Ryan Research Newsletter 02/13/22
1.) Irish Industrialization For The 21st Century: A 10 Point National Development Plan
Angela Nagle and I released our 10 point plan to economically develop Ireland with key emphasis on monetary sovereignty and national industrialization. It was a follow-up to our analysis of how the global minimum tax rate change will call into question Ireland’s current economic model which is dependent on multinationals’ attraction to low corporate tax. Overall, the reception was very positive with many saying it was “refreshing” and “bold”. A few criticisms were how does Ireland shift from service to manufacturing model, how will Ireland deal with the negative reaction of the European community, and how will Ireland utilize tariffs while still being in the European Union. These can be addressed in further writing but here are a few concise follow-ups. The perceived high wage of service labour in Ireland is distorted by high emigration of anyone that finds the economy inadequately supplying jobs and a small minority of high-skilled beneficiaries that work with multinationals. Many Irish people would find manufacturing wages not only acceptable but better than nothing. Furthermore, manufacturing doesn’t require a nation to start at the bottom of the value chain. It is possible to leapfrog into higher value-added manufacturing. There are currently 8 countries that are in the EU but outside the Eurozone. Ireland has every right to voluntarily leave the Eurozone if it finds it not suiting its interests just as it voluntarily entered it. Furthermore, other nations like Italy, Spain, etc. might find leaving the Eurozone attractive as well. A trans-national coalition of European nations may reduce tension by all leaving the Eurozone together. I recommend Cormac Lucey’s (@CormacLucey) book “Plan B” where he talks about such a trans-national Eurozone transition plan. The tariff issue will be a hard debate. I think it is worth having the debate in the EU about why it thinks uneven economic development across the EU should persist. While common tariffs are appropriate for certain products, services, and sectors, in others it will be detrimental. It is not obvious to me why Irish policymakers were able to carve out loopholes in the global minimum tax rate change framework like it only effecting companies with very high revenue or protection for R&D, but they won’t be able to do similar work in the EU on tariffs. Finally, I’d like to share Alexei Arora’s (@AlexeiArora) 10 point plan to industrialize India. He said he was inspired by our plan and retooled it for India’s unique conditions. We may quibble on a few policy issues, but we largely agree on the main objective of national sovereignty. I applaud his attempt at bettering his nation. I would be happy to consult with other economic thinkers to develop monetary and industrial policy plans in other nations. Please reach out.
2. ) Post-MMT Economics - Clint Ballinger - Ryan Research Podcast #6
I'm joined by Clint Ballinger. He is the author of "1000 Castaways: Fundamentals of Economics". It compresses 10,000 years of economic development into several years and a society small enough to allow an illuminating overview, yet large enough to feature the institutions essential to modern economies. In our chat, we discuss the complex schools of thought within economics. We start with Modern Monetary Theory (MMT) rising trend that is very useful for understanding how money really works. We then explore the history of how economics was formalized through classical to neoliberal. We then focus on early thinkers that talked about national political economy but were underdiscussed. Finally, we end on economic development case studies around the world.
3.) Daily Millennial Interview: Ireland’s Economic Future
I had the pleasure of going on Daily Millennial’s YouTube channel to talk about my 10 point industrial plan. We walk through the problems of the Irish economy, like the housing crisis being exasperated by foreign investment funds buying up property from regular working Irish citizens and distorting the market. We highlight key ways that Ireland could change to introduce more national industry into the country. We also spend a little time talking about my journey out of the cryptocurrency sector. I offer some critiques of that space and how to think about monetary policy in a refreshing way.
4. ) Irish Freedom Party Interview: We Need Our Own National Currency
I was happy to chat with Hermann Kelly of the Irish Freedom Party about my ideas as well. We covered my historical study of Irish intellectual thought on economics, the revolutionary doctrine of Arthur Griffith, and the 100 years of Irish economics since independence. We emphasize the need for national sovereignty over foreign control.
