Episode 327 – Isolation with Bill Mitchell

Steve Grumbine:
00:00:43

All right, folks, this is Steve with Macro N Cheese, and today’s guest is none other than my friend, Bill Mitchell.

Bill is a professor who holds the Chair in Economics and is the director of the Center of Full Employment and Equity (CofFEE) and Official Research Center at the University of Newcastle, Australia. He’s also the Docent professor in Global Political Economy at the University of Helsinki.

He is a JSPS International Fellow at Kyoto University in Japan. He is also, most importantly for me anyway, one of the founders of modern monetary theory.

His daily blog, which you must check out, it’s BillMitchell.org is one of the leading economics blogs in the world and he’s been on this particular podcast many times. If you go to our podcast and just put Mitchell in there, you will find a ton.

In fact, you can go back to episode number one because Bill represented number one. I think he was also three or four later. Bill, thank you so much for agreeing to join me tonight.

Bill Mitchell:
00:01:45

Thank you. More than welcome.

Steve Grumbine:
00:01:47

You know, this time American exceptionalism has bit me. I live in America.

You get to watch what we’re doing here in America, the USA, more importantly, I don’t want to lump in poor Canada when I say America or Central America or South America. You know, the USA is a real cesspool of nonsense right now.

We’ve got a president who has just spun the world into circles with his on again, off again tariffs and all the, let’s just call it what it is, bullying that he has done around the world. And inside this country, we’ve got a lot of people that are being deported on a daily basis, students for no other thing than speaking out.

Tons of people are just randomly disappearing. We have so much pain and suffering going on in this country. And it’s really an ideological thing. It’s shocking to see.

Even though I live here and have been here for 56 years, it is extremely foreign to me. Like it feels so uniquely different. It doesn’t mean that it hasn’t been bad before this.

It just means that the mask has come off and I feel like we’re in a spiral, a real serious spiral. Folks like myself and many other working-class people, you can see, are genuinely terrified of what’s going on.

I’m just curious, as a person that is outside of the US, that gets to look inside the US from afar, what do you see right now? I mean, what is your take on the current events as they stand?

Bill Mitchell:
00:03:18

Yeah, thank you.

I was talking to someone earlier this morning about this matter and they said, drew the conclusion that the current period is worse than the McCarthy period.

We were specifically talking about these ideological audits in the university system and the threats to withdraw funding for research and other matters that the government administration has been making in universities.

These centers of knowledge of each of our nations are being asked whether they’ve got Marxists on staff and whether they’ve got diversity programs and will they accept the appointment of a federal representative on their academic appointment boards and their curriculum boards. Now, you know, it’s a very small step after that that you’re back in a totalitarian society.

And, you know, this is the land of the free, veering towards totalitarianism.

And this is a land that a government administration that is systematically but randomly decommissioning the institutions of the state, running people out of work and your policy departments destroying them. These institutions have taken a very long time to build into sophisticated policy making departments and capacities.

And then you’ve got the richest man in the world who’s got zero, as I understand it, experience in administrative governance, in policy design, in policy implementation and execution, taking a chainsaw to the policy making machinery of your state, the very essence of the state.

So for us outside who monitor these things and in tune with these sort of issues, it’s unbelievable in one way, but from my perspective, to me it’s a further step towards a long deterioration in American society that we’ve been observing for many years now. So it’s accelerating under Trump, but it’s been slowly happening for years and years.

And I think the rest of the world is now finally being pushed to a situation where the idea that America is the sort of stabilizing force in the globe, in keeping peace, and helping poorer nations with USAID [Agency for International Development] type grants, et cetera. I think that we now are being pushed to the view and into action that that setup is no longer viable, doesn’t exist now.

America, every day it’s discussed in Australian media that America is now an unreliable partner and Australia among all nations, has been one of the closest allies of the US.

We now are talking about America as an unreliable partner that we’ve got to shift away from in our alliance-type reliance and look to making alliances and understandings with other countries.

And you’ve got the Department of Foreign affairs in Canada, I’m not sure exactly its title, now issuing official travel advisories to Canadian citizens that if you have to go to America, you’re advised to take a burner phone, leave your real phone at home.

Because there’s now increasing evidence and examples of citizens of the world traveling legitimately to the US as they have for years for various reasons, studies, personal matters, catching up with family and friends, business whatever, who are now being questioned at airports for several hours.

And many of them are being sent back packing because they might have some tweak on their phone, some SMS or email or something that’s been interrogated by the border control officials that they’ve deemed to be offensive. This is now a paradigm shift in global international relationships.

And I think what America is doing is increasingly going to make itself isolated from the rest of us.

And meanwhile the rest of us will work through our previous differences where they exist or build on previous understandings that may not have been formalized as much. And we’ll work out new arrangements that bypass the US to the US’s detriment. And I think that’s what’s going to happen. Yeah.

