Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.
The Australian Bureau of Statistics released the latest labour force data today (November 11, 2021) – Labour Force, Australia – for October 2021. The background is that the entire East Coast has now come out of an extended lockdown over the last few months. The October 2021 data reveals the damage that those lockdowns have caused. But, given that today’s data reflects what was happening about a month ago, it is still too early to say what the speed of recovery will be although more recent payroll data suggests that employment growth is rebounding. But the story of today’s data is that total employment and the unemployment rate are worse than before the pandemic – so the nation has lost ground over the last 20 months. And that is largely because the federal government withdrew its fiscal stimulus too early. The summary results are clear: employment continues to contract, the unemployment and broader underutilisation rates soared. There are nearly 2 million Australian workers without work in one way or another (officially unemployed or underemployed) and several hundred thousand who have left the active labour force due to lack of employment opportunities. Overall, the labour market is in poor shape and the federal government is doing nothing to help. The lack of any significant stimulus from the federal government is telling. There is now definite evidence that further and rather massive fiscal support is required.
It’s Wednesday and today, apart from presenting some great music, I am commenting on the ridiculous notion, that even progressive greenies propagate that we need to harness the financial resources of the markets (Wall street types) to help governments decarbonise their societies. The narrative that has emerged – that the financial CEOs with “trillions in assets” (all at COP26 because they could smell lucre) are a key to solving the climate challenge – is as ridiculous as progressives saying we need to tax them to fund schools and hospitals. Both narratives reflect the dominance of mainstream macroeconomics which has convinced us that currency-issuing governments are like big households and can ‘run out of money’. That is fiction but is part of the reason we have a climate crisis. Read on.
I have been researching the so-called labour shortage that business types are talking about relentlessly as part of their on-going strategy to undermine the conditions of work and make more profit. In the course of that enquiry, I came across an interesting juxtaposition between two US companies that illustrate a lot of what we have known about for years but have allowed this relentless, neoliberal, race-to-the-bottom to obscure. Well-paid workers with job security, work better and are happy workers. Companies that pursue the ‘race-to-the-bottom’ strategy and seek to build profits by trashing the conditions they offer workers eventually struggle to prosper because their bad reputation undermines their ability to attract productive workers. In the case we discuss today, the so-called ‘labour shortage’ is really just a signal of management caprice. Rather than being a shortage of workers, there is a shortage of workers who will tolerate the indignity of low wages, onerous conditions and capricious management. It is also a union versus non-union type of discussion where the unionised work places generate high productivity and worker attachment, while the non-unionised workplaces find it hard to attract reliable staff and blame it all on ‘labour shortages’.
Last Friday (November 5, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – October 2021 – which reported a total payroll employment rise of only 531,000 jobs in August and a 0.2 points decline in the official unemployment rate to 4.6 per cent. With participation unchanged, this was a stronger result than the previous month and the employment-population ratio rose by 0.1 points. It is still well down on the February 2020 peak though. The US labour market is still 4,204 thousand jobs short from where it was at the end of February 2020, which helps to explain why there are no fundamental wage pressures emerging. An occupational analysis shows that the lower paid occupations have not participated proportionally in the jobs growth and many groups have endured real Median weekly earning cuts over the course of the pandemic. Any analyst who is claiming the US economy is close to full employment hasn’t looked at the data.
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.
Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.
One of the recurring criticisms that mainstream economists make of Modern Monetary Theory (MMT) is that does not follow the rules of formalism that have become the norm in the economics profession. The implication is that by not following these conventions, MMT economists are unable to say anything precise and scientific. Apparently, a literary discourse cannot convey anything that is sound. Pity that some of the greatest contributions to human knowledge have come from those who could write properly. But this criticism of MMT is about something else again. Dominant academic communities develop their own rules of enquiry, which encompass perspectives of the field to be studied, procedures to be followed, methods and techniques to be used and the end goals of the analysis. If those communities become riddled with Groupthink, then a degree of uniformity in practice becomes expected and enforced either subtly through peer group pressure or more coercively through publication, grant and promotional practices, which effectively determine whether a person will advance or be cast aside. The criticism waged against MMT economists that we don’t follow the normal rules of exposition is really an attempt to enforce the discipline of the mainstream (New Keynesian) community and avoid discussion of substantive issues, such as empirical congruence or extent of anomaly. If the dominant paradigm can convince young scholars and the public that its techniques and methods are the only sound way in which to conduct scientific enquiry and highlight an emerging threat as not being up to speed then it can avoid the scrutiny.
It’s Wednesday, so just a few snippets before some great music from the early 1960s. Over the last few weeks, the commentary in the financial and economic press has been that the ‘market’ has priced in higher inflation and the central banks will have to concede to the market prerogative. Even people I personally like in the media have been running this line and headlines last week included statements like the RBA has run the white flag up. All of this is a self-fulfilling outcome, if every one acts as if there is an imperative to give the ‘markets’ the running, then it will happen. And we should all be clear on what that means. Corporate welfare abounds. And it is not the only example in the last week.
Today, we have a guest blogger in the guise of Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. Today, he has taken a breather from teaching and exam marking to write about the long-run uneven labour market impacts of the COVID-19 pandemic. The COVID-19 pandemic has been the global emergency that just keeps giving. And not in a good way! Daily figures from around the world show that the pandemic’s health impacts continue to be widely felt. So, it’s over to Scott to explain how.