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The danger of underemployment …

The US Bureau of Labor Statistics released underemployment data for the US overnight. The results are disturbing and follow the same trend that is now common in Anglo countries – these economies, even in good times are increasingly generating marginal employment with low pay and job security, and, most importantly, deficient hours of work relative to the preferences of the workforce. But underemployment presents an added danger as we enter this current downturn.

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The origins of the economic crisis

A good way to understand the origins of the current economic crisis in Australia is to examine the historical behaviour of key macroeconomic aggregates. The previous Federal Government claimed they were responsibly managing the fiscal and monetary parameters and creating a resilient competitive economy. This was a spurious claim they were in fact setting Australia up for crisis. The reality is that the previous government created an economy which was always going to crash badly.

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Labour force data surprises …

The ABS published the January Labour Force Survey data this morning which is the monthly indication of how the labour market is faring. All expectations were that with other indicators such as the NAB Business Confidence Index and the ANZ Job Advertisements count all heading south very rapidly in the last month that the Labour Force data would be equally grim and signal the slide into recession. How wrong we all were. But should we believe the data?

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Professional profiling …

I had to get some photos taken today by Fairfax newspapers for a story they are writing on my views on the expansion and the labour market. Of-course, I told them I had to present myself in a professional manner. They agreed and so it went ….

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Why pander to the financial markets?

In an article in the Melbourne Age today (February 11) entitled Taxpayer trillions fuel a monster mess, columnist David Hirst writing on the massive injection that the US Congress has approved quotes President Obama who said

“Only the stimulus package to be approved this week, the $US700 billion Troubled Asset Relief Program passed four months ago and $US168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $US8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.”

His issue is that the secrecy of the arrangements is troublesome given their magnitude. With that I agree.

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Fiscal stimulus effects …

Opposition leader Turnbull has decided to go to the wall in opposing the $42 billion package. In particular, they want tax cuts rather than the $12.7 billion in cash handouts. He said they will not be provide economic stimulus and that December’s $10.4 billion in handouts had not worked. Soon after Turnbull provided these conclusions the ABS released the latest retail trade figures which showed that consumer spending shot up by 3.8 per cent in December, the highest monthly increase since August 2000 (since the GST came in).

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The D word – a time of national rejoicing …

Various estimates about the size of the federal budget deficit are starting to emerge. The Government has acknowledged that the data shows that tax receipts have fallen dramatically and now their budget is in deficit. For me that is a time of national rejoicing … finally … the federal government is doing what it should … resuming its crucial role in financing non-government (in this case) domestic private savings. Finally, there is a net injection of financial assets coming from the excess spending over receipts. Finally, the drain on private wealth that the creation of budget surpluses requires is at an end.

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Social capitalism …

Australian Prime Minister Kevin Rudd has written an essay extolling the virtues of a new era in public policy which he calls “social capitalism” which is based on a strong guiding role for government and an abandonment of self-regulation by corporate interests which was the hallmark of the neo-liberal era. He sources the current global economic meltdown to the neo-liberal takeover which began more or less in the mid 1970s after the first OPEC oil price rise. The problem is that his new vision is still tainted with the worst elements of the neo-liberal era.

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Recessions are terrible …

Today in the Fairfax press, economics writer Ross Gittins in an article entitled No good reason to feel depression claims that we should not be too worried about the looming recession because after all things aren’t likely to be that bad. Well from my perspective recessions are episodes that wreak havoc on the most disadvantaged citizens in our society and should never occur.

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From boom to bust …

The Sydney Morning Herald is running a series at present looking at the labour market prospects in the coming year. It is a welcome return of emphasis to the massive labour wastage that this country endures given that the major media has up until now largely bought the erroneous “we are at full employment” rhetoric pumped out by the previous federal government.

The story entitled Statistics point to hard time on job front, written by Andrew West and Jessica Irvine and published today (January 24, 2009) began with:

AS MANY as 2 million Australians could be jobless or working fewer hours than they would like by the next federal election – the highest rate of “labour wastage” in a generation …

An analysis by a leading labour economist, Professor Bill Mitchell of the University of Newcastle, predicts the total rate of labour wastage could rise to about 20 per cent of the workforce by mid-2010.

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The paradigm shift in economic policy

The extraordinary events in world financial markets which have undermined the basis of capitalism have led to equally amazing Government responses – massive injections of public spending, nationalisations of banks and bailouts of huge financial institutions with little regard for the relevant shareholder interests.

A major paradigm shift is occurring in economic thinking away from the free market deregulation era that has dominated since the 1970s. All the logic that justified government cut backs; the run down of public infrastructure; the harsh treatment of welfare recipients; the wasteful privatisations, and the rest of the neo-liberal litany that served to transfer wealth from poor to rich and create an disadvantaged underclass has been destroyed by these events.

