Yves here. Lambert and I both noted the dearth of “2020 in review” stories and even greater scarcity of 2021 forecasts. Varoufakis’ optimism is therefore a departure, but you’d have to be an optimist to become Minister of Finance in Greece in 2015.
Nevertheless, I am surprised at his view of Brecht, since I take the social levelers Pirate Jenny (actually Polly Peachum) and Macheath and the collapse of the pleasure city of Mahagonny to represent Brecht’s theory of change.
By Yanis Varoufakis. Originally published at his website
I am Yanis Varoufakis with a message for the New Year from DiEM25.
2020 leaves behind much debris – pain, fear, broken lives, smashed dreams. But, we also owe a debt of gratitude to 2020: It has helped expose seven fundamental secrets.
We used to think of governments as powerless. But since Covid-19 struck we know better: Governments have stupendous powers that they hitherto chose not to use, deferring to the exorbitant power of Big Business.
Yes, the money-trey does exist after all. Except, of course, that is only harvested by the powerful on behalf of the oligarchy: Money created by the rich for the rich.
Solvency is a political decision because power-politics, not markets, decide who is bankrupt and who is not.
Wealth has nothing to do with hard work or entrepreneurship. America’s billionaires made 931 billion dollars from the pandemic. They got richer in their sleep.
Yes, 2020 was a vintage year for capitalists, but capitalism died! Liberated from any remaining competition, colossal platform companies like Amazon own everything. So, yes, during 2020, Capitalism morphed into an insidious Technofeudalism.
Our Europe, its civilisation and power notwithstanding, continued to sell its soul in 2020. One word suffices: Moria, the refuges prison camp in Lesbos – a mirror reflecting Europe’s cruelty and lost soul.
Yes, it has been a difficult year. We lost too many people to the pandemic. We saw exploitation flourish, driving so many into the embrace of destitution. Civil liberties took a major hit. But, despite it all, 2020 let us in on a brilliant, hope-inspiring seventh secret: Everything could be different.
If this pandemic proved anything, it is that Bertolt Brecht was right when he once said:
Because things are the way they are, things will not remain the way they are.
I can think of no greater source of hope than this. We must thank 2020 for it. Now, it is up to us to make 2021 a year of radical change in the interests of the many. Everywhere!
Happy New Year and Carpe DiEM25!
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Maybe, just maybe too, it can be the end of that damned phrase “How are we going to pay for it?” Sanders failed to reply when Biden asked him that a few months ago about how to fund M4A but I look forward now to when the first person to use that phrase gets mocked and humiliated for doing so. Unless of course a compliant media gives that person a complete and total pass.
PayGo’s domination no longer complete:
“Solvency is a political decision because power-politics, not markets, decide who is bankrupt and who is not.”
I also like that as a definition of inflation: a political decision.
Happy New Year
Oh no no no, it’s because the currency is debased and unmoored from the solidity of the Gold Standard! /s
Oh, yes, exactly! (They stick with that mantra, don’t they?)
I forgot rocks proclaimed as valuable by some barbaric royalty thousands of years ago, when there was nowhere near the human population now, is the way to a stable economic system.
(And from what I’ve read recently, sand may be more valuable as an industrial component)
Yep solvency is always just 14 keyboard strokes away!!!
If you haven’t seen it yet, Death to 2020
https://www.netflix.com/title/81332175
I’m with her. “A train wreck in a shit show… but that would be unfair to trains and shit.”
Yes, me too!
I am not at all convinced 2021 won’t be worse, or that it won’t at least be similarly bad.
This is a good message. I am sensing frustration and im hoping that turns into a desire to build new institutions.
I had no idea about DiEM25. Worth a moment on Der Google and crumb path.
Not sure why it has the funky upper-lower case font layout
https://diem25.org/
Occupy W S movement still festers in Sunrise, etc.
Re socialism and massive money handouts for the rich and financial institutions: Yes, that happened and yes, it’s obscene. But it seems to have had little or no affect on inflation, so at least there’s that.
But the implication appears to be that many billions of dollars could instead be channeled to the middle and working classes. According to MMT, wouldn’t that run the risk of too much inflation? The rich won’t spend much of their excess money. Instead, they’ll invest or hide the bulk of it (although they may gobble up substantial quantities of real estate and create inflation in that sector). The middle and working classes, however, are much more likely to spend any extra money and possibly overstress productive capacity, thus generating inflation — though in the current Covid environment, there may be little danger of that.
