Seattle workers better off after significant minimum wage rise

I recently wrote about minimum wage principles in relation to a progressive manifesto and the desire to reduce income inequality, which has risen sharply in the neo-liberal era where mainstream ‘free market’ economics has been the dominant narrative. Please see – Reducing income inequality – for that discussion. That blog considered some evidence that refutes the mainstream economics mantra that implementing minimum wages undermines the employment opportunities for low-wage workers. The standard lie that is rammed down the throats of economics students is that whenever governments impose minimum wages the market retaliates and minimum wage workers are worse off as a result. There are layers of erroneous concepts embedded in that orthodoxy, which I have dealt with many times before. But a significant point is that the real world is doing a good job to expose the lies of the ‘competitive’ model without recourse to any deep theoretical debates about whether ‘marginal productivity’ can be identified (it cannot), or whether the labour demand curve is downward sloping (it isn’t), which also includes a debate about whether productivity declines with extra employment (it doesn’t!). An interesting research paper released July 2016 by researchers at the The Seattle Minimum Wage Study Team based at the University of Washington in Seattle – Report on the Impact of Seattle’s Minimum Wage Ordinance on Wages, Workers, Jobs, and Establishments Through 2015 – provides further evidence to contest the veracity of the mainstream economics myths.
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    Posted in Labour costs, US economy | 8 Comments

    The Weekend Quiz – August 13-14, 2016

    Welcome to The Weekend Quiz, which used to be known as the 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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      Posted in Saturday quiz | 1 Comment

      The Weekend Quiz – August 13-14, 2016 – 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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        Posted in Saturday quiz | 3 Comments

        The struggle to establish a coherent progressive position continues

        There was an interesting article from Spanish political scientist (and economist) Vicente Navarro (August 4, 2016) – Is The Nation-State And Its Welfare State Dead? A Critique Of Varoufakis – which contested the former Greek finance mininster’s claims that the “nation state is dead” and so pan-international movements are required to restore democracy and provide a bulwark against global capitalism. I have a lot of sympathy for Navarro’s argument given that the topic is closely related to current book manuscript I am working on with Italian journalist Thomas Fazi on the reasons that the Left have vacated the progressive space and adopted neo-liberal economic positions that guarantee its steady demise as a political force. So in that context, the work of the former finance minister in trying to revive a Left narrative is admirable but, as Navarro notes, is misguided. DiEM25 is not likely to form a basic of a progressive manifesto for the future.
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          Posted in Demise of the Left, Eurozone | 18 Comments

          Japan’s unemployment rate decline is due to fiscal stimulus not ageing

          In yesterday’s blog – Time for fiscal policy as we learn more about monetary policy ineffectiveness – I discussed, in part, the way that fiscal and monetary policy in Japan were working in a harmonious way, in contradistinction to the way these two major policy levers are working elsewhere (for example, Australia and the Eurozone). One of the results of that harmony is that the official unemployment rate in Japan has dropped to 3.1 per cent, the lowest since July 1995. I considered the willingness of the Japanese government to introduce and maintain large fiscal stimulus programs under its Prime Minister – Shinzō Abe – to be a major contributing factor in that reduction (down from 5.5 per cent in July 2009). However, a Bloomberg journalist asserts that – Japan’s Plunging Jobless Rate Is All About Aging, not Abenomics (published August 10, 2016). We can explore whether that assertion is true. It will certainly be partly true given the population ageing in Japan. That is what this blog is about today.
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            Posted in Japan | 8 Comments

            Time for fiscal policy as we learn more about monetary policy ineffectiveness

            The week before last, the Bank of Japan didn’t set off any bazookas and basically held ground on monetary policy. In its – Summary of Opinions at the Monetary Policy Meeting on July 28 and 29, 2016 – (released August 8, 2016), we detect some tension among the Board members as to the effectiveness of monetary policy as a counter-stabilisation force (altering the economic cycle). The distinguishing feature about Japan is that monetary and fiscal policy are working in harmony in contradistinction to other nations (or currency blocs) where monetary easing is being accompanied by fiscal contraction. The latter ensures that growth will not occur, while the former provides a virtuous cycle. The recent retail sales data for Australia, released last week by the Australian Bureau of Statistics provides further evidence that monetary policy is not very effective in stimulating spending. The same data demonstrated categorically in 2009 how effective fiscal policy can be. It is time for the Australian government to shift policy positions and introduce another major fiscal stimulus and stop relying on the central bank to salvage what is becoming an ugly situation. The latter simply hasn’t got the policy tools available to fulfill the task it has been (implicitly) set by the Government’s irresponsible pursuit of fiscal surpluses.
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              Posted in Economics | 5 Comments

              Reducing income inequality

              The recent political ructions such as the Brexit outcome in the UK, the popularity of Donald Trump and Bernie Sanders in the US, the growing extremist popularist movements in Europe and elsewhere, and the scrape-in victory of the incumbent conservative government in Australia at the recent federal elections, have been attributed in no small part to a growing resentment against rising income (and wealth) inequality. A ‘progressive manifesto’ has to address this issue and work out ways that the gap between real wages and productivity growth is eliminated so that workers can rely more on wages growth to fund their consumption growth rather than credit. This blog continues to discuss the elements of such a Manifesto and today we focus on the question of income inequality and ways in which productivity growth can be better shared.
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                Posted in Demise of the Left | 14 Comments

                The Weekend Quiz – August 6-7, 2016 – 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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                  Posted in Saturday quiz | 10 Comments

                  The Weekend Quiz – August 6-7, 2016

                  Welcome to The Weekend Quiz, which used to be known as the 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.
                  Read the rest of this entry »

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                    Posted in Saturday quiz | 6 Comments

                    Reforming the international institutional framework – Part 2

                    This blog is the second part (now of three) where I discuss how the international institutional framework has to be reformed to serve a progressive agenda where rich countries (and the elites within them) do not plunder then pillory poor countries. In this blog I detail why we should dissolve the World Bank, the OECD, and the BIS, all of which have become so sullied by neo-liberal Groupthink that they are not only dysfunctional in terms of their original charter but downright dangerous to the prosperity and freedoms of people. The third part will consider what a new international institution might look like and the role it can play in aiding poor nations, particularly those who are reliant on imported food and energy. We will also discuss reforming the foreign aid system.
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                      Posted in Demise of the Left, IMF | 8 Comments