There was an Op Ed last week from an Australian academic who attacked Modern Monetary Theory (MMT) along the lines that its proponents are “a bunch of cranks” and practice “charlatanism”. He also considers us to be sellers of “snake oil” and other nasty things. It was an extraordinary public intervention given that the argument was based on assertions drawn from an intermediate mainstream macroeconomics textbook, bereft of historical understanding and bereft of any real knowledge of the way the monetary system and the institutions within it (government, central bank, commercial banks) actually work. The MMT critique went like this: (a) misrepresent MMT through attributing claims to its proponents that are not remotely to be found in the literature; (b) claim you are not misrepresenting the MMT literature by selective quotes that are not actually consistent with the misrepresentations; (c) bring in one liners from textbooks that have been demonstrated to have no real world application and are patently wrong in many key elements of the banking system and the way bond markets operate; (d) call us fools for not knowing any of this. Well, it doesn’t take long into the article to realise who the fool is. The other point is that MMT is now clearly at the stage of development where the mainstream think they have to attack us and put us down. That is the next stage in our development (following years of being totally ignored). Progress is being made.

The Australian Federal Department of Foreign Affairs and Trade (DFAT), which oversees the Overseas Development Assistance (ODA) our nation extends to those less fortunate nations released new data last week in the wake of the Mid-Year Economic and Fiscal Outlook that the Treasurer launched on December 18, 2016. The data allows us to ascertain the shifts in ODA that will occur as the federal government continues its obsessive pursuit of a fiscal surplus. The austerity is not only killing growth in Australia (recall that September-quarter real GDP growth was negative) and increasing the national poverty rate but is also revealing how mean we are as a nation. As one of the wealthiest nations in the world (currently we are ranked 2nd behind Switzerland for per capita wealth), we are now cutting into the resources we extend to poorer nations in our region as part of a mindless quest for surplus. The problem is not only the economic idiocy that underpins these cuts. The other, perhaps larger problem, of which the first is a symptom is that, as a nation, Australia is losing its moral compass. In this neo-liberal era, we have become an increasingly ugly nation – lacking in generosity to each other and to outsiders. We engage in criminal behaviour (indefinitely detaining refugees in prisons on remote islands; engaging in illegal invasions of foreign nations, etc) and punish poverty rather than do everything we can to reduce it and provide the equal opportunities to all that we so often congratulate ourselves as being champions of. We are a mean-spirited nation these days and an international pariah. There is no pride in holding an Australian passport. It is easy to live here if you have money. The climate is good, the beaches great, plenty of open terrain, great sport – but our national spirit is disappearing.

The Australian economics media is awash with claims that Australia will likely lose its AAA government bond credit rating next week in the wake of last week’s disastrous GDP figures (negative growth recorded in the September-quarter 2016) and the widening fiscal deficit at the federal level as tax revenue slumped 15.3 per cent in the September-quarter and the trade account deficit widened. This is a non-news story really. I was asked by a journalist to comment on it the other day and I told him that he would be better-off sorting his socks in his drawer than wasting any time on this topic. A real problem, which, in part is being created by this obsession with ratings, is the massive and growing shortfall in public infrastructure in Australia and other nations as governments cut back public investment in an attempt to reduce fiscal deficits. The reality is this: What the credit rating agencies do is irrelevant to the Australian government. What is not irrelevant is the growth in public infrastructure. It is our legacy to our grandchildren. With populations getting older and dependency ratios rising, the next generations will have to be more productive than the current generation if standards of living are to be maintained, much less, increased. That will require better public infrastructure. Our stupid austerity mindset – justified by on-going lies about the government running out of money and being degraded by the rating agencies – is undermining the very strategies and actions that we require to benefit our children, their children and ourselves as we age. We are a really stupid nation.