Political censorship in Australian research processes – towards authoritarianism

Regular readers will know that I place great value in the disciplines we broadly describe as the Humanities. An understanding of knowledge that history, language, philosophy, geography, politics, sociology, anthropology, music, drama, classical studies and the like is essential if we are to advance societies and avoid the mindless descent into tribalism and authoritarianism. Last month, two things were revealed. First, the Federal Minister for Education vetoed successful grant applications for funding under the Australian Research Council processes, effectively politicising the process. He took exception to the topics. His decision was only revealed months later through interrogations during a Senate Estimates hearing. Second, an Australian university released a research report it had commissioned – The Value of the Humanities – which sought to articulate “the value of the Humanities to students thinking about their education and career options and to businesses faced with hiring choices”. It shows the immense value that teaching and research in the Humanities brings to employers, individuals and society in general. It makes the Federal minister look like a fool, although that was not its intent. A fool and one who is deeply insecure about allowing knowledge to proliferate. The latter is the hallmark of an authoritarian regime.

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Corbyn more scary than Brexit

It is Wednesday, so a truly short blog. We have to proof read the final copy edit of our Macroeconomics textbook by the end of the next fortnight. Tough ask. But apart from a music journey today, the richest people living in Britain are planning journeys as I write (they certainly are not sleeping) because they are scared witless about what Jeremy Corbyn will do to them once he is elected. This fear is even greater than anything Brexit will bring and the proponents of this narrative have also admitted that Brexit will not alter Britain’s position as a “global wealth hub”. Pity about that. I was hoping they would take all their banks and dodgy financial companies with them. Anyway, I am an Australian, as I am being increasingly told these days by those who claim I should stay out of British debates. Primer: I am not uncertain about my nationality. And, I am fast becoming a major critic of Modern Monetary Theory … read on.

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US labour market continues to improve but questions remain

Today is the mid-term elections in the US and it seems that the media is focused on how many seats the Democrats will win. As a progressive this doesn’t particularly interest me much given that the claims the Democrats have been making in the last few months about fiscal policy. Trump is out there demonstrating what expansionary fiscal policy can do when there is idle capacity. And last week’s (November 2, 2018) release by the US Bureau of Labor Statistics (BLS) of their latest labour market data – Employment Situation Summary – October 2018 – showed the employment impacts of that fiscal approach. Total non-farm employment from the payroll survey rose by a very strong 250,000 and the unemployment rate was steady at 3.5 per cent. Inflation remains subdued. The strong employment growth has also stimulated participation, which meant that the growth in the labour force has outstripped the strong employment growth and unemployment rose slightly in October. But that is the sort of dynamic that a high pressure economy exhibits and eventually the cyclical participation effects exhaust and the strong employment growth starts mopping up the last of the cyclical unemployment and underemployment. There is still some way to go for that to be the case. While the US labour market is reaching unemployment rates not seen since the late 1960s, the participation rate is still well below the pre-GFC levels and a substantial jobs deficit remains. There has also been a hollowing out of the occupational employment structure around the median pay occupations which confirms the bias towards low-pay jobs in the recovery. The employment-population ratio rose by 0.2 points in October. Taken together, the US labour market continued to improve in October but remains some distance from full employment.

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Italy should lead the Member States out of the neoliberal Eurozone dystopia

The widely read German news site, Spiegel Online, published an amazing article last week (November 1, 2018) – Italy Doubles Down on Threat to Euro Stability – which confirms to me that very little progress has been within the Eurozone by way of cultural understandings since the GFC. That, in turn, tells me that the monetary union will not be able to get out of austerity gear and is now more exposed than ever to breakup when the next crisis comes. The current Italian situation is the European Commission’s worst nightmare. It could combine with the ECB and the IMF to bully Greece partly because of the size of the Greek economy but also because they had the measure of Tsipras and Syriza. They knew the polity would buckle and become agents for their neoliberal plans. But the politicians in Italy may turn out to be a different proposition – one hopes so. And Italy is a large economy and one of the original accessions to the Community. So the stakes are higher. But what the Commission is demanding of Italy in the present situation of zero economic growth and massive primary fiscal surpluses is totally irresponsible. It will not even achieve the stated Commission aims of reducing the public debt ratio. The likelihood is that the Commission’s strategy, if they succeed in bullying the Italian government into submission, will push the ratio up further. And meanwhile, Italy wallows in a sort of neoliberal dystopia. Italy should lead the other Member States out of this neoliberal disaster.

