In the Libertarian Deep End
Michael Hlinka is the notoriously libertarian daily economics reporter on CBC Metro Morning (the flagship morning radio show in Toronto). Our paths have crossed before; see my previous commentary:
http://www.progressive-economics.ca/2009/07/11/another-economics-journalism-is-possible/
Michael’s segment on September 1 (in conversation with host Matt Galloway) focused on the Statistics Canada GDP release. It was a sensible and largely uncontroversial discussion, with Michael taking a relatively bearish position about the state of Canada’s non-recovery. In fact, I generally agreed with his analysis.
Then Matt mentioned and briefly quoted from my commentary that same morning in the Globe and Mail (http://www.progressive-economics.ca/2010/09/01/capitalism-upside-down/). That unleashed the following exchange which I present without comment as a statement on the condition of economics journalism in Canada. (This kind of thing is hardly unusual; you get it all the time in places like Lang-O’Leary, BNN, and the National Post.)
You can listen to the original show (if interested) here: http://www.cbc.ca/metromorning/2010/09/gdp-growth.html
The good folks at Metro Morning invited me onto the show with Michael the next morning. Nobody apologized for any offense (and none was taken), but we had a very decent exchange that you can listen to here:
http://www.cbc.ca/metromorning/2010/09/get-a-real-job.html
Here’s the transcript of the September 1 segment:
Matt: Jim Stanford, economist with the Canadian Auto Workers union, wrote an editorial in the Globe and Mail this morning, and he says that it’s not – and we discussed this earlier – not the role of government in creating recovery, restarting our economy and getting it going. That it’s actually the role of business. This is a quotation from what Jim wrote: “Business should be leading economic recovery, borrowing money (from households and banks) to fund new investments and jobs. That’s how capitalism is supposed to work.”
Michael: If he believes it so much, why doesn’t he actually do something useful, and actually borrow money and start a business. Really! It’s very easy to say, ‘Let everybody else do something, let everybody else take the risk.’ What does he do? He basically reaches into the hands of hard-working people, ripping out money. I’m telling you, but you’re saying, you’re bringing it up.
Matt: I just, I just asked.
Michael: I know, and I’m just saying, ‘Get a real job. Do something useful.’
Matt: Isn’t that the role of business, though? Shouldn’t business have a role to play?
Michael: Businesses or individuals. Individuals make choices. Free choices about doing what they do.
Matt: But they’re also part of…
Michael: In the same article, he can’t even keep this nonsense straight. He’s talking about an inventory buildup. He says, ‘Moreover, the growth’ – now that we’re quoting it – ‘the growth that did occur was due solely to inventory accumulation. Strip out new inventories and real GDP actually declined.’ So now he’s saying that businesses should invest more when the inventories they’re producing aren’t even being sold. It’s ridiculous.
Matt: How worried are you when all of these numbers start to come together? Again, you’ve been on this saying that we’re not in a recovery, and we get that part of it. A jobless recovery is no recovery at all. But when you have data saying that the trade deficit is huge, that growth is almost at a standstill, are you really worried?
Michael: Personally I’m not worried, because I set my alarm clock early in the morning and I do an honest day’s work. And I would … but you know … but I would … I would recommend very very strongly that people think as carefully as possible and systematically as possible how they can create more value. Because if individuals do that, then all the problems are solved.
The irony is that he (Hlinka) inadvertently made the point for Keynes and fiscal policy.
“I would recommend very very strongly that people think as carefully as possible and systematically as possible how they can create more value.”
Without new investment- how can we have productivity gains. He obviously does not have much of an understanding of how the economy works- of course I am not sure libertarians believe in the notion of an economy. If we left it up to them- we would all be back on the farm- working a hard days labour- growing some new value.
The key point is- new investment produces innovation that increases productivity that keeps the supposed virtuous cycle going. Sadly- without the investment we get competing on wages, living standards and the race to the bottom- and yes in the end- we get inventories piling up because we have stagnant and deflating wages- and no opportunities for people to go out and create value.
Those darn libertarians these days are just about as comical as you can get- they should open up a clown school!? ( and Harper can be the lead act, followed closely by this guy)
Paul
I should add, the question now that we have had actually existing capitalism take the pathway it has, (through the deregulation and globalization and financialization of 30 years of the neo-liberal economic policies) how do we get back onto the pathway of virtuous cycles rather than the viscous cycle we are on.
Well – given we are seemingly constrained to capitalist rules- then according to those rules- the only way forward is business investment- supported by more government stimulus- and through such a process a combination of the two could ignite a recovery.
Alternatively- we could forgive third world debts, and develop the economies of the less developed and create demand for simple basic consumption based on the latest green friendly production techniques- that would take either business investment or public- depending on which way you are going.
You take the first world economies and transform their production systems- with business investment (helped along by targeted government support) and new value in terms of green and socially sustainable production.
The huge economic activity- from this business investment would create a boom and we would be moving in a much more collectively positive direction. I just do not see how we can make it forward without business investment.
Without it- we will just see more ratcheting down of employment- more government debt and more scrapped production assets- what are we gonna start burning wheat again? That is the deflationary route.
The only other alternative I see is purely magical- like erase developed economy consumer debt- which basically the housing bubble was magically doing, until the whole bubble burst. So unless we see another bubble somewhere, (and that is asymmetrical consumer debt repudiation, and leads to more polarization) it is hard to see how people can set their alarm clocks early and get out to create that early morning value. (personally I do my best work at night!- take that how ever you like!?)
So if the financial gurus are working on a new way to create a bubble-which is seemingly been the plan over the past 20 or so years, why not just come out with a big debt eraser and clear consumers debts right now- just do it- much quicker and much more efficient.
Given the nature of those with their hands on the solution levers right now- (at least in N Amerca and most of Europe) the only plausible capacity for a plan is creating a new series of regional bubbles.
pt
Michael Hlinka is the notoriously libertarian daily economics reporter on CBC Metro Morning
Quote;
“Michael: Personally I’m not worried, because I set my alarm clock early in the morning and I do an honest day’s work. And I would … but you know … but I would … I would recommend very very strongly that people think as carefully as possible and systematically as possible how they can create more value.”
I know a lot of the people who post on this sight are economists, so please don’t take offense at what I am about to say.
What the hell of value is produced by this guy spouting economic nonsense? You can’t burn it for fuel you can’t you wear it and you certainly can’t eat it. Where does he get off telling the rest of us we should… “think as carefully as possible and systematically as possible how they can create more value.”
Maybe he should lead by example and get off his ass and PRODUCE SOMETHING. I really hate smug, self centered people who think what they do for a living is so much more important than what the rest of us do, especially when they produce absolutely NOTHING of value.
Jim sets an example here for all progressive economists. When attacked, keep it clean and maintain the high ground. You’ll come out looking good.
Jim: you are a gentleman and a scholar.
I agree with the author. I think it’s the huge economic activity- from this business investment would create a boom and we would be moving in a much more collectively positive direction. I just do not see how we can make it forward without business investment!