Two items this Wednesday before the music segment. First, we saw the stark ideology of the elites on full display in Sydney yesterday with a property developer demanding the government increase unemployment by 40-50 per cent to show the workers that the employer is boss and redistribute more national income back to profits. For anyone who doubts the relevance of a framework based on underlying class conflict between labour and capital, then this outburst should eliminate those doubts. On the same day, a leading research group in the welfare sector released an update in their series tracing poverty in Australia. It demonstrated a rising incidence of poverty (nearly 20 per cent of the population) and 1 in 6 children living in impoverished conditions. And the profit takers want more of that to enrich (engorge) themselves even further. A shocking indictment of what has gone wrong with this nation.
It’s Wednesday and apart from music I am talking mostly about poverty – opposites indeed. The beauty of the beat against the ugliness of enforced poverty. Enforced by government policy, which if there is political will can always eliminate systemic poverty. Yesterday (April 18, 2023), a major report was released in Australia by the grand-titled Economic Inclusion Advisory Committee – 2023–24 Report to the Australian Government. It provided a series of recommendations to the new Labor government about how it should deal with poverty, disadvantage and the appalling state of income support in this country. Among its recommendations it found that “current rates of these payments are seriously inadequate, whether measured relative to the National Minimum Wage, in comparison with pensions, or against a range of income poverty measures. People on these payments face the highest levels of financial stress in Australia”. Accordingly, they recommended a “substantial increase in the base rates” for unemployment benefits and other payments. The new Labour government has already indicated it will not increase the rates in any significant way. The problem, though, is that the recommendation of the ‘Inclusion Committee’, is such that if introduced would still leave the unemployed being forced to live below the poverty line. Yet, its recommendation is now framing the ‘limit’ parameters of the debate. All sorts of so-called progressives are using the recommendation as the aspiration, which really becomes self-defeating. The ‘Inclusion Committee’ might better have been called the ‘Exclusion Committee’.
The Wednesday news and music blog post. The Prime Minister has now announced the federal election will be held on May 21, 2022. I think I will concentrate on the football that Saturday rather than the election given how depressing the political situation is. They should allow only a week for campaigning because 3 days in to the current 6-week campaign it is already deeply depressing and reinforces that Australian voters, particularly those of the progressive variety are caught – Between the Devil and the Deep Blue Sea – when it comes to federal elections. Both major parties are happy to over 550,000 Australians (and their dependants) deliberately forced by government policy to live in abject poverty. Many thought that the Australian Labor Party (the leader of which couldn’t even tell the media this week what the unemployment rate actually is) would probably honour their previous promises to review the unemployment benefit system and increase the payment as a result. Given that voices from the welfare lobby, the OECD, the business lobby (and yours truly) have consistently been calling on the federal government to end the enforced poverty. Overnight, the Labor Party demonstrated their credentials for re-election. No matter what else they say in the next several weeks, the fact that they have abandoned any intent to raise the unemployment benefit nor engage in any job creation disqualifies them from office. I hope they lose. But then I hope the other rotten conservative lot lose to. An impossible set of hopes. The Devil and the Deep Blue Sea. Speaking of the devil we can then listen to ‘Old Devil Moon’ after all of that and calm down.
For years, students have been taught that fiscal policy is an ineffective policy tool to regulate fluctuations in national income derived from changes in spending and saving decisions in the non-government sector. This narrative justified the austerity purges that we have become accustomed to pre-pandemic. The elevation of the fiscal surplus to some desired goal has been instilled in our minds and we have voted to support governments that record these surpluses because we have thought they were being fiscally responsible. The GFC, and, more recently, the pandemic has helped undermine that narrative as people have realised that the only thing between them and hunger has been government spending. The ‘market’ hasn’t helped them. The evidence that government spending has reduced poverty and created opportunities for families that were not previously possible is strong. One such measure is the – Supplemental Poverty Measure (SPM) – which was first published by the US Census Bureau in 2011. This blog post records my notes on that data release.
Today, we have a guest blogger in the guise of Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. Today he is writing about the uneven impact of the government’s withdrawal of its COVID economic support packages aka JobSeeker and JobKeeper. Keeping with some of his earlier blog posts here, Scott takes a spatial angle and considers what might be some of the implications when exposure to the impacts of the government’s changes are concentrated at the level of federal government electorates. Anyway, while I am tied up today it is over to Scott …
US Department of Labor’s latest unemployment claimant data is worrying with the claimants in the week to January 9, 2021 rising to 1,151,051 a shift of 231,335. This is the highest level since the week ending July 25, 2020 and confirms what we now know – that unless a nation deals with the health crisis and gets the virus infections under control (preferably to the point of zero community transmission), it cannot hope for a sustainable economic recovery. The data is the result of lockdowns leading to layoffs in the hospitality and recreation sectors which has pushed the US economy back into contraction. The rise in new claimants follows the payroll data that revealed that employment had fallen by 140,000 (net) – see this blog post for analysis of that data release – US labour market recovery has ended as health problem intensifies (January 11, 2021). And given the nature of the employment most impacted, you can be sure that socio-economic inequalities will have risen. I will write about that last issue another day.
