You’ve got to love MSM economics editors/experts/commentators. They all sing from the same depressing song sheet – ‘The Deficit Dirge’ or the ‘Surplus Serenade’.
The only thing missing in the lyrics is the refrain of ‘need ya baby, wantcha baby, lurv ya babeee…’
What they lack in vocal skills is usually made up of through interpretive dance.
This is usually performed wearing a bespoke suit while clutching a pointer, and features a dazzling array of signs arrows and graphs – gotta have graphs, otherwise the audience may cotton on to the fact that what they’re peddling is a slightly more up market version of tea-leaf reading.
Without exception, they all state what is known in common parlance as the ‘bleeding obvious’.
The economy isn’t in too bad a shape, the first phase of the mining boom is over, climate change could be a problem in the future (no kidding???) and that the trade deficit is okay but could be better.
From ‘Kochie’ to Kohler, Greenwood to Gittins, the message rarely varies.
The depressing thing about listening to this flannel is the knowledge that every last one ’em studied economics at tertiary level and understand the premise of fiat currency and how it operates.
They know that government ‘deficit’ is not debt, that pursuing budget surplus is not beneficial to the economy but in fact is detrimental and most importantly, that creating unemployment to have a ‘buffer stock’ of surplus labour in order to suppress wage demands and control inflation is a recipe for disaster.
Nonetheless, like a drunk at a Karaoke night they keep slurring the refrain of ‘freeing up the economy and the job market’ ad nauseam.
In fairness to MSM economists, much of their research material is sourced from the Reserve Bank of Australia reports, and it would seem that at the RBA there’s been liberal doses of Thorazine in the boardroom Ovaltine.
This week, there have been tea-leaf readings from two of the eminence gris of this august institution, John Edwards, who served as an economic adviser during the Keating years (hardly something to boast about), and Chris Kent, an assistant governor at the RBA. Kent has made the amazing discovery that the buffer stock of available unemployed labour so treasured by supply side economics, is actually declining as available jobs disappear!Kent traces this shrinkage to many of the unemployed simply giving up looking for work as they become discouraged by an ever shrinking job market.
The notion that this is usually what happens when there are fewer and fewer jobs available doesn’t seem to have crossed the good assistant governor’s mind.It may also be argued that this is the end result of creating a permanent pool of unemployed when taken to its logical conclusion. Any downturn in the economy, a high dollar and weakening growth in government spending means that the private sector has to make up the shortfall, and the usual method is to reduce labour and cut wages in order to survive.
Nevertheless, under Hockey’s budget the ship of fools sails on toward disaster while the captain and crew are tranquillized to the eye-balls by the cloying miasma of supply side economics and ‘market forces’.
Rather than continue with the notion of a buffer stock of unemployed and underutilized to curb wage demands and inflation, the intelligent solution is to turn this ‘buffer stock’ into employed workers in a ‘Job Guarantee’ program which pays the minimum wage and thereby circumvents the worst social aspects of long term joblessness, while at the same time is able to control both wage demands and inflation via the fixed minimum wage.This buffer stock would expand during times of private sector downturn, and contract when the private sector recovers.
In a recession, the Job Guarantee would serve as a back-stop against rising unemployment and maintain a stimulus for aggregate demand.In times of economic expansion, participants could leave the Job Guarantee scheme for higher paid positions in the private sector.
A Job Guarantee scheme would also replace the current NAIRU (Non Accelerating Inflation Rate of Unemployment) with a NAIBER – Non Accelerating Inflation Buffer Employment Rate through control of the overall wage rate by allowing participants to transfer from an inflating sector to a fixed wage rate sector.
As the architect of the scheme Bill Mitchell argues, this would ultimately attenuate the inflation spiral. Mitchell’s scheme makes immanent sense. It provides not only a humane solution to unemployment, particularly long term unemployment and underutilization but also serves as both buffer zone and stimulant in times of private sector downturn.
In stark contrast, the continued application of supply side economics and ‘free market forces’ merely exacerbate a widening gap of social dislocation and unrest.
Similarly to Thorazine, Chicago School economics has had the long term effect of stultifying employment in Australia to the point of atrophy.
It is well past time that MSM economists, not to mention assistant governors of the Reserve Bank threw out the dregs of the Thorazine in the Ovaltine and embraced the truth of the need for a new economic strategy based on Keynesian economic theory.
As politicians such as Chris Bowen and Tony Burke are aware, nations which issue fiat currency have the means well within their grasp to create a system of full employment and that the commencement of schemes such as the Job Guarantee are only a key stroke away.
If they don’t know this, then they certainly should as should the Greens.
All that is really required to bring about change especially in the light of the current governments mendacious and draconian ideology – is the political will to do so.
If what is termed ‘The Left’ cannot find this will, then perhaps it’s well past time for the public to insist on replacing the Thorazine with Benzadrine and find a replacement brand for the Ovaltine.
Also by Edward Eastwood: