The poor are more generous and compassionate than the rich

I have been reading a lot of psychology research in recent months which is a very broadening experience. Mainstream economists rarely include research from the wider social sciences. However, I have always been interested in finding out what other social scientists are up to and how their work bears on the human society that I have spent a career studying. At present, the neo-liberals are on the rise again and are driving governments to introduce harsh fiscal withdrawals using the supposition that this is fiscally responsible behaviour. Their position is unsupported by credible logic or empirical research. In fact, the overwhelming body of evidence rejects the theoretical models they parade to defend their positions. One of the under currents of their proposals is that by cutting public welfare payments and support governments can not only “save” money (and reduce their deficits) but also free the welfare space for private charity. They eulogise the benefits and virtue of private charity but demonise public support for disadvantage. So today I read an interesting article from some psychologists who have examined whether those with economic resources are generous or not. The results of their work are that the poor are more generous and compassionate than the rich. Another evidential flaw in the neo-liberal mantra that should worry all of us.

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We have been here before …

The daily rhetoric being used to promote fiscal austerity maybe couched in the urgency of the day but we have heard it all before. In this blog I just reflect on history a little to remind the reader that previous attempts to carve public net spending, based on the “expectations” belief government was not going to tax everybody out of existence, failed to deliver. The expected spontaneous upsurge in private activity has never happened in the way the mainstream macroeconomic supply-siders predicted. Further, the chief proponents usually let it out in some way that the chief motivation for their vehement pursuit of budget cuts was to advance their ideological agendas. Of-course, the arguments used to justify the cuts were never presented as political or class-based. The public is easily duped. They have been in the past and they are being conned again now. My role is to keep providing the material and the arguments for the demand-side activists to take into the public debate.

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The real World Cup

Regular readers will by now know I am not a soccer fan. And my national team (now locally known as the shockeroos) seemed like rank amateurs the other day against the might of Deutschers. The German coach described the game as “a good warm-up”. Reality check! But of-course, there is a competition going on in South Africa that a lot of people are interested in. So I have been following it myself. I am of-course referring to the The First Poor People’s World Cup which is currently underway in South Africa. This event involves 36 teams from 40 different communities coming together on a shoe-string budget to play soccer. In cost benefit terms it will add a lot more value to South Africa than the other less important competition that is being simultaneously run in South Africa.

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CofFEE conference – Day 1 report

Today is the first day of the 11th Path to Full Employment Conference/16th National Unemployment Conference in Newcastle, hosted by my research centre. As host I am of-course tied up in the event but I thought it would be of interest to visitors to my blog to provide some feel for what has transpired today. I only focus on the plenary talks. The other presentations in the parallel sessions have all been very interesting.

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More calls for job creation … but then

In the last few days I have seen more calls from commentators for policy makers to take new initiatives to generate jobs and growth. Some of these calls have come from commentators and research centres that sit on the “progressive” side of the macroeconomic debate. Unfortunately, their proposals are always compromised by their demonstrated lack of understanding of how the monetary system operates. In my view these proposals actually undermine the need to advance an understanding that sovereign governments can create true full employment and should do so as a matter of urgency. By playing ball with the conservatives and choosing to focus on deficit outcomes these progressives divert the policy focus away from the real issues. In short, the federal budget deficit outcome should never be the focus of policy.

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Where the crisis means death!

Today I have been working on a project for the Asian Development Bank concerning regional development and macroeconomic risk management in the Central Asian countries (all the “stans” plus a few others). I have also been reading a lot of the development economics literature lately, which is generally a place that the neo-liberal troglodytes really run amok. It certainly focuses one’s attention. In the advanced countries the media focuses on our own losses. In Australia, a lot is written about superannuation losses. And journalists, who largely ignored the fact that during the boom we still had around 10 per cent of our willing workers without enough work – wasted and excluded, are once again talking about unemployment. But overall, the public debate is not at all focused on how the current economic crisis is damaging the weakest of the weak in far off lands and killing people.

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Hollow rhetoric … the Government is not doing all they can!

Yesterday’s labour force data which showed how quickly the labour market is deteriorating, brought some extraordinary reactions from the Federal government. So far their response suggests to me that they have no coherent plan to meet the crisis and are trying to operate within the same labour market policy framework that the previous government installed. That framework failed to achieve full employment when the economy was growing and will do nothing at all for a labour market that is now in freefall. A major shift in policy is needed. More worrying is that the labour force data shows that the teenage segment is in terrible shape. That requires immediate policy action. But the responses I have heard overnight suggest very little will be done because the Employment Minister seems to want us to believe that “there is no quick fix”. That claim is of-course nonsense. The costs of the downturn could be considerably lessened if the Government abandoned neo-liberalism and demonstrated some leadership through direct job creation.

