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.

Read more

Welfare generosity increases commitment to work

In Australia successive governments (Labor and conservative) have refused to lift the unemployment benefit in line with inflation. As a result the real benefit has fallen dramatically and the unemployment benefit recipients now live well below the accepted poverty line. There have also been attacks on those who live on single parent pensions, disability pensions and other forms of income support associated with disadvantage and dislocation from the labour market. In the US, the Congress cut entitlements to unemployment benefits long before the damage from the crisis was over. In Britain, both sides of politics talk tough about cutting welfare benefits and the Conservatives has indicated that it will cut benefits significantly to force people to find employment. In the Eurozone, massive damage is being inflicted on the most disadvantaged workers as the austerity mavens hack into welfare payments. All these policy ventures are informed by the intellectually bankrupt profession that I belong to. In universities around the world, mainstream economists prattle on about ‘corner solutions’, which in English means that the provision of income support associated with unemployment subsidises the same and leads to less search effort and welfare dependency. The claim is that if benefits are cut people will search for jobs and ‘fiscal stress’ will be relieved. There is a sanctimonious moralism about it all as well buttressed by terminology such as “lifters and leaners”, “dole bludgers”, “job snobs”, “cruisers” as if those in disadvantage without work have chosen that state as a deliberate strategy to bludge on the rest of the population. The problem for all of this is that the credible research comes to the exact opposite conclusion: employment commitment is highest where the generosity of the welfare state is the highest. The neo-liberals need to go suck that for a while.

Read more

Wage rises are required – real wages must grow in line with productivity

There was an interesting article in the UK Guardian last weekend (March 29, 2015) – Why falling inflation is a false pretext for keeping wages low – which examined wage trends in the UK and the validity of the argument that “Falling inflation now provides employers with a pretext for keeping wage settlements low”. Employer groups never support wage increases and are continually trying to suppress real wages growth below productivity growth so that they can enjoy a greater share of national income. As part of my research to discover the nature of the ideological shift accompanying the emergence of Monetarism as the dominant policy paradigm I have been examining wage distributions. This is part of a book I will complete next year (fingers crossed) on the demise of the political left. In this blog we examine the shifting relationship between labour productivity growth and real wages growth since 1960. The results are illuminating and open up a broad research front about which I will write more as time passes.

Read more

Friday lay day – lifestyle choices and destructive ignorance

Its my Friday lay day blog. The aim is to write less here and more elsewhere. I don’t always succeed. Today I have a day full of meetings. One was with the Australian Productivity Council about the viability of establishing a majority-Australian owned motor car industry. I will have more to say about this on another day but the idea is interesting if not compelling. I noted the faked fake is a fake (‘Fingergate’). The tension in Brussels is rising and the position appears to be unchanged. The hardliners lecturing Greece about the need for more reforms. The Greeks claiming they will not reimpose austerity even though they currently are. And it is all leading in one of two directions – capitulation of exit. But closer to homefor a while. The press are zeroing in of the offensive barbs about Holocausts and Goebbels that our Prime Minister keeps using to slur his political opponents, which really, despite all the mock shock and hurt from the recipients, only serve to slur the deliverer and make him look like an idiot. But his other ‘foot-in-the-mouth’ moment came on March 10, 2015, when the Prime Minister, in an attempt to make himself look tough to shore up his waning political support, claimed that indigenous Australians were making “lifestyle choices” by residing in remote communities and live on income support. He was supporting the West Australian state government’s decision to ‘close’ down 150 remote communities and force the residents into larger settlements to ‘save money’. The policy is wrong at the most elemental level and reveals not only an ignorance about economics but also a total lack of understanding of the cultural and anthropological history of our nation.

Read more

Saturday Quiz – March 14, 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.

Read more

Friday lay day – The superiority of economists!

Its the Friday lay day blog and today I briefly discuss economists. What a topic! There is an interesting article just published in the Journal of Economic Perspectives that examines the way economists think of themselves and other social science disciplines. It is a horror story really. Having been immersed in the profession for many years now, I sometimes forget how bad it is. Here is what the study found. The title is a deliberate double entendre. It is more about the way economists think they are superior rather than any absolute finding of superiority.

