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The Weekend Quiz – March 31-April 1, 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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My response to a German critic of MMT – Part 2

This is the second part of my response to an article published by the German-language service Makroskop (March 20, 2018) – Modern Monetary Theory: Einwände eines wohlwollenden Zweiflers (Modern Monetary Theory – Questions from a Friendly Critic) – and written by Martin Höpner, who is a political scientist associated with the Max-Planck-Institut für Gesellschaftsforschung (Max Planck Institute for Social Research – MPIfG) in Cologne. In this part we discuss bond yields and bond issuance. I had originally planned a two-part series but the issues are detailed and to keep each post at a manageable length, I have opted to spread the response over three separate posts. In Part 3 (next week) we will discuss inflation and round up the evaluation of his input to the debate.

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Neoliberalism corrupts the core of societal values

It is Wednesday and just a brief comment on current affairs today. Tomorrow I will have Part 2 of my response to the German attack on Modern Monetary Theory (MMT). Nations more often and not claim to identify with a value system that is intended to bind the citizens together. It is a fine line between this and nationalism. The US for example, claims to be the land of the free, although that is a patently ridiculous thing to hold out given the nature of its society. Australia has long traded on the claim that it elevates sportspersonship, fairness, honesty above all else. In a sports’ obsessed nation, we hold ourselves out to be ‘fair but tough’. We play very hard – competitively – but honour sporting traditions. At times, this claim is at the sanctimonious extremes and we regularly criticise other sporting nations for what we perceive to be rule breaking – even rule stretching doesn’t escape our ‘holier than thou’ media and commentators. That myth has now been exposed. In fact, our most elevated national team – the Australian cricket team – has demonstrated that it stoops to deliberately conceived cheating (not spur of the moment) in order to win. And now these revelations are obvious, the national scandal that has followed, reveals how out of touch we have become with what has happened to our Society in this neoliberal era.

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Corporate Australia – the mendicants who want more!

Over the last few months, we have had the Australian Treasurer clogging up the media with his relentless claims that Australia has no choice but to cut corporate tax rates to keep up with the rest of the world (this is after Donald Trump started the ball rolling). The Federal government is trying to eliminate the resistance in the Senate (Upper House) to their proposal to cut corporate rates from 30 to 25 per cent. The Treasurer is a really pathetic figure – a non-economist, mouthing platitudes over and over about matters that he has little understanding and which the research evidence doesn’t support anyway. Then, last week, the ultimate public purse dependents, big business sent the members of the Senate a letter (a sort of blackmail letter) claiming if the Senators stopped blocking the legislation, then their corporations would go on an investment, wage increasing, employment creating binge. It was sickening to read and listen to. These mendicants are trying to convince us that the only thing stopping an investment boom or wage increases is a 5 cents in the dollar tax impost that tax data reveals many of them don’t pay anyway. It was hypocrisy parading as blatant self-interest. These characters have no shame.

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My response to a German critic of MMT – Part 1

Makroskop is a relatively new media publication in Germany edited by Heiner Flassbeck and Paul Steinhardt. It brings some of the ideas from Modern Monetary Theory (MMT) and other analysis to German-language readers. It is not entirely sympathetic to MMT, differing on the importance of exchange rates. But it is mostly sympathetic. I declined to be a regular contributor when invited at the time they were starting the publication not because I objected to their mission (which I laud) but because their ‘business model’ was a subscription-based service and I consider my work to be open source and available to all, irrespective of whether one has the capacity or the willingness to pay. But I have agreed to contribute occasionally if the material is made open source, an exception to their usual material. Recently, the editors approached me to respond to an article they published from a German political scientist – Modern Monetary Theory: Einwände eines wohlwollenden Zweiflers or in English: Modern Monetary Theory – Questions from a Friendly Critic. The article constitutes the first serious engagement with MMT by German academics and thus warrants attention. Even if you cannot read German you will still be able to glean what the main issues raised in the German article were by the way I have written the English response. The issues raised are of general interest and allow some key principles of MMT to be explicated, which explains why I have taken the time to write a three-part response. Today is Part 1.

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The Weekend Quiz – March 24-25, 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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Australian labour market – subdued and weaker in 2018

The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for February 2018 shows that the Australian labour market labour market has weakened at the start of 2018. Employment growth was again very modest in February 2018 and participation only marginally rose. The rise in unemployment was due to employment growth failed to keep up with the underlying population growth although the slight uptick in participation exacerbated this a bit. The teenage labour market stood still although this cohort did participate in the overall full-time employment growth. Further, underemployment rose marginally as did the broad labour underutilisation rate in the three months to February 2018. Overall, my assessment is that the Australian labour market has a lot of slack remaining. It is not close to full employment yet.

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Neoliberal economic Groupthink alive and well in Europe

It is Wednesday so only a couple of snippets today. I was going to write about the BBC’s ridiculous attempt to portray Jeremy Corbyn as a sort of Russian-spy-type-dude in its Newsnight segment last Thursday (March 15, 2018). They manipulated his peaked hat (via Photoshop or through lighting) to make it look like a typical Lenin-type “Soviet stooge” hat and presented him against a red Kremlin skyline of Red Square (Source). The BBC denied they had altered the hat but then admitted the BBCs “excellent,hardworking) graphics team … had the contrast increased & … colour treated) but it was only accidental (not!) that he was made to look as Leninesque as possible. Amazing how deep the anti-neoliberal Groupthink has penetrated. This is the public broadcaster! But Groupthink is alive and well in Europe and doing its best to pervert, distort, stifle and suppress debate on important matters relating to democratic freedoms and the failure of the EU.

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