Steve Grumbine:
00:07:52

You know, when I remember your book Reclaiming the State, that was a few years back, I know you saw the trajectory of neoliberalism, I know you saw the trajectory of a lot of the elements of that, but it was largely focused on obviously Europe and the EU and the adoption of the Euro.

But when you look at that framework that you guys put together back then, I mean, if you were to flash forward to today, what do you see now in light of all that research, as an economist, as a person who studies these things?

The lack of understanding of MMT, I hate to say just flat out “MMT”, but monetary sovereignty and understanding how the currency works and understanding the great things that could be done, it’s almost as if it’s impossible to even consider that they just jump to things that just make no sense to me. But your thoughts?

Bill Mitchell:
00:08:44

Well, I don’t even see it as a natural extension of neoliberalism. Neoliberalism is about co-opting the state to pursue advantage for selected groups in the society, the top end of town, as I call them.

So there’s an element of that, but there’s sort of a deep irrationality going on here.

Neoliberalism is a systematic, contrived pattern of behavior and strategy, whereas it’s hard to assess whether there is anything systematic and strategic going on here.

There’s certainly things happening and huge policy shifts and huge ructions in the continuity of American society, but I can’t fathom that it’s a very strategic thing.

Now I know that there’s stories, narratives floating around that this is really the Silicon Valley, the broligarchs, as is being reported over here. We’re calling them the broligarchs now.

That these sort of Silicon Valley types who, if you go back to the beginnings of the Internet, were seen as a progressive force being able to liberate us from information poverty and bring us together much more easily, as in communities and whatever. They seem to have morphed into a sort of cheer squad for the US President because I suspect they see major commercial advantages.

I mean, the Internet’s gone from being a non-commercial type of concept to being just another money-making venture. So I’m guessing those guys, and they’re mostly guys, are seeing advantages in cozying up to a wildly irrational president.

I just don’t see all that much strategic behavior. I see just daily swings in pronouncements.

And the administration is trying to make out that Trump’s incredibly clever, that he’s creating all of this chaos as a negotiating transactional strategy. It’s a pretty weird way to go about negotiating from the way I see it.

I think, as you said, it comes down ultimately to a battle between the US and China on the economic front at the moment. And I think Trump has seriously miscalculated that yeah, he can bully Namibia and he can bully small countries into selling out their resources under some sort of weird trade agreement under threat of punitive tariffs if they don’t. That’s for sure. And America’s been bullying those small countries for a long time.

But I believe that ultimately the Chinese had more to lose than America in a standoff, and as a consequence, they would ultimately cave in and he would be able to somehow negotiate. You know, he wants the valuable minerals that are required for semiconductors, et cetera.

But I think that assumption that China would cave in is based upon the insularity in American thinking that “America’s great. Everyone else will be subservient.” Well, China’s not going to be subservient to America now. China can ride this out much longer than the US can.

And I just don’t see that his strategy to bring China to heel will work at all. It’s going to wreck America. And China is already in a very interesting development,
a few weeks ago, when Liberation Day was first announced, you know, historically, South Korea, Japan and People’s Republic of China have not been friends, and there’s obvious historic reasons for that. And certainly on trade, they haven’t wanted to cooperate.

But there was a meeting of those trade ministers a couple of weeks ago, and they formed an agreement to pursue arrangements which will benefit their countries.

And, you know, that’s an example of many that have happened since Trump came to presidency the second time, that the rest of the world is relatively quickly realizing what the scene is and they’re working out arrangements to just play America out of the game. Now, you know, what happens then? We don’t know. And what will be the response of America? We don’t know. I think obviously America needs these minerals.

Well, there’s only a few countries they can get them from. China has 50% of them, Australia has a lot of them, Ukraine obviously has a lot of them, and Greenland has a lot of them.

So, you know, at the moment, I think he’s now targeting Ukraine again to get access to these minerals. I don’t know whether that’ll be successful. Can he bully Ukraine? Probably, because they’re under severe threat from Russia.

Will he try to annex Greenland? Then he’s got a serious geopolitical problem because it’s a NATO country invading in one way or another, another NATO country.

How does that work then? He’s got the whole of Europe against him. So there’s deep uncertainties, but I think he’s miscalculated.

Steve Grumbine:
00:13:46

One of the things that’s interesting if you look at Trump’s cabinet or the people that work with him. J.D. Vance. I mean, these guys are all tied somehow or another to Palantir and Peter Thiel.

Bill Mitchell:
00:13:56

Yeah.

Steve Grumbine:
00:13:57

And you’re talking about a group of people that absolutely don’t believe some people should live. They believe that there is a great many people out there that just are takers and don’t have any real reason to live.

You look at what Palantir is doing with weapons from an AI perspective, and they have this kind of eye-in-the-sky approach to things where they think that they can kind of do remote warfare around the world and just literally from some couch in Silicon Valley, launch limited range nukes, all kinds of insanity, like Skynet from right out of Hollywood, except this is real, right? So we’re not just talking about bad faith, crazy actors. We’re talking about guys with a gun. Right?

