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.

It is my Friday lay day and I am quite distracted with other commitments. But at the London presentation a few weeks ago, I mentioned that I would scrap central banks and consolidate their functions within a division of what we now think of as Treasury departments (or Finance Ministries). Whenever you say that there is a ridiculous response from those who claim to know something about banking along the lines of either, it would cause hyperinflation or that the politicians cannot be trusted. Both arguments are as I say – ridiculous. There are some things that central banks do that are necessary, for example, maintain financial stability through the integrity of the payments system. They also, depending on the nation, manage foreign reserves although that function is unnecessary if exchange rates float. Yes (flame suit on) I know less developed countries face exchange rate volatility and have to import food to survive. Which brings me to the point. The first part of scrapping central banks is to eliminate their ideological/political function. They are bastions of conservative mythology – pick whichever one you like – expanding the money supply is inflationary, ‘printing money’ is inflationary, politician meddling in monetary policy is inflationary, financial markets will desert a country that does not have an independent central bank, etc ad nausea. Politicians also use the so-called independence of the central banks as a way of deflecting policy responsibility for mass unemployment. Modern Monetary Theory (MMT) does not advocated doing away with the functions that are legitimately performed within the current central banks. It would stream-line some and make other functions redundant, but what it would do away with is this incessant cycle of ideology that emanates from these institutions.

One of the small things I noticed (and enjoyed) in Europe in the last few weeks is the speed of the Internet connections available. Even if one takes the so-called ‘low speed’ option at the hotel (invariably free), the connectivity speeds were far superior to anything I have available in Australia. That matters when large datasets are involved. We often wait minutes for datasets to download here from say the Australian Bureau of Statistics. Watching streaming video is often a case of getting it started, pausing it, and waiting an hour or more for the download to occur so that you can watch it without interruption. Australia is very backward in this regard and the reasons that we are set to become even more disadvantaged are the same reasons that the economy are heading towards recession – a neo-liberal fetish against government spending and an ideological blindness to innovation.

At the London event last week, I indicated that governments should not issue any public debt as the benefits of doing so are small relative to the large opportunity costs. The Modern Monetary Theory (MMT) position is that there is no particular necessity to match public deficits with debt-issuance for a currency-issuing government and deficits should be accompanied by monetary operations which we now call Overt Monetary Financing (OMF). Surprisingly there was some arguments by audience members that governments should continue to issue debt, largely, as I understand them, to provide a safe haven for workers to save for the future. So the idea is that we maintain the elaborate machinery that is associated with the public debt issuance just to provide a risk free asset that workers can use to park their hard-earned savings in. It is a strange argument given the massive opportunity costs associated with debt issuance. A far simpler solution is to exploit the currency-issuing capacity of the government to guarantee a publicly-owned National Saving Fund. No debt would be required.