Its Wednesday and as usual I am not writing much here. Further, I have many commitments today (see one of them below). So we just have some information for you plus a podcast I did recently. And, finally, some Bob and Johnny for our music segment.
We need to get a few things straight. And this is partly for those out there who seem to think that the extent of literature on Modern Monetary Theory (MMT) or the Job Guarantee within MMT is confined to collections of Tweets that allow 280 characters or Unicode glyphs. One doesn’t become an expert on ‘full employment’ or ‘political economy’ because they have suddenly realised there is a major crisis in the labour market and have decided to strategically place their organisations for self-serving purposes to be champions of full employment. There is an enormous literature on the Job Guarantee and I have been a major contributor along with my valued colleagues. This is a crucial time in history and one of the glaring deficiencies in the current crisis and economic management in general is the lack of an employment safety net. This is what MMT has to say about that safety net and stabilisation framework.
One of the stark facts about the academic economics discipline is its insularity and capacity to deliver influential prognoses on issues that affect the well-being of millions with scant regard to the actual consequences of their opinions and with little attention to what other social scientists have to say. The mainstream economists continually get things wrong but take no responsibility for the damage they cause to the well-being of the people. A 2015 paper – The Superiority of Economists – published in the Journal of Economic Perspectives (Vol 29, No. 1) by Marion Fourcade, Etienne Ollion and Yann Algan is scathing in its assessment of the economics discipline. They say that mainstream economists largely ignore contributions by other social scientists and consider them inferior in technological sophistication, have a “predilection for methodological and theoretical precision over real-world accuracy”, largely ignore”the basic premise of much of the human sciences, namely that social processes shape individual preferences”, and parade an arrogance and superiority that masks the sterility of their analysis. In this context, I thought the 2015 Report from the Joseph Rowntree Foundation – Sociological perspectives poverty – was a breath of fresh air in its approach to understanding poverty. The empirical base it presents refutes most of the major assumptions and conclusions of economists who work in the field of poverty. A mainstream professor who was supervising my economics graduate program once said to me: “Bill you are a bright boy but you should be doing sociology”, which was an example of the negative control mechanism designed to weed out dissidents (like me). It didn’t work. But I always considered the disciplines of sociology and anthropology (not to mention psychology, political science, social welfare etc) to be important in my journey to become ‘well read’. Most economists, however, do not think that. Perhaps that is why I was able to be part of the development of Modern Monetary Theory (MMT).
At present, the Australian Parliament is debating whether the unemployment benefit (called Newstart) should be increased. The conservative government is refusing to budge claiming it prefers to create jobs and get people of benefits – arguing that it will generate 1.25 million jobs over the next 5 years. The Opposition Labor Party are attacking them for being mean but are just rehearsing the massive hypocrisy that has defined that party since it became a voice for the ‘neoliberal lite’ path. Every time the Labor Party spokespersons criticise the Government for not bringing unemployment benefits above the poverty line, Australians should remember that when they were in office the Labor Ministers ran the same line – they wanted to move people into jobs and would not compromise their obsessive pursuit of a fiscal surplus. Same logic. Disgusting and dishonest then. As it is now. The fact is that the successive governments have forced the unemployed to remain jobless (through austerity policies) and then increasingly plunge into deeper poverty (by refusing to increase the income support level in line with movements in poverty lines). In this blog post, I show that even if the 1.25 million pledge is achieved (and there are reasons why they might struggle to achieve it), there would be thousands of workers remaining in a jobless state by June 2024. This denies the Government’s claim that the pledge will eliminate the need to increase the unemployment benefit. Given that the current policy mix is likely to force thousands to remain in elevated levels of unemployment, the unemployment benefit should be increased, immediately, by more than $A200 per week, in the first instance, for a single adult. And then the government should introduce a Job Guarantee to allow workers to transit from joblessness to work at a decent, socially inclusive minimum wage (well above the revised unemployment benefit level). That would be the responsible thing for government to do in this regard. I am not holding my breath.