I like MMT and believe its application would give us a great deal more scope to solve many of our problems, particularly if used to build or rebuild infrastructure. That’s why I think it would behoove its advocates to be careful when they suggest in a sweeping way what it can do over an extended period. In a downturn, MMT is enormously helpful. Once an economy is out of the woods, however (and if I understand correctly), it shouldn’t be used as a money spigot.
Bill Mitchell is running the numbers and says no:
The Introduction
The Numbers
Inflation is caused by demand for something exceeding its supply, not necessarily the amount of money available (but it’s a factor). There will be greater demand for fuel as the vaccine takes hold and travel picks up, and greater fuel costs are one thing (not prosperity) that does ‘trickle down’ ($50+ WTI is already in the forecast, and will likely exceed that).
There is a much greater supply of un-/low-skilled labor than there is demand for it–largely, but not entirely, caused by automation–hence basic wages don’t rise (unless mandated by government).
All the excess money will be sopped-up by the stock market and other casinos.
Supply and demand are also controlled by…wait for it…political decisions.
And you don’t think that loading up the working class with debt, removing their jobs and starving them of cash suppresses demand? Is consumer demand from the 1% sufficient to sustain economic growth in America?
I didn’t say that (not that isn’t true). You injected your point of view, like a virus injecting foreign DNA into a cell nucleus.
someone can correct me if I’m wrong, but you need to understand that MMT is primarily an explanation of where money comes from in currency-issuing states. It is not something that can be turned on or off. It is not something that can be used in bad times, and switched off in good times (and I don’t think this is a position any MM theorists hold – they point out the inflation risk comes when the economy is at full capacity. I’m too stupid to explain precisely what that means, but my basic understanding is that if there is no job guarantee/bona fide full employment, then the economy is not at full capacity and there is no inflation risk – again, if I’m wrong I hope someone more familiar with the literature can correct me)
From this understanding of where money comes from, policy recommendations informed by said understanding logically follow, including the Job Guarantee, which Mitchell considers a sine qua non of MMT. (I think there is a bit of an unreconciled Motte and Bailey problem here: “It’s not true MMT without a job guarantee but actually MMT is just a description of how the monetary system works”, but that’s a rhetorical issue and I’m more or less persuaded already on the key points already so it’s not a big issue to me personally – my point about it not being something you can turn off and on essentially still applies; you couldn’t even if you thought that was somehow a sensible thing to do. You would stop spending (NB this is semantically different from ‘turning MMT off’, which, to reiterate, is impossible) when a country’s resources were being maximally utilised, but one would hope that an economy would be ‘out of the woods’ well before that.
I hope that all makes sense. Again, I can’t claim to be an authority on the subject but I do like to think I have a pretty good command of it for a layman. I recommend going to billyblog: the search engine is good for finding answers to certain questions. His blog is somewhat repetitious and he’s covered a lot of the same topics on MMT over and over again, so it’s a handy learning resource.
Inflation occurs due to resource supply limitations.
Kelton’s example is trying to take the ASCE list of public works deferred maintenance issues and do the entire list at one go. Doing so will create massive inflation because there’s not enough materials (steel, concrete, sand, excavators, etc.) and skilled labor available to work on the entire list at once.
I see your point. But would inflation in construction, one (admittedly big) sector of the economy, cause a surge in overall inflation as measured by the usual market basket of goods? Of course, no sector is entirely separate from others. But neither are they wholly connected.
Consider healthcare, where persistent astronomical costs amounting to fully 18% of the US economy (even to the extent that they’re prohibitive for millions of Americans) don’t appear to have much effect on officially measured inflation. Or the international value of the dollar, for that matter.
I would offer that prices for consumption of health C/I is a case of prices being administered, due to balance sheet flow – stock market demands and not inflation due to lack of supply or over demand E.g. financialization with perverse incentivizes.
Whilst were at it I would point out that the hyper paranoia about inflation during the neoliberal era is all about labour costs due to being the low hanging fruit on the margins. This makes the whole IS-LM drama interesting when its used to quantify using structural under-unemployment as a one stop shop tool in managing the destroyer of nations economies. Then still bang on about some mythical beast that is the labour market E.g. how can you have a ***market*** when it has forced slack labour, hence the more accurate term labour pool.
Back in the 70s our local temporary labor agency in Minneapolis used to be called ‘Labor Pool’, big red letters on a small plastic sign.
