It's Wednesday and there are a few topics that caught my attention this week as…
There is absolutely no reason for musicians to lose all income because gigs are cancelled
A fairly short post today (Wednesday oblige!). So just some snippets. Today, the Australian Bureau of Statistics published the latest – Retail Trade, Australia, Preliminary, February 2020 – which was the first release of a “suite of new products for Australian retail turnover”. The new offering is designed to more accurately and immediately pick up the “economic impact of coronavirus”. This release is preliminary and gives us more current data to that which is published in the upcoming April Retail Trade, Australia. The news is not good, as you might expect. Retail trade rose by 0.4 per cent in February 2020, as food purchases rose but all other spending categories fell. So the result is driven by the ridiculous panic hoarding behaviour that is now common. I went to a supermarket last night on the way home to get a few items (like some oats for muesli) and the shelves were nearly empty across a wide range of products. It makes no sense. Even if we are to be locked down, the Government has said shopping will be allowed. But in other sectors of the economy major impacts are being felt. All by band’s gigs in Melbourne have been cancelled and Virgin (who I fly with mostly) have cancelled all international flights until at least the end of June and many domestic flights. Life is changing dramatically. And this would be a great time to introduce a Job Guarantee for artists and musicians. Further, I report on some statistical events in West Africa that have far-reaching implications for how nations interact with multilateral agencies such as the IMF or the World Bank.
“Every musician I know is now facing bankruptcy!”
Classic FM – published an article last week – “Every musician I know is now facing bankruptcy” – the impact of coronavirus cancellations on classical artists – which reports a trend that is now happening all over the world – artists, musicians are rapidly becoming unemployed.
As I noted above – all the gigs my band had on our books for the coming months are cancelled (postponed) as venue owners face an almost complete drying up of their custom.
One place we play in South Melbourne is reporting no one coming into the pub anymore.
Classic FM “is the UK’s only 100 per cent classical music station”.
In the article cited it notes:
1. “Concert halls are closed, gatherings cancelled, and large sectors of the economy are paralysed. Many members of the classical audience are self-isolating or just staying home.”
2. “freelance and touring musicians, who rely on performances for their livelihoods, are feeling a deep impact from the cancelled performances, scrapped tours and the resulting loss of income and opportunities.”
3. “with most cultural organisations worldwide shutting down for a period, is unprecedented and will cause most self-employed performers to face major financial issues, even bankruptcy.”
4. “Most performers live life on a financial knife-edge because if we don’t work, we don’t get paid, and we aren’t catered for even under the current statutory sick pay regime.”
And so it goes.
Solution?
Pretty easy really.
Introduce a Job Guarantee – which is an unconditional job offer at a socially inclusive minimum wage to anyone who wants to work and cannot find it.
The Government has flexibility in what it would require as work given their is no ‘profit’ motive involved in this.
And while the musicians might reasonably be called on to contribute to society in normal times in return for the income security a Job Guarantee wage would provide, these are not normal times.
So, the musicians might be expected to develop some new repertoire while the coronavirus prevents public performance or mixing with each other.
The Government could also help with better digital connectivity. My own band records and mixes remotely via exchanging information through the Internet.
It doesn’t extend the imagination too far to think that with high quality broadband, live rehearsals and even concerts could occur via the Internet with musicians from disparate locations.
It is time to use our imagination.
But there is absolutely no reason why artists and musicians need to go without income as a result of losing their gigs while the crisis unfolds.
African nation suddenly grows – and exposes the problem of using debt ratios
I follow the news in Africa as I have work interests there. Last week (March 12, 2020), it was reported that the West African nation and former French colony, Côte d’Ivoire had suddenly discovered its economy was nearly 40 per cent larger than previously calculated.
What?
This is one of the CFA franc using nations, which reflects the on-going post-colonial exploitation by Europe.
Now, one shouldn’t assume anything much has changed. It was always larger than recorded. Why?
Because the national accounts data becomes sensitive to the passage of time and over time can become a distorted (inaccurate) measure of output produced in a nation.
The – Intitut National de la Statistique – the national statistics office in Abijan has been engaged in a modernisation process for their national accounts dissemination.
You can read the Termes de référence (in French), which guided their review process.
Last week (March 11, 2020), the Cabinet approved the new framework that has been in the pipeline for some years.
The most important change reported by Reuters in their new release – Revision to GDP methodology gives boost to Ivory Coast’s reported economy (March 12, 2020) – is that the:
The new methodology for determining GDP … includes changing the base year for its calculation from 1996 to 2015 …
What does that mean?
