Is there hope for a post neoliberal world?

I grew up in a society where collective will was at the forefront and it is true to say people looked out for each other. The state – at all levels – had various policy structures in place to provide levels of economic protection for the least advantaged members of society. Having grown up in a poor family, those structures were important in allowing me to stay at school and then go onto to university. It also allowed my friends on the housing commission estate (state housing) who had different skills (not academic) to get apprenticeships and build careers that gave them material security in that way. It wasn’t a perfect period – there was racism, misogyny, and xenophobia – but as mass education spread, my generation left a lot of that behind. I was thinking about that when I read the recent article by Robert Reich in the UK Guardian (December 29, 2026) – Americans are waking up. A grand reckoning awaits us – which carried a resonance of some of the things that I have seen emerge in Australia as well as this 4-decade or so neoliberal nightmare reaches some sort of denouement.

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When contraction is called expansion – Japanese government style

Well my holiday is over. Not that I had one! This morning we submitted the manuscript to the publisher for the Second Edition of our Macroeconomics text, which will come out later this year. Finishing a massive project like that always is non-linear – the last few months have been hideous – checking everything and filling gaps. Anyway, that was the Xmas break. And as the New Year starts, one always hopes that humanity learns from the mistakes of the previous year. In economics, though, that is the hope of the forlorn. I read this morning’s Japan Times newspaper and lo and behold there are predictions of dire consequences as a result of the current Cabinet decision to shift focus away from pursuing a primary fiscal surplus to massaging the public debt ratio. The mainstream economists are arguing about the relative virtues of each and forecasting gloom. The reality is that neither target is worth attention. Meanwhile, the privatised rail companies are negotiating with communities for the closure of certain rail segments because they are loss making. All that discussion is about costs per passenger km, rather than satisfaction gained from bringing people together. The priorities are all wrong.

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Video – Japan at a Crossroads: Fiscal Policy, China, and the Growth

I have limited time today to write a blog post and last night I was sent a new video that I recently recorded with my research colleague at Kyoto University, Professor Fujii where we talk for some hours on the topic – Japan at a Crossroads: Fiscal Policy, China, and the Growth. It was a conversation we had via Zoom that was recorded on Friday, December 5, 2025. We reflect on recent developments in Japan and its relationship with other major countries (US, China, etc) and consider the policy challenges facing the new Takaichi Cabinet. It is a very long session. The transcript was generated by YouTube AI I believe and then edited and is not perfect. A lot of unnecessary aspects are edited out and the latter part of the transcript is really just an AI summary. But I think the record is acceptable. At times, the discussion changed from English to Japanese, where there was some ambiguity in terminology etc, and those segments have been cut from the transcript. I put in timestamps during the transcript to help you zoom into topics of interest. I hope you find something useful in our long discussion.

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Trump’s “best is yet to come” and the data reality are diverging – for the worse!

I haven’t provided detailed commentary on the US labour market for a while now. To some extent the month-to-month changes are not that interesting but after a lapse, discernible trends can be detected. The US President is about to give a national address today in the context of declining poll popularity and a series of negative trends emerging. His constant narrative that everything is great and America has never been so soundly governed (by him!) is finally starting to come up against the reality of data, which has been masked a little by the government shutdown, which meant that key statistics were not published in a timely manner or are being published late. The labour market data has been so affected and the most recent release by the US Bureau of Labor Statistics (BLS) last Tuesday (December 16 , 2025) – Employment Situation Summary – November 2025 – shows a deteriorating situation and negates the political bombast coming from the President and his cronies.

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The US attack on Europe misses the point entirely

The other day I was asked whether I was happy that the US President was finally saying things that I have been noting for years. The reference to Trump was, on interrogation, based on the US government analysis of Europe that appeared in the so-called – National Security Strategy of the United States of America – November 2025 (hereafter NSS) – which was released to the public on December 4, 2025. When I finally got around to reading the document, it was clear that the person who put that proposition to me didn’t understood Trump’s position and certainly didn’t understand my position. While the Trump Administration is critical of the European Union, as I am, the respective bases for those criticisms couldn’t be farther apart.

