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2021/05/11
MMT21 - POLITICAL ECONOMY OF FISCAL POLICY - Sept 2021
2021/09/17
5:00~7:18
#122 Warren Mosler, Philippa Sigl-Glöckner, Achim Truger, Paul Sheard: T...
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5:00~7:14
MMT21 - POLITICAL ECONOMY OF FISCAL POLICY - Sept 2021https://t.co/whqLYFxSI2
— 地域通貨花子１ (@TiikituukaHana) November 18, 2021
2021/09/17
5:00~ pic.twitter.com/jJ3xvZaTB6
P:
yeah i guess forgive me i see it probably from the stupid government's employee perspective of finance official and you know rather than looking at kind of the end state or the abstract i guess i've i i i've seen the difficulties in practice which probably cannot can be overcome if you're more creative um so so two things to that first of all yes i mean i agree that at the moment we use unemployment as a macro tool um although probably not even very coherently because you know we've got this whole theory of the of the naira and that we need a certain level of unemployment to keep inflation at bay um which doesn't really seem to hold um and then i i don't know that much about it in the us but i know that in europe we play lots of funky games with the naira essentially to somehow get results for our fiscal rules that the politics around it doesn't explode on that framework yeah i think it's very hard to defend and one shouldn't defend it and one should look for a better one and there's obviously no reason to um turn turn down deficit because we're close to denial i mean it just doesn't make a lot of sense spain's supposed to have a naira above 10 um i do think it's a little bit tricky on the micro level um it's not just governments creating unemployment i mean now looking at the specific german situation for instance but i guess you have the same and many other industrial economies that are changing you do just have unemployment because of skills mismatches because lots of factors which are quite tricky and it's not that easy to overcome at the micro level and i'm not sure that you know just at the macro level providing enough demand will fix it all maybe i'm not i'm i'm not creative enough um so i completely on board on the macro side i think then on the microsite we also need to do some active interventions to to kind of help push from that side as well.
5:00~7:14
P:
そして、最終的な状態や抽象的なものを見るというよりは、おそらく克服できないであろう実際の困難さを見てきたと思います。
まず第一に、現在私たちはマクロ的なツールとして失業を利用していますが、おそらく首尾一貫したものではないということに同意します。
インフレを抑えるためには、ある程度の失業率が必要であるということですが、これは実際には成り立っていないようです。
アメリカではあまり知らないのですが、ヨーロッパではナイラを使ってたくさんのおかしなゲームをしていて、基本的には財政ルールのためになんとか結果を出そうとしています。
守るべきではなく、より良いものを探すべきです。否定に近いからといって、赤字をひっくり返すような理由は明らかにありません。
ミクロのレベルではちょっと難しいと思いますが......政府だけが失業を生み出しているわけではありません。つまり、例えばドイツの特殊な状況を見ても、同じようなことが言えると思いますし、他の多くの産業経済が変化している中で、スキルのミスマッチによる失業が発生しているのです。
ミクロのレベルで克服するのはそれほど簡単ではありませんし、マクロのレベルで十分な需要を提供するだけですべてが解決するとは思えません。
マクロ的には完全に賛成ですが、ミクロ的には積極的な介入をして、そちら側からも後押しする必要があると思います。
24:19~29:14
P:
sure um so let me start with yeah maybe the physical framework in in germany and europe because it really kind of relates to so in germany we have a so to the debt um it limits uh the annual budget deficit um first of all to 0.35 of gdp plus a cyclical adjustment um which is where basically the whole question of output gap comes in and you know depending on how big how far away you are from your leech potential um depending on that you're you're allowed to do more or less deficit spending um this is also where the german dead break is basically tied straight into the european rules the european rules in total are pretty complex but basically they limit you to 60 debt to gdp a three percent deficit.
and then you have this is like when you're already kind of in a bad corner and then there's so-called preventive arm of disability and growth pack um which you should stick to if you want to be in a good corner and that says um you should limit your medium term deficit to 0.5 cyclically adjusted so you know depending on on your output gap you're allowed to do more or less so we kind of i guess tackle it from two sides we tackle it from trying to understand what actually the right objective is and then you know what can you actually make work in our context because it's always going to be an evolutionary process and then also we think it's urgent we do something i share achievements worry that you know now after the crisis um we will get back to oh my god we need to reduce that and that would really be quite destructive um so on the high level objective we do see full employment is quite a good objective especially when you look at what the big problem in aging societies is which is you know basically having having enough money to pay pensions um probably a good idea of people at working age work even if you're just like cold-hearted budget person because then they pay tax and you know you don't have to pay social security to to sustain them um we when we started we talked about full employment and realized that people in the german european context didn't really understand that well because they say well everybody in germany has a job problem is indeed most people have a job but a lot of them are very poor jobs.
so you know they just don't pay for a living it's 10 of our workforce is mutually employed so that really doesn't do very much for your living not even speaking of your pension so we speak of full capacity utilization and then we say all right let's start with the current framework and how can we you know take a first step in the right direction um because i don't know what the perfect optimal state is but the more relevant one i think is how can we make reform progress in the right direction and so what we say is how about you know we take that definition of what full capacity under the debt break is uh because that defines how much deficit you're allowed to run every year and and try and really think about or get closer to what full capacity is than what it is today today we defined full capacity as you know the output of the economy yesterday so if only 50 of women in germany were working well then we say full capacity is you know if half of half of women do not work that seems pretty ridiculous to i think any sane human being whether you're an economist or not um the advantage if you move from a definition of full capacity from what it was in the past to you know what could it reasonably be is that.
you can do that without changing the german constitution i mean some some legal scholars um have now looked at this as well and it's looking like we can probably even do it if everything goes goes well without changing or a major legal change because it's really quite in you know in the technical details of things you're not changing the the basic setup and then you could essentially do the same thing for europe um you have a working group that looks at the technical ins and outs of this um and change definition of of capacity and you know you still have rules and it's still somehow arbitrary how you then multiply this output gap with you know whatever number um semi-elasticity but i think it will already you know bring some form of reality back to the rules and and you would get a step closer to to looking at what can our economy actually do and hopefully you know even make it fiscally more sustainable if you want to talk about it in that those terms.
P:
まず、ドイツとヨーロッパの物理的な枠組みから始めましょう。なぜなら、ドイツでは債務保証制度があり、年間の財政赤字をまずGDPの0.35%に制限しています。 これは、基本的に生産高ギャップの問題が出てくるところで、 リーチの可能性からどれだけ離れているかによって、多かれ少なかれ赤字支出が許されるということです。
そして、これはすでに悪い方向に向かっているときの話ですが、次に、いわゆる予防的アームである障害と成長のパックがあり、良い方向に向かいたいのであれば、中期的な赤字を0.5%に抑えるべきだとしています。 私たちは2つの側面からこの問題に取り組んでいると思います。実際に正しい目標は何かを理解しようとすることと、私たちのコンテクストで実際に何を機能させることができるのかを理解することです。危機の後には、「ああ、神様、私たちはこれを減らさなければならない」という話に戻ってしまうかもしれませんが、それは非常に破壊的なことです。ですから、高レベルの目標としては、完全雇用は非常に良い目標だと思います。 私たちは完全雇用の話をしましたが、ドイツやヨーロッパの人々はそのことをよく理解していないことに気づきました。なぜならば、ドイツでは誰もが仕事を持っていると言うからです。
ドイツでは、ほとんどの人が仕事を持っていますが、その多くは非常に貧弱な仕事で、生活費にはなりません。完璧な最適状態はわかりませんが、より重要なのは、正しい方向に向かって改革を進めるにはどうしたらいいかということだと思うのです。つまり、毎年どれだけの赤字を出すことができるかを定義しているわけですが、今日のような状態ではなく、完全な能力とは何かを実際に考え、それに近づけようとしています。経済学者であろうとなかろうと、まともな人間であればかなり馬鹿げていると思います。
つまり、ドイツの憲法を変えずにできるということです。いくつかの法律学者がこの問題を検討しましたが、すべてがうまくいけば、変更や大きな法改正なしに、おそらく実現できそうです。ヨーロッパでも基本的には同じことができるでしょう。技術的な裏表を検討するワーキンググループを設置し、容量の定義を変更します。 しかし、これにより、ルールに何らかの形でリアリティが戻り、我が国の経済が実際に何ができるのかということに一歩近づくことができると思いますし、うまくいけば財政的にもより持続可能なものになると思います。
50:0~53:17
P:
um let me just make one more comment oh great on the question earlier um [Music] i don't i mean i would love to be that optimistic i don't think we are nearly there last year we were allowed to run whatever deficit because we suspended the rules um we completely suspended them and actually the the clause for when you can do that they're not that flexible i mean people are trying to stretch them now and we are already stretching them so that we can suspend them for 2022 as well but that's gonna be tricky and i think everybody is fighting as much as they can so that 2023 we won't get a contraction like we did after the financial crisis i think this is a serious risk.
and so i'm a bit more sanguine on on that because changing european primary legislation is incredibly hard when you have quite a few countries opposed to this you just had a letter published by the netherlands the austrians who said you know what we're not changing this the sixty percent debt to gdp level you know i mean it seems completely mad but it is still a number that people believe in and they still think we need to get back to sixty percent you know.
it's not even really 90 um not even speaking of moving away from that completely arbitrary useless number it's 60 is where we're safe so i think there's still a lot of work to be done unfortunately and we need to do it really really fast because you know you can't really do fiscal policy a month at a time um portuguese greek italian government kind of needs to know what they're able to spend pretty soon um it's also about expectations for for the economy right.
um so so i think there's a lot of work to be done um on job guarantee yeah i mean you know coming from that perspective i think we're far away from that um because and i guess this is you know comes back to to some of the basic issues of the european union or of having a monetary union um this was all built on on the promise of convergence right because then you can also have some kind of convergence on for instance you know having having public sector jobs provision and having a certain wage that you set for it like i think you proposed seven euros in your paper.
um well we haven't really seen that much of that convergence we've we've rather seen the opposite um so you can't really have a common wage level at the moment i mean you can probably institute some kind of country specific policy um but i think you're probably even missing quite a bit of legitimacy um with the european union to do something like that um we have to work on the economic and the the kind of political side to to get that ready so i do think that that kind of policy will be a long way out and you know if i'm wrong then probably happy okay so i just wanted to uh back up to something our keem said about.
P:
去年はルールを一時停止したので、どんな赤字でも許されましたが、実際にはルールを一時停止しても、それほど柔軟ではありません。2023年に金融危機後のような財政縮小が起こらないように、皆ができる限りの努力をしていると思います。これは深刻なリスクだと思います。
というのも、ヨーロッパの主要な法律を変えるのは非常に難しく、多くの国が反対しているからです。先日、オランダとオーストリアから手紙が出されましたが、彼らは「債務残高の対GDP比60％という水準は変えない」と言っています。
実際には90%でもなく......完全に恣意的な無駄な数字から離れるという話でもなく......60%が私たちの安全な位置なのですから、残念ながらまだやるべきことはたくさんあると思いますし、それを本当に早くやらなければなりません。
雇用の保証については、やるべきことがたくさんあると思います。その観点から言うと、私たちはまだそれには程遠いと思います。
今のところ、共通の賃金水準を設定することはできません。しかし、国ごとの政策を導入することはできるでしょうが、欧州連合（EU）で何かを行うには、かなりの正当性が欠けていると思います。そのようなことをするためには、経済的にも政治的にも努力しなければなりません。ですから、そのような政策はずっと先のことになると思いますし、もし私が間違っていたとしても、それはそれで幸せなことだと思います。
1:09:07~1:10:50
P:
no i mean we need we need common institutions right this is made a bit more difficult by obviously the language barrier um but also.
and i guess this is where you know who's a young impatient people like me but we have to remind ourselves this kind of stuff takes time right.
i mean you can't just forge a nation state with a guy within a couple of years or even a decade um there's a fantastic paper i thought by broyger think tank from brussels that basically looks at the us and the monetary and fiscal union in the us.
and what that took um throughout history to to evolve and i mean basically and and it does so um you know from a european perspective and what are the implications for us and it ends with well hopefully we don't need uh two civil wars um to to get there um that is that is my hope as well.
i think we do really need to get there because otherwise you know we will have a problem preserving the way of life we have but it's not a not an easy path and it's not a um yeah the conclusion isn't there yet so i think it really i do think agency matters.
and and you know whether committed politicians are there who can also help to form a union in a way that you know people can see that vision and are able to just yeah jump a little bit and take on a european identity it's easily.
i think underestimated how much is still national and how much people still derive from a national identity we i'm not convinced that we've really moved beyond that.
P:
いや、つまり、共通の制度が必要なんです。これは、明らかに言葉の壁があるために少し難しくなっていますが、それだけではありません。
私のようにせっかちな若者は、この点に注意しなければならないと思います。
ブリュッセルのBroyger think tankが出した素晴らしい論文がありますが、そこでは基本的にアメリカとアメリカの通貨・財政統合について考察しています。
つまり、基本的にはヨーロッパの視点から見て、私たちにとってどのような意味があるのかを述べており、最後には、そこに至るまでに2度の内戦を必要としないことを願っている、と締めくくっています。
しかし、それは簡単な道のりではなく、結論はまだ出ていません。だからこそ、機関が重要だと思うのです。
そして、人々がそのビジョンを理解し、少しだけジャンプしてヨーロッパのアイデンティティを身につけることができるような形で連合を形成する手助けができる、献身的な政治家がいるかどうかということも重要です。
私は、どれだけの人々がいまだに国民的であり、どれだけの国民的なアイデンティティから得ているかを過小評価していたと思います。
1:20:25~1:22:41
P:
sure and i mean let me try and be a bit more optimistic in the end at least so one thing that has been very very surprising to me in a positive way is um you know how much has already changed.
um when i kind of started to you know kind of really listen listen to the german debate again that was between like 2016 and 17 it was still all about you know balancing the budget.
and you know basically getting getting the highest possible surplus and that was the best thing that could happen um the debate here has has moved on um a lot has changed completely.
um we we're now just before a national election there's only one party still campaigning on a balanced budget so things have changed a lot the fact that an [Music] organization and you know gets invited to things um is is pretty exciting.
and you know you have to give credit to everybody like people have been pretty open-minded um so i think a lot of a lot has changed a lot can change what i want to say also to everybody listening um you know i think we can really all do a lot um what is necessary is it is mentally really really hard and makes it a lot more harder than going with you know the nice clean theory but we need to start with the status quo um you need to take into consideration like the political aspect legitimacy aspect sometimes we can't jump and sometimes the steps are smaller and uglier you need to spend a lot of time reading legislation.
you know i'm not a lawyer i've gotten used to that and reading commentary on legislation but it's really rewarding it really pays off because the people you know on the european level as well as the national governments they're also looking for solutions not all evil they actually want to get somewhere constructive um just have quite a lot of constraints.
so i think it really pays off to engage and to engage deeply and and to put forward ideas so you know anybody who's he's keen on on europe working out um come on board help um lots of ways to do that from you know all your different perspectives and points of expertise.
P:
少なくとも最終的には、もう少し楽観的に考えてみたいと思います。私にとって良い意味で非常に驚いたことのひとつは、すでにどれだけ変わってしまったかということです。
2016年から17年にかけて、ドイツの議論に耳を傾け始めたときは、やはり予算のバランスをとることがすべてでした。
そして、基本的には可能な限り最高の黒字を得ることが、起こりうる最善のことだと考えていました。
国政選挙の直前になっても、均衡財政を訴えている政党は1つだけですから、状況は大きく変わりました。
これはとてもエキサイティングなことです。そして、人々がとてもオープンマインドであるように、みんなを賞賛しなければなりません。 私たちは本当にたくさんのことができると思います。必要なのは、精神的にとても難しいことで、きれいごとを並べるよりもずっと難しいのですが、現状維持から始めなければなりません。政治的な側面や正当性の側面などを考慮する必要があり、時にはジャンプできなかったり、ステップが小さくて醜かったりします。
私は弁護士ではありませんが、立法案の解説を読むことには慣れています。しかし、それはとてもやりがいがあり、報われるものです。なぜなら、欧州レベルの人々や各国政府も解決策を求めており、すべてが悪ではなく、実際には建設的にどこかへ行きたいと思っているのですが、制約が非常に多いのです。
ですから、人と関わり、深く関わり、アイデアを出すことは本当に価値のあることだと思います。ですから、ヨーロッパの問題を解決したいと思っている人は誰でも参加して、皆さんの様々な視点や専門的なポイントから、様々な方法で支援をしてほしいと思います。
～～
A panel discussion with Warren Mosler (MMT founder), Achim Truger (German Council of Economic Advisers), Philippa Sigl-Glöckner (Dezernat Zukunft) and Paul Sheard (Harvard Kennedy School) from the 2nd International European Modern Monetary Theory Conference. Recorded September 14, 2021.
