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@RedSky

First, if it were up to me, you could take over as Minister of Finance in this country tomorrow. Our differences seem miniscule compared to what horrendous policies our last three MoF have pushed. The one prior, ironically, was dubbed the most dangerous man in Europe by The Sun.

We're in agreement on almost everything you mentioned in your last comment, so I'll focus on what I perceive differently.

First, I'd differentiate between fiscal stimulus and fiscal spending, the former being a situational application of the latter. As you said, fiscal stimulus during an economic crisis tends to be inadequate with regards to our macroeconomic objectives. You can neither whip out plans for major investments at a whim nor can you mobilize the neccessary resources quickly enough to make a difference and still be reasonable efficient. Not to mention that it only affects certain parts of the economy (construction, mostly), leaving others completely in the wind. So I'm with you on that one, it's a terribly inefficient and ineffective approach.

Automatic stabilizers work magnificently in this regard, but they barely take any pressure from the lower wage groups, especially if unemployment benefits come with a metric ton of strings attached, as is the case in Germany. A basic income guarantee might work, but that's an entirely different discussion.

The problem I see with merely relying on reasonable automatic stabilizers in the form of payments is that they do put a floor into demand, but do very little to tackle the problem of persistent unemployment due to a lack of jobs. As useful as training and education are, the mere number of highly educated people forced to work mundane jobs tells me that, at best, it doesn't work, and at worst pushes a systemic problem onto the individual, leading to immense pressure. Not to mention the psychological effects of being unemployed when employment is tauted as a defining attribute of a proper person -- aka the demonization of the unemployed.

It's still somewhat decent in Australia, but in Europe... it's quite a horrible experience.

Anyway, my point is that I'd rather see a lot more fiscal spending (permanent!) in the shape of public sector jobs. A lot of work cannot be valued properly by the market; should be done without the expectation of a return of investment (hospitals, anyone?); occurs in sectors of natural monopolies -- all of that should be publicly run. A job guarantee, like your fellow countryman Bill Mitchell advocates quite clearly, might be an approach worth trying out. Economy in the shit? More people on the public payroll, at rather low (but living wage!) wages. Do it at the county/city level and you can create almost any kind of job. If the private sector wants those people instead, they'd have to offer better working conditions. No more blackmail through the fear of unemployment -- you can always take a public job, even if it is at a meagre pay.

I should probably have mentioned that I don't buy into the notion of a stable market. From where I am standing, it's inherently unstable, be it through monopolies/oligopolies, dodging of laws and regulations (Uber), impossibility to price-in externalities (environmental damage most of all) or plain, old cost-cutting leading to a system-wide depression of demand. I'm fine with interfering in the market wherever it fails to deliver on our macroeconomic objectives -- which at this point in time is almost everywhere, basically.

Healthcare is all the rage these days, thanks to the primaries. I'd take the publicly-run NHS over the privately-run abomination in the US any day of the week. And that's after all the cuts and privatizations of the last two decades that did a horrible number on the NHS. Fuck ATOS, while we're at it.

Same for the railroad: the pre-privatization Bundesbahn in Germany was something to be proud of and an immeasurable boost of both the economy and the general standard of living.

In the mid/long run, the effects of automation and climate change-induced migration will put an end to the idea of full employment, but for the time being, there's still plenty of work to be done, plenty of idle resources to be employed, and just nobody to finance it. So why not finance it through the printing press until capacity is reached?

As for the Venezuela comparison: I don't think it fits in this case. Neither does Weimar Germany, which is paraded around quite regularly. Both Venezuela and Weimar Germany had massive supply-side problems. They didn't have the production capacity nor the resources to meet the demand they created by spending money into circulation. If an economy runs at or above its capacity, any additional spending, wherever it comes from, will cause inflation. But both Europe and the US are operating faaar below capacity in any measurable metric. You mentioned LRAS yourself. I think most estimates of it, as well as most estimates of NAIRU, are off quite significantly so as to not take the pressure off the wage slaves in the lowest income sector. You need mass unemployment to keep them in line.

As you said, the participation rate is woefully low, so there's ample space. And I'd rather overshoot and cause a short spike in inflation than remain below potential and leave millions to unneccessary misery.