Bill Mitchell:
00:14:42

The real scary thing, and it’s not giving much coverage at the moment, but the real scary thing is that Trump’s got what? He’s got four years.

But I think Vance is in the vanguard to become the next president, and he’ll be certainly groomed that way unless Trump somehow evades the constitutional restriction. And I guess he’ll try. He tries anything.

The real scary thing for the world, I think, is that, yeah, everybody’s saying, “Oh, well, Trump will be gone in four years.” Yeah, he will be, probably. Trump isn’t really as hardcore right. Trump’s just a transactional sort of opportunist property developer.

He hasn’t got a grounding in the hardcore libertarian sort of militaristic tradition. Trump could almost be a Democrat in the American sense, whereas Vance is a child of that hardcore Right.

I think that’s a really scary thing for the world, that I think Vance would be much more extreme than Trump. I think Trump doesn’t really want world wars, whereas I think Vance wouldn’t hesitate. I think that’s a real scary thing.

Vance is much more connected with the dangerous elements of the world than Trump is.

Trump’s just an opportunist who can give a good speech and he is able to beguile those who are feeling frustrated by globalization, whereas Vance is the real deal. He’s the real hardcore, right, evil, whatever.

Steve Grumbine:
00:16:12

I’m very interested in your take as an economist in this particular case. As you watch these countries come together, obviously we know about the BRICS.

We know that a large part of the goal is not just the trade, but to get away from the payment system that the US controls, the SWIFT system, which allows the US to have incredible power as they seize the assets of Russia.

When they didn’t like what Russia was doing. They seized assets many times. They’ve imposed sanctions. They’ve done all kinds of economic warfare, but the rest of the world is looking to break away, as you said. What do you envision as you watch the U.S. isolate itself? I’m not sure I’m willing to say that it’ll be like North Korea.

But when you think about it in terms of its Monroe Doctrine, like their own little sphere of influence, do you see the US becoming more militaristic, or do you see it becoming more just truly isolated and trying to lick its own chops? I’m confused on the economics of it all. Obviously, Trump doesn’t have a coherent plan, so it makes it really difficult to go through.

But let’s just go with the tariffs for now. What is the impact to other countries? Like, in real terms, are tariffs really going to cause the problem?

Maybe they change the way they value their currency. Maybe they loosen or weaken it.

Maybe they strengthen it. Can you talk about the tactics different countries might be using to counter the tariffs and what tactics the US may use to prevent prices from going up, et cetera?

Bill Mitchell:
00:17:46

What I tried to do myself as a researcher was to investigate whether there was any coherent analytical material that would have infiltrated into the decision making of the current US administration. And what appears to be the justifying documents come from this guy, Stephen Miran, who is now one of the sort of “in” players of the administration.

And he wrote this analytical piece which was attempting to justify the decision to impose tariffs and why it would be in America’s advantage and not to the disadvantage of the rest of the world.

And his principal rationale, I use that word loosely, was that, yes, the tariffs will increase the prices of all imported goods in US Dollars because that’s what they do. A tariff is effectively a tax. And all importing agents then have to pay whatever the proportional tax to the US Federal Government.

And the retailers will then seek mostly to pass that on to the final consumer. I think everybody agrees on that. This guy Stephen Miran certainly agrees on that, and he’s sort of an adviser to the President.

But what he argued was that for various reasons, including the specter of recession coming from the increased prices and uncertainty, was that we know historically it’s true that when there’s deep global uncertainty and dislocation occurring in economic sentiment, the rest of the world floods into US Treasury bonds because they’re seeing it as being risk free. They’re seen historically as being a safe haven for investment funds when there’s deep uncertainty and especially threats of recession.

So what they believe, I think, and this is outlined in this document I read from the Hudson Bay Investment Bank, which where Stephen Miran has an association, is that deep uncertainty and that flood into U.S. treasuries will appreciate the U.S. dollar, strengthen the U.S. dollar. And of course, if the U.S.
dollar strengthens, the prices of all goods in foreign currency terms become cheaper.

And so you get the offset happening that the tariff increases the price in US Dollar terms, but the appreciation of the currency reduces the price in US Dollar terms. And I think they believe that becomes an offset.

And so what happens then is that the impact of the tariff is not borne by the American consumer because what they lose on the tariff, they gain on the increased value of the US Dollar. But in that scenario, which they believe is likely, the rest of the world then bears the burden of the tariff.

Now, the question is that likely? It’s possible that the US Dollar would appreciate, but it’s unlikely, I think. And what we’ve observed since Liberation Day, and I hate to use their nomenclature. I think I’ll stop using that term.

What we’ve observed since that particular Wednesday, a sell off of U.S. Treasury bonds. As global uncertainty has risen to quite high levels.

