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Governments should be working for everyone, not just the fortunate few

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 …

Governments should be working for everyone, not just the fortunate few

When it comes to political speak there is a common phrase that escapes the lips of politicians and those who are vying for votes on a semi-regular basis.

That phrase? ‘We are all in this together’.

The phrase is trotted out during election campaigns and during times of national emergency such as the current COVID pandemic.

For readers in America, I am sure you were almost bludgeoned to death by leaders telling you they are working for all of you.

Joe Biden’s campaign website reminded me of being an audience member at an Oprah Winfrey show.

Everyone gets a car.

Here in Australia, the rhetoric around inclusive governance has been coming on thick and fast.

In my own state of Queensland, we have just had an election where both sides were promising to work for all Queenslanders, while the federal government’s COVID response has seen the Prime Minister and others constantly harping on how ‘we are all in this together’.

The problem with such motherhood statements is that they rarely line up to the hype.

Such statements should come with a disclaimer.

Sure, they are feel-good, but usually the policy surrounding such statements either get lost in translation or was never going to be about everyone in the first place.

In a recent piece on the Queensland election- Hi-vis haute couture and the peril of the unemployed—I suggested that it was going to be difficult to reconcile political talk about ensuring jobs for all Queenslanders and addressing the state’s high level of unemployment when major job announcements were aimed at a narrow few largely employed in jobs associated with infrastructure build.

Politicians promising the world while donning hi-viz vests make a good photo-op, but are rarely about a jobs bonanza as they claim.

Similarly, in my last blog- Why luxury watches shouldn’t be the most egregious news to come out of Canberra -I pointed out how the Australian Government’s Jobseeker payment (income support for unemployed) is deliberately set at low levels to ensure that unemployed Australians remain motivated to seek work.

While Prime Minister Scott Morrison and his colleagues talk about everyone being in this together, what they are actually meaning to say is ‘we are in this with some of you, while we will throw the rest of you under a bus’.

The point is that while there is lots of fluff around ‘working for everyone’, the truth is that a large majority of our population are constantly left behind, so that the net sum is significant and persistent accumulated social wreckage.

Evidence is not hard to find.

Just last week researchers at theAustralian National University updated their modelling on the number of people living in poverty during the COVID economic slowdown. In the original modelling released in August we learned that the introduction of additional income support measures had a positive impact on poverty rates:

As a result of the introduction of the original JobKeeper and the JobSeeker Supplement, the poverty gap and the number of persons in poverty is not only lower than in the absence of a policy response but also much lower than pre-COVID times. The poverty gap has been lowered by 39 per cent and the number of people in poverty has been lowered by around 32 per cent.

However, in a report in the Guardian last week – Covid welfare cut will cast 330,000 more Australians into poverty, analysis shows – we learn that:

The most recent changes, announced by the government last month, will reduce the supplement to $150 a fortnight, taking the base rate of the jobseeker payment for a single person to $715 … modelling suggested the reduction would increase the number of people living in poverty from 3.49 million to 3.82 million by January.

We are all in this together, except when we are not.

Responding to these findings, a spokesperson from the Australian Unemployed Workers Union lamented (in Guardian article cited above):

We know that the only moral thing for the government to do is to uphold its duty of care and keep people who rely on welfare payments out of poverty.

Sounds like something the government might do if they were working for everyone, but sadly this is not the case!

We also came to learn last week that despite some positive signs the Australian labour market remains in a perilous state. More accumulated social wreckage!

The latest Australian Bureau of Statistics data –Labour force, Australia, October 2020 –showed that unemployment increased by 25,500 to 960,900 people between September and October and increased by 238,900 over the year.

The unemployment rate was at 7 per cent and youth unemployment was at 15.6 per cent.

Total underutilisation (unemployed plus underemployment) sat at 17.4 per cent representing a very large 2.3 million workers either unemployed or underemployed.

This represents significant labour wastage with widespread negative social and economic impacts on not only the individuals involved, but their families and broader communities.

Add to this the precarious working conditions and low pay earned by the hundreds of ‘workers’, reliant on delivering people or food as they pretend to benefit from being part of the gig economy, and the social wreckage keeps accumulating.

I could go on, but you get the gist.

The fairy-tale of government working for everyone is continuing to result in significant social and economic pain for many individuals, their families and their communities.

Why is it that the government says one thing, but then in practice does another?

What has led us down this path of accumulated social wreckage?

We know that it is not because sovereign currency issuing governments are fiscally limited in their ability to work for the good of everyone.

The government, if they wished, could intervene in a heart-beat to improve the precarious lives currently being lived by so many Australians.

We have seen this during the COVID emergency where governments have been quick to step in and provide a wide range of support to a wider range of the population than has been the case in the past.

