The Weekend Quiz – December 16-17, 2017 – 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.
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    The Weekend Quiz – December 16-17, 2017

    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.
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      Posted in Saturday quiz | 9 Comments

      Australian labour market – relatively bright result for November

      The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for November 2017 shows that total employment growth was relatively stronger than October with a bias towards full-time employment growth. Unemployment rose because of the sharp rise in the participation rate following on the stronger employment growth. The combination of a rising participation rate and relatively strong employment growth is a good sign even as unemployment rises in the period that the labour force adjusts to its new cyclical high. Whether this virtuous cycle continues remains to be seen. Broad labour underutilisation (underemployment and unemployment) was at 13.7 per cent summing to 1,799.7 thousand persons, which tells you that there is still considerable slack in the labour market. TThe teenage labour market improved (if we consider total employment growth) but teenagers failed to share in the full-time employment growth (going backwards). Overall, my assessment remains – the labour market has improved over 2017 but still fluctuates between good and bad from month to month and has a lot of slack remaining. We are not in a position to say that there is a sustained growth path ahead.
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        Posted in Labour Force | 4 Comments

        Britain doesn’t appear to be collapsing as a result of Brexit

        Do you remember back to May 2016, when the British Treasury, which is clearly full of mainstream macroeconomists who have little understanding of how the system actually operates released their ‘Brexit’ predictions? The ‘study’ (putting the best spin possible on what was a tawdry piece of propaganda) – HM Treasury analysis: the immediate economic impact of leaving the EU – was strategically released to have maximum impact on the vote, which would come just a month later. Fortunately, for Britain and its people, the attempt to provide misinformation failed. As time passes, while the British government and the EU dilly-dally about the ‘divorce’ details, we are getting a better picture of what is happening post-Brexit as the ‘market’ sorts what it can sort out. Much has been said about the destructive shifts in trade that will follow Brexit. But these scaremongers fail to grasp that Britain has been moving away from trade with the EU for some years now and that process will continue into the future. I come from a nation that was dealt a major trading shock at the other end of Britain’s ill-fated dalliance with Europe. It also made alternative plans and prospered as a result. The outcomes of Brexit will be in the hands of the domestic policies that follow. Stick to neoliberalism and there will be a disaster. But the opportunity is there for British Labour to recast itself and seize the scope for better public infrastructure, better services and stronger domestic demand. Then the nation will see why leaving the corporatist, austerity-biased failure that the EU has become was a stroke of genius.
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          Posted in Britain, UK Economy | 20 Comments

          US labour market steady but low wage bias continues

          On December 8, 2017, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – November 2017 – which showed that total non-farm employment from the payroll survey rose by 228,000 in November, slightly less than the October net increase. While the payroll data showed a fairly strong employment outcome, the Labour Force Survey data estimated a weaker rise in employment (57 thousand) in November. The labour force was estimated to have risen by 148 thousand after October’s results showing a sharp contraction. The BLS thus estimated that unemployment rose by 90 thousand and the official unemployment rate rose slightly from 4.07 to 4.12 per cent. There is still a large jobs deficit remaining and other indicators suggest the labour market is still below where it was prior to the crisis. I also update my ‘low-wage jobs bias’ to November 2017 and conclude that in the recovery, there has been a bias towards low wage and below-average wage job creation.
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            Posted in Labour Force, US economy | 3 Comments

            British Tories reject the ‘free market’ neoliberal myth

            The conservatives in the British Labour Party are obviously worried. The UK Guardian article (December 2, 2017) – Labour faces subversion by Momentum and far left, says Roy Hattersley – reports the claim by former Deputy leader, Roy Hattersley that British Labour is “facing the biggest crisis in its history” because left-wingers are engaged “in a systematic takeover of the party”. Gosh. Sounds shocking. A traditionally left-wing political party slowly wresting it back to mission after being hijacked by the right-wing, neoliberal Blairites. That sounds like Armageddon. The Blairites tried to kill off Jeremy Corbyn several times as they continued to undermine him in the public eye and bleated about how he was going to destroy the Labour Party. They then fell silent when he nearly delivered the Party government in the recent national election and saved many of their jobs. Now, with a by-election in Watford, the conservatives are back to it although it has to be said that Hattersley cannot be called a Blairite. He represents the pre-Blairite right-wingers who backed Dennis Healey as he imposed Monetarist ideology on the Party in the mid-1970s. And this article came out soon after the Tory government announced a major ‘socialist’-style industrial plan. In its press release (November 27, 2017) – Government unveils Industrial Strategy to boost productivity and earning power of people across the UK we learn that the Tories are finally understanding that it can actually improve the fortunes of British workers by abandoning the failed neoliberal, ‘free market’ narrative and recognising, instead, the central role to be played by the nation state in advancing well-being and economic fortune.
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              Posted in Britain, Reclaim the State, UK Economy | 27 Comments

              The Weekend Quiz – December 9-10, 2017 – answers and discussion

              Here are the answers with discussion for yesterday’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.
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                Posted in Saturday quiz | 3 Comments

                The Weekend Quiz – December 9-10, 2017

                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 »

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                  Travelling all day today – up hill and down dale

                  I am travelling a lot today and do not have enough time write a blog other than to tell you that. Last Thursday, work took me to remote destinations where the wind blows strong and rain is always expected. This Thursday, I am pursuing my craft and spreading the Modern Monetary Theory (MMT) word up hill and down dale. I have also been reading various new ‘reform’ proposals for the Eurozone – they seem to be coming out at a rate of one a day or so it seems. They all fail to get to the nub of the problem – it is essentially so flawed with so many historical and cultural constraints that it needs to be abandoned. One lame idea tells us to ‘fix the roof while the sun shines’. I will comment on that next week. The problem – as my recent tweet notes – is that the ‘roof’ is the least of the problems. It is falling in for sure but only because the foundations are rotten to the core. I also wouldn’t actually characterise the current situation in the monetary union as being ‘sunny’. If it is, then spare the thought of what ‘cloudy’ much less ‘rainy’ might be. The quiz will be back tomorrow as usual. For the moment I am listening to …
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                    Posted in Admin, Music | 5 Comments

                    Australia national accounts – growth slows with declining consumption growth

                    When the Australian Bureau of Statistics released the September-quarter National Accounts (on September 6, 2017) annual growth was running at 1.8 per cent, around half the trend rate before the GFC. But the striking result was that public spending (consumption and investment) contributed 0.8 percentage points to the growth rate – which means that without that contribution, real GDP growth would have been zero in the September-quarter. Today (December 6, 2017) we received the next ‘rear vision’ account of where the economy has been from the ABS, when it released the September-quarter 2017 National Accounts data. Real GDP rose by 0.6 per cent in the September-quarter 2017 (down from 0.8 in the June-quarter) and the annual growth (last four quarters) was just 1.8 per cent just under half the trend rate before the GFC. The striking result was that household consumption expenditure was very weak while private capital formation improved. The reduced growth in household consumption (with a slight rise in the saving ratio) may signal that the recent credit-fuelled consumption binge is coming to an end and households are starting to restructure their precarious balance sheets. Let us hope so. But this will require a stronger fiscal contribution than is evident in the current data. The external sector made a zero contribution to growth while public spending (consumption and investment) reduced growth by 0.4 percentage points (a sharp reversal on the June-quarter result). Overall, the growth is unbalanced and uncertain.
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                      Posted in National Accounts | 9 Comments