IIRC, you would walk with about $20 for a day’s work.
We don’t have access to the contrafactual world where health care didn’t get expensive, and the FED has been managing interest rates, so things can cause inflation, but that just means that the FED pays some tiny fraction more interest on reserves or whatever. Would be my guess anyway. Like your stove might make heat, but then your furnace just makes a bit less, I think temperature and inflation are usually a balance between opposing forces. I would tend to agree with you that money to actual people would be far more inflationary than to zombie banks or whatever, and with possible supply shocks and such it could take off. But letting people fall into poverty and evicting them in January has costs as well. And there is PLENTY of room to raise interest rates if it shows up.
We already have inflation… healthcare, higher education and housing… when housing costs inflate, people think it’s great…
Seems a market thingy … sorta like bitcoin …
That is because they are positional goods, which makes buyers price insensitive, or essential (see AOC’s tweet on healthcare not being a commodity because health is not a commodity, you’ll pay whatever it takes).
I understand your inference to Fred Hirsch “which makes buyers price insensitive” and would add Veblen to that but quire the balance sheet cash flows vs. market valuation aspect dynamic E.g. its built in even if its contra older notions and that is the rub …. no one wants a bar of that after the GFC antics and what geopol is shaping out too be …
And per Michael Hudson’s Killing the Host, banks like higher house prices because higher house prices sell more debt — the banks’ flagship product. The availability of credit (we could cynically say the “access to” credit) makes higher house prices less intolerable to the buyers.
Because things are the way they are, things will not remain the way they are.
The question is not how to get good people to rule; THE QUESTION IS: HOW TO STOP THE POWERFUL from doing as much damage as they can to us.
and
Ignorance is not a simple lack of knowledge but an active aversion to knowledge, the refusal to know, issuing from cowardice, pride, or laziness of mind.
Karl Popper
mr popper would be pleased with Y V today:
Every intellectual has a very special responsibility. He has the privilege and the opportunity of studying. In return, he owes it to his fellow men (or ‘to society’) to represent the results of his study as simply, clearly and modestly as he can. The worst thing that intellectuals can do – the cardinal sin – is to try to set themselves up as great prophets vis-à-vis their fellow men and to impress them with puzzling philosophies. Anyone who cannot speak simply and clearly should say nothing and continue to work until he can do so.
Karl Popper
Stay positive – test negative, Happy New Year.
From Larry Summers own ‘Ignorant’ mouth (Introduction)
And given that lots of a hole is from the fact not that people don’t want to spend but that they can’t spend because they can’t take a flight and they can’t go to a restaurant.
and
But gosh David I think it would be a real mistake to be going to two thousand dollars. And I have to say that when you see the two extremes agreeing you can almost be certain that something crazy is in the air. And so when I see a correlation of Josh and Bernie Sanders and Donald Trump getting in behind that idea I think that’s time to run for cover.
Larry is a scumbag no doubt about it, but he is right.
“When, by their foolish thirst for reputation, they [popular leaders] have created among the masses an appetite for gifts and the habit of receiving them, democracy in its turn is abolished, and changes into a rule of force and violence. . . . For the people, having grown accustomed to feed at the expense of others, and to depend for their livelihood on the property of others, …degenerate into perfect savages, and find once more a master or monarch. Polybius 264 -146 BC”
Baloney since SOME fiat creation is an ethical necessity.
Another ethical necessity is that fiat be created for the general welfare only and that certainly excludes welfare for the rich but certainly allows equal fiat distributions to all citizens.
This is not about ethics. We are in a fiat currency system. This is now things work.
You have again presented misinformation. I warned you you would be blacklisted if you persisted. This is your final warning.
Interesting comment! So it is OK to give the trillions to the corporations and 1% in order to preserve our ‘democracy’? How’d that work out for other countries who supported their 1% at the expense of their people?
But I’m not quite sure how that fits in with the United States’ mission statement:
https://constitution.congress.gov/constitution/preamble/#:~:text=We%20the%20People%20of%20the%20United%20States,%20in,this%20Constitution%20for%20the%20United%20States%20of%20America.
But I guess quoting Polybius is appropriate – he too was writing for the leaders of an empire that was starting to fail.
It’s clarifying to see someone like Summers say that if a position is popular and therefore could be passed easily there must be something wrong with it, right?
When I look at the choices the US is making I just hide my head and weep for my countrymen. We are choosing misery at every level.
+ 100
Now everyone is Blessed with 2020 Hindsight.