Read more

Employer group demands free labour from Government

Last week, the peak body representing small business in Australia, the Australian Chamber of Commerce and Industry (ACCI) called on the Federal Government to hand over free labour under the guise that “making coffee” will enhance the skills of the workers. The free labour they want to get their hands on are the unemployed on income support. They want the Government to continue to pay the below-poverty income support but force the recipients to work in small and medium-size businesses “making coffee or serving customers” as a solution to youth unemployment. This is the same group that thinks the pay of the lowest-paid workers (like kitchen hands, cleaners etc) should be cut. They also claim that rising unemployment in Australia is being caused by structural rigidities in the workplace (job protection, occupational health requirements etc). There is a wide-ranging attack on workers going on at the moment. This is just one aspect of this attack. Austerity is forcing more onto the unemployment pile. Once there they are being increasingly subjected to pernicious policy requirements (see yesterday’s blog – Job Services Australia – ineffective and rife with corruption – scrap it!). Then employer groups lobby government to cut wages and conditions and scrap regulative environments that protect workers. It is an important era for social democrats. Either we regain some political equanimity and coherence or we continue to call parties Socialist that impose austerity and talk about being ‘pro-business’, while attacking pensions, wages, and employment.

Read more

Time is running out for neo-liberalism

You get a sense as to why the public are confused about economic issues when you read this article in the Fairfax press this morning (February 3, 2015) – The brutal politics of privatisation stark after Queensland election shock – written in the aftermath of the conservative electoral bloodbath in the state of Queensland last weekend. The writer is a ‘well-respected’ business journalist, which just goes to show how ‘respect’ is easily gained if you sing from the appropriate hymn sheet. It is all in the conclusion: “The clock is ticking for Australia. With an infrastructure backlog and big budget deficits, we can build the infrastructure we need only by selling assets and attracting private capital”. Which is a barefaced (and ignorant) lie, even when applied to a state government that uses the currency issued at the federal level. Privatisation is not TINA. But while the public might be confused at the level of understanding (about how the monetary system operates etc), it is clear they are becoming increasingly focused at the level of feelings/sentiment. More and more people are seeing that neo-liberal remedies – privatisation, austerity, structural ‘reform’ etc – do not live up to their claims. Increasingly, we are seeing rising income and wealth inequality being associated with these attacks on workers. Several recent election outcomes around the world have categorically affirmed the obvious – citizens all over are starting to rebel against austerity and neo-liberal so-called ‘solutions’ (such as privatisation and public sector job cuts). In Australia we have just witnessed a remarkable electoral rout in the Queensland State Election where the neo-liberal, privatising conservatives were tossed out of office on Saturday exactly as a result of a widespread rejection of these policies. The Greek elections a few weeks ago provided a more profound signal of this trend. The European Parliament elections in May last year another. Time is running out for neo-liberalism. The smugness that the elites have had is

Read more

Germany has a convenient but flawed collective memory

There is a lot of discussion at present about the historical inconsistency of the German position with regard any debt relief to the Greek government. Angela Merkel has reiterated over the weekend that there would be no further debt relief. Why she is now a spokesperson for the Troika that does not include the German government is interesting in itself. In this context, I recall a very interesting research study published in 2013 – One Made it Out of the Debt Trap – by German researcher Jürgen Kaiser, who examined the London Debt Agreement 1953 in great detail. After becoming familiar with the way the Allies handled the deeply recalcitrant Germany and its massive debt burden in that period, one wonders why the German government is so vehemently against giving relief to Greece. This is especially in the context that the only mistake that Greece made was joining the Eurozone and surrendering its own capacity to deal with a major financial crisis. The ‘mistakes’ of the German nation before the London Agreement have been paraded before us all again with the 70th anniversary of the liberation of the Auschwitz death camp featuring in world events last week.

