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22nd October, 2020 - "Why the International Monetary Fund is in a hurry to become the International Digital Monetary Fund"

The IMF and World Bank are being "encouraged" to change in an effort to shore up US control over international monetary affairs.

Covid-19 has been selected as the watershed moment to justify this change.

This is needed but the IMF theatrics are not convincing.


22nd October, 2020 - "Alleviating the Covid-19 economic hardships through DxCs"

This article covers the issue of how to boost a depressed a depressed economy and enable all to purchase theior needs under Covid-19 without debt.

DxCs are Digital exchange currencies or essentially digital vouchers. The paper versions of vouchers have been used to boost economies in the past.

I will follow this up with a more detailed analysis on how this can work in the UK and how to avoid abuse of the system. Unfortunately this is an issue with any initiative involving means of payment.


28th September, 2020 - "A constitutional economic policy - Part 7; Designing a sustainable future - Step 1 "

This article covers the issue of investment quality especially in relation to the current need for a rapid and sustained economic recovery.

The following articles cover the "next steps" on the policy incentives to encourage this investment and also the business rules to be applied to maximise corporate and economic growth.


28th September, 2020 - "Monetary policy: The journey to there and back - a note "

This note sums up the challenge facing governments and central banks.

This has been the consistent position of the real incomes approach, established as a logical alternative theory and practice some 44 years ago in 1976.

It is disappointing that monetary policy decision makers think they know better by investing in the flawed logic of the Quantity Theory of Money; their actions are destroying the economy.


27th September, 2020 - "The real incomes and investment trap"

Have just posted this note. The PE ratios (price earnings ratios) are, for many companies, beyond logic. Although the asset holders remain satified with Bank of England's QE, this will push the economy into a structural currency devaluation which is a form of a silent collapse of the economy.

I have included an index projection of this process covering 2010-2024. The assumptions are optimistic but it is obvious, from the table, that the likely result is dire.

The unacceptable levels of increasing real incomes disparity can only be reversed with good quality real investment under a RIO-Real Income Objective policy.

The next article will review what is meant by high quality investment and the subsequent article will outline a practical policy option.


22nd September, 2020 - "The imposed internalization of monetarism's destructive externalities"

Have just posted this note. The externalities of monetarism, and QE in particular, are selectively prejudicial to those who do not benefit directly from policy such as a minority of constituents who hold assets. There is an abuse of property rights in that money holders or savers, face a overt monetary policy that depreciates funds at 18% each decade by targeting 2% inflation and QE that drives down savings returns and has sequestered the incomes of many retirees. This bias in policy is so stark that serious considerations needs to be given to compensation for such externalities.


16th September, 2020 - "The British Strategic Review (BSR)"

The BSR is coming together quite well and it moves beyond Anthony Sampson's excellent series "An Anatomy of Britain" that was published between 1962 and 2004. Unfortunately Anthony Sampson died in 2004.

In basic terms the difference is that the BSR contains more functional analysis of theories of constitution and economics, compares the theory with actual practice and identifies gaps in delivery from the standpoint of a constituency in a so-called democracy. The BSR is essentially a, "Physiology of Britain". It identified functional gaps which have appeared as a result of the motivations of those in power and how they have shaped constitution and economic policies largely in their own and their benefactor's' interests. The BSR goes beyond this and contains propositions for better constitutional settlements and macroeconomic policies that respond better to constituent needs.

It is of interest to note that Sir Paul Judge, the businessman who attempted to launch a new wave of "politics without parties" in the UK, was an admirer of Anthony Sampson's analysis in exposing myths. One such myth is the belief that political parties represent the interests of constituents.

The sections on the BSR recounting the negative impacts of political parties on the British constitution and the individual freedoms of constituents, draw on fully updated sections of the publication "The Briton's Quest for Freedom - Our unfinished journey ..." which I completed in 2007.


29th August, 2020 - "A constitutional economic policy - Part 3"

I have just posted this article which adds explains why conventional policies fail and how Covid-19 pay outs cannot be treated in the same way as quantitative easing.

I explain how RIO can help governments sort out their post-Covid-19 balance sheets and how to introduce RIO policies in the UK.


28th August, 2020 - "A constitutional economic policy - Part 2"

I have just posted this article which adds considerations of freedom and opportunities. It explains why the current basis for policy decisions is a classic case of what is referred to as constitutional anarchy in the field of constitutional economics. This is because the decision-making processes involved are commandeered by a small group of people who seem to have unlimited power over the people in this country and use it unfairly; this is the definition of tyranny.


28th August, 2020 - "A constitutional economic policy - Part 1"

I have just posted this article which has three parts. The first sets out the basis of the constitutional dimension of constitutional economics of which RIO is a branch. The folowing parts will spell out the specific policy in more detail.


26th August, 2020 - "Is this RIO business socialism or capitalism?"

I have just posted this article which has been a long time coming because this is a question I receive regularly because people like to place economic policies on a spectrum on that left-right axis.

