Australian labour market – holding steady in a weak state

Today’s release of the – Labour Force data – for March 2015 by the Australian Bureau of Statistics shows that the Australian labour market was stronger than in recent months but overall remains relatively weak. There was some modest growth in employment for the second consecutive month and better full-time employment growth. Employment growth just kept with the growth in the labour force (new entrants and a slight rise in participation) which meant that the fall in unemployment was virtually zero. The unemployment rate fell from 6.15 per cent to 6.12 per cent (1,500 persons). The teenage labour market remains in a parlous state and requires an urgent policy problem that the Federal government refuses to recognise or deal with. In general, there remains a need for more job creation stimulated by an increased federal government deficit.

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The skies above Britain predicted to fall down … again. Don’t fear!

You may not remember the prediction by the American Arthur Laffer in his Wall Street Journal Op Ed (June 11, 2009) – Get Ready for Inflation and Higher Interest Rates. As the US government deficit rose to meet the challenges of the spending collapse and the US Federal Reserve Bank’s balance sheet shot up as it built up bank reserves, he predicted “dire consequences … rapidly rising prices and much, much higher interest rates over the next four years or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s”. You may have forgotten that prediction because it was in a sea of similar nonsensical claims by mainstream economists locked in a sort of mass hysteria and only their erroneous textbooks to give them guidance. It is 2015, nearly six years after Laffer humiliated himself in that Op Ed. Inflation is low and falling generally. Interest rates remain very, very low (note his use of “much, much” to give his prediction some gravity). Gravity forces things to crash! But the doomsayers have learned very little it seems.

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Latest military expenditure data reveals the hypocrisy of austerity

Yesterday, the Stockholm International Peace Research Institute (SIPRI) released their latest data for – World Military Expenditure 1988-2014. In their – Press Release – we learn that total World military spending has fallen in the last three consecutive years although it “levelled off” in 2014. While the global trends are interesting (the shifting patterns between the big geo-blocks), I was interested in what was happening in the Eurozone in the era of austerity. I was also interesting in juxtaposing the military expenditure and social expenditure dynamics. What you learn is that Greece maintains its position as one of the largest relative spending nations on military items, spending nearly twice the proportion of its GDP compared to Germany and the Netherlands, two nations that lead the charge on imposing austerity. Further, the nations that are pushing the hardest for more austerity are those that benefit the most from Greek military expenditure. The hypocrisy is amazing.

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Unemployment makes you sick

An interesting study published in The European Journal of Public Health recently November 2014) – Length of unemployment and health related outcomes: A life course analysis – provides fairly unambiguous evidence that the changes in labour markets under neo-liberalism towards higher entrenched unemployment rates, increased casualisation of work, the lockout of graduates and the widespread deskilling of the workforce are eroding the health outcomes of the population. While most studies of the link between unemployment and health have focused on cohorts that endure continuous long-term joblessness (unbroken spells exceeding 12 months), this study is novel because it studies whether accumulated spells of shorter-term unemployment over a person’s lifetime are detrimental to their health. The reason that is relevant is because under neo-liberalism, many individuals are forced to eke out an existence in low paid jobs interspersed with spells of unemployment. The evidence in the former case (continuous) long-term unemployment is clear – unemployment makes the person sick and they get sicker the longer they are unemployment (both physically and mentally). The new study shows that long-term unemployment generated over a person’s life through a series of accumulated spells of shorter-term unemployment also is bad for public health and well-being. It means that the emphasis on austerity which causes cyclical effects to be worse (entrenched mass unemployment) is bad but also the main structural bias in growth periods towards casualised, precarious work is also bad for our health.

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Saturday Quiz – April 11, 2015 – answers and discussion

Here are the answers with discussion for yesterday’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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Friday lay day – The Troika is the enemy and its either exit or capitulation

Its the Friday lay day blog. Lay day means rest, sometimes. The Greek government paid €450 million back to the IMF bloodsuckers yesterday which apparently calmed markets (Source). How can a so-called bankrupt country afford to pay that sort of cash? Well it can by causing more unemployment and poverty. The Government is trying to appease the Troika (IMF, ECB and the European Union) so that they will given them more cash in the coming weeks. Appeasement is an appropriate word here. Just as in the historical context, it means going along with something evil that will ultimately backfire and cause more grief. But then according to the US economist James Galbraith, in his latest apology (April 7, 2015), Syriza is – The Real Thing: An Anti-austerity European Government. Funny about that. Unless it is flying below all perception, Syriza seems trapped by an anti-democratic force that is intent on squeezing any notion of abandoning austerity from its agenda. And, try to square Galbraith’s claims against the insights provided by Alain Badiou and Stathis Kouvelakis in this interchange (April 3, 2015) – Dangerous Days Ahead.

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Australia’s generosity to other nations is collapsing

There was a story in the Australian press (April 8, 2015) – ‘Impossible choices’ to be made as human cost of foreign aid squeeze measured – that not only exposes the deep flaws in economic reasoning that accompany neo-liberalism’s emphasis on austerity but also makes one ashamed to be Australian. The problem, however, is not Australian-specific. The neo-liberal paradigm rules the World at present and humanity generally is the victim, particularly those most disadvantaged in material terms. The cuts announced by the Australia federal government to our Overseas Aid Program in the next three years will be the largest shift in provision of aid in our history. The projected cuts are now starting to manifest in concrete terms as aid agencies start to cancel programs and lay off staff. Once again the myths of neo-liberal macroeconomics leads us to accept governments doing appalling things in our name.

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Monetary policy is largely ineffective

Australia is demonstrating at the moment the monumental bind that neo-liberal (Monetarist) thinking has reached with respect to macroeconomic policy. By extolling the virtues of monetary policy as the only viable counter-stabilisation tool and eschewing the use of fiscal policy (biasing it towards austerity and the falsely virtued goal of fiscal surpluses), the policy making environment has created an economy that is susceptible to asset price inflation (particularly housing) and stagnant growth with rising unemployment. This experience is common across other economies and to break out of the destructive malaise, there will have to be a major shift in policy awareness – away from the exclusive use of monetary policy to work against the private spending cycle and towards fiscal policy as the only effective counter-stabilisation tool the government has available. The global financial crisis was caused by the elevation of monetary policy and the stagnation that has followed continues the problem.

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US labour market – weaker than headline data indicates

The latest US – Employment Situation Summary – for March 2015, was released by the US Bureau of Labor Statistics (BLS) last Friday (April 3, 2015). The growth in employment was disappointing to say the least. The Bloomberg survey of economists came up with an median estimate of 247,000 (net) jobs would be created in March. The data shows only 126,000 would be created. The closest forecast in the Survey was 200,000. The data is consistent with other negative data published in the last week (for example, the ADP National Employment Report. Most of the commentators focused on the fact that the unemployment rate remained unchanged at 5.5 per cent. This was taken as an indicator that the US labour market was still relatively strong. But closer analysis provides quite a different view of the state of the US employment situation.

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