Read more

Friday lay day – The myth of equal opportunity

Its my Friday Lay Day blog, which was meant to mean a smaller writing commitment but sometimes doesn’t turn out that way. But today I plan to stick to that ‘pledge’. I have just arrived back from 2 weeks working in Sri Lanka and have things to catch up on back here. I read an interesting book a few years ago – Whither Opportunity: Rising Inequality, Schools, and Children’s Life Chances – by Greg Duncan and Richard Murnane (2011), which studies “the consequences of rising in- equality for America’s education”. While there are national differences, the dynamics uncovered in that book apply to most nations (that I know of). I am currently engaged in a project on equity and opportunity and the link that this has with income inequality. We are now well informed about the rising income inequality that has occurred over the last 20-30 years. But we are less informed on how this is reinforced and reinforces itself by a stark inequality in opportunity.

Read more

Smart Austerity – its just the same dumb austerity

“In its current form, EMU is not viable in the long run”. That quote comes from a Report – Repair and Prepare – Strengthening Europe’s Economies after the Crisis – jointly published by the – Jacques Delors Institut (located in Berlin) – and the Bertelsmann Stiftung – (located in Gütersloh, Germany). The Report purports to lay out a blueprint to prepare Europe for the “next potential threat to its very existence”. It proposes a “path towards renovation” to create an “ever closer union”. They claim that they have taken up this task because there is “extensive ‘crisis fatigue’ and ‘euro area debate fatigue’ in “in governmental circles and the media”. I would call it adherence to ideological Groupthink rather than fatigue. There has been a major failure yet none of those who created the failure have put their hands up to take responsibility. Once they dismissed the problem as being caused by “profligate and fat Greeks (insert vilified nationality as to your preference)”, various policy makers and media commentators resorted to the even more amorphous “structural problems” to explain the on-going crisis. The media has been full of captive writers who just reiterate press releases from neo-liberal politicians and/or mainstream economists. So is this new Report different? Is their plan viable?

Read more

Friday lay day – unemployment is a pernicious state

Its my Friday lay day blog and today I have been working on social psychology and group dynamics today. I am trying to dig into how economic ideas forms and how they are reinforced by language, media, and the educational system. Many people have researched topics like this but we are aiming to bring it all together into a coherent framework with the added aim of developing a progressive language guide to advance the conceptual ideas that I research and write about. The events in the last few days in Paris have also given me cause for thought within this overall research agenda, given the obvious link with a particularly zealous interpretation of a religious script and the role of economic disadvantage and austerity in fostering what some might call medieval, at best, behaviour. The role of language and conceptualisation is also implicated. I don’t intend to write about the events though. I am not professionally qualified to provide any meaningful input and as an individual I have mixed views on it. I certainly wouldn’t be perpetuating the ‘Je Suis Charlie’ campaign but that doesn’t mean I excuse the behaviour of the barbarians. But barbarism has many forms as does terrorism, and one could easily argue that the sort of austerity that has been inflicted on nations like Greece and France has created a responsive form of terrorism that is more random and very dangerous.

Read more

Trickle down economics – the evidence is damning

The condition known as – Schizophrenia – describes “a mental disorder often characterized by abnormal social behavior and failure to recognize what is real”. Then again, the condition known as – Dissociative identity disorder – describes a condition where a person has “at least two distinct and relatively enduring identities or dissociated personality states that alternately control a person’s behavior”. If these states can be applied to institutions, then the OECD needs urgent medical attention. The OECD released a working paper yesterday (December 9, 2014) – Trends in Income Inequality and its Impact on Economic Growth – by Federico Cingano. It provides evidence that destroys the basic tenets of neo-liberal economics and supports a wider social and economic involvement of government in the provision of public services and infrastructure, particularly to low income groups. The fiscal implication is that deficits need to be higher.

Read more

The inexact science of calibrating fiscal policy

In the showdown between France and the European Commission last week, France clearly is the winner on points, which is not surprising given the impossibility of the task the Commission had set it in meeting the Excessive Deficit Procedure (EDP) rules and the danger to the latter if France was to openly defy it. We have a sort of stand-off between the surrender monkeys – France is going along with the rules sort of and the Commission is bending the rules to save face. It is 2003 all over again. The public might actually think this EDP process is based on a fairly definite science with respect to measuring fiscal policy positions which provide unambiguous statements of deficits. The public would be very wrong if they did adopt that conclusion. In general, the applied work associated with informing the EDP process is very inexact. But, moreover, it is ideologically tainted which makes the process very damaging for any notion of prosperity. All applied work has measurement and other technical issues, which means it is always just an approximation. But when those errors are overlaid by a systematic bias against government net spending and therefore full employment, then the exercise becomes a scandal.