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The Twitter echo chamber

It is Wednesday so just a few things to report and discuss. I have noted in recent weeks an upsurge in the Twitter noise about Modern Monetary Theory (MMT) and various statements along the lines that MMT economists are male chauvinists, mindlessly attack other heterodox economists because we are a religious cult, that we thrive on conflict, that only the US has a sovereign government and more. Quite amazing stuff. And these attacks are coming mostly from the so-called heterodox side of the economics debate although not exclusively. It is quite an interesting exercise to try to understand the motivations that are driving this social media behaviour. Things that would never be said face-to-face are unleashed with regularity these days. There appears to be a sort of self-reinforcing ‘echo chamber’ that this squad operate within and it seems to lead to all sorts of bravado that would be absent in face-to-face communication. None of the attacks seem to have any substance or foundation. They just reflect an insecurity with the way that MMT is creating awareness and challenging progressives to be progressive. And, they just make the Tweeters look stupid. I thought I would document some of the recent trail of nonsense to let you know what is going on in case you haven’t been following it. It is a very interesting sociological phenomena.

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US growth robust but doubts remain

Last Friday (October 26, 2018), the US Bureau of Economic Analysis published their latest national accounts data – Gross Domestic Product, 3rd quarter 2018 (advance estimate) , which tells us that the annualised real GDP growth rate for the US remains strong at 3.5 per cent (down from 4.2 per cent in the June-quarter 2018). Note this is not the annual growth over the last four-quarters, which is a more modest 3 per cent (up from 2.9 per cent in the previous quarter). As this is only the “Advance estimate” (based on incomplete data) there is every likelihood that the figure will be revised when the “second estimate” is published on November 28, 2018. The US result was driven by a growing household consumption contribution (2.7 points) with the personal saving rate falling by 0.4 points. Further, the government spending contribution was also strong (0.6 points up from 0.4) with all levels of government recording positive contributions. Real disposable personal income increased 2.5 percent, the same increase as in the second quarter. While private investment was strong it was mostly due to unsold goods (inventories). Notwithstanding the strong growth, the problems for the US growth prospects are two-fold: (a) How long can consumption expenditure keep growing with slow wages growth and elevated personal debt levels? Most of the consumption growth is coming because more people are getting jobs even though wages growth is flat. (b) What will be the impacts of the current trade policy? It is a work in progress.

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Left-liberals and neoliberals really should not be in the same party

This week’s theme seems to be the about how the so-called progressive side of the economic and political debate keeps kicking ‘own goals’ (given a lot of this is happening in Britain where they play soccer) or finding creative ways to ‘face plant’ (moving to Europe where there is more snow). Over the other side of the Atlantic, as America approaches its mid-term elections, so-called progressive forces who give solace to the New Democrats, aka Neoliberal Democrats are railing against fiscal deficits and demanding that the left-liberals in the Democratic Party be pushed out and that the voters be urged to elect candidates who will impose austerity by cutting welfare and health expenditure and more. And then we have progressive think tanks pumping out stuff about banking that you would only find in a mainstream macroeconomic textbook. This is the state of play on the progressive side of politics. The demise of social democratic political movements is continuing and it is because they have become corrupted from within by neoliberals. And then we had a little demonstration in London yesterday of the way in which the British Labour Fiscal Rule will bring the Party grief. The Tories are just warming up on that one.

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Progressive political leadership is absent but required

One of the themes that has emerged in the discussions of the British Labour Party Fiscal Credibility Rule (which should be renamed the Fiscal Incredulous Rule) is when is the right time for a political party to show leadership and start educating the public on new ideas. The Modern Monetary Theory (MMT) project has been, in part, about educating people even if our ideas have been strongly resisted by the mainstream. The mainstream (New Keynesian) paradigm in economics is degenerative (meaning it has little empirical validation) and eventually it will fade into historical obscurity. For many of us that cannot come quickly enough. The defenders of the Rule argue that progressive politicians have to tread carefully or else the amorphous financial markets will turn on them and destroy their initiatives. The problem is that by kowtowing to the City or Wall Street, the progressive political forces become captured and redundant. Witness the electoral demise of social democratic parties over the last several decades. The conditions are ripe (see below) for a courageous head-on attack on these financial market elites and educate the public so that they allow elected governments to legislate for all rather than serving the interests of the elites, which has become the norm over the last several decades. The problem is that progressive political forces are also taking advice from mainstream economists who use the tools of neoliberalism. The upshot is that progressive political leadership is absent but desperately required.