Are you suggesting Yanis Varoufakis misread the import of our past year — and its portents for the new year? I tend to agree with that opinion … except I am still not entirely sure what Varoufakis intended by his reference to Brecht, unless he has a very different understanding of Brecht than I do.
Brother Yanis has great focus, determination and optimism. Let’s hope that DiEM25 makes progress in ’21.
Remember the roast family moto…non carborundum illegitimatus.
What was revealed to me the most during this pandemic is the abstruse character of our politicians. We know they all lie but they do so with the idea that they have a privileged position because they have been elected to parliament by the people. We need humble, creative, honest, industrious, helpful, kind, empathic people to be our politicians. In my country the politicians of half the provinces have maybe fallen short of displaying any of the above characteristics, but the other half are not trying very hard at all! Half of them felt that the economy was more important than the lives of the elderly–Can you #$%^&!!!@ imagine that. Some of the least tolerable representatives elected in the provincial cabinets told everyone to stay home and then went on an expensive holiday of their own!
I think part of the answer to the problem that a politician represents is to start electing half men and half women, right across the board. The minister of finance should not always be a man; the minister of families should not always be a woman. I would love to see a government run by all women just for a change! Let us change places and women do the work of men and men do the work of women–just even for a day.
A few women: Phyllis Schlafly, Margaret Thatcher, Indira Ghandi, Madeleine Albright, Gina Haskel, Samantha Power, Nancy Pelosi…
Half women, half men is idpol and magical thinking.
Thanks YV (and NC) for the vision of a better new year!
I care more about politicians policy stances than I care about their gender. I’m not really sure why I should care about the gender of a neoliberal minister or whatever.
For year in review, we do have https://www.peakprosperity.com/dave-collum-2020-year-in-review-part-1/
If you want to read the perspective of a libertarian curmudgeon who has tenure (as a chemist…)
I think he’s mostly wrong but some research is provided
And likewise, things are what they are because of change. Brecht was almost a fatalist. It’s a comforting dream that a tall ship with eight sails and 50 cannons is coming to save us. How long have we been dreaming about Justice? YV is correct about everything being a political decision – how else? Politics follows necessity. The question is Whose necessity? The really bad thing is that politics goes brain-dead just when it should be changing. Our dear Congress is so entangled with big business and so dependent on political contributions that it will take more than a Covid pandemic to dislodge them and create a just society. National Medicine? That means every clinic and every hospital and every doctor, nurse, orderly, technician, janitor, accountant, pharmaceutical company and insurance company (to name just the tip of the MIC) must join. It means bribing the industry with public-private-partnerships that are almost as bad as the original biz plan. But the most efficient way to change and stabilize everything is to take away the profit motive. If profits cannot be skimmed those self-interested entrepreneurs will go on to something else. The rest will stay and change society – out of necessity. I’m very skeptical that the US can accomplish this one. The only other way is for big business to die from its own hubris – when it kills off all the people that have supported its existence. So far the only thing being killed off is small business and the environment… but that’s a start. Brecht would be smiling.
I hate to agree with you, Susan.
But I do, completely. Class trumps everything, absolutely.
“Brecht was almost a fatalist. It’s a comforting dream that a tall ship with eight sails and 50 cannons is coming to save us”
Weill’s “Jenny die Seerauberbraut” song has always belonged to Lenya and the “Jenny Diver” persona. So why did Brecht originally put it into Polly’s marriage scene? I suspect he wanted to counterpose the bloodthirsty machismo of the Kanonensong (“Ihnen ‘ne neue Rasse, ‘ne braune oder blasse, Denn machen sie vielleicht daraus ihr Beefsteak Tartare”) to the bloodthirsty feminism of “Wenn mann fragt, wer Wöhl sterben muss, Und da werden Sie mir sagen hören: Alle! Und wenn dann der kopf fällt, sage ich Hoppla!” He may also have been hinting at a reference to Part 2 of the original Beggar’s Opera, in which Polly takes over the gang and proves a much better Highwayman than Macheath!
I never regarded the Kanonensong as bloodthirsty. You left out the line, and refrain throughout the song of “Soldaten wohnen, Auf den Kanonen” which to me is like saying soldiers live as cannon fodder which is hardly bloodthirsty. I have always regarded the song as a song commemorating a comradery of suffering. As for bloodthirsty feminism — recall the AmerIndian practice of letting their women handle to torture of their captives. I do not believe bloodthirsty feminism was what Brecht was pressing for — as much as the level to which Jenny’s degradation had reduced her. The thirst for blood, not unlike pacifism, is not a male or female trait. I like to believe Brecht was not ‘woke’ enough to care whether Macheath or Polly managed the Highwaymen better. Macheath was hands-on and Polly was more inclined and trained for management.
