The Bank of International Settlements published its – 84th BIS Annual Report, 2013/2014 – yesterday (June 29, 2014). Their message is that governments (particularly central banks) have been too focused on reducing short-term output and employment losses at the expense of a long-term focus on the financial cycle, the latter, which is in their view, essential to restore “sustainable and balanced growth”. I beg to disagree.

The opening paragraph read “National debt will continue to balloon throughout the first term of the Coalition government, despite harsh spending cuts to be identified by a Commission of Audit, a crackdown on public service jobs, and a promise that government would be smaller”. Of-course, the journalist meant to say “because of” rather than “despite” but his neo-liberal keyboard thwarted his better understanding. The article was about the debate now in full swing about our debt ceiling. That’s right, suddenly, Australia has a debt ceiling debate. As if the nonsense in the US wasn’t enough. We had to show the world how stupid we are as a nation by having our own ceiling and then spawning a debate about, which then sees salivating journalists chasing politicians around asking them all sorts of questions about increasing it etc. None of the above has any foundation in economics yet will lead to poor policy choices being taken which will undermine social and economic prosperity. What a vacuous world politics and the industry that is fed by it really is!

Australians have a history of being prone to a syndrome, which social anthropologists refer to as – cultural cringe. It’s a very nasty condition an “internalised inferiority complex which causes people in a country to dismiss their own culture as inferior to the cultures of other countries”. Not very attractive. Some might say it is a “fundamental element of Australian self-identity”. I don’t intend to write about that though – just observe that it exists and explains why scores of Australians have to “go overseas” and then come back again before recognition is forthcoming (for example, do PhD programs abroad when there is no evidence that they are better). Anyway, this syndrome revealed itself again this week when our politicians clearly felt they were being too sane and so decided to follow the lunacy of the politicians in the US and beat up our own little debt ceiling crisis. It just confirms that we are all living in the Land of Smoke and Mirrors and the Martians are embarrassed for us.

There was an article in the UK Guardian (Australian) edition last week (September 27, 2013) which carried the title – Can Labor be blamed for rising unemployment?. The Labor government, which was tossed out of office in Australia on September 14, had been in power since late 2007. They inherited an unemployment rate of 4.4 per cent (which dropped 3 months later to 4 per cent on the tail end of the growth phase), an underemployment rate of 6.2 per cent (total labour underutilisation rate of 10.7 per cent), a participation rate of 65.6 per cent and an employment-population rate of 62.7 per cent. By the time we got sick of them, the unemployment rate was 5.8 per cent and rising, the underemployment rate was 7.8 per cent and rising (total wastage was 13.7 per cent and rising), the participation rate had dropped to 65 per cent (some 114 thousand workers exiting the labour force because of the lack of jobs), and the employment-population ratio had dropped to 61.2 per cent (a loss of 285 thousand relative jobs). The labour force increased by 1147 thousand over this time but employment only rose by 934 thousand, which meant that unemployment rose by 161 thousand more than if the relative scales had been maintained from November 2007. So is Labor to blame for this? Of-course it is – it was the currency-issuing government for 6 years or so. Any rise in the unemployment rate is the fault of the national government because it alone as the complete capacity to offset any reductions in employment arising from other sources such as global financial crisis, the slowdown in the Chinese economy, an appreciated Australian dollar and whatever else. The author of the Guardian article, while mounting a reasonable fight against the conservative view of the changing labour market, feels unable to admit that basic truth. So the Labor Party is obviously to blame because it was in government and could have prevented the rise in the unemployment rate.