Limits to government spending are not determined by private bond markets

Wednesday and a relatively short blog post after two rather long posts in the preceding two days. The first topic concerns the limits to government spending. The second brief topic reports on research where it was found that the music of AC-DC confounds Lady Beetles and soybean aphids. Who would have thought! Which was by far the most interesting research paper I have read this week after dealing with the likes of Stuart Holland on Monday and Tuesday. And then some music from around the world to smooth out the day.

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The abdication of the Left – redux – Part 2

This is the second and final part in my response to the Social Europe article by Stuart Holland (July 11, 2018) – Not An Abdication By The Left – where he attempts to eviscerate various writers who have dared to suggest that the “social democratic Left in Europe … has run out of ideas” or that “there has been an intellectual abdication by the Left”. He uses his experience as an advisor to Harold Wilson in the 1960s and to Jacques Delors in the early 1990s as an ‘authority’ for his rejection of the claims that the Left has abandoned its social democratic remit. He holds the likes of Delors and António Guterres has shining Left lights. In Part 1, I showed that the view that Delors and Guterres are beacons of Left history and that the social democratic Left has not sold out to the neoliberal orthodoxy (particularly at the political level) is unsustainable. Holland distorts history to suit his argument and is in denial of the facts. In Part 2, I trace the argument further by examining the 1993 Delors White Paper, which was meant to be the European Commission’s response to the mass unemployment that was bedevilling the Continent at the time (and remains, by the way) and later propositions that Holland was associated with in relation to Greece during the GFC. They further demonstrate that Stuart Holland is attempting to maintain an indefensible position.

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The abdication of the Left – redux – Part 1

Former Austrian Chancellor Bruno Kreisky was quoted as saying during the 1979 Austrian election campaign that: “I am less worried about the budget deficits than by the need for the state to create jobs where private industry fails”. That is the statement of a social democrat. That is a progressive Left view. In June 1982, with French unemployment at 7.2 per cent (having risen from 2.4 per cent in 1974 after a near decade of austerity under the right-wing Prime Minister Raymond Barre), the French Minister of Economy and Finance cut 30 billion francs from government spending so that the fiscal deficit would remain below 3 per cent. In March 1983, the same Minister pressured his colleagues including President François Mitterrand, into imposing a further bout of austerity, cutting another 24 billion francs and increasing taxes by 40 billion francs. These were very deep cuts. The austerity under the so-called ‘Barre Plan’ had failed to reduce inflation. When the turn to austerity was repeated under Mitterand’s so-called Socialist government, France was already in a deep recession. Under the Socialist austerity period unemployment rose sharply to further to 9.3 per cent by 1987. By then the architect of that austerity, one Jacques Delors, was European Commission President and starting work on his next exercise in neoliberal carnage – the Eurozone. None of his behaviour during that period remotely signals a position we could call progressive or Left. Like his austerity turn (“tournant de la rigeur”), Delors had turned into just another neoliberal obsessed with fiscal surpluses, free markets (he oversaw the 1987 Single European Act), and privatisation (which he claimed was necessary to attract foreign direct investment) (Source). This is Part 1 of a two-part series on the abdication of the Left, which some still choose to deny.

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The Weekend Quiz – July 14-15, 2018 – 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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New Labour Account framework in Australia provides new insights

The Australian Bureau of Statistics released a new labour market framework on Tuesday (July 10, 2018) – Labour Account Australia, Quarterly Experimental Estimates – which will improve statistical analysis and allow new conjectures to be examined against the evidence. This blog post is really an exploration on my behalf of this new dataset and I know it is rather dry. But that is part of my work and it has to be done to build an evidential basis for the claims I make about this and that. I am still exploring the framework and will obviously use it to advantage (hopefully) in the future but for now here are some of the compelling insights that emerge from it. The first obvious new insight we can gain is to divide total filled jobs (employment) into Main and Secondary jobs. This allows us to assess the quality of the change in overall employment. Up until now we have considered employment in terms of persons employed. But now we can work out how many persons are employed in more than one job and where those jobs are. It provides an excellent check on statements made by politicians etc about the number of jobs being created and their quality.

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Fiscal policy in Australia is undermining the future of our grandchildren

Its Wednesday, so just a few short snippets that came to my attention, some comedy and some great music that has kept me company today while I have been working today. The first snippet concerns my revelation that fiscal policy in Australia is undermining the future of our grandchildren. Yes, an out-of-control government is spending our way to a future oblivion. The second snippet is my analysis of the latest INSA/YouGov German poll which shows that the euphoria if you can call it that which followed the formation of the GroKo has now dissipated and the AfD have overtaken the SPD in popularity. Which tells you that the progressive movements in Germany are failing. Why? Because they decided not to be progressive and, instead, decided to ape the conservatives. Not a good idea. The polls are showing why.

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Elements in a strategy for the Left

Reuters reported (July 8, 2018) that the awful Madame Lagarde was in France last week lecturing people on how the “joint euro zone budget could be designed with conditions so that it does not become a no-strings transfer of rich countries’ cash to poorer members”. Meanwhile, Jürgen Habermas was lecturing all and sundry on how a “frightened retreat behind national borders cannot be the correct response to … the politically uncontrollable functional imperatives of a global capitalism that is being driven by unregulated financial markets” (Source). Meanwhile, in the UK, the ‘Remainers’ think staying in the corrupt EU is a good idea because the Tories are so incompetent and divided. The state of the world. Misperceptions, misinformation and just plain poor analysis. There are tremendous opportunities for the Left to make political gains. But if they don’t abandon the type of ideas and language that is exemplified by Habermas’s latest entreaty and if they don’t undermine the likes of Lagarde and the Remainers (the pan-Europe contingent) then they will, once again, miss the boat.

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US labour market – muddling along and real wages growth goes negative

On July 6, 2018, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – June 2018 – which showed that total non-farm employment from the payroll survey rose by 213,000 and the unemployment rate rose by 0.2 per cent to 4 per cent in June 2018. The employment-population ratio was unchanged in June at 60.4 percent and has been largely stable since February 2018. The Labour Force Survey data, however, showed that employment only rose just 102 thousand in June 2018 and was accompanied by a substantial rise in the labour force (601 thousand) on the back of a surge in participation (up 0.2 points), which meant that total unemployment rise by 499 thousand. The broad labour underutilisation measure (U-6) also signalled weakness, rising by 0.2 points. There is still no evidence of a wages breakout going on although wages growth for blue-collar occupations has surpassed the white-collar occupations over the last 8 quarters. However, the data shows that real wages fell in June 2018 by 0.4 points. Taken together, the US labour market is showing no definite trend up or down at present and it is still some distance from being at full employment.

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The Weekend Quiz – July 7-8, 2018 – 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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