Political censorship in Australian research processes – towards authoritarianism

Regular readers will know that I place great value in the disciplines we broadly describe as the Humanities. An understanding of knowledge that history, language, philosophy, geography, politics, sociology, anthropology, music, drama, classical studies and the like is essential if we are to advance societies and avoid the mindless descent into tribalism and authoritarianism. Last month, two things were revealed. First, the Federal Minister for Education vetoed successful grant applications for funding under the Australian Research Council processes, effectively politicising the process. He took exception to the topics. His decision was only revealed months later through interrogations during a Senate Estimates hearing. Second, an Australian university released a research report it had commissioned – The Value of the Humanities – which sought to articulate “the value of the Humanities to students thinking about their education and career options and to businesses faced with hiring choices”. It shows the immense value that teaching and research in the Humanities brings to employers, individuals and society in general. It makes the Federal minister look like a fool, although that was not its intent. A fool and one who is deeply insecure about allowing knowledge to proliferate. The latter is the hallmark of an authoritarian regime.

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The Weekend Quiz – November 3-4, 2018 – 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 Twitter echo chamber

It is Wednesday so just a few things to report and discuss. I have noted in recent weeks an upsurge in the Twitter noise about Modern Monetary Theory (MMT) and various statements along the lines that MMT economists are male chauvinists, mindlessly attack other heterodox economists because we are a religious cult, that we thrive on conflict, that only the US has a sovereign government and more. Quite amazing stuff. And these attacks are coming mostly from the so-called heterodox side of the economics debate although not exclusively. It is quite an interesting exercise to try to understand the motivations that are driving this social media behaviour. Things that would never be said face-to-face are unleashed with regularity these days. There appears to be a sort of self-reinforcing ‘echo chamber’ that this squad operate within and it seems to lead to all sorts of bravado that would be absent in face-to-face communication. None of the attacks seem to have any substance or foundation. They just reflect an insecurity with the way that MMT is creating awareness and challenging progressives to be progressive. And, they just make the Tweeters look stupid. I thought I would document some of the recent trail of nonsense to let you know what is going on in case you haven’t been following it. It is a very interesting sociological phenomena.

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The British Labour Fiscal Credibility rule – some further final comments

Over the last weekend, it seemed that we had a return of the Spanish Inquisition with a prominent British academic, who by his own words designed the fiscal rule that British Labour has unwisely adopted, repeatedly demanding that MMT Tweeters confess to knowing that I was completely wrong on my interpretation of the fiscal rule. It is apparent that my meeting with the British Shadow Chancellor in London recently and my subsequent discussion of that meeting has brought the issues relating to the fiscal rule out into the open, which is a good thing. It is now apparent that British Labour is still, to some extent, back in the 1970s, carrying an irrational fear of what financial markets can do when confronted with the legislative authority of a sovereign government. I am not a psychologist so I cannot help them heal that irrational angst. But the claims that I misunderstood the fiscal rule – which are being repeated daily now by the fanboys of the rule are just ludicrous. The rule is simple. And it will bring Labour grief politically. Rolling windows or not!

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The Weekend Quiz – October 20-21, 2018 – 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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Sleep and reading – Australia bound

Today’s blog post is about sleep and reading. I am travelling from London to Sydney today via Hong Kong so I will not write anything more than a few lines. I will be back in writing mode on Tuesday I should think. For the next 24 hours I have a lot of reading to do. I also provide some advice for those who pack running shoes when travelling.

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MMT and the external sector – redux

This blog post is written for a workshop I am participating in Germany on Saturday, October 13, 2018. The panel I am part of is focusing on external trade and currency issues. In this post, I bring together the basic arguments I will be presenting. One of the issues that is often brought up in relation to Modern Monetary Theory (MMT) relates to the foreign exchange markets and the external accounts of nations (particularly the Current Account). Even progressive-minded economists seem to reach an impasse when the question of whether a current account should be in surplus or deficit and if it is in deficit does this somehow constrains the capacity of currency-issuing governments to use its fiscal policy instruments (spending and taxation) to maintain full employment. in this post I address those issues and discuss nuances of the MMT perspective on the external sector.