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Rinse and repeat – Truss chaos – the new benchmark

For years, those who want selective access to government spending benefits (like the military-industrial complex and other parasitic sectors), while claiming the government cannot afford to provide adequate income support to the most disadvantaged citizens have used various ruses to give an air of authority or legitimacy to their claims. So in the UK, the lie in 1976 by the then Labour government that it was going to have to borrow from the IMF to stay solvent has been regularly wheeled out. In Europe, it was the ‘tournant de la rigueur’ (austerity turn) introduced by the French government of François Mitterrand in 1983 that effectively cancelled the commitment to the progressive – Programme commun – that is often cited as a demonstration of the limited capacity of governments to resist the global power of the financial markets. The fact that it was progressive governments that instigated these events made it more emphatic – the Left essentially swallowed the fictions introduced by the Right and the corporate elites that governments were now powerless against the power of the financial markets. The macroeconomic contest was essentially ceded to the conservatives and it has been that way since. There is now a new ruse that the elites are using that the progressives are also spreading – the Liz Truss Ruse. This apparently tells us that governments must appease the financial markets or face currency destruction and rising bond yields. Like its predecessors, there is no validity to the claims. But the Left is so bereft that it cannot see through the smoke and mirrors. And that is why the world is in the parlous state that it is – the contest of ideas is non-existent. It is a case of rinse and repeat – except all is happening is lies and posturing is being recycled.

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And the winner is Brisbane … well kind of … or maybe not

Just when we were meant to be waving our national flags, standing to attention at the medal ceremonies and enjoying the Olympic Games from our various states of lockdown or in my case (day 12) quarantine, Professor Scott Baum sends me his latest guest blog telling us how bad the Games are. What a spoilsport (sorry). So, today, Scott from Griffith University, who has been one of my regular research colleagues over a long period of time, brings the wet blanket to wreck our fun, and just as Victoria (where I am holed up in quarantine at present) comes out of lockdown. Over to Scott …

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Europe’s neoliberal DNA is still at work

Many progressives are claiming that the EU has seen the light as evidenced by their relaxation of the harsh Stability and Growth Pact rules during the pandemic. There are even papers coming out advocating a ‘Post Third Way’ revival of social democratic forces in Europe to further integrate and reorient it along the lines of the social Europe narratives. I think this enthusiasm misrepresents what is going on in Europe at present. The hard-core, neoliberal DNA has not morphed. There has been no relaxation of the SGP rules given that a thorough knowledge of the legal basis of the Pact shows that there is scope in the rules for what is going on at present. Further, there is evidence that even though the temporary provisions in the SGP are being exercised, the European Commission is resorting to blackmail by imposing conditionality on Member States who want access to the stimulus funds. It seems that to get the funds, Member States have to fast track structural reforms, which means the stimulus funds are not stimulus funds at all, but, rather offsets, partial or otherwise, for the damage that cutting pensions etc will cause. Europe’s neoliberal DNA is still at work!

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The fundamental realignment of British society via fiscal austerity

In my analysis of the UK fiscal statement that George Osborne released on March 23, 2011 – I don’t wanna know one thing about evil (April 29, 2011) – I noted that the imposition of fiscal austerity in Britain meant that any hope of growth was really dependent on a combination of export growth and household consumption growth. With the former source unlikely and household income growth sluggish (and falling in real terms), households would have to run deficits, which necessitated running down savings and/or increasing borrowing. British households were already overloaded with debt at the time. The New Keynesian economic orthodoxy claimed that my concerns about a growth strategy that was ultimately reliant on increasing household indebtedness were misplaced because the debt would be accompanied by increased wealth via rising house prices. Well the most recent data available from the British Office of National Statistics and other sources (house prices) shows that my concerns were real. Real housing prices have been falling for the last few years in Britain and are now growing at their slowest pace since 2013. Further, ONS data shows that “UK households have seen their outgoings surpass their income for the first time in nearly 30 years” and they “are borrowing more and saving less”. At the same time, households are accumulating more debt than assets and borrowing more by way of non-mortgage loans to cover the squeeze on disposable incomes. Also, it is not just mortgage debt that has been rising. The real burden of short-term household debt (credit cards etc) in Britain has risen dramatically over the last 20 years. The rising debt and household deficits are also concentrated at the lower end of the income distribution and wealth inequality is rising significantly. Then we learn that in excess of 30 per cent of British children are living in poverty. So in the face of withering fiscal austerity that is impacting severely on the prosperity of the current generation of adults, the policy failure is also ensuring that the disadvantage will be taken into the next generation of adults and their children. Deprivation breeds deprivation. This is a fundamental realignment of British society that will take it back to C19th-type relativities.