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P:
yeah
i guess forgive me i see it probably
from the
stupid government's employee perspective
of finance official and you know rather
than looking at kind of the end state or
the abstract
i guess i've
i i i've seen the difficulties in
practice which probably cannot can be
overcome if you're more creative
um
so so two things to that first of all
yes i mean i agree that at the moment we
use unemployment as a macro tool um
although probably not even very
coherently because you know we've got
this whole theory of the
of the naira and that we need a certain
level of unemployment to keep inflation
at bay um which doesn't really seem to
hold
um and then
i i don't know
that much about it in the us but i know
that in europe we play lots of funky
games with the naira essentially
to somehow
get results for our fiscal rules that
the politics around it doesn't explode
on that framework yeah i think it's very
hard to defend and one shouldn't defend
it and one should look for a better one
and there's obviously no reason to
um turn
turn down
deficit because we're close to denial i
mean it just doesn't make a lot of sense
spain's supposed to have a naira above
10
um
i do think it's a little bit
tricky on the micro level
um it's not just governments creating
unemployment i mean now looking at the
specific german situation for instance
but i guess you have the same and many
other
industrial economies that are changing
you do just have unemployment because of
skills
mismatches
because lots of factors which are
quite tricky and it's not
that easy to overcome at the micro level
and i'm not sure that you know just at
the macro level
providing enough demand will
fix it all maybe i'm not i'm i'm not
creative enough um so i
completely on board on the macro side i
think then on the microsite we also need
to do some active interventions to
to kind of help push from that side as
well.
thank you philippe
and um
moving on to akim um
do you agree with this broad view of
this broad macro view that mmt puts
forward the charterless view anything to
add
what i'm i'm i'm not i'm not
so sure whether i really
share or by buy everything
it's
of course if you if it if it's very
broad then i would agree that
the government
can do a lot
to reduce unemployment to have very low
unemployment
uh and there may then be politicalism
why
the government
does not use its power that's i think
well quite uncontroversial
but as philippa already hinted at some
factors
there may of course be some economic
reasons why
maybe the government
could not be able to have
unemployment without
serious
side effects
and the one obvious uh which is i know
is contentious
but
may of course be inflation
uh philippa
had some other factors
but then that's the economic um
analysis i think then also from a
political economy point of view
i'm not so sure uh whether it's that
easy that there is the government and
there are other people
and the government does what the people
or maybe the 90 percent people who are
employed
what they want i think i mean there can
be lots of uh controversy there can even
be class struggle many things can happen
um and of
course it's possible that
uh the government for political reasons
serving some interests
uh maybe also partisan interests could
then
prevent
the government
the unemployment rate from being as as
low as possible but that's that that's a
complex
issue and um i think we should
yes and if we go to the european level
or the eu level euro area currency union
but it's it's very very complex but
that's
something that we can
address in the next round i think thanks
great okay and finally turning to you
paul do you have any uh overarching
comments to make about uh
a political economy and uh
of fiscal policy
thanks christian yeah um
it's an interesting question and you
know i'm tempted to say i don't think
that governments deliberately are that
sinister to want to create unemployment
although i do take warren's uh point
that the those in employment um can
often be blase about the
suffering that is happening to the
unemployed um i i tend to approach this
political economy issue and perhaps nest
this question inside uh a slightly
different take on the question which is
um you know does the current
conventional framework that we have in
the world
does that do a good job of
attaining full employment and good
macroeconomic outcomes and what is that
framework of course that framework uh
taking a little bit of
liberty is you know rests on a couple of
pillars one is a fairly strict not
totally strict but a fairly strict
separation of monetary policy from
fiscal policy
and also a different conceptualization
and opera operationalization of those
two macroeconomic policy tools
and secondly
the idea that we we can assign society
can and should assign the primary role
of achieving full employment price
stability financial stability now as
well to the central banks and to
monetary policy with fiscal policy
taking more of a back seat role and you
know maybe just a supplementary or a
kind of an emergency fire engine that
turns up in a crisis and and i think
that that framework what we've learned
over the last you know 20 years and i
think you know mmt has come at this
whole issue from a more sort of
analytical
uh first principles perspective uh but
what we've also learned just from
watching japan and then watching the
global financial crisis and now with
covert
and and what's happened to economies and
what policy believers have been pulled
what we've learned is that that is a
flawed framework um it's a framework
which works well in some circumstances
and in fact it's evolved to work well in
a certain set of circumstances what
other circumstances when the proximate
threat is runaway inflation or high
inflation and you know i hardly need to
dwell on that for any a german audience
that's listening in um but it that
framework um so basically and the irony
here is that you know this there's this
sort of uh kind of
pitch warfare almost or acrimony that
goes on between mmt and the mainstream
but the sort of irony is that the reason
we have this strict separation of
monetary and fiscal policy which is most
strictly codified in the eurozone uh
kind of architecture is precisely
because we sort of learnt the lesson in
the 20th century
that governments can create
fiat currencies can spend can print
money and if that is not checked in some
way it will lead to a high inflation so
we devised this kind of neat way of
dealing with that problem but that does
not deal in fact is i would say almost
counterproductive in many ways when
there's an opposite problem which is if
there's a huge shortfall of aggregate
demand much too high unemployment
if there's a financial crisis and a
potential meltdown if there's a very low
natural rate of interest or r star that
the central banks talk about or if there
is a deflationary environment like such
as in japan then this strict separation
of monetary and fiscal policy and
assigning the role
the primary role to monetary policy i
think does not work very well and then
we run into all the political economy
issues around um you know what are the
fiscal policy makers supposed to do and
how do they do it and how do they
coordinate if they do coordinate with
monetary policy that's one of my lens on
this uh this broad question
okay thank you for that and uh warren
paul brought up there this sort of
separation of church and state
there's you know fiscal policy monetary
policy i mean
it's been
my understanding for a while though that
that uh
central banks and
uh treasury
coordinate all the time that the
separation isn't quite as hard as
as as they'd like us to think it is uh
does that sound about right
yeah
i suppose they do but they don't need to
there's no reason to that okay
the treasury can run any size deficit it
wants regardless of what the central
bank is doing
now
you know what i've pointed out for a
long time starting in the 1990s
is that i think that they've got the
interest rate thing backwards
and uh that you know raising rates is
actually inflationary and cutting rates
is uh deflationary contractionary
negative rates as a tax so it's even
more deflationary it's a spectrum
negative rates are tax positive rates or
subsidy
and uh when i
look at the world that way through that
lens so to speak it all
makes perfect sense and all the data
seems to fit what i'm doing and i see a
lot of research papers around the edges
that are that confirm it and i've been
watching this for 30 years and i'm not
trying to prove i'm right i don't you
know when i'm out
living in the world i want to understand
why it works and be able to forecast and
that type of thing uh and let me just
say something quickly about
we've got nehru in mainstream economics
but we also have game theory and
game theory tells you that the labor
market if you want to call it that isn't
a fair game people have to work to eat
and business only has to hire if they
like their return on equity prospects
and so that alone which you learn in the
first week of game theory will tell you
that you would expect real wages to
stagnate due to the fact that you've got
this
unfair game and that's exactly what we
observed so without some kind of support
for labor we get
stagnating wages and so uh
you know if you look at the even if
unemployment's down to the last guy
what's his leverage he either takes the
job offered or doesn't eat that week so
it's just
you know the micro foundations just
aren't there to support the nehru in
and that's just mainstream economics and
and so that's and and all the research
around whether the neighbor was real or
not real or whatever has always been
problematic
for the central banks and for the
mainstream and
they talk about why it shifts all the
time when it goes up and down that's
because the
what they call inflationary pressures
are happening for other reasons
did i did i answer your question i i i
think you said some great stuff
okay
okay
so i wanted to get the european uh
excuse me uh you know just i was gonna
throw this one to philippa um uh
because i uh i'm
a little bit of an outsider on on what
it must be like to be in the euro zone
but it seems to me in this this current
pandemic crisis is different to the
global financial crisis in terms of
cause but also in the broad strokes i
think it's a different world now in
terms of policy response
um in terms of
governments understanding
what they can and can't do
so um
i'm gonna come to each of you in turn
but um
i'll start with you philippa um
how do you think ideas about fiscal
policy in a crisis have changed since
the global financial crisis and this
crisis
[Music]
i actually think i mean for
crisis it's been accepted for a while
and you know you're allowed to do active
fiscal policy um
but we we did it to quite a large extent
now and um isabel
from the european central bank gave a
speech yesterday where she said well
this is the first time where fiscal
policy has actually been supportive of
what we're trying to do
now during the crisis
so yeah we had we had quite a big
response
which i think was made possible first of
all by basically suspending the european
fiscal rules
um or allowing countries to just go into
deficit without a certain set limit
um and secondly because we had built out
a little bit the entire
you know
if you want to call it i hate the word
safety net structure i mean
you have you have sovereign ones which
should be saved by definition and we
create the euro area and make them
unsafe and then we build out a safety
net to kind of make them safe again
um
but you know you have the
european stability mechanism
um you have um the ecb which can jump in
so
i think basically you know there wasn't
a question about whether countries were
able to refinance themselves and then
obviously the ecb came forward with
um you know huge huge government bond
buying so basically just bought a lot of
the debt that got issued
um so arguably in
in in this crisis i think uh fiscal
monetary coordination worked fairly well
whether that was implicit or explicit
okay and and uh akeem uh i was gonna
turn to you uh you know do you think um
that uh
the the structure of the the the ecb is
has learned lessons from the
global uh great financial crisis
uh
you know
has their approach
is their approach to this crisis uh a
little better
yes of course it's it's much better
because uh
now the system is stabilized we don't
see we don't have a
crisis for government bonds
we don't see this and
that was
because the
ecb has learned
the lesson uh well
or when dragon came into office uh
everything changed
so i think from from uh
concerning the um
the ecb
i wouldn't be uh critical
uh the critical thing is is fiscal
policy and uh the the attitudes and
views about
fiscal policy there has been a
significant change there as well
uh because uh when the euro prices hit
then basically
the the idea dominated that fiscal
policy
was ineffective the multiplier is very
low
and that you could
and and also have to
consolidate fast
uh the budgets and
that this will not
have a high cost
in terms of employment and output and i
think
this has been completely um
rejected by by the evidence
we have new
estimates for the multiplier we know
it's an effective tool
and
by now
many people in the european commission
in many governments
many researchers they recognize that
you cannot consolidate in terms of in
times of crisis and that you
that you have to stabilize the system
and that that you need expenditure for
some policy and that that you cannot
withdraw the stimulus
uh
soon so that for sure there is even
consensus on the european level
that
well
there is consensus among many people
on the repeat level that we need
a change in the fiscal rules
because uh sticking to those rules
uh would drive the euro area and the
periphery into christ again
and this will be the last crisis
when of course
so uh
this i think is
is by now
uh recognized by many people but
it's not yet
common sense and
we will see a major struggle over the
coming months and years
about the reform of the rules and
this will be
this will be tough because there are
really
many people
uh conservative people in uh in mostly
in the northern countries
uh little european countries
uh they really think that you need a
sound fiscal policy
meaning
you have
to actively cut
the government debt now
and
if you still see budget deficits
then it's it's a the problem of uh
the government's not being willing
uh
to
cut spending so but but actually i think
that's that's very wrong
but that's the debate that we are going
to have in uh in europe for the next
well
as soon as the german election is over i
think we see the uh we see
and and so
that uh debate should be uh informed by
asking the right questions so i was just
going to turn to philippa i know that
paul
has
some strong feelings about the structure
of the eu as it relates to fiscal and
monetary policy and and sovereignty and
uh and those matters but
philippa you uh
recently wrote a paper entitled a new
fiscal policy for germany
and you begin by asking what is the
right objective for fiscal policy what
might an institutional framework look
like to put this objective into practice
and what concrete politically
realistic reform options could move us
in that direction um would you mind
laying that out for us and for those of
us who are new to german fiscal policy
can you say what the debt break is uh
just in case you leave anybody behind？
P:
sure um so let me start with yeah maybe
the physical framework in in germany and
europe because it really kind of relates
to
so in germany we have a so
to the debt
um it limits uh
the annual budget deficit um first of
all to 0.35 of gdp plus a cyclical
adjustment
um
which is where basically the whole
question of output gap comes in and you
know depending on how big how far away
you are from your leech potential
um
depending on that you're you're allowed
to do more or less deficit spending
um
this is also where the german dead break
is basically tied straight into the
european rules
the european rules in total are pretty
complex
but basically they
limit you to 60
debt to gdp
a three percent
deficit.
and then you have this is like
when you're already kind of in a bad
corner and then there's so-called
preventive arm of disability and growth
pack
um which you should stick to if you want
to be in a good corner and that says um
you should limit your medium term
deficit to 0.5
cyclically adjusted
so
you know depending on on your
output gap you're allowed to do
more or less
so
we kind of i guess tackle it from two
sides we tackle it from trying to
understand what actually the right
objective is and then you know what can
you actually make work in our
context
because it's always going to be an
evolutionary process and then also
we think it's urgent we do something i
share achievements worry that you know
now after the crisis
um we will get back to oh my god we need
to reduce that and that would really be
quite destructive
um
so on the high level objective we do see
full employment is quite a good
objective especially when you look at
what the big problem in aging societies
is which is you know basically
having having enough money to pay
pensions
um
probably a good idea of people at
working age work even if you're just
like cold-hearted budget person
because then they pay tax and you know
you don't have to pay social security to
to sustain them
um
we
when we started we talked about full
employment and realized that people in
the german european context didn't
really understand that well because they
say well everybody in germany has a job
problem is indeed most people have a job
but a lot of them are very poor jobs.
so
you know they just don't pay for a
living it's 10
of our workforce is mutually employed
so that really doesn't do very much for
your living not even speaking of your
pension so we speak of full capacity
utilization
and then we say all right let's start
with the current framework and how can
we you know take a first step in the
right direction
um because i don't know what the perfect
optimal state is but the more relevant
one i think is how can we make reform
progress in the right direction
and so what we say is how about you know
we take that definition
of
what full capacity under the debt break
is
uh because that defines how much deficit
you're allowed to run every year
and and try and really think about or
get closer to what full capacity is than
what it is today
today we defined full capacity
as you know
the output of the economy yesterday
so if only 50 of women in germany were
working
well then we say full capacity is you
know if half of half of women do not
work that seems pretty ridiculous to i
think any sane human being whether
you're an economist or not
um
the advantage if you move from a
definition of full capacity from
what it was in the past to
you know what could it reasonably be
is that.
you can do that
without changing
the german constitution
i mean some
some legal scholars
um
have now looked at this as well and it's
looking like we can probably even do it
if everything goes goes well without
changing or a major legal change because
it's really quite in you know in the
technical details of things you're not
changing the the basic setup
and then you could essentially do the
same thing for europe
um you have a
working group that looks at the
technical ins and outs of this
um and change definition of of capacity
and you know you still have rules and
it's still somehow arbitrary how you
then multiply this output gap with
you know whatever number
um
semi-elasticity but i think it will
already you know
bring some form of reality back to the
rules and and you would
get a step closer to to looking at what
can our economy actually do
and hopefully you know even make it
fiscally more sustainable if you want to
talk about it in that those terms.
okay that's great um so i'm going to
turn to you now paul and um
so um
you know philip is talking about
trying to construct
ask the right questions and and
and and chart the the best way forward
and she mentioned you know
that you know the the
the
the eurozone and the eu is a
it's still evolving it's still in flux
and uh this is something that you bring
up in your 2018 article
uh entitled brexit is a wake-up call to
the eu but so far it's not being
answered
so back then you wrote it's not too late
for brexit to be seized as an
opportunity on both sides of the english
channel to reconfigure the sharing of
national sovereignty in a more
politically and economically sustainable
way so could you say more about that and
anything else from that article that you
think has bearing on what we're talking
about here
i think thanks very much uh christian
that's a travel back in time yeah i was
i was quite
you know i'm a australian american
sitting here on the east coast of the us
i've never lived in europe i've never
lived in london um although sometimes
people take my accent to indicate that
i'm a brit no not so um so yeah with a
little bit of reluctance way into this
but as an economist i look at these
things um and you know i was pretty
active in the in the brexit debate and
the one of the key points i was making
is you know 99
of the of the focus on around brexit was
about
obviously the uk exiting
um what i was trying to point out is
that you know the the britain was not
leaving a fixed point it was leaving a
political and economic entity which was
very much well i would say
dysfunctionally designed and because of
that very much in flux
um
so i put more emphasis on that point no
no what is the what i mean by that and
again we're going from one extreme to
the other here because you know philippa
and akim obviously are in the weeds uh
you know in germany and and of course
dealing with practical issues and
you know i'm flying at 60 000 feet here
and talking in kind of abstract terms
about sovereignty and monetary unions
and things like that so there's a bit of
a you know it's we're moving from a
different across dimensions of space
here um but when i look and i'm not
alone in this i think probably most
mainstream economists outside the euro
area or the european union and i
probably i can't speak for mmt people
but i suspect most mmt people would also
look at the eurozone in particular the
euro area
in kind of horror because it is um from
a from an economic point of view a very
dysfunctionally designed thing um why is
that it it's a monetary union so what
does that mean it means the 19 member
states of the euro area have given up
their monetary sovereignty and that's a
key concept in in mmt but it's important
even from a mainstream perspective
um but they didn't give up their fiscal
sovereignty so again if so mmt insight i
think really revolves around you know
monetary and fiscal almost two i call it
two sides of the same coin two ways of
looking at the elephant but they're
really um it's all about money creation
and how that happens so to split that
humpty dumpty in two and on the monetary
sort of narrow monetary front the
currency front um
say we are going to behave as if we are
one sovereign entity we're going to pool
our monetary sovereignty but then on the
fiscal front to say well we're not going
to do that we're going to remain
uh so 19 fiscally sort of separate uh
nation states that is really really
dysfunctional now of course it's not
that simple because uh it's even worse
than that because
um
as you know of course as we talked about
and everybody knows because they
designed a monetary union but not a
fiscal union
they said well we're going to have to
put fiscal constraints and fiscal
restraints the stability growth pact
fiscal compact and all of these things
and even embedded in german's
constitution so that we don't get this
fiscal free riding at the nation-state
level on the monetary sovereignty but
what that does um and again i think that
the design of the euro area
institutionally sort of came as the
apotheosis if i can pronounce that word
the kind of apex of
the thinking around um you know
monetary policy being the be-all and
end-all and and and and basically
relegating fiscal policy to the back
seat and worrying about fiscal
sustainability etc so all of that was
kind of codified in the eurozone but
it's created a very dysfunctional entity
in the following sense take an italy or
a greece or a spain
you're looking at a country now that
doesn't have their own monetary
sovereignty anymore it doesn't have
their own independent monetary policy
and of course that's a
just a simple application of the
mandel's trilemma that you've got
essentially a fixed exchange rate with
everybody else in the euro area free
capital movement so you've lost your
monetary sovereignty
but you've also lost your fiscal
flexibility on your fiscal space
artificially because now you don't have
that central bank that can you can sort
of bail you out you don't have the
unlimited um ability to to kind of spend
because markets may not actually
look kindly on that that was sort of the
sovereign debt crisis of 2012 to 2015.