Real GDP attempts to represent the actual volume of production over given period.
When calculating real GDP, statisticians attempt to remove the changes in prices over the period so as to get a more pure measure of volume shift.
Now, think of all the goods and services that are sold in each period. These are valued by their individual prices.
One way of decomposing the price and volume effects is to choose a base year set of prices and then compute the subsequent volumes with the base year prices.
The problem is that the prices of some goods and services might fall over time and as a result real GDP growth will be overestimated.
Why? Because these goods will have a higher (price x quantity) weight in the calculation than is justified (given their prices are lower than the base year price).
Base years are changed by statistical offices in order to better represent the structure of the economy at the current time, given that major shifts can occur over time.
In the case of Côte d’Ivoire, its economy has transformed from a war economy to a more diverse, peaceful economy. The pattern of production and sales has shifted dramatically since 1996 with many new industries and services.
I could go into more technical detail but that would just blur the point.
In the case of Côte d’Ivoire, the statistician is reporting that:
1. In 2015, GDP was now estimated to be 27 trillion CFA francs instead of the 1996-weighted estimate of 19.6 trillion CFA francs.
2. The average growth rate between 2015 and 2018 was 7 per cent per annum.
3. Other nations, such as Ghana, Nigeria and Senegal have performed similar exercises in the last few years with similar results.
Why does this matter?
Think about the use of fiscal balance and public debt ratios, which all use GDP as the denominator in their calculations.
These ratios are weaponised by multilateral organisations such as the IMF, the World Bank and by conservative governments to invoke austerity and hardship on nations if they pass some meaningless threshold.
As of yet, the Intitut National de la Statistique of Côte d’Ivoire has not released the full updated time series.
But in 2015, the following ratios were recorded for Côte d’Ivoire:
1. General government fiscal deficit in 2015 as a per cent of GDP = 2.823 per cent (and rising to 4.5 per cent in 2017).
2. General government gross debt in 2015 as a percent of GDP = 47.266 per cent.
Now, if we recomputed those ratios, with the upwardly revised GDP estimates
1. Fiscal deficit ratio falls to 1.67 per cent.
2. Public debt ratio falls to 27.9 per cent.
While these ratios are of no particular importance to a person with an Modern Monetary Theory (MMT) understanding, the bean counters in the treasuries and multilateral institutions use them to push anti-people policies.
This is why the statistical agencies should ensure their weighting in the national accounts estimation process is as current as resources allow.
Call for MMTed Support
I imagine the current crisis will put a halt on people donating to causes.
But we are making progress in developing the program that will become – MMTed.
I ran my first Masterclass in London recently and it was well attended. I received good (useful) feedback from several people which will help tune the way we run these face to face classes.
The planned further Masterclasses (May in Australia, June in Europe, September in the US) are on hold while we assess the state of the world. But I hope we will be able to offer them sometime this year.
And on-line curricula is being developed.
But we still need significant sponsors for this venture to ensure that we can run the educational program with negligible fees.
If you are able to help on an ongoing basis that would be great. But we will also be appreciate of once-off and small donations as your
You can contribute in one of three two ways:
1. Via PayPal – which is our preferred vehicle for receiving donations.
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Please help if you can.
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But we can still listen …
The gigs might be cancelled and we might be soon locked up inside our homes, but, we can still listen.
Michel Philippe-Gérard was a French composer (born in Brazil 1924) who died in Paris in May 2014. He wrote this classic – originally called Le Chevalier de Paris (recorded by Edith Piaf in 1950). The English and French lyrics were quite different but the melody is the thing.
The narrative of the English lyrics is about a Parisien who frequents the streets of Paris (a ‘boulevardier’) – often Anglicised to ‘man about town’ – who is getting old and losing it. The song describes his reflection on life as he watches the world go by.
But even though the lyrics are somewhat crass (in my view) the melody is beautiful and you hear all the sensitivity of it in this rendition by the so-called “The Sound” – alias Stan Getz on tenor ably supported by – Gary Burton on vibes, Steve Swallow on double-bass and Roy Haynes on drums.
The latter three are still alive.
This concert was recorded in London in 1966.
It is hard to find better than this.
He certainly knew how to get the range out of the tenor particularly in the low register.
That is enough for today!
(c) Copyright 2020 William Mitchell. All Rights Reserved.
