It is Wednesday so some snippets and some music – sad music this week because it signals the death of one of the great pioneers of Jamaican music last week. I am holding a Mini-Music Festival today – right here on my blog. Join in an celebrate a legend. But a few economics matters first pertaining to the Job Guarantee and the nonsensical arguments I have been seeing in the media about it being a system of enslavement and not better than a system that forces workers into unemployment.
Japan has a new leader of the ruling Liberal Democratic Party, who, given the majority of the LDP in the Diet will become prime minister in the coming days. He was interviewed over the weekend about the current crisis and the role that the Japanese government can play to attenuate the costs. He stated clearly that there was no limit to government debt issuance. The meaning of this statement is clear. The Japanese government should ignore claims that its public debt ratio is too high or is facing impending insolvency or bond-market revolts or any of the other manic predictions that economists who do not know better keep making. Instead, as Yoshihide Suga noted, the challenge is jobs and incomes. The only limits are real resource constraints and when there is a pandemic and rising unemployment, those constraints ease and the fiscal space for more net spending increases. At least one world leader understands that.
A different type of blog post here. I am part of a community in Newcastle which is engaged in opposing a massive overdevelopment in our local area. The development proposal is an example of developer greed and disregard for the local citizens and their amenity. It compromises almost everything that a neighbourhood would consider important. We have been fighting this for a few years now and have won the right to be heard in the Land and Environment Court in February 2021. The developer has submitted a revised application with very minimal changes to the original DA. We now must respond again through the usual response process. We are getting to a critical stage for 11-17 Mosbri Crescent. This blog post is to encourage you all to please write a submission to Newcastle City Council expressing your strong views about the amended DA2019/00061 by 17:00 September 15, 2020 (Newcastle, NSW, Australia time). That is TOMORROW (Tuesday) We will really appreciate any help. Anyone can submit an objection to this over-development no matter where you live. The more we get the better it is for our fight. Please help if you can
Piety has no bounds it seems. The Sunday Times ran an Op Ed at the weekend (September 12, 2020) – John Major and Tony Blair: Johnson must drop shameful no-deal Brexit bill or be forced to by MPs (paywall) – which told us how angry former British Prime Ministers Tony Blair and John Major are with Boris Johnson about the Government’s intention to introduce the Internal Market Bill to ensure the so-called Withdrawal Agreement is compatible with national law. They started by appealing to the international treaty status of the Withdrawal Agreement, which outlined Britain’s terms of exit from the EU. The Op Ed called the decision by government as “shocking”. The Remainers are jumping on the ‘breach of international law’ bandwagon like there is no tomorrow. Of course, they never highlight the fact that they want to be part of an arrangement, which is created by international law and which regularly violates that law to serve its own political and elite interests. And those breaches, which include gross human rights abuses and deliberately undermining the prosperity of its own citizens through mass unemployment and more, have had severe consequences for humanity. The fact that the British government is now declaring national law will no longer be subjugated and subservient to international agreements is not in the same ball park of international violations.
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.
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.
On Tuesday (September 8, 2020), the ABS released the latest data for – Weekly Payroll Jobs and Wages in Australia, Week ending 22 August 2020 – which gives us the most up-to-date picture of how the labour market is coping with the on-going restrictions. This data provides more accurate estimates of the impact of the harsh Stage 4 restrictions that have been imposed in Victoria to address the Second Wave of the coronavirus. Unsurprisingly, payroll employment fell in the six-week period ending August 22, 2020 in Victoria by 2.5 per cent. But what was also surprising was that employment fell in every other state or territory bar South Australia and NT. The Victorian case is about lockdown. The other declines are about failed macroeconomic policy, which goes to the performance of the federal government. The fact that the first recovery period failed to regain the jobs lost was an indicator that the policy intervention was insufficient. The second-wave job losses tell us clearly that more needs to be done by the Federal government. I am not holding my breath.
Wednesday brings music and not much blog posting activity. But I have been following the debate in the UK and Europe about the likelihood of some sort trade deal or not with some interest and amusement. There are several facets to the discussion: (a) the on-going hypocrisy of the European Union elites; (b) the necessity for major state intervention in Britain (and everywhere) and the possibility that the Tories will abandon Margaret Thatcher’s EU single market legacy is another sign that the paradigm shift in macroeconomics is well under way. (c) the way in which the Labour party are being wedged on the issue and refusing to come out in support of further state aid. Instead, inasmuch as they are saying anything, they are just repeating the mindless, neoliberal dogma about ‘free trade’. They will lose on that one, one thinks. All round it is interesting to follow as an external observer.
This is Part 5 of my on-going examination of the concept of ‘duty to work’ and how it was associated with the related idea of a ‘right to work’. In Part 4, I demonstrated that the dual concepts were long-standing ideas and the emergence of neoliberalism distorted their meaning by, one, abandoning the commitment by governments to facilitating the right to work, and, two, perverting the meaning of duty to work. Neoliberalism thus has broken the nexus between the ‘right to work’ responsibilities that the state assumed in the social democratic period and the ‘duty to work’ responsibilities that are imposed on workers in return for income support. That break abandons the binding reciprocity that enriched our societies. In this part, I examine the way in which full employment and work has been treated within the justice literature to extend the notion of reciprocity that we discussed in Part 4. In Part 5 I will consider how this bears on discussions about basic income and coercion.
On September 4, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – August 2020 – which shows that while employment continued to grow, the rebound has moderated. All the major aggregates are heading in the right direction. Employment is up, participation is up, the labour force is recovering and the unemployment rate and broader measures of labour underutilisation are falling. The problem facing the US is that the lack of economic support from the Federal government means that the huge pool of unemployment will take years to reduce and the damage will accumulate. How far the recovery can go depends on two factors, both of which are biased negatively: (a) How many firms have gone broke in the lockdown? (b) Whether the US states will have to reverse their lockdown easing in the face of a rapid escalation of the virus in some of the more populace states. I do not see appropriate policy responses in place at present. From abroad, it looks like the US government is stepping back when it should be engaging in supporting all incomes and introducing large-scale job creation programs.