Heck I’m in for the old timmie marriage conflict resolution of the man standing in a hole up to his waste and the female standing on the ground with weapons of choice.
Let you know who sort it out ….
I disagree. The Corona pandemic has not served to dislodge Big Money from Government as evidenced by the CARES Act and ongoing slaughter of small and medium business speeding Big Money’s consolidation of its Empires of Monopoly and Monopsony. Big Money is eagerly waiting for the opportunity of a Century to pick-up bargains and consolidate under the Corporate ‘friendly’ — as in completely bought and co-opted — Government.
Your statement how “the rest [those entrepreneurs driven by more than self-interest alone] will stay and change society” is very hopeful — but who are these dark knights willing to stay and change society for the better? Where are they hiding? I am very skeptical that the US will become a better place in coming year. The future beyond the next year is well-hid behind a dark curtain. And whatever this new year promises is a dark cypher to me. I believe Brecht would be grimacing and sneering.
Like Jenny the Pirate waiting for her ship or Macheath waiting for a Coronation reprieve from the Queen — we can only hope to afford and know how to buy Macheath’s reprieve for ourselves first and then for our families — the Neoliberal way.
I would not argue any of this, JG. My point is that necessity dictates. Kinda like the situation has to ripen to the point that its own process is ending. Regardless of consolidation tactics, it (our current politics) really has no where left to go. Imho, that is really where we stand these days. “They” (Who? is the question.) even graced Nancy Pelosi’s garage door with threats and left a pig’s head on her driveway. Those who stay will be the same old people, with a new perspective on society.
I think it is time to try a few more revivals of Brecht’s Three-Penny Opera, along with some Mother Courage, if our forever wars continue or bear offspring.
Did anyone listen to the entire song of Jenny the Pirate? Her pirates round up all the survivors from their bombardment of the town and haul them before Jenny wrapped in chains … and when they ask who should we kill she says “All!”. [Amanda Palmer’s more recent version is also very good.] The clip Yves linked to comes from the 1931 Movie “Die Dreigroschenoper”. It ends with Polly Peachum, Mac-the-Knife, and Tiger Brown sitting around a boardroom table with several banking magnates. [A German Wiki indicated that Brecht brought suit to forbid showing the film because it didn’t express his intentions for the play. I do not know the content of Brecht’s objections but suspect he might have preferred that the last scene be cut from the film. Unfortunately, I believe the film may have better captured the direction of things as they played out in Germany, than the play did. I believe the hollow note that ends Brecht’s play is more optimistic than the boardroom scene ending the movie.]
I have no idea what Yanis Varoufakis believes might come from things the way they are. I suppose I could wander through his website now that my black-eyed peas and ham are slow cooking. The ending of “Low-Dive” Jenny’s song and both the history of Germany and the ending of the film suggest changes from the way things are to some changes that offer no sources of the hope Varoufakis sees for the future.
I think some interpretations of Pandora’s box [jar] might be better guides for 2021 than a blind hope that things are so bad they can only get better — which is how I might encapsulate Varoufakis’ beliefs in his quoting of Brecht.
Pandora closed the lid as quickly as she could but the evils escaped. Only Hope remained in the box. But Pandora’s box contained only evils and curses from the gods. Why was there also Hope inside? Why had Pandora been able to hold on to Hope alone of all that had been in the box? One answer that make sense to me, is that Hope is a special kind of curse. Hope can indeed inspire triumph in some situations. But Hope held too long, becomes the curse that hid inside Pandora’s box … and made no effort to leave. Fixing upon a Hope blocks the other kinds of thinking necessary to discover some solutions — some new Hopes.
It is depressing. No question. So I prescribe 2 big bowlfuls of hopin’ john for every one.
“Ihr Herren, redet euch nur da nichts ein” – I’m quite sure poor Brecht saw the choice as between Socialism and Barbarism. Plenty of bloodshed either way, but one is in the service of a better world.
Varoufakis is part of the lame loser left. His message leaves me with even less hope than before. :D
What about the loser right – ???
I bet has has even fewer subscribers than Jimmy Dore!!