The Italian left should hang their heads in shame

Today is a blog lay day only because I now have to pay the piper for being Australian but having to undertake work commitments in Europe – a very long tiring flight. At least I can read a lot of detective novels. But there was a story on Monday in the Italian media that I report on now as a conclusion to my stay here in Italy. The only conclusion is that the Italian left should hang their heads in shame for being surrender monkeys to the neo-liberal forces defined by the Troika.

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Austerity hacks into our cultural heritage

As I noted last Friday, the Australian government has announced it will be cutting a massive part of the budgets of the Australian Broadcasting Commission (ABC) and the Special Broadcasting Service (SBS), both publicly-owned national media organisations as part of its mindless fiscal austerity push. The Minister claims there is plenty of fat in these organisations but the ABC news report (November 24, 2014) – ABC cuts: Managing director Mark Scott announces more than 400 jobs to go – tells us that nearly 1 in 10 staff will be sacked and programs scrapped to meet the funding cuts. The ABC and SBS are jewels in Australian cultural life. They support local filmmakers, musicians, artists, and advance a more sophisticated understanding of what is going on around us. I am very critical of the way they have succumbed to neo-liberal economics, but in general, the alternative is a mind-numbing Fox-type flow of game and reality shows and sensationalist news. The only thing that is worth watching on commercial TV is the coverage of AFL football and even then one has to turn the sound off and have the ABC radio commentary accompanying the TV coverage to ensure a quality experience.

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Catalonia’s vote largely misses the point

The bets are on at the moment that the Eurozone will dip back into recession for the third time since 2008 such is the incompetence of the policy makers and the policy framework they have erected to operate within. There is constant talk that the ECB will once again step in to save the day but all they can do is stop a nation going broke by guaranteeing their fiscal deficits and/or buying their debt. The central bank has very limited capacity to actually stimulate aggregate spending, which is the source of economic growth when there is massive idle productive capacity. In this context, the vote on Sunday by Catalonians (well around 33 per cent of them), which was overwhelmingly yes (81 per cent), is interesting although I doubt it will lead to anything constructive – like the Community exiting the Eurozone and really becoming independent. Most likely, Spanish prime minister Mariano Rajo will come up with some fiscal compromise to relieve the calls about Spain robbing Catalonia blind and the same problems will persist. I don’t pretend to know much about the cultural issues but in the scheme of things as I show below the economic circumstances the Community finds itself in are a direct consequence of being part of the Eurozone. That would have to change for there to be any meaning to the calls for secession. I don’t hear those arguments coming out strongly at all.

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ABS revises labour force methodology – things are much worse than we thought

Yesterday, the Australian Bureau of Statistics released an extraordinary press notice – Statement from the Australian Statistician on the Labour Force estimates – which aimed to help everyone understand why the Labour Force data has been so weird lately. A lot of readers E-mail me seeking help understanding what seasonal adjustment is all about. It is a dry topic and not one I relish even though I have a background in statistics and econometrics. But given yesterday’s announcement and the disarray that people have sensed with the official labour force data in Australia recently, I thought I might try a non-technical explanation of what has been going on. Here goes! And for those who like attacks on austerity etc, underpinning this whole discussion is the mindlessness of neo-liberalism. That should get you reading!

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US labour market beset by massive job shortages

There was an interesting piece of analysis presented on the US Economic Policy Institute (EPI) site a few weeks ago – Labor Market Weakness Is Still not due to Workers Lacking the Right Skills – which showed the “the number of unemployed workers and the number of job openings by industry” as a means of evaluating the nature of the job cycle in the US. The conservatives, who want to build arguments against any fiscal activism, try to explain the massive and persistent unemployment in the US and elsewhere in terms of structural constraints including skill shortages and mismatches. The EPI analysis showed that “unemployed workers dramatically outnumber job openings across the board” and in the individual industries. The conclusion – “the main problem in the labor market is a broad-based lack of demand for workers”. I had been working on a similar story myself since the latest Job Openings and Labor Turnover Survey (JOLTS) data came out on October 7, 2014. Here is what I found, which is a little different to the EPI outcomes but similar and doesn’t alter the facts.

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The UK recovery is a false dawn

A few weeks ago (October 1, 2014), I wrote in this blog – British economic growth shows that on-going deficits work – that the British Chancellor was overseeing an expanding fiscal deficit and public debt ratio, which despite the rhetoric to the contrary, was supporting growth and helping private households increase their saving ratio. The national accounts and public finance data could not support the claim that it was austerity in the UK that was promoting growth. But in drawing that conclusion, I certainly didn’t want to give the impression that the conduct of macroeconomic policy in the UK was appropriate. The point was that growth, albeit tepid, was occurring in the UK and it was not in an environment where the fiscal deficit was being cut. The fact is that the UK economy is in a parlous
state and such that the word recovery is a totally misleading descriptor for what is happening.