Given the high level of private debt, there will be no increase in spending on that front. Corporations don't feel the need to invest, since demand is down and their own vaults are filled to the brim with cash. So if the private sector intends to net save, you either have to run a current account surplus (aka leech demand from other countries) or a fiscal deficit. Doesn't work any other way, sectoral balances always sum up to zero, by definition. If we want to reduce the dangerous levels of private debt, the government needs to run a deficit. If we don't want to further increase the federal debt, the central bank has to hand the cash over directly, without the issuance of debt through the treasury.

As for the independant central bank: you can only be independant from either the government or the private sector, not both. Actually, you can't even be truly independant from either, given that people are still involved, and people have ideologies and financial ties.

Still, if an "independant" central bank is what you prefer, Adair Turner's new book "Between Debt and the Devil" might be worth a read. He's a proponent of 100% reserve banking, and argues for the occasional use of the printing press -- though controlled by an inflation-targeting central bank. According to him, QE is pointless and in order to bring nominal demand up to the level we want, we should have a fiscal stimulus financed by central bank money. The central bank controls the amount, the government decides on what to spend it on.

Not how I would do it, but given his expertise as head of the Financial Services Authority, it's quite refreshing to hear these things from someone like him.

I would argue that automation still isn't the job killer #1. Plain old political decisions, such as sound finance, deficit hawkery, and austerity lead by a mile in this category. Neither is being addressed properly, but I find it hard to focus on the employment effects of automation when the Eurozone, for instance, runs at >10% unemployment strictly due to policies enacted by (non-)elected officials. We don't need technology to cause mass unemployment, humans can do that all on their own.

Additionally, even the amount of work available is a matter of perspective. Within the current system, the number of jobs with a decent salary is already dwarfed by the number of people looking for one. The amount of work to be done, on the other hand, is not.

Case in point: our (read: German) national railroad company is short-staffed by about 80.000-100.000 people, last I checked; our healthcare system is short-staffed by at least 200.000 people, probably a lot more; law enforcement is short by about 50.000; education is short by at least 20.000. Let's not even talk about infrastructure or ecological maintenance/regeneration. These are not open positions though, because nobody is willing/able to pay the bill.

So while I agree that we should be discussing how to deal with technological change, a more pressing matter is either to alter the system or to at least take back control over the vast sums of dead currency floating around in the financial nirvana or on Stephen Schwarzman's bank accounts. First stop: full employment. Then, gradually, guaranteed basic income when automation does, in fact, cause mass unemployment.

Finally, I don't think automation will do as quick as sweep as some presume. The quality of software in commercial machines is quite absymal in many cases, since it was written in the normal fashion: do it now, do it quickly, here's five bucks. Efficiency improvements generally come at the price of QA, and it shows. Europe's most modern railway control center is nearby, and it never went online -- Bombardier cut corners and never had the proper railway expertise to begin with. Meanwhile, the center build in '53 is working just fine, and so are the switches put in place when Wilhelm II was running the show.

Edit: That said, I'm thrilled to see mind-numbing labour being replaced by machines. Can't happen quickly enough.

[Updated at 10:00 a.m.] On Twitter, the teen clarified that he was never kicked off the football team—that story was "made up" by the media, he said. The school district also denied that he would be suspended; whether the petition influenced that decision is unclear. For me, the fact that 20,000 people expected the hero to get unfairly railroaded by the system is still quite a testament to the ubiquity of zero tolerance.

Yeah, it was way too easy to believe he'd get treated unfairly. I'm glad the cops are trying to charge the bully though. That shit, no matter WHAT the blind kid could of said or did, is just fucking troglodytic.

This should be a standard part of drivers education. You get the boring guy in the cheap suit who makes sure you check your mirrors when changing lanes and stop at railroad tracks, and then next a really pumped up Irishman co-driver yelling instructions at you and berating you for not pushing hard enough on a rally course.

At some point, yes. But for the time being, increases in productivity (automation) are less of a job killer than your everyday policies and ideologies.

Speaking of my own country, the amount of work not being done is enormous, and the aggregate of work not having been done over the last decades is absolutely staggering. The current economic system not only unloaded a great number of burdens onto society, it also never found a way to come up with a way to integrate the aforementioned work. No one is willing to pay for it, so it doesn't get done, period. The most prominent examples would be infrastructure works of all kinds (energy, most of all), ecological restauration and care for the elderly. Our national railroad alone could hire 100,000 people and still be understaffed.

