The ‘truth sandwich’ and the impacts of neoliberalism

On June 15, 2018, the OECD released their report – A Broken Social Elevator? How to Promote Social Mobility – which provided “new evidence on social mobility in the context of increased inequalities of income and opportunities in OECD and selected emerging economies”. If you are still wondering why the mainstream progressive political parties have lost ground in recent years, or why the Italian political landscape has shifted from a struggle between ‘progressive’ and conservative to one between anti-establishment and establishment (the latter including both the traditional progressive and conservative forces which are now virtually indistinguishable) then this evidence will help. It shows categorically that neoliberalism has failed to deliver prosperity for all. While the full employment era unambiguously created a dynamic environment where upward social mobility and declining inequalities in income, wealth, opportunity were the norm, the more recent neoliberal era has deliberately stifled those processes. It is no longer true that ‘all boats rise on a high tide’. The point is that this is a situation that our governments have allowed to arise and which they can alter if they so choose. We should be forcing them to restore the processes that deliver upward mobility. And that is where the “truth sandwich” comes in. Progressive politicians that bang on about ‘taxing the rich to deliver services to the poor’ or who ask ‘where is the money going to come from’ or who claim the ‘bond markets will rebel’ and all the rest of the neoliberal lying drivel should familiarise themselves with the way the sandwich works. It is a very tasty treat if you assemble it properly.
Read the rest of this entry »

Spread the word ...
    Posted in Debriefing 101, Framing and Language, Friends like this, Labour Force, Reclaim the State | 7 Comments

    European-wide unemployment insurance proposals – more bunk!

    The Europhiles have been tweeting their heads off in the last week or so thinking that the corner has been turned – by which they mean that Germany is about to get all cuddly with France and agree to fundamental shifts in thinking which will make the dysfunctional Economic and Monetary Union (EMU) finally workable, without the need for the ECB to break Treaty law by propping up the private bond markets. The most recent incarnation of the ‘saviour’ is a few words that the new German Finance Minister, Olaf ‘Wolfgang Schäuble’” Scholz said during an interview with Der Spiegel (June 8, 2018) – ‘Germany Has a Special Responsibility’ – about his support for a new unemployment insurance scheme for the Eurozone. It seems even the smallest things excite those who remain in denial about the long-term viability of the common currency. The proposal that Scholz was advancing has been out in the public debate for some years and is nothing like an effective solution to the terminal design flaws in the EMU. It is just an application of the same thinking that led to the creation of that flawed architecture in the first place and reinforces the conclusion that the main players in Eurozone policy setting have no intention of creating an effective federated monetary system. Just more of the same. Tomorrow, the tweets will be extolling the virtues of some other erroneous plan that some Europhile has come up with to save the system. And so it goes.
    Read the rest of this entry »

    Spread the word ...
      Posted in Eurozone, Reclaim the State | 13 Comments

      The Weekend Quiz – June 16-17, 2018 – answers and discussion

      Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
      Read the rest of this entry »

      Spread the word ...
        Posted in Saturday quiz | 8 Comments

        The Weekend Quiz – June 16-17, 2018

        Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
        Read the rest of this entry »

        Spread the word ...
          Posted in Saturday quiz | 4 Comments

          Australian labour market – weaker in May with tepid employment growth

          The Australian Bureau of Statistics released the latest – Labour Force, Australia, May 2018 – today which showed that the Australian labour market weakened further over the last month. Overall employment growth was tepid and was marked by a significant decline in full-time employment and a sharp fall in monthly hours worked. In addition, the participation rate fell by 0.2 points (rounded), which is the only reason total unemployment and the unemployment rate declined. Had the participation rate not declined, then the weak employment growth would have caused a rise in overall unemployment. The teenage labour market was the only bright spot. Further, underemployment rose by 19.2 thousand in the three months to May 2018 and the broad labour underutilisation rate remains high at 13.9 per cent. Overall, my assessment is that the Australian labour market remains stuck in a weak state and is still a considerable distance from full employment. There is a lot of slack remaining and defies the foolish calls in recent months from those demanding reductions in the fiscal deficit.
          Read the rest of this entry »

