Wynne Godley ir europietiškos problemos

Ralph Musgrave — European Commission tells the UK what do about youth unemployment.
That’s “European Commission” as in “we lot who have managed to create 50% youth unemployment in Greece, 50% in Spain and 36% in Portugal, so we obviously know what we’re talking about”.

See: Council Recommendation on the United Kingdom’s 2013 national reform programme

The European Commission’s – er – “advice” then descends from the ridiculous to the totally ridiculous: it tries to tell the UK what do about it’s deficit. Here it follows the standard IMF / OECD / Pete Peterson / Bowles and Simpson / Rogoff and Reinhart line, namely that a country should have a PLAN for deficit reduction.

The whole notion of a PLAN for reducing the debt or deficit is nonsense because it fails to get a point made by Keynes: “Look after unemployment and the budget will look after itself”.

In other words, a monetarily sovereign government should pitch it’s deficit (or surplus) at a level that reduces unemployment as far as is possible without exacerbating inflation too much. If the private sector happens to be in a fit of irrational exuberance, government may well need to run a surplus in order to confiscate financial assets from the private sector and quieten things down. Conversely, if the private sector is in subdued mood, government will need to run a deficit so as to boost demand and feed financial assets into private sector pockets.
And since it is impossible to predict what mood the private sector will be in in twelve months time (never mind three years time), it’s impossible to say what size deficit (or surplus) will be suitable in twelve months’ time or three year’s time.
Paskutinė pastraipa yra paprastas paaiškinimas, kodėl metinės BVP prognozės ir metiniai biudžetų planavimai negali būti "atsakingos" politikos dalimi. Prognozavimas tokiems laikotarpiams neveikia.

Jei kam įdomu, dedu nuorodą į 1998 metais publikuotą Wynne Godley ir George McCarthy straipsnį "Fiscal Policy Will Matter", kuriame jie

a) pademonstravo stock-flow consistent modelį, leidžiantį gana tiksliai prognozuoji JAV BVP pusę metų į priekį. Amerikos ekonomika didžiausia pasaulyje ir gana uždara, todėl tuos pusę metų galima laikyti ilgiausiu įmanomu prognozės laikotarpiu apskritai. Mažesnėms ir atviresnėms ekonomikoms prognozės būtų dar trumpesnės (jeigu dar būtų laiku prieinama joms reikalinga statistika;

b) suformulavo teiginį, dažnai vadinamą Godley teorema, pasak kurio bet kurios ekonomikos BVP augimui būtinas valdžios deficito plius eksporto santykio su mokesčiais ir importu augimas.
This concept of fiscal stance is not new. It is thirty years since Carl Christ, of Johns Hopkins University, had the brilliant insight that should an economy ever reach stationary equilibrium, all stock variables as well as all flow variables would be constant; and that if all stock variables, including government debt, were constant, government receipts would have to equal government payments. It would then follow that if the economy were moving toward stock-flow equilibrium and if taxes were levied as a proportion of income, the GDP of a (closed) economy would always be tracking, perhaps with a long lag, government outlays divided by the average tax rate – the very same concept that we call fiscal stance. Therefore, a necessary condition for the expansion of the economy, at least in the long term, is that the fiscal stance should rise: Government expenditure must rise relative to the average tax rate. If the tax rate were held constant, government expenditure would have to rise absolutely for output to grow; if government expenditure were held constant, the tax rate would have to fall.
Christ’s finding was confirmed in two famous articles, Blinder and Solow (1973) and Tobin and Buiter (1976). But this whole line of argument has never been influential in the policy discussion and now seems to have disappeared from the literature. Perhaps the notion of a stock-flow equilibrium is too much of a will-o’-the-wisp, and the lags that would lead the economy to it so long and complex that this concept of fiscal stance has been thought to have no operational significance. Our first major contention is that the Christ conclusion, suitably adapted, has a practical application of decisive importance.”
Jeigu jau pradėjom, pora papildančių nuorodų tekste:
The result of ignoring the accounting matrix is to forget we must have an ever increasing deficit in order to for the economy to grow. Reading through the papers by Buiter and Blinder, it’s easy to they knew this at some point roughly 40 years ago, but have forgotten it now.

