Public R&D austerity spending cuts undermine our grandchildren’s future

Growth in material living standards, which is just one measure of overall (average) prosperity and contestable at that, depends on productivity growth. How national income is distributed, real wages growth in relation to productivity growth, and the employment rates also impact on how this average is reflected in the fortunes of individuals. Strong productivity growth is only a necessary condition for improved material living standards. In this period of fiscal austerity with suppressed overall growth rates and labour market deregulation that undermines working conditions and reduces the incentives to invest in best-practice technology labour productivity is falling – as will living standards in the coming years. The world is locked into an idiotic race-to-the-bottom. It is a curious period really. The hypocrisy of governments, aided and abetted by the right-wing think tanks, who claim they are cutting into public spending to reduce the drain on living standards of our children and grandchildren, is clear to see. What they are really doing is undermining the future prosperity of the next several generations at the same time that they push millions into unemployment and poverty now. Why are we so stupid that we tolerate this nonsense?

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The Eurozone Groupthink and Denial continues …

I have been going back through my snippets library looking at what economists and politicians said back earlier in the crisis and comparing the predictions with reality to try to understand better why Europe is lagging behind. I have been compiling national profiles for various nations lately to ensure I remain cogniscant of the detailed developments that have been occurring. It takes some organisation. I have been concentrating by interest on Finland, Spain and Portugal lately. It astounds me when I read or hear that the Eurozone has been a success because the currency is stable. Even that last statement is false given the monetary union is fighting deflation at present with recessed output levels and entrenched mass unemployment. The current statements coming out of European leaders accord almost directly with the same sort of things they were saying in 2010 as the region was plunging deep into recession. It seems that they have learned nothing. Some of the past leaders have retired with handsome pensions and will not be held to account for their policy incompetence. Others remain in office and their public statements demonstrate that they cannot see beyond the blindness of the Groupthink that defines the patterned behaviour of the elite European policy-making institutions.

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Full video – University of Helsinki lecture, October 9, 2015

Here is the video of the lecture I gave at the University of Helsinki on Friday, October 9, 2015. There were around 450 people in attendance, which the organisers indicated was an exceptional turnout for a cold Friday late afternoon (the presentation started at 17:00). The size of the audience was a demonstration of the concern that Finnish people have for the future of their nation given that the conservative government is signalling it wants to impose an extreme form of economic austerity in an economy that is already in recession. The economics profession in Finland is ultra conservative and as far as I can detect supports the austerity despite, of course, their own jobs not being in the direct firing line of the public spending cuts.

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Friday lay day – the Unit Labour Costs obsession in Finland

Its my Friday lay day but today is going to be anything but. I am in Helsinki at present and it has been a busy few days so far. The concept of Unit Labour Costs (ULCs) is being used by the right-wing government in Finland to bash the population into submission so they can impose the nonsensical austerity. The Finnish government is trying to get rid of some public holidays and reducing wages for sick leave, overtime and working on Sundays. This is the starting point for a broader austerity attack on the public sector and the prosperity of the people. They are calling for a decline in ULCs of at least 5 per cent. The rationale is that with growth flat to negative for five years or so and the massive export surplus they had disappeared the only way to stop unemployment going through the roof is to cut labour costs relative to productivity – that is, cut ULCs. They have been caught up in the ‘dangerous obsession’ that prosperity can only be gained through ‘export competitiveness’ (whatever that actually is) and the domestic economy has to be sacrificed at the net exports altar. International competitiveness is a slippery concept at best but so-called internal devaluation is rarely a successful strategy.

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The total Greek election farce – RIP democracy

Last weekend, the Greece people (or a declining proportion of them) elected a new national government. It was a farce. There was no competing electoral mandates sought. The population know what is in store for them. The policy mandate in force wasn’t even supported by popular vote. It comes from the Troika, which now effectively governs the Colony of Greece. The new Prime Minister, who sold the people out prior to the election, is now talking about making changes. Yeh, right! He is now just a tool for the Troika. National elections where the people do not vote for anything much don’t look like a healthy democracy to anyone who isn’t in denial as to what has been going on. Democracy is about the people being able to change governments that do them harm. In the Eurozone that is an old-fashioned idea. National elections have become a sop, a pretense. And the people knew it and stayed away in droves. The Greek election was a total farce – democracy died.

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Monday travel and some austerity stories

There is no detailed blog today as I am travelling from Brussels to Sydney. I will resurface again on Tuesday after the long flight. When I wrote my blog on Friday documenting the austerity tour around Porto I forgot to mention a few things. This blog adds some more observations I have made of conditions in this part of the world at present.

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Friday lay day – the ‘worst tour’ in the world

Its my Friday lay day blog and I am on the austerity trail. I have been in Porto, Portugal for the last few days, ostensibly taking a short break by the beach. There has been no swell at all. The beach area to the south of the Douro River is like beach areas everywhere. They give little hint of what austerity has done to this country. Porto is the northern capital of Portugal and a town of around 240 thousand people (in 2012) with the wider region containing around 1.4 million people. It is considered one of “the major urban areas of Southwestern Europe.” But it is also disintegrating as an urban centre with an extraordinary number of derelict buildings and many shops closed as austerity ate into incomes and spending. There are decaying buildings everywhere some with for sale signs on the front. The urban infrastructure is falling apart – the main market is being held up with scaffolding and weeds overtake sporting arenas. In many respects, it looks like a city in the poorest nations rather than being part of Europe. Around a third of the inner city population has left. A large number of people in the greater urban area have left. The mobile are dominated by the young and the educated with the skills leaving behind an elderly population. There is little hope for the city under the current policy structures. A nation and its cities destroyed by austerity. There is no exaggeration here. I invite people to see for themselves. An extraordinary outcome of an out of control recession cult ideology reinforced by neo-liberal Groupthink ruining the prosperity of a people. I had quite a day yesterday as I went on a field trip around Porto organised by the – The Worst Tours.

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Multimedia Tuesday – London event and interview

I am heading south today to the periphery of the Eurozone and will spend the rest of the week down in the sun. We will see what I come up with. My next blog will come from the South – in deep austerity land! Today, though, I have little time. So I have posted the Presentation I gave in London last Thursday plus a Radio interview I did in London on Friday. They might be of interest to those who could not make it to the event on Thursday. We launched my latest book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale – in Maastricht yesterday and a video record of the proceedings will be available in due course. But for now it is off to the beach!

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Greece – now the conservatives are denying there was austerity

The Project Syndicate recently (August 6, 2015) published an Op Ed by conservative Edmund Phelps – What Greece Needs to Prosper. The article was widely syndicated by the conservative media and represents part of the conservative narrative to conveniently revise history when the facts violate the conservative ideological agenda. It is an appalling article. We are now in a phase of “Austerity denial”, where conservatives attempt to massage history to avoid the unpalatable conclusion that the massive austerity that has been imposed on certain countries by the IMF and its partners in crime (in Greece’s case the European Commission and the ECB) has caused huge declines in GDP (levels and growth rates) and deliberately led to millions of people becoming jobless with associated rises in poverty rates. That causality is undeniable.

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