The Ongoing Collapse of Economics

We’re obviously at the end of an economic era. Clearly there are at least one, maybe several, fundamental, structural flaws deep in the heart of our economic system. Any financial news source from any day of the week will give you evidence of economic stagnation and instability. And any Trumpeteer, Bernie Bro or Brexiter will tell you that all is not well among the ordinary people of the heartland. Clearly something is badly wrong with the actual, real economy.

Is Economics Bollox?
Very serious people who think about very important things that affect us all. Or is it bollox?

Meanwhile, in the dusty halls of academia, of governments, and of banks, think tanks and other established and often ancient institutions, a bunch of people, mostly men, who like to think of themselves as smart are charged with fixing whatever it is that has gone wrong. They’re economists, and their ideas, perspective and advice not only strongly influences what governments and central bankers do, but influences how governments and central bankers think about what they do. Economists even frame the choices within which governments and central bankers operate. In a way, their theories help create real, actual economic reality for us all.

Money is important, governments have power, and economists influence what governments do with that power. Economists are therefore very, very important people doing very, very serious and important things that affect the real lives of hundreds of millions of people. This is serious stuff. Just ask them – they’ll tell you.

economics bollox
They don’t look very practical.

The thing to know about economists is that, like the magicians in the world of Jonathan Strange and Mr Norrell, there are two kinds of them: Practical Economists and Theoretical Economists. Practical economists are the ones out to change something. They work for governments, banks, central banks, lobby groups, etc. They want to fiddle with the workings of the economic machine to make it better – for somebody, if not for everybody.

Theoretical economists, on the other hand, are above all that. They think of themselves as scientists and see their purpose as a search for Truth. The practical economists, occupied with many other matters, depend on the theoretical economists for their theories. In other words, theoretical economists (specifically, theoretical macroeconomists) create the theory used by practical economists to strongly influence power. Theoretical economists may be relatively unknown, they may be boring, they may be incomprehensible, but they are very, very, very important people.

This is unfortunate, because there are two serious problems facing the community of theoretical macroeconomists these days:

The first problem facing theoretical macroeconomists is that reality is diverging from theory. More specifically, reality is diverging from their theory. In theory, theory and practice are the same, but in practice they’re not. In macroeconomic theory, X should be happening, or Y should be happening. Meanwhile, in practice, financial instability, weak growth, austerity, inequality, income insecurity and many other economic woes blight the lives of billions. In other words, whatever it is that macroeconomists are doing, or think they’re doing, it’s clearly not working.

economics bollox
That was a surprise! Oh well, these things happen.

And it’s not just that theoretical macroeconomists can’t fix the economy – they can’t even predict what’s going to happen! The 2008 financial calamity came out of the blue for most of them. Can you imagine the credibility of weather forecasting if the biggest storm in 75 years hit with almost no warning whatsoever? When an economic theory can’t even predict that, and seems useless at improving the situation, then what’s the point of it? It’s hard not to call bullshit.

Which brings me to the second problem facing theoretical macroeconomists today – the growing rebellion within their ranks. Essentially, theoretical macroeconomists are dividing into two camps, with more and more of them publicly doubting the orthodoxy. Faced with fact after fact that does not conform to their theories, more and more theoretical economists are, to their great credit, doubting those theories. Simply put, the ideas of theoretical macroeconomists affect the lives of millions, and there is currently an earthquake happening in their conceptual field.

The Chief Economist of the World Bank says that much of macroeconomics has become a religion, whose “pseudoscience” is infecting all social disciplines (that’s the Chief Economist of the World Bank). In a NYT article titled ‘How Did Economists Get It So Wrong?’ Paul Krugman questions the very assumptions that underlie conventional macroeconomic theory. Willem Buiter, the Chief Economist of Citigroup, calls most modern macroeconomics “useless“. Former Bank of England economist Charles Goodhart argues that economists need to start paying attention to money again. Olivier Blanchard, former Chief Economist of the IMF, calls the dominant strand of macroeconomic thinking “insular” and “imperialistic”.  And on and on it goes, with the recurring theme that macroeconomic theory has become orthodoxy, not science.

In other words, the macroeconomic theories behind the decisions of finance ministers, central bankers and other powerful people and institutions may well be bollox. Looking at financial instability, stagnant demand, tepid growth, austerity, inequality, income insecurity and all the other endemic economic problems of our age, it’s hard not to think that this might explain a lot.

You might think that the debate between orthodox theoretical economists and their colleagues who call bullshit would be dry, boring and filled with talk of phlogistons, cycle theory, DSGE models and other impenetrable concepts, but it’s not always that way. With a kind of morbid fascination at the spectacle of concepts behind many a distinguished career crumbling in the cold, hard light of factual reality, huge entertainment can be had from following the twitter feed of Paul Romer, the Chief Economist of the World Bank, as he appeals to his more orthodox colleagues to face facts. It would almost be funny if weren’t for all the real human pain behind it.

If we accept the rapidly growing body of evidence and authority suggesting that many of the core concepts of conventional macroeconomics are bollox, and that economists don’t really know what they’re doing, then the important question becomes ‘What next?’ As conventional macroeconomic theory crumbles in the face of facts, what will replace it?

One of the primary contenders is Modern Monetary Theory, which focuses on money itself (something which,  believe it or not, conventional macroeconomic theory doesn’t do). Another possibility is that macroeconomics will learn from complexity and systems theory, and that its models (and, hopefully, their predictive ability) will become more like those used in meteorology and climate science. Anti-economist Steve Keen is working in this direction, influenced by the Financial Instability Hypothesis (FIH) of Hyman Minsky, whatever that is.

But wherever macroeconomics is going, it’s clear that the old order is collapsing. The theoretical orthodoxy that has guided the highest level of economic management for many decades is crumbling. Either economics is an objective science or it’s not. And if economics is not an objective science, then we quickly need an economics that is. Countless livelihoods and lives will be deeply affected by the revolution we are witnessing in theoretical macroeconomics. It may be dry, it may be boring, it may be theoretical, and it may seem incomprehensible.

But it’s hard to think of any discussion that’s more important.

The 25 People Who Made €1.2 Trillion out of Nothing

Yesterday, as happens every six weeks, the Governing Council of the European Central Bank met in Frankfurt to discuss monetary policy. In attendance, as always, were the six members of the ECB’s executive board and the nineteen governors of the eurozone’s national central banks. Together these 23 men and 2 women discussed economic conditions, interest rates and their €1,225,566,000,000 (and counting) quantative easing program.

The decisions made at these meetings are vast, and have very real effects on the financial lives of the 340 million people who live in the Eurozone. The results of ECB meetings dramatically influence markets, the economy and the amount that governments have to spend on public services. In other words, those 25 people who met in Frankfurt yesterday are, for all practical purposes, the gods of money for the 340 million of us who live in the Eurozone.