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Saturday Quiz – October 18, 2014 – 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 – ABS funding should be appropriate and access free

Its my Friday lay day blog and my mini-topic today is a left-over from yesterday’s commentary on the latest Labour Force data from the Australian Bureau of Statistics. The last few months data has been very volatile and the ABS has finally admitted that their seasonal adjustment techniques have not delivered realistic estimates of employment (and hence unemployment). This matters because many sectors and people use the summary aggregate statistics produced by the ABS, such as the headline unemployment rate for all manner of purposes, some of which are more important than others. The Federal Treasurer’s response to the issue has been predictably asinine. This is a person who has cut the national statistical agency’s budget by more than $68 million in the last year. His solution – force a user-pays regime onto the ABS so that we will have to pay to access their data to work out what is going on in our nation. It has been done before by conservative Australian governments, in part to reduce the flow of information but also, more mindlessly, to ‘save’ money – in a currency that the government issues! That is how mindless neo-liberal bean counters get.

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The German experiment has failed

In the last week, several new data releases have shown that the Eurozone crisis is now consolidating in the core of Europe – France, Italy and … yes, Germany. The latter has forced nonsensical austerity on its trading partners in the monetary union. And, finally, the inevitable has happened. Germany’s factories are now in decline because the austerity-ravaged economies of Europe can no longer support the levels of imports from Germany that the latter relied on to maintain its growth and place it in a position to lecture and hector the other nations on wage and government spending cuts. The whole policy approach is a disaster and is exacerbating the flawed design of the euro monetary system. The leaders should find a way to dismantle the whole charade and allow nations to seek their own paths to prosperity with their own currencies. The German experiment has failed.

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Strong public benefit from tertiary education in Australia

There was an interesting article this morning in the Fairfax press (September 29, 2014) – OECD figures show public benefits more than individuals from tertiary education – which used the recently released – Education at a Glance 2014 – to compare private and public (social) returns from tertiary education. The results are that private net returns outweigh social returns in the majority of nations but not for the UK, Australia, Japan and Korea. The results have implications for the debate about who should fund tertiary education – the private individuals (or families) of those undertaking it or the government. They also highlight that one should be somewhat protean in outlook and avoid falling into Groupthink.

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Friday lay day

Its Friday lay day for me. I am up in Northern Australia until later today finalising my involvement in some projects that I have been part of. I was watching the TV in my hotel this morning after a run in the early morning humidity. There was a program on the Ebola crisis and how medical teams in Western Africa are so short of basic resources that the virus is spreading and becoming uncontrollable. The world is facing a major health crisis at present that is currently centred on the impoverished nations of West Africa. The struggle to combat the spread of the Ebola virus is being seriously hampered, if not imperiled by a lack of resources – simple things like disinfectants, drugs, staff etc. You might be wondering how the world could envision cutting the budget of the World Health Organisation, which is the prime institution charged with dealing with these sorts of crises. Well – fiscal austerity – take a bow! A class act.

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CEO pay still out of control

On September 15, 2014, the Melbourne Age article – Workers can forget about big pay rises for some time to come – summarised the wages outlook that workers can expect in the coming year as the labour market weakens. Its bleak. Meanwhile, CEO pay while down from the peaks of 2007 remains excessive according to a major survey released in Australia this morning. Depending on how one measures it, the average CEO of the Top 100 companies earns between 65 and 84 times what the average worker takes homeeach year. And these bosses lead the cheer squad when industry leaders and government ministers claim workers have to take pay cuts and surrender penalty rates and that the minimum wage should be abandoned. The neo-liberal obscenity survived the GFC and has now reorganised. Woe be us!

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European Employment Strategy – barely a new job in sight

Eurostat released the latest – Employment – data for July 2014 last week (September 12, 2014) and announced that total employment was up by 0.2 per cent in the euro area. For those that study the data closely you will not be confused. But for the casual observer you might have cause to puzzle. Has this been a sudden turnaround given that last quarter employment growth was firmly negative in Europe? The clue is that Eurostat publish two different measures of employment. The first (published last week) is derived from the National Accounts estimates whereas the other is derived from the Labour Force Survey. The latter doesn’t paint a very rosy picture at all. But whatever these data nuances, the European Commission is still facing a disaster and their latest policy response will do nothing much to alleviate the problem. But then why should we be surprised about that?

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Friday lay day

Its Friday and my declared lay day for blogging. I am currently working on some research analysing the shift in patterns of regional unemployment in Europe as a result of the GFC and the policy austerity that followed (it is an invited paper from one of the leading regional science journals). That is my most pressing deadline. The patterns that we are picking up are interesting already and will be analysed in more formal terms using spatial econometric tools. I will report more fully when the paper is finished around the end of the month. I am also working on the completion of our Modern Monetary Theory (MMT) textbook, and a book on the evolution of MMT (due later this year). Bit busy.

