A government can always afford high-quality health care provision

The Commonwealth Fund, a New York-based research foundation that analyses health care systems, recently released an interested international comparison of the performance of such systems across a number of criteria (July 2017) – Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Health Care. Health care is one of several policy areas where the debate descends into fiasco because the typical application of mainstream economics obscures a widespread understanding of how the monetary system operates and the opportunities that system provides a currency-issuing government. Once an understanding of Modern Monetary Theory (MMT) is achieved the choices available in health care policy become more obvious and better decision-making is likely. The Commonwealth Fund report provides useful information in this regard, although the MMT understanding has to come separately.

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British employers exhibit on-going greed but lie about it

One of the abiding and recurring trends, accentuated in the neo-liberal era, is the apparent ‘concern’ for the low-paid by the captains of industry. They continually warn against allowing pay increases for this cohort because they are – so the story goes – deeply concerned about the damage it will do to the employment prospects. What they really mean is that they know pay rises at the bottom end of the pay structure don’t alter employment levels significantly but have some impact on profitability. That is, they reduce profits a little. And that is the concern they are really expressing. The British Chambers of Commerce have called for a freeze on real wages for the lowest paid workers in Britain despite profitability soaring and the share of business profits in national income rising. The expression ‘where do these characters get off’ comes to mind. Although it is hardly surprising. British entrepreneurs tend to be lazy and take the easy way out when they can to further their own ends.

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The Weekend Quiz – July 15-16, 2017 – 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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The conservative opposition to full employment legislation in the US

In 1946, with the Second World War at an end, the world governments turned to the question of how to maintain the full employment that the prosecution of the War had brought in the peace. It was clear that governments could choose whatever unemployment level they wanted through the manipulation of fiscal and industry policies and so the only question was the political will to maintain the full employment state. In the US, the political debate led to the Employment Act 1946, which demonstrated that the parameters of the conflict between conservative and the more liberal forces over what constituted full employment and what responsibility the currency-issuing government had for maintaining high levels of employment. We can see through successive attempts in the US to legislate for full employment how the economic profession has influenced the political process and how we have reached the point today where governments pay lip service to fulfulling their responsibilities as the fiscal agency to maintain sufficient jobs for those who desire to work.

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Disturbing pay trends in Britain

Earlier this month (July 3, 2017) the British Office of National Statistics (ONS) released a research report – Wage growth in Pay Review Body Occupations – which basically summarises what has gone wrong with the world under neo-liberalism. While the Report is about the UK, which has particular characteristics, the trends identified are almost universal and reflect the dominance of the ‘free-(not!)-market’ austerity mentality that has crippled progress around the world. It also helps us understand why the British economy is stalling again and why the latest data on household spending is so disturbing. These trends have nothing to do with Brexit. They are all down to misguided government policy (austerity) and erroneous strategies that seek to generate fiscal surpluses when the non-government sector needs to also run surpluses (and the two aspirations are not simultaneously achievable). British workers are paying for this incompetence. The economists who gratuitously hand out the spurious advice, unfortunately do not lose their jobs.

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US labour market – improves in June but still no growth trend is apparent

On July 7, 2017, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – June 2017 – which showed that total non-farm employment from the payroll survey rose by a relatively healthy 222,000 in June, after a much weaker result in May 2017. The Labour Force Survey data showed that employment rose by 245 thousand in June but was still not large enough an increase to offset the rise in the labour force, and as a consequence, official unemployment rose by 116 thousand. The official unemployment rate rose by 0.1 points to 4.4 per cent as a result. There are still 6.98 million unemployed persons in the US. The Federal Reserve Board’s Labour Market Conditions Index showed a slight deterioration in the overall labour market. There is still a large jobs deficit remaining and other indicators suggest the labour market is still below where it was prior to the crisis. Further, the bias towards low-pay and below-average pay jobs continues.