As usual, Mario Draghi, president of the group, held a press conference right after the Frankfurt meeting. Again, as usual, that press conference was published on YouTube as soon as it had finished. Four hours later that YouTube video had attracted a total of 35 views. A full 24 hours later and there have been 460 views. As I write this there are 650 views.

ECB Press Conference
Monetary policy for 340 million people. Not exactly riveting YouTube viewing – but only 650 hits?

However I know for a fact that at least a dozen of those views were mine, and I imagine there are others who also account for multiple views. And since the press conference is not exactly riveting viewing, I expect that many viewers only watched a little of it before clicking on elsewhere. Apart from the 50-odd people who were in the room, it’s safe to say that only a few hundred other people have actually seen the whole thing.

The last ECB press conference, on August 2nd, has had only 1,308 views in the 6 weeks it’s been on Youtube. The July 21st press conference has attracted 4,130 hits, several of them from me. The one before that only got 3,962 views since it was published nearly three months ago. Again, several of those hits were mine.

Now, money is very important to me, and I’m sure it’s important to you too. Money is especially important for poor people, who spend much of their time thinking about it, but many rich people also spend a lot of their time thinking about money. Many of us spend much of our lives working for money. It’s how we eat. It’s how we put a roof over our heads. It buys our clothes. It allows us to travel. It dictates what our democratic governments can and can’t do. Reach into your pocket or purse or wallet and take out some money and look at it. It’s important, right!

So despite money being, lets face it, the most practically important thing in the day-to-day lives of us 340 million people; and despite the fact that the financial sector accounts for around 20% of GDP; and despite the vast size and reach of the business and financial press and media, and the many thousands of people writing and communicating in this area; and despite the fact that highlights from Mario Draghi’s press conference were publicised in news broadcasts across the continent and around the world (it was even mentioned on my local radio station) – despite all that, only a few hundred people out of 340 million were interested enough to see for themselves what the Eurozone gods of money had to say.

The ECB’s website statistics tell a similar story. Their site gets around 216,000 visits a month, or about 50,000 a week. However it’s ‘bounce rate’ (i.e. the number of visits in which the viewer looks at only one page on the site, discovers they’re not interested, and moves on) is a phenomonal 65%. That means that there are only around 17,500 real visits a week or about 2,500 per day.

ECB Press Conference
The ECB website: A dense, boring, inpenetrable morass of euphemisms for ‘printing money’.

Now, 2,500 visits a day might sound like a lot, but it’s not – especially when you consider the importance of the institution and the fact that it controls the money supply of 340 million people. And, since many of those visits are multiple visits from the same people, and some are search engine bots and other non-human visitors, we’re probably talking about real traffic of significantly less than 2,000 actual people each day. And even among those 2,000 people the average visitor looks at only 2 pages and spends less than 2 min on the site. Almost none of this traffic (only 1.27% or about 200 real visits per week) comes from social media. My Twitter profile sometimes gets more than that.

The inescapable fact is that, despite the importance of the European Central Bank to the real financial lives of 340 million people, almost nobody, including most financial journalists, is interested in the details, minutiae and specifics of what they actually do. I suspect the same is true for the activities of the Federal Reserve, the Bank of England, the Bank of Japan and other central banks.

This is a pity, because there’s some interesting stuff on the ECB’s wesite. For example, did you know that the ECB now owns €1,225,566,000,000 (i.e. €1.2 TRILLION) worth of assets (mostly government bonds) purchased with printed money through its Asset Purchase (i.e. QE) Program? Or that it has lent $20 billion of printed money to corporations since June and is printing and lending €7 billion more each month? Did you know that the ECB buys some of this corporate debt directly from the corporations concerned, even though it’s not allowed to deal directly with governments? And did you know that the ECB even promotes the availability of its printed money to corporations, advertising that “Market participants involved in private placements can contact the relevant national central bank”.

ECB Press ConferenceDid you know that the ECB lends out the corporate assets it has bought with printed money so that borrowers of those assets can sell them short and make a profit if the price falls? The ECB has already bought and lent out securities from SAP, Siemens, Allianz, E.ON, BMW, Volkswagen, BASF, Bayer, Bosch, Merck and many other corporations since it started lending out the securities it owns six weeks ago.

And did you know that lists of all purchases of assets with printed money (minus the amounts) are available on the websites of the six national central banks buying on behalf of the ECB, and that those lists are updated every monday? Did you know that the ECB does buy securities from corporations classified as “public undertakings” (i.e. owned or controlled by government), but won’t disclose any details of exactly what “public undertakings” it is buying from? And there’s lots more of interesting, juicy information that could easily be spun into accessible and interesting media stories.

ECB Press Conference
You can borrow the ECB’s freshly printed money to buy Monsanto, but not to buy groceries.

For example, the ECB says that it is lending €7 billion of freshly printed money each month to big corporations in order to “further strengthen the pass-through of the Eurosystem’s asset purchases to financing conditions of the real economy”. One of the corporations it lends to is Bayer, which is in the process of buying Monsanto for $65 billion, so the ECB is essentially printing money to help Bayer buy Monsanto. Surely that would be interesting to many people, if only they knew?

As one of the literally one-in-a-million Eurozone citizens who actually watched yesterday’s ECB press conference, and as one of the very few people who have waded through the ECB’s website, it seems clear that more people, including more financial journalists, need to pay a lot more attention.

How Trump can Win the Presidency – and the Respect of History

Donald Trump is popular. His defiance of political convention is widely admired. His unscripted, politically incorrect, flaws-and-all humanity is trusted (despite his words). And his willingness to take risks is seen by many as what’s needed in the face of an overwhelming appetite for fundamental, systemic change.

Of course, that’s not the only reason Trump is popular. Many support him just because they hate Hillary Clinton, or just because he’s the GOP candidate. Some support him because they believe he shares their prejudices. The point is, a lot of people support Donald Trump.

But probably not enough to win the presidency.

Donald Trump Demographics
Old White People vs Everybody Else

Hillary has the lead in people under 65 – and the younger they are, the more likely they are to support her. She has runaway leads among minority groups, and strong leads among educated whites (the more educated, the stronger her support). Trump has most Republicans, of course, but apart from that he’s relying on less-educated, older white people for his core support. Sixty percent of non-college educated whites support him. They are his base, and there’s probably not enough of them to win an election.


Trump does well among those left behind by automation, technology, globalisation and by our new, global, high-tech, 21st Century information society. He does well among those who find it difficult to compete in the modern labour market because of education, or location, or family situation, or even aptitude. Yet he doesn’t do well among those who are immersed in this world, but who also find it difficult to compete (or even to stay afloat). In other words, Trump doesn’t do well among the young.

Bernie Sanders – the other ‘surprise’ political challenger of the campaign – had no problem attracting the young. He even had a majority of young women supporting him over America’s first female presidential nominee! He did this because he offered a hopeful, inclusive, positive vision of deep, fundamental change, and because he focused on the political issues that young people care about – systemic economic unfairness, inequality and the environment. Turned off by Trump’s divisiveness and lack of focus on inequality, 85% of them intend to vote for Hillary. If Donald Trump wants to be more popular with young people, he could do worse than study why Bernie Sanders had their support.

