The pandemic is demonstrating that we can resist neoliberalism

A few snippets today, being Wednesday and my short-form blog day (sometimes). I will have a few announcements to make early next week. One will concern a streaming lecture I will be giving next Tuesday as part of my usual work in Finland this time of the year. The title of my talk will be: Political economy thought and praxis post pandemic. I give an annual public lecture in Helsinki but this time it will be coming from the East Coast of Australia, given the pandemic. Details about access will be coming early next week (Monday’s blog post). For now some comments on the pandemic.

Read more

No justification for public sector wage freezes during the pandemic

I provide a lot of research support for trade unions in wage determination cases in Australia, where wage agreements are uniquely decided in judicial processes. The cases are onerous and highly contested and as an expert witness I am often grilled for lengthy periods by the employers’ barristers in the evidential phase. One of the things that has been relevant in the last year or so has been the wage caps and freezes that government employers are placing on their workforce as a way of ‘saving money’. Prior to the pandemic they were forcing real wage cuts or zero real wages growth on workers under their wage cap strategies as part of their pursuit of fiscal surpluses. Now they are imposing freezes to reduce the size of their deficits. And, the same is happening in other jurisdictions such as the UK. Not only were the wage caps in the public sector damaging the well-being of public workers, in some cases, the lowest paid (cleaners etc), but they were also providing ‘wage guidance’ to the private sector, at a time when household debt is at record levels and consumption growth wage faltering. At a time when consumers are already wary and saving higher proportions of their disposable income, freezing wages is not a responsible thing to do in a pandemic. The UK government, for example, does not need to ‘save money’. But as part of the recovery from the pandemic, the government will benefit from households having been able to pay down debt while saving more and from the maintenance of their real purchasing power. There are no grounds for freezing wages – public or private.

Read more

Those in glass houses …

I saw a letter published by IPPR – who call themselves “The Progressive Policy Think Tank” – urging the BBC to change the way it conducts economic commentary. The letter – Economists urge BBC to rethink ‘inappropriate’ reporting of UK economy – was sent to the Director-General of the BBC following some “BBC reporting of the spending review” which they say “misrepresented the financial constraints facing the UK government and economy.” The H.M. Treasury – Spending Review 2020 – was published on November 25, 2020. I decided not to comment on it publicly given that my time is poor at the moment with lots of writing deadlines and travel now resuming with pent-up demand for my services (in person). It was what you would expect from the British Treasury. But some of the signatories to this latest letter criticising the BBC coverage of the Spending Review should look in the mirror. They seem to have short memories or perhaps they are learning the error of their ways. We can only hope.

Read more

Governments should be working for everyone, not just the fortunate few

Today, we have another contribution from 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. He indicated that he would like to contribute occasionally and that provides some diversity of voice although the focus remains on advancing our understanding of Modern Monetary Theory (MMT) and its applications. It also helps me a bit and at present I have several major writing deadlines approaching as well as a full diary of presentations, meetings etc. Travel is also opening up a bit which means I can now honour several speaking commitments that have been on hold while we were in lockdown. Anyway, over to Scott for another one of his contributions …

Read more

Why improve policy when a government can pillory a low-paid, precarious worker instead

Last week we saw further evidence of the way in which class divisions create havoc for society although the way these events have been constructed in the media and popular perception are the antithesis of what was really going on. After having no coronavirus cases since April 16, 2020, suddenly we were informed on Sunday, November 15, 2020, that a dangerous virus cluster had emerged in South Australia (in particular the capital Adelaide) as a result of a breach in quarantine. The memories of Victoria’s second wave, which had started as a result of a similar breach came flooding back and the South Australian state government almost immediately imposed a very harsh 6-day lockdown (the most restrictive imaginable). The following day, amidst all the furore about the severity of the restrictions, the Government announced they were rescinding the orders (mostly). Why? Because some foreign worker had contracted the virus had lied to investigators about his status and was, in fact, working at both the quarantine hotel where the breach occurred and a pizza shop were additional cases had been detected. Apparently this ‘lie’ led to the severe lockdown because it created some uncertainty in transmission links. I doubt that was the case and I think the Government just overreacted and lacked confidence in their own systems. But now it is the ‘lie’ that everyone is focusing on and the Premier is threatening to ‘throw the book’ at the individual. Not many questions are being asked in the media about the poor systems that led to the breach in the first place nor the overreaction of the government. All attention is being focused on a casualised, precarious worker who was forced to work (at least) two jobs to survive. There lies the issue.

