The Weekend Quiz – January 27-28, 2018 – answers and discussion

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.

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Older workers in the US dominate employment growth – troubles ahead

The Federal Reserve Bank of St Louis published a very interesting article earlier this month (January 15, 2018) – Older Workers Account for All Net Job Growth Since 2000 – which was written by William Emmons, the Lead Economist with the Bank’s Center for Household Financial Stability. The Center focuses on the “balance sheets of struggling American families” and was launched in May 2013 in response to the GFC. It seeks to investigate factors that impact on the fragility of household finances. The research paper finds that since 2000, workers older than 55 have captured almost all the net employment growth leaving the prime-age workers (more than a million) languishing. This abnormal pattern is not predicted to continue for much longer but that is disputable. Further, even if the domination of older workers ends within the decade, the lack of opportunities that are apparent for those who are moving through the prime-age years now spells a looming disaster in a decade or more in the form of increased poverty rates and disadvantage. Then you will hear the screams that the US government cannot afford the income support that will be needed. But at the same time, without that income support the situation will get worse. Something needs to be done now to interrupt this trend.

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Greece – the next bailout is just around the corner

When the latest Greek bailout deal between the Greek government and the European Commission/IMF) was concluded on June 16, 2017, I concluded that it was designed to fail. Please read my blog – Latest Greek bailout – a recipe designed to fail. Despite all the statements from the European Commission and the IMF to the contrary, the terms of the deal with the Greek government confirms that these institutions had abandoned any pretense to being interested in serious economic policy. For the European Commission, the desired irrevocable status of the euro, as a political statement, is all it seems interested in when it comes to Greece. They just don’t want to admit that Greece cannot reasonably function in this monetary union. This deal only stalled reality for yet another day and the only goal it serves is to keep Greece using a currency it cannot afford to use. And now the reality is emerging that the Greek economy will need a further bailout to survive for another period. The latest analysis from the German research group – Centrum für europäische Politik – shows that Greece remains close to insolvent and cannot survive within the Eurozone on its own. One has to ask what has all the austerity been for if the patient is still on life support some 10 years later. We know the answer.

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The GFC only temporarily interrupted the trend towards rising inequality

The UK Guardian Editorial ran a sub-header yesterday (January 21, 2018) “Democracies will fall under the spell of populists like Donald Trump if they fail to deal with the fallout of globalisation?”, which I thought reflected the misunderstandings that so-called progressive have about ‘globalisation’ and its impacts on the capacities of the sovereign state. The UK Guardian Editorial was responding to the release of the latest Oxfam report (released January 16, 2018) – An Economy for the 99%: It’s time to build a human economy that benefits everyone, not just the privileged few – timed to coincide with the gathering of “billionaires and corporate executives” at Davos this week. The Oxfam report reveals further staggering shifts in inequality across the globe, that the GFC barely interrupted. A major shift in political sentiment on the Left is needed to arrest these trends before they break out in destructive social instability.

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The Weekend Quiz – January 20-21, 2018 – answers and discussion

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.

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Australian labour market – steady to finish a relatively good year

The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for December 2017 shows that the Australian labour market was relatively steady in December 2017, with both relatively strong employment growth and a rising participation rate. Unemployment rose due to the sharp rise in the participation rate following on the stronger employment growth. The teenage labour market however did not enjoy the benefits of this growth and went backwards. Further, underemployment rose sharply as did the broad labour underutilisation rate signifying that the Australian labour market still is a fair distance away form full employment. Overall, my assessment remains – the labour market has improved over 2017 but still fluctuates between good and bad from month to month and has a lot of slack remaining. We are not yet in a position to say that there is a sustained growth path ahead.

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Writing, listening but not blogging (much) today

Today is Wednesday (my newly declared blog free (almost) day this year) and I am writing up material relating to the neoliberal trend to replace jobs with volunteers and then extol the virtues of the same. Hideous. I am also listening to some post-minimalist orchestral music. Fun day even if the subject matter is rather bleak.

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