The federal government would sack the RBA Board and Governor except it is too busy jumping at its own shadow

It’s Wednesday and as usual I cover a few topics briefly rather than provide a deeper analysis of a single issue. Today, I consider yesterday’s RBA monetary policy decision which held interest rates at elevated levels despite the inflation rate dropping towards the lower range of its targetting band. The RBA has lost credibility and the federal government should sack the RBA Board and Governor. The problem is that the federal government is too busy jumping at its own shadow to actually take any meaningful decisions about almost anything. I also reflect on the recent decision by the Nobel Committee to award the Peace Prize to the – Hibakusha – which reminds us of the devastation that nuclear arms can (and did) cause. Some other matters then precede today’s great music segment.

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The demise of trade unions as a countervailing power to civilise Capitalism

One of the striking characteristics of the neoliberal era has been the dramatic decline in trade union membership across the world. The decline has also been associated with depressed wages growth for workers overall, increased income inequality, reduced job security, and the rising domination of the ‘gig’ job phenomena. Related trends include rising household indebtedness (as wage suppression has led to use of credit to maintain consumption levels) and reduced housing affordability, etc. Today (December 9, 2024), the Australian Bureau of Statistics (ABS) released the latest edition of biannual – Trade union membership – for August 2024 (the latest data available), which shows that trade union membership has grown from 12.5 per cent in August 2022 to 13.1 per cent now. But that modest rise doesn’t hide the fact that trade unions are no longer serving the role as a – Countervailing power – in the labour market. The decline has many drivers and many consequences and I consider that topic a bit in this post.

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Austerity cultist Kenneth Rogoff continues to bore us with his broken record

One would reasonably think that if someone had been exposed in the past for pumping out a discredited academic paper after being at the forefront of the destructive austerity push during the Global Financial Crisis, then some circumspection might be in order. Apparently not. In 2010, Carmen Reinhart and Kenneth Rogoff published a paper in one of the leading mainstream academic journals – Growth in a Time of Debt – which became one of the most cited academic papers at the time. At the time, they even registered a WWW domain for themselves (now defunct) to promote the paper and tell us all how many journalists, media programs etc have been citing their work. While one can understand the self-promotion by Rogoff and Reinhart, it seems that none of these media outlets or journalists did much checking. It turned out that they had based their results on research that had grossly mishandled the data – deliberately or inadvertently – and that a correct use of the available data found that that nations who have public debt to GDP ratios that cross the alleged 90 per cent threshold experienced average real GDP growth of 2.2 per cent rather than -0.1 per cent as was published by Rogoff and Reinhart in their original paper. So all their boasting about finding robust “debt intolerance limits” arising from “sharply rising interest rates” – and then “painful fiscal adjustments” and “outright default” were not sustainable. Humility might have been the order of the day. But not for Rogoff. He regularly keeps popping up making predictions of doom based on faulty mainstream logic.

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A 78 per cent tax on fossil fuel companies in Australia is not required to fund a Just Transition away from carbon

As I noted yesterday, last evening I accepted an invitation to speak on a panel at a – Rising Tide – event, which is part of the massive – People’s Blockade – of the port of Newcastle that is running from November 19-24, 2024. The Blockade is a threat to the mining corporations and the NSW State Government has introduced pernicious regulative structures in the last week to make it illegal to venture in into the shipping channel to block the coal ships. Heavy fines and an aggressive police force are waiting for any activist who tries. It is an extraordinary overreach by government, who are clearly siding with these corporations. The discussion last night was interesting if only to confirm that this important group of activists have been channelled by poor advice into adopting mainstream macroeconomic frames, which make it very hard for it to broaden its appeal to the rest of the population. Here is my advice to them which will allow them to break out of that straitjacket and become an important educative vehicle for the climate movement.

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The dislocation between the PMC and the rest of the working class – Part 2

I mentioned last week in this blog post – The dislocation between the PMC and the rest of the working class – Part 1 (November 11, 2024) – that I had been reading the 2021 book – Virtue Hoarders: The Case Against the Professional Managerial Class (published by Minneapolis: University of Minnesota Press) – written by US cultural theorist – Catherine Liu It is now an open access document. It provides a brutal critique of the professional-managerial class, which she thinks has become so associated with the aspirations of the capital class’ that it has lost any progressive force in society. Here is Part 2 of that discussion.

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Australian labour market – weaker and may now be falling in line with the weaker spending and GDP growth

Today (November 14, 2024), the Australian Bureau of Statistics released the latest – Labour Force, Australia – for October 2024, which shows that employment growth was very weak and may signal that the labour market is finally slowing in line with overall spending and GDP growth. Employment growth failed to keep pace with the underlying population growth and the only reason the unemployment rate remained ‘stable’ was because participation fell, in line with the weaker jobs outlook. We should not disregard the fact that there is now 10.4 per cent of the working age population (over 1.6 million people) who are available and willing but cannot find enough work – either unemployed or underemployed and that proportion is increasing. Australia is not near full employment despite the claims by the mainstream commentators and it is hard to characterise this as a ‘tight’ labour market.