“Even if we are to be locked down, the Government has said shopping will be allowed. ”
Not if you’re one of those forced to self-isolate. Kind of like Australia having half of it’s strategic petroleum reserve on the other side of the planet – how much exists is not nearly as relevent as whether you can easily access it when you need it.
Bill
Could we have some comment on the UK’s new announcements regarding the £330 billion loan guarantee scheme. My analysis is that amongst other things this is partially another hidden bank bailout at the expense of business and people. The banks do not have this money to lend, under fractional reserve they can only create the money on the basis that the UK government and tax payers will guarantee the loans. So insolvent banks who were bailed out by the government and public over 10 years ago will be able to create loans to business at interest which are backed by the government and the very same businesses and public who are collectively guaranteeing the loans. This means there is no risk to the banks and previously solvent businesses which had no debt at all will be forced into taking on debt to keep going whilst the banks are gifted a nice little earner in interest payments.
The only real answer lies with MMT. The government can create money in an emergency that never needs to be repaid. Extraordinary times call for extraordinary measures.
Bill please don’t waste this crisis. Soon enough the virus will go the stimulus will stop and the austerity nonsense will be back. This is the time to front the media and explain exactly how we will pay for it. It is also the time when the job guarantee will make sense to Joe public.
The International Monetary Fund has quickly rejected a surprise request Tuesday by Venezuela for an emergency $5 billion loan to fight the new coronavirus. They say they do not recognise Maduro as leader.
Typical of the IMF to try and use any means possible to cause a crises and implement regime change. If it was a neoliberal puppet in charge of Venezuela increasing interest rates to gazillion % to fight inflation making matters worse. Who was implementing structural reforms ( cough) and running 20% fiscal surpluses. The IMF would have give them a blank cheque.
The IMF would have given Venezuela anything they wanted and more if the neoliberal puppet they would like to be in charge, had agreed to take on $ billions more of dollar debt, that can never be repaid just for good measure as a hand of friendship.
Here in France there is a catastrophie unfolding with Intermittent de spectacle.
Typical kind of fall through the cracks scenario here, where people have to run an association, a micro-enterprise and a statute as a performing musician (Intermittent de spectacle) and the government is already doing the ‘you have called the wrong number’ routine as people try to get assistance to pay rent and pay bills.
Things will blow up early in April when people have Zero in their accounts if the relief is not quick and adequate.
A typical scenario where no help is forthcoming:
” Comme toutes celles et ceux qui ne font pas un travail essentiel, je suis confinée chez moi, dans l’impossibilité de travailler.
Je suis indépendante, pas salariée, donc en théorie ça veut dire zéro rentrée d’argent jusqu’à début mai au plus tôt (plus probablement fin septembre, vu que je doute qu’on retourne une vie normale avant les vacances d’été).
Le boulot de prof de musique et danse freelance ne permet pas vraiment de mettre de côté :p en plus, si on peut en théorie “attendre” avant de payer les factures et le loyer, ça m’étonnerait que les propriétaires et les entreprises s’assoient sur le recouvrement de leurs impayés lorsque tout sera terminé (et avec le si peu de marge de ma rémunération, ce recouvrement sera juste ingérable pour moi).
Les écoles et associations qui m’emploient ont encaissé tout ou partie des inscriptions des élèves à l’année. Le souci de leur côté, c’est : “si les gens demandent un remboursement des cours non effectués, on ne pourra pas vous payer. Donc dans le doute, on ne vous paye pas”. Tout le monde a ses contraintes financières, quoi
Beaucoup de salariés sont couverts par une procédure de chômage technique, ils touchent 80% de leur rémunération sans devoir aller au travail. Pas d’équivalent pour nous ?”
You can multiply this kind of scenario by one hundred that im seeing on facebook right now.
in Canada, the spigots seem to be opening up. People who are no longer able to work due to preventive measures will have an income paid by the federal government; this seems to be direct spending and not merely loans.
Miraculously, 6 major banks have announced mortgage deferral for 6 months, and I believe I heard something about government adding other protections for troubled mortgages.
Thanks Bill. Beautiful recording. Good stress reliever for sure.
On J’s comment – Is it possible that Trudeau actually gets it? Let’s hope it rubs off on the usual suspects.
