In today’s Australian newspaper ex Federal Treasury official Tony Makin writes that We keep repeating Keynes’s mistakes. Do we now? The story is a litany of half-truths and basic conceptual errors. He is now a professor of economics. Bad luck for his students. The article, one of a regular contribution he makes to the increasingly squawking right-wing News Limited daily, is a classic example of how to deceive the public with spurious economic reasoning – that the author knows most of the public will just accept without question.

Today I am a keynote speaker at the LHMU National Conference in Canberra. I am talking about the challenges of underemployment and low wages and the need for the union movement to broaden out their activism from narrow concerns about wages and conditions for their members to development and pursuit of a full-scale attack on neo-liberalism. In much the same way that the neo-liberal think tanks boosted the saturation of those ideas. I will report back when I get back – much later this evening.

On Friday, the RBA signalled that it wanted to start hiking interest rates early in the upturn (and be one of the first central banks to do so). The justification was that this recession was more like the shallow, short-lived downturn in 2000-2001. I disagree. The evidence doesn’t support that contention. Increasing interest rates now will have serious impacts on the solvency of households currently struggling to get anywhere near enough hours of work. The RBA once again will be choosing to use underutilisation as a tool rather than a policy target. Another disgraceful chapter in their history is looming.

In March 2008, we released the CofFEE/URP Employment Vulnerability Index (EVI), which provides a risk assessment by suburb of job loss in event of a serious downturn. It was based on an economic model that captured the major risk factors that would predicate job loss at a local spatial scale. Some data is now coming in that provides the capacity to assess the accuracy of our framework.

Today I have been working on part of a new book I am writing on the pathology of recessions. I have written a lot about this in the past and my last book was about this topic. But you can never say it enough – recessions impose huge social costs on the most disadvantaged members of our society and it is the responsibility of national governments to do every they can to avoid them. The neo-liberal onslaught on public policy has seen governments all around the world abandon this responsibility with obvious (ugly) consequences. Anyway, here is a way of thinking about all of this. It is not a happy story.

Today among other things I have been examining the hours data more closely to further highlight the difference between the 1991 recession and our current woes. The comparison is interesting and reveals a lot about how labour markets adjust. It also provides some scope to develop further insights into total labour underutilisation. However, while the current labour market state requires an urgent further injection of net public spending the circumstances are different to what we faced in 1991.

This afternoon I am off to Brisbane to appear in tonight’s SBS TV Insight Program, which is focusing on unemployment. The program airs live from 19:30 tonight on SBS One. The on-site location for tonight’s show is Logan City, which is south of Brisbane on the way to the Gold Coast. In the work I did with Scott Baum at Griffith University earlier this year developing an Employment Vulnerability index, we identified the Logan City area as having a concentration suburbs which we considered to be at high risk of job loss. So SBS decided to conduct a ground level exploration of the sorts of considerations that expose a region to job loss and to develop narratives that inform us of how people in battling areas cope with economic downturn. While the topic is depressing it is excellent that one of our national TV broadcasters is actually elevating it to national importance.

There were two related stories this week from either side of the Pacific Ocean. From the east coast came – Rollout of jobs scheme ‘a sham’ and from the west coast – Stimulus Is Bankrupt Antidote to Failed Stimulus. While the US-based article is a polemic from the right-wing American Enterprise Institute and the second is a journalist’s reporting on Australian political trivia, they both raise interesting issues regarding the way fiscal policy is conducted. The issues raised provide further justification for employment guarantee schemes as a sophisticated addition to the automatic stabilisation capacity that is inherent in fiscal policy and makes it superior to monetary policy.

Current problem: jet lag. I keep saying to myself – 1 day for every time-zone. I have a week to go! Today I have been in Brisbane discussing the Functional Economic Regions geography which I have created to improve spatial analysis in Australia. The new geography is now being used by other social scientists because it represents an improvement on the standard geographical boundaries that ABS uses to disseminate regional data. I might write a blog about this one day although it is very technical and rather dry. But life as a researcher is “10 per cent inspiration and 90 per cent perspiration” although for me the 10 might be a little lower! After all I am a stupid modern monetary theorist! But today’s blog is about the Compact with Retrenched Workers – the latest policy joke emanating from Canberra.

The talk at present is that while we are hoping for a V we might have to accept a W. Its all about shape. The shape of the future. The shape of the recovery! In Post-Lehman World Will Mean W-Shaped Recoveries we read that Japan’s former economic and fiscal policy minister, Hiroko Ota said that “The worst is over but I can’t say the economy is heading for a recovery at all”, Japan’s recovery may be W-shaped instead of V-shaped. There are some very real reasons why W might rule over V. They all relate to the lack of understanding of the characteristics of a fiat monetary system and the opportunities that such a system presents the sovereign government. Unfortunately, the ignorance (or wilful neglect) among policy makers may force millions of people to endure unnecessary hardship.

I saw this in The Australian (on-line) front-page today – “POLL: Do unions have too much power?” So the campaigns are emerging: deficits, debt and union power. Seems like we are back in the 1970s when the conservatives last ran the union power campaign. The topic is apposite given the Government’s reaction last week to union requests to eliminate some of the nasty elements that remain from Work Choices. I laughed when I saw the poll – who are they trying to kid. Anyway, the current Government is playing hard cop with the union movement exploiting the lack of capacity of the latter to fight back.

Today the ABS released the March quarter National Accounts data which showed that the Australian economy is actually resisting the global slowdown although barely. The results allowed all and sundry to pronounce that Australia had escaped recession, despite there being no acceptable definition of what actually constitutes a recession. For now then we do not have a recession based on the national accounts benchmark – two consecutive quarters of negative GDP growth. But I hardly think this is the end of it. And if we take a labour market definition of recession which researchers such as me think is a better approach because unemployment is a personal experience that allow us to feel the movements in the cycle – then we are already in recession. That is what this blog is about – R we or R we not!

The Social Inclusion Research Paper series are slowly emerging. Professor Tony Vinson (Sydney University) was commissioned to write six papers on the topic and they are available HERE. In the paper on Jobless Families in Australia, he considers a range of strategies which have been advanced to reduce chronic joblessness which has wrecked families across Australia since the neo-liberal attack on full employment began in the mid-1970s. I was pleased to see him mention the Job Guarantee. This is what he said.