Sound macroeconomic management — or, socialism

October 19, 2020 11:26 PM

New Zealand Prime Minister Jacinda Ardern's Well-Being Budget Proves Politically Successful: "targeting budget resources towards outcomes in areas like environmental protection, poverty and literacy rates and even the amount of free time people need to volunteer with community organisations."[1]

[S]tarting in New Zealand the woolly concept of happiness has been ditched in favour of a more data-driven approach to quality of life including data analysis and surveys.

In New Zealand’s case those initial targets included the transition to a sustainable and low-emissions economy, supporting digital adoption, addressing the relative poverty among Māori and Pacific Islander population versus the population as a whole, reducing child poverty, and supporting mental health.

Rather than reject the idea that wealth equals health, as Bhutan sought to do, the New Zealand approach has been about matching annual spending by the State to a set of long-term policy goals that have been identified as keys to delivering quality of life for the public.

Billions have poured into historically overlooked areas, including mental health, as a result. While all are long-standing areas of policy concern, the explicit language of a budget and the annual assessment of spending commitments and measurement of outcomes is new...

Dr Kieran Keohane, a sociologist at University College Cork, says the attempt to develop new ways to measure policy success or failure by expanding on purely economic measurements reflects rising anxiety among policy makers across the world... The cascade of revolutions that broke out across Europe in 1848 and the so-called Age of Extremes in the 1930s that saw the rise of Nazism both provoked similar anxiety around governability and were followed by explosions in the use of statistics as governments made dramatic efforts to better understand those they governed, he says. In both cases chaos was ultimately put back in the bottle by the development of state infrastructure capable of delivering large scale social, educational and healthcare provision, he says.

-Why is Jacinda Ardern cruising to reelection in New Zealand?
-New Zealand's next parliament is set to be the most diverse ever

Fair Pay Agreements: "If you are interested in seeing how sectoral bargaining could be brought about into an Anglophone country, pay attention to New Zealand, where Jacinda Ardern's Labour Party has proposed Fair Pay Agreements."

The Money Men Could Save Us. But They're Stuck in the Seventies.[2]
(And, unfortunately, yes, they mostly are men.)

We need blue sky ideas, and they exist. One example, a proposal by former Fed economists Julia Coronado and Simon Potter, is that the Fed could get money directly to people, using digital currency not unlike a direct deposit. To avoid politics, this emergency support would be tied to macroeconomic conditions, like the unemployment rate. Such policies would blur the line between fiscal and monetary policy, but if done well, the independence of the Fed from Congress could be preserved.

Finally, the Fed must get serious about exorcising its hawkish demons. It must commit — not simply promise — to meet its dual mandate. They must define maximum employment with numbers not good intentions. They must explain, in detail, what hitting their new average inflation target will look like. Then they need a plan to get it done.

Yes, to take some of the boldest measures under consideration — like sending money directly to people — the central bankers would need more authority from Congress. But Congress has been more than happy of late to delegate economic policy to Fed officials. So they should ask for it.

Some day: "every American will have a basic checking account with the Federal Reserve and we will fight recessions by causing extra money to appear in those accounts and we'll think it's crazy we ever did it another way."[3,4]

Instead of socialism: "Trump has given us an economic system where the fortunes of businesses and indeed entire sectors rises or falls based on favoritism from Washington."[5]

American economics: "right now is like Soviet economics in 1987. More and more economists understand that the entire intellectual system they created is a lie."

also btw...

• Yanis Varoufakis, Allison Schrager, Robert Reich, and Larry Summers debate wealth redistribution
• Housing capital earns a large share of declining labor share
• Oregon has led the nation in housing reform, but there's a big risk here that it's going to be gutted
• Of course even if you improve housing policy you're still left with the fact that poor people need more money — so give them money

-Audrey Tang on the Technology of Democracy[6]
-Taiwan's Digital Minister Knows How to Crush Covid-19: Trust

America Feels Like It's Falling Apart. Time for Some Optimism - "Octavia Butler's classic futurist novel 'Parable of the Sower' recently made the New York Times bestseller list for the first time. It depicts an America falling apart at the seams due to violence, economic decline, and governmental dysfunction. But despite the chaos, the protagonist, Lauren Olamina, spends much of her time thinking about space exploration. Faced with a dystopian Earth, she motivates herself and her followers to survive by dreaming of the stars."

posted by kliuless (9 comments total)

Impressive post! Thank you.
posted by mumimor at 11:50 PM on October 19, 2020 [1 favorite]

That wealth redistribution debate is not "a good one" as the linked tweet describes it.

Rather, it's everything you'd expect to see from any televised Left vs Right gabfest in 2020: the Left keeps making sound points in good faith, while the Right keeps conceding all those points very very quietly when forced to, then immediately trying to shove those concessions down the memory hole by hacking endlessly away at an utterly predictable array of tedious straw men.

