My current number one candidate for the worst economics article of the year

Unfortunately, the so-called progressive UK Guardian has an Australian economics editor who is anything but if his economic analysis is anything to go by. The economic news for this week started with the release of the – Final Budget Outcome – (FBO) for the 2024-25 fiscal year for the Federal government (released September 29, 2025). It showed the actual fiscal deficit for the year just gone was slightly lower than had been predicted in earlier official statements. The government celebrated claiming a lower deficit was a sign not only of its good management but was also virtuous. The journalists, however, had a different spin, claiming that while the situation could have been worse, it was still bad. The discussion in the media and the official statement from the Treasurer seemed to omit one rather important fact. The context. This allows us to understand the distinction between ‘good’ and ‘bad’ fiscal deficits, a distinction that the commentariat seems unable to grasp. Anyway, this UK Guardian article is my current number one candidate for the worst economics article of the year. Why discuss it? Because it helps illustrate the essentials of macroeconomics that people need to understand.

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Kyoto Report 2025 – 2

This Tuesday report will provide some insights into life for a westerner (me) who is working for an extended period at Kyoto University in Japan but who over the years of working here has increasingly began to understand the language and local cultural traditions

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Argentina entering the usual doom loop that austerity inevitably creates

‘A picture is worth a thousand words’ is an old adage, which means that some image can express a very complex message more quickly than a written tract – of the sort that will follow in this blog post. At the Spring 2025 meetings of the IMF in Washington, the IMF boss Kristalina Georgieva was ebullient about how well Argentina was doing as a result of the harsh austerity (‘shock therapy’) that the current President Javier Milei has unleashed on his nation. If you watch the IMF boss please also have a brown bag handy for the obvious nausea that will follow. The scene became even more bizarre when the new Minister of Deregulation and State Transformation. aka El Coloso, one Federico Sturzenegger, during a panel with others including Rachel Reeves, pinned a little badge of a chainsaw to Georgieva’s lapel. It was all very lavish and symbolic and ignored the plight that these elites have imposed on ordinary citizens back in Argentina. What is happening back in Argentina is once again demonstrating how the ideology of austerity initially promises the world to the citizens only to backfire and turn to crisis.

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Bank of Japan’s ETF sell-off is a sideshow

On September 19, 2025, the Bank of Japan issued its latest – Statement on Monetary Policy – where they announced that there would be no change in the overnight call rate (the policy rate). However, they also announced that they would begin selling off their holdings of exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs). Many people are unaware of what these assets are and why the Bank of Japan would be holding them. Further, the media went wild and the Japanese share market gyrated (down) upon the news, suggesting that there was something significant going on or that the ‘markets’ are just dumb. It was the latter by the way. However, this has become an issue in Japan and this blog post is about sorting through the nonsense.

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Kyoto Report 2025 – 1

This Tuesday report will provide some insights into life for a westerner (me) who is working for an extended period at Kyoto University in Japan but who over the years of working here has increasingly began to understand the language and local cultural traditions.

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Australian labour market takes a backward step

I regularly warn against using the observations from one month to tell a story given that the data jumps around a lot at this frequency over time. It is clear that there is a lot of month-to-month variation in the data at present. The Australian Bureau of Statistics (ABS) released the latest labour force data today (September 18, 2025) – Labour Force, Australia – for August 2025, which reveals that the slowdown that has been signalled for some months and was interrupted by last month’s stronger result appears to have reasserted itself. Employment fell overall as did the participation, which saved the unemployment rate from rising. Without the fall in the participation rate, the official unemployment rate would have been 4.4 per cent (rounded) rather than its current official value of 4.2 per cent. That means some workers are likely to have moved into hidden unemployment (outside the labor force) as job opportunities have stalled. Underemployment fell 0.1 point, which was surprising given the significant loss of full-time employment. I expect a revision to this result next month. It remains a fact that with 9.9 per cent of available labour not being used it is ludicrous to talk about Australia being close to full employment. There is substantial scope for more job creation given the slack that is present.

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Terrestrial water storage capacity is declining fast and is hardly getting any attention

I read some disturbing research over the weekend about the rapidly declining terrestrial water storage (TWS) that is now becoming a global issue with drying regions linking up to form mega-drying areas that will be nearly impossible to reverse. While global warming gets a lot of attention in the media the surface water issue is not very well understood by the population, although it augurs devastation. I am working on a project at present that is focusing on new land use forms for the production of food and construction materials. The TWS problem is a central consideration in that it is being driven by poor land management and hopelessly inefficient and damaging agricultural practices, particularly those involved in producing animal protein. There are solutions but tell the next Greenie you meet tucking into some meat product that they have to stop eating that form of protein and see the reaction. That will tell you about how difficult it will be for societies to adapt and change.

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US Bureau of Labor Statistics revisions are not some arbitrary act but an attempt at making the data as accurate as possible

Last Tuesday (September 9, 2025), the US Bureau of Labor Statistics published a news release – Preliminary benchmark revision for March payroll employment is -911,000 (-0.6%) – which told us that its employment estimates for the current year are likely to be significantly overstated. Given that the BLS has been under intense political scrutiny in recent months, with the US President recently sacking the Bureau’s head, I expect some noise from the conspiracy types to accompany this preliminary statement from the BLS. The fact is that when we undertake the adjustment process that the BLS deploys (explained below), the average monthly change in non-farm employment between March 2024 and March 2025 will turn out to be around half the current estimate – 71 thousand as opposed to 147 thousand per month. In other words, when the revisions are finalised in February 2026, the labour market will be assessed as having started slowing considerably in 2024 and continuing into 2025. I explain all this in the following discussion but emphasise that the process of revision is not some arbitrary act to make some politicians look bad. It is actually a process that upholds full transparency and is a regular activity that national statistical agencies undertake to make the data they publish as accurate as possible.

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Some discussion about taxation

Over the weekend, I was a presenter at a Fabian’s Society meeting which sought input on ‘alternative taxation policies’ under the general tenet of the need for the Australian government to raise revenue to ensure a socially just society. The other presenter was John Quiggin and I think we provided a good complementarity for the relatively large audience (for a Saturday afternoon – with football finals in progress!). Of course, my opening salvo was to reject the fundamental premise of the workshop – which is a premise that progressive commentators and activists seem unable to shed to the detriment of their argument. I indicated to the audience at the outset that the aim of taxation is generally not to raise more revenue for government, but, instead, to ensure the non-government sector has less spending capacity. More is not less. That is a fundamentally different frame in which to discuss the topic and I closed the workshop by suggesting that one of the single most important things that progressives can learn is to stop using terms like ‘taxpayers’ money’ when discussing fiscal policy. Using those type of terms immediately frames the discussion against progressive goals.

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