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Australian labour market – considerably weaker in November (not even close to full employment)

I should remind myself not to listen to the media (even the public broadcaster) when the Australian Bureau of Statistics (ABS) releases the latest labour force data – Labour Force, Australia – for November 2025 – as it did today (December 11, 2025). The commentary immediately after that data release today was the exemplification of mainstream massaging of the truth. The ABC had some bank economist on telling the nation that the data showed that Australia was operating above capacity (over full employment) and interest rates would have to rise further to discipline inflation. He didn’t mention that his corporation would benefit from such rate rises via increased profits. He also failed to tell the listeners that while unemployment remained stable at 4.3 per cent (only because participation fell in the face of falling employment), underemployment rose further to 6.2 per cent (up 0.4 points), and the broad labour underutilisation rate rose to 10.5 per cent – think about that – 10.5 per cent of available and willing labour in Australia and this so-called expert thinks that is full employment requires unemployment to rise at least a further 0.2 points. Meaning is lost and neoliberal ideology and corporate-speak replaces it. Disgusting. The interviewer was also terrible and should be sacked for his mistakes and failure to hold the ‘expert’ to account. Such is the national broadcaster in Australia these days. The reality is that it is nonsensical to argue that Australia being close to full employment. Without the fall in the participation rate, the official unemployment rate would have been 4.63 per cent rather than its current official value of 4.3 per cent. The labour market is considerably weaker in November and there is substantial scope for more job creation given the slack that is present.

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A lower yen is not inflationary once the adjustments are absorbed

Last Friday (December 5, 2025), I filmed an extended discussion with my Kyoto University colleague, Professor Fujii about a range of issues concerning the Japanese and Global economy. Once it is edited, the video will be available on YouTube. Fujii-sensei is advising the new Japanese Prime Minister and is the author of the ‘Responsible proactive fiscal policy’ slogan that is summarising the shift within the Japanese government from the Ishiba Cabinet and their austerity mindset to the new Takaichi Cabinet and its desire to introduce renewed fiscal expansion. Among the topics discussed: (a) my conjecture that Japan is caught in a vicious cycle of secular stagnation and requires a large fiscal shock to alter the deflationary mindset that has crippled the economy over several decades; (b) the need for tariffs to protect Japanese industry to advance food security (in the face of major rice shortages during the last year or two); (c) whether Japan should participate in Plaza Accord 2.0 (aka Mar-a-Lago Accord) that Trump is demanding China accept; and (d) policy structures that are necessary to reallocate labour from areas of excess (gig economy) to sectors where shortages and bottlenecks are present (for example, Construction), The latter will be essential if the proposed fiscal expansion is to stimulate production rather than prices. For the purposes of this blog post though, we also discussed the validity of fiscal expansion within the context of the yen. Mainstream economists keep arguing that the expansion is not viable given the depreciation of the yen, which they claim has been inflationary. It is a standard argument and I mentioned it in this recent blog post – Panel of Japanese economists mired in erroneous mainstream constructions and logic (November 27, 2025). I consider that issue more today.

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British Labour’s obsession with fiscal rules is untenable and ignores the reality of the situation

I have been a consistent critic of the way in which the British Labour Party, both in opposition and in government, is obsessed with rigid fiscal rules, thinking it is the only way that it can demonstrate fiscal credibility (whatever that is in their minds). The result is that they get cornered into situations that either lead them to make poor decisions which lose them votes and give the likes of Nigel Farage more fuel for his crusade or they are forced to admit they cannot achieve the (unachievable) fiscal rules. Either way it is a clusterf*)@. In the last week or so, we have witnessed the ludicrous situation of the British Office of Budget Responsibility failing to protect its own file systems and leaking information before the Chancellor presented her official fiscal statement. The leaked information just happened to contradict the messaging of the Chancellor which was a bit inconvenient. But the important issue that all this raises is not whether OBR can run a secure WordPress site (evidently it cannot), but that the information it generates is so inaccurate and systematically biased that it cannot realistically be used as the basis for assessing fiscal policy. Which means that the obsession with the fiscal rules leads to policy changes that damage things that matter – such as employment and services – but those policy changes are based on information (OBR forecasts) that subsequent revelations tell us would not justify those policy shifts. As I said – clusterf8x@.

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Australian national accounts – government spending saves nation from zero growth

The Australian Bureau of Statistics released the latest – Australian National Accounts: National Income, Expenditure and Product, September 2025 – today (December 3, 2025), which shows that the Australian economy slowed to 0.4 per cent (from 0.6 per cent) in the September-quarter 2025. At the current annual growth rate, unemployment is predicted to rise further, given current labour force and productivity growth (see below). Household consumption expenditure growth weakened while public and private investment was stronger. The 0.4 point overall government contribution was the difference between zero growth and the positive result recorded.

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