Read more

Saturday Quiz – November 22, 2014 – answers and discussion

Here are the answers with discussion for yesterday’s quiz. The information provided should help you understand the reasoning behind the answers. 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.

Read more

Back to 1917 – the wealth distribution in the US

The current evolution of Capitalism is taking the world back to where it was in the early C20th, before trade unions were strong enough to protect workers’ rights, before central governments were willing to mediate the class struggle and step in to make sure workers had the means to enjoy the material prosperity that the system generated, before wages growth allowed workers to share in productivity growth and build a modicum of material wealth. There is no class struggle, Bill! How many times do I hear that now. It is just a convenient sop by those with a vested interest in promoting that view or who has been conned to believe that to be the case. Of course there is a class struggle. Industrial capital might be sharing the hegemony with totally unproductive financial capital and the robber barons of the C19th and early C20th are less prominent and the banksters and the politicians in their pay have replaced them, but don’t ever think that there is a massive conspiracy to undermine the welfare state and put workers back into an even more subservient position than before. Unemployment, part-time precarious work, tax evasion and all the rest of the scams are working a treat.

Read more

European Commission is once again bereft of credibility

The European Commission released its – European Economic Forecast – Autumn 2014 – which is its bi-annual statement of economic outlook. In his editorial to the outlook, Director General Marco Buti admits that “euro area is still projected to have spare capacity in 2016”, which means the Commission is overseeing economic policy choices that will deliberately impose a recessionary bias for the next two years (at least) and deliberately force millions of Europeans to endure joblessness, savings erosion and the march towards poverty and despair for the next two years. Its a statement of monumental policy failure and the Director General Marco Buti should resign immediately just after he sacks his policy advisers.

Read more

MMT – lacks a political economy?

There was a ‘Guest Editorial’ published on the UK site Renewal last week – Modern money and the escape from austerity – by one Joe Guinan, who lists himself as a Senior Fellow at The Democracy Collaborative and Executive Director of the Next System Project. He is a journalist by background. Renewal is a “A quarterly journal of politics and ideas, committed to exploring and expanding the progressive potential of social democracy”, so it would seem to be wanting to head in the right direction, which reflects my values. The article’s central message is that “Modern monetary theory destroys the intellectual basis for austerity but needs a more robust political economy”. It is a serious embrace with our ideas and it is welcome that Modern Monetary Theory (MMT) is entering the progressive debate in a thoughtful manner and being advanced by others than the small core of original developers (including myself) who, in turn, built the ideas on the back of others long gone. The problem is that I don’t necessarily agree with many of the propositions advanced in the article. Here are a few reasons why.

Read more

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?

Read more

Public employment and other matters of scale

I gave a keynote presentation at a recent conference where I showed that public sector employment contractions in Australia were a significant part of the rise in unemployment in Australia since the late 1980s. Had the public maintained its scale (proportion) with the underlying growth in the population then unemployment would have remained low throughout that period. The neo-liberal onslaught and the fiscal surplus fetishism has been a major reason why persistent unemployment occurs. All the nonsense about structural reform and the need to cut workplace protection overlook this fact. The government made a political decision to significantly cut its own employment and quite apart from the fluctuations in the private sector and the increased precariousness in private employment, that decision by government has had devastating consequences. The same situation arises in many advanced western nations under the spell of neo-liberalism. The thing about the current pro-market orthodoxy is that it has lost all sense of proportion. Mass unemployment involving billions of dollars of lost income is deliberately created by policy makers in search of a few pennies (relatively) in making ports work more quickly etc (microeconomic reform). In Europe, all sense of proportion has been lost. Read on …

Read more
Back To Top