(Update: Ramaman provides us the links to the papers Godley mentions. Blinder and Solow is here :Does Fiscal Policy Matter? (1972). Buiter and Tobin: Long Run Effects of Fiscal and Monetary Policy on Aggregate Demand (1974) )
Grįžkime prie eurozonos realijų. Žinomame 1992 metų straipsnyje Maastricht and All That Godley prognozavo dabartines eurozonos problemas
Some writers (such as Samuel Brittan and Sir Douglas Hague) have seriously suggested that EMU, by abolishing the balance of payments problem in its present form, would indeed abolish the problem, where it exists, of persistent failure to compete successfully in world markets. But as Professor Martin Feldstein pointed out in a major article in the Economist (13 June), this argument is very dangerously mistaken. If a country or region has no power to devalue, and if it is not the beneficiary of a system of fiscal equalisation, then there is nothing to stop it suffering a process of cumulative and terminal decline leading, in the end, to emigration as the only alternative to poverty or starvation.
ir nurodė gilumines priežastis
The central idea of the Maastricht Treaty is that the EC countries should move towards an economic and monetary union, with a single currency managed by an independent central bank. But how is the rest of economic policy to be run? As the treaty proposes no new institutions other than a European bank, its sponsors must suppose that nothing more is needed. But this could only be correct if modern economies were self-adjusting systems that didn’t need any management at all.

I am driven to the conclusion that such a view – that economies are self-righting organisms which never under any circumstances need management at all – did indeed determine the way in which the Maastricht Treaty was framed. It is a crude and extreme version of the view which for some time now has constituted Europe’s conventional wisdom (though not that of the US or Japan) that governments are unable, and therefore should not try, to achieve any of the traditional goals of economic policy, such as growth and full employment. All that can legitimately be done, according to this view, is to control the money supply and balance the budget. It took a group largely composed of bankers (the Delors Committee) to reach the conclusion that an independent central bank was the only supra-national institution necessary to run an integrated, supra-national Europe.

But there is much more to it all. It needs to be emphasised at the start that the establishment of a single currency in the EC would indeed bring to an end the sovereignty of its component nations and their power to take independent action on major issues. As Mr Tim Congdon has argued very cogently, the power to issue its own money, to make drafts on its own central bank, is the main thing which defines national independence. If a country gives up or loses this power, it acquires the status of a local authority or colony. Local authorities and regions obviously cannot devalue. But they also lose the power to finance deficits through money creation while other methods of raising finance are subject to central regulation. Nor can they change interest rates. As local authorities possess none of the instruments of macro-economic policy, their political choice is confined to relatively minor matters of emphasis – a bit more education here, a bit less infrastructure there. I think that when Jacques Delors lays new emphasis on the principle of ‘subsidiarity’, he is really only telling us we will be allowed to make decisions about a larger number of relatively unimportant matters than we might previously have supposed. Perhaps he will let us have curly cucumbers after all. Big deal!
Prieš dvidešimt metų pažadėjo, kad murkdysimės ir paaiškino kodėl. Deja, neapsiriko.


Portugalai skaito knygas apie pinigus

Wall Street Journal. Idea of Euro Exit Finds Currency in Portugal

LISBON—A book by a Portuguese economist achieved a small feat on its release last month: It instantly topped Portugal's bestseller list, overtaking several diet books and even the popular erotic novel "Fifty Shades of Grey."

The book, "Why We Should Leave the Euro" by João Ferreira do Amaral, has helped ignite a public debate in Portugal about the real cause of the country's economic pain: Is it only the hated austerity needed to secure European bailout loans, or is the euro?

Public lectures, TV debates, newspaper columns and some politicians are starting to explore a question that until recently was confined to university seminars: whether the country has a realistic path to recovery inside the euro.

Portugal "has no chance of growing fast within a monetary union with a currency this strong," Mr. Ferreira do Amaral said in a recent interview. "Thankfully, this issue has stopped being taboo, and there is now a lot of discussion here and abroad." The book is in its fourth edition, selling more than 7,000 copies so far—a lot for an economics tract in the small Portuguese market.

[...] Mr. Ferreira do Amaral is getting some high-profile backers. This month, Supreme Court of Justice President Luís António Noronha Nascimento called for Portugal and other Southern European countries to quit the euro, warning the gap between Europe's richer and poorer states will keep widening otherwise.

Nejaugi ir mums reikia įsivesti eurą, kad žmonės ekonomika susidomėtų labiau, negu pornografija...