You can have full employment next year, but not if you expect the private sector to provide the jobs within the current system. The public sector could create them, if you use a sovereign, free-floating currency, but ideology doesn't allow for it.

As long as we focus on finding people for a given job, there'll be mass unemployment, no matter what. Reverse the process, create/find jobs for a given people and we might make some headway.

Again, ideology doesn't allow for it. And that's also what made me stop advocating for an unconditional basic income (UBI). The financial details of it can be a nightmare, yes, and it would be a break with a social welfare system that survived two world wars. But the deal breaker for me was politics.

A UBI would mean taking the boot of the peasants' necks. Liberty and (some) equality made real. Love it.
But look at how vicious the Greeks are attacked these days, not just by the elite, but by our fellow worker bees. They're not just burying the last bit of European solidarity in Greece, they're unloading all their frustrations onto the schmucks who had very little to begin with. It's despicable. And it indicates to me that any attempt to introduce a system that would take from people the need to work would unleash unimaginable hatred from the usual suspects. And significant portions of the public would go along with it, given how easy it already is to channel their frustrations towards "welfare queens" and "moochers".

So yeah, a UBI would be lovely. Finally some liberty, finally more negotiating power for the worker (can decline any job offer without repression). But the shit would need to hit the fan hard before there can be any room within the political sphere for it.

Men walkin' 'long the railroad tracks
Goin' someplace there's no goin' back
Highway patrol choppers comin' up over the ridge

Hot soup on a campfire under the bridge
Shelter line stretchin' 'round the corner
Welcome to the new world order
Families sleepin' in their cars in the Southwest
No home no job no peace no rest

The highway is alive tonight
But nobody's kiddin' nobody about where it goes
I'm sittin' down here in the campfire light
Searchin' for the ghost of Tom Joad

He pulls a prayer book out of his sleeping bag
Preacher lights up a butt and takes a drag
Waitin' for when the last shall be first and the first shall be last
In a cardboard box 'neath the underpass
Got a one-way ticket to the promised land
You got a hole in your belly and gun in your hand
Sleeping on a pillow of solid rock
Bathin' in the city aqueduct

The highway is alive tonight
Where it's headed everybody knows
I'm sittin' down here in the campfire light
Waitin' on the ghost of Tom Joad

Now Tom said "Mom, wherever there's a cop beatin' a guy
Wherever a hungry newborn baby cries
Where there's a fight 'gainst the blood and hatred in the air
Look for me Mom I'll be there
Wherever there's somebody fightin' for a place to stand
Or decent job or a helpin' hand
Wherever somebody's strugglin' to be free
Look in their eyes Mom you'll see me."

Well the highway is alive tonight
But nobody's kiddin' nobody about where it goes
I'm sittin' down here in the campfire light
With the ghost of old Tom Joad

@RedSky

Selling assets and, to a certain degree, the reduction of public employment is an unreasonable demand. There's too much controversy about the effects it has, with me being clearly biased to one side.

Privatisation of essential services (healthcare, public transport, electricity, water) is being opposed or even undone in significant parts of Europe, since it generally came with worse service at much higher costs and no accountability whatsoever. Therefore I see it as very reasonable for Syriza to stop the privatisation of their electricity grid and their railroad. There are, of course, unessentials that might be handed over to the private sector, but like Varoufakis said, not in the shape of a fire sale within a crisis. That'll only profit the usual scavengers, not the people.

Similarly, public employment. There's good public employment (essential services, administration) and "bad" public employment. Troika demands included the firing of cleaning personnel, who were replaced by a significantly more expensive private service. And a Greek court decision ruled the firing as flat out illegal. For Syriza to not hire them back would not only have been unreasonable financially as well as socially, it would have been a violation of a court order. Same for thousands of others who were fired illegally, according to a ruling by the Greek Supreme Court.

Troika demands are all too often against Greek or even European law, and while the previous governments were fine with being criminals, Syriza might actually be inclined to uphold the law.