With all this dysfunction and chaos going on, for the first time in recorded history, the rest of the world is moving away from US Treasuries, not towards them. And I think that tells you that a serious misjudgment in reasoning in terms of the US administration has been occurring.

Now, moreover, the idea that tariffs would somehow work in favor of US manufacturing is really sort of a throwback from some decades ago where the supply chains of manufacturing firms were mostly contained within this national border.

So that, you know, a car manufacturer would buy steel from Pittsburgh or wherever you make steel, and the rubber moldings would be bought from a molding factory in Detroit or somewhere. So the impact of the tariff on the supply chain would be uniform.

Now, what globalization has done, of course, is that the multitude of components that go into a manufactured item and more so if they’re complex items, sourced from many different countries. So it’s sort of unbelievable that you’ll have a uniform effect across your supply chain by imposing a tariff in America. It’s just not possible.

Intermission:
00:22:25

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Bill Mitchell:
00:22:47

And so the idea that somehow this will benefit US manufacturing, which has pretty much all but disappeared, it can’t happen. And the other thing is the idea that suddenly Apple will move their manufacturing and assembly operations back onto main soil America.

I’ve read assessments that there’s just not enough and there won’t ever be enough in the foreseeable future of these highly skilled engineers that are required for the processes and designs, et cetera, and the manufacturing processes of the iPhone and complex products like that that you just haven’t got the skilled labor to do it. Apple could not do it.

They may be able to move back and they have more simple products like the iPad apparently, which has a much longer production cycle, but the iPhone, they’ve got to innovate every year to keep pace with Android and the Chinese manufacturers. And that requires really high-skilled technical expertise that America just doesn’t have.

And China has in abundance because the Chinese have been much cleverer than America and invested in the human capital skills.

And so there’s no way that you’re going to get a revitalization of American manufacturing on the scale, especially in high tech products, of the scale that would ratify this policy stance as being successful. It’s just not going to happen.

Steve Grumbine:
00:24:20

You know, every movie we see here, you know, all the documentaries show us thinking through these important problems, these physics problems and all these mathematical mind twisters and “Look at the ingenuity of the American people,” and so forth, and we’ve been dumbed down. We have been systematically dumbed down and they’re making it impossible.

Real quickly before we go, beyond that, I want to just say, what do you suppose is so ideologically bankrupt about this nation that we don’t invest in our nation? It can’t just be, they don’t know we create our own currency. It can’t be that. It’s got to be something else. It makes no sense to me on any level.

Like there’s no electoral solution to this problem here, in my mind, I don’t see one anyway.

But when you think about depriving people of education, depriving people of services, depriving people of institutions, literally filling their minds full of propaganda, it feels extremely like 1935-1936, Germany. It feels incredibly like that. And I feel bad because I look around and you don’t see people learning those high skills.

You see a lot of people that are being left behind because of globalization.

So the working class in this country turned to Trump, thinking that Trump was bringing those jobs back, when in reality they’re talking about bringing AI and robotics and automation to the production process. Things that will never ever help regular working-class people.

You researched in a great blog post that kind of described, you know, it’s not really the poor, you know, that are turning to Trump and turning right. Not even to Trump, just in general. They’re not turning fascist. They’re not going right wing.

It’s that middle-class folks that are watching this tide rise of the impacts of globalization on their lives. Can you talk about your research? Because this was fascinating to me.

Bill Mitchell:
00:26:23

We’re seeing a sort of swing to the right all around the world really, and most extraordinarily in countries like Germany, where the Alternative for Deutschland [AfD], the right-wing party that’s mostly out of the old East Germany, is now the second largest party by vote in Germany. Now, you know, considering German history, that’s really scary. That’s really bizarre.

And researchers now are doing work on trying to understand what’s driving this. And we know that there’s winners and losers from what we call globalization, from increased global financial flows and decentralized supply chains.

And so that’s on the industry side, and then on the government side, the several decades now of retrenchment of the welfare states.

And you know, welfare states are different in different countries, some more generous than others, but across the globe there’s been a retrenchment of a lot of the services, the outsourcing, the privatization of government services, less so in America because you had less public enterprises than the other countries had. But, you know, there’s winners and losers of that process.

And one hypothesis is that the swing to the right of which, you know, Trump is part of that is the extreme losers have given up hope of the conventional political systems are going to do anything good for them.

And so they’re swinging to these populist right-wing parties who hold out that their key electoral ambition is, once they get power, is to bring back prosperity for the weak, for the disadvantaged.

And I watched several of Trump’s speeches and for example in America and leading up to the November election last year, and his narrative was all about that, that he was going to bring back prosperity and make America richer than ever for everybody, not just the broligarchs. He didn’t mention the broligarchs. He was just going to revitalize the towns that had the manufacturing centers and what have you.

And so it’s a plausible hypothesis that this swing to the right and abandonment of the conventional traditional political parties that had held sway since the Second World War, that period of peace after the war, it’s a plausible hypothesis that’s explaining it.

