Mark Blyth: "how globalization and capitalism are failing people throughout the world"

[Cara]

Mark Blyth is Professor of Political Economy at Brown University and author of "Austerity: The History of a Dangerous Idea" & "Great Transformations".

He has recently made predictions on both the Brexit and the Trump win. ForbiddenKnowledgeTV has recently featured a video of him (here: http://forbiddenknowledgetv.net/economist-who-predicted-brexit-trump-brilliantly-explains-capitalisms-collapse/) with commentary by Jimmy Dore:


Jimmy Dore breaks down the task that lays head for Progressives, by showing a recent statement by Brown University Economics professor, Mark Blyth.

Blyth accurately predicted Brexit and Trump and he explains in plain English (with his fabulous Scottish burr) how globalization and capitalism are failing people throughout the world – and why this means that more Brexits and Trumps are on the way – starting with Italy, France and Spain.

As Dore notes, the last time the world saw CEO-to-worker pay discrepancy as high as 475-to-1 was during the Third Reich. The NeoLiberalism of Barack Obama and Hillary Clinton is exactly that: Fascism – or what “Il Duce”, Benito Mussolini preferred to call “Corporatism”.

Dore urges Progressives to wake up to this and “Do NOT listen to Chris Hayes, do NOT listen to Rachel Maddow, do NOT listen to CNN, do NOT listen to George Snuffleupagus">Snuffleupagus (Dore is a comedian – he means George Stephanopoulos) – or any of those people. Don’t listen to Joan Walsh, don’t listen to Ezra Klein. Don’t listen to any of those people. They have an interest in the system staying the way it is – and they have no idea what a working person is – NONE!”


http://www.youtube.com/watch?v=-K8bf6dbYt4

[Cara]

Here is an earlier dated (23 June 2016) video of him speaking about Brexit, Scottish Independence and "Trumpism":


http://www.youtube.com/watch?v=nwK0jeJ8wxg

Summary from ForbiddenKnowledgeTV (here: http://forbiddenknowledgetv.net/Mark-Blyth-on-the-Brexit-Vote/):

Brown University professor of Political Economy, Mark Blyth talks about the Brexit vote with AthensLive and about the ultimate outcomes for the UK and across Europe. Don’t panic, his deep Scottish burr is bolstered by English subtitles (I can understand him just fine, myself).

He also surmises that Scotland’s possible upcoming vote to secede from Britain, in order to return to the EU would likely result in a similar situation to that of Greece.
In his words, “So, you’re going to give up George Osborne, an austerity chancellor – for Dr. Schauble? So, your nice little Scottish welfare state’s going to be protected by the tender embrace of the Germans? How’s that working out for the Greeks?

“People aren’t thinking this through. This is a vote against Technocracy. It is a vote against governance by unrepresented, unelected, undemocratic elites.

“It’s a no-win situation until the elites…figure out that at the end of the day, as I like to tell my American hedge fund friends, the “Hamptons is not a defensible position.

“The Hamptons are a very rich area on Long Island that lies along low-lying beaches. Very hard to defend a low-lying beach. Eventually people will come for you.”

[Cara]

Here is a recent academic style article written by Mark Blyth about the current political and economic challenges in Europe:

http://www.elgaronline.com/view/journals/ejeep/13-2/ejeep.2016.02.06.xml

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Policies to overcome stagnation: the crisis, and the possible futures, of all things euro
Mark Blyth * *

Abstract

This article argues that the Europe's continuing economic underperformance, particularly in the eurozone, is neither a function of insufficient information (policymakers do not know the right policies) nor ideology (policymakers are unable to recognize the right policies due to ideological priors). Rather, this article places the continuation of policies that cause stagnation in a longer historical context. Building upon the insights of Kalecki (1943) regarding the political limits of full employment policies, it is argued that the shift from a regime that generated inflation, low profitability, and a high degree of equality to one that generates deflation, high profitability, and inequality has hamstrung the ability of policymakers to respond positively to the situation at hand. This has generated structural pressures for political realignment across cases that compound the economic problems of stagnation while exacerbating tensions between different European ‘Varieties of Capitalism.’ The result is a set of ‘second-best’ strategies that lead to second-best outcomes in both politics and economics that further stress the already stressed economies and polities of Europe.