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The British Labour Fiscal Credibility rule – some further final comments

Over the last weekend, it seemed that we had a return of the Spanish Inquisition with a prominent British academic, who by his own words designed the fiscal rule that British Labour has unwisely adopted, repeatedly demanding that MMT Tweeters confess to knowing that I was completely wrong on my interpretation of the fiscal rule. It is apparent that my meeting with the British Shadow Chancellor in London recently and my subsequent discussion of that meeting has brought the issues relating to the fiscal rule out into the open, which is a good thing. It is now apparent that British Labour is still, to some extent, back in the 1970s, carrying an irrational fear of what financial markets can do when confronted with the legislative authority of a sovereign government. I am not a psychologist so I cannot help them heal that irrational angst. But the claims that I misunderstood the fiscal rule – which are being repeated daily now by the fanboys of the rule are just ludicrous. The rule is simple. And it will bring Labour grief politically. Rolling windows or not!

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The AfD and its ilk is a sideshow in the neoliberal takeover

The weekend before last I was in Germany (and Bavaria) at the same time as the – Bavarian state election. The results for the SPD (Social Democratic Party) were disastrous losing 20 seats (down from 42) and gaining only 9.7 per cent of the vote (down from 20.6 per cent). The Greens came second, winning 20 extra seats (to 38) and 17.5 per cent of the vote (8.6 per cent last election), while the neo-fascist AfD party, which did not contest the last election, came in fourth, gaining 22 seats (10.2 per cent of the vote). There is a growing fear that the AfD and its counterparts across Europe will grow further and push Europe back into its dark fascist days. One would not conclude that from the Bavarian voting patterns. Further, to construct what is going on in Europe as a right-wing counter to a ‘social democratised’ Europe, which is a common narrative among the Europhile Left is seriously missing the point. The social democratisation of Europe has been in retreat for decades under the onslaught of a very sophisticated campaign from the elites on the Right and often it has been the traditional Left political parties that have pushed the neoliberal agenda more vigorously than the conservatives. The AfD is a sideshow in this deeper take over of our democracies by capital. Root and branch change is needed not a few ‘reforms’ around the edges to make the Eurozone less of a disaster for workers than it currently is.

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The Weekend Quiz – October 20-21, 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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Australian labour market weaker – no employment growth and participation down

Today, the Australian Bureau of Statistics released the latest data – Labour Force, Australia, September 2018 – which show that the Australian labour market has weakened, with employment growth virtually zero. Compounding that weakness was a sharp decline in the participation rate (0.3 points). Taken together, unemployment and the unemployment rate fell but this is a sign of weakness not improvement. The decline in unemployment is because workers gave up looking for jobs in a weak labour market. Monthly hours worked remained on a flat trend. Overall, my assessment is that the Australian labour market remains in a fairly weak state and, is still a considerable distance from full employment. There is clear room for some serious policy expansion at present.

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A summary of my meeting with John McDonnell in London

It is Wednesday and I am reverting to my plan to keep my blog posts short on this day to give me more time for other things. Today, I will briefly outline what happened last Thursday when I met with Shadow British Chancellor John McDonnell in London. As I noted yesterday, I was not going to comment publicly on this meeting. I have a lot of meetings and interactions with people in ‘high’ office which remain private due to the topics discussed etc. But given that John McDonnell told an audience in London later that evening that he had met with me and that I thought the proposed fiscal rule that Labour has adopted was “fine”, I thought it only reasonable that I disclose what happened at that meeting. I did not think the rule was fine and I urged them to scrap it and stop using neoliberal constructs.

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The Weekend Quiz – October 13-14, 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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MMT and pluralism in economics

I am recording some promotional videos in London today for Macmillan Higher Education who will publish our forthcoming textbook – Macroeconomics on March 11, 2019. These will be the first of many short videos to support the teaching program outlined in the textbook. At last Friday’s very successful launch of the – Gower Initiative for Modern Money Studies (GIMMS) – I was asked a question at the end of the first formal workshop I presented, which I was unable to answer due to time constraints. The question went something like – “What do you think of the movements to instill pluralism into the teaching of economics?” The corollary was whether our forthcoming textbook adopts a ‘pluralist’ approach. The question implied that ‘pluralism’ was a desirable characteristic for a macroeconomics course to feature. In this blog post I discuss this question. It outlines what I might have said by way of answer to that question. But, given the medium, in a lot more detail than I would have provided at the actual event. Generally, we adopt a ‘pluralist’ approach. But it all depends on what we mean by that term. What we do not do is privilege the mainstream macroeconomics in any way. Too often, those who call for ‘pluralism’ in economics think it is appropriate to force students to learn swathes of the mainstream theory and practice as if it is knowledge. They think this is somehow a liberal approach to learning. Our view is that learning is about knowledge accumulation. Universities are not places where ‘fake knowledge’ should be disseminated. That is what propaganda is about.

