Welcome to the Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.
It is Friday, my blog lay day, so no real blog. I am editing my Europe book and up in the North of Australia today dealing with various projects I have been working on. But here is an example of what happens when climate change denialists merge with fiscal austerians. Mindless and damaging confusion! Here is my non-blog for today!
The Fair Work Commission, the Federal body entrusted with the task of determining Australia’s minimum wage handed down its – 2013-14 decision – on June 4, 2014. The decision meant that more than 1.5 million of our lowest paid workers (out of some 11.6 million) received an extra $18.70 per week from July 1. This amounted to an increase of 3 per cent (up from last year’s rise of 2.6 per cent). The Federal Minimum Wage (FMW) is now $640.90 per week or $16.87 per hour. For the low-paid workers in the retail sector, personal care services, hospitality, cleaning services and unskilled labouring sectors there was no cause for celebration. They already earn a pittance and endure poor working conditions. The pay rise will at best maintain the current real minimum wage but denies this cohort access to the fairly robust national productivity growth that has occurred over the last two years. The decision also widens the gap between the low paid workers and other wage and salary recipients. The real story though is that today’s minimum wage outcome is another casualty of the fiscal austerity that the Federal Government has imposed on the nation which is destroying jobs and impacting disproportionately on low-paid workers.
My upcoming book about Europe is tentatively called ‘European Groupthink: denial on a grand scale’. I have covered the concept of Groupthink before but I have been thinking about this in relation to the economics curriculum, given our textbook is entering its final stages of completion. When I was at the iNET conference in Toronto in early April, there was much to-do about the so-called ‘exciting’ new developments in economics curricula being sponsored by iNET at their Oxford University centre (CORE). Forgive me for being the ‘wet blanket’ but the more I spoke to people at the conference the more I realised that the neo-liberals were reinventing themselves as ‘progressive’ or ‘heterodox’ and hi-jacking the reform process. I mentioned this to one of the iNET Board members who I shared a flight with back to San Francisco. He seemed taken aback. My expectation is that very little of substance will change in this new approach to economics. It will dispense with the most evil aspects of the current dominant framework but will remain sufficiently engaged with it that we will not see a truly progressive teaching approach emerge that can deal with evidence and real world facts. People are scared to break out of the ‘group’.
The UK Guardian article – Britain’s economy returns to pre-crisis strength earlier than expected (June 30, 2014) was interesting, especially in the light of the major revisions that the Office of National Statistics has announced, which suggest the loss of real output during the crisis was somewhat less (but still very large) than was previously indicated in the official data. One commentator was quoted as saying that the “recession was still huge even if it has now gone from perhaps 10 to 9.9 on the Richter scale”. But when a national statistical agency makes announcements like that people with vested interests in talking the economy up jump and the Government is no exception. The problem is that while growth has firmed over the last three quarters it is mostly due to an increase in private sector debt and a dramatic drop in household saving. There is still support for growth from the Government, which suggests that the austerity hasn’t been as severe at the macroeconomic level as the rhetoric might have indicated. The growth dynamics in the UK are looking decidedly like the pre-crisis build-up, which doesn’t augur well.
The Bank of International Settlements published its – 84th BIS Annual Report, 2013/2014 – yesterday (June 29, 2014). Their message is that governments (particularly central banks) have been too focused on reducing short-term output and employment losses at the expense of a long-term focus on the financial cycle, the latter, which is in their view, essential to restore “sustainable and balanced growth”. I beg to disagree.
Here are the answers with discussion for yesterday’s quiz. The information provided should help you understand the reasoning behind the answers. If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
Welcome to the Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days.
See how you go with the following questions. Your results are only known to you and no records are retained.
I have been doing the final edits on my euro-zone book all day today. The final stages are always a slog and I am ready to move on. But I have had some great music to keep me company. Read more if you want to swing a bit on a late Friday afternoon.
The IMF recently called on the euro-zone leaders to In its 2014 Consultation – 2014 Article IV Consultation with the Euro Area Concluding Statement of the IMF Mission – (an annual event the IMF does with each contributing member) the IMF said that the Stability and Growth Pact (SGP) in the euro-zone “has become excessively complicated with multiple objectives and targets. Compliance with fiscal targets has been poor, reflecting in part weak enforcement mechanisms. And there is a worry that the framework discourages public investment.” The IMF might have mentioned that it also discourages private investment. The failure to include that in their warning is a reflection of their continued belief that fiscal austerity is good for the private sector. The evidence is very clear – it is bad for every sector. But at least the IMF is joining the chorus in opposition to the manic rule-driven approach the euro bureaucrats have put in place.