The World’s financial system would have collapsed in 2008 and early 2009 if the governments of the day (including their central banks) had have maintained the dominant belief held by most mainstream economists that fiscal policy is not capable of an effective stimulus to real economic activity and that building central bank reserves to historically massive levels would cause accelerating inflation. Within a short time, all that orthodox posturing that had been shared by politicians, their advisors, and the mainstream financial and economics media was abandoned and pragmatism reigned supreme. Well sort of! The system was saved because governments largely ignored the dominant mainstream economics view. At the time, I thought that this shift in policy practice was the beginning of a paradigm shift in macroeconomics. The crisis clearly demonstrated the poverty of the orthodox theoretical framework and the policy prescriptions that flowed from it. The dominant theoretical models didn’t even have banking sectors included such was the arrogant ignorance of the profession. However, I was wrong or perhaps a bit hasty in thinking that the defences built up by the orthodox economics Groupthink would fall so quickly in the face of this amazing failure. There was a period of quietness within the profession, save for the manic interventions of some of the more extreme Monetarist elements who called on the governments to do nothing other than continue deregulation and target even bigger fiscal surpluses. But the conservative voices progressively gathered volume as the crisis moved from the probability of collapse to a deep (balance-sheet) recession and the attacks on the fiscal and monetary policy shift that occurred in 2008 and 2009 began to reach fever pitch. Governments retreated somewhat and the recoveries were then stalled and we are where we are now as a consequence – still bearing the residual damage of the GFC with many of the trigger points still unresolved and facing a new calamity. Maybe the paradigm shift is still coming. Let’s hope so.

Last week (September 17, 2015), the European Commission announced – Long-term unemployment: Europe takes action to help 12 million long-term unemployed get back to work. The press release summarised the latest proposal from the European Commission – On the integration of the long-term unemployed into the labour market – which outlines a series of initiatives that aim to “to better help long-term unemployed return to work”. I studied the proposal in detail and came to a stark conclusion – there is nary a job in sight!

There was an interesting article by US historian Jackson Lears in the in the London Review of Books (July 16, 2015) – The Long Con: Techno-Austerity. I recommend people regularly reading the LRB because it has some fabulous articles. In this case, the review by Jackson Lears is of the recent book by Steve Fraser – The Age of Acquiescence: The Life and Death of American Resistance to Organised Wealth and Power (published by Little, Brown). I have taken time to write about this because I had to read the book being reviewed myself first. There is also an excellent review of the book by Naomi Klein in the New York Times – ‘The Age of Acquiescence,’ by Steve Fraser (March 16, 2015). So what is it about?

I was first really exposed to the concept of what social responsibilities a university has when I was a student at Monash University in the early 1970s. The issue was the University’s decision to allow the napalm-producing company, Honeywell to use the Monash Careers and Appointments office facilities on campus to conduct interviews and recruit potential graduates. I was reminded of this dispute the other day for two reasons. First, I did a radio interview for the national broadcaster (ABC) where I was asked about the decision by the Newcastle City Council (my local council) to divest itself of fossil fuel investments (see story – Newcastle Council abandons fossil fuel investments). This is a global trend. This was a shock to some, given that Newcastle is the largest coal exporting port in the world and there are major coal mines nearby up the Hunter River valley (the river flows into the Pacific Ocean at Newcastle). Second, around the same time, we learned that the University of Newcastle, my homeinstitution, had awarded a lucrative contract to Transfield Services, who hold the contracts to provide welfare and garrison support services in the offshore prisons (detention centres) which the Australian government established to ensure that asylum seekers who try to reach Australia by boat never reach the mainland. These prisons house families including young children for lengthy periods. There is strong evidence that the detainees incur mental illnesses and other health issues from the isolation. There have also been allegations against Transfield staff in relation to rapes and sexual assaults on detainees. These instances raise questions about the responsibilities of public institutions such as universities to operate according to acceptable community standards which makes the decision by the University of Newcastle (NSW) to enter into a commercial arrangement with Transfield rather odd indeed.