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.
Welcome to The Weekend Quiz, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.
Last month’s Australian labour force data showed what a part-time employment nation we were becoming. The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for June 2016 show that employment growth has virtually ground to a halt (although there was positive growth in full-time employment). The Australian labour market has stagnated with low to zero employment growth failing to match the underlying population growth, with the result that unemployment has risen over the last six months. The teenage labour market remains in a poor state and requires urgent policy intervention. Overall, with weak private investment now on-going, the Australian labour market is looking very weak and the Federal government should have introduced a rather sizeable fiscal stimulus in its June 2016 fiscal statement. That is what it should do now it has been re-elected. This should have included a large-scale public sector job creation program which would ensure teenagers regained the jobs that have been lost due to the fiscal drag over the last several years. We won’t be holding our breath!
With the new British Prime Minister now indicating that she will push ahead with Brexit and free the nation from the undemocratic imposts of the increasingly dysfunctional European Union, a view that is apparently ‘poisonous’ to some so-called progressive writers, several pro-Remain economists or economic commentators have realised that the game is up for neo-liberalism in Britain. There have been several articles recently arguing (after bitching about the loss of the Remain vote and repeating the catastrophe mantra) that a new economic paradigm is now called for in Britain, based on its new found sovereignty (after it finally exits). It could, by the way, exit through an Act of Parliament without all the Article 50 palaver if it wanted to. That is just a smokescreen. This idea of a new paradigm being required is exactly what Thomas Fazi and I are working on as part of our current book project which is nearing completion. Today, I consider briefly our view that nationalisation has to return as a key industry policy plank for any aspiring progressive political party.
Last week (June 8, 2016), the US Bureau of Labor Statistics published the latest – Employment Situation – June 2016 – and the data shows that “Total nonfarm payroll employment increased by 287,000 in June, and the unemployment rate rose to 4.9 percent” on the back of rising labour force participation. The Household Survey measure showed that employment grew in net terms by 67 thousand (0.04 per cent), which presents a more modest picture than the media reports, that focus on the payroll data, are portraying. Clearly, the 287,000 net jobs added according to the payroll data is a lot better than the 11,000 added according to the same measure in May 2016 (which was revised downwards from 38,000). Further, hours and earnings data suggests a fairly moderate labour market outlook rather than any boom conditions. Broad measures of labour underutilisation also indicate a worsening situation. Underemployment (persons employed part time for economic reasons), which had risen sharply in May (by 468,000) fell by 587 thousand in June, which along with the rising participation rate (a fall in the discouraged workers by 36 thousand), suggests a better state of affairs that was anticipated in May. It remains to be seen whether this renewed jobs growth reduces the bias towards low-pay jobs – which I most recently examined in this blog US jobs recovery biased towards low-pay jobs continues.
I am here to report that the sky is still up there in the sky although a little cloudy today. The power is still on. The rivers are still flowing. And as far as I can tell, the Australian continent isn’t looking like sinking into the ocean on either side. But we have to be warned – that bastion of sagacity and purity Standard & Poor’s put our AAA government bond rating on negative watch last Thursday. The Government is claiming it has to increase the intensity of its austerity plans, economists are being wheeled out for their moment in the media claiming government borrowing will ‘cost more’, and the media is having a picnic on the predictions of chaos and despair. It reminds me of the panic that followed the War of the Worlds broadcast on American CBS radio on October 30, 1938. That broadcast suggested to ‘weak minds’ that there was an invasion from Mars underway and precipitated panic. Similarly, the media is trying to whip a sense of gravity over the S&P decision. The reality is that nothing has happened nor will. The rating is irrelevant and the media should just ignore any press release these corrupt organisations put out. They are only designed to advance the profitability of the agency and should be subject to tight product quality scrutiny. The resulting fines for incompetence would put the companies out of business. It would be better if the government just legislated them into outlaw status immediately.
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.
Welcome to The Weekend Quiz, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.
So several investment funds based on real estate in the UK have suspended trading to stop people withdrawing their funds. Who would have thought that in a vastly overvalued UK property market that people would start to reassess the value of these investments, especially after working out (gosh!) that the mismatch in maturities in these type of funds was more or less extreme? And so the Leave vote is now being blamed on crashing a market when all that is happening is that the real estate market is starting to correct back to something less ridiculous. And talking about ridiculous. The Italian government is now coming headlong into conflict with the, now ridiculous, European Commission on the impending crash of its zombie banking sector. You might have thought we were still back in 2008 or something. No folks, this is 2016 and the Eurozone problems just keep on going. The Italian banking crisis was always going to happen – it was just a matter of when. Why? Simply because the single currency experiment has failed and the policy making process and the institutional machinery is so detached from reality – as in all cases of Groupthink – that it can no longer respond in an effective way to changing circumstances. The Eurozone is still crippled by its flawed monetary design and in more recent years the migrant issue has come over the top to reinforce this malaise. The Brexit vote outcome reflects the consequences of this dysfunction and demonstrates that a world contrived by the elites to benefit themselves is not the world of reality where things have a habit of turning sour if the rest of us are suppressed.
I am in the final stages of completing the manuscript for my next book (this one with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and started to believe that the state had withered and was powerless in the face of the transnational movements of goods and services and capital flows. Accordingly, social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and compromise the well-being of their citizens as a result. In Part 3 of the book, which we are now working on, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world, are available. Today, I discuss capital controls.