On the issue of reforms, I would argue that the previous governments did bugger all to establish working institutions. Famously, the posts of department heads of the tax collection agency were auctioned for money, even under the last government. Everything is in shambles, with no intent of changing anything that would have undermined the nepotic rules of the five families. Syriza's program has been very clear about the changes they plan to institute, so if it really was the intent of the troika to see meaningful reform the way it is being advocated to their folks at home, they would be in support of Syriza.

Interventions by the troika have crashed the health care system, the educational system and the pension system. Public pension funds were practically wiped out during the first haircut in 2012, creating a hole of about 20 billion Euros in the next five years.

I would like to address the issue of taxation specifically. Luxembourg adopted as a business model to be an enabler of tax evasion, even worse than Switzerland. In charge at that time was none other than Jean-Claude Juncker, who was just elected President of the European Commission. He's directly involved in tax evasion on a scale of hundreds of billions of Euros every year. How is the troika to have any credibility in this matter with him in charge?

Similarly, German politicians are particularly vocal about corruption and bribery in Greece. Well, who are the biggest sources of bribery in Greece? German corporations. Just last week there was another report of a major German arms manufacturer who paid outrageous bribes to officials in Greece. As much as I support the fight against corruption and bribery, some humility would suit them well.


As for the GDP growth in Greece: I think it's a fluke. The deflation skewers the numbers to a point where I can't take them seriously until the complete dataset is available. Might be growth, might not be. Definatly not enough to fight off a humanitarian crisis.

Surpluses. If everyone was a zealous as Germany, the deficit would in fact be considerably narrower, which is a good thing. Unfortunatly, it would have been a race to the bottom. Germany could only suppress wage growth, and subsequently domestic demand, so radically, because the other members of the Eurozone were eager to expand. They ran higher-than-average growth, which allowed Germany to undercut them without going into deflation. Nowadays, Germany still has below-target wage growth, so the only way for Greece, Spain, Portugal and Italy to gain competetiveness against Germany is to go into deflation. That's where we are in Europe: half a continent in deflation. With all its side effects of mass unemployment (11%+ in Europe, after lots of trickery), falling demand, falling investment, etc. Not good. Keynes' idea of an International Clearing Union might work better, especially since we already use similar concepts within nations to balance regions.

Bond yields of Germany could not have spiked at the same time as those of the rest of the Eurozone. The legal requirements for pension funds, insurance funds, etc demand a high percentage of safe bonds, and when the peripheral countries were declared unsafe, they had nowhere to go but Germany. Also, a bet against France is quite a risk, but a bet against Germany is downright foolish. Still, supply of safe bonds is tight right now, given the cuts all over the place. French yields are at historic lows, German yield is negative. Even Italian and Spanish yields were in the green as soon as Draghi said the ECB would do whatever it takes.

The current spike in Greek yields strikes me as a bet that there will be a face-off between the troika and Greece, with very few positive outcomes for the Greek economy in the short run.

QE: 100% agreement. Fistful of cash to citizens would not have solved any of the core issues of the Eurozone (highly unequal ULCs, systemic tax evasion, tax competition/undercutting, no European institutions, etc), but it would have been infinitely better than anything they did. If they were to put it on the table right now as a means to combat deflation, I'd say go for it. Take the helicopters airborne, as long as it's bottom-up and not trickle-down. Though to reliably increase inflation there would have to be widescale increases in wages. Not going to happen. Maybe if Podemos wins in Spain later his year.

Same for the last paragraph. The ECB could have stuffed the EIB to the brim, which in return could have funded highly beneficial and much needed projects, like a proper European electricity grid. Won't happen though. Debt is bad, even monetised debt during a deflation used purely for investments.

A fascinating episode in the struggle between unions and the establishment is currently taking place over here. A change in the regulations of union membership within a company allowed the union of railroad engineers to grow a pair and actually represent their members in a meaningful way.

Keep in mind, unions over here were not busted, but subverted instead. "Domesticated", you might say. Now here's a small union in posession of tremendous leverage: if the trains stop rolling, half the country grinds to a halt.

Many corporate lackeys in government got scared and a new law was proposed to curtail the power of smaller unions. A law that is deemed quite unconstitutional, by the way.

And that's when the umbrella organisation of this small union pitched in with a statement that can be summed up unequivocally as "it's on, bitches". It's just rhetoric so far, but the small union already made good on their threats last month, so I'm somewhat hopeful that we'll finally get to see some meaningful pushback against the war on unions.

