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, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for April 2017 shows that while employment rose by 37.4 thousand, full-time employment fell by 11,600 and monthly hours worked fell by 0.12 per cent. Underemployment rose by 0.1 points. The employment growth did outstrip the underlying growth in the population and with the participation rate steady, unemployment fell by 19,100. The unemployment rate fell by 0.2 points. Certainly the employment growth was modest compared to last month. Broad labour underutilisation remains high at 14.3 per cent with unemployment and underemployment summing to 1,836.7 thousand persons. The teenage labour market also showed some improvement although full-time employment fell. It remains in a poor state.
In the most recent – Annual Survey of Hours and Earnings: 2016 provisional results – published by the British Office of National Statistics on October 26, 2016, we learn what we had suspected for some time – the purchasing power of workers’ wages are now lower than before the GFC. Neo-liberalism at work in Britain. Today (May 17, 2017), the Australian Bureau of Statistics released its latest – Wage Price Index, Australia – for the March-quarter 2017. For the fifth consecutive quarter, annual growth in wages has recorded its lowest level since the data series began in the December-quarter 1997. Nominal wages growth in Australia was just 1.9 per cent in annual terms below the annual inflation rate for March of 2.1 per cent. So real wages declined even though productivity growth remains positive – which means that the profit share in national income rose again as real unit labour costs plunged. But employment growth also remains flat. This represents a major rip-off for workers. The flat wages trend is also intensifying the pre-crisis dynamics, which saw private sector credit rather than real wages drive growth in consumption spending. As I also noted in last week’s commentary on the 2017 Fiscal Statement – Australian government in contractionary bias when stimulus is needed – the forward estimates for fiscal outcomes provided by the Australian government are already under threat as a result of the cuts in real wages. There is no way the tax receipts will rise in line with the projections, which assumed much stronger wages and employment growth than will occur under current austerity-type fiscal settings
On April 26, 2017, some smarta*!se journalists wrote a Bloomberg piece – The Brexit Banker Exodus Gains Momentum – with some not-so fancy graphics purporting to show where the “U.K. banking jobs might be headed” allegedly because Britain is to leave the European Union. On May 9, 2017, the increasingly terrible UK Guardian bought in on the frenzy with its article – City banks could move at least 9,000 jobs from UK due to Brexit . And so it goes. Apparently, Deutsche Bank is “leading the threatened exodus”, followed by JP Morgan and Goldman Sachs. All exemplars of virtue, not! While the threat of the ‘City’ leaving London is now used to frighten British people about Brexit, the reality is, in my view, quite different. I would be celebrating the cleaning out this infestation of unproductive enterprises, which remain one of the destructive legacies of Margaret Thatcher and, later, New Labour and its so called ‘light touch regulation’.
In last week’s fiscal statement (aka ‘the budget’), the Australian government decided to make the poorest citizens in the world, including those living in close proximity to our shores, the target of its austerity mania. It decided to increase Overseas Development Aid (ODA) to match the inflation rate until 2018 and then freeze that contribution for the next two years after that. Effectively cutting real aid over the next four years at a time it forecasts strong growth in total national income. The Government claimed it was just a “pause” and follow several years of cuts in absolute levels of aid. The austerity is not only hampering growth in Australia and maintaining elevated levels of labour underutilisation, but, it is also revealing how mean we are as a nation. As one of the wealthiest nations in the world (currently we are ranked 2nd behind Switzerland for per capita wealth), we are now cutting into the resources we extend to poorer nations in our region as part of a mindless quest for surplus. The problem is not only the economic idiocy that underpins these cuts. The other, perhaps larger problem, of which the first is a symptom is that, as a nation, Australia is losing its moral compass. In this neo-liberal era, we have become an increasingly ugly nation – lacking in generosity to each other and to outsiders. We engage in criminal behaviour (indefinitely detaining refugees in prisons on remote islands; engaging in illegal invasions of foreign nations, etc) and punish poverty rather than do everything we can to reduce it and provide the equal opportunities to all that we so often congratulate ourselves as being champions of. We are a mean-spirited nation these days and an international pariah. There is no pride in holding an Australian passport. It is easy to live here if you have money. The climate is good, the beaches great, plenty of open terrain, great sport – but our national spirit is disappearing.
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, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
Today’s blog represents the notes that make up the conclusion of my upcoming book with Italian journalist Thomas Fazi which will be entitled – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World – and is due to be launched by Pluto Press in London on September 26, 2017. More details of that event and the promotion tour that will follow in due course. We have just about finalised the events through Europe and hope to see as many of you as is possible. As previously noted, this work traces the way the Left fell prey to what we call the globalisation myth and formed the view that the state has become powerless (or severely constrained) in the face of the transnational movements of goods and services and capital flows. Social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and, as a result, champion right-wing policies that compromise the well-being of their citizens. The book traces both the history of this decline into neo-liberalism by the Left and also presents what might be called a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world are available. In today’s blog I present some notes that will form the conclusion of the book. The manuscript is now at the publishers and it will be available for purchase in a few months.
This will be my only commentary on last night’s fiscal statement (aka ‘the budget’) from the Australian Treasurer unless I make another one. There were few surprises and lots of tricks all aimed at presenting a government that has abandoned its extreme right-wing ‘hit the poor the most’ past (as in 2014 and 2015) and decided to quell the deficit and debt hysteria that the right-wing of its party had determined was the best way to win votes. The conservatives are still in office but now they just claim that “the government has to live within its means” and spreads the adjustment profile by which it claims it will force the government to do that over a longer time period (2020-21 the first fiscal surplus is projected). It is big on claims about infrastructure development but, in fact, it tricks the population into believing that cuts are increases. It talks about fairness but introduces compulsory drug and alcohol testing for income support recipients because apparently you “can’t go to work if you are smashed”. It also includes projections that are required to get the surplus projection which are simply unbelievable, which means the 2020-21 surplus is just a token. Even the Treasurer has stopped short of promising its realisation saying the figure is just a “projection”. The government is cutting spending on universities despite saying it wants Australia to be a clever country. And in making changes to secondary education funding in general it is squeezing into the natural territory of whining Labor Party opposition and giving them nowhere to go. That Party has become trapped by its own adherence to neo-liberalism and now just looks stupid. In summary, it still delivers contraction in the year ahead at a time when Australia is growing well below trend and domestic spending growth flat. In other words, to be a fair and responsible policy document it should have increased the deficit over the next few years to stimulate employment growth and bring down unemployment and underemployment.