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The destruction of Greece – the slow-burn decline of a nation

Herman Van Rompuy, the former European Union president told us all we needed to know about democracy in the EU when he spoke to a a gathering in Louvain (Belgium) in 2010. In his speech (September 8, 2012) – A Test of Solidarity – Von Rompuy said that the Eurozone meant a “loss of sovereignty for all”. He went on to wax lyrical about the need for solidarity – “Solidarity is a duty, not only a right”. Unfortunately, his behaviour when in power, and the policies pursued by other EU bosses was not consistent with their narratives. Their constant claims that solidarity and convergence marked the aspirations of the EU was never borne out in reality. In the case of Greece, the Troika inflicted such harsh policies that, not only has the material prosperity of the nation been trashed, but now, evidence is emerging that the underlying physical and mental health of the people has been significantly damaged. One step short of genocide. The slow-burn destruction of Greece and its people continues.

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US labour market improves but GFC residue remains

On October 5, 2018, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – September 2018 – which showed that total non-farm employment from the payroll survey rose by only 134,000. The labour force survey measures show that employment growth outstripped the growth in the labour force, which resulted in the unemployment rate declining by 0.2 points to 3.69 per cent. The US labour market is reaching unemployment rates not seen since the late 1960s, although the participation rate is well below the pre-GFC levels and a substantial jobs deficit remains. The employment-population ratio rose by 0.1 points in September. Taken together, the US labour market continued to improve in September but remains some distance from full employment.

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Reflections on the 2nd International MMT Conference – Part 2

I am now on a train heading back from Galway to Dublin for tonight’s event. This is Part 2 of my responses to the conversations I had and presentations I attended during the Second International Modern Monetary Theory which was held last weekend in New York City. In Part 1 I focused on the importance of starting an activist program with a thorough grounding in the theory and practice that the core Modern Monetary Theory (MMT) team has developed over the last 25 or so years. As MMT becomes more visible in the public domain and seems to offer much to those with progressive policy aspirations, there is tendency to adopt a stylised version of it (a sort of shorthand version), and sloganise MMT. Part 1 cautioned against that tendency. The latter part of Part 2 also introduced the idea that there is only one Job Guarantee and many of the multitude of employment guarantee proposals that have popped up like weeds after rain in recent years do not have the essential technical design features to make them consistent with MMT. I continue that theme in this blog post.

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Reflections on the 2nd International MMT Conference – Part 1

I have very little free time today. I am now in Dublin and am travelling to Galway soon for tonight’s event (see below). Last evening I met with some Irish politicians at the Irish Parliament and had some interesting conversations. I will reflect on the interactions I have had so far in Ireland in a later blog post. But today (and next time I post) I plan to reflect briefly on my thoughts about the Second International Modern Monetary Theory which was held last weekend in New York City. Around 400 participants were in attendance, which by any mark represents tremendous progress. The feeling of the gathering was one of optimism, enthusiasm and, one might say without to much license, boundless energy. So a big stride given where we have come from. Having said that, I had mixed reactions to the different sessions and the informal conversations I had over the three-day period, which might serve as a cautionary warning not to get to far ahead of ourselves. This blog post is Part 1 of my collection of some of those thoughts. They reflect, to some extent, the closing comments I made on the last panel last Sunday.

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I hope the Italian government holds its nerve against Brussels

Only a short blog post today as I am travelling for a fair part of the day on my way from New York City to Dublin for my next speaking engagement. Tomorrow’s blog post will cover some reflections on the 3-day Modern Monetary Theory (MMT) conference that finished yesterday in New York. There are several things I thought about the event, some of which I will share in public, the others, in private, with the organisers. But, today’s post, is a brief reflection on the latest crisis that is about to engulf the Eurozone. I am referring to the announcement by the Italian government that it will target a fiscal deficit of 2.4 per cent of GDP. The elites are up in arms. I hope that Italy holds its nerve.

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