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Exploring the effectiveness of social media – Part 2

This is another addition in the ‘Exploring the effectiveness of social media’ series, which I last discussed in the blog post of the same name – Exploring the effectiveness of social media (September 5, 2018). This is current research I am doing with Dr Louisa Connors and we will discuss it at the The Second International Conference of Modern Monetary Theory (New York, September 28-30), that is, later this week. There is no doubt that social media (among other things) has played a major role in building a non-academic audience for Modern Monetary Theory (MMT). As I noted in the previous blog post on this topic, it is not clear that MMT advocates fully utilise social media in a way that advances advocacy even though it is clear that advocacy is the intent of the social media activity. The earlier blog post examined some of the reasons why Twitter use for example might be counterproductive. This blog post extends the discussion about the strategic use of social media.

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Australian labour market – employment growth improves but uncertainty remains

The Australian Bureau of Statistics released the latest – Labour Force, Australia, August 2018 – today which show that the Australian labour market showed better signs in August 2018 than in July but there are questions about the sensitivity of the results to the sample rotation used by the ABS to construct its survey. I expect the results to be revised downwards next month. With that said, employment growth was solid (dominated by full-time growth) and the participation rate rose. Taken together, unemployment rose slightly and the unemployment rate was steady. Monthly hours worked however hardly moved which is further reason to doubt the employment estimates. Overall, my assessment is that the Australian labour market remains in an uncertain state and, is still a considerable distance from full employment. There is clear room for some serious policy expansion at present.

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The Weekend Quiz – August 18-19, 2018 – 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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CEO pay binge in Australia continues while workers’ wages growth remains flat

The headlines in the last week summarised the inherent inadequacy of capitalism for most of us who depend on real wages growth to enhance our material standard of living in economies that are growing. The latest report from the Australian Council of Superannuation Investors released on Thursday (July 17, 2018) – CEO Pay in ASX200 Companies: 2017 – shows how unfair and unsustainable the income distribution is in Australia. Australian CEOs were fully committed to the ‘greed is good’ binge leading up to the GFC along with their peers across the globe. The GFC interrupted that ‘party’, albeit temporarily. As the emergency environment that surrounded the business community during the GFC abated as a result of extensive government support (bailouts, stimulus packages, etc), the managerial class in Australia has returned attention to its on-going ‘national income grab’. The Report shows that in 2017, CEO pay reached its highest level in 17 years and the managerial class enjoyed real growth in pay at a time when the average worker is enduring either flat to negative growth in pay. Further, overall economic growth in Australia is being driven by increased non-government indebtedness as real wages growth (what there is of it) lags well behind productivity growth. And, at the same time, the Federal Government is intent on pursuing an austerity policy stance. All these trends are similar to the dynamics we experienced in the lead-up to the GFC. They are unsustainable. A major shift in income distribution away from capital towards workers has to occur before a sustainable future is achieved.

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The government is not a household and imports are still a benefit

It is Wednesday and so a shorter blog post today while I spend more time writing other things. But there was one issue that was raised in the comments in the last week following my blog post – Build it in Britain is just sensible logic (July 26, 2018) – that I thought warranted attention. The government is not a household is a core Modern Monetary Theory (MMT) proposition because it separates the currency issuer from the currency user and allows us to appreciate the constraints that each has on its spending capacities. In the case of a household, there are both real and financial resource constraints which limit its spending and necessitate strategies being put in place to facilitate that spending (getting income, running down savings, borrowing, selling assets). In the case of a currency-issuing government the only constraints beyond the political are the available real resource that are for sale in that currency. Beyond that, the government sector thus assumes broad responsibilities as the currency issuer, which are not necessarily borne by individual consumers. Its objectives are different. Which brings trade into the picture. Another core MMT proposition is that imports are a benefit and exports are a cost. So why would I support Jeremy Corbyn’s Build it in Britain policy, which is really an import competing strategy? Simple, the government is not a household.

