The catch-all category for my blogs reflecting my professional expertise as a full professor of economics.

Public employment and other matters of scale

I gave a keynote presentation at a recent conference where I showed that public sector employment contractions in Australia were a significant part of the rise in unemployment in Australia since the late 1980s. Had the public maintained its scale (proportion) with the underlying growth in the population then unemployment would have remained low throughout that period. The neo-liberal onslaught and the fiscal surplus fetishism has been a major reason why persistent unemployment occurs. All the nonsense about structural reform and the need to cut workplace protection overlook this fact. The government made a political decision to significantly cut its own employment and quite apart from the fluctuations in the private sector and the increased precariousness in private employment, that decision by government has had devastating consequences. The same situation arises in many advanced western nations under the spell of neo-liberalism. The thing about the current pro-market orthodoxy is that it has lost all sense of proportion. Mass unemployment involving billions of dollars of lost income is deliberately created by policy makers in search of a few pennies (relatively) in making ports work more quickly etc (microeconomic reform). In Europe, all sense of proportion has been lost. Read on …

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Myths regarding sovereign funds

There was an article in the Australian edition of the UK Guardian last week (September 4, 2014) – Oil tax: Norway could teach Australia a thing or two about managing wealth – which demonstrates the myths that pervade the public debate about fiscal policy and monetary systems. This particular myth relates to the opportunities that so-called sovereign funds offer currency-issuing governments and the calibration of national assets as something being

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Neo-liberal capture of the policy making process in Europe

Mainstream macroeconomics has mounted a range of arguments over the years to argue against any discretionary involvement by governments or regulators in the economy. The claim is always that the ‘market’ will self regulate and weed out bad players and produce the best outcomes with the least resources each period of activity. Various fancy terms are introduced into textbooks that make these arguments seem to have scientific weight. In narratives, there is often claims that left-wing groups blurred as trade unions have too much influence on political processes, particularly when a non-conservative party is in power. Rarely, is there any discussion of the way governments (of all political persuasions) become captured by the financial and industrial capitalist elites and become meagre conduits for capitalist rule. The west talks a lot about democratic rights and freedoms and people dutifully wander off at appointed times and cast votes which by the end of the day usually result in a government being elected. But they rarely realise that lying behind all of that flim-flam is rule by capital. There is very little democracy in advanced nations. We might turf out one party and elect another but the domination of capital persists and the lobbyists just duchess and bully a new political machine. The European Union takes this violation of democratic rights to new heights.

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Large-scale employment guarantee scheme in India improving over time

Today I am reflecting on employment guarantees. I ran into a mate in a computer shop in Melbourne yesterday, totally by accident. He happens to be one of the big players in the job services sector – the unemployment industry. We exchanged our usual pleasantries and then we got angry together about the government policies – the usual interaction. Then I said well what we need is all you guys and the related charities (such as the Brotherhood of St Laurence, the Smith Family) and other groups (such as Greenpeace, Amnesty International etc) all getting out of their comfort zones and agreeing that being angry is stupid and that action is required. These are the people who lobby government. Academics only create ideas and write them out. I suggested that these groups use their significant public profiles to organise a coalition of support for the Job Guarantee and really push it hard – if only to expose the denials and failures of the orthodoxy that besets us all. Anyway, that conversation just happened to dove-tail with an article I read last week about employment guarantees in practice that I found interesting and which was exposing the deniers for what they are – ideological sycophants. That is what this blog is about.

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Why we should close the ‘unemployment industry’

This morning I gave a Keynote presentation to the Jobs Australia conference in Melbourne, which is a gathering of people who work in what I call the extra industry – the ‘unemployment industry’ – which has sprung up in the neo-liberal period to manage the unemployment that the government has deliberately created as a result of its obsession with fiscal austerity (trying to run surpluses when increased and on-going deficits are required). I take no umbrage with individuals who work in the ‘industry’ but its productivity is close to zero (you cannot search for jobs that are not there) and they have become co-opted servants of the pernicious government policy regime. The facts are clear – we have erected a massive corporate sector funded by government to manage the fiscal failure. The problem is that all these job service providers are not just shunting inanimate widgets around into so-called training schemes etc but are dealing with very disadvantaged people, which the capitalist system is excluding from the opportunity to engage in paid and productive work. The ‘unemployment sector’ is the Government’s front-line attack dog on the victims of the policy failure.

