Today we go into the kitchen cupboard for a lesson in macroeconomics. That is according to the main economics writer of the Sydney Morning Herald, which is published in a city of over 4 million people. The reality is that while we are encouraged to get our heads into the cupboard, all we succeed in doing is further obscuring any understanding at all of how budgets work and the opportunities and capacities of a sovereign government operating within a fiat monetary system. We were really scraping the barrel today!

Some readers have been picking up on various statements I have made about the decline in public employment in Australia over the last thirty or so years and what it means for the trajectory of unemployment. I am on the public record as saying that if the persistence of unemployment in Australia is largely to do with the failure of the public sector employment to maintain growth in line with labour force growth. If it had have achieved this then we would have had very low levels of unemployment during the growth period following the 1991 recession. The 1991 recession was much worse because the public sector cut its employment growth. Further, while neo-liberals hold the US out as a model for us to follow, the fact remains that US government employment growth has more or less maintained pace with US labour force growth. The resulting unemployment dynamics are in stark contrast to those found in Australia.

This week’s Economist Magazine (print edition) is running a story Making fiscal policy credible – Bind games, continues the mounting conservative push for governments to return fiscal conduct back to the days before the crisis. The conservatives (except the really loopy ones) are begrudgingly being forced to recognise that the fiscal stimulus packages have saved the World economy from a total disaster. But after taking a deep breath they get back on track with the “debt is bad” “surplus is good” mantra that got us into this mess in the first place.

Today I am travelling to Kioloa which is on the South Coast of NSW. I am to be part of a three-day “dialogue” on The Land Restoration Imperative in Australia. The immediate past Governor-General of Australia Major General Michael Jeffery has invited me to be part of a Task Force he is forming to pursue this issue. This is what it is about.

Today the retail sales data came out in Australia and showed a 1.0 per cent fall in the month of July and the beginnings of a declining trend (2 negative months in a row). Many economists are seeing this as a sign that the impacts of the fiscal stimulus packages have come to a screaming halt and all we have left for our troubles is a public debt burden that will kill our kids and pets. While the fall-off in retail activity is a problem I don’t think we are about to follow the US path into temporary oblivion. Further, debates about retail sales allow me to extend my Austrian theme. Attack dogs on the ready!