Australian Treasurer embarrasses himself

The Australian Treasurer gave his first major statement in Sydney last week (August 25, 2016) since being barely re-elected in July. The speech – Staying the course – strengthening our resilience in uncertain economic times – was before an invited gathering of the business world who sat their listening to total nonsense from a man who disgraces the role he holds. Australians have always lagged behind developments in the rest of the world in many ways. It used to be blamed on the ‘tyranny of the distance’ (geography) but that excuse can no longer be used in this digital age. You realise how far behind the times our Treasurer is when you read articles such as this one in Foreign Policy (August 26, 2016) – The Stimulus Our Economy Needs. In that article, we read that “Now, the idea that governments, with or without the help of central banks, should spend substantial resources on creating jobs, both directly and through private sector incentives, is widely accepted among economists across the political spectrum”. Sound advice but lost on the Australian Treasurer. Bad luck for us. He is an embarrassment.

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The Weekend Quiz – August 27-28, 2016 – 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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Modern Monetary Theory – what is new about it? – Part 3 (long)

I noted in Monday’s blog – Modern Monetary Theory – what is new about it? – that I am working on a paper (with my colleague Martin Watts) that will form the basis of a a keynote talk I will give at the – International Post Keynesian Conference – which will be held at the University of Missouri – Kansas City between September 15-18, 2016. That talk will now be held at 15:30 on Saturday, September. 17, 2016. I also listed four areas where we would discuss the novel contribution that Modern Monetary Theory (MMT) has made to macroeconomics, despite the claims of both mainstream economists and some Post Keynesians that there is nothing new in MMT. The first two blogs on this topic covered the juxtaposition of employment versus unemployment buffer stocks and the implications of that for how we view the Phillips curve, a central framework in macroeconomics linking inflation to developments in the real sector (unemployment etc). Today’s blog considers another section of the paper – the dynamics of fiscal deficits and public debt. We consider the difference between deficit doves, who consider fiscal deficits are appropriate under some conditions but should be balanced over some definable economic cycle, which we argue has been the standard Post Keynesian position, and the MMT approach to deficits, which considers the desirable deficit outcome at any point in time to be a function of the state of non-government spending and the utilisation of the productive capacity of the economy. We argue that fiscal rules expressed in terms of some rigid balance to GDP target are not only meaningless but dangerous. Fiscal rules in MMT are only meaningful if related to the state of non-government spending and the utilisation of the productive capacity of the economy. This body of MMT work is clearly novel and improves on the extant Post Keynesian literature in the subject which was either silent or lame on these topics.

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Mayday! Mayday! The skies were meant to fall in … what happened?

The British Office for National Statistics, which although recently revamped continues to have the most user-unfriendly homepage and dissemination service of all the national statistical agencies, published the latest – Retail Sales in Great Britain: July 2016 – data last week (August 18, 2016). It looked good to me. In the past week or so there has been a stream of data coming out of Britain or about Britain, which also looks good to me. What the hell is going on? The skies over Britain were meant to have fallen in by now. Unemployment was meant to be going through the roof or was the roof meant to collapse first. All manner of despair was meant to be visiting the shores of Britain after the June 23 vote to get out of the dysfunctional European Union. The reality is that things are looking okay there. Skies are intact and quite blue I believe which has boosted the confidence of British consumers. Tourism is booming. Unemployment is falling or at least those claiming unemployment benefits. One investment bank put out a briefing last month with a Mayday! Mayday! warning that unemployment was about to rise dramatically. Who has been sacked for that piece of public misinformation. George Osborne, remember him, said in mid-June that British public finances were about to collapse and an immediate, emergency fiscal response would be needed. Days have passed – things are looking ok. Eurozone nations should take note! Ignore the neo-liberal scare mongering. Follow Britain’s lead in abandoning the ridiculous notion that there is something special about ‘Europe’. Eurozone nations should get out of the currency union as soon as possible.

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Modern Monetary Theory – what is new about it? – Part 2 (long)

In yesterday’s Part 1 of this two-part blog – Modern Monetary Theory – what is new about it? – I introduced the idea that a major new contribution of Modern Monetary Theory (MMT) to economic theory was in its treatment of inflation and the Phillips curve. This is part of a keynote presentation I will be giving at the International Post Keynesian Conference – which will be held at the University of Missouri – Kansas City between September 15-18, 2016. The keynote presentation is scheduled for Friday, September 16 at 17:00. The topic of my keynote presentation will ‘What is new about MMT?’ and will challenge several critics from both the neo-liberal mainstream and from within the Post Keynesian family that, indeed, there is nothing new about MMT – they knew it all along! I contest that when they say this they are lying and doing so to cover up the inadequacies of their own failed analytical frameworks whether they be mainstream or Post Keynesian.

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Modern Monetary Theory – what is new about it?

In a few weeks I am off to the US to present a keynote talk at the – International Post Keynesian Conference – which will be held at the University of Missouri – Kansas City between September 15-18, 2016. I will also be giving some additional talks in Kansas City during that week if you are around and interested. The keynote presentation is scheduled for Friday, September 16 at 17:00. The topic of my keynote presentation will ‘What is new about MMT?’ and will challenge several critics from both the neo-liberal mainstream and from within the Post Keynesian family that, indeed, there is nothing new about MMT – they knew it all along! Well the truth of it is that these characters clearly didn’t previously know or understand a lot of key insights that MMT now offers. No matter how hard they try to reinvent what they knew, the facts are obvious. MMT makes some novel contributions to our knowledge base and shows why a lot of so-called mainstream macroeconomic theory that parades as ‘knowledge’ is, in fact, non-knowledge. This blog and the second-part will provide some notes on the paper I am writing (with my colleague Martin Watts) on this topic.

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The Weekend Quiz – August 20-21, 2016 – 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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Australian labour market – the part-time employment nation

Last month’s Australian labour force data showed what a part-time employment nation we were becoming. The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for July 2016 shows that trend to be intensifying with modest employment growth and collapsing full-time employment growth. With more than 86 per cent of total net jobs created over the last 12 months being part-time, it is clear that Australia is becoming a nation of part-time employment growth with all the attendant negative consequences. The teenage labour market remains in a poor state and requires urgent policy intervention. Overall, with weak private investment now on-going, the Australian labour market is looking in pretty dismal shape and the recently elected Federal government should have introduced a rather sizeable fiscal stimulus immediately upon re-election to provide some fiscal leadership to the nation. This should have included a large-scale public sector job creation program which would ensure teenagers regained the jobs that have been lost due to the fiscal drag over the last several years. There are no signs that our polity understands any of that.

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