Australian labour market – continues to languish

The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for April 2016 show that those ominous signs that have been apparent for most of this year are still hovering above the labour market. Total employment growth was virtually non-existent with only 10,800 (net) jobs created. Full-time employment decreased 9,300, while part-time employment increased by 20,200. It is the second consecutive month of negative full-time employment growth, which highlights the deteriorating labour market situation in Australia. There was also a decline in hours worked which is now trending downwards. Over the last six months, around 87 per cent of the net jobs created have been part-time. The growth in part-time work suggests that overall the quality of work in Australia again deteriorated. So overall a poor outcome. Unemployment rose marginally this month but this is largely because the weak employment growth is interacting with even weaker labour force growth. The participation rate fell again. The teenage labour market remains in a poor state and requires urgent policy intervention. Overall, with weak private investment now on-going, the Australian labour market is looking very weak and the Federal government should have introduced a rather sizeable fiscal stimulus in its recent fiscal statement. This should have included a large-scale public sector job creation program which would ensure teenagers regained the jobs that have been lost due to the fiscal drag over the last several years. However, the Federal government appears incapable of addressing this dire issue. It is embroiled in mythical discussions about running out of money and not being able to defend the economy if there is another crisis. All make believe, while the real world does head towards another major rift. It is up to the Opposition to shift the political agenda (in the current election campaign). But, they are missing in action on these important issues.

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British Left reject fiscal strategy – speculation mounts, March 1976

This blog continues the discussion of the British currency crisis in 1976. Today we discuss the rejection of the 1976 Public Expenditure White Paper by the British Parliamentary Left who wanted an expansion of the fiscal deficit given that unemployment was well in excess of 1 million people in early 1976. Soon after Harold Wilson resigned as Prime Minister and James Callaghan, took over. He was by then ‘anti-union’ and was, increasingly, making statements about trade union power that played into the hands of the conservative push for an increased share of national income. After the rejection of the fiscal strategy, the sterling sell-off intensified. It was no coincidence.

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ATTAC should drop the ATT part!

Last Thursday evening in Madrid, I was invited as a guest of the local ATTAC chapter to talk about the Eurozone at a public meeting. I say guest, because one would be excused for thinking that the local ATTAC President was in fact the guest given that he launched into a 25 minute diatribe, masquerading as the first question after my presentation, that attacked Modern Monetary Theory (MMT) for (allegedly) ignoring taxes (no: we just say they do not fund spending) and basic income (no: we just prefer employment guarantees). While it was obvious he hadn’t actually read my book (despite claiming to be commenting on it), he also claimed that I was just another apologist for capitalism and had failed to advocate any fundamental changes to the system. It was quite a performance as you might guess, but I thought it rather odd that the president of ATTAC, which takes its name from its principal advocacy of a Tobin Tax (financial transactions tax), a small little surcharge on the Wall Street excesses, rather than a head-on attack on the legitimacy of the financial markets in general, would dare criticise others for advocating policies within the capitalist realm. I have long written about the need to control financial speculation via regulation rather than through the ‘price system’ (by taxing it). Those who think that working through the price system is the way to change behaviour are operating within neo-liberal logic. It is much more effective to just work through the legal system and ban something that is damaging to the prosperity of nations. That is the MMT position on these financial market excesses – where they just involve wealth shuffling and serve no productive purpose, the state should just legislate them into oblivion. But the so-called revolutionary ATTAC (if my understanding of the president’s ravings were correct) just wants to impose a small tax on Wall Street. And, I guess they will have to go looking for the cash in Panama or somewhere!

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Spanish El Pacto – A Syriza Reprise!

I am now back in Australia after a very interesting 2-week visit to Spain. There were several ‘private’ events in that time, and I gave 7 public lectures over 5 days, with travel and meetings in between. It was a hectic week once the public events began, criss-crossing the rather large (by European standards) nation. I learned a lot about grass roots political movements (how they easily splinter as personalities get in the way) and about the state of European politics. I learned little about European economic policy – it is as ridiculous and damaging as ever, yet the ideologues, in the ‘pay’ of the financial and corporate elites, keep claiming everything is on track for recovery. Not! I heard about the ‘ghost’ airport, the unused Formula 1 race track, and saw the massive Arts and Sciences Complex in Valencia, all of which epitomise the excesses in the early years of the Eurozone and the unbridled capacity of Spanish politicians for corruption (the Wiki page doesn’t tell you that several corrupt pollies are already in prison over this project with more to come – see HERE and HERE and ). In the last week, a major development occurred with the signing of the so-called ‘El Pacto’ – Cambiar España: 50 pasos para gobernar juntos – which is an historic agreement between the leaders of Podemos and the United Left (IU) coalition and constitutes the manifesto to ‘Change Spain in 50 steps’ if they win government at the upcoming national election on June 29, 2016. If they don’t win government it will probably squeeze the Socialist party (PSOE) into extinction (which would be good). But ‘El Pacto’ is a dangerous document for the progressive side of politics. This blog explains why. Short summary: Syriza reprise!