After all, if Donald Trump could attract a significant portion of change-hungry young people away from Hillary, he would win the presidency.

Young women love Bernie!
Young women love Bernie!

At first glance, it should be easy. Like Trump supporters, Bernie supporters also find the current economic and political order untenable. They also want deep, radical, fundamental change in economic policy and in politics. Both Bernie Sanders and Donald Trump attract passion and support from those who see their own lives, and the lives of their loved ones, becoming more difficult and economically stressed. And supporters of both Trump and Sanders feel that their candidate has been treated unfairly by a biased, comfortable, establishment, and out-of-touch mainstream media and politics. Trump and Sanders supporers share a lot.

But Trump’s divisiveness alienates young, inclusive Bernie supporters, and he offers them few economic policies to address their concerns about financial power, income inequality, and the environment. They have overwhelmingly turned to Hillary not just because many of them are loyal Democrats, but because Trump offers them nothing. That’s understandable, considering the seeming contradictions between traditional Republican and traditional Democrat positions, between market and government as solutions, between freedom and equality as values, and between rough-and-tumble capitalism and Bernie’s vision of Scandanavian-style socialism. But what if these contradictions could be resolved?

The three core policies of Equitable Capitalism offer Donald Trump a way to reconcile these seemingly irreconcilable values, structures and priorities. Consider:

  • Helicopter money, the Chicago Plan, or some other version of ‘QE for People‘ would take at least some the vast power of money creation away from incompetent, self-interested, and often corrupt bankers and give it to the Federal Reserve, dramatically reducing financial instability, economic stagnation and federal debt while giving the real market an adaquate supply of the medium of exchange it so desperately needs to function. Milton Friedman, Irving Fisher, Ben Bernanke and other prominent free market thinkers have supported this policy direction in one form or another.
  • The introduction of some version of a Basic Income (paid for through some combination of reduced welfare bureaucracy, taxback from higher earners, people’s QE, Fee & Dividend, increased economic growth and reduced social spending), would radically and positively alter the lives of most Americans. It would generate sustained market demand, remove existing disincentives to work and enterprise, practically eliminate poverty, and would get the government off the backs of the millions of Americans who depend on it. Experimental implementations are underway or planned in Finland, the Netherlands, Canada, New Zealand and elsewhere. Prominent free market thinkers that have supported a Basic Income in one form or another include Tom Paine, Friedrich Hayek, Richard Nixon and many others. Support is especially strong among technological entrepreneurs, who understand where we’re heading better than most.
  • Finally, you don’t have to accept climate change to know that oil, coal and other carbon are the dirty, expensive, Saudi Arabian-dependent energy souces of the past. The policy of carbon Fee & Dividend – a revenue-neutral carbon tax in which all of the proceeds are distributed equally to everybody – is not only fair (polluters pay more), but market friendly. By internalising the real costs of carbon into its price, Fee & Dividend powerfully motivates the market in favour of alternatives, while maintaining complete market freedom. Two thirds of people come out ahead, which could make Fee & Dividend a significant funding source for a Basic Income. This was originally a GOP idea, and supporters include Hank Paulsen, Bob Inglis, George Shultz and many others from the Right.

Together, the three core policies of Equitable capitalism offer a coherent, interconnected alternative to both anti-market, redistributive socialism on one hand, and ruthless, dog-eat-dog, free market capitalism on the other. Together these three policies vastly expand individual freedom and individual security. Each of these policies has a solid economic, philosophical and moral pedigree. Each of them is fair. Each of them vastly expands equality. Each of them has existing bipartisan political support from across the political spectrum. Each is evidence-based. Each is politically possible.

Donald Trump
Go on, Donald – Do the right thing.

The three policies of Equitable Capitalism offer Donald Trump a way to appeal to Bernie Sanders’ young supporters without alienating much of his existing support. After all, what Bernie supporter could be against the reduction of the power of the bankers? Or the almost complete elimination of poverty? Or meaningful action on climate change? And what die-hard Republican could be against solutions to debt, inequality and climate change that support the free market instead of restricting it? What sales person, business executive or entrepreneur could be against policies that would vastly stimulate market demand – while protecting the environment? And what American could be against a vast real expansion of individual opportunity and freedom?

And who’s going to vote against more money in their pocket?

If, in the final months of the 2016 presidential election campaign, Donald Trump were to put the policies of Equitable Capitalism firmly on his agenda, and communicate those policies in the way that only he can do, he would radically alter the dynamics of the campaign overnight. Framed carefully, this new, radical, coherent pro-market and pro-social economic policy would draw in huge support from progressives, Bernie supporters, Jill Stein supporters and young progressives, while maintaining and even expanding support among the GOP and the conservative right. It wouldn’t get them all. But it would get enough. That’s how Trump could win the presidency,

But it is through the implementation of these three policies that Donald Trump (or any other political leader) could win history. One hundred years from now, – twenty five presidential elections into the future – ever-growing debt will be a thing of the past, artificially intelligent machines will do most jobs, and climate change and its effects will be obvious and apparent. If that future society is a happy, prosperous and peaceful one, then it will be because we have countered and resolved the problems of ever-increasing debt, income inequality, and atmospheric carbon without restricting and damaging the market that makes the abundance of our modern world possible.

We must resolve the current, destructive contradictions between freedom (including market freedom), and genuine equality and economic security for all, regardless of the circumstances of birth. Capitalism will have to be fair and sustainable if it is to survive. A stagnant economy of ever-rising debt is not financially sustainable. Ever-increasing income inequality and insecurity is not politically sustainable. And carbon emissions along our current path are not compatible with the long term survival of our organised, global civilisation. One way or another, dramatic change is coming.

Equitable Capitalism offers the only realistic, responsible, politically possible way for that to happen. It would not be easy. Minds – especially over confident, institutionalised minds – are difficult to change. An equitably capitalist political leader would need courage, self-belief, tenacity, excellent communication abilities and, above all, the willingness to take risks (a willingness absent among mainstream, institutionalised ‘leaders’). Like anything worth doing, it would be very, very, very difficult. But it’s probably the only chance the United States has to Make America Great Again.

We don’t have to slowly decend into some Mad Max nightmare of vast inequality, drought, abandoned cities and hundreds of millions of climate refugees roaming the globe to esape hunger. Instead we can essentially have a ‘Star Trek Economy’ in which all are secure in the basics of life, in which all are free to follow their dreams, and in which future environmental stability is assured. We can survive and thrive – but only if we radically change the way our current economic system works.

Whoever does that, whether it be Donald Trump or somebody else, will lay the economic groundwork for our far, far future, and will earn the enduring and indelible respect of history.