In Poland, PM Morawiecki has decided to hand over cash to hibernating firms to fund 40% of the average wage (the firms will be required to pay another 40%). Every employee from an office where at least one case has been detected has to go for a 14 days quarantine, etc. Morawiecki also decided to pay 80% of the minimum wage to people operating in the gig economy sector (what also includes musicians). This is very little but probably enough for them to physically survive without going bankrupt. There is strong pressure from the corporate sector to allow for reducing wages during the corona virus crisis, what is obviously un-Keynesian and dangerous. Mainstream economists aligned with the liberal opposition (e.g. prof Jerzy Hausner) try spreading the usual propaganda (about people withdrawing deposits due to reduced interest rates, what might reduce the ability of banks to lend, etc) but ordinary people and the ruling party just don’t care any more about this retarded stuff. The majority of the population strongly support the authorities. Also the closure of the borders has caused grave problems in Germany because of the queuing of vehicles on the motorways leading to border crossings with Poland but so what? Germany showed the same level of solidarity to Greece a few years ago. Also – Poles from all across Europe are coming back, they prefer to be quarantined in Poland than infected in the UK or Germany. We all know about the weakness of the health care system and the overall usual mess but at least they are trying to do sensible things now, before it is too late (the total number of known infections in Poland is still below 300). For example the production of hand sanitiser and face masks has been restarted.
Meanwhile here in Australia… the policies regarding school closures might be reconsidered when a few hundred people die. How is it possible that the ruling group can be so stupid? (hint: because they were elected by equally stupid people). It’s worse than during the bush fires. There is one number which matters now, the average number of people one person infects. If it is below 1, we are OK. If it is above – don’t even think about “herd immunity” – the epidemics will spread and overwhelm the society because nobody can ensure that the coefficient stays “just above 1” especially when mass hysteria causes elderly people to storm supermarkets. Why can’t we just do “whatever it takes” to suppress the spread and loosen the restrictions later? They finally admitted in the UK that the “herd immunity” or “flatten the curve” strategy is unworkable, how much more time is needed here?
Honestly, for the first time since I migrated, I would prefer to be in Poland now (in an “illiberal democracy”) but the horse has bolted. I am not concerned about myself or my family, we will be OK, but why do we need to watch an entirely preventable crisis unfolding for the next half a year? The states which have higher level of civilisation than Australia or the US, such as China, South Korea or even Singapore, have demonstrated that the problem can be resolved or at least successfully managed. It looks like this is the end of the supremacy of Western civilisation once and for all – and the fall from the tall horse will be painful. The liberal system based on individual greed and absolute property rights is brain dead now, the corona virus and mass hysteria are finishing it off.
Classic FM “is NOT the UK’s only 100 per cent classical music station”. There’s BBC Radio 3.
J christensen, I sincerely hope the Oz government adopts similar measures to yours. many people and employers will be in survival mode and economic ideology as usual will no longer cut it. A depression is not out of the question if bean counter mentality. ie inadequate support remains dominant.
UK government is considering a temporary UBI for the duration of the covid-19 crisis, to those who face loss of income. According to the Scottish newspaper The National. I wonder if that will open a Pandora’s box?
My letter in today’s Morning Star. I sent similar to FT but they didn’t publish.
For years the Universal Basic Income (UBI) campaign lurked in the libertarian undergrowth: give everyone a basic wage, unconnected to their labour or their needs and get government off their backs. But over the last 5 years or so the idea has crept into the left-wing of the Labour Party. It was a relief that it didn’t feature in the last two manifestos.
It has been depressing, therefore, to see recently on social media so many people who consider themselves socialists calling for UBI. Finally today I was horrified to see good MPs like Sam Tarry and Rebecca Long Bailey joining the throng.
UBI was always a snake-oil policy but suggesting that it is a sensible response to the Covid-19 crisis is frankly crazy. The problem that needs to be solved is maintaining people’s incomes if they cannot work because of illness or temporary redundancy. People, as best they can, adjust their outgoings to their incomes. UBI is a one-size-fits-all payment. The correct response is for the government to underwrite payrolls for the duration of the emergency. If that were done there would be no need for rent or mortgage holidays for workers or tax/National Insurance holidays for employers.
Bill, your arguments about Ivory Coast’s debt to GDP and deficit to GDP ratio don’t seem to hold for me. Both the debt and the deficit are measured against the nominal, not the real GDP. Changing the base year does not modify the value of nominal GDP.
Also, a change in the value of real GDP has no meaning whatsoever, as in the case of real GDP, only the growth rates are meaningful. So the question is whether these have changed too with the methodological update.