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There is a true oppositional Left forming and gaining political traction

I have avoided discussing the British and French parliamentary elections to date, mostly because I couldn’t stomach the outcomes – May back and the neo-liberal Macron dominant. I also was tired of reading stupid columns from the likes of William Keegan and the rest of the Guardian neo-liberals raving on about Brexit and Jeremy Corbyn. Keegan is like an old record that lets the needle get stuck in a groove. He seems to have written the same column since June last year where the reader is told about the Brexit disaster and how Britain will be impoverished. But both elections, particularly the British outcome confirms what we have been noticing for a few years now – there is finally what we might call a true oppositional Left forming and gaining political traction in these nations. This is a Left platform that concedes little to the neo-liberals. It is vilified by the conservatives and the so-called progressive commentariat (such as the Guardian writers) and politicians (New Labour in Britain) as being in “cloud cuckoo land” and predictions from all of sundry of electoral wipeouts have been daily. But the results demonstrated that the message (such as in the Labour Manifesto) resonates with millions of people (40 per cent of those who voted in Britain). It is now a mainstream Left message that has taken over the British Labour Party and the Blairites are hiding under rocks. There is hope. People will only tolerate being bashed over the head for so long. There is now retaliation going on.

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Deepening the Economic and Monetary Union – no solution in sight

Periodically, the European Commission puts out a new report or paper on how it is going to fix the unfixable mess that the Eurozone continues to wallow in. I say unfixable because all of the proposed reforms refuse to confront the original problem, which, at inception, the monetary union builders considered to be a desirable design feature – a lack of a federal fiscal capacity. They now know that this is the major issue but cannot bring themselves to deal with it directly. The politics won’t allow that. Everyone knows that Germany will veto such a development immediately and that would be the end of it. The latest report (May 31, 2017) – Reflection paper on the deepening of the economic and monetary union – maintains the inertness that was characteristic of previous ‘grand’ statements, such as the White paper on the future of Europe and the way forward (March 1, 2017) and the The Five Presidents’ Report: Completing Europe’s Economic and Monetary Union (June 22, 2015). So not much has happened in 2 years, despite the unemployment rate still hovering around 9.5 per cent, other than many workshops, conferences, reports, speeches, meetings in salubrious surrounds where the catering is the highlight and the conclusions moribund.

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If Africa is rich – why is it so poor?

When I was a student, that is, formally studying for degrees rather than the constant-learning approach which makes us permanent students, I was very interested in development economics and have carried that into the career phase of my work, including doing commissioned work for international agencies in Africa and Asia. One of the things I have come up against in that work has been the question of why are the nations in Africa, for example, so poor, when it is obvious to all and sundry that they possess massive resource wealth. My student days introduced me to dependency theory, which provided a solid framework for understanding the nature of underdevelopment. It stood in contrast to the mainstream development theory that was presented in most textbooks and which we would now call the neo-liberal approach. That approach is publicly enunciated by the IMF and the World Bank as if it is reality. In fact, it is a chimera! The framework of development aid and oversight put in place by the richer nations and mediated through the likes of the IMF and the World Bank can be seen more as a giant vacuum cleaner designed to suck resource and financial wealth out of the poorer nations either through legal or illegal means, whichever generates the largest flows. So while Africa is wealthy, its interaction with the world monetary and trade systems, leaves millions of its citizens in extreme poverty – unable to even purchase sufficient nutrition to live. It is a scandal of massive proportions and should become the target of all progressive governments (as they emerge).

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The Weekend Quiz – June 17-18, 2017 – answers and discussion

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.

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Australian labour force data – improvement but no positive trend yet emerging

The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for May 2017 shows that employment rose by 42,000 on the back of a strong rebound in full-time employment (up 52,100), given last month’s contraction in full-time work. Unemployment fell by 18,600, which allowed the official unemployment rate to fall to 5.5 per cent. There was a slight uptick in the participation rate as job opportunities improved. Underemployment remained steady at 8.6 per cent and broad labour underutilisation remains high at 14 per cent with unemployment and underemployment summing to 1,837.4 thousand persons. The teenage labour market also deteriorated in May contrary to the overall improvement. It remains in a poor state.

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When economists ignore the elephant called reality and applicability

I have sat through many economic seminars in my time where there is a sense of suspended reality necessary so the presenter can run through the exercise of bringing their latest research idea to the academic community. This suspended reality normally relates to the a priori assumptions made to condition the exercise and the framework within with the exercise is conducted. It typically involves ignoring the elephant in the room called reality and applicability. The ruse goes like this – assume a, b and c (where none of these assumptions capture the most important aspect of the object of study); then use these analytical tools (none of which reflect how the actual mechanisms being studied operate); and QED we show this. I no longer go to seminars like this – life is too short. An example of this sort of exercise appeared recently in summary form on VoxEu site (June 6, 2017) – Japanese frugality versus Italian profligacy? – written by an MIT academic. Perhaps the salient aspect is that the author was previously a Central Bank governor in Cyprus (2007-12) and a member of the Governing Council of the European Central Bank (2008-12). That experience may have led to his clouded judgement. But more so is the fact that he is a Friedmanite! One of them! That explains everything. The blindness. The failure to see the obvious. The neo-liberal ideology.

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Stuart Chase – a visionary ahead of his time

I recently re-read several books (well books), the first of which was published in 1932, and, the others published in the early 1940s, which were written by a relatively unknown American economist Stuart Chase. He not only wrote about economics but also ventured in the area of semantics (which is one reason I wanted to re-read the collection). As a economist and a social theorist, he was way ahead of his times. Much of his insights and ideas still have currency today, especially as it appears that an oppositional Left is finally starting to emerge from the wreckage of the conventional social democratic political parties and is in no small way due to the engagement of young voters in the political process who know that neo-liberalism is not the way of the future. Stuart Chase understood that the limits of the government’s spending capacity was defined by the available real productive resources and he also understood that the natural environment had to be accessed in a sustainable way. Very modern insights – 75 odd years ago.

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US labour market – poor results – not close to full employment

On June 6, 2017, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – May 2017 – which showed that total non-farm employment from the payroll survey rose by just 138,000 in May. While the payroll data confirms an on-going deterioration in job creation, an examination of the Labour Force Survey data presents an even worse picture. The official unemployment rate fell from 4.4 per cent to 4.3 per cent, the lowest rate since May 2001. But the fall in unemployment of some 195 thousand persons was not a sign of strength. Total employment fell by 233 thousand but was a smaller decline than experienced by the labour force (down 429 thousand) on the back of a fall in the participation rate (0.2 percentage points). In other words, hidden unemployment rose while official unemployment fell as workers gave up looking for work in the face of declining employment growth. The estimate of employment change from the Labour Force Survey was also positive (156 thousand net jobs added). There is still a large jobs deficit remaining and other indicators suggest the labour market is still below where it was prior to the crisis. Which makes the claims by a number of analysts that the US jobs market is so strong that inflation is about to accelerate on the back of wages growth (which at present is largely non-existent). In other words, there are many assessments that the unemployment rate has reached the so-called NAIRU (Non-Accelerating Inflation Rate of Unemployment) below which accelerating inflation becomes inevitable. I doubt that assessment.

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The Weekend Quiz – June 10-11, 2017 – answers and discussion

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.

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