Mind the Gap (in the centre)

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Jeremy Corbyn has been crowned leader of the Labour party. If this happened a year ago I would be jubilant. The experience of the ‘government of the left’ in Greece however has scared me enough to distrust any ‘left’ alternative that comes from ‘movements’ in the sidelines of the political spectrum.

Once again we have this paradox. Corbyn seems to voice many concerns that as academics we have been expressing for years, yet as I explained before this is a revolution past its sell-by date. I think pigs have a better chance of flying than Corbyn ever seeing the inside of Downing Street. Nonetheless, Corbyn can open up a debate that helps to recreate a political centre in British politics.

This is exactly why there is value to the Corbyn win, it opens a gap between the left and Cameron’s uncaring right. Seen through the lens of the Brexit referendum, this could be a pro-euro centre. Who can occupy such a space in 2020? The only centrist pro-Europe party we have left are the Liberal Democrats. Can they rise to the challenge and lead the centre of British politics?

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@iGlinavos

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17 thoughts on “Mind the Gap (in the centre)

  1. Copy of post on my blog
    https://erikdesonville.wordpress.com/2015/09/15/corbynomics-101/

    (Quote)

    Labour’s newly elected party leader Jeremy Corbyn proposes PQE or People’s Quantitative Easing as a novel policy to stimulate the economy. There’s an in-depth analysis of PQE on Susan Webber’s blog.

    It compares in detail PQE with so-called PVD (= Plain Vanilla Deficit), both considered as so-called OMFG (= Overt Monetary Financing of Government).

    The conclusion of the analysis, in a nutshell, is that, from an operational point of view, there is no difference between People’s Quantitative Easing and Plain Vanilla Deficit spending. When the government decides on an expansionary fiscal policy and spends X billions on public infrastructure (or whatever), it makes no difference whether it’s financed via classical public borrowing or via PQE, the net effect on public debt is exactly the same.

    In my opinion (not explicitly mentioned in the article) there are essentially two caveats around PQE:

    (1) Terminology. With a public opinion averse to public debt increases, the different name (PQE instead of deficit spending) could be abused as a political trick to hide the debt effects. The PQE terminology is also misleading since it’s fundamentally different from the regular (Fed, ECB) QE programs.

    (2) Potential lack of efficiency. The explicit primary goal of stimulating the economy via public spending may lead to poor choices of investment projects (“pink elephants”), with only temporary employment effects and little long-term worth for the national economy, and thus with little perspective for future benefits to compensate for the increased public debt.

    For the full text (it’s very technical), see
    http://www.nakedcapitalism.com/2015/09/corbynomics-101-a-guide-to-peoples-qe-pqe.html

    (End quote)

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  2. mikenetherlands says:

    I am trying to understand it all but I don’t. In fact, I am complete confused.

    I have seen the video on Yanis blog. Emmanuel Centre, London. Austerity is the keyword. Yanis told their, austerity is the cause of the great depression in Greece.
    On your blog, Erik, you had the topic Money for nothin’ and chicks for free. (Dire Straiys.)
    OK, no austerity. But Greece was/is overborrowed and compleet inefficient.

    Who is going to pay for that money for nothin’ and that chicks for free? In England and Greece? When Greece didn’t had that austerity, were did they want to find the money to finance everything?

    Of course it makes me very sad if I see what is happening in Greece, like all of us. But was keeping everything as it was, likes Yanis suggest, the solution?
    In my opinion is the cumulation of year after year mismanagement starting in the eighties the cause of the crisis, not the austerty. What am I missing? Who is paying the bill afterward or does money for Nothin exist?

    Liked by 1 person

    • Don’t be confused, Mike. I think the idea is that debts don’t necessarily have to be repaid, accept state bankruptcy. Maybe? If debts are simply erased or postponed to let’s say 2080 much of it will be erased by inflation. With that guaranteed, there wouldn’t be a problem to borrow again with a little help of Lamont and his friends.

      *********

      The problem with Europe is that it never really learned from the 30/40s versus the economically wise benevolent hegemon US:

      And the weak must suffer what they must

      ” In between, the story of how Europe mishandled its yearning for a common currency by never having learned the lessons that US policy makers learned the hard way in the 1930s and 1940s; namely that if the burden of crisis falls upon the ‘weak’, capitalism goes into hideous spasms that threaten its very existence. Thus the fate of the global economy hangs in the balance, and Europe is doing its utmost to undermine it, to destabilize America, and to spawn new forms of authoritarianism. Europe has dragged the world into hideous morasses twice in the last one hundred years… it can do it again.”

      *********
      Didn’t we in 2008 bring disaster to the US already. And now this??? Do our dear American friends deserve to be treated like that by us, probably centrally us Germans.

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  3. mike> On your blog, Erik, you had the topic Money for nothin’ and chicks for free. (Dire Straits.)