[Music]
so you don't have the margins of
adjustment now is this a big deal well
you know it's not necessarily a big deal
for germany but it is a big deal i
mentioned italy and greece and spain the
level of and you know we've had three
shocks now in the euro area we had the
global financial crisis the sovereign
debt crisis now covered
and i just like to look at some simple
metrics just to figure out how is this
looking
um if you look at where the real gdp is
now in
italy for example relative to where it
was at the peak before the financial
crisis the accumulation of these three
shocks it's almost nine percent below
the u.s same metric is 22 above greece
is 28
nearly 28 below level of gdp now germany
is much better it's 10
above its pre-crisis level its
unemployment rate is quite low
italy and greece unemployment rate now
is considerably above the pre-global
financial crisis level so
um that's in a nutshell kind of kind of
the problem here
that the 19 and the 27 if you go to the
eu countries are in this political
treaty-based construct that is just very
very badly designed you mentioned
sovereignty just from a pure kind of
analytical point of view or conceptual
level the big problem i see with the
euro
area or the eu is that you have a
partial and inconsistent
pooling or sharing of sovereignty so on
some dimensions monetary policy freedom
of movement of people
um you know foreign trade on some
dimensions the eu
or the euro area was switched between
the two
functions as if it's one big you know
united states of europe whereas on other
margins um particularly fiscal policy
but even you know protection of the
national border
or even the external border
the eu plays quite a small role in the
protection of the external eu border
strangely enough
you
you have these 27 countries or 19
countries depending on what we're
looking at behaving as separate nation
states that does not make any sense so
how do you solve this problem i believe
in a nutshell and i think you're going
to ask about this later on maybe what's
the future
either they have to move in europe to a
more consistent and functional sharing
of sovereignty that means going towards
a fiscal union um going towards
political union as well in a much truer
sense or i think they have to start to
repatriate the sovereignty that they
pulled in the past back to the
nation-state level and the problem is
they're damned if they do damned if they
don't neither it's easy for me to state
these choices if you're living in the in
the system and trying to coordinate
political change in either direction
it's very very difficult but what we can
say is if you look at the history of the
last 10 to now even 12-15 years
as pressure as shocks have been applied
to the eu and the euro area with the
exception of brexit
everything has moved
in one direction which is more
collective action if you like more
pooling of sovereignty more movement
towards the united states of europe if
you want to call it that perhaps in a
looser form than you have in the u.s
whether that's going to remain the
direction of travel or not you know who
knows but um what i do feel the strong
degree of conviction is the current
situation is cannot be the steady state
solution that we're going to see in the
eu
thank you for that and i'll come to
akima in a minute but i thought i'd just
uh for the insider's view but i thought
i'd just complete the uh
uh deeply interested outsiders view by
uh asking warren about this so i think
we would all agree that the
the current eurozone deficit rules are
hampering aggregate demand and
therefore creating unemployment so so if
we agree to that what fiscal policy
rules are needed instead warren
well they are moving in that direction
and we
i outlined all this back in the early
1990s
uh before they had locked the currencies
when it was still under discussion and
led to our uh
presenting what we thought was going on
in europe in 1996 we had a brentwood's
conference which
and you can see the writings it's all
turned out to be the case
of what was happening and which paul
described a lot of that very well so
what
i think the easiest thing in a short
presentation here is just to say what
it is going to look like at the end you
know what where is it heading towards
and it's heading towards the um
ecb just having a permanent zero rate
policy
once they understand of course that
raising rates is inflationary there's no
reason left to raise rates you just
leave them a zero
and uh
and then the maastricht limit becomes a
policy tool
rather than and they are you know rather
than a limit
and so uh you might look at it this year
and say instead of uh three percent this
year it needs to be eight or twelve or
whatever and you'll have some
uh hopefully democratically responsible
authority coming you know using that as
a policy tool whether it's the european
parliament or the european commission or
so something uh right now it's the
european central bank that's setting
fiscal policy because uh
if they don't approve of what any
country is doing with their fiscal
policy they threaten to pull them out
for the do what it takes to prevent the
fault umbrella the spread start widening
and
you know there's a panic for them to get
back under that umbrella and they come
quickly in line so
the only entity and it's by default
i'm not sure the ecb wanted to be in
that position but there was
there's no other entity left to enforce
fiscal rules the treaty process for
enforcing fiscal rules didn't work so
we've got the really the only central
bank in the world right now that's
dictating fiscal policy
so
to get to get back to uh
where you get to so you get to uh the
mastering limit becoming uh well you
keep the guarantee in place and it
should be made explicit and it probably
will be that
uh
the
central bank will not allow a default
that all the bonds from all these
nations are money good and then with a
permanent
zero rate
that service is zero for everyone for
all practical purposes and so it doesn't
matter whether your deficits 125
from past behavior or 60 everybody's got
the same debt service forever which is
zero so it gives you a clean sheet of
paper start
to uh you know on the on the issue to do
this and then when you've got the
um uh
uh european parliament or commissioner
somebody setting
using the master what's today the master
limit the fiscal limit as a policy tool
and then they'll be having the debate in
a what i'd call a rational context do we
need
more restrictive or more expansive
fiscal policy they'll vote on it and
then each country will
then be allowed to uh
go to that new
you know policy limit and i'd go a step
further and have the
the
countries balance their budgets
and then uh
have the ecb just make a
fiscal distribution
uh to all the member nations on a maybe
on a per capita basis uh you know on
whatever percent of gdp they determine
is appropriate for the uh
for the union so uh
does that answer your question there
absolutely yeah so okay i'll turn it
over to you ikea um
what we just heard sounds like uh common
sense to me or it sounds very reasonable
um
what do you make of it as somebody
within the eurozone
well um first of all i would like to say
that i that i completely agree with uh
with paul's analysis uh that
uh
well the institutional arrangements that
this can never be a steady state of
course
and
then of course
we need some something like a fiscal
capacity
uh
and well
euro bonds that are that are backed by
the central bank i think that's that's
something that uh
that that we really need
um i'm not
so sure about uh the institutional
details that uh although the concept
that warren has just presented
um because i i don't think i mean we are
not going to get a clean sheet approach
we do have
to go there in small steps we need a
stepwise approach
and every little step
is is politically contested
and there is always the
the risk of failure
but of course i mean if
if i want to be optimistic
then i
then i will just just mention that um
nobody
would ever have believed that we will
would see such a
rescue and resilience
facility on the european level
that the countries would finally agree
to have that
and there were people that i know well
that just months before said uh where we
have the esm
uh let's let's let's uh
the italians and everybody who's in
trouble they can just turn to two bsm
then they get uh some
some loans they will have to repay them
and there will be a strict
conditionality
so that was the approach at the time
that some
people some auto liberal
scholars had in mind and i'm sure also
some
conservative politicians that in mind
but that's not how it uh how it
developed and i think
what helped very much was the experience
uh that we had the supply chains that
were completely in disorder after the
uh the kovic 19 shock and that
everybody was well aware
how very very important
uh international coordination is and
that we really have to rely
on if we depend on
each other i think that was a lesson
learned and that in the end
made this this
[Music]
fund possible
and uh well if you want to be optimistic
the german finance minister
spoke of a hamilton moment
at the time
this was
the agreement was reached
and
why couldn't we
step wisely move forward
and develop this
so
and i don't believe that we will ever
have a
clean sheet approach
unless
we have a huge crisis and the whole
thing
goes to pieces and of course we need a
clean sheet approach
but uh at the moment we have to go
step wisely
uh it's particularly contested it's
difficult
but uh in the end i think people will
have to understand
that this idea
national governments are responsible for
their budgets
and the
financial markets are watching
and controlling national budget and you
just have to
obey the marketplace
you have to do your homework
everything uh it's fine
that doesn't work
if you um if if you don't have a
sovereign currency or if you don't have
uh if you're not not in control of the
currency that's
i think
it's as easy as as that
um
but
it's it's a huge step to
to make people aware of this i can tell
you
okay and just yes please worry
just quickly oh
let me suggest that we're we're already
there
we already have a zero rate policy it's
just a question of leaving it alone
which has always been
easy you know just leave things alone
that service is already approaching zero
due to the zero rate policy just leave
it alone and the maastricht limit has
become a policy tool as evidenced last
year
that uh
italy was eleven percent that did uh you
know
the deficit as percentage was like 11 or
something like that so it's already
being used as a policy tool so i it's
functionally already there it's just a
quite a question of formalizing this
and or not formalizing it and just
leaving it alone so i'm i'm hopeful in
that sense and as you said it took a
great crisis to get there and so we've
already had the great crisis couldn't
have been any more severe than a health
crisis
and all these things that i'm talking
about are are functionally there right
now so
you know hopefully can stay there the
one thing i'd like to see would be the
uh
well it's been called the job guarantee
which is a transition job to promote the
transition from unemployment to private
sector employment once the public sector
is fully provisioned
and uh i actually
did that in a paper academic paper that
was published
along uh with my co-author was
professor uh silipo from uh calabria
and uh it's in the uh journal of policy
models is it called the policy modeling
so i was published in a leading
mainstream journal so
uh
along with the rest of these things i
just talked about so
it's it's there i think i'm more hopeful
than everyone else that uh we've kind of
backed into the right answer through a
series of crisis and through millions of
destroyed lives but
you know we are there and uh
i'm somewhat optimistic of the future of
europe right now
okay and uh philippa um
uh warren just brought up
the uh
the eurozone-wide job guarantee it's
sometimes called an mmt uh warren uh
likes to call it a transition job um
are you aware of that because i remember
that paper warren that you framed it as
a stabilization tool you know obviously
it has the
uh
the social benefits but uh you know you
you framed it as a stabilization
macroeconomic stabilization tool i i
don't know philip are you familiar with
this
uh
and and and what are your thoughts on
that？
P:
um
let me just
make one more comment oh great
on the question earlier um
[Music]
i don't i mean i would love to be that
optimistic i don't think we are nearly
there last year we were allowed to run
whatever deficit because we suspended
the rules
um we completely suspended them and
actually the the clause for when you can
do that
they're not that flexible i mean people
are trying to stretch them now and we
are already stretching them so that we
can suspend them for 2022 as well
but that's gonna be tricky and i think
everybody is fighting as much as they
can
so that 2023 we won't get a contraction
like we did
after the financial crisis i think this
is a serious risk.
and
so i'm a bit more sanguine on on that
because changing european primary
legislation is incredibly hard when you
have
quite a few countries opposed to this
you just had a letter published by
the netherlands the austrians who said
you know what we're not changing this
the sixty percent debt to gdp level you
know i mean it
seems completely mad but it is still a
number that people believe in
and they still think we need to get back
to sixty percent you know.
it's not even
really 90
um not even speaking of moving away from
that completely arbitrary useless number
it's 60
is where we're safe
so i think there's still a lot of work
to be done unfortunately and we need to
do it really really fast because you
know you can't really do fiscal policy a
month at a time
um portuguese greek italian government
kind of needs to know what they're able
to spend pretty soon
um it's also about expectations for for
the economy right.
um so so i think there's a lot of work
to be done um on job guarantee
yeah i mean you know coming from that
perspective i think we're far away from
that um
because
and i guess this is you know comes back
to to some of the basic issues of the
european union or of having a
monetary union
um this was all built on on the promise
of convergence right
because then you can also have some kind
of convergence on
for instance you know having having
public sector jobs provision and having
a
certain wage that you set for it like i
think you proposed seven euros in your
paper.
um well we haven't really seen that much
of that convergence we've we've rather
seen the opposite um
so you can't really have a common wage
level at the moment i mean you can
probably institute some kind of country
specific policy
um
but i think you're probably even missing
quite a bit of legitimacy um
with the european union to do something
like that
um
we have to work on the economic and the
the kind of political side to to get
that ready so
i do think that that kind of policy will
be a long way out and you know if i'm
wrong then
probably happy
okay
so i just wanted to uh back up to
something our keem said about.
okay let's
let's be pessimistic now we have to take
a stepwise approach ikea
what's a realistic step in that case
well
at the moment um
i mean
basically the eu has has bought some
time because we have the the resilience
fund
and this will uh well hopefully
but it it does support uh many of the
member states and those
that were hit the hardest are supported
the most so
that's good um and that
will help them
to overcome the crisis and uh well most
optimistically to even
boost the economies for uh for a while
for two or three years
so uh we'll have a recovery
everywhere
that's a good thing and um in the
meantime maybe we will have changed the
uh the fiscal rules and then uh let's
let's see how far we get with
a permanent physical capacity i mean
there is this discussion
and many um
institutions that that
will have a
have usually have a sound fiscal policy
uh orientation or reputation
uh even the the european physical board
that has probably said you you either
change the rules
or you you will inevitably uh bend them
forever so
uh
so i think that's that's pretty
cool so
that could be the steps uh
i i agree that it's it's interesting uh
warren to uh
to listen to you how you say okay we're
already already there i think
many people would
fiercely disagree
uh and uh
and even
if
they uh
it would be a suspicion that we could be
there
and if we were there then we would have
to do anything to get out of the
situation
and then and really uh do the
consolidation and withdraw support from
the ecb
that's how it's how it goes i mean there
are constitutional courts
uh that will be the people who press
charges there that that's that's a
really it's really a mess
so it's i i see intellectually your
point
um but i don't think that's uh how it
will go in in the euro area
so but maybe um
there's a stepwise interpretation of
what you
of what you suggested and then uh
finally we we have some
some stable architecture that's that's
possible
okay that's great well
i was about to uh turn it over to the uh
audience questions and comments um but
does anybody have any any final thoughts
before we move on to those
kristen just just just to put a bow on
that on that point of akim i mean i
think
again that's probably the most likely
scenario a continuation of these
incremental steps i mean the you know
the commission and the european council
have been talking for years i mean
literally a decade now about you know
completing the
european union they you know they you
know obviously
very careful around their language with
anything that looks like fiscal union
but um you know
it's the facts have changed on the
ground you know obviously
you go through the whole acronym soup
they have their acronym soup like like
the us does with the esm and the esfs
and and omt and of course you know omt
outright monetary transactions which i
think is has was challenged in the
constitutional court as i seem to
remember but you know not one euro has
actually been put behind omt
um just that you know one paragraph in
mario draghi's speech in july 2012
literally changed the world
um you know greek
yields came down from almost 30 percent
to now what their 70 basis points um so
that was an absolute game changer and
then of course you have with all the the
qe the ecb has done now their balance
sheet is north of eight trillion euros i
think if they'd never done very late to
the game 2015 january i think it started
um i think my calculation rough back at
the envelope probably without qe asset
purchases it would have been you know
two and a half maybe three trillion
they're up to eight and and going higher
so an awful lot has happened but what i
worry and i think will continue to
happen particularly crisis driven um
what worries me or would worry me if i
was sort of really you know sitting in
europe and my future hinged on this
um is
the
you know the politics of the whole
situation
that there is this very technocratic
kind of flavor to all the architecture
changes that have happened in in europe
and when you've still got you know the
likes of you know the italy's the
greece's the spains portugal with you
know still high unemployment gdp not
having re re
gained even you know pre financial
crisis levels
um this and and an increasing sort of
disconnect in other words the
technocrats and the elites don't seem to
have been very successful or maybe even
tried to sell the hamiltonian vision
vision in a to the to the demo you know
to the people themselves in a way that
resonates um democratically so that is i
think if if if the wheels fall off this
project it will come through
the economic strains and stresses
bleeding into the politics then probably
um destabilizing the politics uh sorry
the the
the
the political framework in brussels and
and and frankfurt and and then markets
going haywire after that so you know
dysfunctional monetary unions can
survive for a long long long time but if
they're not
you know properly designed they can fall
apart and unravel very very quickly
that's not a forecast but it's it's a
worry
thanks for that paul um any other
business before i uh dive into the
comments
from anyone just dive in if you've seen
anything you like
okay i'll uh i'll move into this i saw
something interesting
uh
give me a second sorry about this okay
so this is from yan prakat
um and uh they write charterism thought
of from the other side the state gives a
reason for accepting money
uh but then money is a symbol of the
authority of the state it can there also
it could therefore also become a symbol
of a nation and support the creation of
a nation uh as the high identification
of the of germans with the mark proves
couldn't the euro
then also have helped to unify the
european oh sorry it keeps jumping the
couldn't the euro then also have helped
to unify the european union by being a
symbol um
who wants to have a first stab at uh uh
commenting on that
i'm just going to pick one of you if you
don't
jump in so i'll jump in quickly
i'll jump in i mean i think that's i
think there's a lot there's a lot to
that yeah and again something that is on
the side of the euro is that it is now
what you know 20 odd years old um and
you know the european if you listen to
commission or ecb folks they you know
when we have these pessimistic kind of
discussions they always trot out
uh was a
question a questionnaire public polls
which show that there's very
very high support among the public for
the euro
um you know as a currency and i have so
i think there's a lot in that what i
think is less well understood
you know is what it means for everybody
to join together and have that euro
currency it's not just the convenience
of being able to travel
you know around those 19 countries and
not have to worry about exchange rates
and
and and different currencies um
but it is it is a real pooling of
sovereignty and this is the thing that
has never has always struck me with with
talking european interlocutors and
colleagues um
and i don't think anyone on this panel
would is in this category but people
who'll say no the euro is great but we
can't go to fiscal union because
that would be really you know that would
be like political union and we haven't
signed up for that and my response is
always to say the moment you signed up
for monetary union and you gave up that
most important you know from an mmt
perspective as well ability to to create
your own money
and fund your government
you have already crossed that rubicon so
it should be in theory much easier to
complete the process um
but i don't think it's necessarily being
kind of explained that way
okay
um
okay uh sorry can i just quickly add to
this because that was
very interesting i think working working
in the government um i mean i came from
outside and you know i never really
worked in germany before joining the
ministry of finance in 2018 and
i was really wondering you know what
people were thinking about this whole
fiscal monetary union thing and
sovereignty and
you know basically very often the red
line is oh we can't give away national
sovereignty
well the problem is once you have a
common currency i mean that that ship
has sailed a little bit and if it hasn't
you really have a problem in so many
ways so
i mean i wasn't i wasn't there when you
know discussions around the
the euros started
the euro was introduced i mean i i got
it as a kid and i was excited about new
coins um ahem can maybe say more about
that but
i don't know i think an explanation at
that point was really missing about what
we were doing there or you know maybe
you have to jump and then you have to do
it afterwards and then you have to
explain well you know we're all really
like one point and now we have to do
something about this so it works
that that did not happen and we're
definitely not there so then you're kind
of tied at the hip but you don't
understand and i think that's a real
problem today
uh
did you have any thoughts akin
no i just uh
i'm sorry i agree with everything i
heard okay
i remember new points and actually uh
when um we just had the new coins
uh we went to france and that was really
um
[Music]
a wonderful moment really uh
sharing our
uh our coins uh um
with
french french people
so people
who didn't know each other before we
were just talking to each other look
that's that's on your money isn't it
isn't it great
but that was really something uh well
really a historical moment
um but as
as poland um philippa have just have
said it's
it wasn't explained and in instead or
to the country that there was a
controversy before
and that's basically the the controversy
that we're still having
the the the fear that the new currency
would be inflationary uh because
the um
the
periphery um countries would uh somehow
run irresponsible fiscal policy
uh which then caused inflationary
pressure and all that so that was
exactly the
debate there were hundreds of professors
signing
um
uh articles and and pushing painters in
the architecture
it was really um contested right from
the start and that's what what's coming
up
uh all the time so so that that's really
the problem so
um
there would have been
the chance i mean uh
now is the first time that we're really
seeing some inflation actually
which is of course not due to in
intrinsic factors but
in terms of inflation
the the euro wasn't extremely stable
even too stable a currency uh i think so
uh
many of the rays
were just
not not right
yeah but that's that's how it
gonna turn to a question from stuart
medina now that's uh probably
did anybody else want to come in there
for a second yeah i think quickly
so uh
if you look at the us states for example
they are not global actors uh new york's
worried about what's happening with the
roads in new york and the schools and
that type of thing and
all the u.s states
aren't don't have opinions about whether
we should be in afghanistan or not if
that's all congress it's all at the
federal level and so what what we've
seen is
that transition in europe over the last
30 years or 25 years whatever it's been
since they revoke we locked the
currencies and so
you know italy and spain and germany
used to be global actors and now they're
not and it took a while for the
politicians the political system to
adjust to that but now the adjustments
is
a long way there and so when you look at
the elections and now like local
elections uh within these nations
they've all turned inwards they've all
turned towards governance you know
within this union of their own
territories and uh they're no longer uh
global actors oh no they're not involved
in it and they're not those aren't
issues in their
national
campaigns now you know immigration a
little bit but not not to the extent of
course that it was before
which uh has
i think i think it's a good thing now
what you need that for is if there's a
common defensive issue if you're worried
about defending your against russia or
against china or something like that and
so that's
that's been let slide and europe said
has no capability against
you know all war with with anybody right
now but um
you know just
let me just throw that out as some
major change that you know that's been
undergone some political shift here and
uh
that you know i find
fascinating to watch when to
see when i talk to politicians now
versus 30 years ago
european politicians
okay
so um uh this question is from uh stuart
medina
kind of gets to the heart of what we've
been talking about here stuart asks do
you think a real democracy within the eu
with countries so culturally different
as say estonia and portugal
is possible
without a common dam demos
media political parties
trade unions do you think it's possible
without those you know
i guess you call institutions
uh and and um i think this is for the
europeans
to answer so i'll i'll turn to you
philippa？
P:
no i mean we need we need common
institutions right this is made a bit
more difficult by obviously the language
barrier um
but also.
