The victims become the perpetrators – the neo-liberal smokescreen

I am in working in Seoul all day today and then rushing to the airport to get back to Sydney – so this blog has to be quick. When I saw the headline in the UK Telegraph (October 20, 2012) – A rude awakening for those who refuse to play by the rules – I thought it could have referred to the British government who are intent on defying the rules of responsible fiscal policy by pursuing pro-cyclical austerity and who are seeing the unfolding problems that their policies were generating. I didn’t really think that but it should have been referring to the abandonment of proper fiscal practice in the UK. Upon reading the article I learned it was about the British government – in that it was written by the Minister for Employment. The article was like deja vu for me and the message was one that Australians will be familiar with. It said that the unemployed are in that state because they game the “most generous” system of support and benefits that the UK provides to its citizens. Forget about the lack of jobs. The smokescreen descends – the victims become the perpetrators.

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A Greek exit would not cause havoc

I am in Seoul (South Korea) today and tomorrow working on a project I have with the Asian Development Bank. It is a mega city that is for sure – more than 10 million in the city itself and 25 million in the nearby areas linking Seoul to the airport. Quite a place where you see massive public sector involvement in planning and infrastructure developing aiding mega capitalist firms. But I will report on the work I am doing here in due course, once government clearances are available. Today, I am focusing on the Eurozone after I read a report sent to me that was written by a German consulting firm of some note predicting havoc if the Greeks exit the Eurozone. The European press gave the report oxygen that it does not deserve. It is another example of a highly selective and “fixed” study, which is influencing the debate because of its scare value. It substance is largely zero. The reality is that a Greek exit would not cause havoc and is to be recommended (about 3 years ago)!

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Saturday Quiz – October 20, 2012 – 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.

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Sectoral balances – Part 2

I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to complete the text by the end of this year. Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.

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The US labour market has improved but more stimulus is required

On Tuesday I provided some analysis in this blog – US labour market is in a deplorable state – of the latest US Bureau of Labor Statistics Employment Situation release for September 2012. Today, I add some more calculations and analysis that I didn’t get time to write up for that blog. The UK Guardian article (October 17, 2012) – US jobs data reveals economy is bouncing back strongly from recession – would appear, on first appearances (comparing titles), to be at odds with the message I imparted in the Tuesday blog. But on closer inspection you will see that the message is consistent across both pieces of analysis. And what I provide today will bring that concordance into relief.

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Australian government funding increased cancer incidence

One of the complaints that critics of a Job Guarantee raise is that it might compete with the private sector for labour, which they say would be unfair given the unequal capacities of the two sectors (government allegedly has an advantage) and the undesirability of allocations being based on so-called “non-market” criteria. Mostly these complaints reflect the fact that the critic hasn’t read any of the relevant literature about Job Guarantee design and rationale (it employs workers which have no private sector bid). However, when the government becomes a speculator balancing risk and return in private capital markets and, in doing so, contributes to asset price bubbles and uses its financial might to “distort” market outcomes, it is praised for being financially prudent. Welcome to the hypocrisy of the Future Fund, Australia’s so-called sovereign fund. But it gets worse. We have now learned about the types of products that the Future Fund is investing in. It comes down to the Australian government promoting increasing cancer incidence in our nation. And all because they lie about their economic capacities as a sovereign currency-issuer.

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US labour market is in a deplorable state

Last week, upon the release of the latest – BLS Employment Situation – for September 2012, which showed a drop in the official unemployment rate of 0.3 percentage points, one of the big corporate noters in the US – one Jack Welch tweeted (October 5, 2012 at 10:35 PM) “Unbelievable jobs numbers … these Chicago guys will do anything … can’t debate so change numbers”. It was clear what his meaning was in the build up to the Presidential election in November. He wanted to impugn the integrity of the President (Chicago guy) and more worryingly, the reputation of the workers at the (excellent) Bureau of Labor Statistics. Not only was his comment revealing of his total ignorance of the way these surveys are designed, framed, conducted and then processed but nearly a week later, after being taken to the cleaners by various critics, he later tried to rationalise his ignorance in a Wall Street Journal article (October 11, 2012) – I Was Right About That Strange Jobs Report. The problem is that while his tactics are questionable and his analysis poor – the bottom line is that the US labour market is in a deplorable state.

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IMF to get Nobel Peace Prize in 2013

There was a report – Poverty in Australia – released over the weekend by the Australian Council of Social Service, which brought the reality of our lying federal government home- 1 in 6 Australian’s are living below the poverty line (which itself is a very low hurdle for an advanced nation to have to clear). I will dedicate a separate blog to that in the coming weeks. But the Federal government needs to face facts and stop adding to the despair of millions of Australia as part of its ideological and political obsession with budget surpluses. This brazen disregard for the most disadvantaged citizens probably qualifies the Government for a Nobel Peace prize, although I was thinking of nominating the IMF and the OECD to be joint recipients for 2013. They would join the current recipients, the EU and a host of other “deserving” winners over the last several years. I guess in awarding this year’s Peace Prize to the EU, the Nobel Prize Committee is trying to bring their main prizes into line with the rogue Economics Prize in terms of quality and deservedness of the winners.

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Saturday Quiz – October 13, 2012 – 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.

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