Deep Adaptation – Part 1

As part of the my research on the concept of a ‘poly crisis’, which is the focus of my next book, I have been reading a lot about urban systems, building codes, and other facets of the climate problem. In that vein, I have been considering the concept of – Deep Adaptation – which emerged from the work of British academic Jem Bendell in 2018. His seminal paper – Deep adaptation: a map for navigating climate tragedy – was updated in July 2020 as – Update. The author has a background in geography and makes it clear he is not a climate scientist. His work on deep adaptation came up against a harsh refereeing process because it ran counter to the Groupthink surrounding how we should deal with the climate issue. Most of the resistance I suspect relates to a view that the crisis can be solved within Capitalism. In that sense, his work was dismissed as being overly pessimistic. However, the initial work on deep adaptation is rather scant on how it fits in with the ideas of class conflict within the current economic order. Jem Bendell admitted that is his original essay “the power of capital in keeping us compliant is implied” rather than explicit. His defense was that he was “writing for the sustainability profession” and he was thus “embedded in that system” (Source). This is where I am interested in the concept – to fully embed it within a more radical, Modern Monetary Theory (MMT) focused paradigm. This is Part 1 of a series of unspecified Parts at this stage where I explore the concept of Deep Adaptation and try to extent it into the MMT world.

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The Weekend Quiz – August 20-21, 2022 – 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 deteriorating as employment and participation contract

The Australian Bureau of Statistics (ABS) released of the latest labour force data today (August 18, 2022) – Labour Force, Australia – for July 2022. With Covid infection rates rising quickly, and already around 780,000 workers working few hours than usual because of sickness, I predicted last month that there would be a deterioration in the labour market in the coming months. That trend emerged in July 2022. The labour market deteriorated in July 2022 with employment and participation both contracting. While the official unemployment rate fell to 3.4 per cent this was all down to the decline in participation. Had the participation rate not declined the unemployment rate would have risen from 3.6 per cent to 3.9 per cent. Further, the underlying (‘What-if’) unemployment rate is closer to 6.1 per cent rather than the official rate of 3.4 per cent. There are still 1313.7 thousand Australian workers without work in one way or another (officially unemployed or underemployed). The only reason the unemployment rate is so low is because the underlying population growth remains low after the border closures over the last two years. Overall, the situation worsened over July.

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Australia – wages growth flat and purchasing power of workers is plummeting to new depths

All eyes have been waiting for today’s release (August 17, 2022) of the – Wage Price Index, Australia – by the Australian Bureau of Statistics for the June-quarter, given that the Reserve Bank of Australia has been claiming wage pressures are becoming threatening and using that as a cover for unnecessarily pushing up interest rates. Prior to pushing up interest rates over the last several months, the RBA had been signalling that they would not move on interest rates until there was a concerted increase in wages growth, which has been at record low levels for some years now. On the back of that information, many new entrants to the housing market ran up massive mortgage debts and now feel dudded by the central bank. Whatever, information on wages the RBA is privy too is not gelling at all with the official data, which continues to show that wages growth remains flat (hasn’t moved in three months) and at record low levels. The is no acceleration. Wages growth is not driving the inflation trajectory. Workers are enduring massive real wage cuts and the RBA has made that worse by pushing up mortgage rates for those exposed. The business sector, as a whole, thinks it is clever to always oppose wages growth and the banks love that because they can foist more debt onto households to maintain their consumption expenditure. But the reality is clear – there can be no sustained recovery for the economy post Covid without significant increases in the current rate of wages growth.

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Germany is in deep trouble and requires a major shift in policy strategy

The latest news I read from Germany was that the Rhine is now so low on water that its importance as a commercial waterway for transporting raw materials and finished products is being significantly compromised. The water level in places is now well below that required for navigation by the barges. It is the second time in the space of a few years that inland shipping in Europe has been thwarted by this sort of problem. The War in Ukraine is also causing bottlenecks in the inland transport routes as grain transports are being diverted as a consequence of the Black Sea blockades. Sure enough there are rail transports still capable of shifting the cargo but this problem is one of many now hitting Germany, which is finding out that its economic growth strategy is deeply flawed. It was only a matter of time before the ‘chickens came home to roost’. It was obvious for years that the Post-unification strategy the German government took as it entered the common currency could not deliver sustainable and stable growth. The reliance on suppressing domestic expenditure and wages growth in order to game its Eurozone partners so they recorded large external deficits in order to buy German exports was problematic given that the German insistence on austerity across the Eurozone resulted in stagnation and weaker export markets. Further, Germany relied heavily on diesel engines to underpin the strength of their dominant motor vehicle industry and not only did they lie about the quality of the products, but they failed to foresee the shifting sentiment away from polluting diesel. And, of course, they relied on imported energy from Russia to feed this industrial strength and supply their consumer markets, which assumed that Russia would remain reliable. At present they are also being impacted by the supply disruptions in China, given they have shifted their external sector towards an increased reliance on China. Some of these problems will ease but the reality is that the German model that they took into the Eurozone is now unsustainable. They must abandon their export led growth obsession, increase their reliance on domestic demand and improve the circumstances for their workers while dealing with the increasingly evident climate emergency.

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The Weekend Quiz – August 13-14, 2022 – 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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Radical change is needed and mainstream economics will not be part of the solution

I wrote about what I am terming a ‘poly crisis’ in this recent blog post – The global poly crisis is the culmination of the absurdity of neoliberalism (July 18, 2022). I am working on material for my next book to follow up – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017). The German word ‘Zeitenwende’ means turning point. A fork in the road. It carries with it, from one interpretation, a recognition that the path that has been traversed to date is not the path that should be followed in the future. Something has to give. Whether Albert Einstein actually said “Insanity is doing the same thing over and over and expecting different results” is an interesting literary issue but the essence of the quote (correctly attributed to him or not) is sound. The idea of a ‘poly crisis’ is that big shifts in thinking and behaviour are required. We simply cannot continue to act in the same way as before whether it be on an individual level (us making our own choices) or at a societal level. The organisation of economic activity, our patterns of consumption and conduct of economic policy must all change – radically – for the planet to survive. Tinkering around the edges will be insufficient. Identifying a ‘poly crisis’ is tantamount to declaring the neoliberal experiment has failed dramatically and taken us all to the brink. It cannot form a basis for the future. But there is massive resistance to change and in Australia in the last week we have seen that in spades.

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