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Full article available online and in PDF download format here: http://www.elgaronline.com/view/journals/ejeep/13-2/ejeep.2016.02.06.xml

Here are some interesting comments from the article:


Factors previously cited as growth-enhancing, such as low oil prices and low interest rates, were suddenly seen by financial markets as growth-retarding, with both being ‘too low,’ as reflected in market volatility in early 2016. And when a bastion of not just economic orthodoxy, but the main promoters of ‘structural reforms,’ ‘flexibility,’ and ‘austerity’ for the past 25 years – the Organisation for Economic Co-operation and Development (OECD) – issued a report in February 2016 saying that now is the time for all not ‘to tighten,’ as ex-European Central Bank (ECB) head Jen Claude Trichet argued in 2011, but to deploy a massive fiscal response, then we know that stagnation is already here (OECD 2016)


Table 1 Some different policy targets to overcome stagnation
http://www.elgaronline.com/view/journals/ejeep/13-2/Images/06_tbl-001.jpg
And that those policies will never happen is equally obvious. First, to stop squeezing, one has to admit that austerity hasn't worked. Given the electoral stakes for governing parties that have taken their countries through austerity programs, there is no way in which that volte-face can happen without their removal from office and a simultaneous cognitive revolution in Brussels. Second, the ECB has been desperately trying to halt inflation since 2011 with the Very Long Term Refinancing Operations (VLTROs), and now with full-blown Quantitative Easing (QE)



The OECD's report bluntly stated that growth prospects have ‘practically flat-lined’ and that ‘a commitment to raising public investment would boost demand and help support future growth’ (OECD 2016). I can only agree. But I can also state just as bluntly that despite all the evidence marshaled to make this case overwhelming (see, most recently, Gechert 2015), it's still not going to happen for the political and economic reasons given in Table 2.

Table 2 Obstacles to recovery policies
http://www.elgaronline.com/view/journals/ejeep/13-2/Images/06_tbl-002.jpg




Figure 1: Europe's deflationary problem
http://www.elgaronline.com/view/journals/ejeep/13-2/Images/06_fig-001.jpg

In Figure 1, the equilibrium position of euro-area member states had shifted from the Taylor-rule ‘sweet spot’ before the crisis to looking dangerously like Japan, with one exception. Japan is, despite its very high debt levels, a rich society, whose citizens are very old and treat government debt as an intergenerational gift. The consequences of deflation in such a society are benign, at least for pensioners, which is most of those who vote. In an austerity-shocked economy such as Greece or Portugal, deflation creates a much less benign distributional and electoral politics that is summarized in Table 3.

Table 3 The anti-Kaleckian politics of deflation
http://www.elgaronline.com/view/journals/ejeep/13-2/Images/06_tbl-003.jpg

Table 3 maps out how euro area electoral politics have played out since deflation established itself in Europe in 2013. Anti-austerity movements such as Spain's Podemos and Italy's Five Star movement were initially seen as temporary reactions that would die down as recovery took hold. They have not acted according to the script because the recovery has not taken hold, but rather, deflation has.



But crucially for politics in demand-shocked high unemployment countries with lots of debt, such as the eurozone periphery, deflation increases the value of debt but undermines the ability of debtors to pay it back. This is not to say that in the short term debtors ‘benefit,’ in a material sense, from deflation. They do not. Rather, it is their resistance to and defection from mainstream politics that powers the populists of both left and right.
...

Debtors in crisis countries may vote more for left than right, recognizing that bailing other people's banks comes at their expense. Reciprocally, debtors in creditor countries may vote more for populists of the right, who want to enforce creditor contracts all the harder, so long as such enforcement always falls on foreigners.
...

As such, the results across cases are reactionary (in the neutral sense of the word) anti-creditor pro-debtor coalitions eating away at mainstream party vote shares. 3 Seen in this way, and as I have argued elsewhere, Syriza in Greece, the National Front in France, Sinn Fein in Ireland, UKIP in the UK, the SNP in Scotland, and Podemos in Spain, are then more similar than different (Blyth 2015b). They are all, regardless of left or right political stances, at base anti-creditor, anti-market, pro-national, populist movements that constitute a threat, not just to macroeconomic stability, but to the very idea of Europe as it has been constructed over the past 30 years, with the euro at its core (ibid.)


The article goes on to look at the different types of capital market operating in European countries - Liberal Market versus Co-ordinated Market - and reviews how the system as a whole has tended to create surpluses and deficits in a self-reinforcing way.

He concludes by considering what CAN versus what is POSSIBLE be done in the political climate:


... the other ‘political’ reason that fiscal policy is off the table, which again limits ‘what can be done?’ apart from the politics, is the problem of inequality. That is, in a world where the top 62 capitalists own as much as the bottom half of the world's population, the investor class does not need to invest to survive, but the rest of us need their investment to survive (Oxfam 2016)
...

In short, the problem of ‘better policy’ is political more than it is informational, and the political problem for fiscal policy is precisely that it will work and that it will cost the investor class, which is why it will not be tried. Yes, we all benefit from better fiscal policy, but some very powerful folks – those who have made off with 90 percent of everything for the past 30 years and are already doing very nicely with private financing initiatives, speculation against government debts, the outsourcing of jobs, and the chasing down of bankrupts both large and small – benefit less. That they can veto good policy is down to the politics of fiscal policy, not the economics.


Interesting reading...