Today (July 26, 2024), MMTed releases Episode 2 in the second season of our Manga series – The Smith Family and their Adventures with Money. Have a bit of fun with it while learning Modern Monetary Theory (MMT) and circulate it to those who you think will benefit …
The UK General Election was held on Thursday, July 4, 2024 and the British Labour Party stormed home winning 411 of the 650 seats in the House of Commons to take a huge simple majority of 174 seats. The awful Tories were cleaned out well and truly and only managed 121 seats a loss overall of 251 seats. The Liberal Democrats improved their seat holding by 64 to end up with 72 (a rather dramatic reversal after they were shunned for siding with the Tories in past Parliaments). So for those who hate the Conservatives this was, on the face of it a huge win, surely. Not quite. In fact, despite the simple statistics above, Labour only gained a 1.7 per cent swing despite 14 years of shocking Tory rule, while the Tories endured a swing of 19.9 percentage points. In fact, the result highlighted the failed electoral system used in Britain – first past the post – when there are more than 2 parties involved, not to mention the demonstration of national apathy as captured by the 59.9 per cent turnout in the voluntary system, which was down by 7.4 percentage points on the last election. In other words, British Labour, despite all the hubris from the leadership actually performed pretty badly gaining 33.7 per cent of the 59.9 per cent who bothered to vote. And, into the bargain, their total vote dropped from 10,269,051 to 9,708,716. When considered in terms of the total registered voters then Labour was preferred by only 20.4 per cent. From the perspective of an outsider, these numbers are simply stunning and do not resonate with any reasonable concepts of representative government. The joker in the pack was, of course, the entry into the election of Reform UK, which effectively split the conservative vote and in this sort of electoral system grossly distorts the overall outcome. I conclude that British Labour can hardly claim to be in a safe position and less people wanted them to govern than when Jeremy Corbyn was leader.
It’s the Wednesday pot-pourri – British politics, self promotion, events, sport and music. Politicians invariably claim that the situation they inherit when they take office following an election is untenable and that the ‘public finances’ are worse than they had initially thought. Of course, the idea that ‘public finances’ can be good or bad or somewhere in between is a misnomer and just reflects the ignorance of the fiscal capacity that governments have (that is, currency-issuing governments). There is no such thing as a deteriorating public finance situation. So when Rachel Reeves got up after being elected the new Chancellor of the UK she was just posturing and telling the British people that they should not expect much better than what the Tories delivered. What can be good or bad or somewhere in between is the state of public infrastructure and public services. And after 14 years of devastating Tory rule, one can safely conclude that there is a huge deficit in the UK in that context. The question then is what can be done about it. My reading of the situation is that if Labour want to actually improve things significantly in terms of public service provision and the viability of Britain’s infrastructure then it will have to abandon its mindless fiscal rule. And it would be better that they do that quicksmart while they enjoy such a large domination of the Parliament.
I am still catching up after being away in the UK last week. I will reflect on that trip in another blog post. So, today, we have 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. Today he is going to talk about income tax cuts and cost of living relief. Over to Scott …
Today (July 18, 2024), the Australian Bureau of Statistics released the latest – Labour Force, Australia – for June 2024, which shows that the labour outlook has improved somewhat from the last several months of plodding along not sure which way to turn. While it has been difficult to make any definitive conclusions about where the labour market is going based on the data from the last few months, the June data suggests that the direction is up rather than down. With both employment growth and participation rising, unemployment rose slightly but that is a sign of an improving labour market outlook rather than the opposite when unemployment rises on the back of a falling participation rate. The official unemployment was 4.1 per cent, a modest rise over the month, but would have actually fallen to 3.9 per cent had the participation rate not risen. Employment growth was stronger and concentrated on full-time work with monthly hours worked rising. As a result, underemployment and broad labour underutilisation fell – another good outcome. But we should not disregard the fact that there is now 10.5 per cent of the working age population (1.6 million people) who are available and willing but cannot find enough work – either unemployed or underemployed and that proportion is increasing. Australia is not near full employment despite the claims by the mainstream commentators and it is hard to characterise this as a ‘tight’ labour market.
I am briefly in the UK (arrived Tuesday and returning to Melbourne early Friday). We are officially launching our new book – Modern Monetary Theory: Bill and Warren’s Excellent Adventure – later this morning at the UK MMT Conference in Leeds, England. I am avoiding many of the sessions to reduce Covid risk, given the lecture theatres do not seem to have been refitted with modern ventilation. But from what I can see the Conference is well attended and going well. I should add that I had nothing to do with the organisation of the Conference but as usual I thank those who have put time to build an event that focuses on the work that I am part of. Anyway, a whirlwind trip this time. Today, though I reflect on the latest developments in Japan with respect to its ageing and shrinking population and how that impacts on business viability and skill shortages. All part of my research on degrowth strategies.
I am travelling to Europe and the UK today so will not have the time necessary to write anything here. I will be at the UK MMT Conference – at Leeds on Tuesday and Wednesday for some of the time and I might see a few people there. I am only away a few days this time. The next post will be Wednesday. For now an announcement and some music.
Today (July 12, 2024), MMTed releases Episode 1 in the Second Season of our Manga series – The Smith Family and their Adventures with Money. We have spent the last several months developing the storylines and graphics and Season 2 will run from today to December 6, 2024 with episodes appearing on a fortnightly basis.
Have a bit of fun with it while learning Modern Monetary Theory (MMT) and circulate it to those who you think will benefit …
In our new book – Modern Monetary Theory: Bill and Warren’s Excellent Adventure – which will be launched in the UK next Wednesday, we devote a chapter to what we refer to as the Japanese irony. This relates to the fact that while the conduct of policy in Japan is justified in mainstream terms, the more extreme policy settings that emerge produce outcomes that expose the deficiencies of the mainstream theories. At present, we are observing more examples of this. The latest matter of interest in Japan (from my watch) is the pressure the three megabanks are putting on the Bank of Japan policy makers to push up bond yields and interest rates. There is no reason based in financial stability concerns or community well-being for the Bank of Japan to agree to their demands. They just amount to special pleading from Japan’s fossil fuel financing megabanks for more corporate welfare to boost their profits.
It’s Wednesday, which means a few (sometimes unrelated) items are discussed or analysed. Today, we see that real wages in 16 of the 35 OECD countries are still below the pre-pandemic levels, which tells us among other things that the inflationary pressures were not wage induced. Further, a speech yesterday by the Federal Reserve boss demonstrated quite clearly how central bankers fudged the whole rate hike narrative. And after all that, some music from the 1960s.