Last week (February 1, 2021), the Australian Chamber of Commerce and Industry, which represents the business lobby, demanded the Australian government cut the unemployment benefit back to less than $A40 per day but at the same time it also demanded the Government extend wage subsidies to businesses. It is repugnant that the business culture in Australia is so impoverished, that the key business lobby group wants unemployed workers who cannot get a job because there are not enough jobs on offer to be forced to live at income support levels that are well below conventional poverty lines. But, at the same time, it supports businesses putting their own hands out to government for more. It is also stupid. They don’t seem to realise that providing an environment for strong wages growth produces the best conditions for profits. Yet these characters just want to accelerate the ‘race to the bottom’ which is a self-defeating strategy.
It’s Wednesday and a blog-light day as usual combined with some great jazz. But it is worth commenting briefly on yesterday’s monetary policy decision, which saw the Reserve Bank of Australia hold its policy rate at the record low of 0.1 per cent. That was no surprise. Mildly surprising given all the hype about the size of the public debt at present was the RBA’s decision to expand its asset purchasing program by an addition $A100 billion. In effect, the RBA is doing what many central banks are now doing – buying up the debt that has been issued to match (not fund) the expansion of fiscal deficits by governments as they try to deal with the negative consequences of the pandemic. While all this has helped the Australian economy record the disastrous economic impacts of the virus the state of affairs is still very poor. And the RBA knows that and is urging extending fiscal and monetary policy support until “at least” 2024. Yet, the Federal government is starting to talk about cutting fiscal support next month. This tension in aggregate policy was evident before the crisis. And it has been a global tension. The neoliberals haven’t disappeared. Austerity is in the wind. More struggle is necessary.
Since Britain left the European Union, the Remainer Woke Brigade (RWB) has associated every little bit of bad news that has been published about that nation to the decision to leave the EU. Op Ed articles, Tweets and the like. All scathing of the decision, indicating a failure to accept the democratic volition of the 2016 Referendum. They lost. They can’t get over it. But in the last few weeks there has been an extraordinary silence from this media ‘traffic’. It is of no surprise to me that this should be so. Their beloved EU has been demonstrating across multiple fronts why no sensible nation would want to be part of it bungling and dysfunctional membership. I also admit that I have been astounded how bad things have become under this European administration. Britain did the right thing in getting free of it even though its political scene is not yet capable of dealing with the new scope it now has. But the events of the last few weeks in Europe have been nothing short of breathtaking in their hypocrisy, incompetence and venality. The cosmopolitan progressive set have surely now realised that their dreams of pan-national workers paradise led by Brussels is just a figment of their own imagination.
There was an article in The Lancet from its editor (September 26, 2020) – Offline: COVID-19 is not a pandemic – which questioned the “narrow approach” that governments were taking to the coronavirus pandemic based on the assumption that “the cause of this crisis … [is] … an infectious disease”. His argument is a whole of medical professionals have become prominent in daily press briefings and the like as they trot out the results of epidemic models and news agencies interview “infectious disease specialists” every other day. But the reality is that “(t)wo categories of disease are interacting within specific populations” – COVID-19 and “an array of non-communicable diseases” which are “clustering within social groups according to patterns of inequality deeply embedded in our societies”. He thus used the term ‘syndemic’ rather than pandemic to highlight the socio-economic distribution of the pandemic and focus attention on inequality and other forms of socio-economic disadvantage which interact with biological dimensions to determine health outcomes. He focuses on co-morbidities but I would focus on poor working conditions, poor housing, inadequate nutrition, the stress of poverty and poor urban planning that segments populations into leafy, low-density suburbs and suburban hell-holes where people are crammed in like whatever due to social inequalities and deficient government policy interventions.
A few snippets today, being Wednesday and my short-form blog day (sometimes). I will have a few announcements to make early next week. One will concern a streaming lecture I will be giving next Tuesday as part of my usual work in Finland this time of the year. The title of my talk will be: Political economy thought and praxis post pandemic. I give an annual public lecture in Helsinki but this time it will be coming from the East Coast of Australia, given the pandemic. Details about access will be coming early next week (Monday’s blog post). For now some comments on the pandemic.