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Friday lay day

Its my Friday Lay Day blog, which means I don’t really write one. I am working on an Modern Monetary Theory (MMT) volume for my publisher, Edward Elgar, which will document, to date, the key literature that I consider to be foundational to the development of what we now call MMT. I am putting the literature together and writing an extended introduction explaining how each contribution fits into the jigsaw. I am starting with Marx (of-course)! But today, I also take a moment to briefly reflect on an article that apppeared in the German Der Spiegel (September 3, 2014) – France and Friends: Merkel Increasingly Isolated on Austerity. I will follow up on this next week in more detail. The reflection is really just a segue for one of my favourite songs …

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Australian national accounts – weak and getting weaker

When the first-quarter National Accounts data came out for Australia I noted that despite the relatively strong growth recorded in that period, the Australian economy was in a fragile state and the contemporary indicators (given that the real GDP data is 3 months old by the time it is published) were indicating that the economy would slow significantly in the June-quarter. Today’s Australian Bureau of Statistics – Australian National Accounts – for the June-quarter 2014, confirms that prediction. Real GDP growth grew by 0.5 per cent down from 1.1 per cent in the June-quarter 2013. The annualised growth rate of 3.1 per cent is being held up by the strong June-quarter growth but something around 2 per cent per annum looking forward is a more realistic assessment of where the economy is at present. The external sector is now a negative influence on growth as is the government sector. In this quarter, there was a large inventory adjustment (up) which was the difference between positive and negative growth overall. That short of inventory swing will not continue. With export prices plummetting due to a glut in iron ore shipments to China, the external sector will continue to be a drag. Fiscal austerity is set to worse, which means that the data paints a fairly gloomy picture for the Australian economy for the rest of this year at least.

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Large-scale employment guarantee scheme in India improving over time

Today I am reflecting on employment guarantees. I ran into a mate in a computer shop in Melbourne yesterday, totally by accident. He happens to be one of the big players in the job services sector – the unemployment industry. We exchanged our usual pleasantries and then we got angry together about the government policies – the usual interaction. Then I said well what we need is all you guys and the related charities (such as the Brotherhood of St Laurence, the Smith Family) and other groups (such as Greenpeace, Amnesty International etc) all getting out of their comfort zones and agreeing that being angry is stupid and that action is required. These are the people who lobby government. Academics only create ideas and write them out. I suggested that these groups use their significant public profiles to organise a coalition of support for the Job Guarantee and really push it hard – if only to expose the denials and failures of the orthodoxy that besets us all. Anyway, that conversation just happened to dove-tail with an article I read last week about employment guarantees in practice that I found interesting and which was exposing the deniers for what they are – ideological sycophants. That is what this blog is about.

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Why we should close the ‘unemployment industry’

This morning I gave a Keynote presentation to the Jobs Australia conference in Melbourne, which is a gathering of people who work in what I call the extra industry – the ‘unemployment industry’ – which has sprung up in the neo-liberal period to manage the unemployment that the government has deliberately created as a result of its obsession with fiscal austerity (trying to run surpluses when increased and on-going deficits are required). I take no umbrage with individuals who work in the ‘industry’ but its productivity is close to zero (you cannot search for jobs that are not there) and they have become co-opted servants of the pernicious government policy regime. The facts are clear – we have erected a massive corporate sector funded by government to manage the fiscal failure. The problem is that all these job service providers are not just shunting inanimate widgets around into so-called training schemes etc but are dealing with very disadvantaged people, which the capitalist system is excluding from the opportunity to engage in paid and productive work. The ‘unemployment sector’ is the Government’s front-line attack dog on the victims of the policy failure.

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French government in tatters and the financial markets want growth

The French government is in tatters after a number of the more enlightened members of parliament resigned as a protest against the mindless austerity that Hollande is imposing on his nation, which is causing the already desperate unemployment situation to worse. Le Monde ran a story (August 25, 2014) – La dernière chance du président (The last chance for the President) and said that the political season just became explosive for the President and the Prime Minister as a result of some of his senior ministers walking out in protest over the austerity obsession that Hollande has imposed on the French government. Despite all the scaremongering that financial markets love austerity and see it is a move to stability, the ‘markets’ appear to be rejecting austerity and voting for growth. We will see.

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Germany contracts as the French suggest defiance

According to data just published by the French National Institute of Statistics and Economic Studies (INSEE), its national statistics agency, the French economy has stalled in the second-quarter 2014. In its – Informations Rapides, Principaux indicateurs 14 août 2014 – n°186 – we learn that the “le PIB en volume est stable”, which is a cute French way of saying that real GDP growth was zero, building on the zero growth from the first-quarter, which means their terminology that it is “stable” is accurate but an understatement. The latest data from Eurostat (August 14, 2014) – GDP stable in the euro area and up by 0.2% in the EU28 – show that the three largest economies in the Eurozone (and Europe) are either in recession (Italy) or teetering on recession (France, Germany). The French Finance Minister reacted to this news by calling for a rethink of economic policy in Europe with a shift in emphasis to growth. He indicated that the French government would reduce its deficit in its own time without undermining new stimulus measures aimed at kickstarted domestic growth and reducing the unemployment rate. It is looking like 2003 all over again.]

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