Politicians have been allowed to leave their ideologies (think neo-liberalism) at the door.

But what their ideology doesn’t allow them to do is to stray for long. Before too long they have to go back and pick-up where they left off.

The apparatus of justification that is so entrenched within the neo-liberal ideology means that even when ‘business as usual’ approaches have to be abandoned due to a crisis, it is not long before we turn back to the usual ideas that have led us to where we are today.

Throughout the COVID slowdown statements by politicians have been steeped in this kind of ‘return to normal’ thinking.

Early on Australian Prime Minister Scott Morrison said

The measures are all temporary, targeted and proportionate to the challenge we face. Our actions will ensure we respond to the immediate challenges we face and help Australia bounce back stronger on the other side, without undermining the structural integrity of the Budget.

Reading between the lines, yes, we had to do something we were not comfortable doing because the ‘system’ wasn’t working.

But we can’t wait to get back to our comfort zone.

In short, as a society, we are where we are because of the failures of the neoliberal system, the inability of politicians to see beyond their ideological views and the ability of those who benefit most to continue to legitimate the system.

So even though there is ample evidence that the ‘usual’ way of doing things has resulted in a society where the most disadvantaged are blamed for their situation in life, where if you live at the wrong address your options are limited, or if you are unable to access to a good job you are consigned to poverty, the government’s policy compass is set firmly back towards business as usual.

But business as usual is not what we need or deserve. The topsy-turvy world of 2020 has raised lots of questions.

If we believe, that most crisis situations are opportunities to either advance or stay where you are then perhaps 2020 should be the line in the sand when we begin to look for something different.

A new normal that transitions us towards a better society and economy.

I am not the first to suggest this, nor will I be the last.

Pre-empting where we now find ourselves, Australian social commentator Hugh Mackay writing in January 2020 said

Australia Day is widely regarded as a chance to celebrate what it means to be Australian. Perhaps, this year, we might turn the national day into a time of sombre reflection, and ask: are we the kind of society we want to be?

Others, including the Australian Labor Party’s Treasury Spokesman Jim Chalmers joined the chorus arguing for fresh thinking

It’s not too early for the rest of us to start thinking about what this crisis is teaching us; what the world looks like after the virus is gone; and what all this means for Australia in the years ahead.

What we need is a plan for transition.

Some people have talked about a Green New Deal aimed at addressing climate change and economic inequality.

The name refers back a set of social and economic reforms and public works projects undertaken by President Franklin D. Roosevelt in response to the Great Depression during the 1930s.

The Green New Deal combines Roosevelt’s economic approach with modern ideas such as renewable energy and resource efficiency.

But the problem with a New Deal is that it is not meant to be a long-term strategy.

If we want to turn things around, we need to have a sustainable proposition.

Recently with my colleagues Bill Mitchell and Noel Pearson I have been talking about the need for a Just, Urgent and Sustainable Transition (JUST) for Australia.

Our JUST blueprint, which will be the subject of future blogs, uses the lens of Modern Monetary Theory and is built on propositions including

  • providing jobs for everyone who wants to work through the implementation of a Job Guarantee.
  • implementing policies and programs that support an economy for everyone, not just the 1 percent;
  • ensuring that environmental justice is maintained so that the decisions on environmental changes don’t unevenly impact on those who have the weakest voice; and
  • ensuring that our most disadvantaged individuals and communities receive the help they need and deserve.

Conclusion

Now is the time to move from an economy and society that only works well for the minority and has, in the past, left so many out to dry.

Governments need to start governing for everyone.

Can we be optimistic about the future?

There will be issues, which I will write about in future blog posts, but maybe, just maybe there will be a change for the better.

As Bill is fond of saying ‘the fight continues’.

That is enough for today!

(c) Copyright 2020 William Mitchell. All Rights Reserved.

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    This Post Has 8 Comments
    1. As Gramsci wrote in the early XX century, “the old is dying and the new cannot yet be born” and during which time “a great variety of morbid symptoms” can appear (taken from Thomas Fazi article “Italy’s Organic Crisis”).
      100+ years later, we are again in an INTERREGNA period.
      Remember: change happens in the long run.
      Some apes left the trees a long time ago, despite the will of the big apes, who still live on tree tops; the descendents of the former built a civilization.
      It will take much suffering; the elites will fight back any change.
      But the nobility dissapeared in the middle ages, kings were overthrown, the Roman Empire was forever lost, stalinism became a joke and neoliberalism will be recognized as a pack of lies.

    2. Paulo Rodrigues: The problem is that humanity no longer has the luxury of more time to solve the problems before us. We are in the midst of rapidly growing existential crisis now, and it’s not even covid-19.

      The only good that might come of the pandemic would be a decision to rapidly replace our current paradigm with one that prevents the collapse of our life support systems.