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Real GDP growth now requires less energy but is that the point?

Regular readers will know that I am pro-growth – economic growth that is. I get criticised for saying that by Greens and such because they only consider GDP growth within their own economic paradigm, which is tainted, if only subconsciously, by neo-liberal conceptions of enterprise and employment. I would say that I am as Green as anyone but also understand that being engaged in employment is a basic human endeavour. I also agree that our usual conceptions of gainful employment – working for a capitalist to make them profits – will typically not place the ‘greenness’ of the jobs as a priority, and will, in many cases involved environmentally destructive resource use. The key to disengaging growing employment and hence, economic growth, from activities that are environmentally destructive is to redefine what we mean by productive and useful employment. But, there is also evidence that within the mainstream world of markets, private firms are starting to disengage the link between energy use and economic growth. But will that be enough? This blog is just sketching my own catchup on the latest energy use data. You might find it interesting.

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RBA spills the beans on Australia’s failed fiscal strategy

The Governor and other senior officials of the Reserve Bank of Australia (RBA) appeared before the House of Representatives Standing Committee on Economics yesterday (August 20, 2014), as part of the review by the Government of the 2013 RBA Annual Report. The Governor and the RBA Board are, ultimately, creatures of the political process, being appointed by the Government, which tells you that all the guff about central bank independence is just a smokescreen. Further, the insights that the RBA officials provided to the Economics Committee should leave no-one in doubt that the Federal government’s fiscal strategy is a failed vision for the prosperity of our nation.

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Real wages falling and Treasury continues to deceive

There is growing pressure on Australia’s wage setting tribunals to scrap penalty and overtime rates, allegedly because they damage employment and firms are just busting to put more workers on as long as wages drop. I have had a long association with these tribunals as an expert witness and I cannot recall the employers’ representatives ever agreeing that the time is right for wage rises. If their submissions are to be taken on their word then there would never be any wage increases. The facts are that real wages continue to fall in Australia – more rapidly in the private sector than the public. The Australian Bureau of Statistics published the latest – Wage Price Index, Australia – for the June quarter yesterday (August 13, 2014) and the data shows that hourly wage inflation is running at 2.4 per cent per annum, which is well below the current inflation rate. Real wages growth is also well below the growth in hourly productivity, which means that the Australian distribution system is still redistributing real national income to profits. And all the while employment growth is flat or negative. Meanwhile, our cigar-smoking Treasurer sees it as his role to berate the poor for being poor and distorting the public data to hide the fact that the May fiscal statement (aka budget) significantly cuts the real standard of living for low income earners and leaves the top income earners relatively unscathed. But all of this is in the name of fiscal austerity (aka madness).

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Fiscal policy saved the world

There was an article in the Melbourne Age this morning (August 12, 2014) – As jobless numbers climb, RBA is perilously close to a rare mistake – that is running a theme that is increasingly being played out by the financial commentators. Basically, that monetary policy saved the world from the GFC but that central bankers may lose their resolve and hike interest rates too quickly. While I certainly do not advocate interest rates going up anywhere (that I am familiar with), what seems to be forgotten is that monetary policy is relatively useless at encouraging growth. It was fiscal policy that saved the world.

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MMT is not conservative thought

Last night I sent the final manuscript of my Euro book to the publisher and felt somewhat downcast – that always happens after an intensive piece of work is finished. But this morning, I woke up free of that and focusing on the next task in the list. The list is always bubbling away and one juggles multiple projects at the same time, with more or less intensity. Curiosity demands that. But at some point more effort goes into one to complete it and the others wait in the queue for their turn. My next major deadline is an Modern Monetary Theory (MMT) compilation commissioned by my publisher Edward Elgar. The compilation will be my version of the roots of MMT and the development of its major ideas and influences. I have to write an overview piece explaining why I selected the literature and how it fits into the intellectual MMT tradition. It will obviously be an eclectic exercise and there is no certainty that my other original developers of what is now more broadly known as MMT will agree with my compilation or emphasis. I plan to start with Theories of Surplus Value – for reasons I explained in this blog – We need to read Karl Marx. I also do not plan to eulogise John Maynard Keynes, even though many of my colleagues think he is the most important link in the chain. It is here that I have to walk the fine line between technical detail and a broader reflection on how values intersect with what we might call the facts.

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