and i guess this is where you know who's
a young impatient people like me but we
have to remind ourselves this kind of
stuff takes time right.
i mean you can't
just
forge a nation state with a guy within
a couple of years or even a decade
um
there's a fantastic paper i thought by
broyger think tank from brussels
that basically
looks at
the us and the monetary and fiscal union
in the us.
and what that took
um
throughout history to to evolve and i
mean basically and and it does so um you
know from a european perspective and
what are the implications for us
and it ends with well hopefully we don't
need uh two civil wars
um to to get there
um
that is that is my hope as well.
i think
we do really need to get there because
otherwise you know we will have a
problem preserving the way of life we
have
but it's not a not an
easy path and it's not a
um yeah the conclusion isn't there yet
so i think it really
i do think agency matters.
and and you
know whether committed politicians are
there who can also help to
form a union in a way that you know
people can see that vision and are able
to just yeah jump a little bit and take
on a european identity
it's easily.
i think underestimated how
much is still national and how much
people still derive from a national
identity we i'm not convinced that we've
really moved beyond that.
okay okay
uh and uh akeem uh
do you have any comment on on that
no i
uh of course i agree it's um
[Music]
but
well once again i i think uh the only
chance is is a stepwise approach
and i mean uh if you if you talk to the
people in brussels uh the european
parliament
uh the commission um
you there you have this
this eu or european identity uh and
community actually so and there's this
really there's a european spirit there
you can really feel it and that's
impressive
despite all the language problems and
and the cultural differences so but it
works
and the only way is uh
to move forward
in little steps and uh and and
when finally then
we we can arrive at the the institutions
and uh but of course it's
um
we
we should actually really encourage
steps to go there
and not pretend that uh we can stay
where we are so that's that's the
problem i think
um
christian
can i just make one quick again as the
as an outsider um
is you know around this this democratic
deficit issue um you know one one
challenge let's put it in the in the box
of a challenge here you know is the
the this sort of sui generous um
political architecture they have where
the european parliament you know which
has elected parliamentarians from from
the whole
eu
does not uh initiate initiate
legislation and the power to initiate
legislation resides in the commission
which is a very sort of you know
bureaucratic entity that tends to be
stopped by uh you know bureaucrats and
elites from the nation states who then
make their careers in brussels
um and the president of the european
commission you know
has sort of executive power as well as
sort of um you know administrative power
and i think you know one again i don't
know if we want to talk about this at
all now but just to post it out there
a little bit disappointing to me was to
see what happened at the last european
uh elections with the european
commission president where there had
there been this beginnings of this bits
and condition system my german is
terrible
but the idea building on a provision in
the lisbon treaty
that the the uh election of the
president the european commission would
start to reflect uh the results of the
parliamentary election and you know with
juncker that happened it was supposed to
happen with um the last president and
then there were all these smoke filled
well i guess in europe it's not smoke
filled anymore
but back door deals and all these
positions were stitched up and then
ursula vandalia popped up all of a
sudden and so the spitz candidate
approach which was supposed to sort of
bring in a little bit of direct
democracy into the process sort of seem
to have died a bit of a stillborn
uh debt so that seems to me to be from
in terms of the political
and the democratic legitimization moving
forward with these other
advances on the more technocratic
institutional front maybe took a step
backwards i don't know if my european
colleagues would agree with that
or not
uh anybody want to pick up that bat on
there
fully fully agreed but i think
you know it's whether it's a parliament
or it's a commission or it's even about
yeah knowing your you know your your
local representative
we do not have
you know functioning democracy in europe
um that that can work as a government um
not even close
uh
uh right okay right so i will um so i i
i'll just do what i think is a bit of
summing up and then i will turn to the
four of you for any kind of closing
statement so you know if you if you do
have a song or something
get ready to bust it out um but it seems
to be
what's being said here is
uh we started off probably get getting
to the conclusion that there's two
directions we could go in the eurozone
can go in
one is the nation states uh reclaim
monetary sovereignty uh
and then the other one is
to
the drive towards uh
fiscal union
uh because that that's the problem or
the challenge is uh paul
would like uh rephrase it um
and but there's probably also
uh a third way which is
we bumble along
and crises drive the kind uh open little
windows for the kind of uh step changes
that uh
akeem was talking about so you know that
that's my take on what's come out of
this conversation but um i'll turn to
each of you in turn and see if you have
anything to add uh to what i've just
said um i'm sorry if i oversimplify it
there um you guys can keep me honest so
maybe warren you could start
oh uh i i i just want to say you know
over the last 30 years this is the most
constructive
uh
panel or whatever i'm not sure how to
call it that that i've been on or you
know heard these kind of discussions the
whole time and it's gotten
and something that never would have
existed 20 years ago so i
i think that hopefully it's reflective
of what's going on with other
discussions in europe now if there are
anywhere near this
type of discussion uh
i'm certainly you know here i am the
optimist here but
i'm
reasonably optimistic here not that
anything's gonna happen today or
tomorrow but that
uh
you know kicking and screaming maybe a
little bit but it's it's it's in the
process and the process is a slow one
sometimes a painful one but it seems to
be moving towards
you know where i saw where i see it it
has to move where it's ultimately going
to be okay
so we've we've heard from the definite
optimist and we'll
move to the to uh
it's it's too strong to call you the
pessimist akeem but um
maybe the perhaps just the other end of
the spec towards the other end of the
spectrum do you have anything to add
well i'm not sure i'm so pessimistic
it's just that i
um well maybe stepping on the brake a
little and
yes uh talk about the stepwise approach
but that's that's not that doesn't mean
it's what has to be pessimistic
i mean as i said before i would never
have imagined that we'd get something
like this
uh fund uh this rescue fund on the
european level so that's
well maybe one one thing
that i don't know whether it's
optimistic but uh if you if you uh talk
about um
uh
splitting up of the euro area
so um i mean there was a there was this
interesting uh book by uh joseph
stieglitz
uh where he would really and i think
rightfully attacking um
many governments um mostly the german
government for what he did in the euro
crisis
uh and then he said i mean if you need
some
you have to agree on some principles
how to run the system
uh and many of the principles were
similar to the principle that we
discussed uh today
um but if you if if the people are not
ready for it if they just don't want it
if they do the opposite
then maybe it's better to have a
friendly
divorce that was
his idea
but then
if if you really look at it then
he didn't really come up with a
a very good uh explanation on how you
would actually do this
and in the end uh the result was pretty
similar
because to have this
it without a big crisis
you would need some good will
you would need well you need the
friendly aspect uh you would have
governments to agree on many things
and
then my conclusion would be
if you
if you want the divorce
uh but
having the divorce
actually support exactly what you need
to keep the system running then why why
don't you
why don't you let the system run why
don't you support the system
uh and and
don't and just be friendly without the
divorce okay so that's uh maybe the
the one important thing that i would
like to think
okay that's good and yeah that's quite
the paradox that you that you put out
there
um and uh i'll turn to philippa next i
guess what it is
what's going to help people on the
ground
is uh you know knowing
what to want policy wise what you know
do you have anything to say about that
philippa？
P:
sure and i mean let me try and be a bit
more optimistic
in the end at least
so
one thing that has been very very
surprising to me in a positive way is
um you know how much
has already changed.
um when i kind of
started to you know kind of
really listen listen to the german
debate again that was between like 2016
and 17
it was still all about you know
balancing the budget.
and you know
basically getting getting the highest
possible surplus and that was the best
thing that could happen
um the debate here has has moved on um a
lot has changed completely.
um we we're
now just before a national election
there's only one party
still campaigning on a balanced budget
so things have changed a lot the fact
that an
[Music]
organization and you know gets invited
to things
um is is pretty exciting.
and you know
you have to give credit to everybody
like people have been pretty
open-minded um
so i think a lot of a lot has changed a
lot can change what i want to say also
to everybody listening um you know i
think we can really all do a lot
um what is necessary is
it is mentally really really hard and
makes it a lot more harder than
going with you know the nice clean
theory but
we need to start with the status quo
um you need to take into consideration
like the political aspect legitimacy
aspect sometimes we can't jump and
sometimes the steps are smaller and
uglier you need to spend a lot of time
reading legislation.
you know i'm not a
lawyer i've gotten used to that and
reading commentary on legislation
but it's really rewarding it really pays
off because the people you know on the
european level as well as the national
governments they're also looking for
solutions not all evil they actually
want to get somewhere constructive um
just have quite a lot of constraints.
so
i think it really pays off to engage and
to engage deeply and and to put forward
ideas so you know anybody who's he's
keen on on europe working out um come on
board help um lots of ways to do that
from you know all your different
perspectives and points of expertise.
thank you and i'll just say before i
forget to say that
if you go to the website of
the
international mft european international
mmt conference
um which will uh probably be in the show
notes uh you will see the schedule for
tomorrow which is uh
uh september the 15th and there are a
lot of presentations too numerous for me
to uh
list here um in the time we have left
but also um
uh these are all zoom uh conferences so
um
there are links on the site for you to
go to uh
for you to attend these
these uh presentations so um
that's tomorrow
um but also um as uh uh
philippa was saying there
that you know if you want to get
involved
there are these organizations now and
i'm i'm sure um
if you
uh philippa's organization is going to
be listed on the on the website if you
if you want to get in touch just for
instance and um
obviously uh the mmt door is always open
to anybody that wants to follow uh our
effort me and patricia we're at mmt
podcast on twitter um a little plug
there oh and warren
yeah just i just want to say one thing
here look
there's been a core group of mmt
activists since
probably the last 10 10 years ago
that was originally started by a
journalist paolo bernard
and uh these people are
dedicated intense their scholarship is
of the highest quality they're promoting
the knowledge and the understanding
you know person to person you know
grassroots movement it started in italy
uh i've got people in austria spain
france and
and poland and uh
and you can't underestimate the
contribution they've made
towards what is looking to me like you
know ultimately going to be successful
and so far
and you can see when uh
top european union officials at the
central bank are just mentioned the word
mmt
people in government are mentioning it
economists mentioning it
it didn't come down from the top it came
up from the bottom from these
grassroots activists
working on this cause and it's uh
interesting cause that has attracted
this kind of you know intense uh
effort to get the word out and i my
hat's off to them and i want to thank
them right now for for all they've done
to get us here
and you're wonderful by the way it came
a little later but
it's the same thing you know you come
out of nowhere you're whatever got you
started to
actively be promoting this understanding
but it's just something grabs you a
certain truth to it and recognizing that
it's
you know that this is something worth
doing spending your life doing
and again it's uh i'm glad to have been
alive to observe this kind of a
international movement
me too me too and and so
um thank you warren and um we'll give
the last word to paul i guess because uh
we we need a closing statement from paul
so uh it's over to you
oh
oh sorry yeah
no pressure
indeed well just maybe as a closing note
then um let me just kind of
uh you know i think what's happened the
last 10 years from my vantage point i
cut my teeth on sort of these issues as
a japan economist sitting in tokyo
trying to work out what the bank of
japan was doing with what became known
as quantitative easing started in 2001
in march and then over the years sort of
you know
ran into various writings warren's very
early on and then randy ray's and people
like that read a lot of that stuff when
godly obviously very good a wonderful
book there a few years back um but i've
sort of had a foot in so you know i had
to put in the sort of mmt world and and
sort of discovered that and sort of come
out of the mainstream world
um of economics and you know i wrote an
op-ed i think two or three years ago now
where i sort of said look um there are
some disagreements and look i mean
mainstream economics is argued between
keynesians and monetarists and austrians
and rational expectations and etc etc so
disagreements between different sort of
groups of economists of schools is
hardly new but if we look at what's
going on in the world today and maybe
different languages being used there
seems to be an incredible amount of um
agreement alignment among so-called mmt
economists and mainstream economists i'm
thinking people at larry summers um you
know paul krugman
who's often you know they've engaged
from time to time
um
olivia blanchard who was the president
of the american economic association
gave her his keynote address a couple of
years ago where he said look maybe we
have to rethink fiscal sustainability
interest rates seem to be permanently
low and we don't have to worry about
sustainability in the way we used to so
it seems to me that there's a lot of
sort of potential agreement around
particularly economic policy and how we
should move the institutional frameworks
forward so i ended my op-ed a couple of
years ago by a calls for the mmts and
the mainstream to sort of put down their
pitchforks and join together a little
bit more so let me just leave leave on
that more optimistic note because i
still do feel that there's a little bit
of a lot of distance and it almost feels
a little bit this raged in the
blogosphere a couple of years ago a lot
of the mainstream economists started
looking at mmt digging into it often
being critical of it but now they seem
to have gone back to a large extent to
kind of ignoring it again and i think
that's just not healthy for uh for
anybody
no that is a great note to leave it on
put down the pitchforks everyone
um
so with that i will say thank you to the
these uh wonderful esteemed panelists um
and uh thank you to the organizers of
the conference
and uh stay tuned for more presentations
tomorrow and yes with that thank you and
have a great evening
thank you.
文字起こし
00:03
oh hello and uh hopefully welcome back
00:06
everyone um but for those who couldn't
00:08
make it to the earlier panels my name is
00:10
christian reilly i'm the co-host of the
00:12
mmt podcast and on behalf of the
00:15
organizers of the second international
00:16
european mmt conference i'd like to
00:19
extend a warm welcome to you our
00:22
audience from around the world and once
00:24
again it's my great pleasure to moderate
00:26
this final panel for today on the
00:29
political economy of fiscal policy and
00:31
again to maximize time for the
00:33
discussion i'll briefly introduce our
00:36
panelists on this panel we have mmt
00:38
founder and author of the seven deadly
00:41
innocent frauds of economic policy
00:43
warren mosler
00:45
we have professor akim truger who is
00:48
currently serving as a member of the
00:49
german council of economic experts
00:52
we have philippa siegel gleckner who is
00:56
the director of the economics think tank
00:59
and forgive my pronunciation here uh
01:02
desernat
01:03
zukunt and in english i believe that's
01:06
the department of the future
01:09
which sounds great and we have paul
01:12
sheard who is professor paul sheard who
01:14
is currently research fellow at the
01:17
harvard kennedy school after a career of
01:20
holding chief economist positions at
01:22
lehman brothers standard pause rating
01:24
services and smp s and p global so given
01:28
that we have such a distinguished panel
01:30
let's get straight into the topics for
01:31
discussion
01:32
and i thought i'd throw this question to
01:34
warren to start with and then come to
01:37
each panelist in turn for their thoughts
01:39
and any other opening remarks so uh
01:41
turning to you warren
01:43
why would a national government want to
01:45
deliberately create unemployment for any
01:48
people who weren't here for your
01:49
interview yesterday a little recap
01:52
okay so there's uh two levels uh
01:56
to that question
01:57
one level on the fundamental level if if
02:00
the government wants to be able to
02:01
provision itself to hire
02:03
uh a military legal system public health
02:07
workers by using its currency
02:09
it has to have people who are willing to
02:11
work for that currency people who are
02:13
looking for jobs paid in that currency
02:16
and people looking for work in that
02:17
currency that's how we define
02:19
unemployment people looking for paid
02:21
work not people looking to volunteer for
02:23
the american heart association or
02:24
something like that and so to create
02:27
unemployment governments impose tax
02:29
liabilities
02:31
now this creates and i always use a tax
02:33
on everybody's house as an example so we
02:35
don't have to
02:36
start thinking of complex interactions
02:38
due to transactions taxes like income
02:41
tax and that kind of thing so you put a
02:43
tax on everybody's house and something
02:44
they don't have the national currency
02:47
and now now you've got a you know a
02:50
drain in the bathtub
02:51
and they need to get the water to be
02:54
able
02:55
to live and so um
02:57
they're out looking for paid work that
02:59
pays in that currency and now the
03:00
government can hire them with its
03:02
otherwise worthless currency so
03:04
that that answers your question on one
03:06
level and on a second level
03:09
this is a bit
03:10
always been troublesome for me but it's
03:13
something we have to deal with
03:16
people like unemployment just as a
03:18
population be because let's say you have
03:20
10 unemployment 90 of people have jobs a
03:24
lot of them are fixed income
03:26
and
03:28
you know there's
03:29
the last thing they want is inflation of
03:30
course not that they can't keep up but
03:32
they don't want to have to deal with
03:33
that
03:34
and um
03:36
they like the idea that if the pipe
03:37
breaks they need a plumber there's three
03:39
or four plumbers who are out of work
03:41
you know competing
03:42
uh to fix their their pipes or if they
03:44
need home improvements
03:46
they need a carpenter there are people
03:47
out of work looking for work that they
03:49
like that situation when you get a
03:51
situation closer to full employment
03:54
and it's hard to find people to come out
03:55
because they already work you know they
03:57
have
03:58
work and jobs and you have to pay more
04:00
you know to compete with what they're
04:01
doing people don't like that and so uh
04:05
you almost have to appeal to the um
04:08
humanitarian side of people into the
04:11
you know some form of empathy to uh get
04:14
support for real full employment policy
04:17
at uh you know at that level so
04:20
let me leave it at that
04:22
okay thanks for that warren that's uh
04:25
characteristically crisp so unemployment
04:27
is a policy tool or a result of using
04:31
this policy tool that we
04:33
colloquially call money and uh it allows
04:36
the government to spend and
04:38
and then your second point being
04:39
um
04:40
unemployment's great except for the
04:42
people who are unemployed
04:45
so
04:46
i'm gonna turn to you now philippa um uh
04:49
do you have any comments on on this
04:51
opening question about government's uh
04:53
very creating and then ameliorating
04:56
unemployment but not quite enough
04:59
um
05:00
yeah
05:01
i guess forgive me i see it probably
05:03
from the
05:05
stupid government's employee perspective
05:10
of finance official and you know rather
05:12
than looking at kind of the end state or
05:14
the abstract
05:15
i guess i've
05:16
i i i've seen the difficulties in
05:19
practice which probably cannot can be
05:21
overcome if you're more creative
05:23
um
05:24
so so two things to that first of all
05:26
yes i mean i agree that at the moment we
05:28
use unemployment as a macro tool um
05:31
although probably not even very
05:32
coherently because you know we've got
05:34
this whole theory of the
05:36
of the naira and that we need a certain
05:38
level of unemployment to keep inflation
05:40
at bay um which doesn't really seem to
05:42
hold
05:43
um and then
05:45
i i don't know
05:46
that much about it in the us but i know
05:48
that in europe we play lots of funky
05:49
games with the naira essentially
05:52
to somehow
05:55
get results for our fiscal rules that
05:57
the politics around it doesn't explode
06:03
on that framework yeah i think it's very
06:05
hard to defend and one shouldn't defend
06:07
it and one should look for a better one
06:08
and there's obviously no reason to
06:11
um turn
06:13
turn down
06:14
deficit because we're close to denial i
06:16
mean it just doesn't make a lot of sense
06:18
spain's supposed to have a naira above
06:20
10
06:21
um
06:22
i do think it's a little bit
06:25
tricky on the micro level
06:27
um it's not just governments creating
06:30
unemployment i mean now looking at the
06:32
specific german situation for instance
06:34
but i guess you have the same and many
06:35
other
06:37
industrial economies that are changing
06:40
you do just have unemployment because of
06:43
skills
06:45
mismatches
06:47
because lots of factors which are
06:50
quite tricky and it's not
06:52
that easy to overcome at the micro level
06:55
and i'm not sure that you know just at
06:57
the macro level
06:58
providing enough demand will
07:01
fix it all maybe i'm not i'm i'm not
07:04
creative enough um so i
07:07
completely on board on the macro side i
07:08
think then on the microsite we also need
07:10
to do some active interventions to
07:13
to kind of help push from that side as
07:15
well.