Merkel su Schäuble susirūpino įvaizdžiu

Spiegel Online. Austerity About-Face: German Government to Gamble on Stimulus
But a new way of thinking has recently taken hold in the German capital. In light of record new unemployment figures among young people, even the intransigent Germans now realize that action is needed. "If we don't act now, we risk losing an entire generation in Southern Europe," say people close to Schäuble.

Berlin is making an about-face, even though it aims to stick to its current austerity policy. The German government has stressed budget consolidation and structural reform since 2010, when Greece was on the verge of bankruptcy. Berlin has been arguing that this is the only way to instill confidence among investors in the battered debt-ridden countries and help their ailing economies recover.

[...] The government's change of heart isn't just a sign of selflessness and compassion. More than ever, the chancellor and the finance minister are worried that Berlin's tightfisted, heartless, austerity-obsessed image could solidify throughout Europe and do irreparable political damage. An exporting nation that sells two-thirds of its exports to other European countries cannot be unconcerned about its image abroad, they reason, especially when its government fears that constant criticism from the center-left Social Democratic Party (SPD) and the Green Party, claiming that it is acting as the gravedigger of the euro and dividing the EU, could hurt it in the upcoming election campaign.

[...] Last Tuesday, Schäuble sent a letter to Economics Minister Philipp Rösler in which he proposed that the coalition partners act together. "I believe that we should also offer bilateral German aid," he wrote, noting that he hoped that this approach would result in "significant faster-acting support with visible and psychologically effective results within a foreseeable time period."
Situaciją eurozonoje gelbėtų ekonomikos stimuliavimas fiskalinės ekspansijos priemonėmis. Politiškai tai nepriimtina, tai kad neatrodytų, jog visai nieko nedaroma, Vokietija paskolins pigiau pinigų nedideliems investiciniams projektams.

Depresuotoms pietų ekonomikosms toks stimuliavimas padės kaip viagra nabašninkui. Bet niekas negalės nuneigti, kad "Vokietija rūpinasi".



Eurosistemos trūkumai akivaizdūs vis didesniam skaičiui žmonių. Matias Vernengo: Lafontaine, Flassbeck and Lapavitsas say the euro is over.
Earlier this month Oskar Lafontaine, German Finance Minister in 1998-99 and leader of the Social Democrats before Schröder, asked for the break up of the euro. Now in a more substantive paper Heiner Flassbeck, Lafontaine's second in command in the Finance Ministry, and ex-head of the macro division at UNCTAD, together with Costas Lapavitsas, also suggests that the euro should be undone.
46 puslapių apsaugotas nuo kopijavimo pdf'as: Heiner Flassbeck, Costas Lapavitsas. The Systemic Crisis of the EURO - True Causes and Effective Therapies.


Neokolonializmas. Trumpai ir aiškiai apie Vokietijos euro politiką

Levy ekonomikos instituto bloge pristatomas C. J. Polychroniou straipsnis The New Rome. The EU and the Pillage of the Indebted Countries.

[...] with the eurozone mired in recession (the latest numbers from Eurostat are here) and a deep depression in Greece, it might look like a failed experiment.  But it only looks this way, Polychroniou suggests, if you think of economic growth and the wellbeing of the average worker as among the primary goals of the project.  The setup of the EMU is not the result of some set of technical errors or oversights.  It is consistent with a long-developing attempt, culminating in the Maastricht Treaty, at transforming a social market economy into a laissez-faire market economy:  “it stemmed,” Polychroniou writes, “from the very premises of the fundamentally neoliberal economic thinking that had begun to take hold of the mindset of European policymakers in the 1980s.”  If anything, he argues, the struggles in the eurozone, particularly on the periphery, are being seized on as an opportunity to accelerate this transformation, with Germany playing the role of “neocolonialist” in the process:
Germany has adopted toward the indebted eurozone member-states the same policy it carried out with regard to East Germany after unification: the destruction of its industrial base and the conversion of the former communist nation into a satellite of Berlin. The bank rescues masquerade as the rescue of nations, and are followed by the enforcement of unbearable austerity measures to ensure repayment of the “rescue” loans. Then comes the implementation of strategic economic policies aimed at reducing the standard of living for the working population and the shrinking of the welfare state, complete labor flexibility, and the sale of public assets, including state-controlled energy companies and ports. This constitutes the German strategy for pillaging the debt-laden economies of the Mediterranean region.