Essentially, everybody involved agrees that we should redistribute wealth, obviously; but the Right faction makes a huge show of refusing to agree that what redistribution means is making public policy changes that alter the way wealth is distributed compared to the status quo, arguing instead against a very very narrow conception of redistribution that they made up themselves and then wheeling out tired old talking points like "a politics of envy".

Varoufakis and Reich are arguing in favour of wealth redistribution; Summers and Schrager spend the whole debate talking past them by arguing against Robin Hood, apparently convinced that what they're there for is to "win" a debate as opposed to illuminating an issue via informed discussion.

Grrrr.
posted by flabdablet at 5:14 AM on October 20, 2020 [4 favorites]

But I probably should have lead with the customary heartfelt thank-you to kliuless for yet another astonishing collection of high quality links on a topic of vital public interest.

<3
posted by flabdablet at 5:15 AM on October 20, 2020

Also, Jacinda Ardern is a fucking legend and if the world had more leaders as good as her we'd all be much, much better off than we are right now.
posted by flabdablet at 5:17 AM on October 20, 2020 [5 favorites]

An important factor in New Zealand's sane politics:

“A huge reason that our politics is not so extremely polarised and so far out there is because we no longer have Murdoch-owned press in New Zealand, and it’s never taken a foothold,” said David Cormack, the co-founder of a public relations firm and a former head of policy and communications for the left-leaning Green party.

posted by PhineasGage at 7:07 AM on October 20, 2020 [15 favorites]

I was just reading a more cautious take on the idea of the well-being budget and whether it will actually translate into transformational change under a Labour majority. In any case, I hope some sort of agreement with the Green party might help push "ecological economics" to the foreground.
posted by piyushnz at 7:34 AM on October 20, 2020 [2 favorites]

-How Taiwan is Using Technology to Foster Democracy (with Digital Minister Audrey Tang)
-Brazil's Central Bank Just Revolutionized Instant Payments

Next month, the Central Bank of Brazil will debut a new instant payments tool. Called PIX, it promises hassle-free transactions within seconds for anyone with a mobile phone and a bank account. And it comes free of charge. The bank has already logged more than 39 million requests by prospective PIX clients, both corporate and individual, eager to lock in access “keys” to the service.

Brazilian banking was long due for a shakeup. Latin America’s signature economy boasts some of the world’s biggest and most lucrative banks, where dexterous moneymen finessed hyperinflation and the shell game of serial government stabilization plans through market acumen and innovation. Yet these sophisticated brand banks still deliver many of their headline services on last century’s clock — Monday to Friday from 10-to-4, and 10-to-2 during the pandemic — and often at bruising lending rates and fees.

No wonder some 45 million Brazilians have no bank account, and 71% still prefer to do business in cash...

Brazil is actually a relative latecomer to instant digital payments. Kenya launched its M-Pesa system (42 million subscribers) via mobile phone in 2007; India’s four-year-old Unified Payments Interface clocked 1.62 billion transactions in June; China’s two biggest digital wallet competitors, Alipay and WeChat Pay, have more than 2.2 billion active users.

Yet those are competitive businesses, each of which takes a cut per transaction. PIX, by contrast, is a public good, launched by the Central Bank and free of charge. The initiative was an attempt to lay the ground rules — and perhaps get a jump on the competition — in the relatively cloistered Brazilian economy for an aggressive frontier business dominated by international giants. Tellingly, the Central Bank in June withdrew authorization for WhatsApp Payments, the Facebook-owned phone-based payment tool, a week after its Brazilian rollout...

Legacy banks, understandably, are less enthusiastic. They stand to forfeit a bundle in fees for moving money. The bank transfers nest egg has grown 31% since 2017, according to Moody’s Investors Service, which says banks could forfeit as much as 8% of their annual winnings in traditional transfers to PIX users. The Sao Paulo market research company Eleven Financial Research projects a much smaller hit of around 1% of their yearly fee income. “Traditional banks might have wished that PIX had never come along,” said Bilyk.

Indeed, they had no choice. The Central Bank has ordered all financial institutions with more than 500,000 clients to offer account holders the option to sign up for the no-charge pay app. Lenders have joined the October scramble to lock up PIX accounts.

posted by kliuless at 1:23 AM on October 22, 2020 [2 favorites]

great post!
posted by The Minotaur at 4:31 PM on October 27, 2020

Next month, the Central Bank of Brazil will debut a new instant payments tool. Called PIX, it promises hassle-free transactions within seconds for anyone with a mobile phone and a bank account. And it comes free of charge.

And not a blockchain in sight. Well played, BCB.
posted by flabdablet at 5:19 PM on October 27, 2020 [1 favorite]