Two stories today make you wonder about the direction of our Australian government. The first relates to the changes to the industrial laws that the Greens finally were able to push through the Senate last night and the second relates to the threat of mass censorship using lists that are seemingly highly flawed.
The US program 60 Minutes interviewed Fed Reserve Chairman Ben Bernanke at the weekend. The interview is largely a litany of mainstream statements but at one point the Chairman gives the game away to the interviewer Scott Pelley. Apart from Bernanke’s very clear statement about how governments actually spend, the interview reveals the confusion that the top banker has with the way the modern monetary economy operates.
Today I released a major new research report Red alert suburbs: An employment vulnerability index for Australia’s major urban regions which was the result of a collaboration with Scott Baum (URP, Griffith University) who I share a large ARC Discovery Grant with. The Report and its findings has already received front page coverage in the large Australian dailies – The Age and the Sydney Morning Herald.
The Australian government announced that as a result of the rising unemployment it would cut the skilled migrant intake by nearly 20,000 to 115,000 this financial year. It also removed some key industries (construction and manufacturing) from the critical skills list which will prevent firms from sourcing tradepersons from abroad unless they can prove local labour is not available. The announcement while seemingly a sensible statement of the jobs equation – less jobs require less workers – once again raises the question of how population policy should be formulated.
Put People First group are running a grass roots campaign for all of us to send a message to the G20 about their priorities. The campaign symbol is the megaphone logo appearing below. Their campaign will culminate in a march in central London on March 28, 2009 to push a case for jobs, justice and climate. I am not associated with this group but I share their priorities, even if I might see them in different terms. Anyway, this is the first of my messages to the G20. In summary: they need to learn how the economy actually operates and then they would use their fiscal policy capacity to ensure everyone has a job in a sustainable economy.
Many readers have asked me to explain why social security and pension schemes run by national governments can never become insolvent. Some have heard me commenting on the radio recently about this. In the current recession, where automatic stabilisers are pushing the budget back into deficit to dampen the fall in aggregate demand there are now renewed cries that social security funds around the World are likely to become insolvent. There are the familiar howls that all the “debt” that is being built up as governments go into deficits (mostly because they have been dragged into them by the cycle) will require huge future tax burdens that will undermine the capacity of governments to deliver adequate social security and health care systems. I think its time to de-brief again. The short answer to these claims is: sovereign governments can always fund social security in their own currency. Always, always, and even always.
Some readers have written to me asking to explain what quantitative easing is. Some of them had heard an ABC 7.30 Report segment the other night which interviewed the Bank of England Governor who outlined the BOE’s plan to “print billions of pounds” as its latest strategy to stimulate lending and hence economic activity in the very dismally performing UK economy. Once again we need to de-brief and learn what quantititative easing actually is. We need to understand that it is not a very good strategy for a sovereign government to follow in times of depressed demand and rising unemployment. We also need to get this “printing money” mantra out of our heads.
After yesterday’s shock admission that our Federal Finance Minister Lindsay Tanner was losing sleep because he was worried about the Federal debt buildup, there he was on the ABCs 7.30 Report last night giving us more cause for concern that his sleeplessness is having a negative effect on his ability to conduct reasonable dialogue on economic matters.
Today’s labour force data revealed the the world recession is starting to impact directly on jobs in Australia. Last month’s data surprised people because it suggested the labour market was resisting the global trends. At the time I indicated that the inaccuracy in the data due to the large sample errors was likely to be a factor. Today’s data also carries some surprises although the trends it is indicating are clear enough.
Today I heard that our Federal Finance Minister Lindsay Tanner is suffering from insomnia because of the growing Government debt burden. Poor thing. Why is he worrying himself sick? Well I have the cure. If he reads this blog and understands it I think he will back in slumberland sooner rather than later.