But when you dig down into the research, what you find is that an alternative hypothesis is probably more valid and that is that this swing to these more extreme right populist political ambitions and movements, the support is coming from lower middle-class people who have stuff they’re not the most disadvantaged in our societies.

And in survey evidence, qualitative evidence is pointing to this, that what they are fearing is unless something dramatically changes, they will lose what prosperity they’ve got. The research evidence appears to indicate that the lowest income strata in our societies are really still supporting progressive left policies.

The educated middle class are supporting progressive policies, and the less-educated middle class are supporting the swings to the right.

Now, that opens up a completely different set of questions and awarenesses of who’s supporting Trump and who’s supporting AfD in Germany and what have you and what it’s clear Is that the traditional parties, so in America, the Republicans and the Democrats, you haven’t yet and you probably won’t get an emerging third or fourth force like AfD in Germany, which has sort of driven a wedge between the sort of conservative Christian Democrats and the Socialist Party, the Social Democrats. In America what’s happening is that the traditional parties are getting taken over by these more extreme movements.

So the Republican, and correct me if I’m wrong, but my understanding from the outside, the traditional Republican structure and party doesn’t resemble the current party at all. They’re Republicans in name, but they’ve morphed into this sort of weird new broligarchy-type party.

Steve Grumbine:
00:30:58

We have a unique thing in this country and I don’t know whether the rest of the world experiences this, but truly unique in the United States, where our duopoly, these two manufacturers of consent for the elite’s will, one moves to the right, the other moves further to the right. We call it the ratchet effect.

Bill Mitchell:
00:31:17

Yeah.

Steve Grumbine:
00:31:18

And it’s been going on nonstop really since neoliberal era began. I mean, I’m sure it started even before that.

But to be fair, what was once a cloth-coat Republican Nixon era, where they actually were diplomats and really talked, I mean they may have, you know, eavesdropped, but my goodness, I would welcome Nixon at this point. How bad it is.

Bill Mitchell:
00:31:39

Don’t say that.

Steve Grumbine:
00:31:42

I’m just saying like, I mean, my goodness, look at how bad it is, right? I mean he looks like a relatively decent man comparatively.

Bill Mitchell:
00:31:50

In Australian terms, Robert Menzies was a very long-serving conservative prime minister after the war, right up through to the sort of mid-60s.

And he was a really long-serving prime minister and he was a conservative, he was a royalist and all this, you know, the anathema of a progressive person.

But our Labor Party now, which is the political voice of the trade unions historically, is now more right wing than the Menzies government of that era. And that tells you everything, that the so-called left party is more right wing than the Conservative post-war party.

And so the Conservative Party in Australia now the Liberals, they’ve gone wacko to the right. And it’s the same in America. You know, the Republicans have gone wacko and the Democrats are not quite as wacko, but they’ve followed them.

It’s those traditional parties where there is scope, have lost the sort of voice for the people. And that’s why these extreme parties in some countries like Germany have emerged.

Steve Grumbine:
00:32:52

I think the hopelessness that neoliberalism created in many people has in many ways given rise, at least within America, right? To major backlash. Kind of a pivot, if you will, where people are so frustrated.

You know, we’ve been told all of our lives that each generation is supposed to make sure the world’s better for the next generation and so on. And we haven’t seen that here. It’s been miserable.

Bill Mitchell:
00:33:19

This is the first generation in history that have left our children less well off in general.

Steve Grumbine:
00:33:24

Absolutely. And I frequently start in the middle of the story, unfortunately. But I think if you really think it through, people are not powerful.

Individuals are not powerful. Individuals have to survive whatever elites decide. And I think individuals are becoming progressively angrier and angrier.

And you look at the horrific things that occurred under Obama and you look at the nonsense that Hillary Clinton put forward, it’s not hard to see them say, when somebody’s trying to tell Kamala Harris, “Hey, stop committing genocide in Palestine.” And she turns around and puts the hand up and she goes, “I’m speaking.”

I think that kind of elitism, that lack of awareness plays right into the hands of this kind of shift, at least I could say on the ground level, watching it happen in real time. The Democrats have become what Republicans were. And I don’t even want to speculate on what Republicans are today.

It’s definitely a consent-manufacturing element to society. These parties play an outsized role in forming whatever message people think they believe.

They don’t have enough information to understand what they believe. They aren’t well enough informed to be able to have deep thoughts on economics.

I mean, just here recently, listening to this guy, Stephen Moore, debating Stephanie at something called, I think it was called the Steamboat something or other, this guy was literally saying every trope known to mankind. And it follows hand in glove with what you see, with the idiots like Musk who are out there telling everybody, saving them their “tax dollars.”

And this resonates with people that are trying to scrape pennies. Resonates with people that are thinking this corrupt government. Not seeing the corruption in these guys. Yeah, because they don’t know.

They’re just ignorant.