07:16
thank you philippe
07:18
and um
07:19
moving on to akim um
07:23
do you agree with this broad view of
07:25
this broad macro view that mmt puts
07:28
forward the charterless view anything to
07:31
add
07:32
what i'm i'm i'm not i'm not
07:35
so sure whether i really
07:38
share or by buy everything
07:42
it's
07:43
of course if you if it if it's very
07:45
broad then i would agree that
07:48
the government
07:49
can do a lot
07:50
to reduce unemployment to have very low
07:53
unemployment
07:54
uh and there may then be politicalism
07:57
why
07:58
the government
07:59
does not use its power that's i think
08:04
well quite uncontroversial
08:07
but as philippa already hinted at some
08:10
factors
08:11
there may of course be some economic
08:14
reasons why
08:16
maybe the government
08:18
could not be able to have
08:20
unemployment without
08:22
serious
08:23
side effects
08:25
and the one obvious uh which is i know
08:28
is contentious
08:30
but
08:31
may of course be inflation
08:33
uh philippa
08:35
had some other factors
08:38
but then that's the economic um
08:40
analysis i think then also from a
08:42
political economy point of view
08:44
i'm not so sure uh whether it's that
08:48
easy that there is the government and
08:49
there are other people
08:51
and the government does what the people
08:53
or maybe the 90 percent people who are
08:56
employed
08:57
what they want i think i mean there can
08:59
be lots of uh controversy there can even
09:02
be class struggle many things can happen
09:05
um and of
09:06
course it's possible that
09:09
uh the government for political reasons
09:13
serving some interests
09:15
uh maybe also partisan interests could
09:18
then
09:19
prevent
09:21
the government
09:23
the unemployment rate from being as as
09:25
low as possible but that's that that's a
09:28
complex
09:29
issue and um i think we should
09:32
yes and if we go to the european level
09:35
or the eu level euro area currency union
09:37
but it's it's very very complex but
09:40
that's
09:40
something that we can
09:42
address in the next round i think thanks
09:44
great okay and finally turning to you
09:47
paul do you have any uh overarching
09:49
comments to make about uh
09:51
a political economy and uh
09:54
of fiscal policy
09:57
thanks christian yeah um
10:00
it's an interesting question and you
10:01
know i'm tempted to say i don't think
10:03
that governments deliberately are that
10:05
sinister to want to create unemployment
10:07
although i do take warren's uh point
10:09
that the those in employment um can
10:12
often be blase about the
10:14
suffering that is happening to the
10:16
unemployed um i i tend to approach this
10:18
political economy issue and perhaps nest
10:21
this question inside uh a slightly
10:24
different take on the question which is
10:26
um you know does the current
10:28
conventional framework that we have in
10:31
the world
10:32
does that do a good job of
10:35
attaining full employment and good
10:37
macroeconomic outcomes and what is that
10:40
framework of course that framework uh
10:42
taking a little bit of
10:43
liberty is you know rests on a couple of
10:46
pillars one is a fairly strict not
10:48
totally strict but a fairly strict
10:50
separation of monetary policy from
10:53
fiscal policy
10:55
and also a different conceptualization
10:57
and opera operationalization of those
11:00
two macroeconomic policy tools
11:02
and secondly
11:04
the idea that we we can assign society
11:07
can and should assign the primary role
11:10
of achieving full employment price
11:12
stability financial stability now as
11:14
well to the central banks and to
11:16
monetary policy with fiscal policy
11:18
taking more of a back seat role and you
11:20
know maybe just a supplementary or a
11:22
kind of an emergency fire engine that
11:24
turns up in a crisis and and i think
11:26
that that framework what we've learned
11:28
over the last you know 20 years and i
11:30
think you know mmt has come at this
11:31
whole issue from a more sort of
11:33
analytical
11:35
uh first principles perspective uh but
11:38
what we've also learned just from
11:39
watching japan and then watching the
11:41
global financial crisis and now with
11:43
covert
11:44
and and what's happened to economies and
11:46
what policy believers have been pulled
11:49
what we've learned is that that is a
11:50
flawed framework um it's a framework
11:54
which works well in some circumstances
11:57
and in fact it's evolved to work well in
12:00
a certain set of circumstances what
12:02
other circumstances when the proximate
12:04
threat is runaway inflation or high
12:07
inflation and you know i hardly need to
12:09
dwell on that for any a german audience
12:12
that's listening in um but it that
12:14
framework um so basically and the irony
12:17
here is that you know this there's this
12:19
sort of uh kind of
12:21
pitch warfare almost or acrimony that
12:23
goes on between mmt and the mainstream
12:26
but the sort of irony is that the reason
12:29
we have this strict separation of
12:30
monetary and fiscal policy which is most
12:33
strictly codified in the eurozone uh
12:35
kind of architecture is precisely
12:38
because we sort of learnt the lesson in
12:40
the 20th century
12:42
that governments can create
12:44
fiat currencies can spend can print
12:46
money and if that is not checked in some
12:49
way it will lead to a high inflation so
12:52
we devised this kind of neat way of
12:54
dealing with that problem but that does
12:56
not deal in fact is i would say almost
12:59
counterproductive in many ways when
13:01
there's an opposite problem which is if
13:03
there's a huge shortfall of aggregate
13:06
demand much too high unemployment
13:09
if there's a financial crisis and a
13:11
potential meltdown if there's a very low
13:13
natural rate of interest or r star that
13:16
the central banks talk about or if there
13:18
is a deflationary environment like such
13:20
as in japan then this strict separation
13:23
of monetary and fiscal policy and
13:24
assigning the role
13:26
the primary role to monetary policy i
13:28
think does not work very well and then
13:30
we run into all the political economy
13:32
issues around um you know what are the
13:35
fiscal policy makers supposed to do and
13:37
how do they do it and how do they
13:38
coordinate if they do coordinate with
13:40
monetary policy that's one of my lens on
13:42
this uh this broad question
13:44
okay thank you for that and uh warren
13:47
paul brought up there this sort of
13:49
separation of church and state
13:52
there's you know fiscal policy monetary
13:54
policy i mean
13:56
it's been
13:57
my understanding for a while though that
13:59
that uh
14:01
central banks and
14:02
uh treasury
14:04
coordinate all the time that the
14:06
separation isn't quite as hard as
14:09
as as they'd like us to think it is uh
14:11
does that sound about right
14:13
yeah
14:14
i suppose they do but they don't need to
14:16
there's no reason to that okay
14:18
the treasury can run any size deficit it
14:20
wants regardless of what the central
14:22
bank is doing
14:23
now
14:24
you know what i've pointed out for a
14:26
long time starting in the 1990s
14:29
is that i think that they've got the
14:30
interest rate thing backwards
14:32
and uh that you know raising rates is
14:34
actually inflationary and cutting rates
14:36
is uh deflationary contractionary
14:38
negative rates as a tax so it's even
14:40
more deflationary it's a spectrum
14:42
negative rates are tax positive rates or
14:44
subsidy
14:45
and uh when i
14:47
look at the world that way through that
14:49
lens so to speak it all
14:51
makes perfect sense and all the data
14:54
seems to fit what i'm doing and i see a
14:56
lot of research papers around the edges
14:58
that are that confirm it and i've been
15:01
watching this for 30 years and i'm not
15:02
trying to prove i'm right i don't you
15:05
know when i'm out
15:07
living in the world i want to understand
15:09
why it works and be able to forecast and
15:11
that type of thing uh and let me just
15:13
say something quickly about
15:15
we've got nehru in mainstream economics
15:18
but we also have game theory and
15:21
game theory tells you that the labor
15:23
market if you want to call it that isn't
15:24
a fair game people have to work to eat
15:27
and business only has to hire if they
15:29
like their return on equity prospects
15:32
and so that alone which you learn in the
15:34
first week of game theory will tell you
15:36
that you would expect real wages to
15:38
stagnate due to the fact that you've got
15:40
this
15:41
unfair game and that's exactly what we
15:43
observed so without some kind of support
15:45
for labor we get
15:47
stagnating wages and so uh
15:51
you know if you look at the even if
15:53
unemployment's down to the last guy
15:55
what's his leverage he either takes the
15:57
job offered or doesn't eat that week so
15:59
it's just
16:01
you know the micro foundations just
16:02
aren't there to support the nehru in
16:05
and that's just mainstream economics and
16:07
and so that's and and all the research
16:10
around whether the neighbor was real or
16:12
not real or whatever has always been
16:13
problematic
16:14
for the central banks and for the
16:16
mainstream and
16:18
they talk about why it shifts all the
16:20
time when it goes up and down that's
16:21
because the
16:23
what they call inflationary pressures
16:24
are happening for other reasons
16:27
did i did i answer your question i i i
16:30
think you said some great stuff
16:32
okay
16:34
okay
16:34
so i wanted to get the european uh
16:38
excuse me uh you know just i was gonna
16:41
throw this one to philippa um uh
16:44
because i uh i'm
16:45
a little bit of an outsider on on what
16:48
it must be like to be in the euro zone
16:49
but it seems to me in this this current
16:52
pandemic crisis is different to the
16:54
global financial crisis in terms of
16:56
cause but also in the broad strokes i
16:59
think it's a different world now in
17:00
terms of policy response
17:02
um in terms of
17:06
governments understanding
17:07
what they can and can't do
17:09
so um
17:11
i'm gonna come to each of you in turn
17:12
but um
17:14
i'll start with you philippa um
17:17
how do you think ideas about fiscal
17:19
policy in a crisis have changed since
17:21
the global financial crisis and this
17:24
crisis
17:25
[Music]
17:28
i actually think i mean for
17:30
crisis it's been accepted for a while
17:32
and you know you're allowed to do active
17:34
fiscal policy um
17:37
but we we did it to quite a large extent
17:40
now and um isabel
17:43
from the european central bank gave a
17:45
speech yesterday where she said well
17:46
this is the first time where fiscal
17:48
policy has actually been supportive of
17:50
what we're trying to do
17:52
now during the crisis
17:54
so yeah we had we had quite a big
17:56
response
17:57
which i think was made possible first of
18:00
all by basically suspending the european
18:02
fiscal rules
18:04
um or allowing countries to just go into
18:06
deficit without a certain set limit
18:09
um and secondly because we had built out
18:11
a little bit the entire
18:14
you know
18:15
if you want to call it i hate the word
18:17
safety net structure i mean
18:19
you have you have sovereign ones which
18:21
should be saved by definition and we
18:22
create the euro area and make them
18:24
unsafe and then we build out a safety
18:26
net to kind of make them safe again
18:28
um
18:29
but you know you have the
18:31
european stability mechanism
18:33
um you have um the ecb which can jump in
18:37
so
18:38
i think basically you know there wasn't
18:40
a question about whether countries were
18:42
able to refinance themselves and then
18:44
obviously the ecb came forward with
18:47
um you know huge huge government bond
18:50
buying so basically just bought a lot of
18:52
the debt that got issued
18:54
um so arguably in
18:56
in in this crisis i think uh fiscal
18:59
monetary coordination worked fairly well
19:01
whether that was implicit or explicit
19:04
okay and and uh akeem uh i was gonna
19:07
turn to you uh you know do you think um
19:10
that uh
19:13
the the structure of the the the ecb is
19:17
has learned lessons from the
19:19
global uh great financial crisis
19:21
uh
19:22
you know
19:23
has their approach
19:25
is their approach to this crisis uh a
19:28
little better
19:30
yes of course it's it's much better
19:32
because uh
19:34
now the system is stabilized we don't
19:36
see we don't have a
19:39
crisis for government bonds
19:41
we don't see this and
19:44
that was
19:46
because the
19:48
ecb has learned
19:50
the lesson uh well
19:54
or when dragon came into office uh
19:56
everything changed
19:58
so i think from from uh
20:00
concerning the um
20:02
the ecb
20:04
i wouldn't be uh critical
20:06
uh the critical thing is is fiscal
20:08
policy and uh the the attitudes and
20:11
views about
20:12
fiscal policy there has been a
20:14
significant change there as well
20:17
uh because uh when the euro prices hit
20:22
then basically
20:23
the the idea dominated that fiscal
20:26
policy
20:27
was ineffective the multiplier is very
20:29
low
20:30
and that you could
20:32
and and also have to
20:34
consolidate fast
20:37
uh the budgets and
20:39
that this will not
20:41
have a high cost
20:43
in terms of employment and output and i
20:46
think
20:47
this has been completely um
20:50
rejected by by the evidence
20:53
we have new
20:54
estimates for the multiplier we know
20:56
it's an effective tool
20:58
and
20:59
by now
21:00
many people in the european commission
21:02
in many governments
21:05
many researchers they recognize that
21:09
you cannot consolidate in terms of in
21:11
times of crisis and that you
21:13
that you have to stabilize the system
21:15
and that that you need expenditure for
21:16
some policy and that that you cannot
21:18
withdraw the stimulus
21:21
uh
21:22
soon so that for sure there is even
21:24
consensus on the european level
21:28
that
21:29
well
21:31
there is consensus among many people
21:33
on the repeat level that we need
21:36
a change in the fiscal rules
21:39
because uh sticking to those rules
21:42
uh would drive the euro area and the
21:45
periphery into christ again
21:48
and this will be the last crisis
21:50
when of course
21:51
so uh
21:52
this i think is
21:54
is by now
21:55
uh recognized by many people but
21:58
it's not yet
22:01
common sense and
22:03
we will see a major struggle over the
22:05
coming months and years
22:07
about the reform of the rules and
22:10
this will be
22:11
this will be tough because there are
22:13
really
22:14
many people
22:15
uh conservative people in uh in mostly
22:20
in the northern countries
22:21
uh little european countries
22:24
uh they really think that you need a
22:28
sound fiscal policy
22:31
meaning
22:32
you have
22:33
to actively cut
22:35
the government debt now
22:37
and
22:38
if you still see budget deficits
22:41
then it's it's a the problem of uh
22:44
the government's not being willing
22:46
uh
22:47
to
22:48
cut spending so but but actually i think
22:50
that's that's very wrong
22:52
but that's the debate that we are going
22:54
to have in uh in europe for the next
22:58
well
22:59
as soon as the german election is over i
23:01
think we see the uh we see
23:05
and and so
23:06
that uh debate should be uh informed by
23:10
asking the right questions so i was just
23:11
going to turn to philippa i know that
23:13
paul
23:14
has
23:15
some strong feelings about the structure
23:18
of the eu as it relates to fiscal and
23:21
monetary policy and and sovereignty and
23:23
uh and those matters but
23:26
philippa you uh
23:28
recently wrote a paper entitled a new
23:31
fiscal policy for germany
23:33
and you begin by asking what is the
23:35
right objective for fiscal policy what
23:37
might an institutional framework look
23:40
like to put this objective into practice
23:42
and what concrete politically
23:45
realistic reform options could move us
23:47
in that direction um would you mind
23:49
laying that out for us and for those of
23:51
us who are new to german fiscal policy
23:54
can you say what the debt break is uh
23:56
just in case you leave anybody behind?
23:59
P:
sure um so let me start with yeah maybe
24:02
the physical framework in in germany and
24:04
europe because it really kind of relates
24:06
to
24:07
so in germany we have a so
24:12
to the debt
24:13
um it limits uh
24:15
the annual budget deficit um first of
24:19
all to 0.35 of gdp plus a cyclical
24:23
adjustment
24:24
um
24:25
which is where basically the whole
24:27
question of output gap comes in and you
24:30
know depending on how big how far away
24:32
you are from your leech potential
24:35
um
24:36
depending on that you're you're allowed
24:37
to do more or less deficit spending
24:40
um
24:41
this is also where the german dead break
24:43
is basically tied straight into the
24:45
european rules
24:47
the european rules in total are pretty
24:49
complex
24:51
but basically they
24:53
limit you to 60
24:55
debt to gdp
24:56
a three percent
24:58
deficit and then you have this is like
25:01
when you're already kind of in a bad
25:02
corner and then there's so-called
25:04
preventive arm of disability and growth
25:07
pack
25:07
um which you should stick to if you want
25:10
to be in a good corner and that says um
25:13
you should limit your medium term
25:16
deficit to 0.5
25:19
cyclically adjusted
25:20
so
25:21
you know depending on on your
25:23
output gap you're allowed to do
25:26
more or less
25:28
so
25:30
we kind of i guess tackle it from two
25:32
sides we tackle it from trying to
25:34
understand what actually the right
25:35
objective is and then you know what can
25:38
you actually make work in our
25:40
context
25:41
because it's always going to be an
25:42
evolutionary process and then also
25:45
we think it's urgent we do something i
25:47
share achievements worry that you know
25:49
now after the crisis
25:51
um we will get back to oh my god we need
25:55
to reduce that and that would really be
25:57
quite destructive
25:59
um
26:00
so on the high level objective we do see
26:04
full employment is quite a good
26:05
objective especially when you look at
26:07
what the big problem in aging societies
26:09
is which is you know basically
26:11
having having enough money to pay
26:13
pensions
26:14
um
26:16
probably a good idea of people at
26:17
working age work even if you're just
26:19
like cold-hearted budget person
26:22
because then they pay tax and you know
26:24
you don't have to pay social security to
26:27
to sustain them
26:28
um
26:30
we
26:30
when we started we talked about full
26:32
employment and realized that people in
26:34
the german european context didn't
26:36
really understand that well because they
26:37
say well everybody in germany has a job
26:40
problem is indeed most people have a job
26:42
but a lot of them are very poor jobs so
26:45
you know they just don't pay for a
26:46
living it's 10
26:48
of our workforce is mutually employed
26:51
so that really doesn't do very much for
26:53
your living not even speaking of your
26:55
pension so we speak of full capacity
26:57
utilization
26:58
and then we say all right let's start
27:00
with the current framework and how can
27:01
we you know take a first step in the
27:03
right direction
27:04
um because i don't know what the perfect
27:07
optimal state is but the more relevant
27:09
one i think is how can we make reform
27:10
progress in the right direction
27:12
and so what we say is how about you know
27:15
we take that definition
27:17
of
27:18
what full capacity under the debt break
27:20
is
27:21
uh because that defines how much deficit
27:24
you're allowed to run every year
27:26
and and try and really think about or
27:28
get closer to what full capacity is than
27:30
what it is today
27:32
today we defined full capacity
27:34
as you know
27:36
the output of the economy yesterday
27:38
so if only 50 of women in germany were
27:40
working
27:41
well then we say full capacity is you
27:43
know if half of half of women do not
27:46
work that seems pretty ridiculous to i
27:48
think any sane human being whether
27:50
you're an economist or not
27:52
um
27:54
the advantage if you move from a
27:57
definition of full capacity from
27:59
what it was in the past to
28:01
you know what could it reasonably be
28:04
is that you can do that
28:08
without changing
28:10
the german constitution
28:13
i mean some
28:14
some legal scholars
28:16
um
28:17
have now looked at this as well and it's
28:19
looking like we can probably even do it
28:21
if everything goes goes well without
28:24
changing or a major legal change because
28:27
it's really quite in you know in the
28:28
technical details of things you're not
28:31
changing the the basic setup
28:34
and then you could essentially do the
28:36
same thing for europe
28:37
um you have a
28:38
working group that looks at the
28:40
technical ins and outs of this
28:42
um and change definition of of capacity
28:46
and you know you still have rules and
28:48
it's still somehow arbitrary how you
28:50
then multiply this output gap with
28:53
you know whatever number
28:55
um
28:56
semi-elasticity but i think it will
28:58
already you know
29:00
bring some form of reality back to the
29:02
rules and and you would
29:03
get a step closer to to looking at what
29:06
can our economy actually do
29:09
and hopefully you know even make it
29:11
fiscally more sustainable if you want to
29:13
talk about it in that those terms.