          Spread the word ...
            Posted in Labour Force | 1 Comment

            German press and its politicians lose the plot – Europhiles be warned

            I am reverting back this Wednesday to a shorter blog post to free up a bit more time to advance other writing projects. Here are some snippets on Germany and Italy that caught my eye this week. And a link to an essential video about Venezuela. And some music in a sad week (musically).
            Read the rest of this entry »

            Spread the word ...
              Posted in Eurozone, Music | 19 Comments

              ECB continues to play a political role making a mockery of its ‘independence’

              Those who follow European politics will be familiar now with the recent events in Italy. I wrote about them in this blog post – The assault on democracy in Italy. The facts are obvious. The democratic process for all its warts rejected the mainstream political parties in the recent national election and minority parties Lega Nord and M5S formed a governing coalition. The trouble started when they nominated Paolo Savona as Finance Minister. He had occasionally made statements that paranoid European elitists would interpret as being anti-Europe and anti-German. The political solution was easy and Italian President Sergio Mattarella vetoed Savona’s nomination. The Coalition withdrew and a right-wing technocrat Carlo “Mr Scissors” Cottarelli was to be installed as Prime Minister. That arrangement didn’t last long and the Lega Nord/M5S coalition emerged in government with the unelected Guiseppe Conti the new Prime Minister. But the interesting story to emerge out of all that relates to overt political behaviour by the supposedly independent European Central Bank. It has been clear for some time that the ECB has used its currency-issuing capacity to ensure that ‘spreads’ on Member State government bonds (against the benchmark German bund) do not widen too much. But it is also clear that when the ‘market forces’ do increase the spreads, which foments a sense of financial crisis, the ECB doesn’t necessarily act immediately. A good dose of crisis talk is what the political process needs to keep the anti-European forces at bay. The ECBs behaviour in this context became very political in the recent weeks and the only explanation is that they wanted the sniff of crisis to pervade while all the negotiations were going on over who would emerge as the new government in Italy. Democracy suffers another blow in that neoliberal madhouse that is the European Union.
              Read the rest of this entry »

              Spread the word ...
                Posted in Central banking, Eurozone | 15 Comments

                Low-paid workers in Australia – give with one hand, take back with the other

                It is a public holiday in Australia today. Would you believe it is the annual Queen’s Birthday holiday – the Queen of England that is. How Australia maintains this colonial relic is down to progressive forces being divided on rather irrelevant details and some of them siding with the monarchists. Tomorrow’s blog post will analyse the recent ECB behaviour with regard to Italian government bond purchases. But today I consider the minimum wage decision that was handed down on June 1, 2018, by Australia’s wage setting tribunal, Fair Work Australia in its – Annual Wage Review 2017-18. This is the process through the Federal Minimum Wage in Australia is adjusted. The decision announced will increase the minimum wage by 3.5 per cent from July 1, 2018 so that the new minimum wage will be $719.20 per week or $18.93 per hour. Given that the annual inflation rate is running around 2 per cent (or thereabouts), the decision, on the face of it, would suggest that the real minimum wage is now higher than it was a year ago, which is a good sign. But over the last year, low-paid workers have had to endure cuts in pay rates for work during non-standard hours (so-called penalty rates), which Fair Work Australia made operational on July 1, 2017. For some workers the losses from the penalty rate cuts amount to more than $6,000 per year. So our wage setting tribunal is giving with one hand and taking it back (and then some) with the other. The most sordid aspect of all this is that many employers demanded Fair Work Australia deliver real wage cuts in the annual review.
                Read the rest of this entry »

                Spread the word ...
                  Posted in Labour costs | 7 Comments

                  The Weekend Quiz – June 9-10, 2018 – answers and discussion

                  Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
                  Read the rest of this entry »

                  Spread the word ...
                    Posted in Saturday quiz | 2 Comments

                    The Weekend Quiz – June 9-10, 2018

                    Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
                    Read the rest of this entry »

                    Spread the word ...
                      Posted in Saturday quiz | 4 Comments