Friday lay day – US midterm election show lack of progressive leadership

Its my Friday no blog day yet a brief discussion of this week’s US mid-term elections cannot be resisted. In the spirit of the lay day, I will just have a little stretching and warm up type blog though. What the F*&#! The largest economy with the biggest weapons has just voted into majority positions in both houses of their parliament a bunch of crazies, who are only slightly crazier than the alternatives they might have chosen. Although in many cases, the crazies were voted in uncontested.
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    Posted in Friday | 10 Comments

    Australia Labour Force – weak and no signs of improvement

    Today’s release of the – Labour Force data – for October 2014 by the Australian Bureau of Statistics is the since it made extraordinary admissions about the breakdown of seasonally adjustment methodology, which had made the last three months’ data largely unbelievable. See below for comment on that. Today’s major revision shows that employment growth was modest in October after two consecutive months of negative growth. Unemployment edged up again this month although the unemployment rate remained stable (when rounded to one decimal place – it actually rose a little in unrounded terms). The participation rate edged up a little but remains well below recent peaks. Monthly hours of work rose but that was due to the fact that full-time employment growth dominated the overall tepid employment expansion. The teenage labour market deteriorated further and has been signalling a state of emergency for several years now – a crisis ignored by the policy makers.
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      Posted in Labour Force | 1 Comment

      ABS revises labour force methodology – things are much worse than we thought

      Yesterday, the Australian Bureau of Statistics released an extraordinary press notice – Statement from the Australian Statistician on the Labour Force estimates – which aimed to help everyone understand why the Labour Force data has been so weird lately. A lot of readers E-mail me seeking help understanding what seasonal adjustment is all about. It is a dry topic and not one I relish even though I have a background in statistics and econometrics. But given yesterday’s announcement and the disarray that people have sensed with the official labour force data in Australia recently, I thought I might try a non-technical explanation of what has been going on. Here goes! And for those who like attacks on austerity etc, underpinning this whole discussion is the mindlessness of neo-liberalism. That should get you reading!
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        Posted in Economics, Labour Force, Teaching models | 4 Comments

        Japan demonstrates the real limits on government spending

        Last week, Reuters put out a story (October 30, 2014) – Special Report: Tsunami evacuees caught in $30 billion Japan money trap (thanks Scott Mc for the link) – which provides an excellent demonstration of the true limits of government spending in a currency-issuing nation. The underlying principles should be understood by all as part of their personal mission to expel all neo-liberal myths from their thinking and to help them see the nature of issues more clearly. Unfortunately, the application we will talk about is sad and has tragic human and environmental consequences, but that doesn’t reduce the relevance of the example for conceptual thinking. In a nutshell, the central Japanese government has transferred some $US50 billion worth of yen to the local government to combat the destruction caused by the tsunami in March 2011. Thirty billion is unspent despite people still living in temporary housing and suffering dramatic psychological trauma as a result. Why is this happening? Doesn’t Modern Monetary Theory (MMT) tell us that a currency-issuing government can spend what it likes? Well, not exactly. What MMT tells us is that a currency-issuing government can purchase whatever is for sale in its own currency and that propensity is limited by the availability of real resources. Here is a classic demonstration of the limits of government nominal spending.
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          Posted in Inflation, Japan, Labour costs | 9 Comments

          The secular stagnation hoax

          Last year, the concept of secular stagnation was reintroduced into the economics lexicon as a way of explaining the lack of growth in advanced nations. Apparently, we were facing a long-term future of low growth and elevated levels of unemployment and there was not much we could do about it. Now it seems more and more commentators and economists are jumping on the bandwagon such that the concept is said to be “taking economics by storm” – see Secular Stagnation: the scary theory that’s taking economics by storm. The only problem is that it first entered the economics debate in the late 1930s when economies were still caught up in the stagnation of the Great Depression. Then like now the hypothesis is a dud. The problem in the 1930s was dramatically overcome by the onset of World War 2 as governments on both sides of the conflict increased their net spending (fiscal deficits) substantially. The commitment to full employment in the peacetime that followed maintained growth and prosperity for decades until the neo-liberal bean counters regained dominance and started to attack fiscal activism. The cure to the slow growth and high unemployment now is the same as it was then – government deficits are way to small.
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            Posted in Economics, Eurozone, Job Guarantee, US economy | 27 Comments

            Saturday Quiz – November 1, 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 – November 1, 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 – music while you work

                Its my Friday lay day blog – a short blog today about music at work. Building on yesterday’s blog – Self-imposed corporate regulations control workers but choke productivity – which told the story of an increasing imposition of productivity choking workplace rules and procedures that capitalists use to control their workers. A classic manifestation of these workplace changes has been the increased use of open-plan offices (abandoning private offices) and so-called hot desking. This is a very alienating environment for workers and research has shown that if workers have access to music while they work that they choose, they get through the day in better shape. Cue the turntable! Pablo Moses on. Start typing.
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                  Posted in Friday | 3 Comments

                  Self-imposed corporate regulations control workers but choke productivity

                  Two new industries have emerged in this neo-liberal era. The first is what I call the ‘unemployment’ industry, which operates to case manage the unemployed that poorly crafted fiscal policy has deliberately created and entrenched into our modern societies. A whole parasitic array of private providers get paid by the government to coerce and threaten the unemployed under the guise of retraining them for jobs. I wrote about this scandal in this blog – Why we should close the ‘unemployment industry’. In the last few days, a new industry has been identified which employs over a million people in Australia, making it one of the largest sectors, although no official data is published on it. This sector has been labelled in the press this week – the ‘red tape’ industry or the ‘compliance sector’. It is growing faster than any other industry in Australia and probably elsewhere, although there is no data available that can tell us that. It is largely unproductive because it undermines the productivity of other workers. Red tape, compliance, must be the public sector once again imposing its heavy hand on private endeavour, right? Wrong, the neo-liberals not only created and expanded a moribund and dysfunctional financial sector but has also created the red tape industry as it seeks to control workers down to the smallest degree. Hilarious really if it wasn’t so wasteful and hypocritical.
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                    Posted in Economics | 18 Comments

                    The case of the financial commentator who turned into a banana

                    Today, I am writing about the mysterious case of the financial commentator who turned into a banana. It happened around 4.5 years ago and has left a disturbing trail of comedic predictions. The person in question still looks a little like he used to although he has clearly become a piece of fruit. Anyway, some further analysis will help us track down the culprit. In simple terms, the perpetrator is that familiar neo-liberal groupthink that we know so well. The commentator was so imbued with it that he turned into a banana. Read on, it is a terrifying tale.
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                      Posted in Economics, Eurozone, US economy | 10 Comments