29:16
okay that's great um so i'm going to
29:19
turn to you now paul and um
29:21
so um
29:22
you know philip is talking about
29:25
trying to construct
29:26
ask the right questions and and
29:28
and and chart the the best way forward
29:32
and she mentioned you know
29:34
that you know the the
29:36
the
29:37
the eurozone and the eu is a
29:40
it's still evolving it's still in flux
29:43
and uh this is something that you bring
29:45
up in your 2018 article
29:48
uh entitled brexit is a wake-up call to
29:50
the eu but so far it's not being
29:52
answered
29:53
so back then you wrote it's not too late
29:55
for brexit to be seized as an
29:57
opportunity on both sides of the english
29:59
channel to reconfigure the sharing of
30:01
national sovereignty in a more
30:03
politically and economically sustainable
30:05
way so could you say more about that and
30:09
anything else from that article that you
30:11
think has bearing on what we're talking
30:13
about here
30:15
i think thanks very much uh christian
30:17
that's a travel back in time yeah i was
30:20
i was quite
30:21
you know i'm a australian american
30:23
sitting here on the east coast of the us
30:24
i've never lived in europe i've never
30:26
lived in london um although sometimes
30:29
people take my accent to indicate that
30:31
i'm a brit no not so um so yeah with a
30:35
little bit of reluctance way into this
30:37
but as an economist i look at these
30:38
things um and you know i was pretty
30:40
active in the in the brexit debate and
30:42
the one of the key points i was making
30:44
is you know 99
30:46
of the of the focus on around brexit was
30:48
about
30:49
obviously the uk exiting
30:51
um what i was trying to point out is
30:53
that you know the the britain was not
30:55
leaving a fixed point it was leaving a
30:58
political and economic entity which was
31:01
very much well i would say
31:03
dysfunctionally designed and because of
31:06
that very much in flux
31:08
um
31:09
so i put more emphasis on that point no
31:11
no what is the what i mean by that and
31:13
again we're going from one extreme to
31:15
the other here because you know philippa
31:16
and akim obviously are in the weeds uh
31:19
you know in germany and and of course
31:22
dealing with practical issues and
31:24
you know i'm flying at 60 000 feet here
31:27
and talking in kind of abstract terms
31:29
about sovereignty and monetary unions
31:31
and things like that so there's a bit of
31:33
a you know it's we're moving from a
31:35
different across dimensions of space
31:37
here um but when i look and i'm not
31:39
alone in this i think probably most
31:41
mainstream economists outside the euro
31:45
area or the european union and i
31:46
probably i can't speak for mmt people
31:49
but i suspect most mmt people would also
31:51
look at the eurozone in particular the
31:54
euro area
31:55
in kind of horror because it is um from
31:58
a from an economic point of view a very
32:00
dysfunctionally designed thing um why is
32:02
that it it's a monetary union so what
32:04
does that mean it means the 19 member
32:07
states of the euro area have given up
32:09
their monetary sovereignty and that's a
32:11
key concept in in mmt but it's important
32:14
even from a mainstream perspective
32:16
um but they didn't give up their fiscal
32:19
sovereignty so again if so mmt insight i
32:21
think really revolves around you know
32:23
monetary and fiscal almost two i call it
32:26
two sides of the same coin two ways of
32:30
looking at the elephant but they're
32:31
really um it's all about money creation
32:34
and how that happens so to split that
32:37
humpty dumpty in two and on the monetary
32:40
sort of narrow monetary front the
32:42
currency front um
32:44
say we are going to behave as if we are
32:45
one sovereign entity we're going to pool
32:47
our monetary sovereignty but then on the
32:50
fiscal front to say well we're not going
32:52
to do that we're going to remain
32:54
uh so 19 fiscally sort of separate uh
32:58
nation states that is really really
33:00
dysfunctional now of course it's not
33:02
that simple because uh it's even worse
33:04
than that because
33:06
um
33:07
as you know of course as we talked about
33:08
and everybody knows because they
33:10
designed a monetary union but not a
33:12
fiscal union
33:14
they said well we're going to have to
33:15
put fiscal constraints and fiscal
33:17
restraints the stability growth pact
33:20
fiscal compact and all of these things
33:23
and even embedded in german's
33:24
constitution so that we don't get this
33:27
fiscal free riding at the nation-state
33:29
level on the monetary sovereignty but
33:31
what that does um and again i think that
33:33
the design of the euro area
33:35
institutionally sort of came as the
33:38
apotheosis if i can pronounce that word
33:41
the kind of apex of
33:43
the thinking around um you know
33:47
monetary policy being the be-all and
33:49
end-all and and and and basically
33:52
relegating fiscal policy to the back
33:54
seat and worrying about fiscal
33:55
sustainability etc so all of that was
33:57
kind of codified in the eurozone but
33:59
it's created a very dysfunctional entity
34:02
in the following sense take an italy or
34:04
a greece or a spain
34:06
you're looking at a country now that
34:09
doesn't have their own monetary
34:10
sovereignty anymore it doesn't have
34:12
their own independent monetary policy
34:14
and of course that's a
34:16
just a simple application of the
34:18
mandel's trilemma that you've got
34:21
essentially a fixed exchange rate with
34:22
everybody else in the euro area free
34:24
capital movement so you've lost your
34:26
monetary sovereignty
34:27
but you've also lost your fiscal
34:29
flexibility on your fiscal space
34:31
artificially because now you don't have
34:34
that central bank that can you can sort
34:36
of bail you out you don't have the
34:38
unlimited um ability to to kind of spend
34:41
because markets may not actually
34:43
look kindly on that that was sort of the
34:45
sovereign debt crisis of 2012 to 2015.
34:49
[Music]
34:50
so you don't have the margins of
34:52
adjustment now is this a big deal well
34:54
you know it's not necessarily a big deal
34:56
for germany but it is a big deal i
34:58
mentioned italy and greece and spain the
35:00
level of and you know we've had three
35:02
shocks now in the euro area we had the
35:04
global financial crisis the sovereign
35:05
debt crisis now covered
35:07
and i just like to look at some simple
35:09
metrics just to figure out how is this
35:11
looking
35:12
um if you look at where the real gdp is
35:16
now in
35:18
italy for example relative to where it
35:20
was at the peak before the financial
35:22
crisis the accumulation of these three
35:24
shocks it's almost nine percent below
35:28
the u.s same metric is 22 above greece
35:32
is 28
35:34
nearly 28 below level of gdp now germany
35:37
is much better it's 10
35:39
above its pre-crisis level its
35:41
unemployment rate is quite low
35:43
italy and greece unemployment rate now
35:45
is considerably above the pre-global
35:48
financial crisis level so
35:50
um that's in a nutshell kind of kind of
35:52
the problem here
35:54
that the 19 and the 27 if you go to the
35:58
eu countries are in this political
36:01
treaty-based construct that is just very
36:04
very badly designed you mentioned
36:06
sovereignty just from a pure kind of
36:08
analytical point of view or conceptual
36:10
level the big problem i see with the
36:12
euro
36:14
area or the eu is that you have a
36:16
partial and inconsistent
36:21
pooling or sharing of sovereignty so on
36:23
some dimensions monetary policy freedom
36:26
of movement of people
36:27
um you know foreign trade on some
36:30
dimensions the eu
36:33
or the euro area was switched between
36:35
the two
36:36
functions as if it's one big you know
36:38
united states of europe whereas on other
36:40
margins um particularly fiscal policy
36:43
but even you know protection of the
36:45
national border
36:47
or even the external border
36:49
the eu plays quite a small role in the
36:51
protection of the external eu border
36:53
strangely enough
36:54
you
36:55
you have these 27 countries or 19
36:58
countries depending on what we're
36:59
looking at behaving as separate nation
37:01
states that does not make any sense so
37:03
how do you solve this problem i believe
37:05
in a nutshell and i think you're going
37:06
to ask about this later on maybe what's
37:09
the future
37:10
either they have to move in europe to a
37:12
more consistent and functional sharing
37:16
of sovereignty that means going towards
37:17
a fiscal union um going towards
37:20
political union as well in a much truer
37:22
sense or i think they have to start to
37:24
repatriate the sovereignty that they
37:27
pulled in the past back to the
37:28
nation-state level and the problem is
37:31
they're damned if they do damned if they
37:32
don't neither it's easy for me to state
37:34
these choices if you're living in the in
37:37
the system and trying to coordinate
37:39
political change in either direction
37:41
it's very very difficult but what we can
37:43
say is if you look at the history of the
37:46
last 10 to now even 12-15 years
37:50
as pressure as shocks have been applied
37:53
to the eu and the euro area with the
37:55
exception of brexit
37:57
everything has moved
37:59
in one direction which is more
38:03
collective action if you like more
38:04
pooling of sovereignty more movement
38:07
towards the united states of europe if
38:09
you want to call it that perhaps in a
38:10
looser form than you have in the u.s
38:12
whether that's going to remain the
38:14
direction of travel or not you know who
38:16
knows but um what i do feel the strong
38:19
degree of conviction is the current
38:22
situation is cannot be the steady state
38:25
solution that we're going to see in the
38:26
eu
38:27
thank you for that and i'll come to
38:30
akima in a minute but i thought i'd just
38:33
uh for the insider's view but i thought
38:36
i'd just complete the uh
38:38
uh deeply interested outsiders view by
38:40
uh asking warren about this so i think
38:43
we would all agree that the
38:45
the current eurozone deficit rules are
38:47
hampering aggregate demand and
38:49
therefore creating unemployment so so if
38:52
we agree to that what fiscal policy
38:54
rules are needed instead warren
38:58
well they are moving in that direction
39:00
and we
39:02
i outlined all this back in the early
39:04
1990s
39:05
uh before they had locked the currencies
39:07
when it was still under discussion and
39:08
led to our uh
39:10
presenting what we thought was going on
39:12
in europe in 1996 we had a brentwood's
39:14
conference which
39:16
and you can see the writings it's all
39:17
turned out to be the case
39:20
of what was happening and which paul
39:22
described a lot of that very well so
39:25
what
39:27
i think the easiest thing in a short
39:28
presentation here is just to say what
39:30
it is going to look like at the end you
39:33
know what where is it heading towards
39:35
and it's heading towards the um
39:38
ecb just having a permanent zero rate
39:41
policy
39:43
once they understand of course that
39:44
raising rates is inflationary there's no
39:47
reason left to raise rates you just
39:48
leave them a zero
39:50
and uh
39:51
and then the maastricht limit becomes a
39:54
policy tool
39:56
rather than and they are you know rather
39:58
than a limit
40:00
and so uh you might look at it this year
40:02
and say instead of uh three percent this
40:04
year it needs to be eight or twelve or
40:06
whatever and you'll have some
40:09
uh hopefully democratically responsible
40:12
authority coming you know using that as
40:14
a policy tool whether it's the european
40:15
parliament or the european commission or
40:17
so something uh right now it's the
40:20
european central bank that's setting
40:23
fiscal policy because uh
40:26
if they don't approve of what any
40:28
country is doing with their fiscal
40:30
policy they threaten to pull them out
40:32
for the do what it takes to prevent the
40:34
fault umbrella the spread start widening
40:36
and
40:37
you know there's a panic for them to get
40:38
back under that umbrella and they come
40:40
quickly in line so
40:41
the only entity and it's by default
40:44
i'm not sure the ecb wanted to be in
40:45
that position but there was
40:46
there's no other entity left to enforce
40:49
fiscal rules the treaty process for
40:52
enforcing fiscal rules didn't work so
40:54
we've got the really the only central
40:56
bank in the world right now that's
40:58
dictating fiscal policy
41:00
so
41:01
to get to get back to uh
41:04
where you get to so you get to uh the
41:08
mastering limit becoming uh well you
41:10
keep the guarantee in place and it
41:12
should be made explicit and it probably
41:13
will be that
41:14
uh
41:16
the
41:16
central bank will not allow a default
41:18
that all the bonds from all these
41:20
nations are money good and then with a
41:22
permanent
41:23
zero rate
41:25
that service is zero for everyone for
41:27
all practical purposes and so it doesn't
41:29
matter whether your deficits 125
41:32
from past behavior or 60 everybody's got
41:35
the same debt service forever which is
41:37
zero so it gives you a clean sheet of
41:39
paper start
41:41
to uh you know on the on the issue to do
41:43
this and then when you've got the
41:45
um uh
41:49
uh european parliament or commissioner
41:51
somebody setting
41:52
using the master what's today the master
41:54
limit the fiscal limit as a policy tool
41:56
and then they'll be having the debate in
41:58
a what i'd call a rational context do we
42:01
need
42:02
more restrictive or more expansive
42:04
fiscal policy they'll vote on it and
42:05
then each country will
42:08
then be allowed to uh
42:11
go to that new
42:12
you know policy limit and i'd go a step
42:15
further and have the
42:18
the
42:19
countries balance their budgets
42:21
and then uh
42:23
have the ecb just make a
42:25
fiscal distribution
42:27
uh to all the member nations on a maybe
42:30
on a per capita basis uh you know on
42:32
whatever percent of gdp they determine
42:34
is appropriate for the uh
42:36
for the union so uh
42:38
does that answer your question there
42:40
absolutely yeah so okay i'll turn it
42:43
over to you ikea um
42:45
what we just heard sounds like uh common
42:47
sense to me or it sounds very reasonable
42:50
um
42:51
what do you make of it as somebody
42:53
within the eurozone
42:56
well um first of all i would like to say
42:59
that i that i completely agree with uh
43:01
with paul's analysis uh that
43:04
uh
43:05
well the institutional arrangements that
43:08
this can never be a steady state of
43:10
course
43:12
and
43:13
then of course
43:15
we need some something like a fiscal
43:17
capacity
43:19
uh
43:20
and well
43:21
euro bonds that are that are backed by
43:24
the central bank i think that's that's
43:26
something that uh
43:28
that that we really need
43:30
um i'm not
43:33
so sure about uh the institutional
43:35
details that uh although the concept
43:38
that warren has just presented
43:42
um because i i don't think i mean we are
43:45
not going to get a clean sheet approach
43:49
we do have
43:51
to go there in small steps we need a
43:53
stepwise approach
43:55
and every little step
43:57
is is politically contested
44:00
and there is always the
44:03
the risk of failure
44:06
but of course i mean if
44:08
if i want to be optimistic
44:11
then i
44:12
then i will just just mention that um
44:16
nobody
44:18
would ever have believed that we will
44:20
would see such a
44:23
rescue and resilience
44:25
facility on the european level
44:27
that the countries would finally agree
44:29
to have that
44:32
and there were people that i know well
44:35
that just months before said uh where we
44:38
have the esm
44:39
uh let's let's let's uh
44:42
the italians and everybody who's in
44:44
trouble they can just turn to two bsm
44:48
then they get uh some
44:51
some loans they will have to repay them
44:53
and there will be a strict
44:55
conditionality
44:57
so that was the approach at the time
44:59
that some
45:00
people some auto liberal
45:03
scholars had in mind and i'm sure also
45:06
some
45:07
conservative politicians that in mind
45:10
but that's not how it uh how it
45:11
developed and i think
45:14
what helped very much was the experience
45:18
uh that we had the supply chains that
45:21
were completely in disorder after the
45:23
uh the kovic 19 shock and that
45:27
everybody was well aware
45:31
how very very important
45:34
uh international coordination is and
45:36
that we really have to rely
45:38
on if we depend on
45:40
each other i think that was a lesson
45:43
learned and that in the end
45:46
made this this
45:48
[Music]
45:49
fund possible
45:50
and uh well if you want to be optimistic
45:56
the german finance minister
45:58
spoke of a hamilton moment
46:01
at the time
46:02
this was
46:04
the agreement was reached
46:06
and
46:07
why couldn't we
46:08
step wisely move forward
46:11
and develop this
46:14
so
46:15
and i don't believe that we will ever
46:17
have a
46:18
clean sheet approach
46:20
unless
46:22
we have a huge crisis and the whole
46:24
thing
46:27
goes to pieces and of course we need a
46:30
clean sheet approach
46:31
but uh at the moment we have to go
46:34
step wisely
46:36
uh it's particularly contested it's
46:38
difficult
46:39
but uh in the end i think people will
46:42
have to understand
46:44
that this idea
46:45
national governments are responsible for
46:48
their budgets
46:50
and the
46:51
financial markets are watching
46:54
and controlling national budget and you
46:57
just have to
46:58
obey the marketplace
47:01
you have to do your homework
47:03
everything uh it's fine
47:07
that doesn't work
47:09
if you um if if you don't have a
47:11
sovereign currency or if you don't have
47:14
uh if you're not not in control of the
47:16
currency that's
47:17
i think
47:18
it's as easy as as that
47:20
um
47:22
but
47:22
it's it's a huge step to
47:25
to make people aware of this i can tell
47:28
you
47:29
okay and just yes please worry
47:32
just quickly oh
47:33
let me suggest that we're we're already
47:36
there
47:36
we already have a zero rate policy it's
47:38
just a question of leaving it alone
47:40
which has always been
47:42
easy you know just leave things alone
47:44
that service is already approaching zero
47:47
due to the zero rate policy just leave
47:49
it alone and the maastricht limit has
47:52
become a policy tool as evidenced last
47:54
year
47:55
that uh
47:56
italy was eleven percent that did uh you
47:59
know
48:00
the deficit as percentage was like 11 or
48:02
something like that so it's already
48:03
being used as a policy tool so i it's
48:06
functionally already there it's just a
48:08
quite a question of formalizing this
48:10
and or not formalizing it and just
48:13
leaving it alone so i'm i'm hopeful in
48:15
that sense and as you said it took a
48:18
great crisis to get there and so we've
48:20
already had the great crisis couldn't
48:22
have been any more severe than a health
48:24
crisis
48:25
and all these things that i'm talking
48:27
about are are functionally there right
48:29
now so
48:31
you know hopefully can stay there the
48:32
one thing i'd like to see would be the
48:34
uh
48:34
well it's been called the job guarantee
48:36
which is a transition job to promote the
48:39
transition from unemployment to private
48:40
sector employment once the public sector
48:42
is fully provisioned
48:44
and uh i actually
48:46
did that in a paper academic paper that
48:48
was published
48:50
along uh with my co-author was
48:52
professor uh silipo from uh calabria
48:56
and uh it's in the uh journal of policy
48:58
models is it called the policy modeling
49:01
so i was published in a leading
49:02
mainstream journal so
49:03
uh
49:04
along with the rest of these things i
49:06
just talked about so
49:07
it's it's there i think i'm more hopeful
49:09
than everyone else that uh we've kind of
49:11
backed into the right answer through a
49:13
series of crisis and through millions of
49:16
destroyed lives but
49:18
you know we are there and uh
49:20
i'm somewhat optimistic of the future of
49:22
europe right now
49:24
okay and uh philippa um
49:26
uh warren just brought up
49:28
the uh
49:29
the eurozone-wide job guarantee it's
49:32
sometimes called an mmt uh warren uh
49:35
likes to call it a transition job um
49:38
are you aware of that because i remember
49:40
that paper warren that you framed it as
49:43
a stabilization tool you know obviously
49:46
it has the
49:47
uh
49:49
the social benefits but uh you know you
49:51
you framed it as a stabilization
49:54
macroeconomic stabilization tool i i
49:56
don't know philip are you familiar with
49:57
this
49:58
uh
49:59
and and and what are your thoughts on
50:01
that？ 50:02
P:
um
50:03
let me just
50:04
make one more comment oh great
50:06
on the question earlier um
50:08
[Music]
50:10
i don't i mean i would love to be that
50:12
optimistic i don't think we are nearly
50:14
there last year we were allowed to run
50:16
whatever deficit because we suspended
50:19
the rules
50:20
um we completely suspended them and
50:22
actually the the clause for when you can
50:24
do that
50:26
they're not that flexible i mean people
50:28
are trying to stretch them now and we
50:30
are already stretching them so that we
50:31
can suspend them for 2022 as well
50:36
but that's gonna be tricky and i think
50:39
everybody is fighting as much as they
50:41
can
50:42
so that 2023 we won't get a contraction
50:45
like we did
50:46
after the financial crisis i think this
50:48
is a serious risk
50:50
and
50:52
so i'm a bit more sanguine on on that
50:55
because changing european primary
50:57
legislation is incredibly hard when you
51:00
have
51:01
quite a few countries opposed to this
51:03
you just had a letter published by
51:06
the netherlands the austrians who said
51:08
you know what we're not changing this
51:10
the sixty percent debt to gdp level you
51:12
know i mean it
51:14
seems completely mad but it is still a
51:16
number that people believe in
51:18
and they still think we need to get back
51:20
to sixty percent you know it's not even
51:22
really 90
51:24
um not even speaking of moving away from
51:26
that completely arbitrary useless number
51:29
it's 60
51:31
is where we're safe
51:33
so i think there's still a lot of work
51:34
to be done unfortunately and we need to
51:36
do it really really fast because you
51:38
know you can't really do fiscal policy a
51:41
month at a time
51:42
um portuguese greek italian government
51:45
kind of needs to know what they're able
51:47
to spend pretty soon
51:49
um it's also about expectations for for
51:51
the economy right
51:53
um so so i think there's a lot of work
51:55
to be done um on job guarantee
51:59
yeah i mean you know coming from that
52:00
perspective i think we're far away from
52:02
that um
52:05
because
52:06
and i guess this is you know comes back
52:08
to to some of the basic issues of the
52:10
european union or of having a
52:13
monetary union
52:15
um this was all built on on the promise
52:17
of convergence right
52:19
because then you can also have some kind
52:21
of convergence on
52:23
for instance you know having having
52:26
public sector jobs provision and having
52:28
a
52:29
certain wage that you set for it like i
52:31
think you proposed seven euros in your
52:33
paper
52:34
um well we haven't really seen that much
52:37
of that convergence we've we've rather
52:38
seen the opposite um
52:41
so you can't really have a common wage
52:43
level at the moment i mean you can
52:46
probably institute some kind of country
52:48
specific policy
52:50
um
52:50
but i think you're probably even missing
52:52
quite a bit of legitimacy um
52:55
with the european union to do something
52:58
like that
52:59
um
53:00
we have to work on the economic and the
53:03
the kind of political side to to get
53:05
that ready so
53:07
i do think that that kind of policy will
53:09
be a long way out and you know if i'm
53:11
wrong then
53:13
probably happy
53:14
okay
53:15
so i just wanted to uh back up to
53:17
something our keem said about.