The Answer to Trump is a Basic Income

Across the western world and beyond, the political status quo is crumbling. In response to the effects of automation and globalisation on the sufficiency and security of labour and incomes, and in the light of clear, blatant, and unambiguous unfairness in our political economic system, voters are revolting. Electorates in nation after nation, in election after election, are abandoning traditional ideologies, loyalties and political parties in favour of new radicals, revolutionaries, nationalists and populists from both the Left and the Right. Sometimes it seems like their policies are from both Right and Left.

Answer to Trump is a Basic Income
“My whole life is about winning. I don’t lose often. I almost never lose.” – Donald Trump, 2016 GOP Presidential Nominee

In the UK the narrowness of the Scottish independence defeat was a surprise, the popularity and rise of Jeremy Corbyn to the leadership of the British Labour Party has been a surprise and, of course, the loss of the Brexit referendum was a surprise. In France it’s Marine Le Pen, in Iceland the Pirate Party, in Spain Podemos. In the United States, of course, there is Bernie Sanders and Donald Trump. Everywhere the barbarians are at the gate, and the comfortable classes (and media) are surprised. After all, their theories say things aren’t so bad.

Pope Francis
“We want change – real change, structural change. This system is by now intolerable”. – Pope Francis

But to many ordinary people – to voters – struggling to pay their rent, or their car insurance, or their utility bills – for the Amazon packers, the Uber drivers, the so-called freelancers and contractors of the Gig economy, and for the ones left behind when manufacturing moved on – for them it wasn’t a surprise. Their political anger, cynicism and sense of injustice is palpable. And since many see themselves as having nothing to lose, they are more and more willing to take political risks. Every country is seeing challenges to the intolerable economic stress, insecurity and unfairness of the Way Things Are. As Pope Francis spells out: “We are faced… with one complex crisis which is both social and environmental. We want change – real change, structural change. This system is by now intolerable”.

When the people are suffering and their politicians ignore them or are ineffective in relieving that suffering, there is a political vacuum. Voters who are unrepresented by existing politicians will seek new ones – it’s as simple as that. And the unscrupulous, self-interested and power-hungry will seek to fill that vacuum and meet that demand in whatever way they can – including relying on the corrosive division of identity politics.

We’re already seeing this across the western world and beyond, as growing income stress and insecurity result in populist political challenges and political (and ideological) instability. And as the pain and the blatant and self-evident unfairness grows, so too will this political pressure.

Long before the 1% own it all, in some major country there will be the election either of a disastrous, conflict-causing leader, or of a pragmatic revolutionary agent of positive change. Either the problem will be solved, or change will happen – there is no middle ground any more. And that major country, whichever is the first to take that leap, will be an example – either a horrific example or a shining example – to the entire world.

Brexit may be that example, or maybe Trump will be. Or perhaps it will be France and Marine Le Pen. Or maybe it’ll be Jeremy Corbyn, or somebody who rises in his reinvention of the British Labour party. It’s too early to tell. But until individual economic stress and insecurity are alleviated it’s only a matter of when.

But how can economic stress and insecurity be alleviated without restricting the technology and globalisation that’s causing it? If you don’t now the answer to this, then you’re not paying attention to important economic experiments planned or underway in Canada, Finland, the Netherlands, New Zealand and elsewhere.

Simply put, the answer to Donald Trump, Bernie Sanders, Brexit, Front Nationale, Jeremy Corbyn and all the other challengers is a Basic Income.

Burning Taxes Rather than Admit a Mistake

One way to think of debt is as an ever-growing mountain of interconnected paper, largely created out of nothing, and piling up against the gravity of finite income and ability to repay. The 2008 crisis was an avalanche of default in such a metaphorical mountain – initially triggered by defaults in US sub-prime mortgages. Today the mountain is much, much bigger, and the ability to repay is more limited. And, of course, the mountain continues to grow – both in absolute terms and, in many cases, as a percentage of income (i.e. the ability to repay).

So the question is not if there’ll be another financial crisis, but when it will start. It might begin with Italian bank debt, or Greek sovereign debt, or a collapse of a residential or commercial real estate market in China, or London, or Canada, or Australia. Or maybe it will be triggered somewhere else, by some other over-leveraged, unrealistic, boom-and-bust debtors. And when the defaults get big enough they will cause other defaults, and on and on the contagion will go – just like the last time.

Except the next financial crisis will probably be worse than the last one because the vast effects of the last one are still with us. Some individuals, companies and countries will come out if it better than others, depending on their exposure, just like last time. And the sheer and utter stupidity of relying on consumption debt and speculative debt for the creation of our money supply will become even more farcical and surreal.

One of the most surreal aspects to this farce is that central bankers and government are and will be essentially taxing hardworking people and cutting desperately needed services, and then burning the some of the proceeds. For years central banks bought up vast quantities of government debt using directly created QE money fresh off the presses. In order to make the books balance in traditional economic theory what came from nothing has to go back to nothing, so QE has to be paid back to be destroyed. And who’s going to pay those $€£trillions back so that they can be destroyed? That’s right – you are!

Burning money.
This is what happens to some of your taxes. It’s necessary, so that the economic models still make sense to those who have built careers around them.

You could sort of understand this if the economy was overheating and inflation was raging out of control, but our current predicament is far from that. So why are they doing it?

Because establishment economists can’t face the fact that the old equilibrium models in which money is just another traded good (models to they’ve devoted much of their careers) are at best seriously flawed, and at worst a load of nonsense.

In other words, hundreds of millions of people are suffering, and will be on the hook for $€£trillions, just because a bunch of established economic ‘experts’ can’t admit they’re wrong. And because government and central bank economists can’t admit they’re wrong, they’re not even seriously looking at the solutions right in front of their noses.

They can’t even see the need for deep, structural and systemic change.

Response to Javier Solana’s article: ‘Taming the Populists’

Note: This post is a response to an opinion piece by Javier Solana. Since it’s a response, if you don’t want to waste your time you’ll have to read the original article first.


I’m getting sick of this waffle.

Solana may have finally grasped the problem – but that’s hardly grounds for congratulations. After all, hundreds of millions of ordinary, struggling people supporting Trump, Corbyn, Wilders, Sanders, Le Pen, Iglesias, Ukip, Syriza, the Austrian Freedom Party and all the other radical challengers to the system figured that out years ago when they had a problem paying the rent or insuring the car. Welcome to obvious, practical economic reality, Mr. Solana!

Javier Solana, waffler
Former EU High Representative for Foreign and Security Policy, Secretary-General of NATO, and Foreign Minister of Spain, and currently President of the ESADE Center for Global Economy and Geopolitics, Distinguished Fellow at the Brookings Institution, and a member of the World Economic Forum’s Global Agenda Council on Europe, and waffler, the “Most Excellent” Javier Solana.

You’d wonder why somebody as clearly smart as Solana can be so emotionally and empathetically dumb. I guess that’s what comes of having more money than you could ever morally need for most of your live, and having yourself and your family assured of economic security. Meanwhile, back in the real world with the rest of us, the electricity bill is due… No wonder they just don’t get it.