I use the examples of Labour and Conservative governments over the last 75 years to explain why the UK versions of socialism and capitalism do not have a good track record because they both apply the same school of flawed economic logic.

RIO shares nothing with these failed systems but is a new policy front within the perspective of constitutional economics.


28th August, 2020 - "A constitutional economic policy - Part 1"

I have just posted this article which has three parts. The first sets out the basis of the constitutional dimension of constitutional economics of which RIO is a branch. The folowing parts will spell out the specific policy in more detail.


26th August, 2020 - "Is this RIO business socialism or capitalism?"

I have just posted this article which has been a long time coming because this is a question I receive regularly because people like to place economic policies on a spectrum on that left-right axis.

I use the examples of Labour and Conservative governments over the last 75 years to explain why the UK versions of socialism and capitalism do not have a good track record because they both apply the same school of flawed economic logic.

RIO shares nothing with these failed systems but is a new policy front within the perspective of constitutional economics.


13th August, 2020 - "DIO publication"

The DIO-Development Intelligence Organization has published the article "A Real Money Theory" as a stand alone document. This explains why the old standard, Quantity Theory of Money (QTM), the mainstay logic of monetarists and central banks, is flawed and pretty useless. The DIO consider the content to be of importance in understanding the failure of QE and something that should be widely circulated for use by students and study groups. Click here to access the DIO document

I would like to add that if any groups do have any feedback on this document I would be glad to receive and respond to this.


6th August, 2020 - "Why the partying has to stop"

I have just posted a note entitled, "RIO and Locational State Theory - The evolving dualistic disequilibrium". I am extending the exploration on the impact of Locational State Theory (LST) coordinates on economics. The fact that LST adds the time dimension we find that people's freedom is more intimately bound up with free as well as transacted goods and services with equates this with real incomes. This mmakes apparent more clearly, the current economic policies not only reduce the purchasing power of the majority, but they also reduce our freedom. Our political economy should not be doing this. Political parties need to stop acting as proxies for their benefactors. As a citizens of a democracy, our wellbeing is better defended by the free expression of the population gaining access to a parliament which does not include political parties.


25th July, 2020 - "Welfare & constitutionalism"

I have just posted a note entitled, "RIO and Locational State Theory - Changing perceptions on welfare and constitution". I am extending the exploration on the impact of Locational State Theory coordinates on economics. In this article I show that LST expands the legitimate scope of the considerations of significance to people in the exercise of freedom within the confines of their real income. This justifies a more proactive concern of individuals with a wider range of externalities, including the negative impacts of policy on the earning capacity of the majority. The solution requires positive incentives such as those proposed under RIO-Real Incomes Objective policies. It also requires that "representatives" in government take into account the needs of the majority. Political parties are unable to achieve this. There are solutions which will be explored in subsequent articles.


23rd July, 2020 - "Individual freedom"

I have just posted a note entitled, "RIO and Locational State Theory - Adding individual freedom to policy objectives". I am beginning to explore the impact of Locational State Theory coordinates on economics. This is an initial exploration of this topic. In this short exploration I explain how Locational State Theory expands the boundaries of real incomes to become the domain within which individuals are free to pursue their objectives. However, conventional macroeconomic policies severely constrain these freedoms as a result of the declining real incomes of the majority. I think this is a significant exploration and I am sure it will be revisited and expanded upon in the coming period.


20th July, 2020 - "Rolling short termism"

I have just posted a note entitled, "Evolutionary economics - a note" to set out some points on the necessary foundation of policies designed to avoid our current chaotic and erratic scurrying towards a state of affairs that represents an existential threat to the human populaton. Needless to say I am preparing the ground to explain the role of RIO-Real Incomes Objective policies as a possible solution to this unacceptable void in rational policies ;-)


18th July, 2020 - "Yes, Bitcoin has been around since 2009"

Just to clarify, the SEEL document referred to in the article comparing RIO and Bitcoin as "36th Annual Review of Global State-of-the-Art Network Technologies", as the last title of an internal series. SEEL was established to track the State of global network technologies in 1983. Bitcoin progress is covered in the last seven editions.


16th July, 2020 - "Supporting Bitcoin"

I have just posted a short article entitled, "RIO and Bitcoin" to explain their complementary nature, because their common objective of preventing currency debasement. They can work together or separately to good effect.


16th July, 2020 - "The Bitcoin standard"

Saifedean Ammous's book "The Bitcoin Standard" has an excellent historic review of the impact of raising volumes of exogenous money a la monetary policy on the debasement of the currency, social instability, revolutions and wars. The rest of his book deals with the benefits of Bitcoin.