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More Germans are at risk of severe poverty than ever before

Just how poorly the Eurozone is performing is usually illustrated with reference to Greece, then Spain, then Italy and Portugal. The weakest links among the Member States. Not to mention Cyprus, Finland and then some. But the other way of looking at the same question is to focus on the strongest link in the currency union – Germany. A new report from DIW Berlin (German Institute for Economic Research) (released July 5, 2017) – Einkommensschichten und Erwerbsformen seit 1995 (Income levels and forms of employment since 1995), which is only available in German, tells a pretty sombre, if not bleak story as to what has been happening in the Eurozone’s powerhouse over the last 18 years. It demonstrates that not only is the German model wrong for the rest of the Member States, but it is also not generating sound outcomes for its own citizens – well the lower- and middle-classes to be more exact.

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The rise of the “private government”

I have always found it odd (read totally inconsistent) that people rail against government intervention as if it is a blight on our freedom, but ignore the ‘governance’ of workplaces by capital, who seek every way possible to destroy our freedom and initiative unless it is serving to advance their bottom line. We ignore the benefits of collective goods and laws that protect us, but turn a blind eye to the on-going, minute-by-minute, repression in the workplace. I was reminded of this again as I was reading a new book that came out in May 2017 – Private Government: How Employers Rule Our Lives (and Why We Don’t Talk About It) – by American philosopher Elizabeth Anderson. She studies that way in which corporate America serves in effect as a “private government” minutely and vicariously controlling our daily working lives yet many of us still accept the construction that this is the ‘free market’ operating. It is when the word ‘free’ loses all meaning. I especially like her use of the term “private government” to reinforce the hypocrisy of the elites and the inconsistency of those (workers included) who call for small ‘government’ as if that is the exemplar of freedom.

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The Weekend Quiz – July 1-2, 2017 – 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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Employment as a human right

As I indicated earlier this week, I will progressively add notes to the body of work that will become the manuscript for my next book (with long-time co-author Joan Muysken) on the – Future of Work. As I write bits and pieces, I will post them here for comments and feedback. The book will be published sometime in 2018. At present, I am working on the philosophical considerations that we will deploy to underpin the more prescriptive elements (policy proposals) that we will produce. Today, I have been writing about the ethical basis for work. This is derived from work I did at the turn of the century. Part of the text today was written in collaboration with a former colleague John Burgess and the body of work we produced was subsequently published in several periodicals and book chapters around that time. However, the ideas sketched here were taken from parts of the papers that I mostly wrote although trying to decipher the exact division of labour is impossible. In that sense, I acknowledge the fruitful nature of my interaction with John at that time and the body of work we produced together.

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When the top-end-of-town realise their strategy is failing

There was an interesting article in the Financial Times on Monday (June 26, 2017) – Why US big business is listening to Bernie Sanders – which, despite the somewhat misleading and over-the-top headline, tells us a little of the way the full neo-liberal attack on workers is in regression. Not, I might add because of any philosophical or moral consideration. But, rather, the top-end-of-town is starting to work out that their headlong race-to-the-bottom approach over the last three decades is not actually in their best interests. The top-end-of-town is not that bright. More brutish than bright and it takes some time for them to work out what we have known all along. Globalisation mixed with neo-liberalism is poison. Globalisation mixed with social democracy is progress.

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France has received its orders from the masters

The 19 Member States of the Eurozone cover some 4,422,773 km2 of territory, much of that is densely populated. The geographic area of Australia covers 7,682,300 km2 and is mostly sparsely populated. The reason density matters is because it impacts on the resources that need to be expended to provide infrastructure across the geographic space. In the past month, the French people have elected a new President and a dramatically different National Assembly. In his election campaign, Emmanuel Macron spoke of being part of a major reform process for the dysfunctional Eurozone. To create some federal fiscal capacity including the idea of debt-mutualisation (issuing Euro-level debt) to match spending on public infrastructure etc, which could help to revitalise the stagnation that besets many regions across the currency union. In 2012, François Hollande was also elected on a reform ticket. The same day he was elected he visited Angela Merkel in Germany. The reform process ended before it started. He went away with no uncertainty about what the Germans would tolerate as masters of the union. Well within a short-time of being elected, Emmanuel Macron has also received his instructions from the Germans, this time in the guise of remarks made by Bundesbank boss Jens Weidmann. The orders are clear. Germany will never tolerate the creation of anything like a functioning federal fiscal capacity. End of story. Macron now knows the limits of his volition. What are the limits of being confined to a straitjacket?