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Being lectured about the problem by those who created the problem

There are many examples of high profile players in the political arena trying to revise history and reinvent themselves to suit the new climate they are operating in. Tony Blair is a notable example in recent months where he sought to influence the upcoming British election by casting aspersions on the current Labour Party leadership. His past record is so abysmal that anyone in their right mind would just go away and stay silent. But this sort of person – the revisionist reinventers – have a thick hide and a sense of entitlement that most of us couldn’t imagine. I read an article in the American Prospect Magazine last week (June 1, 2017) – The Democrats’ ‘Working-Class Problem’ – written by Stanley B. Greenberg, an American pollster who “works with center-left political parties in the United States and abroad” and so claims to have insights into why people vote the way they do. This was a classic example of being lectured about a problem when the lecturer is himself part of the problem but, seemingly, fails to see that.

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Disgraceful cut in wages for more than a million low-wage workers in Australia

In case you thought that neo-liberalism had gone and buried its head in shame after all the disasters that it has wrought after several decades of privatisation, outsourcing, pernicious welfare changes, fiscal austerity, out of control banksters, dramatic increases in income and wealth inequality, then Australia’s most recent effort will remind that it is still alive and well and morphing into something more nasty than we have previously seen (in this country). On Thursday (February 23, 2017), the Fair Work Commission, which is the judicial body empowered by the Federal Government to set minimum wages and conditions in all sectors (so-called ‘awards’) determined that the lowest-paid workers in Australia – more than a million of them (in an employed Labour Force of just over 12 million) – were getting too higher wages and incomes. Accordingly, they decided to cut wages – not just the real equivalent but the actual wage rates that these workers earn. The judges (who I guess do not work as a matter of course on Sunday) have fallen prey of this 24/7 greed for more profits and determined that Sunday work no longer justifies the existing penalty rates. Their decision to savagely cut them just means the bosses pocket more profits and workers move closer or into poverty with rising bankrupcties, mortgage and credit card defaults and the rest of it. The decision is a disaster for the lowest-paid (hospitality, retail and cafe) workers in this country and it will feed through to other sectors before long. The Federal government could easily legislate to stop the cuts. It won’t. The trade unions could rebel. They won’t. So it is really left to us – the citizens to do everything we can including boycotts of firms who exploit the decision to proctect the wages of the poor.

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Moving on from the post-modernist derailment of the Left

“The linguistic construction of post-capitalist hegemony opens a space for the engendering of the public sphere”. Sounds ominous and deep. Sounds knowledgeable. Then what about the next sentence: “The illusion of praxis carries with it the discourse of the public sphere.” amd the next: “The emergence of normative value(s) opens a space for the ideology of the public sphere.” I could write a whole essay about that topic in the style that typified the so-called post-modernist explosion in social sciences in the 1970s and beyond. Aah, Pomo, the nonsensical shift in literary endeavour that has set the Left back as much as the embrace of Monetarism and, more generally, neo-liberalism. This blog continues to add to the material we are working on as part of my next book (with co-author, Italian journalist Thomas Fazi), which traces the way the Left fell prey to what we call the globalisation myth and formed the view that the state has become powerless (or severely constrained) in the face of the transnational movements of goods and services and capital flows. This material will be part of the final section of the book, which we are sort of calling a ‘Progressive Manifesto’, designed to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world are available. The book will be published in 2017 by Pluto Books, London. This blog examines the way the Left became entranced with post-modernism and fell into the trap of disappearing into crevices of meaningless at the expense of a focus on class struggle and a coherent critique of capitalism. We argue that critique is an essential part of the revitalisation of the Left political struggle against neo-liberalism and the restoration of the Left as a political force.

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IMF recommends that firms should increase real wage growth in Japan

I read two articles/reports today about Japan. The first was a Fairfax article (March 21, 2016) from a journalist who invariably peddles the neoliberal economic myths. The second was from the IMF extolling the virtues of higher wages in Japan. What? Yes, you read the second point correctly. The IMF considers that an essential new policy element (a “fourth arrow”) is required in Japan in the form of real wages growth outstripping productivity growth by around 2 per cent. It wants the government to legislate to ensure that happens. In general, the IMF solution for Japan is in fact one of the key changes that nations have to do bring in to restore some sense of stability into the world economy. Governments around the world has to ensure that real wages growth, at least, keeps pace with productivity growth and that workers can fund their consumption expenditure from their earnings rather than relying on ever increasing levels of credit and indebtedness. This will of course require a fundamental change in our approach to the interaction between society and economy. It will require increased employment protection, larger public sector employment proportions, decreased casualisation, and legislative requirements imposed upon firms to pass on productivity gains. It’s no small order, but it is one of a number of essential changes that we will have to do introduce as part of the abandonment of neoliberalism.