There is something there which did not occur to me the first time I read these sections but Ammous does state the issue in his sub-title of his book, "The decentralization alternative to central banking". RIO-Real Incomes Objective policies are exactly run on the same basis i.e. total decentralization of policy instruments but without looking at opperational alternatives for the currency itself. This is, I feel, a significant realization since the "logic" behind Bitcoin is the same as RIO. However, in both cases, these approaches are a significant challenge to conventional thinking on monetarism which, as we all know, is archaic and somewhat out of date when it comes to securing sustainable and real economic growth.


14th July, 2020 - "MMT"

It is notable that Modern Monetary Theory "solutions" are popping up in interviews related to many different topics including how to get out of the Covid-19 related depression. I have just posted an article "The emerging status of Modern Monetary Theory" on what I have concluded so far on MMT since reviewing it since April 2020.

Articulations on MMT are so "easy to understand" as to be simplistic. As a result it is seductive and for some, convincing. However, this simplicity relates to a failure to face up to a range of constraints within our political economy which relate to who really controls and benefits from monetary policy. The track record of monetary policy to date is not in any way encouraging and MMT doesn't present any significant logic or evidence to separate it from this evolving disaster.


14th July, 2020 - "article classification"

This site has around 110 articles posted as a selection from the RIO-Real Incomes Objective development work since 1975. RIO relates to all issues in economics across the micro-macro spectrum and this is not immediately apparent from the titles. I will therefore classify the articles by topic. I am working on this and hopefully within the next few weeks I can post a new home page with indexed articles by topic to help readers access those articles of interest to them.


8th July, 2020 - "constitueny oversight over unethical financial decisions"

I just posted an article entitled, "Function assignment options - Part 4 - Imprudence under prudential financial regulations".

The objective is to call attention to the fact that monetary policy is "ring-fenced" not against budgetary limitations but rather against the constituents gaining any oversight or any participatory contribution to decions on matters which, to date, have created prejudice for the majority.


6th July, 2020 - "archaic elusiveness of macroeconomic management endangers us all"

I just posted an article entitled, "Function assignment options - Part 3, Artificial intelligence and economic practice".

The objective is to demonstrate that not only is monetary theory and policy archaic and a bad fit for a modern democractic society, the slow application of appropriate means of analyzing and managing financial markets by governments, through state-of-the-art technologies, only contributes to the chaos and prejudice caused by financial markets.


4th July, 2020 - "financialization"

I have updated the article on the growth of financialization to extend coverage to 2020.

The point to note is that the solution to the excesses of financialization witnessed in 2008 has been more financialization! So the prejudice continues.



4th July, 2020 - "liberty?"

I have posted a note, "The opportunity cost of our democratic deficit" co-incidentally on the day of indendence of the USA.

In this context, it is paradoxical that worldwide the monetary policy model, exogenous money and taxation applied by colonial overlords was the motivation for revolutions, and yet, having rejected this system as unjust, the "liberated and now democractic" societies, free from their colonial oppressors, installed the very same archaic undemocratic system of exogenous money and taxation.

As in the past, a very small faction controls government decision making on monetary policy, to their benefit. As in the past, the rest of the constituency faces the consequences of these policy decisions with no say in the matter; the opportunity cost of this persistence systemic democractic deficit. It is unlikely, if given the choice, this is what the constituency would vote for.

The deciding factor is whether or not such a small faction can avoid arbitrary decisons with respect to the interests of the majority; the track record shows that they have not achieved this, at least during the last century. Tyranny is defined as: "government by a ruler or small group of people who have unlimited power over the people in their country or state and use it unfairly".




3rd July, 2020 - "the impact of information technology on economics"

I have posted a note, "Function assignment options - Part 2 - The implications of location state theory on economics " in which I review explain in a little more detail how information technology and telecommunications is demanding that we re-evaluate many past economic theories declared to be defunct, when this is no longer the case. We need to exercise an enormous precaution over the excessive confidence in our conventional economic theories and practice which were essentially conceived at least a century ago when information and knowledge management were in their infancy.



2nd July, 2020 - "Pigou's welfare economics and his tax"

I have posted a note, "Is RIO policy Pigovian Welfare Economics?" in which I review Pigou's tax proposals, made in 1920 which are applied today, one century later, in carbon trading and plastic bag charges. Well done Pigou!

RIO Real Income Objective policies in fact apply a positive Pigovian tax (I only realised this last week). However, in reviewing this area and analysing criticisms of Pigou's proposals, I was interested to note that the criticisms made by, for example, Ronald Coase and Ludvig von Mises, are no longer valid. This is because their criticisms related to the then state of communications and information processing state-of-the-art. The global W3 and associated digital capabilitie have invalidated their criticisms.

These are good examples of Alfred Korzybki's concept of time-binding, a part of this General Semantics approach. The validity of statements is time-bound to when they were made.



30th June, 2020 - "Function assignment options"

I have posted a note, "Function Assignment Options - Part 1" in response to some criticisms leveled at Say's Law. It is interesting to observe how the attacks on Say's Law become more strident and irrational as we transition towards policies that favour exogenous money (debt). This has been associated with a widening array of function assignment options resulting in a loss of control over transactional monetary instruments. This caused the 1929 Crash and Great Depression, the 2008 crisis and the current quantitative easing fiasco. It isn't too late to move back to policies that reinstate endogenous money policies, including savings, so that we can get back to Say's principles and an strengthened supply side and contented constituency.



