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The Weekend Quiz – August 10-11, 2019 – 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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The Green New Deal must wipe out precarious work and underemployment

I was coming through the streets of inner Melbourne the other night after playing in my band. I couldn’t believe how many little scooters with those big boxes on the back were buzzing around, in and out of traffic, turning here and there, presumably, delivering food to people who preferred to stay in from the cold weather. I had sort of noticed these ad hoc cavalcades of cheap scooters before but never really assessed the extent of the proliferation. It represents an amazing and highly disturbing trend in our labour market. Okay, that sounds like something someone from another (older) generation might say. He who grew up when there was secure employment and wages and conditions were more tightly regulated. And I have seen Tweets from young people telling us ‘oldies’ to step aside. But what the scooter riders don’t realise is that they will get old themselves one day. And secure, well-paid work coupled with a broad spectrum of high quality public services is what makes that transformation liveable. In mapping out what I think are the essential aspects of a social transformation that we might call a Green New Deal, eliminating precarious work is one of the priorities – it is intrinsic to creating a more equitable society in harmony with nature. This aspect also calls in question the role of a Job Guarantee. Note the capitals – there is only one Job Guarantee but many jobs guarantees. I will explain today why the Job Guarantee will be an intrinsic part of the Green New Deal but by far a minor player in terms of the job opportunities that will be created by the socio-economic shift. Many commentators seem to think the Job Guarantee is sufficient for a Green New Deal. It is not and we need to understand its role in a monetary system to understand why.

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Apparently Brown could but Boris cannot – British progressive journalism at its worst

It is Wednesday and my blog post-lite day. A few topics – thugs in Britain. Mindless ‘progressive’ journalism trying to tell readers that while Gordon Brown could use fiscal policy tools (spending and taxation) to advantage to stimulate the British economy, Boris Johnson cannot. Piffle and the lies from the UK Guardian are getting more desperate by the week. And some notes on guns. Then a nice bit of guitar playing. Tomorrow, I will be extending my ideas on the Green New Deal.

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Australia’s broadband disaster has lessons for a Green New Deal strategy

I am working on a manifesto (‘White Paper’) linking Modern Monetary Theory (MMT) with a Green New Deal (GND) concept. I will announce an important strategic coalition I am forming to advance this agenda in the coming period and some great events to present the framework. As part of that process, I have been sketching some of the important guiding principles that I consider to be essential if a massive socio-economic transformation like the Green New Deal (or whatever we want to call the strategy) is to be successful. Lessons from history are a good starting point to understand why things go awry. In that respect, the largest national infrastructure project that Australia has embarked on for decades – the National Broadband Network (NBN) – is a object lesson in how not to conduct government policy when nation building. The Green New Deal is about nation building – creating a framework of infrastructure, education, skills development, employment, distributive mechanisms and more to take nations into the next century while reversing the environmental degradation that industrialisation and mass consumerism has wrought. The central role of the government as the currency issuer will be paramount. The whole transformation will not be successful while policy makers hang onto mainstream macroeconomic views about government financial capacities, which manifests into obsessions about achieving fiscal surpluses. This is why an understanding of MMT is central to any proposal to advance a GND. Without that understanding, we will always encounter the nonsensical issues that have plagued the NBN development and left it in a state of chaos and near-redundancy, when it should have underpinned our technological network for decades to come.

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US labour market – bias towards toward job creation in below-average pay sectors

Last week’s (August 2, 2019) release by the US Bureau of Labor Statistics (BLS) of their latest labour market data – Employment Situation Summary – July 2019 – reveals a steady labour market with month-to-month volatility. The US labour market is still adding jobs, albeit at a slower pace than last year. The unemployment rate remains low (at 3.71 per cent) and the participation rate has moved up a tick, which is a good sign. It is also clear that there is still a substantial jobs deficit remaining and considerable scope for increased participation. Significantly, the bias toward jobs in below-average pay sectors being produced in the recovery has intensified during 2019.

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The Weekend Quiz – August 3-4, 2019 – 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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The adult unemployment benefit in Australia should be immediately increased by $A200 per week

At present, the Australian Parliament is debating whether the unemployment benefit (called Newstart) should be increased. The conservative government is refusing to budge claiming it prefers to create jobs and get people of benefits – arguing that it will generate 1.25 million jobs over the next 5 years. The Opposition Labor Party are attacking them for being mean but are just rehearsing the massive hypocrisy that has defined that party since it became a voice for the ‘neoliberal lite’ path. Every time the Labor Party spokespersons criticise the Government for not bringing unemployment benefits above the poverty line, Australians should remember that when they were in office the Labor Ministers ran the same line – they wanted to move people into jobs and would not compromise their obsessive pursuit of a fiscal surplus. Same logic. Disgusting and dishonest then. As it is now. The fact is that the successive governments have forced the unemployed to remain jobless (through austerity policies) and then increasingly plunge into deeper poverty (by refusing to increase the income support level in line with movements in poverty lines). In this blog post, I show that even if the 1.25 million pledge is achieved (and there are reasons why they might struggle to achieve it), there would be thousands of workers remaining in a jobless state by June 2024. This denies the Government’s claim that the pledge will eliminate the need to increase the unemployment benefit. Given that the current policy mix is likely to force thousands to remain in elevated levels of unemployment, the unemployment benefit should be increased, immediately, by more than $A200 per week, in the first instance, for a single adult. And then the government should introduce a Job Guarantee to allow workers to transit from joblessness to work at a decent, socially inclusive minimum wage (well above the revised unemployment benefit level). That would be the responsible thing for government to do in this regard. I am not holding my breath.

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