I stole the title of today’s blog from an article I wrote for the US weekly – The Nation – which will come out on April 4 in print. The on-line version is out now. It comes out in the same week that the nations that are leading the austerity charge – Ireland and Britain – publish disastrous labour market data. The Irish data is nothing short of atrocious some 2 years after their government led them down the austerity path promising salvation. Where are the economists who from the desks of their safe jobs were highly vocal in promoting the myth of the “fiscal contraction expansion”? Still sipping Chardonnay from their safe jobs I dare say. The article, in part, is about how these liars have convinced governments to push their economies over the brink. It is also about how the same lies that are being to used to justify the austerity barrow were used to justify the massive deregulation that led to the financial sector feeding frenzy and caused the crisis in the first place. When we will ever learn? In today’s blog I offer a video commentary on the thoughts behind the article in this blog (which as it turns out didn’t save me much time – I seem to type faster than I speak!).
Here is the front cover of today’s on-line edition of The Nation:
I was very happy to be invited to write for this publication and it might extend the coverage of the ideas that I push out into the world on a regular basis. Thanks to Don, Molly, Roane, and Lisa for all the help in getting it to press.
There was an accompanying piece – Sound Bites for a Sick Britain – written by Aditya Chakrabortty who is a columnist for the UK Guardian newspaper that is worth reading.
The article came out in the same week as the latest labour market data from Ireland and Britain was released. You will see practical evidence of what I am talking about in the article in that data.
Ireland was an early (and eager) austerity proponent – starting to cut in early 2009. We were told that things would be improving as a result of the public cutbacks because all those tax-fearing consumers and investors were poised ready to spend their savings – which were being earmarked to pay back the higher taxes that were going to be inevitably imposed to pay back the deficits.
This idiocy was all the rave as mainstream economists, public finance commentators all supported the Irish government’s manic decision to impose fiscal austerity on its near-ruined economy.
It was obvious what was going to happen – as plain as day. The denials were thick and fast from the conservatives. But you can only lie about data a few times – eventually as trends develop the penny has to drop. The performance of the Irish economy has gone from bad to worse since they imposed austerity.
Most recently, on March 15, the Irish Central Statistical Office released the – Labour Force data – for the December 2010 quarter. There is no other word for the trends revealed – atrocious.
On UK Guardian report (March 16, 2010) – Growing dole queues expose fragility of Irish economy – actually had the audacity to suggest the further deterioration in the Irish labour market was a surprise.
The data outcome would only surprise an observer who didn’t understand macroeconomics and how the monetary system operates.
The following table is taken from the CSO Report.
The unemployment rate is now at 14.7 per cent the highest in 17 years.
In 2010, employment fell by 80,700 or 4.2 percent. This followed losses of 171,100 or 8.1 per cent between 2008 and 2009. 64,500 jobs were lost in December 2010 quarter alone and an additional 31,600 were added to unemployment queue in that quarter.
It is even more dire than that because the labour force is contracting as an estimated 1000 people a week are emigrating in search of work – a lot coming to Australia given how bad the British labour market is. The labour force participation rate is also falling.
You can quote all the financial data you like but the labour market data is about real people, their families, the aspirations of the next generation, and demonstrates that the Irish government has failed.
The recent election threw the perpetrators of the crisis in Ireland out but replaced them with a coalition that is just as bad in the sort of policies they are advocating. Ireland should leave the Eurozone immediately and re-establish their own currency and start using that power to get people back into work. If there isn’t enough private sector work at present then the public sector should start employing people and putting them onto socially useful projects.
The neo-liberal position – and the austerity push in general – has no credibility. We have to go beyond austerity and realise that the neo-liberal policy advice is based on a sequence of well-orchestrated lies!
The same goes for Britain which is now following Ireland down the plug hole. The austerity cuts are just about to hit and already the economy is heading backwards.
On Wednesday (March 16, 2011), the UK Office for National Statistics put out the – Labour Market Statistics – for March 2011.
Here is a sample:
The unemployment rate for the three months to January 2011 was 8.0 per cent, up 0.1 on the quarter. The total number of unemployed people increased by 27,000 over the quarter to reach 2.53 million, the highest figure since 1994. The unemployment rate for those aged from 16 to 24 increased by 0.8 on the quarter to reach 20.6 per cent, the highest figure since comparable records began in 1992. The number of unemployed 16 to 24 year olds increased by 30,000 on the quarter to reach 974,000, the highest figure since comparable records began in 1992. In
This will get worse …
In one word – atrocious. Surprised? Not at all.
Austerity damages private expectations (encouraging risk averse spending patterns and more saving) and directly reduces aggregate demand. The only thing that drives output, income and employment growth is spending!
So my The Nation article should be read with these trends firmly in mind. The neo-liberals and the bulk of my profession are liars and advocate policy positions that damage the opportunities for most of us.
I am thinking of doing a regular video commentary one day a week instead of writing. This 12-minute video was recorded using a pretty low quality camera/microphone so I plan to improve that side of it. But then I think I prefer writing – so we will see.
The Saturday Quiz will be available some time tomorrow as usual.
That is enough for today!