      This is something were we are all in the push together with, lest we become the parents of the generation to witness our ultimate failure as a species.

      Such an effort cannot bear the weight of financial parasites, constraints on maximized employment of available labor, or class inequality.

    3. Can’t wait, Dr. Baum, to see a Just Blueprint for Australia grounded in MMT. I posted a short time ago about Greenpeace USA’s Just Recovery Agenda, which repeatedly talked about guaranteed jobs but failed to mention MMT’s JG proposal. Shortly after the pandemic broke, I had a sign made that has ever since been in my front yard. Yesterday, I ordered a new bumper sticker, the prior one (opposing American imperialism) having been destroyed in a fender-bender. Both the yard sign and the new bumper sticker express what I believe to be the heart of your valuable guest post, especially the second line: “We’re in this together/Bail out everyone.” God help us if “we the people” miss this extraordinary opportunity to bring home to our clueless, callous governments the necessity of “a new normal that transitions us towards a better society and economy”–in Australia, the U.S., and across the world.

    4. Dear j Christensen. You are absolutely right.
      Unfortunatley, Mankind won’t do anything to reverse the climate time bomb.
      We are all involved in the capitalist system.
      That is a system of prey, which includes human beeings beeing used as a commodity.
      In my country, you can’t find one single cow living in the wild, but there are millions of cows living somewhere.
      All of them are born, all of them live and all of them are killed for the benefict of the capitalist system, from the farmer who profits with the industry, to the common man who eats the meat.
      Cows are na exemple, but some studies say that, by the year 2026, all animals will be either extinct, ou living in captivity.
      It’s year zero.
      But Nature is fighting back our system of prey.
      We have allready seen uncontrollable fires, we’ve already seen violent droughts, but it’s going to get worst.
      We will see rising sea levels, famines, millions dying and, in the end, all the bullsh** neoliberalism brought us is going to the trash can, as something absolutely worthless.

    5. It is generally silly to speak of “being in this together” in a class society when one or more class thrive on the backs of toiling masses.

      Bourgeois parties serve the rich. That is what we expect. I don’t think we are going to go anywhere by still having them in charge.

      I am afraid that no amount of theory will convince them to serve the poor. That is not capitalist societies are supposed to do.

    6. As far as “being in it together,” Tom Y. makes valid, incisive points, but there’s a larger one expressed so simply and beautifully by JFK, whose assassination “anniversary” just recently passed. “Our most basic common link is that we all inhabit this planet. We all breathe the same air. We all cherish our children’s future. And we are all mortal.” IMHO, it’s only by embracing (not again, but for the first time) this universal idealism that we will be able to emerge from this pandemic into a better, more beautiful world.

    7. Yes, we have idealism. That is our motivation to develop and to become better. That is a beautiful world that we must strive for. It is especially in the poor and working people’s interest to go to that dream, whether they realize it or not.

      We also have to be realistic that the capitalist class is AGAINST this and so are a section of middle class people. Its their fundamental interest to be against our dream. That is the fundamental class contradiction.

      I’m at the point where there is no right or wrong but really who wins this struggle. In capitalists, perspective, you work your way up and the status quo is fair. In my perspective, one shouldn’t be in poverty after graduating college and working 40hr a week while the middle/upper class are making out like bandits. That is our fundamental irreconcilable difference. Capitalists do not (and can’t) care about climate change, working people do. That is fundamental difference.

      Capitalists make money by keeping things in private hands and create a political system that cements the status quo. They do that by paying a section of middle class to do that. They set up schools and universities to mentally straitjacket people. I am not saying I’m against education but that is a very real problem that we discussed in our recent union coalition meeting.

      There is no “being in this together” between the oppressors and the oppressed.

    8. A recent post talked about the IMF getting a bit more fiscal since the 2008 Crash. Neil W commented with “I suspect the answer is: “It is difficult to get a man to understand something when his salary depends upon his not understanding it!”. Ay, there’s the rub! as Hamlet would say.

      There are thousands who are doing that. Have a look at https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/methodologies/internationalmonetaryfundsgovernmentfinancestatisticsframeworkinthepublicsectorfinances

      And if you have the fortitude, have a look at https://www.ons.gov.uk/file?uri=%2feconomy%2fgovernmentpublicsectorandtaxes%2fpublicsectorfinance%2fdatasets%2finternationalmonetaryfundsgovernmentfinancestatisticsframeworkinthepublicsectorfinancesappendixe%2fcurrent/datdataset7appendixefinal.xls Can you spot which number is the actual number of “units of account” currently existing outside of the UK Treasury?

      Only man can make his life this complicated; but, it does pay well. Can you calculate how many would be out of work under MMT?

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