Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.
In the blog post earlier this week – The conflicting concepts of cosmopolitan within Europe – Part 1 (January 29, 2019) – I juxtaposed two concepts of ‘cosmopolitanism’ which appeared to be part of the early moves to achieve European integration. On the one hand, there was a Kantian-style desire to create, through cooperation between previously warring states, a peaceful and prosperous future for a ‘one’ Europe. This construct would be welcoming to outsiders, progressive, and celebrate ethnic and cultural diversity. It was a rights-based conception of citizenship and democracy, which closely aligned with the growing popularity of the social democratic polity. On the other hand, the early moves to overcome the resistance to creating a supranational entity that would increasingly compromise national sovereignty – the so-called “functionalist” approach of Jean Monnet and Robert Schuman, created a pragmatic, free market-based cosmopolitanism, which set the Member States against each other as competitors. As I demonstrated, over time, the economic cosmopolitanism channeled the burgeoning neoliberalism of the 1980s and compromised the rights-based, political cosmopolitanism, to the end that we now talk about democratic deficits as the European Commission and its unelected allies such as the IMF trample over the rights of citizens across the geographic spread of Europe. Europhile progressives hanker for the first conception of European cosmopolitanism and proffer various reform proposals, which they claim will tame the economic dimensions and restore the ‘European Project’ as a progressive force in the world. In this second part of the series I will argue that from the outset the cosmopolitanism embedded in the ‘Project’ was deeply flawed and it is no surprise that democracy is now compromised in the European Union. I argue that reform is not possible such is the extent of the failures.
Only a short blog post today as it is Wednesday and I reserve most of the day for other writing (book manuscripts etc). What follows is some analysis I provide to several Australian journalists to help them get the arguments right when it comes to the political spin that the politicians try to pump out. Australia’s Prime Minister has been making a big deal that “Over the last five years we’ve delivered more than a million jobs” and yesterday, as we lead into the election cycle (due in May) he said that the Federal government aimed “to see 1.25 million jobs created over the next five years”. Should we cheer or cry? Many economists who have offered commentary over the last 24 hours seem to think we should be happy with that goal. Me, I think it is about half as many new (net) jobs that are required given the state of the labour market and signals a failed policy strategy. Here is why I think that.
In the past week, the UK Guardian readers were confronted with the on-going scandal of wealthy British politicians and ‘peers’ receiving massive European Union subsidies under the Common Agricultural Policy (CAP). The article (January 27, 2019) – Peers and MPs receiving millions in EU farm subsidies – recounted the familiar tale –
“Dozens of MPs and peers, including some with vast inherited wealth, own or manage farms that collectively have received millions of pounds in European Union subsidies”. The story is not new and this scandal is just a reflection of the way in which the development of the European Union has contradicted the idealism that the Europhile Left associate with ‘Europe’. As an aside, it would be telling, one imagines to map the EU payments (and well-paid job holdings) with Brexit support – one would conjecture a strong negative correlation. This is a two-or-three part mini-series on the evolution of concepts of ‘cosmopolitanism’ in the European context. It is part of work I am doing for the next book Thomas Fazi and I hope to publish by the end of the year. In this blog post, I introduce the conflict that is inherent in the European Union, and the way the Europhile Left has been seduced by a concept of cosmopolitanism that bears not relevance in the reality of modern Europe.
The British Office of National Statistics (ONS) published its latest labour market data last week (January 22, 2019) – UK labour market: January 2019. Employment continues to increase, unemployment is steady and inactivity is falling (participation is rising). Real wages are also finally starting to rise (average weekly earnings rose by 3.3 per cent over the last 12 months) after a decade of flat wages growth. The ONS say that the 4 per cent unemployment rate “has not been lower since December 1974 to February 1975”. But the labour market of 2019 is very different to that of late 1974. While the growth in real wages is a positive development, the large negative is that employment for employees fall in the three months to November 2018 and all the employment growth was taken by self-employed. The other disturbing statistic is that if we considered the involuntary part-time workers to be equivalent to the unemployed, then the adjusted unemployment rate would be around 6.6 per cent, a far cry from full employment.
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.
Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.