5.) Based Economics Panel with Q&A
I hosted a Twitter Spaces (live podcasting feature) with some fellow rising scholars in heterodox economics. It received about 700 live listeners and as of now has 2.2k total listens. “Based” is internet slang for anything cool or an inherent truth that cuts through nonsense. It is often opposed to its inverse slang term “cringe” which is uncool or something that is conducive to nonsense. We use these jokes to launch into a serious discussion about how the intellectual schools of thought in the economics discipline are very disorganized. The mainstream is very cringe and offers little utility for those hoping to develop nations in a productive and sustainable path. We contend that based economics focuses on national sovereignty and national interests. We come from different countries and different economic starting points but all find common ground on our repulsion at most of the mainstream (often called neoliberal) economics.
6.) What Is Really Driving Inflation?
There is real economic pain caused by high inflation. The 7.5% figure has been tossed around in recent weeks. Many pundits argue that it is “obviously” related to large increases in the money supply. This perspective feels very disconnected from the past 2 years that we’ve all been living through. I lay out a series of charts that suggest there other real causes of inflation. The Biden administration’s energy pessimism policies have without a doubt increased costs across the board. Energy prices have increased in a range of 9-25%. This was coupled with covid pandemic chaos and lockdowns. Global supply chains screeched to a halt. Many offices and stores were severely affected by strict lockdowns. Regardless of the science, the trade-off was clearly voluntary economic degradation. In my 2nd tweet on this matter, I describe where all that money printing went. It has largely fueled the speculative stock, venture, and crypto markets. The finance sector, rather than investing in real productive value-adding activities, took that money from the Fed to fuel a bubble. The solution is to end voluntary energy handicaps and lockdowns to start reducing inflation. In the longer term, one would want our money supply to go towards real productive enterprise and not speculation. Reshoring manufacturing will go a long way in preventing these types of issues in the future.
7.) Ireland’s Neoliberal Economic Plan
Shortly after I published my own economic plan for Ireland, Enterprise Ireland and other institutions within the Irish state announced their own plan. I gave it a read and offered some concise commentary in my Twitter thread below. It is very vague and has some problem areas. It is not clear who is controlling the strategy. Is it Ireland or the EU entities like the European Investment Fund that is managing the fund attached to this plan? Will the money go to only Irish citizens or non-Irish citizens? Are there constraints on where they can move operations and capital after receiving the money? They list some broad categories of what they want to focus on sector-wise. It seems like multinational data centers are the most approximate to what they are talking about. There are 70 data centers currently in Ireland. They employ 30 long-term people and 100 short-term (construction) people per center. They hog about 20% of current energy consumption in the nation and are estimated to take more than 30% by 2030. For their very low employment and disproportionate energy cost, it doesn’t make sense why this would be a preferred sector to focus on. With that being said, the general concept of setting up a fund to invest in high-growth technology startups is fine on its own. It is the details that we must examine closely.
8.) Richard Werner’s Economics: A Summary
I happened to be reading a lot of Richard Werner (@ProfessorWerner) this week. He is one of the most respected economic writers on the topic of Japanese economic history in the 1980s and 1990s. While discussing Japanese industrial and monetary policy with Bloomberg’s Noah Smith (@noahopinion), I highlighted some key passages from Werner’s “Princes of The Yen”. Werner observed that the unique monetary policy by the Bank of Japan of window guidance or quantity of credit quotas on private banks was the secret to the post-war Japanese economic miracle as well as its downfall. The older generation of Japanese central bankers set credit quotas for productive industries. Skittish of American influence and internal rivalries, the older generation was reluctant to transmit their economic methods to the younger generation. That younger generation had also uniquely done their higher education at US universities and was partial to American ideological frameworks. In the 1970s, Japan began to reach the plateau of its input-intensive manufacturing model along with a negative reaction to its dominance on the world stage, especially by the Americans. It was this stimulus that led the younger generation to use the window guidance method to restructure the Japanese economy using American-style liberalization. They needed a crisis to do so. So they switched the aim of the window guidance from productive allocation and towards speculative areas like homes in the 1980s. The Japanese bubble burst and the younger generation got their wish in the 1990s with the beginning of restructuring. Werner suggests that liberalization was a misguided approach to solving the productivity issue. The Bank of Japan could have just as easily increased productivity using the same window guidance methods. Finally, I composed a Tweet thread of a presentation Werner gave on his main contribution to economics: the quantity theory of credit. The takeaway from this theory is that interest rates are not that important. The real monetary tool is the expansion and contraction of the quantity of credit and where that credit is directed. This general theory complements his specific observations in the Japanese case study above.