[katchytitle]

I don't think Armstrong's solution neccessarily implies that. He proposes debt free money being spent into the economy instead of borrowed money, or money raised through national taxes. There would still be local taxes, but potentially no income or corporation tax, or VAT.

Business is still free to operate within the ethical / social / environmental / safety / fairness laws set down by government. It's still free to be capitalist, borrow money, raise funds, invest how it likes. It can still make a profit.

The major threat is that they print too much.. there would have to be proper safeguards - set percentages of GDP for example, but that shouldn't be an impossible obstacle.

I'd certainly love to see these ideas properly debated. Positive Money did get an airing in parliament once, and there are some MPs who support it. If it isn't the right solution, maybe some better ideas will come out of the debate.

GDP can be gamed like anything else. In addition global economic shocks can suddenly create GDP/Debt ratio spikes that are unforeseen. The reality of it is, human beings who are self interested on the whole rise up to leadership positions because that is what they want. Any doo-lally ideas about cooperatives and group government could only work through technology and complete transparency - but no one can feather their own nests then...so it will never happen. As long as human beings are in control, history has shown that every empire crumbles under corruption.

Edited July 27, 2015 by katchytitle

[ManVsRecession]

The money is still a government liability (like 'debt').

Just because there is no interest paid on it doesn't mean they don't have to redeem the notes when present (for tax mainly, but not just tax).

And sometimes the money would need to be removed from circulation thus reducing government spending power, which to all intents and purposes is the same as 'being in debt'.

It wouldn't be a government liability. The money would be debt free. Therefore there wouldn't be a need for national taxation either, since the government prints the money, rather than raise it through taxation.

Remember, the government won't be able to "print" as much as it wants.. that will be restricted to a percentage of GDP. And if a government does "print" too much, any inflation affects the current generation who voted for that government, not their grandchildren.

Under this system, I can't immediately see why there would be a need to remove money from circulation. The markets would ensure proper allocation of capital in the private / business sphere. If things got overheated, interest rates would naturally rise since lenders would be more cautious as they can't offload their debt or rely on bailouts.

[ManVsRecession]

GDP can be gamed like anything else. In addition global economic shocks can suddenly create GDP/Debt ratio spikes that are unforeseen. The reality of it is, human beings who are self interested on the whole rise up to leadership positions because that is what they want. Any doo-lally ideas about cooperatives and group government could only work through technology and complete transparency - but no one can feather their own nests then...so it will never happen. As long as human beings are in control, history has shown that every empire crumbles under corruption.

Debt would be private debt. People will learn to control their own risk. That's how the free market should work I would have thought.

There would be no need for public debt. The government would print money. Not borrow it.

None of this has anything to do with coorperatives / socialism / group governments. This isn't a leftist solution. It's one that should appeal to both left and right since it has the best of both worlds. Proper free market for most things, alongside non-market based services in those areas that are better suited to public control.

We have to have some mechanism for the creation of new money. Only the gold-bugs dispute that, so if we ARE going to create new money, this could be a better way of doing it than the current system, which has clearly not been optimal, and has led to such poor allocation of capital and the current debt crisis.

EDIT : Technology and transparency could help here. It's much easier to monitor what's actually going on in the economy these days. We can accurately measure trade, imports, exports, consumer spending etc, and this would make it possible to see if over or under spending is having a negative effect, and adjust accordingly.

Edited July 27, 2015 by ManVsRecession

[bankstersparadise]

The money is still a government liability (like 'debt').

Just because there is no interest paid on it doesn't mean they don't have to redeem the notes when present (for tax mainly, but not just tax).

And sometimes the money would need to be removed from circulation thus reducing government spending power, which to all intents and purposes is the same as 'being in debt'.

No, money is not a government debt, you are making up defintions and conditions that are not true.

When you go to the Bank of England to demand your £20 in exchange for the £20 note you give them what do they give you? A new £20 note off the printing press or maybe they credit your bank account electronically with £20. Maybe they destory the old note you gave them or maybe they keep it for the next mug.

Now, if we still had the gold standard your argument would hold. In the "good old days" when you went to them with your £20 note they would have to find a pre-determined amount of physical gold to settle with you and so in effect all the money in circulation was debt because they implicitly owed any holder of money some gold. But we now live in the land of Fiat so no, money is not govermment debt.

Your comment has suddenly got me all excited about gold again, and apparently it is on sale at the moment!

[bankstersparadise]

It wouldn't be a government liability. The money would be debt free. Therefore there wouldn't be a need for national taxation either, since the government prints the money, rather than raise it through taxation.

Remember, the government won't be able to "print" as much as it wants.. that will be restricted to a percentage of GDP. And if a government does "print" too much, any inflation affects the current generation who voted for that government, not their grandchildren.

Under this system, I can't immediately see why there would be a need to remove money from circulation. The markets would ensure proper allocation of capital in the private / business sphere. If things got overheated, interest rates would naturally rise since lenders would be more cautious as they can't offload their debt or rely on bailouts.

What is the magic percent of GDP that would provide a stable equilibrium? Edited July 27, 2015 by bankstersparadise