Today, the Australian Bureau of Statistics released the latest data – Labour Force, Australia, December 2018 – which reveals modest employment growth but a second consecutive month of full-time employment contraction. The moderate employment growth, however, was slightly higher than the weak growth in the labour force and unemployment fell marginally. The broad measure of labour underutilisation fell by 0.2 points to 13.3 per cent. The teenage labour market continued to deteriorate despite the positive employment growth. The current situation can best be characterised as plodding along with with no direction in sight. Other indicators are suggesting a slowdown in the next few months. What we can conclude is that the Australian labour market remains a considerable distance from full employment. There is clear room for some serious policy expansion at present.
This is the second and final part of this cameo set, which aims to clear up a few major blind spots in peoples’ embrace with Modern Monetary Theory (MMT). This is all repetition. I don’t apologise for that and it does not reflect a slack or bad editorial approach from yours truly as some critics have claimed. Repetition is how we learn. Reinforcing things in different ways (aka repetition) helps people come to terms with concepts and ideas that give them dissonance. MMT is certainly about dissonance as the current level of hostility towards our work is demonstrating. It is also challenging existing ‘fiefdoms’ in the academy and beyond, which also creates aggression and retaliation. The problem is that most of the current criticism merely rehearses the same tired lines of inquiry. A stack of mainstream (New Keynesian) economists now regularly claim they ‘knew it all along’. The short and truthful response is – ‘no they didn’t. The standard mainstream macroeconomic theory cannot accommodate MMT principles unless it jettisons its core propositions and becomes something else. At any rate, as noted in – Operationalising core MMT principles – Part 1 – I am happy to help clarify quandaries that newcomers have with MMT if they are genuinely trying to work out what it is all about. I have no desire to interact with ‘critics’ who are just defending mainstream macroeconomics in its death throes and have no genuine interest in really understanding MMT beyond the superficial and no penchant for reading the now lengthy body of work we have generated in the academic literature. Yesterday, I considered a typical inquiry about an important operational detail of implementing a Job Guarantee. Today, I consider a related topic. If a government is facing a situation where it needs to shift workers to the Job Guarantee pool to stabilise inflation, how does it do that? The ‘critics’ often claim we only advocate tax increases to fight inflation and because they are politically tricky to engineer MMT essentially fails to have an effective price anchor. Today, I bring together many past blog posts to summarise the MMT position on counter-stabilising fiscal policy for those that might be struggling to put it all together.
Things seem to come in cycles. We have been at this for some years now – trying to articulate the principles of Modern Monetary Theory (MMT) in various ways in various fora. There is now a solid academic literature – peer-reviewed journal articles, book chapters in collections, and monographs (books) published by the core MMT group and, more recently, by the next generation MMT academics. That literature spans around 25 years. For the last 15 odd years (give or take) there has been a growing on-line presence in the form of blog posts, Op Ed articles etc. More than enough, perhaps too much for people to wade through. Each period seems to raise the same questions as newcomers stumble on our work – usually via social media. The questions come in cycles but there is never anything raised in each cycle that we have neglected to consider earlier – usually much earlier. When we set out on this project we tried to be our own critics because our work (in this area) was largely ignored. So we had to contest each of the ideas – play devil’s advocate – to stress test the framework we were developing (putting together pieces of knowledge from past theorists, adding new bits or new ways of thinking about them and binding it all together with interesting and novel connections and implications). So it is continually testing one’s patience to read the same criticism over and over again. Please do not get me wrong. When these queries are part of the learning process from a reader who is genuinely trying to work out what it is all about there is no issue. Our role as teachers is to see each generation safely through their educative phase in as interesting a manner as we can. But when characters get on the Internet, some with just a year, say of postgraduate mainstream study and start making claims about what we have ignored or left out or got wrong then it can be trying. Ignoring them is the best strategy. But then the genuine learners get confused. So this blog post is Part 1 of a two-part series seeking to help answer two major issues that we keep being asked about – (a) Does MMT only advocate tax increases to fight inflation?; and (b) How can any meaningful jobs be offered in a Job Guarantee if the workforce is ephemeral by construction? Part 2 will come tomorrow.