Neaišku, kodėl iki šiol nesubyrėjo

Thinking the Unthinkable: Quitting a Currency
Euro doomsayers who expected Greece would tumble out of the currency last year have seemingly underestimated Europeans' willingness to put up with years of hardship rather than gamble on an exit. But European officials who point to the stability of pro-euro sentiment may be making the opposite mistake.

[...] "Devaluation is not an option in Argentina," a World Bank economist said at the time. "With such a high dollarization level, a devaluation would be too costly."

Technically, Argentina had its own currency to return to, but abandoning parity with the dollar was seen as too excruciating to undertake, because almost all debts and business contracts were in the U.S. currency. After three years of recession, though, Argentines appeared to decide en masse that whatever came next couldn't be worse than the unending depression needed to keep their pesos interchangeable with dollars.

On a balmy night in December 2001, the middle class took to the streets of Buenos Aires in an explosion of rage. Riots across the country swept the government from power. Argentina defaulted on its debt soon after, and then the country abandoned the peso's peg to the dollar.

How similar is the situation in southern Europe today? Argentina's economy had contracted by around 8% in the three years before the uprising. By the end of this year, Italy's and Portugal's economies will have shrunk by around 8% from their peak, Spain's by around 6% and Greece's by more than 23%, according to the International Monetary Fund.

EU policy makers who take comfort in the apparent popularity of the euro should consider that Argentines also widely supported the dollar peg—right up until the moment they exploded. In a poll published in December 2001, the same month that Argentines rioted, just 14% said the currency regime should be scrapped; 62% said they wanted to keep it. That's virtually the same proportion of Spaniards and Greeks who say they want to keep the euro today.
Argentina, with its ups and downs since devaluation, isn't a model for Europe. Rather, it's a cautionary tale.

In late 2001, Argentina's economy minister called the country's dollar peg "a permanent institution," whose unthinkable collapse would cause "the dissolution of the basic institutions of the economy and society." A month later it was gone.

Those who say the risk of countries leaving the euro has gone away should consider other times when people viewed a currency regime as sacred, right up until the time they swept it away.
Argentinos fiasco su valiutų valdyba, deja, nesumažino lietuvos banksterių entuziazmo vystyti savają.
Lietuvai vis labiau integruojantis į Vakarus, plėtojantis ekonominiams ryšiams su Europos Sąjungos šalimis ir vykstant atitinkamiems pokyčiams prekybos valiutinėje struktūroje, 1999 m. nutarta litą perorientuoti nuo JAV dolerio prie euro, o 2001 m. priimti sprendimai dėl lito susiejimo su euru 2002 m. vasario 2 d., išlaikant fiksuotą valiutos kursą.
 Taip ir tęsiasi muda.


Krugmanas Latvijoje - persona non grata

Kvailiau nebuvo galima sugalvoti.
vz.lt: Krugmanas į Latvijos ekonomikos forumą neatvyks
Paulas Krugmanas nedalyvaus liepos pabaigoje Latvijoje organizuojamame pirmajame Rygos ekonomikos forume. Ekonomikos profesoriaus dalyvavimas atšauktas dėl jo prieštaringų komentarų apie Latvijos ekonomiką.

Nobelio ekonomikos premijos laureatas ir ekonomikos profesorius buvo patvirtinęs savo dalyvavimą liepos 24-26 dienomis, tačiau p. Krugmano kvietimą nusprendė atšaukti patys forumo organizatoriai, portalą „The Baltic course“ cituoja „Aripaev“

„Profesoriaus Krugmano pakvietimas į forumą sukėlė netikėtą politinį rezonansą. Svarbūs sprendimai dėl Latvijos prisijungimo prie euro zonos turėtų būti paskelbti panašiu metu, kai vyks forumas, o tam prieštaraujantys profesoriaus pareiškimai per daug politizuoja mūsų renginį“,– leidiniui komentavo Pavelas Morozovas, vienas forumo organizatorių
Latvijoje diskusijų sulaukė p. Krugmano kritika dėl to, kaip šalis gelbėjosi ši krizės – ekonomistas ne kartą sakė, kad devalvuoti nacionalinę valiutą Latvijai, Lietuvai ir Estijai būtų buvęs geriausias sprendimas, o Latvijos sprendimas imtis griežtos taupymo politikos sukėlė smarkų BVP nuosmukį.
Bus išjuokti visame pasaulyje. Gal pasiseks net tapti anekdotų personažais.