The global poly crisis is the culmination of the absurdity of neoliberalism

We are used to segmenting destructive episodes as crises – the Mexican debt crisis in 1982, which gave way to the Latin American debt crisis in the 1980s, the East Asian financial crisis of 1997-98, then the Global Financial Crisis in 2008 and beyond, then the pandemic crisis since 2020. Meanwhile, firefighters are dealing with major fires from Portugal, France to Crete; Britain is about to experience 40 degrees Centigrade; Australia is dealing with a sequence of massive floods; corporations are gouging profits and pushing inflation, which is provoking policy makers to take it out on the most disadvantaged in our societies, with no logical link between the policy and the perceived problem, other than deep recessions stop the gouging; nations considered to be ‘middle income and rising’ are now lining up behind Sri Lanka to see who will be the next to basically collapse into anarchy, unable to feed its population; housing shortages are causing havoc almost everywhere; the quality of employment has declined dramatically (job security, worker agency, etc) and the trade unions are a pale imitation of what they used to be; politicians are more self-serving than ever; and people are still dying in the thousands everyday from the pandemic but our leaders insist we are now ‘living’ with Covid (more like dying with it). The reality is that all these events are linked and part of what some might call a poly crisis. Capitalism has failed and the institutions we created to tame the raw-profit greed of capital – the state, trade unions, etc – have also been compromised to such a degree that they, either are no longer effective or work as agents of capital rather than mediating the labour-capital conflict. A poly crisis requires fundamental change. But, such is the dominance of the mainstream, which has created this crisis, that all we get is more of the same. That means the ultimate solutions will be more painful and destructive and lead to conflagration as this period of human civilisation collapses.

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Federal Reserve Bank researchers openly acknowledge the inevitability of recession

It’s Wednesday, and so I have some shorter analysis on a range of matters today. First, some discussion of a technical paper from the US Federal Reserve researchers, which makes it clear they think that the interest rate hikes have a high probability of causing a recession. Second, we analyse some Russian data which suggests the sanctions are having the opposite effect to that intended. Third, I consider the stupidity of the new Australian government which is now falling into the ‘we have too much debt’ to even provide basic health care trap. And, I comment on a State Government that is now openly ignoring its professional health advice because the corporate sector told them to. And if all that wasn’t depressing enough, some music that focuses our attention of the vicissitudes of colonial might. All in a day.

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RBA aims to cut policy stimulation by adding to it

It’s Wednesday, and we have some analysis and news and then my music segment for the week. Yesterday, the Reserve Bank of Australia (RBA) stunned the nation by pushing up interest rates by 0.5 points, claiming it was the responsible thing to do given that inflation was higher than expected. They then outlined all the factors driving inflation – none of which are going to be responsive to interest rate rises. Further, when one dissects the way in which interest rate rises work through distributional effects and effects on business costs, it is not clear that increasing rates will not just add to the stimulation rather than reduce it as the RBA claims. Next, we Fact Check the Fact Checkers and after all of that we have some Tupelo Blues, to restore some sense of decorum.

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The Covid trade-off between health and the economy did not exist

With yesterday’s detail CPI analysis, I am transferring the news/music blog post that normally appears on a Wednesday to today. This morning, I read the newly published report from the UK-based – Institute for Public Policy Research – Health and prosperity: Introducing the Commission on Health and Prosperity (released April 27, 2022) – which provides a sobering (to say the least) evidence base for how the pandemic has impacted on Britain’s health system and labour market. As more evidence comes out from the experience of the last 2.4 years, I wonder when those who demanded nations learn to live with the virus – by basically denying its existence – will reflect on the folly of their laissez-faire positions.

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Deliberately creating mass unemployment now would be the work of vandals and New Keynesians

Last week, the New York Times published the latest Paul Krugman article on inflation (which is behind its paywall). It is syndicated elsewhere and you can access it here at The Berkshire Eagle (April 13, 2022) – Paul Krugman: Inflation is about to come down – but don’t get too excited. I wondered whether the author had offered his services cheaper to the NYTs and elsewhere given his concern for inflation, and, apparently, his assertion that wages are a critical factor in sustaining it. What this article highlights is mainstream New Keynesian macroeconomics – the dominant paradigm in our teaching, research and policy circles. What it also highlights is how different the mainstream is to Modern Monetary Theory (MMT), despite characters like Krugman and his fellow New Keynesians trying to tell the world that there is nothing particularly different about MMT and the way they do economics. It also provides another chance for me to add nuance to the Job Guarantee.