30th June, 2020 - "useless CPIs"

I have posted a note, "Useless Consumer Price Indices" because as our eonomy declines in real terms the CPI has become wholly arbitrary and an anathema to consumer interests. The CPI provides no indications on the drastic decline in purchasing power because it only records transactions. It is not taking into account failures to purchase and heavy product substitution based on price by a struggling population. In fact this consumer behaviour is reflecte in the CPI as a component reflecting declining inflation and therefore reflecting "policy success in containing inflation".



30th June, 2020 - "money volumes and inflation"

I have posted a note, "Keynes' position on Money and Inflation" because his position on this is virtually identical to that of RIO analysis. However, on the side of the Quantity Theory of Money, he and other Cambridge colleagues, only went a partial step towards a full explanation of money volume impacts, by adding savings as non-circulating funds, in their Cambridge Equation. RIO added assets to create the Real Money Theory. This provides a more realistic explanation of how low interest funds drive a massive inflation in asset markets and a serious inflationary leakage into goods and service consumption markets. The case study for this has been a decade of quantitative easing.



30th June, 2020 - "supply and demand"

I have posted an article, "Supply and Demand, Revisited" because it is the misrepresentation of supply and demand that creates some confusion in explaining the real incomes approach. The application of the conventional supply and demand diagram to an economy is unrealistic because, in reality, market positions are largely indeterminate because of the variation in performance of producers in any sector, consumer income levels and purchasing power. The best we can do is define a transactional envelope within which transactions can occur with benefits to both producers and consumers.



24th June, 2020 - "managing recovery"

At the moment I am editing the first edition of the British Strategic Review (BSR) (publishers HPC). This contains a considerable amount on proposals for economic recovery. I have just posted the article "Heading for recovery" which provides an overview of some aspects of this report.

I have tried to make this "understandable" but in reality moving forward will be complicated because of the embedded lobbies who are articulate and fund-rich and who have been close to key politicians and parties for a long time. There is a need to spell out how things can improve for all. This is why the details will be set out in the BSR



23rd June, 2020 - "inertia of interests"

I have just posted an article entitled: "Constitutional inconsistencies" which explores why the design and outcome of monetary policy is biased towards the financial interests of a tiny group of constituents.

This is a systemic problem cause by the structures of government revenue-seeking (taxation), the accountancy legal and regulatory treatment of profits and monetary policy. This structure is levered by the Bank of England and the Treasury with a coordinated objective.

Constituents have no representation or means to influence these policies.



22nd June, 2020 - "reducing income disparity"

I have just posted an article entitled: "Addressing income disparity" which is changing focus to practical solutions to the issue of policy-induced income disparity. Attempting to introduce completely new "system" would have too many interested parties working against such a move. Accordingly I have identified solutions, in this case a major investment in mutuals, that operate within existing legal and regulatory frameworks. I will extend this analysis suggesting ways and means of mutuals to become major innovators and MuTecs for the future.



21st June, 2020 - "the deflationary policy bonus"

The last cluster of articles to be posted represent a new frontier in policy making because it is revealing new policy instrument options in support of RIO (real incomes objective) policies. The exciting aspect to this advance is that it does not represent a zero-sum game but rather a realization of the real incomes policy imperative of a "Positive systemic consistency" or the concept of all constituents benefiting.

This is of paramount importance because the original objective I set out to establish in 1975 was to identify policies which avoid the prejudice imposed on constituents by conventional policies. These continue to create winners, losers and those who appeal to remain in a neutral policy-impact state. Unfortunately the winners are always a select few and the losers many.

This policy frontier needs to review the role of central banks whose actual contribution appears to be increasingly marginal because one of the policy options is to initiate policies of fixed money volumes in order to reverse the centuries of decline in currency value. The notion of price stability being associated with a 2% inflation rate is defunct in the new scenario. Centralized fixing of interest rates would appear to have no beneficial function to generate fixed income from savings or to manage currency value and exchange rates. There appears to be a strong case for a transition to natural interest rates, see "Is there such a thing as a natural interest rate? - note". In the end all of this has to do with a form of pursuit of optimization based on microeconomic principles as set out by Adam Smith and the correct perception of the role of the supply side in establishing a more stable and manageable economy (see: "A clarification of the role and significance of supply side operations").

Lastly, as far as I can see this dispels the logic and the need for so called Modern Monetary Theory which follows the well-trodden path of the aggregate demand model (ADM) and by placing too much emphasis on financialization which by its very nature is controlled by those who manage finance; the track record on this count does not inspire any confidence in such an approach benefiting the constituency in an impartial manner.