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When Austrians ate dogs

You will notice a new ‘category’ on the right-side menu – Future of Work. It will collect all the blogs I write as part of the production of my next book (with long-time co-author Joan Muysken) on that topic. We aim to present a philosophical, theoretical and empirical analysis of a plethora of issues surrounding the role, meaning and future of work in a capitalist society. As I complete aspects of the research process I will produce the notes via blogs. Eventually, these notes, plus the input from Joan will be edited to produce a tight manuscript suitable for final publication. Today, I am discussing an important case study that needs to receive wider attention. Its lack of presence is in some part due to the fact that it was written up in German in 1930 and escaped attention of the English-speaking audience until it was translated in 1971. In selected social science circles this study provides classic principles that transcend the historical divide. The relevance of the study is that it provides a coherent case for those, like me, who argue that work has importance to societies well beyond its income-generating function. Humans need more than just income and in a society where work is considered normal time-use and frames the time we spend not working, it is an essential human right. Progressives who think that only income should be guaranteed by the state rather than work miss many essential aspects of the issue. The case study is important in that respect.

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Latest Greek bailout – a recipe designed to fail

I have been looking at the latest Greek bailout deal between the Greek government and the European Commission/IMF), which was concluded last week (June 16, 2017) and released a further 8.5 billion euros in new loans to the Greek government which means it can make bond payments due in July. Despite all the statements from the European Commission and the IMF to the contrary, the terms of the deal with the Greek government confirms that these institutions have abandoned any pretence to being interested in serious economic policy. For the European Commission, the desired irrevocable status of the euro, as a political statement, is all it seems interested in when it comes to Greece. They just don’t want to admit that Greece cannot reasonably function in this monetary union. Just like the previous bailout agreements, this deal will fail. It actually only stalls the reality for yet another day and the only goal it serves is to keep Greece using a currency it cannot afford to use – afford in both monetary and real terms.

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There is a true oppositional Left forming and gaining political traction

I have avoided discussing the British and French parliamentary elections to date, mostly because I couldn’t stomach the outcomes – May back and the neo-liberal Macron dominant. I also was tired of reading stupid columns from the likes of William Keegan and the rest of the Guardian neo-liberals raving on about Brexit and Jeremy Corbyn. Keegan is like an old record that lets the needle get stuck in a groove. He seems to have written the same column since June last year where the reader is told about the Brexit disaster and how Britain will be impoverished. But both elections, particularly the British outcome confirms what we have been noticing for a few years now – there is finally what we might call a true oppositional Left forming and gaining political traction in these nations. This is a Left platform that concedes little to the neo-liberals. It is vilified by the conservatives and the so-called progressive commentariat (such as the Guardian writers) and politicians (New Labour in Britain) as being in “cloud cuckoo land” and predictions from all of sundry of electoral wipeouts have been daily. But the results demonstrated that the message (such as in the Labour Manifesto) resonates with millions of people (40 per cent of those who voted in Britain). It is now a mainstream Left message that has taken over the British Labour Party and the Blairites are hiding under rocks. There is hope. People will only tolerate being bashed over the head for so long. There is now retaliation going on.