Bill Mitchell:
00:35:20

One of the problems is, and you mentioned our book Reclaiming the State, and one of the central conjectures in that analysis was that we’ve got to where we are because the extreme Right has become a creation of the Left.

Steve Grumbine:
00:35:34

Yes.

Bill Mitchell:
00:35:35

And what I mean by that is that it was the abandonment beginning in the 1970s and accelerating through the 1980s by social democratic parties. So that includes labor parties in Britain and Australia, socialist parties in France, social democrats in Germany, Democrats in America.

These parties, which we call social democratic parties, historically, when they basically abandoned the macroeconomic contest and fell in line with the sort of monetarist, neoliberal, New Keynesian-type economic narrative and abandoned the contest. So no longer were we talking about appropriate fiscal policy.

Everybody agreed, “Oh, we’ve got to have fiscal austerity because public debt is dangerous,” et cetera, et cetera.

And so the only way those historically progressive parties could continue to differentiate themselves electorally to the voters was to get lost in a whole lot of identity politics or “We’ll do the austerity in a fairer way.” That was the other thing.

You know, “We’ve got to have austerity, but we’ll do it fairer,” and then go off onto a tangent into identity-type issues to differentiate themselves. Once they did that, that was the end of the game.

The major contests that historically had divided the left and right of politics and gave voters an actual choice, and certainly those who are progressive bent hope that there was an alternative into supplying good education, good public transportation, health for all, all this sort of stuff, and in the modern era, proper policies to address climate change and pandemics and poverty and whatever. That choice is gone now, and it just has become a, you call it a ratcheting. It’s just become a sort of race to the Right.

Because as the Democrats became more oriented towards fiscal austerity and what that meant for policy options and the capacity to deliver policies, in other words, a highly restricted capacity and an increasingly restricted capacity to differentiate themselves further, the Right had to go further and become more extreme and work out issues that “press button” issues, and in America, you know, I guess that’s immigration, the fact that you’re getting invaded
apparently by millions of criminals and mentally insane people that countries around the world are working out that they can free up their prisons and their mental asylums and send everyone to America. What did the Democrats do?

Well, you know, I mean, Kamala Harris, as I understand it, correct me if I’m wrong, was the person under Biden who was in charge of the borders, and she accelerated the Trump-type mentality about border control. Now, you know, unrestricted immigration is probably a problem, but I can’t fathom that
it’s the problem that people believe it is in America, but that’s the way the politics have morphed further and further to the Right. And Democrats have been in a game of chasing the Right. And so you end up with no choice, a Hobson’s choice. They’re both bad. And which one’s worse?

Well, it’s hard to tell these days in American politics. And the outcome is that the policies that people are forced to accept are disastrous.

That’s what I said at the beginning of our talk today, that we’ve seen this sort of shift to the Right and this increasingly restricted policy space of what’s possible and what’s not, and increasingly moving towards a situation that’s just unfathomable. It’s now so extreme under the second Trump administration that it’s just sort of crazy, doesn’t have any reason at all.

Steve Grumbine:
00:39:33

You know, I was telling you at the beginning here when we were talking about this, and I’m not going to ask you necessarily to comment on this, but I’m going to put my thought on this.

Whenever you dumb a nation down, whenever you take away information from them and you feed them information, that fills a certain void in their thought process, especially when it’s not real. It’s fake. Fake news, so to speak.

And people are searching for truth, or at least they think they are, and then they stop searching for truth because they can’t figure out where truth lies. And then everything’s not true, so nothing matters. And you can see this part of society breakdown in terms of “Your facts, my facts.”

This is why idiots like RFK Jr have a platform even.

This is why when you watch people talking about climate change, I mean, they’re literally making it so that there is no NOAA [National Oceanic and Atmospheric Administration]. There is no funding for climate research. There is none of this stuff. And people are cheering it on as if somehow or another anti-knowledge is good.

The problem is that if you’re looking at it from that angle, you won’t see the problem.

The other part is that these elites have made people suffer by making them feel small, by making them feel useless, by stripping away their ability to earn a living, by ultimately dumbing them down and making them feel optionless. And then to your point, seeing the impacts of globalization, they’re like, “who’s my enemy?”

And then they hear all this stuff through right-wing talk radio, right-wing weird, bizarre things like Truth Social and Gab and all these other sieg heil right-wing kind of platforms.

And they’ve got more than enough nonsense being shoved down the… don’t get me wrong, the MSNBCs, the CNNs, all this stuff, they are filled to the rim with misinformation. But it’s the nasty, hateful, evil kind of othering and “We got to get rid of those people” kind of thing that show up elsewhere.

And it’s the lack of empathy now. It’s kind of like, I brought up Khmer Rouge earlier.

And just in terms of the way that people stopped caring about their neighbor, it was just like slaughterhouse killing fields, right? America is a corporation with a lot of people with guns, right? It’s an oil company with a bunch of guns.