RIO-Real income objective policies pass the baton to the supply side and the constituency who are almost bound to do a better job, if they are allowed to do so. This of course raises significant political questions which we can explore later.



21st June, 2020 - "tackling debt in a rational fashion"

I have just posted a short article, "Why we should not need banks " which clarifies the fact that deflation is equivalent to having a savings account that raises the value of money holdings. However, in the case of deflation the same number of currency units end up having more value as a result of increased purchasing power of goods, services and assets. Real incomes objective (RIO) policies can use this reality to extend the range of policy instruments to get governments and constituents off the debt addiction imposed by conventional macroeconomic policies, monetarism and misguided central banks.



20th June, 2020 - "observations on money volumes and inflation in market segments"

I have just posted a note entitled, "QTM Inflation analysis" which clarifies the fact that the QTM can only indicate inflation in asset markets but not in consumption item markets. Apologies for coming back to this dead topic but it clarifies why monetary policy is largely ineffective as a means of managing goods production and service activity price inflation. This further confirms the potential benefits of RIO-Real Incomes Objective policies.



22nd June, 2020 - "the importance of microeconomic foundations to macroeconomic policies"

I have just posted a follow up to "A Real Money Theory" pointing out why the QTM, The Cambridge Model and the RMT, in reality, cannot provide any useful basis for deciding on macroeconomic policies related to inflation. This is because inflation, or price levels, are wholly dependent of resources acquisition, allocation, production and unit output price setting by individual economic units. This is why the The Real Incomes Approach concentrates on the provision of incentives for economic unit productivity and price setting designed to augment real incomes.

Keynesianism, monetarism, so-called supply side economics and MMT do not have such microeconomic foundations and, as a result, frustrate the operation of the "invisible hand" by marginalizing the potency of decisions taken freely by the economic constituency.



19th May, 2020 - "cracks in monetary economics"

The Real Incomes Approach has essentially established that the Aggregate Demand Model which is the basic tenet of Keynesianism, montarism, supply side economics and, it would seem, Modern Monetary Theory, cannot endure as a logical determinant model of how the economy works. The following have been demonstrated:
  • inflation has no functional connection to demand
  • the quantity theory of money (QTM) is bogus
The last valiant policy instrument, struggling for a rational role in the monetary desert, is the centralized arbitrary interference by central banks in financial markets through the setting of base rates for interest. Although a long established monetary policy instrument, it does not appear to be of much benefit to the real economy. Analysis to date suggests that such interventions appear to be negatively correlated to productivity investment requirements. I am preparing some analyses on this topic.



19th May, 2020 - "Dodgy money theory"

I have just posted short note on a Real Money Theory (RMT) as a substitute for the hallowed Quantity Theory of Money (QTM) which turns out to be flawed since it does not contain key variables to explain the quantitative easing fiasco.

Although people focus on "austerity" as the "visible" part of government policy that has caused problems for this country, the real culprit is QE which has constituted austerity by stealth for most. Since this aspect of policy emanates from the "independent" Bank of England, its ongoing destruction, for some reason, escapes the necessary level of scrutiny while being a bonanza for those the Bank, and government favour, the financial fraternity. Clearly income and wealth disparity is of no concern to government policy makers.



13th May, 2020 - "Irrational debt"

I have just posted an initial attempt to explain what I have termed irrational debt. Although a mundane almost obvious concept, I delayed posting it because so many black holes appeared in the fundament of my understanding of economic theory related to the topic. However, in researching to find who might have covered these topics, I found myself wandering around a sort of Gobi Desert, not for 40 days however, but long enough to realise that, in general, these holes have not been detected or, if some lonesome economist detected them they are still working on the topic or died of confusion.

These relate mainly to what appears to be a fundamental error in how we see "money" as some neutral means of exchange.

In 1963, John Robinson, Dean of Clare College, published a book entitled, "Honest to God". It was covered at its launch with an article in The Observer headed "Our image of God must go". The notion was that to understand the purpose and value of religion, stop taking about God.

In an environment where increasing numbers of economists have joined the ranks of servile clerics and defenders of the faith in the monetarist idol, it is self-evident that to understand the purpose and value of our economy to the constituency, "money" should not feature in the discussion. This helps clarify many issues and then helps place the role of money in a productive perspective.

I am preparing some notes on this issue with a view to preparing and posting something on what appears to be an important topic; to me at least ;-)



8th May, 2020 - "Irrational debt"

In reviewing the impact of exogenous money, within which I would include the money generated under MMT, I have not been able to identify any benefits while there are quantifiable costs in terms of endogenous real growth. Part of this, in the domain of financial intermediation and banking, is related to what I have dubbed "irrational debt" on the part of individuals, economic units and governments; the concept is all-embracing. I will define what this in a note I will post on this issue soon.