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US growth surprise will not last

Last Friday July 27, 2018), the US Bureau of Economic Analysis published their latest national accounts data – Gross Domestic Product: Second Quarter 2018 (Advance Estimate), which tells us that the annualised real GDP growth rate for the US was a very strong 4.1 per cent in the was 3 per cent in the June-quarter 2018. Note this is not the annual growth over the last four-quarters, which is a more modest 2.8 per cent (up from 2.6 per cent in the previous quarter). As this is only the “Advance estimate” (based on incomplete data) there is every likelihood that the figure will be revised when the “second estimate” is published on August 29, 2018. Indeed, the BEA informed users that it has conducted a comprehensive revision of the National Accounts which includes more accurate data sources and better estimation methodologies. So I had to revise my entire dataset today to reflect the revisions. The US result was driven, in part, by “accelerations in PCE and in exports, a smaller decrease in residential fixed investment, and accelerations in federal government spending and in state and local spending.” Real disposable personal income grew at 2.6 per cent (down from 4.4 per cent in the first-quarter). The personal saving ratio fell from 7.2 per cent to 6.8 per cent. Notwithstanding the strong growth, the problems for the US growth prospects are two-fold: (a) How long can consumption expenditure keep growing with flat wages growth and elevated personal debt levels? (b) What will be the impacts of the current trade policy? rise is a relevant question. At some point, the whole show will come to a stop as it did in 2008 and that will impact negatively on private investment expenditure as well, which has just started to show signs of recovery. Government spending at all levels has also continued to make a positive growth contribution. But with rising private debt levels and flat wages growth the growth risk factors are on the negative side. When that correction comes, the US government will need to increase its discretionary fiscal deficit to stimulate confidence among business firms and get growth back on track.

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The plaintive, I just want to do my art!

Today is Wednesday and only a few observations today as I want more time to write other things. Last night, I gave a talk at a Politics-in-the-Pub event in Newcastle, which is a monthly gathering held at a local hotel and attracts an audience of around 80 people or thereabouts. These are people who purport to be active politically and progressive in bent. The topic was Universal Basic Income and Automation, although it was really a general discussion of UBI, and, with my appearance, a comparison with the Job Guarantee. It was a revealing evening really because the discussion indicated that major policy issues are debated in public and among progressive people without the provenance of ideas being understood or how things fit together in a system. Quite dispiriting really. So I thought I would explore the appeal – I just want to do my art, which was one statement last night in support of a UBI.

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Fiscal policy in Australia is undermining the future of our grandchildren

Its Wednesday, so just a few short snippets that came to my attention, some comedy and some great music that has kept me company today while I have been working today. The first snippet concerns my revelation that fiscal policy in Australia is undermining the future of our grandchildren. Yes, an out-of-control government is spending our way to a future oblivion. The second snippet is my analysis of the latest INSA/YouGov German poll which shows that the euphoria if you can call it that which followed the formation of the GroKo has now dissipated and the AfD have overtaken the SPD in popularity. Which tells you that the progressive movements in Germany are failing. Why? Because they decided not to be progressive and, instead, decided to ape the conservatives. Not a good idea. The polls are showing why.

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Italy should prioritise an exit of the Eurozone madness

Last week, the Eurogroup met in Brussels and given all the Macron-Merkel buildup – see my blog post – The Meseberg Declaration – don’t hold your breath waiting (June 26, 2018) – the Europhiles were tweeting their heads off building themselves up into a ‘reform’ frenzy. If we were to believe half of it, then Germany was rolling over and about to agree to reforms that would put the Eurozone on a sound footing. Even progressive Europhile commentators held out hope of some big changes. Well not much happened did it. Like virtually nothing of any substance emerged from the meeting and matters were deferred (again) to December. Ho Hum! This is the European Union after all. At the same time, new voices encouraging an Italian exit appeared in the last week. Regular readers will know that in lieu of some unlikely turn of events in Europe where the elites about face and set in place effective reforms, I maintain that unilateral exit remains the superior option for an individual nation such as Greece or Italy. I am on the public record as arguing that given the size of the Italian economy in relation to the overall Eurozone economy, Italy should demonstrate leadership by finalising a negotiated exit with Brussels that minimises the damage for all parties. That would become the blueprint for other nations to regain their currency sovereignty and escape the Eurozone madness. Another voice joined that line in the last week.

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We can do something about neoliberalism

It is Wednesday, so just a (relatively) short blog post today. I am using the time today to further scope out the material and logic for my next book with Thomas Fazi, which we hope to publish sometime in 2019. I will provide more details on that project soon but it is intended to be the followup to our current book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017). So, today, a bit of that sort of flavour. In 1977, the Young European Federalists, which has long campaigned for European integration, released its Manifesto, which coined the term “democratic deficit”. While they intended it to be a concept to advance their pan-European intentions, the idea resonates strongly in the current climate and can be used to support a return to grass roots democracy aimed at reclaiming the nation state from the neoliberals and the progressive pretenders who have become infested with neoliberal ideas. In the last week, we have seen two notable events. First, the entrenchment of the colonial status of Greece under the watchful eye and collaboration of so-called ‘socialists’. Second, the magnificent success in today’s New York Democratic Primary election by a truly progressive candidate. These events are diametrically opposed. The former tells you what is wrong with traditional progressive political parties. The latter tells us that we can do something about it.