And the more I think about the powder keg that is America, I’m not sure if we’re a bigger danger to the rest of the world or to ourselves internally. Because the hate that is inside this nation, you can feel it. I feel it.

You can feel the punching down, the punching sideways, not looking up and punching up, the lack of analysis, the lack of awareness of their surroundings. Anything can pass as truth, and yet nothing passes at truth.

Bill Mitchell:
00:42:15

I was talking yesterday to somebody and I said that, you know, “I’m at the view that social media is net destructive.” Now. I don’t have a very broad social media footprint.

I use Twitter and then I stopped recently and now I use Bluesky, just because that helps me communicate about blog posts, et cetera. I refuse to have a Facebook account or Instagram or anything like this.

But my assessment of those platforms is that they created a daily habit for people who get up in the morning, get their iPhones out, or whatever phones they have, and they’re glued for the rest of the day and into the night and even in the middle of the night when they turn in their sleep to reading multitudinous nonsense by influencers on Facebook and Instagram and whatever, Twitter. And this has become our perception of information.

You know, I left Twitter because it just became increasingly nonsensical, the sort of weird stuff that was getting legitimized through information. Now, you know, you talk about your conventional media outlets.

Yes, they have definite ideological biases, but I still think most people can’t see through them, particularly in economic commentary. But I still think they have some sort of regard for traditional journalistic standards. It’s probably declining.

But I’m not talking about Fox News here, by the way. Fox News is sort of just a rebel, just a rogue sort of state within itself. And Sky News in Britain and what have you in Australia. But they’re Murdoch creations. Australia’s worst export to the world, unfortunately. [Rupert] Murdoch.

But the social media, now that we’re all completely besotted by, is destroying our ability not only to think, not only to read broadly literature and thinking about it, but it’s destroyed our ability to determine, as you say, the difference between reality and fiction. And that’s really dangerous. And when you think of young children, there’s an obesity epidemic in the world, young children are increasingly not running around outside getting physical fitness, but becoming
obese, sitting in their bedrooms, scanning Facebook all day.

So in terms of our ability to make judgments about what’s right and what’s wrong, in terms of knowledge that’s coming to us, it’s getting increasingly difficult. And I supported the Australian government’s decision recently to put a curb on some of the social media in Australia.

Now, that was seen as being an authoritarian thing by the conservatives, but I think it’s a legitimate way to protect children and give children some space to be children again. But yeah, these are all worrying elements. For many years we’ve been controlled by the mass-consumption urge.

So capitalism was able to maintain itself and because it persuaded us all to become mass consumers and locked us into various credit arrangements and what have you.

But now we’re being controlled by social media and that’s even more destructive because we don’t actually get nice things that mass consumption bought us comfortable lives. We’re increasingly having precarious lives with no ability to differentiate fact from fiction. And that’s really not a good augur for the future.

Steve Grumbine:
00:45:51

No, I agree. Listen, you know, as we wind this down, I just want to thank you first of all for being with me today. But these are truly dark times and it’s weird.

I have spent far more time reading literature, reading history, trying to find the right forms of history and using a more materialist approach to understanding things instead of just jumping on a side and going with it. Really, truly trying to understand the conditions of what happened and where it’s going. And I’m kind of new to this.

I mean, I think I tried to do it, but now I’m trying to do it in a much more structured fashion. But I assure you, most people aren’t even taking time. They don’t even want to talk about it. [Yeah] They just want to throw the opinion out there.

And there is no real dialogue. There’s no zeal for learning anymore. It’s just a free for all.

Bill Mitchell:
00:46:42

You have to be somewhat sympathetic to people too, Steve, because most people don’t have the luxury of time anymore.

Steve Grumbine:
00:46:50

No, yes, exactly.

Bill Mitchell:
00:46:52

That our workplaces are increasingly unstable and the threats to our livelihoods are increasingly amounting. And you know, we’ve got two-income families.

It’s the norm now because the cost of living is so high and the burden of our private debt and what have you. So most people are just struggling to stay alive to keep what they’ve got intact.

I’m not so judgmental that they’re to blame because they’ve been pigeonholed into this sort of struggle to maintain their livelihoods and in a world that’s increasingly hostile to them and is delivering massive returns to the top end of town. So that’s the reality.

Fortunately, there is still a lot of high-quality research being done, and particularly outside of America, there’s high-quality research and there is still a lot of really credible analysis and discussion. Now, how that feeds to the general population is a good question.

It’s not feeding there at the moment because the general population are making voting decisions that are ultimately going to undermine their existing prosperity. Americans who voted for Trump are maniacs, in my view. I’m sorry if I alienate some of your audience by saying that [our audience isn’t there.]

I think, you know, Americans who thought that Trump would be their savior are so misguided. And there’s sort of a denouement going on here. We’re at the end game, in the way of neoliberalism.