Observing the political coverage of the government's grants and loans to companies and income support during this Covid-19 crisis there is a danger of this unique and necessary action being intentionally confused with quantiative easing (QE) to sugar coat the motivations behind QE and to detract from its disastrous outcomes. These payments have nothing to do with the QE policy. QE is, however, a case study in "irrational debt".



May 3rd, 2020 - QTM.

I have posted a replacement pdf for the previous one concerning missing savings and assets from the QTM which was entitled: "A Real Theory of Money (RTM).". This is because applying the RTM algorithm did not project expected results. On closer examination of the Cambridge equation, this also gave unnexpected results.

The replacement document, "A New Real Theory of Money (NRTM)" presents a new equation which generates expected results. However, this area requires a lot more work.



May 3rd, 2020 - Modern Monetary Theory (MMT) ...

I have posted an article concerning my doubts in relation to the national accounts approach used as a basis for KMS macroeconomic policy decision-making, "Production, innovation and national accounts" which, for the moment sets out some of the problems with this approach. The aspect related to there being no microeconomic foundations to KMS policies and, I suspect MMT, is subject to another article, in preparation.



May 1st, 2020 - Modern Monetary Theory (MMT) ...

I stated in my last comments that as far as I have been able to gather Modern Monetary Theory is the same as Keynesianism, monetarism and supply side economics in:
  • being a national accounting approach (NAA)
  • having no microeconomic foundations (NMF)
I stated that this has a major potential problem, if my understanding is correct, because of the implications on innovation and real incomes. At this stage I have posted an article explaining the realtionship between NAA, NMF and innovation.



May 1st, 2020 - Change of title

I have changed the title of the article "A clarification of supply side economics" to "A clarification of the role and significance of supply side operations" to avoid confusion with what is know as supply side economics which is a fiscal scheme with little connection to the economy of the supply side.



April 29th, 2020 - Modern Monetary Theory (MMT) ...

As promised, I am reviewing MMT and my preliminary take is as follows. In spite of all the media and economics exchanges and general "excitement" I have found it to be disappointing. It differs from other macroeconomic management paradigms in that it openly admits to be a financialization system but is, as far as I have been able to gather from very intense workshops, the same as Keynesianism, monetarism and supply side economics in:
  • being a national accounting approach
  • having no microeconomic foundations
These are a major potential problem, if my understanding is correct, because of the implications on innovation and real incomes. There are some, what appear to be, significant constitutional economic issues related to the enhanced role of government in having an even greater role in management of the economy under the guidance of financial intermediation and banking interest groups; so far this has been a mess. Given the way financial institutions work with political parties within the USA, for example, any idealism associated with this "new" approach would appear to be at risk of disappointment. The interesting and troubling point is that MMT has not liberated itself from the Aggregate Demand Model fixation that plagues all macroeconomic theories in practice.

The lack of explanation of what causes inflation only places the theory in the flawed QTM camp. The most troubling aspect is the tone of MMT in that it sees this top down system as a way to "run the economy" which studiously avoids the reality of the heterogeneity of the reality on the ground where one-size has never fitted all. I won't say any more at this stage, but I will prepare some articles in the coming days. I am double checking what I have said here, I hold no "partisan" position on this, only, I hope, logical doubts which I hope MMT can clarify.



April 28th, 2020 - exogenous money ...

I have posted an initial version of an article on exogenous finance, "Resources, economic capacity, endogenous & exogenous means of exchange" promised in the last post below. I will probably modify it because additional implications occured to me while completing it, it will do for now ;-)



April 27th, 2020 - money, money, money ...

Whenever something goes wrong in the field of economics, a frequent occurrence, various individuals appear selling miraculous solutions, as if any theory or construct will, of course, work in practice. From consideration of the discipline of decision analysis procedures to the fact that most policies fail to achieve their objectives, we all need to admit is that life is not that simple. Today, I received an email expounding the benefits of "Modern Monetary Theory & Practice" (MMTP). Based on the email content, my immediate reaction is one of caution, simply because whenever we have seen exogenous money applied to speed up growth or fix some issue, such as unemployment or inflation in the real economy, things go wrong. MMTP has quite a long history but has gathered momentum with economic circles more recently. Exogenous money issuance tends to go wrong quickly if it is:
  • used to support the aggregate demand model
  • based on national accounting principles
I will produce a note on exogenous and endogenous money. I was going to do this anyway as a critique of our current money issuance system, so my notes are more or less complete on this subject. I hope this will clarify why I am cautious from a real incomes position about exogenous money. Then, from that platform I will review MMYP ;-)



April 26th, 2020 - unjustified statements

Today I heard an economist refer to Say's law as nonsense and that economies are demand led. From what followed, the person concerned did not appear to understand, as I am afraid is the case with many economists, what Jean Baptiste had to say concerning production, distribution and consumption.

My latest article "A clarification of the role and significance of supply side operations" attempts to clarify this question. I will follow this up with a loose end I left in that article ;-)



April 4th, 2020 - Concerning the need to be able to distinguish between Gobbledy gook and Mumbo jumbo

In reviewing some of my older papers and communications it is very apparent that the use of common English words, by different economists to mean different things, is a significant problem. This is not only an issue in communication between economists but even more so between economists and the national constituency.