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The rising incidence of Long Covid and its labour market impacts

I have written about the so-called – Great Barrington Declaration – before. The Great Barrington reference is just the name of the town where the letter was drafted and signed during a conference and bears no inference of greatness – far from it. I was also disappointed that some Left commentators fell under the spell of the anti-restriction, lockdown, vaccine lobby that the GBD represented. What transpires is that we now have an increasing body of evidence that suggests the main assumption of those behind the GBD – that herd immunity would be reached by an open slather approach to Covid (with some protections for the vulnerable) – has not been realised. Specifically, the idea of vulnerability was poorly constructed because it didn’t foresee the increasing incidence of Long Covid. The evidence now coming out by credible researchers is that we are mostly all vulnerable to long-term debilitating effects of a Covid infection and the jury is still out on how bad this will turn out to be. And, while it is clearly a medical issue, it is also causing havoc in labour markets, with increasing numbers of workers not being able to work to full potential or at all. And with the fiscal support for incomes now largely gone, that spells trouble for low-income workers. It is also a factor that will prolong the current inflationary episode.

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External border closures in Australia reduced the unemployment rate by around 2.7 points

The debate continues as to whether the population growth slowdown instigated by the Covid border restrictions imposed by the Federal government has been responsible for the rapid decline in the unemployment rate in Australia. The mainstream view is that migration is good for the economy and adds more in net terms to overall spending (and labour demand) than the extra workers add to labour supply, meaning that it does not put upward pressure on the unemployment rate. I have always contested that view – as a general statement. The reality is that depending on the stage of the cycle and the strength of labour demand, the rate at which new entrants enter the labour force, and the size of the unemployment pool at any point in time, immigration can undermine the employment prospects of local workers. Based on some reasonable estimates, if the external border had not been closed, the unemployment rate would be around 6.9 per cent now, rather than the official rate of 4.2 per cent. The rapidity of the recovery in the unemployment rate is due to the border closures and that should condition appropriate visa policies.

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Research on vaccine certificates finds positive outcomes

It’s Wednesday and so some short discussion and news then some jazz, the latter being the highlight. I read an interesting research paper yesterday from the – Conseil d’Analyse Économique (CAE) – which is an French-based organisation that brings together professional researchers “to enlighten the government’s choices in economic matters by comparing points of view and analyses”. It operates under the authority of the French Prime Minister. Its latest public report under its – Focus – series – The effect of COVID certificates on vaccine uptake, health outcomes, and the economy (published January 18, 2022) – presents some very interesting empirical results pertaining to the impact that the enforcement of Covid vaccination certificates has had on the rate of vaccination uptake, on health outcomes (short-term) and on GDP growth rates. I consider the research (methods etc) to be credible and the results are in accord with an array of evidence that other researchers are coming up with.

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Why are the progressive left mixing with the dark right on Covid?

It’s Wednesday and I have been digging a bit into what appears to be a growing coalition opposing lockdowns, mask wearing, vaccine rules, and vaccinations in general. The claims are that none of these things work and that the economy is better off without them. I am not writing today about these matters (I have in the past) but rather about the nature of these coalitions. One of the things that has held back progressive causes in the past is the tendency of social democratic type interests to adopt the mainstream macroeconomics, which not only limits what they can do but exposes them to accusations that the government will run out of money and cause inflation if they have ambitious programs. The pattern of progressive interests aligning with non-progressive voices is thus not new. I am seeing it again in the context of the public health debate, which, in part, explains why our world is in such a Covid-mess. It isn’t all bad today – there is some nice music to finish, being Wednesday.

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Australia is becoming an Orwellian dystopia

It’s Wednesday and I am retaining my practice into 2022 of only offering a sort of short commentary or news with music service on this day, unless a major data release (like the national accounts) comes out. The title of this blog post was inspired by an interview I listened to on the radio the other day with a leading epidemiologist who noted Australia was becoming like some Orwellian dystopia as the national government elevates spin to new levels and effectively jettisons any semblance of leadership. We are now being treated as fools by our national and state governments on a daily basis and it is now approaching dangerous levels.

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