All of the individual little crises are merging into a big polycrisis and a health, environment, employment, poverty, infrastructure, education, transport, housing, all of these crises are merging into one big, can I say it? Clusterfuck [yes.] And the thing that I’m interested in, and I’m thinking about a lot, is how far can you push people?

So we know that at the end of the 19th century, trade unions formed and the push for welfare states gathered pace, and the push for the state to take responsibility and use its fiscal capacity to lift people up from poverty, that accelerated at the end of the 19th century. Why? Because the early era of industrial capitalism was so punitive to people and children in factories dying and what have you.

And so eventually it got to the stage, we know this from history, that the capitalism pushed society too far. Social stability was pushed to the point where people rebelled.

And the fear of total rebellion like that happened in, say, the Soviet Union, for example, forced most Western countries to morph into supporting trade unions and increasingly introducing welfare protections and, you know, job protections, public education and all the things that defined that glorious era. Now, that wasn’t a utopia because there was still a lot of gender inequality and there was racism and what have you. But it was a progressive era.

And so the question is, we know that people can be pushed too far, and when they do, they rebel. And that rebellion leads to some outcome. In that context, it led to better work conditions, better pay, better social services, what have you.

Now, the question I have for myself and my research program now is that we’re getting to a stage where people will be pushed too far. Trump will reveal himself to be a total disaster for the American people. What is going to be the response of the American people?

And in a way that’ll be guided by cultural institutions. And, you know, in Australia, Australians would rebel in a progressive way.

I’m not so sure that downtrodden Americans will rebel in a progressive way, but I hope they do. But ultimately, there will be a rebellion because you can’t push people too far.

You can push some of them too far and isolate different cohorts within society.

And that’s obviously happening, and to the point where people just disregard the poverty and disadvantage and plight of some certain members of society. And in America, you’re vulnerable to that because you’ve also still got a dramatic racist issue.

But when you push people too far, what’s going to happen? That’s my next sort of research issue. I’m pondering that question. It could be disastrous.

It could really be progressive like it was at the end of the 19th century. Let’s hope so.

Steve Grumbine:
00:51:41

Yeah, I was going to say it’s hope, but you got to put some action behind. I know for me, personally, I mean, you see this Bernie Sanders tour happening in the U.S. but really, at the end of the day, it just ends up just winding back to, “Hey, come on back here and vote Democrat and for my good friend Joe Biden.” It’s not a meaningful thing.

Bill Mitchell:
00:52:04

People like Bernie Sanders are not the future.

I’ve never been enamored by what he says, and I don’t see anything within the Democratic Party structure as being the solution at all for progressive Americans.

Steve Grumbine:
00:52:16

Not at all.

Bill Mitchell:
00:52:17

I think what you’ll see is what we saw in the end of the 19th century. The traditional institutions break down, new political forces emerge.

You know, in the end of the 19th century, that’s when the labor parties, the Social Democratic parties, emerged to give a political voice to the industrial developments that were occurring in increasing interest in trade unions. The traditional political parties are not going to be the solution. They’re going to become irrelevant over time.

Now, what replaces them is the question. I don’t know. You can only hope. But, yeah, Bernie Sanders isn’t the solution. I can say that for sure.

Steve Grumbine:
00:52:54

Yeah. All right, listen, Bill, thank you so much for your time. Do you have any books in the works? Anything that you can tell us?

Bill Mitchell:
00:53:01

We’re doing a revised version of our Macroeconomics textbooks, which is thankfully but surprisingly sold very well around the world, and that’s now six years old. And so we’re updating that. We’re doing that right at the moment.

This is a book we’ve Randy Wray [L. Randall Wray] and Martin Watts, and myself.  And I’m also working on a book on de-colonialisation and degrowth with Dr. Louisa Connors, and that’s probing questions of the legitimacy of the state. And what does degrowth mean?

How do we accelerate degrowth narratives in poor countries where they still have to keep growing to escape material poverty? And that’s a book I’m hoping that’ll come out probably later this year or early next year.

I’m also simultaneously looking at these questions about where we’re headed, the sort of things I just spoke about, and what structures are going to support a progressive solution and what of the existing institutional structures, you know, in politics, et cetera, can we possibly salvage to support a progressive response to this total chaos that’s going on at the moment?

Steve Grumbine:
00:54:07

Can’t wait. Cannot wait. All right, well, with that, folks, my name’s Steve Grumbine. I am the host of Macro N Cheese. We are a 501(c)3, not for profit.

We survive on your donations. So please consider coming to our website, realprogressives.org and go to the donate button.

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On behalf of my guest, Bill Mitchell, myself, Steve Grumbine, and the organization of Real Progressives for Macro N Cheese, we are out of here.

End Credits:
00:54:09

Production, transcripts, graphics, sound engineering, extras, and show notes for Macro N Cheese are done by our volunteer team at Real Progressives, serving in solidarity with the working class since 2015. To become a donor please go to patreon.com/realprogressives, realprogressives.substack.com, or realprogressives.org.