Over here, the union of railroad engineers is currently showcasing what a union was supposed to be doing, and almost the entire establishment is fuming. You just got to love how a proper strike reveals so many of them for what they are: corporatists who couldn't give a shit about workers.

"How can such a small group of people exploit their positions to grind an entire country to a halt? How can they hold us hostage like this?"

Ironically, it's the same people who (partially-)privatised our railroad in the first place. Railroad engineers used to be civil servants, no risks of strikes there.

The press is demonising them, brass from both government parties is demonising them, laws are proposed to practically strip them of their right to go on strike...

All major unions have been in bed with corporations for so long now that people barely remember what it looks like when a union fights for its members. They used to fear union leaders like Otto Brenner (Otto the Great, Iron Otto), now they're playing golf with his successors.

How about if a Fed made some shit up, accosted you, manhandled you, and arrested you for contempt of fed with no original charge? ...or better, how about a citizen group making a citizens arrest on you...for a lie, lets say they saw you walk past a park and arrest you for exposing yourself to children and trying to kidnap one...even though you just walked past, the entire group beating you into submission (even after you submit to arrest) and solidifying their planned lie in front of you. From your previous comments here, I can't fathom that now you would simply allow yourself to be railroaded by liars who are arresting you without cause.
Now about 'fight it in court', lets assume you're fired and ostracized for the arrest, and no longer hold 'clout' with the court as an officer, so the feds/citizens lies are believed and you just go to jail for ....well, who knows?
That's what you're suggesting people do, just let yourself be abused and put in jail based on a lie you can't contradict (after you get out of the hospital, perhaps for months or years before court, it's not fast, and maybe jail for life afterwards) because insisting a cop actually follow the law is stupid and dangerous.
Once again you don't think things through.
Thanks for being so predictable.
Oh, and to make you feel better, I'll paint nearly all cops in the world with 'liar' colored paint, it's part of your training to lie to 'suspects'.

"It will wreck our economy"

Sound familiar? Any AGW denier ever uttered that line and when asked "how", they have no clue?

Let me introduce you the institution behind it: Freedom Partners. Check who is behind that. Follow the money, who has most to lose. Then try to think a tactic that will keep you floating in dollars the longest. Yup, it is to teach all your followers to keep repeating the same catchphrase..

When even there has been a great communal investment in better technology infrastructure, the economy has had a tremendous boost. Railroad, electric grid, internet. Renewable energy is just a another on that line. Burning something, destroying it to get energy is finite resource. Renewables are basically infinite. Person who sells firewood is not going to like your electric heater even when it means half of the village will not die next winter. Company that sells oil will not like infinite energy source they are not in control of even if it means half of us die. They and their kids won't be affected but you will.

"It will wreck our economy"

If something, it will boost your economy. Greatly. It is already in motion in most EU countries, Germany is at 33%. Norway is at 99%. Where i live, in Finland, we are at 25% even when half of the year most of our hydro-electric is not functional. Have ANY of those countries seen any negative, economy destroying effects? No? They all have actually benefited from them? No way, bloody communists propaganda.. Lies lies, lallaalaaa, i believe in Koch.

"It will wreck our economy"

The people behind that line of words has been behind every major block in the way of creating green energy. The will raise the cost so high it is impossible, they will lobby until it's too complicated to change anything. THEY are wrecking your economy. THEY are stopping innovation. THEY are wrecking our whole mfcking planet and you are worried about your electric bill or not having two hot showers per day.

"I have nothing against green energy but i'm not going to do anything for it."

That is you.

The engineer threw the train into emergency, but it takes a LONG time for those things to stop.

http://www.chicagotribune.com/news/local/breaking/chi-2-women-narrowly-escape-death-on-railroad-trestle-20140730-story.html

OK, well, Obviously I support a fair internet.
But if we have to go to another random website, every other month while these Ahats just keep drawing up bills, eventualy one will get through. So we can vote down 600 Bills but if they slip just ONE past us, we're screwed.

Who is working to stop them from being allowed to keep sneak this in? Has ever been a more blatant waste of court resources? They will continue to railroad this through until it slips past.

Personally I'd like to see a Court Justice speak up and strike them down as needing to let this drop. - Ya, as if....