okay let's
53:20
let's be pessimistic now we have to take
53:22
a stepwise approach ikea
53:25
what's a realistic step in that case
53:30
well
53:31
at the moment um
53:33
i mean
53:34
basically the eu has has bought some
53:37
time because we have the the resilience
53:39
fund
53:40
and this will uh well hopefully
53:44
but it it does support uh many of the
53:46
member states and those
53:48
that were hit the hardest are supported
53:50
the most so
53:52
that's good um and that
53:55
will help them
53:56
to overcome the crisis and uh well most
54:00
optimistically to even
54:02
boost the economies for uh for a while
54:05
for two or three years
54:07
so uh we'll have a recovery
54:11
everywhere
54:13
that's a good thing and um in the
54:15
meantime maybe we will have changed the
54:18
uh the fiscal rules and then uh let's
54:22
let's see how far we get with
54:25
a permanent physical capacity i mean
54:27
there is this discussion
54:29
and many um
54:31
institutions that that
54:35
will have a
54:36
have usually have a sound fiscal policy
54:39
uh orientation or reputation
54:42
uh even the the european physical board
54:44
that has probably said you you either
54:46
change the rules
54:48
or you you will inevitably uh bend them
54:51
forever so
54:52
uh
54:54
so i think that's that's pretty
54:56
cool so
54:58
that could be the steps uh
55:00
i i agree that it's it's interesting uh
55:03
warren to uh
55:05
to listen to you how you say okay we're
55:07
already already there i think
55:09
many people would
55:11
fiercely disagree
55:13
uh and uh
55:15
and even
55:16
if
55:17
they uh
55:19
it would be a suspicion that we could be
55:21
there
55:23
and if we were there then we would have
55:26
to do anything to get out of the
55:28
situation
55:29
and then and really uh do the
55:31
consolidation and withdraw support from
55:34
the ecb
55:36
that's how it's how it goes i mean there
55:38
are constitutional courts
55:40
uh that will be the people who press
55:42
charges there that that's that's a
55:44
really it's really a mess
55:46
so it's i i see intellectually your
55:50
point
55:51
um but i don't think that's uh how it
55:54
will go in in the euro area
55:56
so but maybe um
55:58
there's a stepwise interpretation of
56:01
what you
56:02
of what you suggested and then uh
56:05
finally we we have some
56:08
some stable architecture that's that's
56:10
possible
56:12
okay that's great well
56:14
i was about to uh turn it over to the uh
56:17
audience questions and comments um but
56:20
does anybody have any any final thoughts
56:23
before we move on to those
56:26
kristen just just just to put a bow on
56:28
that on that point of akim i mean i
56:30
think
56:31
again that's probably the most likely
56:33
scenario a continuation of these
56:35
incremental steps i mean the you know
56:38
the commission and the european council
56:40
have been talking for years i mean
56:42
literally a decade now about you know
56:44
completing the
56:46
european union they you know they you
56:48
know obviously
56:49
very careful around their language with
56:51
anything that looks like fiscal union
56:53
but um you know
56:55
it's the facts have changed on the
56:57
ground you know obviously
56:59
you go through the whole acronym soup
57:01
they have their acronym soup like like
57:03
the us does with the esm and the esfs
57:06
and and omt and of course you know omt
57:09
outright monetary transactions which i
57:11
think is has was challenged in the
57:13
constitutional court as i seem to
57:14
remember but you know not one euro has
57:17
actually been put behind omt
57:21
um just that you know one paragraph in
57:23
mario draghi's speech in july 2012
57:25
literally changed the world
57:28
um you know greek
57:30
yields came down from almost 30 percent
57:32
to now what their 70 basis points um so
57:35
that was an absolute game changer and
57:37
then of course you have with all the the
57:39
qe the ecb has done now their balance
57:42
sheet is north of eight trillion euros i
57:44
think if they'd never done very late to
57:46
the game 2015 january i think it started
57:49
um i think my calculation rough back at
57:52
the envelope probably without qe asset
57:54
purchases it would have been you know
57:56
two and a half maybe three trillion
57:57
they're up to eight and and going higher
58:00
so an awful lot has happened but what i
58:01
worry and i think will continue to
58:03
happen particularly crisis driven um
58:06
what worries me or would worry me if i
58:08
was sort of really you know sitting in
58:10
europe and my future hinged on this
58:12
um is
58:14
the
58:14
you know the politics of the whole
58:16
situation
58:17
that there is this very technocratic
58:20
kind of flavor to all the architecture
58:23
changes that have happened in in europe
58:25
and when you've still got you know the
58:27
likes of you know the italy's the
58:29
greece's the spains portugal with you
58:32
know still high unemployment gdp not
58:34
having re re
58:36
gained even you know pre financial
58:38
crisis levels
58:40
um this and and an increasing sort of
58:43
disconnect in other words the
58:44
technocrats and the elites don't seem to
58:47
have been very successful or maybe even
58:49
tried to sell the hamiltonian vision
58:53
vision in a to the to the demo you know
58:56
to the people themselves in a way that
58:58
resonates um democratically so that is i
59:01
think if if if the wheels fall off this
59:04
project it will come through
59:06
the economic strains and stresses
59:09
bleeding into the politics then probably
59:12
um destabilizing the politics uh sorry
59:15
the the
59:16
the
59:17
the political framework in brussels and
59:19
and and frankfurt and and then markets
59:22
going haywire after that so you know
59:24
dysfunctional monetary unions can
59:26
survive for a long long long time but if
59:29
they're not
59:30
you know properly designed they can fall
59:32
apart and unravel very very quickly
59:34
that's not a forecast but it's it's a
59:36
worry
59:39
thanks for that paul um any other
59:41
business before i uh dive into the
59:43
comments
59:44
from anyone just dive in if you've seen
59:47
anything you like
59:49
okay i'll uh i'll move into this i saw
59:52
something interesting
59:54
uh
59:57
give me a second sorry about this okay
59:59
so this is from yan prakat
60:02
um and uh they write charterism thought
60:05
of from the other side the state gives a
60:07
reason for accepting money
60:09
uh but then money is a symbol of the
60:11
authority of the state it can there also
60:14
it could therefore also become a symbol
60:15
of a nation and support the creation of
60:18
a nation uh as the high identification
60:21
of the of germans with the mark proves
60:25
couldn't the euro
60:26
then also have helped to unify the
60:29
european oh sorry it keeps jumping the
60:32
couldn't the euro then also have helped
60:34
to unify the european union by being a
60:36
symbol um
60:40
who wants to have a first stab at uh uh
60:42
commenting on that
60:45
i'm just going to pick one of you if you
60:47
don't
60:48
jump in so i'll jump in quickly
60:50
i'll jump in i mean i think that's i
60:51
think there's a lot there's a lot to
60:53
that yeah and again something that is on
60:55
the side of the euro is that it is now
60:57
what you know 20 odd years old um and
61:00
you know the european if you listen to
61:01
commission or ecb folks they you know
61:04
when we have these pessimistic kind of
61:06
discussions they always trot out
61:08
uh was a
61:10
question a questionnaire public polls
61:12
which show that there's very
61:14
very high support among the public for
61:16
the euro
61:18
um you know as a currency and i have so
61:20
i think there's a lot in that what i
61:22
think is less well understood
61:25
you know is what it means for everybody
61:28
to join together and have that euro
61:30
currency it's not just the convenience
61:32
of being able to travel
61:33
you know around those 19 countries and
61:35
not have to worry about exchange rates
61:37
and
61:38
and and different currencies um
61:40
but it is it is a real pooling of
61:42
sovereignty and this is the thing that
61:43
has never has always struck me with with
61:45
talking european interlocutors and
61:47
colleagues um
61:49
and i don't think anyone on this panel
61:51
would is in this category but people
61:53
who'll say no the euro is great but we
61:56
can't go to fiscal union because
61:59
that would be really you know that would
62:01
be like political union and we haven't
62:04
signed up for that and my response is
62:06
always to say the moment you signed up
62:08
for monetary union and you gave up that
62:09
most important you know from an mmt
62:13
perspective as well ability to to create
62:16
your own money
62:17
and fund your government
62:19
you have already crossed that rubicon so
62:22
it should be in theory much easier to
62:24
complete the process um
62:27
but i don't think it's necessarily being
62:29
kind of explained that way
62:31
okay
62:32
um
62:33
okay uh sorry can i just quickly add to
62:36
this because that was
62:38
very interesting i think working working
62:41
in the government um i mean i came from
62:43
outside and you know i never really
62:45
worked in germany before joining the
62:47
ministry of finance in 2018 and
62:51
i was really wondering you know what
62:52
people were thinking about this whole
62:54
fiscal monetary union thing and
62:56
sovereignty and
62:58
you know basically very often the red
63:00
line is oh we can't give away national
63:02
sovereignty
63:04
well the problem is once you have a
63:06
common currency i mean that that ship
63:08
has sailed a little bit and if it hasn't
63:10
you really have a problem in so many
63:12
ways so
63:13
i mean i wasn't i wasn't there when you
63:16
know discussions around the
63:18
the euros started
63:19
the euro was introduced i mean i i got
63:22
it as a kid and i was excited about new
63:24
coins um ahem can maybe say more about
63:26
that but
63:28
i don't know i think an explanation at
63:30
that point was really missing about what
63:31
we were doing there or you know maybe
63:33
you have to jump and then you have to do
63:35
it afterwards and then you have to
63:36
explain well you know we're all really
63:38
like one point and now we have to do
63:39
something about this so it works
63:42
that that did not happen and we're
63:44
definitely not there so then you're kind
63:46
of tied at the hip but you don't
63:48
understand and i think that's a real
63:49
problem today
63:52
uh
63:54
did you have any thoughts akin
63:58
no i just uh
64:00
i'm sorry i agree with everything i
64:02
heard okay
64:04
i remember new points and actually uh
64:06
when um we just had the new coins
64:09
uh we went to france and that was really
64:11
um
64:12
[Music]
64:13
a wonderful moment really uh
64:16
sharing our
64:17
uh our coins uh um
64:20
with
64:21
french french people
64:23
so people
64:24
who didn't know each other before we
64:26
were just talking to each other look
64:28
that's that's on your money isn't it
64:30
isn't it great
64:31
but that was really something uh well
64:34
really a historical moment
64:37
um but as
64:38
as poland um philippa have just have
64:41
said it's
64:42
it wasn't explained and in instead or
64:45
to the country that there was a
64:47
controversy before
64:49
and that's basically the the controversy
64:52
that we're still having
64:54
the the the fear that the new currency
64:58
would be inflationary uh because
65:02
the um
65:04
the
65:08
periphery um countries would uh somehow
65:12
run irresponsible fiscal policy
65:15
uh which then caused inflationary
65:16
pressure and all that so that was
65:18
exactly the
65:19
debate there were hundreds of professors
65:22
signing
65:23
um
65:25
uh articles and and pushing painters in
65:28
the architecture
65:30
it was really um contested right from
65:33
the start and that's what what's coming
65:35
up
65:37
uh all the time so so that that's really
65:40
the problem so
65:41
um
65:42
there would have been
65:43
the chance i mean uh
65:46
now is the first time that we're really
65:49
seeing some inflation actually
65:51
which is of course not due to in
65:54
intrinsic factors but
65:58
in terms of inflation
65:59
the the euro wasn't extremely stable
66:02
even too stable a currency uh i think so
66:07
uh
66:08
many of the rays
66:10
were just
66:12
not not right
66:15
yeah but that's that's how it
66:19
gonna turn to a question from stuart
66:21
medina now that's uh probably
66:24
did anybody else want to come in there
66:25
for a second yeah i think quickly
66:28
so uh
66:29
if you look at the us states for example
66:32
they are not global actors uh new york's
66:35
worried about what's happening with the
66:37
roads in new york and the schools and
66:38
that type of thing and
66:40
all the u.s states
66:42
aren't don't have opinions about whether
66:44
we should be in afghanistan or not if
66:46
that's all congress it's all at the
66:48
federal level and so what what we've
66:50
seen is
66:51
that transition in europe over the last
66:54
30 years or 25 years whatever it's been
66:56
since they revoke we locked the
66:58
currencies and so
66:59
you know italy and spain and germany
67:02
used to be global actors and now they're
67:03
not and it took a while for the
67:05
politicians the political system to
67:07
adjust to that but now the adjustments
67:10
is
67:11
a long way there and so when you look at
67:14
the elections and now like local
67:16
elections uh within these nations
67:18
they've all turned inwards they've all
67:20
turned towards governance you know
67:22
within this union of their own
67:24
territories and uh they're no longer uh
67:28
global actors oh no they're not involved
67:30
in it and they're not those aren't
67:31
issues in their
67:33
national
67:34
campaigns now you know immigration a
67:36
little bit but not not to the extent of
67:38
course that it was before
67:40
which uh has
67:43
i think i think it's a good thing now
67:45
what you need that for is if there's a
67:47
common defensive issue if you're worried
67:49
about defending your against russia or
67:51
against china or something like that and
67:53
so that's
67:54
that's been let slide and europe said
67:57
has no capability against
67:59
you know all war with with anybody right
68:01
now but um
68:03
you know just
68:04
let me just throw that out as some
68:07
major change that you know that's been
68:09
undergone some political shift here and
68:11
uh
68:12
that you know i find
68:13
fascinating to watch when to
68:15
see when i talk to politicians now
68:17
versus 30 years ago
68:20
european politicians
68:23
okay
68:24
so um uh this question is from uh stuart
68:29
medina
68:30
kind of gets to the heart of what we've
68:32
been talking about here stuart asks do
68:34
you think a real democracy within the eu
68:36
with countries so culturally different
68:39
as say estonia and portugal
68:42
is possible
68:43
without a common dam demos
68:46
media political parties
68:48
trade unions do you think it's possible
68:51
without those you know
68:53
i guess you call institutions
68:57
uh and and um i think this is for the
69:00
europeans
69:01
to answer so i'll i'll turn to you
69:03
philippa？
69:06
P:
no i mean we need we need common
69:08
institutions right this is made a bit
69:09
more difficult by obviously the language
69:11
barrier um
69:13
but also
69:15
and i guess this is where you know who's
69:17
a young impatient people like me but we
69:19
have to remind ourselves this kind of
69:21
stuff takes time right i mean you can't
69:25
just
69:26
forge a nation state with a guy within
69:29
a couple of years or even a decade
69:32
um
69:33
there's a fantastic paper i thought by
69:36
broyger think tank from brussels
69:38
that basically
69:40
looks at
69:42
the us and the monetary and fiscal union
69:44
in the us
69:45
and what that took
69:47
um
69:48
throughout history to to evolve and i
69:50
mean basically and and it does so um you
69:53
know from a european perspective and
69:55
what are the implications for us
69:56
and it ends with well hopefully we don't
69:58
need uh two civil wars
70:01
um to to get there
70:03
um
70:04
that is that is my hope as well i think
70:06
we do really need to get there because
70:09
otherwise you know we will have a
70:11
problem preserving the way of life we
70:13
have
70:15
but it's not a not an
70:17
easy path and it's not a
70:19
um yeah the conclusion isn't there yet
70:22
so i think it really
70:23
i do think agency matters and and you
70:26
know whether committed politicians are
70:28
there who can also help to
70:30
form a union in a way that you know
70:32
people can see that vision and are able
70:35
to just yeah jump a little bit and take
70:37
on a european identity
70:39
it's easily i think underestimated how
70:41
much is still national and how much
70:43
people still derive from a national
70:44
identity we i'm not convinced that we've
70:47
really moved beyond that.