Read more

Australian labour market improving as Victoria eases its strict lockdown

The latest data from the Australian Bureau of Statistics – Labour Force, Australia, October 2020 – released today (November 19, 2020) shows that the labour market has improved largely due to the recent easing of the lockdowns in Victoria as that state overcomes the second virus wave. All states and territories experienced employment gains in October 2020. Even though employment increased by 1.4 per cent in the month (which is a very strong result), unemployment rose marginally (0.1 points) as a result of the very strong growth in participation (up 0.9 points). Underemployment also fell by 1 point and the broad labour underutilisation rate (sum of unemployment and underemployment) fell by 0.9 points. But the recovery is still too slow and more government support by way of large-scale job creation is required given total employment is still 233 thousand below the level in March 2020 and unemployment is 245 thousand higher.

Read more

Australia – lowest nominal wages growth on record leading to significant real wage cuts

It’s Wednesday and I usually don’t write much on my blog. But today, history was made and so I thought I should at least cover it. Today (November 18, 2020), the Australian Bureau of Statistics (ABS) released the latest- Wage Price Index, Australia – (September-quarter 2020). The ABS reported that while “the September quarter is generally a quarter of solid wage growth … the impact of the COVID-19 pandemic contributed to a subdued rate of wage growth in the September quarter 2020”. However, they might also have said that today’s result was “the lowest quarterly growth in the 22-year history of the WPI”. Private sector grow was just 0.1 per cent and public sector growth was just 0.2 per cent. The overall WPI growth was just 0.1 per cent. With the quarterly inflation in the September-quarter was recorded at 0.693 per cent, real wages thus fell for Australian workers. Further, over the longer period, real wages growth is still running well behind the growth in GDP per hour (productivity), which has allowed profits to secure a substantially increased share of national income.

Read more

ABCD, social capital and all the rest of the neoliberal narratives to undermine progress

I was in a meeting the other day and one of the attendees announced that they were sick of government and were looking at other solutions such as social capital and community empowerment to solve the deep problems of welfare dependency that they were concerned about. The person said that all the bureaucrats had done was to force citizens onto welfare with no way out. It had just made them passive and undermined their free will. It was a meeting of progressive people. I shuddered. This is one of those narratives that signal surrender. That put up the white flag in the face of the advancing neoliberal army intent on destroying everything in its way. The ultimate surrender – individualise and privatise national problems of poverty, inequality, exclusion, unemployment – and propose solutions that empower the individuals trapped in ‘le marasme économique’ created by states imbued with neoliberal ideology. The point is that the Asset-Based-Community-Development (ABCD) mob, the social capital gang, the new regionalists, the social entrepreneurs are just reinforcing the approach that creates the problems they claim they are concerned about. The point is that it is not the ‘state’ that is at fault but the ideologues that have taken command of the state machinery and reconfigured it to serve their own agenda, which just happen to run counter to what produces general well-being. That is why I shuddered and took a deep breath.

Read more

Cutting wages in a deep recession is not a sensible policy

Victoria went the so-called ‘double doughnut’ again today with zero new infections and zero deaths – the fourth consecutive day. It now has the lowest number of people sick with the virus (known) since the start of the pandemic in Australia in February. Only 38 active cases remain in Victoria after its 12 week lockdown. There is no community transmission reported now in Victoria and the other day Australia recorded zero (community transmitted) cases overall. So things are less tense than they were. I still haven’t been able to travel to my office in Melbourne which I have been away from since the lockdowns started in June. But hope springs eternal that the NSW government will open the border and let us move freely between the States. At the same time, the NSW government is demonstrating its economic incompetence. The State Treasurer announced that in the midst of the worst crisis in 100 years, it is cutting the pay of its public servants when it brings down its fiscal statement. Clue: when in a deep recession with records levels of household debt dramatically constraining growth in household consumption expenditure, which in turn, is killing growth, then the sure fire way to make matters worse by cutting the very source of consumption expenditure – yes, you get it – workers’ wages.

Read more

US claimants recovery stalls

Today, I celebrate – my home town of Melbourne has recorded zero new infections for the first time since June 9, 2020 and zero deaths. But things are not so hot elsewhere in the world. As the US labour market started to rebound over the summer, I stopped updating my analysis of the claimants data horror story that had earlier demonstrated how sharp the decline in March and April had been. But I have still been monitoring it on a weekly basis and the information we are now getting from the US Department of Labor’s weekly data releases are indicating that as the virus escalates, seemingly out of control, the labour market recovery has all but stalled and a reasonable prediction would be that it will deteriorate somewhat if the infection rate leads to tighter restrictions (which it should). A relatively short blog post today (tied up with things today) – just some notes as I updated the data to see what was going on. The conclusions are obvious. Much more fiscal support is needed in the US, especially targetted at the bottom end of the labour market. Devastation will follow with the sorts of numbers that appear to be entrenched at present.

Read more
Back To Top