And look at his solutions: “Bold initiatives to tackle inequality”, “stopgap measures”, better and smarter education and training, “improve global governance” and, of course, the admonition that “leaders must ensure that discussion is translated into real action”.

What a crock of nonsense! What a weasly, vague, wishy-washy, meaningless list of nonsense! No wonder people despise politicians who come out with drivel like this. Oh, it sounds great – it all sounds wonderful! But the problem is that it doesn’t actually MEAN anything at all. What do the words “bold”, “better”, “improve”, “ensure” and “real action” actually mean? There’s nothing specific, nothing explicit, nothing defined, nothing precise, nothing clear and nothing real about whatever it is he’s talking about. What, exactly is he proposing? What, specifically, is he suggesting? Where can I find a link to the text of the law that he’s seeking to implement?

Nowhere, that’s where. This is all called ‘waffle’.

And it’s not even very good waffle. Does he really think that redundant factory workers, Uber drivers, Amazon packers, fast food servers and all the many millions of others struggling near or below the median income – does he really think that they’re all going to brush up on their math skills and get jobs writing code for Google? Do we all have to be high-tech entrepreneurs now? Is that it? What a crock!

And what are these “stopgap measures”? I’ll tell you what they are. Sometimes you’re forced by circumstances to do the right thing, but you don’t want to do it, and so you keep reminding everyone that it’s only temporary. QE is a ‘stopgap measure’, for example. Whatever Solana’s “stopgap” measures” are (and like I said, it’s all waffle), he doesn’t want you to think they might be permanent. After all, we don’t want real change, do we.

And don’t get me started about his idea that huge sections of the population have to be “tamed”!

Disconnected, bubble-insulated, comfortably status quo nonsense from a waffler, in my opinion.

The Politics of Public Money

Note: This is a long article (about 4,500 words), and is extremely nerdy on the subject of monetary policy, so be warned! It offers my perspective of the political environment faced by advocates of all forms of Public Money, along with four suggestions for the direction of the movement.

People’s QE, Sovereign Money, Helicopter Money, the Chicago Plan, Full Reserve Banking – there are many names for and variations of the simple act of creating money directly and reducing our reliance on ever-growing, destabilising and unsustainable debt to do the job. Faced with zero-bound interest rates, a deflationary threat, an unstable financial system, weak growth, slack demand, and an economy starved of money, central banks have been doing just that. Their word for this money creation is “Quantitative Easing”.

It’s a lovely word, ‘Quantitative Easing’. Whatever it signifies is ‘quantitative’, and thus countable, objective and scientific – all very reassuring. And there’s nothing sudden or dramatic about the process, whatever it is. It’s merely an ‘easing’ – almost relaxing in a way. There’ll be no shocks, surprises or discontinuities about this process. It’s just a gradual, gentle and even soporific easing, safe in the arms of quantitative objectivity. The central banks and their economists picked their word well.

Of course, the term ‘Quantitative Easing’ is really two words, as is the term for the concept that the central bankers were most assiduously trying to avoid, i.e. the idea that they were ‘Printing Money’. To most people, Printing Money is obviously wrong. After all, if you can just print it, then how can it be valuable? The public understanding of money and of monetary policy is not sophisticated, and even the more knowledgeable people often automatically associate direct money creation (AKA ‘Printing Money’) with Zimbabwe and the Wiemar Republic. In the aftermath of the 2008 debt crisis, the maintenance of public confidence was critical, and central bankers and their economists had to stay as far away from the idea of printing money as possible. As I’ve said, they picked their word well.

“Anyway”, argue central bankers, “QE is not really printing money. It’s just being printed temporarily, to be loaned out – just like any bank does. It’ll be paid back and destroyed, just like any money. What came from nothing will go back to nothing and, eventually, all will be balanced as the theories say it should. Economic theory is still valid, so we can carry on as before. It’s just quantitative easing and it’s only temporary – nothing like Printing Money at all”.

But, of course, Printing Money is exactly what they’ve been doing, whatever they choose to call it.
A Vast Experiment

The term ‘Quantitative Easing’ was first used by the Japanese central bank (the BOJ) in the early 2000s to describe its attempt to fight domestic deflation by Printing Money and introducing it into the economy by buying government bonds, asset-backed securities, equities and commercial paper. The financial crisis following the 2008 collapse of Lehman Brothers saw other nations also adopting QE, and it has continued ever since, with over US$13 trillion created since then (that’s $13,000 billion or $13 million million). Of course, that figure is necessarily approximate because QE is ongoing. The central banks of the Eurozone, the UK and Japan have all expanded their QE programs recently. The European Central Bank and the Bank of Japan are now buying around $180 billion of assets a month with freshly printed money, while the Bank of England has responded to Brexit by extending QE by $60 billion. Something around $8 billion is being created out of nothing every single day.

And nothing has happened.

Well, that’s not exactly true. Asset prices have been pushed up, government debt has been massively expanded, market traders have made vast commissions, and fresh money warm off the presses has flowed into a thirsty economy (albeit in a distorted, inefficient, wasteful, unjust and generally cockeyed way). But what didn’t happen is much more important than what did happen – i.e. there has been no inflation (indeed, the deflationary threat continues). In a classic case of the Dog that Didn’t Bark, the absence of inflation in response to vast, vast quantities of freshly printed money is the most interesting effect of QE. In essence, faced with an illiquid economy starved of money and unable to encourage more debt due to the lower bound, central banks have been forced to do a vast experiment. We’re only now beginning to grasp the results of that experiment.

The idea that if you print money it will lose value has been publicly, empirically, actually tested, and found not to be true – at least, not in all circumstances. It has been proven beyond doubt that money is not just another good to be traded or bartered, but operates by different rules than those claimed by conventional economic orthodoxies. In other words, the core concept of directly created money has already been proven, the action has already been taken, the taboo has been broken, the deed has been done, and the gate has been opened. Economic reality and the threat of economic calamity have forced this policy through and, while it has been done in a grossly inefficient and unfair manner, the sky did not fall. The direct creation of money has already been done – and continues to be done. Now we just need to change how it’s done, so that it is both more efficient and fairer. QE is already a reality. We just need to tweak, adjust and reform it.

Debt-created money is a vast ‘meta-problem’, and is a core cause of many other problems – not least financial instability, inequality, austerity, poverty and all the very real human and social pain and insecurity associated with these problems. And directly-created money (a ‘meta-solution’) can address many of these problems in a very real, practical and significant way. Imagine if that $8 billion per day was being invested in infrastructure, education, healthcare and other social value. Even giving it to individuals directly and equally would have huge positive changes on both human security and welfare, and on consumer demand and economic growth. This could start tomorrow if central bankers chose to do it. Remember, they’re already printing the money, they just have to decide to redirect it.

Energised by the human costs of debt created money and inspired by the vast benefits that properly organised and directed QE could bring, many intelligent, visionary people from around are working hard at this effort, often trying to do the best they can with few resources. The International Movement for Monetary Reform lists national organisations in 23 nations, including half of Eurozone nations. The American Monetary Institute has been campaigning since 1996. The UK’s excellent Positive Money was founded in 2010. Here in Ireland we have Sensible Money. Growing numbers of economists have joined the fight, and many, many others, not affiliated with organisations, do what they can to inform, educate and raise public awareness of these issues.