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I fell off the left-right continuum today

Another relatively short blog today – it is holidays after all. There was an article in the New York Times (December 23, 2013) – Inequality for Dummies – by regular Op Ed columnist Bill Keller, who clearly thinks he represents the pragmatic, reasonable progressive “centre-left” as distinct from the “left-left” who have their heads in the sand and apparently are content to mouth of slogans to make themselves feel better but which do nothing to address reality or advance the progressive cause. My version of the topic is inverted. I usually think the “centre-left”, which used to be the centre-right or even further out to the right before neo-liberalism shifted the central point sharply so that it made Genghis Khan look downright reasonable, are gutless wonders who pretend to be progressives if it allows them to extra personal rents (rewards) and/or gain position of power in non-conservative political parties. I typically see the “centre-left” as part of the problem not part of the solution. So I read on.

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There is a class warfare and the workers are not winning

The Politics of Envy – that old chestnut from the neo-liberals – is bandied around every time there is any insinuation that the capitalist system produces distributional outcomes that are not remotely proportional to the effort put into production. Whenever governments challenge the distributional outcomes – for example, propose increasing taxes on the higher income recipients (note I don’t use the word “earners”) there is hell to cry and the defense put up always appeals to the old tags – “socialist class warriors undermining incentive”, “envy”, etc. In the 1980s, when privatisation formed the first wave of the neo-liberal onslaught, we all apparently became “capitalists” or “shareholders”. We were told that it was dinosauric to think in terms of the old class categories – labour and capital. That was just so “yesterday” and we should just get over it and realise that we all had a stake in a system where reduced regulation and oversight would produce unimaginable wealth, even if the first manifestations of this new “incentivised” economy channelled increasing shares of real income to the highest percentiles in the distribution. No worries, “trickle-down” would spread the largesse. We know better now – and increasingly the recognition, exemplified in 2006 by Warren Buffett’s suggestion that “There’s class warfare, all right … but it’s my class, the rich class, that’s making war, and we’re winning” (Source), is that class is alive and well and in prosecuting their demands for higher shares of real income, the elites have not only caused the crisis but are now, in recovery, reinstating the dynamics that will lead to the next crisis. The big changes in policy structures that have to be made to avoid another global crisis are not even remotely on the radar.

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I don’t care if every fact is correct

I thought it was hysterical when back in 2009 and 2010 there were papers written and conferences held which carried the theme of the “lessons learned from the crisis”. For example, the – 6th ECB Central Banking Conference (November 2010) – had an array of leading mainstream economists and central bankers telling us what it was all about despite these same characters previously representing a body of work that told us the macroeconomic problem (cycles and unemployment) had been solved. There were lots of papers, Op Eds and media commentary (every day on Fox News and its ilk) warning us of the worst unless governments imposed austerity. Even as recently as the last US election, the “skies are about to fall in” message was prominent and dominated the Republican campaign. Millions of people are unemployed as a result of these economists having sway with policy makers. The evidence denying their predictions etc started to slowly trickle in around 2008 and as the years of this madness have passed the evidence is now a dam break. At this point, the mainstream just talk among themselves and continue to bank their high salaries and take on lucrative consultancies. Denial of facts is their ultimate recourse.

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Republican agenda – simple and venal

One of the continuing myths that economists have been responsible for is the notion of – Trickle-down economics or supply-side economics. The popular version of notion is that if there are tax cuts for high income earners and the wealth (reducing capital gains taxes) then saving and investment will rise and the economic growth and productivity growth that ensues benefits even the lowest income earner. In the current debate about the so-called “fiscal cliff” in the US, the Republicans clearly want lower marginal tax rates for the high-income earners while calling for reform to entitlements, which benefit the lowest income recipients. There are countless statements from conservative and not-so-conservative politicians and commentators that cutting the highest marginal tax rates is the best way to stimulate growth. The only problem is that the evidence does not support the claims. Without an evidential basis, the real agenda of the conservatives then becomes transparent. They want to cut entitlements at the bottom end of the income distribution and pocket more at the top end. It is really as simple and as venal as that.

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We do have a choice – we just need to identify it

I went for a walk at lunchtime through a main shopping area where I am working today. In the past you saw Sale signs twice around twice a year – post Xmas and mid-year. The advertised discounts at this time were modest except for some enticement items that might have been discounted by 30 per cent or so. You may check this out going through archives of Catalogue AU. You rarely saw Closing Down/All Stock must go signs. You rarely saw massive discounts – such as 80 per cent off and the like. Times have changed and there seems to be a permanency to these sales and the discounts are huge. Previously well-to-do shopping strips are now slowly being punctuated with empty shops so the Sale/Closing Down signs are now interspersed with For Lease signs. And Australia is meant to be going through a one-in-a-hundred years mining boom and the Government tells us we are doing so well that they have to undermine aggregate demand by running a surplus to give the economy room to grow even more. The problem is that our political leaders are in denial and continually bombard us with lies to perpetuate their ideological stances which work against the well-being of the majority of citizens. It is clear that the system is failing and that means we have a choice. The problem is that we first have to identify that we have that choice.

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