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More bad Euro data

As a brief follow up to yesterday, German labour force data came out yesterday (Tuesday) and reveal that unemployment rose sharply in December and the disgraceful barrier of a record 5 million unemployed is now highly likely in early 2005. In December there were 4.48 million unemployed or 10.8 per cent of the active population. This is the highest level since 1990 and the second highest level in the whole period since World War II.

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Germany attacks its unemployed!

Australia is not alone in mistreating our disadvantaged and unemployed citizens. As a portent of things to come in Australia after July 2005, tough new labour market reforms came into law in Germany on January 1. The Hartz IU reforms received a bit of European press in the last few days. I read two stories over the last few days, one in the German paper Bild am Sonntag (BamS) under the heading – Hartz-IV-Chaos! Kann ich meine Stütze bar abholen? – and another from the French daily Le Monde that provided some useful insights into the how a country that refuses to provide enough work for its citizens turns on the same.

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Unemployment shame to increase!

In the Melbourne Age today (January 3, 2005), the forecasts of 18 economists for the year ahead. The group was overwhelmingly comprised of economists with vested corporate sector interests with only one academic economist being included. They make interesting reading given I also indulge in a bit of crystal ball gazing myself.

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The Free Trade Agreement – not!

On January 1, 2005, the ABC carried the headline Business welcomes trade deal, which officially came into force as the new year unfolded. The Australian-US free trade deal was touted by the current government as a major breakthrough. Well from where I sit it is neither a free trade agreement or one that we will look favourably on in the years to come. The fact that the ALP tried to convince us that they were capable of showing leadership (not!) by passing it with some irrelevant amendments is even more frightening.

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Macroeconomics 101 … not!

Foreign minister Downer displayed his fundamental macroeconomic ignorance yesterday when he was trying to explain to reporters the accounting behind the relief payments the Australian Government is proposing to aid the tsunami victims. Reported on the ABC he said that “the Government will need to dip in to the Budget surplus to provide relief money to areas affected by the tsunami disaster. The amounts proposed are beyond the government’s current disaster relief fund. For reasons I explain below this fund can be nothing more than a notional accounting allocation that the Government considers it will spend each year on disaster assistance. It does not exist in the same way as you and me (as households) might have saving accounts with actual dollars in them in a building society (or bank) each year.

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Why didn’t they build better houses!

I am in a quandary … as usual! I thought along the same lines when Australia was stricken with drought recently and there was a national urgency to provide both government assistance and support from the private sector (national appeals and such). At present the world’s media is focused on the events following the natural disaster in the Indian Ocean. Not without some justification given the extent of the calamity. Nation’s (some) are rushing to provide aid and our Prime Minister John Howard quickly committed $35 million in aid and has said more funds will be made available. He is quoted on ABC news today as saying “The amount will be added to significantly in the time ahead … We have a moral obligation on the basis of pure humanity to help and we will help.” Say that again John: “We have a moral obligation on the basis of pure humanity to help and we will help.” But try this logic out: the citizens who have been ravaged by the earthquake and subsequent tsunamis could have taken steps to avoid their exposure. Why didn’t they educate themselves enough to ensure they knew about the dangers and why didn’t they build better houses and why, why, why?

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The war on the poor

Mike Rhodes reported from California in Homeless attacked in Fresno that in February 2004, a “a coordinated multi-agency attack on homeless encampments earlier this month, the City of Fresno destroyed tents and other shelters used by the homeless … the Fresno Police Department … has returned to the tactic of not allowing the homeless to build any permanent structures. With thousands of homeless on the streets in Fresno, and homeless shelters able to provide only a couple hundred beds, a majority of the homeless have been turned into criminals. If you are homeless and can’t get into a shelter, you are breaking the law if you try to sleep anywhere in this city. This new policy penalizes the homeless and criminalizes poverty … There have also been public service announcements telling the community not to give money to the homeless … ”

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Euro zone madness continues

In the UK Financial Times article by Darryl Thomson, Dollar falls to fresh lows in thin festive trade posted December 24, the continued slide of the USD against the Euro is put down to “disappointing US economic data” (mostly sharp slowdown in new home sales). However, a so-called currency strategist claims it is the “deficits rather than the data which were weighing on investors minds”. The hoary old neo-liberal twin deficits attack on public spending is making a comeback.

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The PM should heed his own words

In the PMs xmas message he says that as Australians we enjoy “a prosperous and successful society, there are more Australians in work than ever before, our living standards are high and we are warmly regarded around the world” and that we should not to forget our less fortunate citizens.

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