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Deepening the Economic and Monetary Union – no solution in sight

Periodically, the European Commission puts out a new report or paper on how it is going to fix the unfixable mess that the Eurozone continues to wallow in. I say unfixable because all of the proposed reforms refuse to confront the original problem, which, at inception, the monetary union builders considered to be a desirable design feature – a lack of a federal fiscal capacity. They now know that this is the major issue but cannot bring themselves to deal with it directly. The politics won’t allow that. Everyone knows that Germany will veto such a development immediately and that would be the end of it. The latest report (May 31, 2017) – Reflection paper on the deepening of the economic and monetary union – maintains the inertness that was characteristic of previous ‘grand’ statements, such as the White paper on the future of Europe and the way forward (March 1, 2017) and the The Five Presidents’ Report: Completing Europe’s Economic and Monetary Union (June 22, 2015). So not much has happened in 2 years, despite the unemployment rate still hovering around 9.5 per cent, other than many workshops, conferences, reports, speeches, meetings in salubrious surrounds where the catering is the highlight and the conclusions moribund.

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If Africa is rich – why is it so poor?

When I was a student, that is, formally studying for degrees rather than the constant-learning approach which makes us permanent students, I was very interested in development economics and have carried that into the career phase of my work, including doing commissioned work for international agencies in Africa and Asia. One of the things I have come up against in that work has been the question of why are the nations in Africa, for example, so poor, when it is obvious to all and sundry that they possess massive resource wealth. My student days introduced me to dependency theory, which provided a solid framework for understanding the nature of underdevelopment. It stood in contrast to the mainstream development theory that was presented in most textbooks and which we would now call the neo-liberal approach. That approach is publicly enunciated by the IMF and the World Bank as if it is reality. In fact, it is a chimera! The framework of development aid and oversight put in place by the richer nations and mediated through the likes of the IMF and the World Bank can be seen more as a giant vacuum cleaner designed to suck resource and financial wealth out of the poorer nations either through legal or illegal means, whichever generates the largest flows. So while Africa is wealthy, its interaction with the world monetary and trade systems, leaves millions of its citizens in extreme poverty – unable to even purchase sufficient nutrition to live. It is a scandal of massive proportions and should become the target of all progressive governments (as they emerge).

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The Weekend Quiz – June 17-18, 2017 – 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 force data – improvement but no positive trend yet emerging

The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for May 2017 shows that employment rose by 42,000 on the back of a strong rebound in full-time employment (up 52,100), given last month’s contraction in full-time work. Unemployment fell by 18,600, which allowed the official unemployment rate to fall to 5.5 per cent. There was a slight uptick in the participation rate as job opportunities improved. Underemployment remained steady at 8.6 per cent and broad labour underutilisation remains high at 14 per cent with unemployment and underemployment summing to 1,837.4 thousand persons. The teenage labour market also deteriorated in May contrary to the overall improvement. It remains in a poor state.

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US labour market – poor results – not close to full employment

On June 6, 2017, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – May 2017 – which showed that total non-farm employment from the payroll survey rose by just 138,000 in May. While the payroll data confirms an on-going deterioration in job creation, an examination of the Labour Force Survey data presents an even worse picture. The official unemployment rate fell from 4.4 per cent to 4.3 per cent, the lowest rate since May 2001. But the fall in unemployment of some 195 thousand persons was not a sign of strength. Total employment fell by 233 thousand but was a smaller decline than experienced by the labour force (down 429 thousand) on the back of a fall in the participation rate (0.2 percentage points). In other words, hidden unemployment rose while official unemployment fell as workers gave up looking for work in the face of declining employment growth. The estimate of employment change from the Labour Force Survey was also positive (156 thousand net jobs added). There is still a large jobs deficit remaining and other indicators suggest the labour market is still below where it was prior to the crisis. Which makes the claims by a number of analysts that the US jobs market is so strong that inflation is about to accelerate on the back of wages growth (which at present is largely non-existent). In other words, there are many assessments that the unemployment rate has reached the so-called NAIRU (Non-Accelerating Inflation Rate of Unemployment) below which accelerating inflation becomes inevitable. I doubt that assessment.

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