    That was tongue-in-cheek. Of course Mark Knopfler made money by being a great and prolific singer songwriter, guitarist, record producer, and film score composer. It didn’t come for free.

    mike> I have seen the video on Yanis blog.

    Political roadshows sometimes remind me of an interesting quote by the Cambridge economics professor Joan Robertson: “The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”

    Austerity is roughly the opposite of heavy public deficit spending (roughly, not to cloud matters with hairsplitting details). For obvious reasons, many left politicians prefer to promise public deficit spending (disguised as any subtle euphemism) and oppose austerity. Depending on which “others” are supposed to pay the bill, one may distinguish Statist left, Trade-Union left, Guerrilla left, May-68 left, Robin-Hood left, Santa-Claus left. Or erratic left, when it fails.

    mike> In my opinion is the cumulation of year after year mismanagement starting in the eighties the cause of the crisis, not the austerty.

    I think your analysis corresponds with mine, cfr
    https://erikdesonville.wordpress.com/2015/08/01/the-party-is-over/

    Now let’s see how the Greek people get their act together. The bailout adjustment programs worked for Ireland, Portugal, Spain; maybe now M3 will do in Greece.

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    • mikenetherlands says:

      The world according Yanis is not always easy to understand. Yanis beliefs in a kind of conspiracy of the trojka to crash SYRIZA.
      But, maybe the team on Varoufakis irritated the Trojka and it had nothing to do with SYRIZA. They didn’t have any experience with institutions , rushed in, they were the experts, they had a moderated proposal.
      In fact, Yanis is completely wrong. The problem is that a solution in the American way is impossible because the population of our country’s didn’t wanted a euro in this way from the first moment. And, exactly what they didn’t wanted happened, Greece made a chaos. Therefor there is no solidarity. And that was what Yanis his team were asking for, solidarity.
      But I am not an Nobel laureate, so my opinion doesn’t count. In fact, tools like spanners and screwdrivers are my best friend. But the socialism of Yanis is a special kind of socialisme. A socialisme I don’t recognize, altho I am a socialist.

      How do you want to fit your plans in the political reality Yanis, how do you want o pay it all? That are my questions.

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      • Mike, I am not even sure if Yanis tells us what he really thinks. My impression is that he is pretty flexible in pleasing people …. Why do I think so? Since he claims that while he always was honest anyone else wasn’t in the EU circles of power. Now I suspect he is trying to take revenge …

        I haven’t finished reading Ioannis Glinavos 2013 book Interesting here a ,snip: page 111

        Sovereign insolvency within the the Eurozone is not a situation that can be maintained, as the suffering inflicted on the population would be unacceptable. If Greece, for example, were to go bankrupt in the absence of assistance, it would inevitably ask to leave the EMU utilizing the mechanisms described above. Therefore anyone wishing to blackmail the Europeans to obtain improved terms for financial support better remember that the inability to expel a member state is no guarantee of economic survival in the euro-system.

        Blackmail is what comes to mind most often considering YV. Which still is not completely clear to me. I kept hearing over here from Syriza representatives: We do not want any further money, all of the time. But this can’t have been the complete truth.

        ********
        failedevolution on September 4, 2015 at 21:59 said:

        Lapavitsas said recently that most of the SYRIZA MPs believed dogmatically that the creditors would retreat. Apparently they were wrong.

        ********

        Austerity no doubt is bad, but are expansionary versus contradictory money politics always good? My grandparents told me stories about this – expansionary macroeconomic effort:

        German Hyperinflation – Background

        “Because reparations were required to be repaid in hard currency and not the rapidly depreciating Papiermark, one strategy Germany employed was the mass printing of bank notes to buy foreign currency which was in turn used to pay reparations. This greatly exacerbated the inflation rates of the paper mark.[8][9]”

        Liked by 1 person

      • Actually, my book says 2014, here it says 2013 though

        “The problem is that a solution in the American way is impossible because the population of our country’s didn’t wanted a euro in this way from the first moment. And, exactly what they didn’t wanted happened, Greece made a chaos. Therefor there is no solidarity. And that was what Yanis his team were asking for, solidarity.”

        Strictly an American versus a European legal/regulatory solutions to the 2008 financial melt down is what I still have to read. I understand without having read it yet, there are disagreements.

        I am not anti-American, anti-British or anti-Greek or seriously anti anything within certain limits of a more general curiosity. … But yes, I may have however disinformed prejudices against the Anglo-American financial ways. Without any substantial basis for them, thus prejudices.

        Besides: You are quite welcome among the fast majority of non-Nobel-laureates but does your use of spanner instead of wrench suggest you are British? Not wanting to join the Euro would fit. On the other hand there is Mikenetherlands?