Public money activists are focusing on a vast, important and urgent problem, and are proposing a simple, practical solution that could almost instantly make many millions of human lives better. I admire these people immensely, and I deeply respect their thoughts, their views and their work in this field. I, on the other hand, am new to the politics of directly-created money and my understanding of the various people, groups, organisations, perspectives and passions of public money advocacy, while growing, is still very limited. But despite this limitation I would like to begin my contribution to this struggle with what I think the global public money movement should focus on. I understand that my perspective may be uninformed by experience, but it is as knowledgeable as I can make it, and also has the advantage of being fresh.

So, for what it’s worth, here’s my overview of the situation we face and my suggestions for what I think we should do:
The Targets

Although central banks are considered independent, in practice their actions are necessarily affected by government. Of course, some form of ‘People’s QE’ directed at infrastructure or social investment would require the involvement of government, but even direct ‘Helicopter Money’ transfers would require some degree of coordination and cooperation from politicians. There are therefore two separate decision-makers involved in potential changes to QE, two sets of minds that have to be changed, and two ultimate targets for advocates of Public Money: central bankers and politicians.

However, neither central bankers or politicians make decisions on economic policy in a vacuum. They rely on a wide network of analysts, academics commentators and other advisors, influencers and expertise that they judge to be credible. To our two primary advocacy targets we must therefore add two more: the economists, advisors, academics, financial commentators and other expertise that influences both central bankers and government, and the voting public who so highly motivate politicians.

I don’t know any central bankers personally, but I do know that there are only a few of them, and that they are already very familiar with all of the options for monetary policy. I also imagine that these are probably very busy people focusing on very important things, and that they might not have much time to talk to you or I about issues that they are already thinking about. So, while I would not discourage anybody from reaching out to their friendly, local central banker if they can, for the purposes of this discussion it’s probably best to leave them alone and focus our attention on more productive pastures.

That leaves us with three targets: Experts, politicians and the public.
The Political, Media and Communication Environment

Money is a difficult topic on which to think about and talk about at a theoretical level. There’s a magic to it – something very unique and special. Money is both very real and very abstract at the same time. It’s made real and made useful solely by shared belief. In a strange parallel to the weirdness of quantum mechanics, quantified value is only potential until it collapses into a numerically-defined price during a transaction. As observation is to wave function in quantum mechanics, so transaction is to value. And it’s money that makes transactions of value possible. In many ways, the very concept of money – what it is and what it does – is weird. Part of it seems ethereal. To paraphrase the late, great Richard Feynman, “If you think you understand money, then you don’t”.

What makes it harder to discuss money in any deep and meaningful way is that, because of its importance to our day-to-day practical and emotional lives, and because of the ‘quantitative weirdness‘ at its heart, the subject of money attracts all sorts of professors, analysts, explainers and cranks. Even central bankers and their economists, with all their resources, knowledge and theories, cannot accurately predict recessions, or improve the economy much. The fact that they didn’t see the debt crisis coming, and the weakness and ineffectiveness of their response to that crisis, indicates that they, too, don’t really understand money. Into this theoretical vacuum pours a lot of noise, diluting and distracting from serious thinking and discussion of the topic. In other words, we are dealing with a complex and slippery concept that is of deep importance to most people and that everybody has an opinion about, but that few understand in any meaningful way.

Our attempts to communicate this difficult message are happening at a time when media is fragmenting into a myriad of channels, each with its own rules, culture and communicative dynamics. Mainstream media is losing market share and credibility. Fact-free ‘Trumpism’ saturates the social media channels. People are angry, cynical and distrustful. In the minds of far too many people in their struggle to understand the world, wishful and emotional belief have overcome empirical evidence about reality.

To sum up, then, in a distracted and fragmented communications environment our task is to communicate a difficult, complex message to experts, politicians and to the public. That’s what we have to do and, I’ll admit, it does seem difficult when you put it like that. But don’t forget that they’re doing it already. Don’t forget the vast QE experiment that has proved it can be done. Don’t forget that we’re just looking for the reform of an existing program. Don’t forget, we’re almost there already!

Reality is on our side, as are the many, many millions of people suffering under austerity, stagnation and instability, and the many millions more who are outraged at the clear and blatant injustice and incompetence of banking, economics and finance. They might not know it yet, but we are together in the pursuit of a very clear, defined, specific goal. Our cause is an unlocked door waiting to be pushed open. The next question is: How do we do it?
Focusing the Message

Our task is to communicate the advantages of directly-created money over debt-created money to experts, politicians and to the public. Keeping in mind that both politicians and the public listen to experts, and that the public listen to politicians, so the flow of awareness goes from experts to politicians to the public. It’s also true that some of the public will listen to anybody, that politicians listen to the public (especially at election time), and that experts only listen to each other. But for our purposes, the priority should be experts, politicians and then the public. Put it this way: if enough experts agree, then it’ll be easier to convince politicians, and if enough experts and politicians agree, then it’ll be easier to convince the public. Hopefully that will be enough to convince the central bankers.

For our purposes we can define ‘experts’ as ‘monetary nerds with a platform or with the ear of power’ (there may be people out there with a perfect understanding of and prescription for monetary economics, but if nobody’s listening to them then it doesn’t make much difference to anybody). Monetary experts are often economists, or economic commentators, or writers and editors of economic media. They may work for government, for business, or for an NGO. They may have the ear of a Prime Minister or a Treasury official, or even the ear of that unicorn that is our Holy Grail – the central banker. If they influence the monetary policy ideas of others, then they’re an expert.

There is credibility in consensus and even economists and monetary nerds are susceptible to the crowd effect. The more experts who agree, the more experts will agree with them, and so the consensus grows. A major step forward in this process was made recently in a letter to the UK Chancellor of the Exchequer, published in the Guardian, in which 36 economists put their names and academic reputations behind the following call:

A fiscal stimulus financed by central bank money creation could be used to fund essential investment in infrastructure projects – boosting the incomes of businesses and households, and increasing the public sector’s productive assets in the process. Alternatively, the money could be used to fund either a tax cut or direct cash transfers to households, resulting in an immediate increase of household disposable incomes“.

My own opinion is that this is an excellent statement, and that it may be pivotal in moving us forward to sane, stable and fair monetary policy. I was disappointed to see the qualifier ‘could’, and would prefer to see the more politically courageous ‘should’. But my biggest problem with the letter is that, for PR purposes, it’s over, largely forgotten about already in a news cycle of the rapidly receding past. I am sure there are other economists, experts and prominent people who would like to have signed that letter, but they will never get the chance. The number of economists who put their name to the letter will be forever fixed at 36, and that number will never grow.

