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Neoliberalism has not been about applying Chicago-style economic theory

Scottish-born economist – Angus Deaton – recently published his new book – An Immigrant Economist Explores the Land of Inequality – in which he provides a swathing critique of the state of the economics profession, particularly in the way that it impacts on policy making and societal well-being. He is a microeconomist who made a name for himself studying consumer demand, which means he has not contributed anything significant to the field of macroeconomics, where I hang out. The title refers to his migration to the US from Britain in the 1980s and his reflections on what he found and how the economics academy has changed over this 45 years in the profession. His point is that the economics profession has lost its purpose and should return to a focus on advancing well-being. He is particularly critical of Chicago-style economics – or ‘free market’ thinking. The problem though is that the neoliberal era has not been about applying Chicago-style economic theory. The elites just say they are doing that when in fact all they are doing is utilising the immense government capacity to shift the intervention dial in their favour. The government has not given way to the free market – it has just been reconfigured to become an agent of capital.

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Australian labour market – slight weakening in September as hidden unemployment rises

The Australian Bureau of Statistics released the latest – Labour Force, Australia – for September 2023 today (October 19, 2023). My overall assessment is that the the labour market is now looking subdued although relatively stable. The decline in full-time employment is a worry. Almost all the net change in employment over the last six months has been part-time. In September, employment growth was not strong enough to absorb the underlying population growth. The only reason unemployment fell in the context of the weak employment growth was because the fall in the participation rate meant more workers left the labour force. There are now 9.9 per cent of the available and willing working age population who are being wasted in one way or another – either unemployed or underemployed. The fact that the broad underutlisation rate fell is not a cause for celebration because it was driven by the decline in participation, which just means hidden unemployment rose. Australia is not near full employment despite the claims by the mainstream commentators.

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Launching the CofFEE Financial Resilience Barometer – Version 1.0

It’s Wednesday and while there is a lot to write about, I am prioritising the release today of our latest research at the Centre of Full Employment and Equity (CofFEE). The release of what we are calling the – CofFEE Financial Resilience Barometer – Version 1.0 – is part of a research collaboration I have with Professor Scott Baum at Griffith University. We have Australian Research Council funding for the next three years to explore regional resilience in the face of economic shocks, particularly after the massive disruptions from the Covid pandemic. Today we release the first output of that research. I also consider other matters today and the usual Wednesday music segment comes with a song from a leading Palestinian singer.

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The de-risking narrative – another in the long line of neoliberal ruses

There have been several interrelated strands in research and practice associated with the dominance of neoliberalism over the last decades. The problem has been that these approaches have been as much enthusiastically promoted by social democratic or progressive forces as they have conservatives. Indeed, conservative political forces have gone down the ‘Trumpian’ far right sink hole and the social democratic parties have moved into the political space vacated – that is, further right than centre. Over the years we have been confronted with social entrepreneurship, new regionalism, corporate social responsibility and self regulation, volunteerism, light touch regulation and more – as part of a so-called ‘Third Way’ where class divisions are dead and the ‘market’ is supreme. More recently, so-called progressive politicians have been touting the ‘de-risking’ narrative as a way of fixing the mess left by the other Third Way approaches. Accordingly, the role for government is to de-risk the vagaries and flux of capitalism, so the entrepreneurs can make profits with surety and if there are issues the government will bail them out. It is a disastrous denial of government responsibility and will fail just as surely as all the rest of the ruses have combined to create the mess societies are in around the globe.

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British Shadow Chancellor promising the impossible

The British Labour Party officials and politicians have all been cock-a-hoop over the last week in Liverpool as they participate in their Annual Conference with the latest modelling suggesting they may win a “landslide 190-seat majority” at the next national election leaving the miserable and incompetent Tories with only 149 seats (currently 352) (Source). The contrast between the two national conferences this year could not have been greater. The Tories looked and sounded divided and like losers. The Labour Party looked like winners and united (although that latter condition has only come from the Stalin-like purge that the leadership has conducted on the Left of the Party). The Labour Party is now schmoozing the corporate bosses and each day that it passes it sounds more like what the Tories used to be like, before the rabid Right took over. That assessment is based on the promises that the Labour Party made at its recent Annual Conference. While the details are still relatively general, my assessment of the fiscal promises the Shadow Chancellor made last Monday and elsewhere is that the conditions that would be required to satisfy them will prove impossible to achieve.

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The legacy of fiscal austerity in the 1990s in Australia lives on

It’s Wednesday and I spent some time this morning reading the latest IMF – Global Financial Stability Report – in which the IMF pretends to know what is going on in the world economy based on a set of erroneous assumptions about how that economy functions. But the data it provides is interesting in itself. Of interest is that fact that Australian households now have the highest debt-servicing ratios in the world as a consequence of record levels of debt and rapidly rising interest rates. What is generally overlooked in these discussions, however, are the circumstances in which the debt rose so much in the first place. In this post, I explain, among other things, how the obsessive pursuit of fiscal surpluses combined with labour market (in favour of the employers) and financial market deregulation (in favour of the bankers) in the 1980s and beyond, created the conditions whereby households could really only maintain growth in consumption expenditure by significantly increasing their indebtedness and running the saving ratio into negative territory. The legacy of that misguided shift to fiscal austerity lives on. Later in the post I make a brief comment about the Middle East and then we listen to some music.

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