I provide a lot of research support for trade unions in wage determination cases in Australia, where wage agreements are uniquely decided in judicial processes. The cases are onerous and highly contested and as an expert witness I am often grilled for lengthy periods by the employers’ barristers in the evidential phase. One of the things that has been relevant in the last year or so has been the wage caps and freezes that government employers are placing on their workforce as a way of ‘saving money’. Prior to the pandemic they were forcing real wage cuts or zero real wages growth on workers under their wage cap strategies as part of their pursuit of fiscal surpluses. Now they are imposing freezes to reduce the size of their deficits. And, the same is happening in other jurisdictions such as the UK. Not only were the wage caps in the public sector damaging the well-being of public workers, in some cases, the lowest paid (cleaners etc), but they were also providing ‘wage guidance’ to the private sector, at a time when household debt is at record levels and consumption growth wage faltering. At a time when consumers are already wary and saving higher proportions of their disposable income, freezing wages is not a responsible thing to do in a pandemic. The UK government, for example, does not need to ‘save money’. But as part of the recovery from the pandemic, the government will benefit from households having been able to pay down debt while saving more and from the maintenance of their real purchasing power. There are no grounds for freezing wages – public or private.
I saw a letter published by IPPR – who call themselves “The Progressive Policy Think Tank” – urging the BBC to change the way it conducts economic commentary. The letter – Economists urge BBC to rethink ‘inappropriate’ reporting of UK economy – was sent to the Director-General of the BBC following some “BBC reporting of the spending review” which they say “misrepresented the financial constraints facing the UK government and economy.” The H.M. Treasury – Spending Review 2020 – was published on November 25, 2020. I decided not to comment on it publicly given that my time is poor at the moment with lots of writing deadlines and travel now resuming with pent-up demand for my services (in person). It was what you would expect from the British Treasury. But some of the signatories to this latest letter criticising the BBC coverage of the Spending Review should look in the mirror. They seem to have short memories or perhaps they are learning the error of their ways. We can only hope.
Today, we have another contribution from a guest blogger in the guise of Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. He indicated that he would like to contribute occasionally and that provides some diversity of voice although the focus remains on advancing our understanding of Modern Monetary Theory (MMT) and its applications. It also helps me a bit and at present I have several major writing deadlines approaching as well as a full diary of presentations, meetings etc. Travel is also opening up a bit which means I can now honour several speaking commitments that have been on hold while we were in lockdown. Anyway, over to Scott for another one of his contributions …
Last week we saw further evidence of the way in which class divisions create havoc for society although the way these events have been constructed in the media and popular perception are the antithesis of what was really going on. After having no coronavirus cases since April 16, 2020, suddenly we were informed on Sunday, November 15, 2020, that a dangerous virus cluster had emerged in South Australia (in particular the capital Adelaide) as a result of a breach in quarantine. The memories of Victoria’s second wave, which had started as a result of a similar breach came flooding back and the South Australian state government almost immediately imposed a very harsh 6-day lockdown (the most restrictive imaginable). The following day, amidst all the furore about the severity of the restrictions, the Government announced they were rescinding the orders (mostly). Why? Because some foreign worker had contracted the virus had lied to investigators about his status and was, in fact, working at both the quarantine hotel where the breach occurred and a pizza shop were additional cases had been detected. Apparently this ‘lie’ led to the severe lockdown because it created some uncertainty in transmission links. I doubt that was the case and I think the Government just overreacted and lacked confidence in their own systems. But now it is the ‘lie’ that everyone is focusing on and the Premier is threatening to ‘throw the book’ at the individual. Not many questions are being asked in the media about the poor systems that led to the breach in the first place nor the overreaction of the government. All attention is being focused on a casualised, precarious worker who was forced to work (at least) two jobs to survive. There lies the issue.
The latest data from the Australian Bureau of Statistics – Labour Force, Australia, October 2020 – released today (November 19, 2020) shows that the labour market has improved largely due to the recent easing of the lockdowns in Victoria as that state overcomes the second virus wave. All states and territories experienced employment gains in October 2020. Even though employment increased by 1.4 per cent in the month (which is a very strong result), unemployment rose marginally (0.1 points) as a result of the very strong growth in participation (up 0.9 points). Underemployment also fell by 1 point and the broad labour underutilisation rate (sum of unemployment and underemployment) fell by 0.9 points. But the recovery is still too slow and more government support by way of large-scale job creation is required given total employment is still 233 thousand below the level in March 2020 and unemployment is 245 thousand higher.