Interview with Asahi Shimbun in Tokyo – November 6, 2019

During my recent trip to Japan, where I made several presentations to various groups, including a large gathering in the Japanese Diet (Parliament), I received a lot of press interest, which is a good sign. I am slowly putting together the translated versions of some of the print media articles. Today, I provide a translation (with my annotations) of an interview I did with the centre-left newspaper – Asahi Shimbun – on November 6, 2019 in Tokyo. This is a daily newspaper and is one of the largest of five national newspapers in Japan. It has an interesting historical past but that is not the topic of the blog post today. The article opened with a statement introducing Modern Monetary Theory (MMT) and then followed a Q&A format. I have expanded the answers reported in the paper to reflect the actual answers I gave to the two journalists during the interview and to a wider press gathering at an official press conference the day before in Tokyo.

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The Weekend Quiz – November 23-24, 2019 – 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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Puzzle: Has real wages growth outstripped productivity growth or not? – Part 2

Inspector Commissionaire Bill is back on the case today for Part 2 and the solution of the puzzle we posed in – Puzzle: Has real wages growth outstripped productivity growth or not? – Part 1 (November 20, 2019). The puzzle was relatively easy to understand. The RBA (Australia’s central bank) published analysis in its most recent – Statement on Monetary Policy (November 2019), which showed that since the early 2000s, real earnings per hour have been above hourly labour productivity. Yet, National accounts data and earnings-productivity data trends that I regularly publish show the opposite. So the puzzle is: How can the RBA say that workers enjoyed real wage increases above labour productivity growth in the early 2000s up to around 2012, when we know the wage share has been falling more or less over the entire period? In Part 1, we laid out the conceptual framework to help us understand what I am writing about today. The resolution is that both sides of the puzzle are correct in their own way. The issue comes down to measurement and this two-part series demonstrates, very powerfully, how perceptions that are shaped by the presentation of data (graph, tables, etc) rarely come to grips with the underlying methods used to construct the presentations. We have all heard the phrase – There are three kinds of lies: lies, damned lies, and statistics. By becoming more educated about how to use statistics, we can all break that nexus and deploy data more reasonably to advance our cases. That is what this two-part blog series is about.

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Puzzle: Has real wages growth outstripped productivity growth or not? – Part 1

I am currently working through the entire Commissaire Maigret detective series written by Belgian author author Georges Simenon. I read a lot as I travel around and I have 74 (out of 75) Maigret novels to read. But don’t let that fool you, I am already becoming familiar with Maigret’s forensic way of thinking (-:. So for the next two blog posts we will be conducting a forensic examination of data to solve a puzzle that appears to be confusing people. This is the sort of puzzle that people (like me), who are interested in data and have a penchant for spy and detective novels like to investigate. For others though, while the nuances might appear to be rather obscure, the importance of this sort of puzzle cannot be understated. Community perceptions are influenced by what I am talking about today. Policy decisions are taken. Industrial relations strategies are designed, implemented, and, in some cases, fought out with significant consequences. The data I am analysing today and tomorrow can provide information about the state of the economy. It can inform us of the way in which the economic is changing in structure over time. It can provide guidance to fiscal and monetary authorities as to the likely impact of policy changes. So, as you will see, ambiguity is not going to be very helpful. The data I am dealing with in this blog post explores the relationships between nominal wages, prices and productivity in the Australian economy. The principles established, though, apply to all economies. What I will show you is that the choice of how we choose to measure key variables can fundamentally alter the way we think and act. This is Part 1 of a two-part series. Now, if only I had a pipe to light! (Maigret joke for insiders).

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Invoking neoliberal framing and language is a failing progressive strategy (British Labour)

Over the years it’s been clear to me that we live in a fictional world when it comes to economic matters. The mainstream has created this world that bears little relationship to reality and which serves the interests of a few at the expense of the majority. But the way in which this fiction is inculcated in the framing and language of our public debates leads the majority to think that the conduct of economic policy is somehow in their best interests, even if, at times, governments claim we have to swallow a bitter pill in order to get well again. The bitter pill always punishes the lower to middle-income groups, rarely the top-end-of-town. The fiction is so deeply ingrained that even progressive political campaigns are framed within it. I have railed against that all my career because I cannot align a belief that democratic choice requires accurate information with the reality that we make these choices in a fog of fiction. I have always considered the role of the progressive forces in politics, as a matter of priority, should be to be the agents of education, so that these democratic choices reflect our realities. I have never supported so-called ‘progressive’ parties that choose, for ‘political’ purposes, to lie to the electorates by adopting neoliberal framing and language as a way of minimising any difficulties that might arise, initially, from the dissonance that accompanies exposure to the truth, after years of believing in lies. It seems that the British Labour Party continues to promote a false narrative to support and otherwise stellar plan for national renewal. But, as history tells us, a plan built on false financial foundations, falters when circumstances change and the false foundations become the issue rather than the plan.

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Australia – wages growth continue at record low levels – further evidence of policy failure

Last Wednesday (November 13, 2019), the Australian Bureau of Statistics (ABS) released the latest- Wage Price Index, Australia – (September-quarter 2019). Both private and public sector wages growth was just 0.5 per cent in the September-quarter – keeping growth at record lows. Over the year to September 2019, overall wages growth was 2.2 per cent and in decline. With the annual inflation rate running at 1.7 per cent, workers were able to enjoy some real wages growth. However, over the longer period, real wages growth is still running well behind the growth in GDP per hour (productivity), which has allowed profits to secure a substantially increased share of national income. And, as the federal government continues to sabotage the economy as a consequence of its obsession with recording a fiscal surplus, the moderating wages growth will likely undermine it planning targets. In the last fiscal statement, the government was forecasting annual wages growth would be 2.75 per cent rising to 3.25 per cent. At the current rate, nominal wages will be lucky to top 2 per cent in 2019-20, which means the tax revenue estimates in the fiscal plans are likely to be over-stated. And, if the mainstream narrative was remotely correct, why is employment growth flatlining when wages growth is at record lows?

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The Weekend Quiz – November 16-17, 2019 – 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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Australia labour market deteriorating – symbolises massive Federal government policy failure

After yesterday’s disastrous wages growth data release, today’s Australian Bureau of Statistics release of its latest data – Labour Force, Australia, October 2019 – confirms, as if we need confirmation, that the Australian economy is weakening and the labour market is is poor shape. The culprit – the Australian government which is starving spending by its obsessive pursuit of a fiscal surplus. It is likely that the economy will thwart that ambition anyway – in the wrong way – by reducing tax revenue below that projected. Meanwhile the well-being of millions of Australian workers is being abused by our elected officials. Employment growth was negative. Full-time employment fell sharply. The participation rate fell. Unemployment rose even though the participation rate fell. Hidden unemployment is up. Underemployment is up. The broad labour underutilisation is at 13.8 per cent with an upwards bias. The unemployment rate is 0.8 percentage points above what even the central bank considers to the level where inflationary pressures might be sourced from the labour market. My overall assessment is The current situation can best be characterised as deteriorating from an already weak state. The Australian labour market remains a considerable distance from full employment and the gap is widening. This persistence in labour wastage indicates that the policy settings are to tight (biased to austerity) and deliberately reducing growth and income generation. There is clear room for some serious fiscal policy expansion at present. The Federal government is willfully undermining our economy with its irresponsible policy position.

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