I therefore propose that interested members of the ‘Group of 36’ who signed that letter discuss among themselves, consult widely and agree upon a permanent, definitive and preferably political statement that other prominent economists, experts and supporters can sign, that anti-austerity, poverty, and anti-debt groups can endorse, and that the movement for Public Money can get behind. This statement would be simple, brief and, best of all, permanent. The number of individuals, groups and organisations publicly associating themselves with this statement could grow and grow, concentrating much of the credibility on this issue in one place.

In a way, what I am proposing is a petition reserved only for prominent signatories. As it grows, these signatures could e kept in a database, organised by country, or monetary jurisdiction, or profession or any other way – all to maximise the publicity value of the endorsements. Since it was the UK’s excellent Positive Money that organised the important Chancellor/Guardian letter, it makes sense that they take the lead in organising and coordinating this effort. But ideas, concept and out-of-date orthodoxies do not respect borders or jurisdictions, especially in the age of the internet. This effort must be international and global in its scope.

The gay rights movement thrived when gay people publicly and proudly came out. The marijuana legalisation movement gained huge momentum when celebrities confidently admitted to smoking. The European anti-GMO movement gained enormous traction when its cause was taken up by celebrity chefs. The movement for public money, often accused of being cranks, grows in strength every time an established, credentialed, authoritative economic expert loudly and proudly supports it – but only if others know about it.

In other words, let’s widely agree on something definitive to support, and get as many experts and influencers as possible to support it.
Building the Coalition

Once we have a defined political statement that experts, politicians and other prominent influencers can sign, we can start building our coalition. This might be a simple as asking a well-known anti-poverty NGO to sign our statement, or getting an anti-austerity political party to sign, or getting an anti-debt group to associate themselves with our common purpose. Building the list of signatories and endorsements is building the coalition. But there’s no reason to stop there.

If anti-poverty, anti-austerity, anti-financialisation and anti-debt groups can be made aware of how beneficial this policy would be to their interests, then it is reasonable to expect that they might talk to their own supporters, their own members, and their own networks about it. And since these groups are often well versed in the dark arts of politics and publicity, it is reasonable that they might focus at least some of their efforts, resources and contacts on this singular important meta-issue. With a snowballing list of economic credibility and some informational tools and material, who knows what is possible?

In other words, by using the nucleus of the expert-drafted, widely agreed and easily understood statement, and by informational tools and materials to affiliated individuals, groups and organisations, we can leverage activism and deep desire for change and coordinate this much greater political energy towards our specific policy direction.

In particular, I strongly urge coordination, cooperation and cross-pollination with another movement struggling against entrenched power and practices to solve a vast ‘meta-problem’ – i.e. the Basic Income movement. In the same way that ‘inflation’ is the primary public attitude against Public Money, ‘cost’ is the major public argument against the Basic Income. Public Money spent by government dramatically relaxes the ‘fiscal space’ available to fund a Basic Income, and Helicopter Money even directly contributes to or supplements it. Since the Basic Income movement is much, much bigger and more advanced than the Public Money movement, and since the Public Movement offers a major support to the financial viability of the Basic Income, these two progressive movements are natural allies that have much to gain from each other.

Cooperation and coordination with the Basic Income movement is also important for another reason. Most voters care little for the specifics of monetary policy. Few people cast their vote on the basis of what kind of QE the central bank should adopt. Those who follow the words of Janet Yellen, Mario Draghi and Mark Carney are few and far between – and most of them are working for the other side. Instead, the energising force of politics today is not monetary policy but the devaluation of labour and the low, unequal and insecure incomes caused by automation, globalisation and financialisation.

Income insufficiency and insecurity are the political issues of the day, which is why the Basic Income idea is developing so rapidly. People who are struggling to pay the rent or insure the car might not be interested in monetary policy, but they’ll support something that puts money in their pocket. Either directly (using Helicopter Money), or indirectly (using Public QE), the implementation of Public QE would do exactly this. And the Basic Income movement is a way to politically reach many of these people.
Focusing the Communication and Lobbying

There are many ways to influence a politician, media editor or financial journalist. Press releases, tweets and constituent’s letters may all have an effect, but nothing works better at changing minds than engaging and meeting with an individual in person. This is especially true when trying to communicate concepts as complex and confusing as monetary reform. Nothing works better than being in the room, being able to respond to questions and concerns on your feet, in real time.

I think that the Public Money movement has a lot to learn from another group campaigning on another vast, urgent ‘meta-problem’ that’s complex to explain. That ‘meta-problem’ is climate change and the group is called the Citizens’ Climate Lobby (CCL), an American-based, international organisation that campaigns for the policy of ‘Fee & Dividend‘ as a response to climate change (essentially the idea is to tax carbon and distribute the proceeds to all equally). They do this mostly through educating, organising and supporting their members to professionally lobby politicians and media. In other words, the function of the CCL is to train their members to lobby and communicate professionally and effectively in support of their agenda.

I think that the Public Money movement and the campaigning organisation within it could learn a lot from the methods of the Citizens’ Climate Lobby. I’m sure they wouldn’t mind having some of their ideas, methods and materials ‘repurposed’ for the cause of Public Money. I would encourage anybody interested in effective, focused lobbying for Public Money to check them out.

The great advantage of communicating with individuals individually is that you can adjust your message to suit that individual’s unique concerns, interests, situation and perspective – in other words, you can customise your approach. For this reason it would be difficult and counterproductive to specify what that individual message and approach should be in too much detail. However there are two aspects to communication and lobbying that I believe deserve special attention.

The first is the fact that by far the greatest conceptual barrier to acceptance of directly-created money is the fear of inflation – of money losing it’s value. This is a deep, visceral, emotional and very real fear, easily whipped up by visions of Wiemar and Zimbabwe. I believe that in the argument for Public Money it is important to fully face and acknowledge this fear. We can point out that vast QE has already happened, with no resulting inflation. We can say that vast QE is currently being produced, while deflation remains a threat. We can emphasise the irresponsibility of money created through debt by dodgey, self-interested bankers – and the responsibility of money directly created by genuinely independent central bankers with the prime mandate of maintaining the integrity of the currency. And we can acknowledge that inflation is a threat that must always be guarded against, and we can point out that deflation, stagnation and financial instability are other such threats.

My second point is that care must be taken not to alienate any particular political ideology. The Left, with their concerns about poverty, austerity, social security and government capacity are natural promoters of Public Money. But the market-loving Right, with their concerns about slack demand, weak growth, and financial instability, are also important allies. Remember, in the political PR game unlikely allies are more effective than obvious ones.
Reaching the Public

Imagine a Public Money movement that is (1) united behind a single policy statement that is, (2) endorsed by a wide and growing number of experts, politicians, groups and organisations, and (3) promoted by and within those organisations, while (4) using the resources that would flow from this new-found attention to organise a targeted and professional lobbying and PR campaign along the lines of the Citizens’ Climate Lobby (the Citizen’s Money Lobby’?). Imagine a Public Money movement that contributes to and draws support from the Basic Income movement in a coordinated movement towards a smart, effective and new economic direction fit for our globalised, high-tech, 21st Century knowledge economy.

