Here are the answers with discussion for this Weekend’s 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.
Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for June 2017 shows that while total employment rose only modestly (14,000) the strong rebound in full-time employment from last month continued (up 62,000). Part-time employment fell sharply though (48,000). As a result of a rise in the participation rate (0.1 points), unemployment rose by 13,100, although the official unemployment rate was steady at 5.6 per cent after the ABS revised it upwards by 0.1 points from the May result. The broad labour underutilisation remains high at 13.9 per cent with unemployment and underemployment summing to 1,795 thousand persons. The teenage labour market also deteriorated further in June and remains in a poor state. Overall, my assessment of the Australian labour market is that it remains in an uncertain state. There is no definitive trend yet.
It didn’t take long from Emmanuel Macron to get started on his neo-liberal agenda. That should be no surprise, given he championed the insidious El Khomri Law when he was Minister of Economy and Finance in the second Manuel Valls Cabinet. In a major speech in Paris on Monday (July 17, 2017), Macron, demanded that local governments in France slash spending by 13 billion euros by 2022 as part of an effort to cut the French fiscal deficit. Why they would want to be cutting the fiscal deficit with growth creeping along and the unemployment rate stuck close to 10 per cent, among other problems facing the French nation is another matter. Clearly, they are under pressure from the Excessive Deficit Mechanism given that the overal fiscal deficit remains around 3.5 per cent (above the 3 per cent threshold) and doesn’t look like coming down any time soon. And it is clear that Brussels will not turn a blind eye to France, as it did for Spain when it allowed the deficit to rise to support growth as part of the strategy to get the conservatives re-elected. The elites in the Eurozone have their boy in power in France so no further political support is required. But austerity will not work for France right now.
The Commonwealth Fund, a New York-based research foundation that analyses health care systems, recently released an interested international comparison of the performance of such systems across a number of criteria (July 2017) – Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Health Care. Health care is one of several policy areas where the debate descends into fiasco because the typical application of mainstream economics obscures a widespread understanding of how the monetary system operates and the opportunities that system provides a currency-issuing government. Once an understanding of Modern Monetary Theory (MMT) is achieved the choices available in health care policy become more obvious and better decision-making is likely. The Commonwealth Fund report provides useful information in this regard, although the MMT understanding has to come separately.
One of the abiding and recurring trends, accentuated in the neo-liberal era, is the apparent ‘concern’ for the low-paid by the captains of industry. They continually warn against allowing pay increases for this cohort because they are – so the story goes – deeply concerned about the damage it will do to the employment prospects. What they really mean is that they know pay rises at the bottom end of the pay structure don’t alter employment levels significantly but have some impact on profitability. That is, they reduce profits a little. And that is the concern they are really expressing. The British Chambers of Commerce have called for a freeze on real wages for the lowest paid workers in Britain despite profitability soaring and the share of business profits in national income rising. The expression ‘where do these characters get off’ comes to mind. Although it is hardly surprising. British entrepreneurs tend to be lazy and take the easy way out when they can to further their own ends.
Here are the answers with discussion for this Weekend’s 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.
Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
In 1946, with the Second World War at an end, the world governments turned to the question of how to maintain the full employment that the prosecution of the War had brought in the peace. It was clear that governments could choose whatever unemployment level they wanted through the manipulation of fiscal and industry policies and so the only question was the political will to maintain the full employment state. In the US, the political debate led to the Employment Act 1946, which demonstrated that the parameters of the conflict between conservative and the more liberal forces over what constituted full employment and what responsibility the currency-issuing government had for maintaining high levels of employment. We can see through successive attempts in the US to legislate for full employment how the economic profession has influenced the political process and how we have reached the point today where governments pay lip service to fulfulling their responsibilities as the fiscal agency to maintain sufficient jobs for those who desire to work.
Earlier this month (July 3, 2017) the British Office of National Statistics (ONS) released a research report – Wage growth in Pay Review Body Occupations – which basically summarises what has gone wrong with the world under neo-liberalism. While the Report is about the UK, which has particular characteristics, the trends identified are almost universal and reflect the dominance of the ‘free-(not!)-market’ austerity mentality that has crippled progress around the world. It also helps us understand why the British economy is stalling again and why the latest data on household spending is so disturbing. These trends have nothing to do with Brexit. They are all down to misguided government policy (austerity) and erroneous strategies that seek to generate fiscal surpluses when the non-government sector needs to also run surpluses (and the two aspirations are not simultaneously achievable). British workers are paying for this incompetence. The economists who gratuitously hand out the spurious advice, unfortunately do not lose their jobs.