Saturday Quiz – September 6, 2014

Welcome to the Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.
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    Friday lay day

    Its my Friday Lay Day blog, which means I don’t really write one. I am working on an Modern Monetary Theory (MMT) volume for my publisher, Edward Elgar, which will document, to date, the key literature that I consider to be foundational to the development of what we now call MMT. I am putting the literature together and writing an extended introduction explaining how each contribution fits into the jigsaw. I am starting with Marx (of-course)! But today, I also take a moment to briefly reflect on an article that apppeared in the German Der Spiegel (September 3, 2014) – France and Friends: Merkel Increasingly Isolated on Austerity. I will follow up on this next week in more detail. The reflection is really just a segue for one of my favourite songs …
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      Posted in Eurozone, Friday | 14 Comments

      Neo-liberal capture of the policy making process in Europe

      Mainstream macroeconomics has mounted a range of arguments over the years to argue against any discretionary involvement by governments or regulators in the economy. The claim is always that the ‘market’ will self regulate and weed out bad players and produce the best outcomes with the least resources each period of activity. Various fancy terms are introduced into textbooks that make these arguments seem to have scientific weight. In narratives, there is often claims that left-wing groups blurred as trade unions have too much influence on political processes, particularly when a non-conservative party is in power. Rarely, is there any discussion of the way governments (of all political persuasions) become captured by the financial and industrial capitalist elites and become meagre conduits for capitalist rule. The west talks a lot about democratic rights and freedoms and people dutifully wander off at appointed times and cast votes which by the end of the day usually result in a government being elected. But they rarely realise that lying behind all of that flim-flam is rule by capital. There is very little democracy in advanced nations. We might turf out one party and elect another but the domination of capital persists and the lobbyists just duchess and bully a new political machine. The European Union takes this violation of democratic rights to new heights.
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        Posted in Economics, Eurozone | 7 Comments

        Australian national accounts – weak and getting weaker

        When the first-quarter National Accounts data came out for Australia I noted that despite the relatively strong growth recorded in that period, the Australian economy was in a fragile state and the contemporary indicators (given that the real GDP data is 3 months old by the time it is published) were indicating that the economy would slow significantly in the June-quarter. Today’s Australian Bureau of Statistics – Australian National Accounts – for the June-quarter 2014, confirms that prediction. Real GDP growth grew by 0.5 per cent down from 1.1 per cent in the June-quarter 2013. The annualised growth rate of 3.1 per cent is being held up by the strong June-quarter growth but something around 2 per cent per annum looking forward is a more realistic assessment of where the economy is at present. The external sector is now a negative influence on growth as is the government sector. In this quarter, there was a large inventory adjustment (up) which was the difference between positive and negative growth overall. That short of inventory swing will not continue. With export prices plummetting due to a glut in iron ore shipments to China, the external sector will continue to be a drag. Fiscal austerity is set to worse, which means that the data paints a fairly gloomy picture for the Australian economy for the rest of this year at least.
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          Posted in National Accounts | 7 Comments

          Same old story – poor getting poorer and more indebted and the rich …

          I have started to research the idea of the disappearing or shrinking middle class as part of a book project (for 2015) I am amassing materials for. The idea is simple but the conceptualisation and demarcation of the idea is rather complex. The hypothesis is that Capitalism is now striking at the income and wealth segment that has helped give it stability (which in this sense relates to not having a revolution rather than eliminating major economic cycles and mass unemployment). Marx said that religion was the opiate of the masses that kept them in line whereas in modern times it is mass consumption and credit that seems to keep the middle class in line. The rise in income and wealth inequality over the last 3 decades under the watch of neo-liberalism is obvious and initially showed up as a widening 90/10 gap (the numbers being deciles in the relevant distribution). But as the lowest income groups were marginalised, the dynamic moved on and started hollowing out the middle deciles. Real wages have lagged well behind productivity growth and mass unemployment is infiltrating the middle-income cohorts who typically have superior education, which has insulated them from job loss. The US Census Bureau provides excellent data on – Wealth and Asset Ownership, which allows us to trace the trends in household net worth and debt in the US in some detail. This blog just documents some of the characteristics of those distributions – it is preliminary work for me but of interest nonetheless.
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            Posted in US economy | 14 Comments

            Large-scale employment guarantee scheme in India improving over time

            Today I am reflecting on employment guarantees. I ran into a mate in a computer shop in Melbourne yesterday, totally by accident. He happens to be one of the big players in the job services sector – the unemployment industry. We exchanged our usual pleasantries and then we got angry together about the government policies – the usual interaction. Then I said well what we need is all you guys and the related charities (such as the Brotherhood of St Laurence, the Smith Family) and other groups (such as Greenpeace, Amnesty International etc) all getting out of their comfort zones and agreeing that being angry is stupid and that action is required. These are the people who lobby government. Academics only create ideas and write them out. I suggested that these groups use their significant public profiles to organise a coalition of support for the Job Guarantee and really push it hard – if only to expose the denials and failures of the orthodoxy that besets us all. Anyway, that conversation just happened to dove-tail with an article I read last week about employment guarantees in practice that I found interesting and which was exposing the deniers for what they are – ideological sycophants. That is what this blog is about.
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              Posted in Economics, Job Guarantee | 6 Comments

              Saturday Quiz – August 30, 2014 – answers and discussion

              Here are the answers with discussion for yesterday’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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                Saturday Quiz – August 30, 2014

                Welcome to the Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.
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                  Friday lay day

                  Its Friday lay day, where I don’t really write a blog anymore. Whatever! Over the last few weeks, I have written a few blogs that have examined the state of affairs in France – for example, Germany contracts as the French suggest defiance and French government in tatters and the financial markets want growth. I recall that earlier this year (January 28, 2014), the French President Francois Hollande told the press that unemployment in France had “finally peaked” (Source). Every month since he made that prediction, unemployment has risen.
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                    Posted in Friday | 7 Comments

                    Why we should close the ‘unemployment industry’

                    This morning I gave a Keynote presentation to the Jobs Australia conference in Melbourne, which is a gathering of people who work in what I call the extra industry – the ‘unemployment industry’ – which has sprung up in the neo-liberal period to manage the unemployment that the government has deliberately created as a result of its obsession with fiscal austerity (trying to run surpluses when increased and on-going deficits are required). I take no umbrage with individuals who work in the ‘industry’ but its productivity is close to zero (you cannot search for jobs that are not there) and they have become co-opted servants of the pernicious government policy regime. The facts are clear – we have erected a massive corporate sector funded by government to manage the fiscal failure. The problem is that all these job service providers are not just shunting inanimate widgets around into so-called training schemes etc but are dealing with very disadvantaged people, which the capitalist system is excluding from the opportunity to engage in paid and productive work. The ‘unemployment sector’ is the Government’s front-line attack dog on the victims of the policy failure.
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                      Posted in Economics, Labour Force, Unemployment Benefits, Youth unemployment | 17 Comments