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The ‘disciplining role of markets’ should be replaced by the disciplining role of democracy

When we elect governments we should expect that they will do what they promised and represent our best interests. We don’t expect them to represent a small, privileged sector of the economy at the expense of the rest of it. The problem is that we overlay these aspirations onto an economic ownership system which has a different logic to our understanding of the operations of a democratic state. And mainstream economics gives reverence and priority to the logic of capitalism rather than ensuring that the quality of democracy is maintained. Which reflects its origins – as an apologist for the unequal ownership of the material means of production and the consequences that arise from that inequality. We keep seeing a restatement of that priority from prominent policy makers and while that generation is in charge it will be hard to really shift the paradigm.

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    The Weekend Quiz – February 20-21, 2021 – 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 – February 20-21, 2021

      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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        Australian labour market stumbling along – no case to withdraw support yet

        The latest data from the Australian Bureau of Statistics – Labour Force, Australia, January 2021 – released today (February 18, 2021), shows that the labour market is stumbling along and the pace of recovery has slowed considerably. Employment increased by 0.1 per cent (29,100) in the month, half the growth that was recorded in December 2020. Unemployment fell by 34,300 to 877,600 persons and the unemployment rate fell by 0.2 points although that was largely due to the decline in the participation rate. Underemployment also fell by 0.4 points and the broad labour underutilisation rate (sum of unemployment and underemployment) fell by 0.6 points, but some of that is due to the special monthly hour movements in January. The main uncertainty now is that the recovery is slowing and the current (extensive) government support is due to end in March 2021. Given the labour market is still quite a margin from where it was in March 2020, the idea that the government would withdraw its fiscal support is not a compelling option. Overall, the recovery is still too slow and more government support by way of large-scale job creation.

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          Britain banking regulation to tighten as a consequence of leaving the neoliberal EU

          It is Wednesday and so just a short blog day. I note that the British Remainer Left fall over themselves to signal whenever there is any bad news about Britain that it must be because of Brexit – “see, we told you so sort of stuff”. And with the pandemic and government incompetence there have been lots of opportunities for this lot to do that. I guess it makes them feel better as the Labour Party designs its comeback based on the ‘flag’ and ‘patriotism’ and expunging any relics of Jeremy Corbyn. Good luck with that, it is bound to work! But the future of Britain will actually be determined by a range of factors now in the control of the authorities and how they handle the transition away from EU law will be a significant element in that ensuring that future works for the people rather than just isolates Britain as a neoliberal hell-hole. We received our first sign of how things might work out last week when the Bank of England’s Prudential Regulation Authority released their latest Consultation Paper (CP5/21, (February 12, 2021) – Implementation of Basel standards – which marked a sharp shift away from the lax EU banking standards. The Remainers were silent on this.

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            The income-expenditure relationship in macroeconomics – graphic treatment

            We have been doing a lot of work developing the MOOC at the University of Newcastle which will also mark the first – MMTed material. We will follow up the MOOC with more detailed learning options in subsequent months. Tomorrow, we will be filming some more material for the MOOC and I think you will enjoy what we have planned when the MOOC begins on March 3, 2021. As part of the planning I have been thinking of simplified frameworks for teaching rather complicated concepts and relationships. Here is an example of that sort of thinking.

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              Central banks should just write off all their government debt holdings

              The tensions in the public policy debate between economists is intensifying and on show in Europe, where these sort of obvious conflicts between adherence to dogma and a recognition that ‘out-the-box’ solutions are not only possible but preferred. More of these latter thought offerings are starting to appear as more people come to understand that the mainstream dogma has become more of a security blanket for reputations rather than saying anything about reality. One such proposal emerged last week in the form of a letter to the major European newspapers signed by more than 100 economists and politicians calling for the ECB to write-off its massive public debt holdings, which currently amount to around 25 per cent of total outstanding public debt. It is a good idea but some of the framing leaves a lot to be desired. At any rate, central banks everywhere should be buying up massive amounts of government debt and hitting the keyboard with zeros and writing it off. The world would be a much better place if they did that.

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                The Weekend Quiz – February 13-14, 2021 – 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 – February 13-14, 2021

                  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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                    Using a regional lens reveals the uneven impact of the COVID employment crash

                    Today, we have 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. Today he is writing about the uneven impact of the COVID employment crash. This theme – the spatial unevenness of fluctuations in aggregate economic activity – is one we often explore (in our past research together) because understanding these patterns is essential for designing appropriate policy interventions. It is one of the reasons we both favour employment creation programs that respond to local conditions, like the Job Guarantee. It is also the topic a new large grant application that we are currently putting in (as part of the annual funding circus in Australia). Anyway, while I am tied up today it is over to Scott …

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