Today, our new Manga series – The Smith Family and their Adventures with Money – begins. There will be weekly episodes designed to bring the principles of Modern Monetary Theory (MMT) to people in an accessible way, while at the same time having a bit of fun. Season 1 starts today …
The Australian Bureau of Statistics released the latest – Labour Force, Australia – for September 2023 today (October 19, 2023). My overall assessment is that the the labour market is now looking subdued although relatively stable. The decline in full-time employment is a worry. Almost all the net change in employment over the last six months has been part-time. In September, employment growth was not strong enough to absorb the underlying population growth. The only reason unemployment fell in the context of the weak employment growth was because the fall in the participation rate meant more workers left the labour force. There are now 9.9 per cent of the available and willing working age population who are being wasted in one way or another – either unemployed or underemployed. The fact that the broad underutlisation rate fell is not a cause for celebration because it was driven by the decline in participation, which just means hidden unemployment rose. Australia is not near full employment despite the claims by the mainstream commentators.
It’s Wednesday and while there is a lot to write about, I am prioritising the release today of our latest research at the Centre of Full Employment and Equity (CofFEE). The release of what we are calling the – CofFEE Financial Resilience Barometer – Version 1.0 – is part of a research collaboration I have with Professor Scott Baum at Griffith University. We have Australian Research Council funding for the next three years to explore regional resilience in the face of economic shocks, particularly after the massive disruptions from the Covid pandemic. Today we release the first output of that research. I also consider other matters today and the usual Wednesday music segment comes with a song from a leading Palestinian singer.
This Tuesday report will provide some insights into life for a westerner (me) who is working for several months at Kyoto University in Japan.
There have been several interrelated strands in research and practice associated with the dominance of neoliberalism over the last decades. The problem has been that these approaches have been as much enthusiastically promoted by social democratic or progressive forces as they have conservatives. Indeed, conservative political forces have gone down the ‘Trumpian’ far right sink hole and the social democratic parties have moved into the political space vacated – that is, further right than centre. Over the years we have been confronted with social entrepreneurship, new regionalism, corporate social responsibility and self regulation, volunteerism, light touch regulation and more – as part of a so-called ‘Third Way’ where class divisions are dead and the ‘market’ is supreme. More recently, so-called progressive politicians have been touting the ‘de-risking’ narrative as a way of fixing the mess left by the other Third Way approaches. Accordingly, the role for government is to de-risk the vagaries and flux of capitalism, so the entrepreneurs can make profits with surety and if there are issues the government will bail them out. It is a disastrous denial of government responsibility and will fail just as surely as all the rest of the ruses have combined to create the mess societies are in around the globe.
Episode 16 of my – Podcast – Letter from The Cape – is now available. Coming today from Kyoto, Japan
The British Labour Party officials and politicians have all been cock-a-hoop over the last week in Liverpool as they participate in their Annual Conference with the latest modelling suggesting they may win a “landslide 190-seat majority” at the next national election leaving the miserable and incompetent Tories with only 149 seats (currently 352) (Source). The contrast between the two national conferences this year could not have been greater. The Tories looked and sounded divided and like losers. The Labour Party looked like winners and united (although that latter condition has only come from the Stalin-like purge that the leadership has conducted on the Left of the Party). The Labour Party is now schmoozing the corporate bosses and each day that it passes it sounds more like what the Tories used to be like, before the rabid Right took over. That assessment is based on the promises that the Labour Party made at its recent Annual Conference. While the details are still relatively general, my assessment of the fiscal promises the Shadow Chancellor made last Monday and elsewhere is that the conditions that would be required to satisfy them will prove impossible to achieve.
It’s Wednesday and I spent some time this morning reading the latest IMF – Global Financial Stability Report – in which the IMF pretends to know what is going on in the world economy based on a set of erroneous assumptions about how that economy functions. But the data it provides is interesting in itself. Of interest is that fact that Australian households now have the highest debt-servicing ratios in the world as a consequence of record levels of debt and rapidly rising interest rates. What is generally overlooked in these discussions, however, are the circumstances in which the debt rose so much in the first place. In this post, I explain, among other things, how the obsessive pursuit of fiscal surpluses combined with labour market (in favour of the employers) and financial market deregulation (in favour of the bankers) in the 1980s and beyond, created the conditions whereby households could really only maintain growth in consumption expenditure by significantly increasing their indebtedness and running the saving ratio into negative territory. The legacy of that misguided shift to fiscal austerity lives on. Later in the post I make a brief comment about the Middle East and then we listen to some music.
This Tuesday report will provide some insights into life for a westerner (me) who is working for several months at Kyoto University in Japan.
Last Friday (October 6, 2023), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – September 2023 – which showed payroll employment rising by 336,000 and the unemployment rate stable, after rising 0.3 points to 3.8 per cent in August. I posed the question last month when employment growth had slowed considerably and unemployment had started to rise whether this marked a tipping point. My answer, given the extra data that resolved some of the uncertainty about last month’s data, is that I don’t think it did. In September 2023, the data suggested a very steady labour market – employment growth above the average of the last 9 months but just enough to keep pace with the labour force growth. Participation was constant as was the employent-population ratio. All signs of stability. The disturbing fact though, was the renewed failure of nominal wages growth to transalate into real wage gains for workers. The relatively modest real wage gains over the last few months as the inflation rate has declined evaporated. The question that mainstream economists need to answer is how come the significant interest rate rises have not seriously impacted the labour market performance? I know why. But their textbooks do not!