However, we were warned that this is the state of affairs. In the mid-1960s, Fritz Machlup published a book entitled "Essays in Economic Sematics", which provides countless examples of how "leading economists" were applying the same terminologies to mean, sometimes, completely different things. Merton Miller, in his preface to this book stated, "By forcing ambiguities, sloppy reasoning and implicit theorizing out into the open, Professor Machlup has alerted his own students and the profession at large to the tyanny of words."

As a student I found this to be quite frustrating. If our mentors could not agree on what they were talking about then we, as a future generation working in this field, were bound to face an unneccessary communications issue. Unfortunately this has turned out to be the case and it has resulted in what should be transparent evidence-based economic logic, often being no more than political assertions.

On this point, I have noticed that engineers and members of the public are adept at understanding the concepts behind the Real Incomes Approach. On the other hand trained economists are more resistant since the concepts jar with what they gleaned from their dog-eared lecture notes.... but then, Fritz did warn me.



April 3rd, 2020

Covid-19 has imposed an awareness that economic policies should be, first and foremost, about the wellbeing of individuals families and communities. This is difficult to honour with a political system that gives power to tiny factional political parties. There has been a transition from mixed economy planning based on the old tripartite system between business, unions and the government to one of applying a business school bottom line mentality, or financialization, to whole economies.

Harvard Business School's Jeremy Sachs advised Russian and Central European authorities, with the fall of the Berlin Wall, to introduce a " "short and sharp" transition from state-based operations to privatization. As a result millions lost their jobs with no social support and state enterprises were carved up. The most profitable segments were transferred at nominal prices to the so-called "young Communists" and much of the rest auctioned off to naive foreign "investors". The result was millions of suicides and the creation of the oligarchs who now influence or control the politics of their nations.

This is a case study of the damage economic policies, driven from an enterprise perspective, can do. It was my disagreement with the social damage wrought by conventional macroeconomic policies in 1975 that motivated me to look for alternatives. Improving the wellbeing of individuals, families and communities can be a central aim of economic theory while improving business productuivity and real incomes. There is no fundamental conflict between these two objectives. This is the foundation of a resilient economy that is also environmentally sustainable. We need to address the climate crisis and build a happy and free society with just settlements and without recriminations. It is certainly the time for the mantra, "There is no alternative", as the sustained cause of social prejudice and disruption, to be abandoned; Covid-19 appears to have sparked some thought in this direction.



March 31st, 2020

A lot of the articles are somewhat repetitive, largely to make specific points that could be overlooked. However, I also find this somewhat irritating because I do not always have time to dedicate to more leisurely and reflective writing. However, I will rewrite some of the more recent addtions in order to consolidate them into more concise focused pieces.



March 26th, 2020

Next steps....

Some may have noticed that I referred to a Real Incomes Policy administrative framework linked to business rules. I know that this is a crucial aspect of turning theory into fully fledged likely-to-be feasible policies. This is a weak point in most economics since the theory does not map over practice and less so over outcomes.

I know this is important because it was first drawn to my attention in 1981 when I had circulated a bare bones proposition to all UK political parties i.e. at the time Conservative, Liberal and Labour. Richard Wainright, the Liberal Party Economics Spokesman, was the one of the only people who demonstrated in his questions to have obviously read and understood the proposition and to have reflected on it in practical terms. He was reticent, he said, not because of the logic but more on the practical point of "If we propose this and win the election, we will then be faced with the problem of having to implement it!"

The main Conservative representative, now in the House of Lords, couldn't advance our exchange because he became fixated with the fact that one of my real income projections generate a growth of 2.75% each year under a specific scenario. This he considered to be impossible, based, of course on ADM experience, and he suggested 0.25% or maybe 0.5% would be more realistic; if he had read the paper I had circulated he might have understood or at least queried me on the model.

Labour asked me to speak to Len Murray, the General Secretary of the TUC but he would not entertain anything that differed from the existing "position of Congress".

However, a senior manager from KMPG, in a Conservative group, had to leave a group luncheon early, so he made the point of approaching me to say he found the proposition to be of interest but, in order to introduce it, thought need to be given to required administrative changes because, at that time, companies and/or authorities did not collect the type of data required to make use of the PPR (price performance ratio) and the PPL (price performance levy) as policy instruments. This message hit home immediately since I was aware I had not, at that time, advanced any details how this would be accomplished at the national administrative level. I had got as far as explaining the microeconomic operation or rudimentary business rules. Unfortunately in attempting to follow up with this individual, no one who had been present was able to identify who he was; bit of a mystery there.