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      • mikenetherlands says:

        No, I am not british, I am born in Amsterdam where my family lived from 1700.
        And blackmail? I am sure it felt for them like blackmail. But was it blackmail? I don’t think so. If you are a part of a monetary union you are not compete free anymore. A part of your democracy is given away to an outher system. And I think they didn’t realize that.
        Professors are no politicians.

        And my grandmother told us to about that hyperinflation in Germany. She was there with her father and the waiter’s had baskets to collect the money. She was deep impressed by that.
        She had banknotes what were stamped. 10 mark was changed into 1.000.000 mark.
        It is a north-european complex what is in our genes. I told it before, Europe is a continent with too much history and good memories.

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  4. @ Leander,
    “I kept hearing over here from Syriza representatives: We do not want any further money, all of the time. But this can’t have been the complete truth.”

    What they mean is, we do not want more money in the form of loans. You (the rest of the Eurozone) should give it to us outright.

    That was the idea YV tried to sell all the time. But if that would have become a precedent everybody else would demand debt relief.

    But the amount of debt is not the main problem. It is the cost of the debt.

    https://contradictingyanis.wordpress.com/2015/09/17/honoring-a-tradition/

    During the first bail-out the amount of debt and the cost were decreased to the extend that Greece finally started to recover.

    Irresponsible promises of Syriza brought them to power and irresponsible negotiations tactics made things worse. Perhaps even beyond rescue.

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  5. Pim, I seem to remember a passage in Iannos book written in 2013 where he mentioned, if I recall correctly, 3% interest rates for Greece above, European or maybe, not sure if he mentioned Germany in the context, but he may well have.

    But then look at this: Interests Eurozone

    But if this horrorscenario is correct. Is it really Germany’s fault? Because we did not convince the Europeans to simply take over Greek debts in 2009/10 to start with?

    Maybe Yanis considered this his trump-card. Look you gotta help us, otherwise you will loose your credit ratings too. I am guessing of course.

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    • @LeaNder,

      If Greece hadn’t been bailed-out in 2010 the austerity that would have followed would have been much worse than they have experienced so far.

      There was of course a certain amount of self interest involved with respect to the other Eurozone members, but why should Greece be the only country that is allowed to look after its own interests.

      In his last post Glinavos spells out the consequences of a disorderly Grexit. Not something you would wish your worst enemy.

      Yanis’s behavior was plain silly. Blaming the ones that are supposed to rescue you. He wrote a book, tried to put it in practice and failed miserably.

      Like

      • I agree, that Iannos article is great. Left a note there.

        He wrote a book, tried to put it in practice and failed miserably.

        Are you aware that from the moment Yanis became prime minister he published an abbreviated version of his book for free via Amazon? You can even get it in the Netherlands. I wasn’t.

        I wouldn’t really describe him as silly, maybe for the time being as a paradox. An economist/politician/activist that obviously is quite good in marketing himself. But also someone who’s intentions are not that clear. Yes, I am pretty unable to grasp his intentions.

        Some decades ago I thought this would never happen, but: I agree with Schäuble, who according to Stephan Lamby said, he doesn’t trust him. I wasn’t even aware Schäuble said that, when I wrote the same thing. On Eric’s blog I think. Lamby by the way accompanied Schäuble over several month and thus met Yanis Varoufakis.

        Yanis, by the way, does not let this stand in the 45 minutes interview for the German Phoenix channel, where he extensively talks about Schäuble’s EU masterplan. See above marketing, he avoids the challenge and instead asks: who doesn’t he trust, me or the Greek people? Claiming Schäuble told him, he trusted him but not the Greek goverment. And it’s exactly this collectivizing strain that seems to surface over and over again. Partly as “the proud Greek”, partly as the no doubt legitimate pride in the fact that Greek gave a lot of words to our languages, like paradox … In any case it keeps surfacing over and over again

        I admittedly wondered if our host here, Iannos, had the same thing vaguely in mind when he posted a Monty Python’s The People’s Front But maybe it was more an allusion to the usual ideological struggle inside the left.

        In any case I seem to remember Iannos made ironical comments about Greek pride. I hope you understand that a vast majority of Germans have a problem with nationalist pride. 😉

        ******

        that said, last time I checked available tools on the web to find out my political position it rendered something like left – liberal. Based on my own experiences with the Marxist Leninists groups in university, I am not sure I would call myself a “liberal Marxist” though. Has he defined what it means somewhere? What is the liberal’s take on economic and especially financial economical forces from an internationalist – as I understand Marxist – perspective? Seems I will read Iannos critique of neo-liberalism in Russia too.

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      • Pim,

        maybe I shouldn’t have used paradox, simply since I love the word and its meaning or since he used (misused?) it to present the proud Greek (again) to the English audience in his recent speech in London.

        really I should have used: Αίνιγμα, enigma, a riddle.

        But yes, the self-marketing part of the riddle stands out clearly.

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