The Case of the Missing Report – Part 1

This blog post is a long time in gestation and I could have written in 2009 which is the relevant year of the events that I will document in this two-part series. My conversations with government officials during my working trip to the Philippines last week highlighted several things, including their sheer terror of IMF intervention and the ratings agency. I will write separately about that in a later post. But the IMF watches these types of nations like a hawk and is ready to pounce to enforce their authority at the slightest departure from the neoliberal macroeconomic policy line. As long as these types of nations concede to the IMF bullying they have very little hope of developing towards being advanced states. And IMF bullying is what this blog post is about. This is Part 1 of a two-part story that might be summarised as the ‘Case of the Missing Report’. I will solve the mystery in Part 2, which will be published on Thursday of this week.

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Field trip to the Philippines – Report

I have been working in Manila this week as part of a ‘knowledge sharing forum’ at the House of Representatives which was termed ‘Pathways to Progress Transforming the Philippine Economy’ that was run by the Congressional Policy and Budget Research Department, attached to the Congress (Government). I am also giving a presentation at De La Salle University on rogue monetary policy. It has been a very interesting week and I came in contact with several senior government officials and learned a lot about the way they think and do their daily jobs. I Hope the interactions (knowledge sharing) shifted their thinking a little and reorient to some extent the way they construct fiscal policy. This blog post reports (as far as I can given confidentiality) what went on at the Congress.

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Shifts in societal attitudes towards well-being mean that a degrowth strategy does not necessarily have to be political suicide

At the end of World War 2, the Western nations were beset with paranoia about what the USSR might be planning. The West had essentially relied on the Soviet armed forces to defeat the Nazis through their efforts on the Eastern front, after Hitler had launched – Operation Barbarossa – which effectively ended the – Molotov–Ribbentrop Pact – signed in 1939 between Germany and the USSR. Following the War, the ‘spectre of Communism’ drove the Western political leaders to embrace social democracy and introduce policies that created the mass-consuming middle class in most countries, which was seen as a bulwark against the development of a revolutionary working class movement and any further spread of Communism. While the interests of capital hated the welfare state and the rise of trade unions, they saw these developments as a means to protect their hegemony in the new world and the uncertainty that the – Cold War – engendered. Mass consumption was akin to Marx’s claims about religion being the ‘opium of the people’ and it has been a dominant part of life in advanced nations in the Post War period. It is one of the reasons that people think a degrowth strategy can never be embraced by the political class because it would confront a population besotted with material accumulation and consumption. However, research from Japan suggests that a strategy designed to reduce material consumption will not “reduce individual happiness and collective wellbeing” (Source) and a decoupling between growth and human happiness is indeed possible, which means the political class, if they are courageous enough, can introduce policies that promote degrowth.

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The Japanese government is investing heavily in high productivity sectors and revitalising regions in the process

Last week I noted in my review of the Australian government’s Mid-Year Economic and Financial Outlook (MYEFO) – Australian government announces a small shift in the fiscal deficit and it was if the sky was falling in (December 19., 2024) – that the forward estimates were suggesting the federal government’s fiscal deficit would be 1 per cent of GDP in 2024-25, rising to 1.6 per cent in 2025-26 before falling back to 1 per cent in 2027-28. The average fiscal outcome since 1970-71 has been a deficit of 1 per cent of GDP. I noted that the media went crazy when these estimates were released – ‘deficits as long as the eye can see’ sort of headlines emerged. It was fascinating to see how far divorced from reality the understandings in Australia are of these matters. Meanwhile, the RBA keeps claiming that productivity is the problem and the reason they are maintaining ridiculously high interest rates even though inflation has fallen back to low levels. My advice to all these characters is to take a little trip to Hokkaido (Japan) and see what nation building is all about. The Japanese government has already invested ¥3.9 trillion for semiconductor industry development since 2021 (that is, 0.7 per cent of GDP) and the Ishiba government recently announced a further ¥10 trillion (1.7 per cent of GDP). Meanwhile, the overall deficit is around 4.5 per cent of GDP and no-one really blinks an eyelid. The Japanese government is investing heavily in high productivity sectors and revitalising regions in the process.

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The assessment that Greece has been an ‘astonishing success’ beggars belief

Today, I consider the Greek situation, the decision by the UK Chancellor to further deregulate the financial services sector and then to calm everyone down or not, some music. The Financial Times published an article (December 12, 2024) – The astonishing success of Eurozone bailouts – which basically redefines the meaning of English words like ‘success’. Apparently, Greece is now a successful economy and that success is due to the Troika bailouts in 2015 and the imposition of harsh austerity. The data, unfortunately, doesn’t support that assessment. Yes, there is economic growth, albeit from a very low base. But other indicators reveal a parlous state of affairs. At least, this blog post finishes on a high note. Please note there will be no post tomorrow (Wednesday) as I am travelling all day. I will resume on Thursday.

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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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