However, on the political side, and based on feedback by two experienced individuals, it was evident that I needed to turn my attention to a specification of the Real Incomes Policy administrative framework linked to the business rules. There are several reasons why the current UK administrative framework needs to change and I have explored some aspects in very short articles on "paradoxes" (the profit paradox, the fiscal paradox and the montary paradox) of how current administrative frameworks currently constrain desired change and innovation.

Hovering in the background, given how we arrived at this location in space-time, and under what policy circumstances, there will be enoromous presssure to not disturb government revenue seeking, or what Gordon Brown frequently referred to as the fiscal neutrality rule. Having analysed this since 1981 I hope the articles that will appear on this topic will prove to be useful and of interest.



20th March, 2020

In the context of Sustainable Development Goals (SDGs) and climate action, most will be aware that the 2019 UN Sustanable Development Report identified that so far, after the launch of Agenda 2030 in 2015, there is a problem with three SDGs that "go backwards" when there is economic growth. These include:
  • SDG 10 - Reduced inequalities
  • SDG 12 - Responsible consumption and production
  • SDG 13 - Climate action
We all know that the failure to meet SDG 10 is the common feature of ADM policies. SDG 12 is essentially the whole economy which is, of course, all supply side. SDG 13 is our existential challenge that needs to be addressed. Well, what can we expect under ADM policies? The UN Sustainable Development Report did not labour these issues it being a typical product of an editing committee very much concerned with the image of their institutions and Agenda 2030. However, individual memmbers of their oversight expert committee have been more forthright.

It is worth noting at over 65% of the indicators for climate action and responsible consumption and production have not yet been specified. So this alone is a serious issue. It is also the case the 70% of the SDG 12 indicators have also not been specified.

The Real Incomes Approach has much to contribute to this predicament as it does to the analysis of poverty economics an important component of the proces of designing projects adapted to the conditions of low income countries and in particular the lowest 40th percentile, many of whom are at risk. I will be adding articles to explain the mechanisms of operationalizing the real income objective to not only promote economic development but also via means to sustain environemntal and ecosystem carrying capacity and thereby contributing to climate action.



Botequim






In this section I provide some feedback to those who write in with questions....

This isn't a blog it is an informal communications platform where I can let people know what is being advanced and to provide some observations.....

The Real Incomes Approach the macroeconomic policy framework with the real incomes objective has always been a fluid exercise advancing rapidly both in terms of theory and practical propositions. Some have asked me why this appears to be the case, I think the reason is that this has occurred because in 1976 this work was no longer guided by the pre-ordained constraints imposed by the Aggregate Demand Model Box. These limitations both in theory and practice are caused by conceptual and quantative model errors that have caused so many problems for Keynesianism, monetarism and so-called supply side economics.

The nature of the problem is that these policies all fail to gain traction and the policy targets keep changing as the failing policy sparks another issue. Invariably these erratic cycles generate winners, losers and those who somehow remain in a neutral policy impact state. The general outcomes, it would seem, for an increasing proportion of the constituency, is the lot of being expected to endure policy-imposed prejudice. It was this prejudice imposed on constituencies by clearly inappropriate policy instruments, that caused me to question conventional economic practice. This naturally led me back to the theory to find how it could be so oblivious of human needs after centuries of development. With time the reason has become obvious.

The visceral nature of confrontational politics deploys a cynical tactic of attracting contending groups, each with a convenient identity tag, used unashamedly by politicians in dog-whistle politics to accumulate enough "identities" to win an election. Today the dog-whistle is less connected to open declarations but the process is operated through web-based social media to route messages to their identity-tagged targets. Many of these messages are purposely misleading either in terms of their promise or characterization of political opponents. This is, in reality, a serious constitutional issue. However, interests, so far, have been effective in attenuating any substantive corrective action.

This undermines any coordinated objective analytical procedures by political parties because they are invariably controlled by considerably smaller but powerful factions, who select procedures that support their interests; to protect their survival in the job the other representatives and members of parliaments tend to go along with the "position" of the party. Somewhat like derivatives, these disjointed policies are "sold" to the electorate as coherent policies but which always result in specific segments of the constituency benefiting while others are prejudiced. Policy makers tend to express policies in broad sweeping declarations, but it is the details that are important and today. many of these details are hidden.

The Real Incomes Approach does not have a political colour or brand, it is neither left wing or right wing (whatever that means), it does not have a pre-ordained position on private enterprise or public services or some underlying desire to nationalize everything or privatise everything.

What the current mission consists of is to bring about a better alignment of the interests of the ciizens of the country in line with how they go about their activities and affairs through a process of constant learning, development and adaptation of technology and techniques, the acqusition of tacit and explicit knowledge leading to better decision analysis to identify and implement appropriate innovation, advancing the interests of all.

What appears on these pages is the result, I hope, of logical deductions from observations. I welcome any feedback pointing out flaws in logic on my part. I am not selling the Real Incomes Approach but I continue to develop it in the directions that analysis leads me and then I write out conclusions on the pages of this website.

There is a long way to go to make this a reality, why not join in?

Hector