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 last few months Australian Bureau of Statistics data has shown that Austrlia is becoming a nation of part-time employment – in the 12 months to July 2016, 84 per cent of net employment created has been part-time and underemployment (workers desiring more hours but unable to find them) has risen. The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for August 2016 shows that trend to be intensifying with negative employment growth and sharply a declining participation rate. With more than 82.3 per cent of total net jobs created over the last 12 months being part-time, it is clear that Australia maintains its status as the nation of part-time employment growth with all the attendant negative consequences. Further, the only reason that the unemployment level and rate fell is because the labour force shrank faster than total employment. This was due to the 0.2 percentage point decline in participation. 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.
I am now in Kansas City for the next several days, so blogs might come at odd times. I am getting close to finalising the manuscript for my next book (this one with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and started to believe that the state had withered and was powerless in the face of the transnational movements of goods and services and capital flows. Accordingly, social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and compromise the well-being of their citizens as a result. In Part 3 of the book, which we are now completing, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also 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. One proposal that seems to have captivated so-called progressive political forces is that of the need for a basic income guarantee. As regular readers will know I am a leading advocate for employment guarantees. I consider basic income proposals to represent a surrender to the neo-liberal forces – an acceptance of the inevitability of mass unemployment. In that sense, the proponents have been beguiled by the notion that the state can do nothing about the unemployment. It is curious that they think the state is thus powerful enough to redistribute income. I also consider basic income proposals demonstrate a lack of imagination of what work could become and a very narrow conception of the role of work in human well-being. This blog will be the first in several (probably about four) where I sketch the arguments that will be developed (but more tightly edited) in the final manuscript.
I am travelling all day today to the US. I am giving three presentations in Kansas City in the coming week – one at the university on teaching pedagogy in macroeconomics and then a Keynote presentation and an additional paper at the International Post Keynesian Conference – which will be held at the University of Missouri – Kansas City between September 15-18, 2016. I am unsure whether the Keynote speech will be available for streaming but I will report in Wednesday’s blog (when I get there) about that if I find anything relevant out. The keynote presentation is scheduled for Saturday, September 17 at 15:00. 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. Apparently a lot of macroeconomists are now claiming they knew it all along, which is interesting given they usually write down what they know to get it published! 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. So until tomorrow I have some music ideas for you to enjoy.
Last week, the Australian National Accounts data showed that Australia had achieved 25 years without a recession. I commented on that data release in this blog – Australian national accounts – public spending saves nation from negative growth. I did several media interviews last week on this topic and, in general, the approach of the interviewer was to build this up into something almost mythical. The Government also rose beyond their usual smugness and claimed Australia was leading the world in economic policy given this track record. They don’t admit that the growth was spawned by a credit binge that has left households with record levels of debt and a housing market that is unaffordable for low income earners and young homebuyers. They also do not admit that more recently, a major fiscal intervention that continues has saved Australia from recession. Below the headlines though is a very murky situation and none more than the teenage labour market, a topic I have been trying to bring to the forefront in the public debate for many years now. The Brotherhood of St Laurence did eventually start agitating on this topic which gave it a higher visibility in the debate. But, in general, the Federal government is doing nothing constructive to solve the youth labour market crisis. And today’s release of the major OECD report – Investing in Youth: Australia – is so full of neo-liberal Groupthink language that it is clear the mainstream hasn’t grasped the problem yet – we need at least a hundred thousand new full-time jobs in the 15-19 segment alone!
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.
Last week, the US Bureau of Labor Statistics released the August 2016 – Employment Situation – which showed that total non-farm employment rose by only 151,000 and the unemployment rate remained steady at 4.9 per cent. Employment growth was well below the expectation (although the banking economists are rarely close) and the question now is being raised as to whether the US has reached a cyclical peak (turning point) and things will get worse from here. While that is difficut to determine on a few months data the fact remains that the US federal government can always offset a slowdown through appropriate fiscal policy interventions if it chooses fit. To dig deeper into the data, I have analysed the Job Openings and Labour Turnover Statistics (JOLTS) which was updated by the BLS yesterday (September 7, 2016). While the number of job openings increased there was little change in the hire and separation rates, which suggests a static situation. In general, it looks as if the US labour market is cooling although perhaps describing the current situation as being an uncertain limbo is more apposite.
Last we we learned that investment in Australia has plunged in the June-quarter. Yesterday, we learned that the external deficit has risen and the contraction in net domestic spending would reduce real GDP growth by 0.2 percentage points. Today, the Australian Bureau of Statistics released the – June-quarter 2016 National Accounts data – which showed that real GDP has slowed significantly in the most recent quarter, growing by only 0.5 per cent (down from 1 per cent in the three months to March 2016). The March-quarter result is now looking like an aberration. Without that public spending contribution to growth, which was dominant in the June-quarter, Australia have recorded negative growth in that quarter. The contribution from non-government spending netted out to minus 0.5 percentage points with negative contributions from the external sector and private capital formation and a declining contribution from private households. The on-going negative growth in private investment means that potential output in Australia and future growth rates will be lower than otherwise. Not a positive sign. The data continues to confirm that Australia faces a very uncertain outlook and if public spending is cut in the current quarter then the nation is heading for recession. That should be a huge wake up call for the Federal government which is currently trying to bully the Senate into accepting a $A6 billion cut in federal public expenditure.
There was a Project Syndicate article (September 2, 2016) – The Unavoidable Costs of Helicopter Money – claiming that “In fact, there are major downsides to helicopter money”. Hmm. Should I read this article was my thought at the the time. Waste a few minutes of my life. I wondered if I could pen the article in advance and then check to see how close I was. The theme would be inflation. In that I was correct. But the author really innovated a bit and, in doing so, undermined his own argument. What we learn is fairly straightforward. If a government continues to increase nominal spending growth ahead of the growth in productive capacity then there will be inflation. The argument presented is, in fact, nothing to do with the monetary operations that accompany government spending – helicopter or otherwise. The inflation risk is in the spending. If private investment expenditure outstripped the capacity of the supply-side to produce the capital equipment demanded then the same outcome. Should we caution against such expenditure? Should be make it taboo? Obviously not.