Many of us hate the human and social costs of austerity. Many of us are outraged at the vast injustice of bank bailouts, at entrenched financial power that is a threat even to our democracies, and the direction of vast quantities of QE to benefit the richest of the rich. With a simple statement of purpose backed by as much credible expertise as possible, and with just a little organisation, we can come together to be much, much more effective than we are apart.

The many problems caused by reliance on debt-created money, and the many significant economic and human benefits of implementing some form of Public Money, are vast and sometimes difficult to grasp. Most people, most voters, most members of the public will never fully grasp them – quite rightly, they have many other things to worry about. But if they are presented with a clear and specific political goal that offers to lighten their economic load and that is endorsed by substantial and credible expertise, many people would be willing to follow.

My final suggestion is therefore to leave the job of communicating directly with the public in the hands of editors, journalists, bloggers and other communicators who understand their respective audiences better than we ever will. If we can unite behind a single, defined policy goal, and focus our shared efforts on influencing the influencers, then surely we will succeed.

After all, the money is already being printed.

Trump is not a Phenomenon. He’s a Symptom.

The rise of Donald Trump to credibly contest for the presidency of the United States is not a phenomenon – it’s the symptom of a phenomenon. Other symptoms include Brexit and the rise of Jeremy Corbyn, Geert Wilders, Podemos, the Austrian Freedom Party, Syriza, Five Star, the Icelandic Pirates, and many others across the western world and beyond. In election after election and in nation after nation we are witnessing an ongoing and growing political revolution.

Donald Trump
“I would build a great wall, and nobody builds walls better than me”. – Donald Trump

The phenomenon behind this revolution is the devaluation and destabilisation of labour by automation, the internet, outsourcing, offshoring and financialisation – in other words, the devaluation of labour by technology and globalisation. As technology and globalisation concentrate income and capital in the wealthy, developed west the majority is experiencing rising core, unavoidable costs (especially housing), while incomes have stagnated. The result is mass and increasing personal economic stress and insecurity. The political revolution we are witnessing across the western world isn’t ideological – it’s personal.

The median income here in Ireland is about €340 a week. In the UK it’s around £300 a week. In Germany it’s about €400 a week. * Try paying rent, electricity, waste collection, phone, internet, car tax, insurance, property tax and all the rest from that – and that’s before groceries, clothes, household necessities, etc. And don’t even think about a doctor’s visit, or a sick pet, or a car breakdown. When you live on the median income every emergency is also a financial emergency. Christmas is a nightmare.

That’s half the population of some of the richest countries in the world with some of the most generous social welfare systems in the world. It’s much worse elsewhere – especially in the US, with a median income about $550/wk and far fewer public services. Of course, many people above the median income are struggling too – and many more have a loved one who is struggling. Together, they are the majority.

And this majority is not represented in either politics or media. A large part of the reason for this is that high salaries of politicians and popular media personalities. When you watch a TV political discussion you’re usually listening to a couple of 200Ks, a 150K and maybe a few 100Ks moderated by a 500K in countries with median incomes of only of 15K – 25K. Even the almost exclusive use of the ‘average’ (i.e. the mean) to represent wage and income figures distorts public discussion to make things seem better than they are (because the mean is skewed upwards by higher earners). You almost never hear about median incomes and wages – the incomes and wages half the population actually live on.

Skewed and out of touch coverage and discussion from the bubble of the ‘mainstream media’, combined with the secure, comfortable lives of themselves and their loved ones, is why so many established, ‘status quo’ politicians just don’t get it. They just don’t see an emergency, while more and more of their constituents live in a constant state of emergency. They think small, incremental improvements are enough, and that risks are not necessary. At best they seem useless.

And there’s is the sheer, blatant, clear, obvious and very unfair injustice that the struggling majority see all around them. The bank bailouts, the too-big-to-jail bank criminals, the tax avoidance, the revolving door between government and Goldman Sachs, the corporate subsidies, and all the rest. Again, politicians seem useless in the face of global corporate and financial power. For growing numbers of people it is no longer their system. It is no longer their government.

Essentially, there is a political vacuum. There is a vast and growing political need, and no sign of governing politicians even recognising that need, never mind meaningfully addressing it. Every mainstream political choice seems to be between the lesser of two evils. Not only is there no coherent plan to practically address the people’s pain – there’s not even a coherent theory, idea or ideology within which to frame such a plan. The ship is on the rocks and the water is pouring in below decks, while the fat and comfortable captains fuss about details.

Into this political vacuum has poured two kinds of challengers – ‘Us vs Them’ haters on one side, and rusty Marxist types on the other. Either would be an economic disaster in the real, practical world – as Brexit is. Whatever the solution to the income problem is, it must involve both the market freedom that makes our abundance possible, and the absolute personal and social security and opportunity that makes meaningful social (and market) access possible. After all, it’s hardly a free market if, under threat of homelessness, the only thing you have to sell is minimum wage labour.

The labour effects of technology and globalisation are accelerating, and the losers are beginning to outnumber the winners. Financial disaster continues to threaten as the austerity from the last crisis continues. Growth remains weak despite negligible interest rates. And many hundreds of millions of people continue to lurch from financial disaster to financial disaster with no hope for their future in an unfair system. The present situation is intolerable to far too many, and so it will change. Trump is just one of the options.
* Note: To their great credit the OECD is now requiring and publishing median income figures for member states, which is where these median income figures come from. See for more.

An Easter Market Miracle

As I write these words at my home in a small Irish town, the shop down the street from me is offering Easter eggs for sale at the price of €2.99, or about twenty minutes work at the legal minimum wage. These milk chocolate eggs are presented in a glossy printed cardboard box, and the egg itself is wrapped in brightly coloured tinfoil. Inside the hollow shell of the egg is even more chocolate, this time in a bar wrapped with colourful paper and more bright tinfoil. The chocolate bar itself contains a sweet, creamy centre that melts delightfully on the tongue.

Easter Egg
My delicious market miracle.

It’s far too easy to take such a product for granted. Within a mile of my house dozens of shops offer a wide variety of similar chocolate eggs at similar prices, and by Easter there will be few homes in the town where at least one of them hasn’t been eaten. These spring treats are simply the background to the changing seasons, along with the bluebells and the lengthening evenings. Yet each one of them is a miracle. Continue reading “An Easter Market Miracle”

Meet the Median Family (U.S.A.)

Median Family
Meet the Median family…

You don’t get more middle class than the median income. That’s the income at which half the country makes more and half make less. Median income is a better reflection of the lives of most people than average income, with which it is often confused. This is because the average income is skewed by the spectacular earnings of those at the very top, which forces it higher. Most people don’t make near the average income, but the median income is right in the middle. 50% of people make more than the median income and 50% make less. You can’t get any nearer to the middle. Continue reading “Meet the Median Family (U.S.A.)”