AltAusterity Digest #26 December 7-13, 2017

The BBC examines how politicized central banks might be problematic. While the US Federal Reserve and the members of its governing committee are appointed by the President and confirmed by Congress, the decisions it makes are supposed to be impartial. Trump has decided not to reappoint Obama-appointed Fed Chair Janet Yellen, instead nominating former investment banker Jerome Powell, which some have questioned as a political move. Despite academic evidence that independent central banks better control inflation and price stability, several other countries, including the UK and Japan, have targeted central banks politically.

A new paper published by the National Bureau of Economic Research has found that austerity was partially responsible for the rise of the Nazi Party in 1933. According to the authors, tax policy – including cuts to unemployment benefits, payments to pensioners, and welfare recipients – was a large economic factor in radicalizing the population and alienating it from pre-Nazi-government. While the article takes steps to distance the recent GOP tax cuts from the context of Weimar Germany, it notes that intense political polarization as well as isolationist and economically disruptive policies may have a similar radicalizing effect.

In a piece on the contradiction between pro-Brexit and anti-austerity stances, Connor Devine writes that the EU is fundamentally a pro-austerity institution citing examples from Portugal, Greece and Ireland, as well as referencing Spain, Italy, France and the Netherlands. Devine highlights how many of the new Corbyn Labour supporters, who are anti-Conservative and anti-austerity on a domestic level, are still committed to EU membership. Polling has even revealed that Corbyn has lost support due to his pro-Brexit stance. The article raises important questions about the potential tentions that left-leaning voters face.

The IMF end-of-mission press release for Jamaica discusses suggestions for continued economic “success.” The report commends Jamaica’s 8-year-low unemployment levels, recording high employment levels, modest inflation, and sound net international reserves. The IMF goes on to suggest that wage containment be undertaken in the public-sector to free up resources for social and growth-enhancing spending. The report also calls for public-sector reforms to make it smaller, more agile and more efficient.

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