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Australia – latest wage data shows real wages continue to decline

Today (November 13, 2024), the Australian Bureau of Statistics released the latest – Wage Price Index, Australia – for the September-quarter 2024, which shows that the aggregate wage index rose by 3.5 per cent over the 12 months (down 0.6 points on the last quarter). In relation to the September-quarter CPI change (2.8 per cent), this result suggests that workers achieved modest real wage gains. However, if we use the more appropriate Employee Selected Living Cost Index as our measure of the change in purchasing power then the September-quarter result of 4.7 per cent means that real wages fell by 1.2 points. Even the ABS notes the SLCI is a more accurate measure of cost-of-living increases for specific groups of interest in the economy. However, most commentators will focus on the nominal wages growth relative to CPI movements, which in my view provides a misleading estimate of the situation workers are in. Further, while productivity growth is weak, the movement in real wages is such that real unit labour costs are still declining, which is equivalent to an ongoing attrition of the wages share in national income. So corporations are failing to invest the massive profits they have been earning and are also taking advantage of the current situation to push up profit mark-ups. A system that then forces tens of thousands of workers out of employment to deal with that problem – that is, the reliance on RBA interest rate hikes – is void of any decency or rationale. That is modern day Australia.

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The dislocation between the PMC and the rest of the working class – Part 1

A while ago, I caught up with an old friend who I was close to during our postgraduate studies. We hadn’t seen each other for some years as a result of pursuing different paths in different parts of the world and it was great to exchange notes. At one stage during the conversation, she said to me that I had become one of the ‘super elites’, a term that evaded definition but could be sort of teased out by referring to lifestyle choices etc. The most obvious manifestation was the fact that she was visiting my new home in an experimental sustainable housing estate, which apparently marked one demarcation between being an ordinary citizen and one of the ‘super elites’. That group also apparently doesn’t have any power in society like the real elites – the old and new money gang – but is privileged nonetheless. I understand the notion even if it somewhat amorphous. I was reflecting on that conversation as I have been trying to understand why the US voters chose Donald Trump over the seemingly more progressive and decent candidate Kamala Harris. I use that description of Harris guardedly, because if one digs below the surface, even just a bit, it becomes clear that the Democrats were not particularly progressive or decent (Gaza!) at all but more interested in lecturing people they look down on as to how they should behave and look. All that stuff about restoring joy – was really what ‘super elites’ think about and is far removed from the aspirations of the voters who went for Trump. Here are some additional thoughts on that topic.

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Both main candidates were unelectable but one was more in tune with the nation than the other

So from January 20, 2025, Donald Trump will inherit the on-going genocide that the US government has been party to in the Middle East. He will then have no cover and will be judged accordingly. What follows are a few thoughts that I had when I watched the unfolding disaster for the Democrats and the amazing victory that Trump has recorded. It was obviously a Hobson’s Choice facing the US voters (from an outside perspective), which also tells us something about the way the US society has evolved. Both candidates were in my view unelectable. But the voters didn’t agree with me. And, one candidate was much smarter that the other and better understood the plight the American voters are in after several decades of neoliberalism. Spare the thought.

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State of Climate 2024 Report signals worse is coming – like very nearly now

This is my Wednesday blog post on a Thursday, given that I spent yesterday dealing with Australia’s latest CPI data release. So today I consider a range of topics in less detail, which is my usual Wednesday practice. Today, I comment on the latest ‘State of Climate 2024’ Report just released in Australia. I also consider the view that underneath all the regional wars at present where war lords fight to gain control of failed states is a voracious surplus extraction system we just happen to call Capitalism. And then some other items that have interested me this week. And a music segment.

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These claimed essential fiscal rules in the UK seems to be disposable at the whim of the polity

Regular readers will know I have been a long-time critic of the fiscal rules that successive British governments have invoked as part of a pretence that they were being somehow responsible fiscal managers. The problem was that in trying to keep within these artificial thresholds, governments would do the exact opposite to what a responsible fiscal manager would do, which is preserve the integrity of public infrastructure, ensure public services reflected need, and steer the nation in a direction where it was able to meet the challenges that beset it. This period of ‘fiscal rule’ domination has been defined by relentless fiscal austerity and a degradation of living standards as successive governments pursued the neoliberal agendas. Now, it seems the British Labour government is finally realising that it cannot achieve its aims while retaining the fiscal rules they so tenaciously claimed were essential. Back when John McDonnell was the shadow chancellor I told him the rules were unachievable given his policy ambitions. His support crew – academics and apparatchiks vicariously slandered me for running that line. They were wrong and the current decision by the Chancellor to alter the rules proves that. But it also proves how ridiculous these rules are anyway.

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The EU is in terminal decline

Some Wednesday snippets. First, I juxtapose the political machinations that the EU President is engaged in to consolidate and expand her power within the European Commission with the reality that Member State governments are becoming dysfunction because social instability and political extremism are rife. Then I reflect on my experience as Chancellor of Britain – a great success I should say, although I was told I had broken all the rules. It tells one how stupid the rules are. Then, finally, some music to enjoy.