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The Weekend Quiz – May 14-15, 2016 – answers and discussion

Here are the answers with discussion for the Weekend Quiz. The information provided should help you work out why you missed a question or three! 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.

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Madrid presentation video and travel

I am tied up for most of today with travelling (from Valencia) to Madrid and then commitments there before flying back to Australia. I will write something more about Spain when I collect my thoughts. The upcoming national election on June 26 this year after the first election (December 20, 2015) failed to consolidate a government, is shaping up to be a very interesting outcome. Last Monday, Podemos and the United Left (IU) coalition (involving many organisations) signed off on a formal alliance to run a list together in the election. It is anticipated that this coalition will have a strong chance of winning power. The leader of IU Alberto Garzón, the head of IU, wrote the forward to the Spanish translation of my book – La Distopía del Euro (with his brother Eduardo). I am meeting with Alberto in Madrid today to discuss various policy issues. The agreement that this coalition has signed – Cambiar España: 50 pasos para gobernar juntos – has some disturbing aspects, which I hope to discuss with Alberto at our meeting. I also have a dialogue going with economists in Podemos at the moment, which I hope will lead to a shift from their pro-Euro position. The trip to Spain has been quite interesting as you might imagine. The blog will resume as usual on Monday with me back in Australia. But in this blog I have a video of one of the seven talks I have given in Spain over the last week.

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The Bacon-Eltis intervention – Britain 1976

This blog continues the discussion of the British currency crisis in 1976. It traces the growing anti-government influence on key players within the British Labour government as the pressures on the exchange rate were mounting in the early part of 1976. While the Chancellor was clearly influenced by the growing dominance of Monetarist thought, he also fell under the influence of the so-called Bacon-Eltis thesis, which argued that the growth of the public sector in the 1960s and early 1970s in Britain had starved the private sector of resources, which had led, directly, to the declining growth, high inflation and elevated unemployment. The conservative mainstream used this thesis to call for harsh cut backs in public spending and the British Labour government were increasingly cowed into submission by the vehemence of this mounting opposition. The problem is that the ‘thesis’ didn’t stand up to critical scrutiny, although that fact didn’t seem to bother those who used it to advance their anti-government ideological agenda. This blog is longer than usual because I felt it important to put this part of the story into one continuous narrative rather than break it up into two or three separate, shorter blogs.

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There is no secular stagnation – just irresponsible fiscal policy

I am in Barcelona today until later then I am off to Valencia for two days. More on the Spanish tour later. The latest edition of the ECB’s Economic Bulletin released on May 5, 2016 carried and – Update on economic and monetary developments – provides more evidence, as if any was needed, that the current reliance on monetary policy – standard or otherwise – to reboot the stagnant economies of Europe has failed and will continue to fail. Why? It is the wrong policy tool. Journalists are increasingly writing that policy options are exhausted because central bankers ‘have fired all their shots’ and the “more shots they fire, the less effective they become”. The implication is that the world is locked into a future of secular stagnation with elevated levels of unemployment and low productivity growth. They seem to have forgotten that fiscal policy remains effective if it is used properly. There is no secular stagnation – just irresponsible fiscal policy use.

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The Wall Street-US Treasury Complex

Today I am in Barcelona, Spain after travelling from Trujillo (in the western part of Spain). Today’s blog continues the analysis I have been providing which aims to advance our understanding of why the British government called in the IMF in 1976 and why it fell prey to a growing neo-liberal consensus, largely orchestrated by the Americans. Yesterday, we analysed the way in which the IMF reinvented itself after its raison d’être was terminated with the collapse of the Bretton Woods fixed exchange rate system. Today’s part of the story, is to trace the growing US influence on the IMF and the way it manipulated that institution to further its ‘free market’ agenda on a global scale. We will consider what Jagdish Bhagwati called the “Wall Street-Treasury complex”, which referred to the way in which financial market interests in the US combined with (pressured) the US Treasury Department to advance the myth that liberalisation of global capital flows would deliver massive benefits in the post-1971 period after the convertible currency, fixed exchange rate system collapsed.

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