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Do not privatise the Australian Broadcasting Commission

It is Wednesday and my blog-light day. I am travelling a lot today and so have little time anyway for blog activities. Today, though, I reflect on the current demand by the conservatives in Australia to privatise our national broadcaster. This is a brazen attempt by mindless people, who are scared of knowing about the world beyond their own prejudices and sense of entitlement, to shut down a broadcaster they perceive to be an ideological threat. The amusing aspect is that this lot are too stupid to realise that the ABC is not left-leaning anyway. It increasingly runs news and economic commentary that is neoliberal to the core! But it remains that a public broadcaster has an essential role to play in a media landscape where profit rules content. The ABC has a long tradition of providing quality programs and analysis and while it has gone off the rails in recent years with its economic analysis (bowing to the neoliberal norm) it still provides excellent material to the public without advertisements that the commercial broadcasters have (and would never) provide. I also have some nice music offerings today.

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The ‘truth sandwich’ and the impacts of neoliberalism

On June 15, 2018, the OECD released their report – A Broken Social Elevator? How to Promote Social Mobility – which provided “new evidence on social mobility in the context of increased inequalities of income and opportunities in OECD and selected emerging economies”. If you are still wondering why the mainstream progressive political parties have lost ground in recent years, or why the Italian political landscape has shifted from a struggle between ‘progressive’ and conservative to one between anti-establishment and establishment (the latter including both the traditional progressive and conservative forces which are now virtually indistinguishable) then this evidence will help. It shows categorically that neoliberalism has failed to deliver prosperity for all. While the full employment era unambiguously created a dynamic environment where upward social mobility and declining inequalities in income, wealth, opportunity were the norm, the more recent neoliberal era has deliberately stifled those processes. It is no longer true that ‘all boats rise on a high tide’. The point is that this is a situation that our governments have allowed to arise and which they can alter if they so choose. We should be forcing them to restore the processes that deliver upward mobility. And that is where the “truth sandwich” comes in. Progressive politicians that bang on about ‘taxing the rich to deliver services to the poor’ or who ask ‘where is the money going to come from’ or who claim the ‘bond markets will rebel’ and all the rest of the neoliberal lying drivel should familiarise themselves with the way the sandwich works. It is a very tasty treat if you assemble it properly.

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ECB continues to play a political role making a mockery of its ‘independence’

Those who follow European politics will be familiar now with the recent events in Italy. I wrote about them in this blog post – The assault on democracy in Italy. The facts are obvious. The democratic process for all its warts rejected the mainstream political parties in the recent national election and minority parties Lega Nord and M5S formed a governing coalition. The trouble started when they nominated Paolo Savona as Finance Minister. He had occasionally made statements that paranoid European elitists would interpret as being anti-Europe and anti-German. The political solution was easy and Italian President Sergio Mattarella vetoed Savona’s nomination. The Coalition withdrew and a right-wing technocrat Carlo “Mr Scissors” Cottarelli was to be installed as Prime Minister. That arrangement didn’t last long and the Lega Nord/M5S coalition emerged in government with the unelected Guiseppe Conti the new Prime Minister. But the interesting story to emerge out of all that relates to overt political behaviour by the supposedly independent European Central Bank. It has been clear for some time that the ECB has used its currency-issuing capacity to ensure that ‘spreads’ on Member State government bonds (against the benchmark German bund) do not widen too much. But it is also clear that when the ‘market forces’ do increase the spreads, which foments a sense of financial crisis, the ECB doesn’t necessarily act immediately. A good dose of crisis talk is what the political process needs to keep the anti-European forces at bay. The ECBs behaviour in this context became very political in the recent weeks and the only explanation is that they wanted the sniff of crisis to pervade while all the negotiations were going on over who would emerge as the new government in Italy. Democracy suffers another blow in that neoliberal madhouse that is the European Union.

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