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Why does anyone read the New York Times?

It is Wednesday and I offer a few snippets for readers today. I have a number of projects on the go at present and time is short today. Apart from introducing a stunning guitar player (now long dead) that very few people have ever heard of but is one of my favourites (what does that say?), I ask the question: Why does anyone read the New York Times? I also announce the development and publication of our latest Employment Vulnerability Index (EVI) now in its third iteration. You can look at colourful maps as a result of this work! And tomorrow I will be trawling through employment losses around the world. All along the path to releasing my 10-point plan later next week.

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    Progressives should never work within the mainstream macroeconomics straitjacket

    There was an interesting article posted on Alternet (April 12, 2020) – Leftist policy didn’t lose. Marxist electoral theory did – in response to the dismal showing by Bernie Sanders in the current Democratic Primaries. I think it summarises the confusion that is now abundant on the progressive side of the political struggle. The arguments presented highlight the dilemma facing the progressive side of politics. Should Leftists compromise with centrists to get more traction? Compromise with what? If you read between the lines, there is no argument being made for Leftists to challenge the basic macroeconomic myths of neoliberalism that social democratic politicians around the world have adopted and straitjacket by. Rather, Leftists should accept these constraints and work at local levels to make small gains for better housing etc. It is a defeatist agenda – a surrender to the main game. I reject it.

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      The provenance of the Job Guarantee concept in MMT

      As the public scrutiny of the body of work we now refer to as Modern Monetary Theory (MMT) widens there is a lot of misinformation abroad that distorts or otherwise undermines what has been done to date. Most, but not all the misinformation or emphasis comes from those who attack our work. Their criticisms usually disclose an incomplete understanding of where MMT came from and what the core propositions and logic are. They stylise, usually using terms and constructs that are present in mainstream thinking, but inapplicable to an MMT way of thinking, and end up spitting out things like ‘printing money’ etc, which they think represents a devastating rejection of our work. As part of my own work, and I do this in liaison with Warren Mosler, I am interested in documenting the train of events that led to what we now call MMT. I love history and think it is very important in helping us understand things. So today I am continuing to examine archives to trace the provenance of key MMT concepts. And I am continuing to document the idea of a Job Guarantee, which is central to the MMT framework, despite many who claim to be MMTers thinking otherwise. I have noted in the recent press, claims that the origins of the buffer stock employment approach that became the Job Guarantee was the work of Hyman Minsky. Nothing could be further from the truth as you will see. It is important, in my view, to make the provenance very clear and that is what this blog post is about.

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        The Weekend Quiz – April 18-19, 2020 – 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 Weekend Quiz – April 18-19, 2020

          Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.

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            Australia labour market – data release not representative of where we are today – Government stimulus underwhelming

            The survey week for the – Labour Force, Australia, March 2020 – data, released by the ABS today (April 16, 2020) was before the major policy interventions (lockdown etc). In other words, the data released today is not likely to resemble where the economy was by the end of March or where it is now. Even so, the results are indicative of a slowing economy with weak employment growth failing to outstrip the underlying population growth. As a consequence, unemployment rose by 20,300. Those numbers will be dwarfed in the coming months. The broad labour underutilisation rate (sum of unemployment and underemployment) rose by 0.2 points to 14 per cent. There were a total of 1,924 thousand workers either unemployed or underemployed. This is a deplorable result. My overall assessment is that the Australian labour market remains a considerable distance from full employment and that that distance is increasing. With the coronavirus about to dwarf everything, the prior need for a fiscal stimulus of around 2 per cent has changed to a fiscal stimulus requirement of several times that. There is clear room for some serious fiscal policy expansion at present and the Federal government’s attempts to date have been seriously under-whelming. I estimate the Government will have to inject at least another $A130 billion into the economy (around 40 per cent more than it already has). Not good times ahead.

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              A 10 per cent unemployment rate is not a “tremendous achievement” – it is a sign of total policy failure

              It’s Wednesday, and a quiet day for writing blog posts for me. But I want to comment briefly on the latest economic news that sees the IMF claiming the Australian economy will contract by 6.7 per cent in 2020 and the Treasury estimates that the unemployment rate will rise to 10 per cent (double) by June this year. While this all sounds shocking, the emerging narrative in the media and among politicians is that this is sort of inevitable given the health crisis and the Government’s Job Keeper wage subsidy, which the Treasury claims will constrain the unemployment rate rise to 10 per cent rather than 15 per cent without it is a jolly decent thing for the politicians to have done and keeping the unemployment rate down to 10 per cent is a “tremendous achievement”. Well, apart from the wage subsidy leaving a million workers outside of any benefit and cutting wages for thousands who will receive the support, I fail to see why the unemployment rate should rise at all. The government has options: (a) wax lyrical about achieving a disaster – 10 per cent unemployment; or (b) create jobs via a Job Guarantee and see the unemployment rate fall to 2 per cent or so. For the neoliberals who run the place and their media supporters, a 10 per cent as a “remarkable achievement” and that is the TINA narrative they are pumping out to assuage the population. For the likes of yours truly, a 10 per cent unemployment rate is not a “tremendous achievement” – it is a sign of total policy failure. The government can always intervene and create sufficient jobs that will be of benefit to the society, can be designed to be safe in the current health context, and maintain the connection for most of us with paid work? Even if some of them would require the workers stay at home while being paid. For me that is a no-brainer.

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                US downturn very harmful to low wage workers and their communities

                I am monitoring the US Department of Labor’s weekly data releases for the unemployment insurance claimants account, that I reported in my last commentary on the US labour market – Tip of the iceberg – the US labour market catastrophe now playing out (April 6, 2020). Their latest release (April 9, 2020) – Unemployment Insurance Weekly Claims – shows that in the prior week ending April 4, 2020, the initial claims rose by 6,606,000, but this was down on the increase the week before by 261,000. In the last three weeks, the total initial claims is 16.8 million persons. The impacts are quite stark already. For example, as you will see, in just one month (March), service sector occupations have shed 36.7 per cent of the total jobs that were added in the ‘recovery’ period between January 2010 and February 2020. And given the timing of the surveys (biased towards earlier in the month), the situation was much worse by the end of March. It is quite obvious that this crisis is impacting heavily and disproportionately on the least-advantaged workers and communities in the US. This cohort always suffers during a recession. But this time, the specific occupation biases are exacerbating the problem and inequity, given the nature of the economic shock (closures, shutdowns etc). It means the fiscal support should be heavily weighted to assisting the most impacted both in terms of people, their families and the regions they live in. The maps show that the spatial impact of the downturn to date is also very uneven. As yet, I have not seen a commensurate response from the US government. The fiscal support funds so far announced do very little for the most impacted communities and people. They certainly shore up the top-end-of-town which, while predictable, will come back to haunt the nation in the years to come.

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                  My blog is on holiday today

                  My blog is on holiday today. There is a lot going on at present and I will report on analysis and upcoming events in the coming period soon. MMTed is coming together, slowly, thanks, in part, to the donations that have been coming in. We need more funds but we appreciate the support so far. But you can see that there will be lots of topics covered in the coming weeks (overleaf) and in the meantime, enjoy some of the best jazz (funk) ever recorded. Back in force tomorrow.

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                    The Weekend Quiz – April 11-12, 2020 – 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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