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Australian labour market – positive shift in September 2024

Today (October 17, 2024), the Australian Bureau of Statistics released the latest – Labour Force, Australia – for September 2024, which shows that the labour outlook shifted towards the positive in September 2024. Employment growth was above the year’s average and was biased towards the net creation of full-time jobs and underemployment fell. The unemployment rate was slightly lower because employment growth outstripped the underlying population growth and the rising participation rate. But we should not disregard the fact that there is now 10.4 per cent of the working age population (over 1.6 million people) who are available and willing but cannot find enough work – either unemployed or underemployed and that proportion is increasing. Australia is not near full employment despite the claims by the mainstream commentators and it is hard to characterise this as a ‘tight’ labour market.

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IMF surcharges cripple the poorest nations and transfer wealth from the poorest to the richest nations

I am now working in Kyoto again and have a full day’s commitments ahead of me. But as part of my on-going research I have been investigating the conditions under which the IMF extends financial support to the poorest nations. And today I will tell you about the surcharge system which the IMF uses to make it even harder for those nations to repay the already onerous debt obligations that the IMF imposes on them. These surcharges are just another component of the IMF’s extraction system which transfers wealth from the poorest nations to the richest. I have long advocated the abolition of the IMF and a replacement, multilateral institution being created that actually works to help reduce poverty and the redistribute resources from endowed to less-endowed nations without any harsh austerity measures. The challenge is how would that work. I will write more about my ideas on that in due course. But the evidence keeps mounting to justify the abolition. The surcharge system is one part of that evidence suite.

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Class origins matter – but who are the agents of change?

The celebratory headlines in Australia today are about how the Federal government has just recorded two consecutive financial year fiscal surpluses, which the Treasurer lauded as an example of “responsible economic management” as the government removes from the economy a cumulative sum of $A172.3 billion since it was elected in May 2022. The headlines should have said “Federal government destroys non-government financial wealth over the last 2 years as more people are without work’, which is actually what has happened. Anyway, it is too depressing to see the media fawn over the Treasurer today. So I am going to go abstract and avoid talking about that any further. There was an interesting article in the UK Guardian the other day September 26, 2024) – Take it from me (and Keir Starmer) – you should never pretend to be more working class than you are. I don’t usually agree with the journalist but this article made me reflect on a lot of things.

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Biocapacity constraints and full employment – Part 1

This week, the Australian government (Labor) did the unthinkable. It approved three thermal coal mine expansions in NSW – the Environment Minister approved the expansion of the Whitehaven Coal mine until 2044, the Mount Pleasant mine until 2048 and the Ravensworth mine until 2032. For a government that claims to hold superior ‘green’ credentials to the main opposition this was a major disappointment and once again demonstrated that the lobbying power of foreign-owned capital, which is only chasing massive profits and care little about the well-being of the environment or its workers, is dominant in public decision-making. It brings into question whether there is a solution to the environmental crisis (the 1.7 times biological capacity problem) while resource allocation remains determined by those seeking private profit, who reluctantly bow to regulative constraints, while continually trying to get around them. In this blog post, the first of a few, I provide some insights drawn from my current research that will come out in my next book (with Dr Louisa Connors) on degrowth and related topics. The question that has to be answered is whether the solution to a sustainable future includes maintaining the capitalist system. Today, I talk about how capacity constraints may prevent full employment from being possible and extend that analysis to the current context where environmental capacity is more important than productive capacity.

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Australian Treasurer refuses to use his legislative power to rein in the rogue RBA

It has been quite the week in central banking terms in Australia. We had the Federal Greens economic justice spokesperson demanding that the Federal Treasurer use the powers he has under the Reserve Bank of Australia Act 1959 and order the RBA to lower interest rates. Then we had the Treasurer playing the ‘RBA is independent’ game, which depoliticises a major arm of economic policy, a (neoliberal) rort that ordinary people are finally starting to see through and rebel against in voting intention. Then an ABC journalist finally told his readers that the RBA was using a flawed theory (NAIRU) and was screwing mortgage holders relentlessly for no reason. Then the RBA Monetary Policy Board met yesterday and held the interest rate constant despite the US Federal Reserve lowering the US funds rate by a rather large 50 basis points last week and continued their pathetic narrative that inflation was too high and ‘sticky’. And then, today (September 25, 2024), the Australian Bureau of Statistics (ABS) released the latest – Monthly Consumer Price Index Indicator – for August 2024, which exposed the fallacy of the RBA’s narrative. The annual inflation rate is now at 2.7 per cent having dropped from 3.5 per cent in July and the current drivers have nothing to do with ‘excess demand (spending)’, which means the claims by the RBA that they have to keep a lid on spending – which really means they want unemployment to increase further – are plainly unjustifiable. As I said, quite a week in central banking. My position has been clear – the global factors that drove the inflationary pressures are resolving and that the outlook for inflation is for continued decline. This was never an ‘excess demand’ episode and there was no case for higher interest rates, even back in May 2022, when the RBA started hiking.

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