70:49
okay okay
70:51
uh and uh akeem uh
70:54
do you have any comment on on that
70:58
no i
70:59
uh of course i agree it's um
71:01
[Music]
71:03
but
71:04
well once again i i think uh the only
71:07
chance is is a stepwise approach
71:10
and i mean uh if you if you talk to the
71:12
people in brussels uh the european
71:14
parliament
71:16
uh the commission um
71:18
you there you have this
71:20
this eu or european identity uh and
71:23
community actually so and there's this
71:27
really there's a european spirit there
71:29
you can really feel it and that's
71:31
impressive
71:32
despite all the language problems and
71:34
and the cultural differences so but it
71:36
works
71:39
and the only way is uh
71:42
to move forward
71:44
in little steps and uh and and
71:48
when finally then
71:50
we we can arrive at the the institutions
71:53
and uh but of course it's
71:56
um
71:58
we
71:59
we should actually really encourage
72:01
steps to go there
72:03
and not pretend that uh we can stay
72:06
where we are so that's that's the
72:08
problem i think
72:09
um
72:10
christian
72:12
can i just make one quick again as the
72:14
as an outsider um
72:17
is you know around this this democratic
72:19
deficit issue um you know one one
72:21
challenge let's put it in the in the box
72:23
of a challenge here you know is the
72:25
the this sort of sui generous um
72:28
political architecture they have where
72:30
the european parliament you know which
72:32
has elected parliamentarians from from
72:34
the whole
72:35
eu
72:36
does not uh initiate initiate
72:38
legislation and the power to initiate
72:41
legislation resides in the commission
72:42
which is a very sort of you know
72:44
bureaucratic entity that tends to be
72:46
stopped by uh you know bureaucrats and
72:49
elites from the nation states who then
72:51
make their careers in brussels
72:53
um and the president of the european
72:55
commission you know
72:57
has sort of executive power as well as
73:00
sort of um you know administrative power
73:03
and i think you know one again i don't
73:06
know if we want to talk about this at
73:07
all now but just to post it out there
73:09
a little bit disappointing to me was to
73:11
see what happened at the last european
73:14
uh elections with the european
73:16
commission president where there had
73:18
there been this beginnings of this bits
73:19
and condition system my german is
73:22
terrible
73:23
but the idea building on a provision in
73:26
the lisbon treaty
73:27
that the the uh election of the
73:31
president the european commission would
73:33
start to reflect uh the results of the
73:36
parliamentary election and you know with
73:38
juncker that happened it was supposed to
73:41
happen with um the last president and
73:44
then there were all these smoke filled
73:45
well i guess in europe it's not smoke
73:47
filled anymore
73:48
but back door deals and all these
73:51
positions were stitched up and then
73:52
ursula vandalia popped up all of a
73:54
sudden and so the spitz candidate
73:57
approach which was supposed to sort of
73:58
bring in a little bit of direct
74:00
democracy into the process sort of seem
74:03
to have died a bit of a stillborn
74:06
uh debt so that seems to me to be from
74:08
in terms of the political
74:10
and the democratic legitimization moving
74:13
forward with these other
74:15
advances on the more technocratic
74:17
institutional front maybe took a step
74:19
backwards i don't know if my european
74:20
colleagues would agree with that
74:22
or not
74:24
uh anybody want to pick up that bat on
74:26
there
74:27
fully fully agreed but i think
74:30
you know it's whether it's a parliament
74:32
or it's a commission or it's even about
74:34
yeah knowing your you know your your
74:36
local representative
74:38
we do not have
74:40
you know functioning democracy in europe
74:43
um that that can work as a government um
74:46
not even close
74:50
uh
74:52
uh right okay right so i will um so i i
74:56
i'll just do what i think is a bit of
74:58
summing up and then i will turn to the
75:02
four of you for any kind of closing
75:03
statement so you know if you if you do
75:06
have a song or something
75:09
get ready to bust it out um but it seems
75:12
to be
75:14
what's being said here is
75:16
uh we started off probably get getting
75:18
to the conclusion that there's two
75:19
directions we could go in the eurozone
75:22
can go in
75:23
one is the nation states uh reclaim
75:26
monetary sovereignty uh
75:29
and then the other one is
75:31
to
75:32
the drive towards uh
75:35
fiscal union
75:37
uh because that that's the problem or
75:39
the challenge is uh paul
75:41
would like uh rephrase it um
75:44
and but there's probably also
75:47
uh a third way which is
75:50
we bumble along
75:53
and crises drive the kind uh open little
75:56
windows for the kind of uh step changes
76:00
that uh
76:01
akeem was talking about so you know that
76:04
that's my take on what's come out of
76:06
this conversation but um i'll turn to
76:08
each of you in turn and see if you have
76:10
anything to add uh to what i've just
76:13
said um i'm sorry if i oversimplify it
76:15
there um you guys can keep me honest so
76:18
maybe warren you could start
76:20
oh uh i i i just want to say you know
76:24
over the last 30 years this is the most
76:27
constructive
76:28
uh
76:29
panel or whatever i'm not sure how to
76:31
call it that that i've been on or you
76:34
know heard these kind of discussions the
76:35
whole time and it's gotten
76:37
and something that never would have
76:38
existed 20 years ago so i
76:41
i think that hopefully it's reflective
76:44
of what's going on with other
76:45
discussions in europe now if there are
76:47
anywhere near this
76:49
type of discussion uh
76:51
i'm certainly you know here i am the
76:53
optimist here but
76:54
i'm
76:56
reasonably optimistic here not that
76:57
anything's gonna happen today or
76:58
tomorrow but that
77:00
uh
77:01
you know kicking and screaming maybe a
77:02
little bit but it's it's it's in the
77:04
process and the process is a slow one
77:06
sometimes a painful one but it seems to
77:08
be moving towards
77:10
you know where i saw where i see it it
77:12
has to move where it's ultimately going
77:14
to be okay
77:16
so we've we've heard from the definite
77:19
optimist and we'll
77:20
move to the to uh
77:22
it's it's too strong to call you the
77:24
pessimist akeem but um
77:26
maybe the perhaps just the other end of
77:28
the spec towards the other end of the
77:29
spectrum do you have anything to add
77:35
well i'm not sure i'm so pessimistic
77:37
it's just that i
77:39
um well maybe stepping on the brake a
77:42
little and
77:43
yes uh talk about the stepwise approach
77:45
but that's that's not that doesn't mean
77:47
it's what has to be pessimistic
77:50
i mean as i said before i would never
77:51
have imagined that we'd get something
77:53
like this
77:54
uh fund uh this rescue fund on the
77:56
european level so that's
78:01
well maybe one one thing
78:04
that i don't know whether it's
78:05
optimistic but uh if you if you uh talk
78:09
about um
78:10
uh
78:12
splitting up of the euro area
78:15
so um i mean there was a there was this
78:17
interesting uh book by uh joseph
78:19
stieglitz
78:20
uh where he would really and i think
78:22
rightfully attacking um
78:24
many governments um mostly the german
78:27
government for what he did in the euro
78:28
crisis
78:30
uh and then he said i mean if you need
78:32
some
78:34
you have to agree on some principles
78:36
how to run the system
78:38
uh and many of the principles were
78:41
similar to the principle that we
78:42
discussed uh today
78:44
um but if you if if the people are not
78:48
ready for it if they just don't want it
78:50
if they do the opposite
78:53
then maybe it's better to have a
78:55
friendly
78:56
divorce that was
78:57
his idea
78:59
but then
79:00
if if you really look at it then
79:02
he didn't really come up with a
79:06
a very good uh explanation on how you
79:10
would actually do this
79:12
and in the end uh the result was pretty
79:15
similar
79:16
because to have this
79:18
it without a big crisis
79:20
you would need some good will
79:22
you would need well you need the
79:24
friendly aspect uh you would have
79:27
governments to agree on many things
79:30
and
79:31
then my conclusion would be
79:34
if you
79:35
if you want the divorce
79:37
uh but
79:39
having the divorce
79:40
actually support exactly what you need
79:43
to keep the system running then why why
79:45
don't you
79:46
why don't you let the system run why
79:48
don't you support the system
79:50
uh and and
79:52
don't and just be friendly without the
79:54
divorce okay so that's uh maybe the
79:57
the one important thing that i would
79:58
like to think
80:00
okay that's good and yeah that's quite
80:02
the paradox that you that you put out
80:04
there
80:04
um and uh i'll turn to philippa next i
80:08
guess what it is
80:10
what's going to help people on the
80:11
ground
80:12
is uh you know knowing
80:14
what to want policy wise what you know
80:19
do you have anything to say about that
80:20
philippa?
P:
80:22
sure and i mean let me try and be a bit
80:24
more optimistic
80:27
in the end at least
80:30
so
80:31
one thing that has been very very
80:33
surprising to me in a positive way is
80:36
um you know how much
80:38
has already changed um when i kind of
80:41
started to you know kind of
80:43
really listen listen to the german
80:45
debate again that was between like 2016
80:47
and 17
80:48
it was still all about you know
80:51
balancing the budget and you know
80:53
basically getting getting the highest
80:55
possible surplus and that was the best
80:56
thing that could happen
80:58
um the debate here has has moved on um a
81:01
lot has changed completely um we we're
81:04
now just before a national election
81:06
there's only one party
81:08
still campaigning on a balanced budget
81:10
so things have changed a lot the fact
81:13
that an
81:15
[Music]
81:16
organization and you know gets invited
81:18
to things
81:19
um is is pretty exciting and you know
81:23
you have to give credit to everybody
81:24
like people have been pretty
81:26
open-minded um
81:28
so i think a lot of a lot has changed a
81:30
lot can change what i want to say also
81:33
to everybody listening um you know i
81:35
think we can really all do a lot
81:38
um what is necessary is
81:41
it is mentally really really hard and
81:43
makes it a lot more harder than
81:45
going with you know the nice clean
81:47
theory but
81:49
we need to start with the status quo
81:51
um you need to take into consideration
81:54
like the political aspect legitimacy
81:56
aspect sometimes we can't jump and
81:58
sometimes the steps are smaller and
81:59
uglier you need to spend a lot of time
82:01
reading legislation you know i'm not a
82:03
lawyer i've gotten used to that and
82:05
reading commentary on legislation
82:08
but it's really rewarding it really pays
82:10
off because the people you know on the
82:13
european level as well as the national
82:14
governments they're also looking for
82:16
solutions not all evil they actually
82:18
want to get somewhere constructive um
82:20
just have quite a lot of constraints so
82:22
i think it really pays off to engage and
82:24
to engage deeply and and to put forward
82:27
ideas so you know anybody who's he's
82:29
keen on on europe working out um come on
82:32
board help um lots of ways to do that
82:35
from you know all your different
82:36
perspectives and points of expertise.
82:40
thank you and i'll just say before i
82:42
forget to say that
82:44
if you go to the website of
82:47
the
82:48
international mft european international
82:51
mmt conference
82:52
um which will uh probably be in the show
82:55
notes uh you will see the schedule for
82:58
tomorrow which is uh
83:00
uh september the 15th and there are a
83:02
lot of presentations too numerous for me
83:05
to uh
83:06
list here um in the time we have left
83:09
but also um
83:11
uh these are all zoom uh conferences so
83:15
um
83:16
there are links on the site for you to
83:19
go to uh
83:21
for you to attend these
83:23
these uh presentations so um
83:26
that's tomorrow
83:28
um but also um as uh uh
83:31
philippa was saying there
83:33
that you know if you want to get
83:35
involved
83:36
there are these organizations now and
83:38
i'm i'm sure um
83:40
if you
83:41
uh philippa's organization is going to
83:43
be listed on the on the website if you
83:46
if you want to get in touch just for
83:47
instance and um
83:49
obviously uh the mmt door is always open
83:52
to anybody that wants to follow uh our
83:55
effort me and patricia we're at mmt
83:58
podcast on twitter um a little plug
84:01
there oh and warren
84:04
yeah just i just want to say one thing
84:06
here look
84:07
there's been a core group of mmt
84:10
activists since
84:12
probably the last 10 10 years ago
84:14
that was originally started by a
84:16
journalist paolo bernard
84:18
and uh these people are
84:21
dedicated intense their scholarship is
84:23
of the highest quality they're promoting
84:25
the knowledge and the understanding
84:28
you know person to person you know
84:30
grassroots movement it started in italy
84:33
uh i've got people in austria spain
84:36
france and
84:38
and poland and uh
84:40
and you can't underestimate the
84:42
contribution they've made
84:44
towards what is looking to me like you
84:46
know ultimately going to be successful
84:48
and so far
84:50
and you can see when uh
84:52
top european union officials at the
84:54
central bank are just mentioned the word
84:56
mmt
84:57
people in government are mentioning it
84:59
economists mentioning it
85:01
it didn't come down from the top it came
85:04
up from the bottom from these
85:06
grassroots activists
85:07
working on this cause and it's uh
85:10
interesting cause that has attracted
85:12
this kind of you know intense uh
85:15
effort to get the word out and i my
85:17
hat's off to them and i want to thank
85:19
them right now for for all they've done
85:20
to get us here
85:22
and you're wonderful by the way it came
85:24
a little later but
85:25
it's the same thing you know you come
85:28
out of nowhere you're whatever got you
85:30
started to
85:31
actively be promoting this understanding
85:34
but it's just something grabs you a
85:36
certain truth to it and recognizing that
85:39
it's
85:40
you know that this is something worth
85:42
doing spending your life doing
85:44
and again it's uh i'm glad to have been
85:47
alive to observe this kind of a
85:48
international movement
85:50
me too me too and and so
85:52
um thank you warren and um we'll give
85:55
the last word to paul i guess because uh
85:58
we we need a closing statement from paul
86:00
so uh it's over to you
86:02
oh
86:04
oh sorry yeah
86:05
no pressure
86:15
indeed well just maybe as a closing note
86:17
then um let me just kind of
86:20
uh you know i think what's happened the
86:21
last 10 years from my vantage point i
86:23
cut my teeth on sort of these issues as
86:25
a japan economist sitting in tokyo
86:27
trying to work out what the bank of
86:28
japan was doing with what became known
86:30
as quantitative easing started in 2001
86:34
in march and then over the years sort of
86:36
you know
86:37
ran into various writings warren's very
86:39
early on and then randy ray's and people
86:41
like that read a lot of that stuff when
86:43
godly obviously very good a wonderful
86:45
book there a few years back um but i've
86:47
sort of had a foot in so you know i had
86:49
to put in the sort of mmt world and and
86:51
sort of discovered that and sort of come
86:53
out of the mainstream world
86:55
um of economics and you know i wrote an
86:58
op-ed i think two or three years ago now
87:00
where i sort of said look um there are
87:02
some disagreements and look i mean
87:04
mainstream economics is argued between
87:06
keynesians and monetarists and austrians
87:09
and rational expectations and etc etc so
87:12
disagreements between different sort of
87:14
groups of economists of schools is
87:16
hardly new but if we look at what's
87:18
going on in the world today and maybe
87:20
different languages being used there
87:21
seems to be an incredible amount of um
87:23
agreement alignment among so-called mmt
87:27
economists and mainstream economists i'm
87:29
thinking people at larry summers um you
87:31
know paul krugman
87:33
who's often you know they've engaged
87:35
from time to time
87:36
um
87:37
olivia blanchard who was the president
87:39
of the american economic association
87:41
gave her his keynote address a couple of
87:43
years ago where he said look maybe we
87:45
have to rethink fiscal sustainability
87:47
interest rates seem to be permanently
87:49
low and we don't have to worry about
87:51
sustainability in the way we used to so
87:52
it seems to me that there's a lot of
87:54
sort of potential agreement around
87:57
particularly economic policy and how we
87:59
should move the institutional frameworks
88:02
forward so i ended my op-ed a couple of
88:04
years ago by a calls for the mmts and
88:07
the mainstream to sort of put down their
88:09
pitchforks and join together a little
88:11
bit more so let me just leave leave on
88:13
that more optimistic note because i
88:15
still do feel that there's a little bit
88:17
of a lot of distance and it almost feels
88:20
a little bit this raged in the
88:21
blogosphere a couple of years ago a lot
88:23
of the mainstream economists started
88:24
looking at mmt digging into it often
88:27
being critical of it but now they seem
88:28
to have gone back to a large extent to
88:30
kind of ignoring it again and i think
88:31
that's just not healthy for uh for
88:33
anybody
88:34
no that is a great note to leave it on
88:37
put down the pitchforks everyone
88:39
um
88:40
so with that i will say thank you to the
88:44
these uh wonderful esteemed panelists um
88:47
and uh thank you to the organizers of
88:50
the conference
88:51
and uh stay tuned for more presentations
88:55
tomorrow and yes with that thank you and
88:58
have a great evening
89:00
thank you
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