Mitchell's Job Guarantee.

Unlike MMTers, I don't think the Job Guarantee Prof. Bill Mitchell and other well-known academics propose is the revolution. Further, I don't think capitalism (with or without JG, with or without MMT) has a long-term cure.

But I have to admit, Prof. Mitchell's proposal is intriguing and, it seems to me, would be a valuable step in the right direction. And its theoretical study may shed light on theoretical topics important to Marxists.

But this post is not about what I believe, it's about what you should know.

So, you be the judge.



Further resources:
Prof. Mitchell's blog
MMT Primer

Our Daily Madness.

"Madhouse", by Francisco de Goya (1812-1819) [A]

 
There was a time when people taking a personal risk would be called courageous. Not anymore.

Nowadays, people are considered courageous based on their eagerness to inflict misery on others. On this criterion, the Queensland state government today gave proof of enormous courage:

"Queensland Health Minister Lawrence Springborg says more than 2,700 jobs will be axed from Queensland Health as part of the State Government's cost-cutting campaign" (See here)

And, if the misery is gratuitous, unnecessary and motivated by ideological obsession only, we could speak of heroism.

Yes, heroism is a better word, because, in this case, the need for the cuts is being challenged by at least two reputable sources: "Queensland's Peter Costello 'audit' trashed by experts". (See here)

But QLD premier Campbell Newman is not fighting alone in his heroic quest to sack between 15K to 20K state public servants. Federal shadow treasurer Joe Hockey (Coalition) joined the fray immediately:

"Campbell Newman, all strength to his right arm, he's showing incredible courage to try and fix up a state government that has been in complete chaos, an absolute mess during the term of Labor and Campbell is showing the sort of courage and doing the right thing by the people of Queensland that hopefully gets Queensland back on the rails." (See here)

After the wannabe federal treasurer's statement, it was Wayne Swan's turn. Full of concern for those sacked, the real federal treasurer (Labor) said:

"These comments from Mr Hockey should send shivers down the spine of Australian workers across the country who are already worried about what Mr Abbott's reckless negativity might mean for the economy and for jobs". (See here)

Swan certainly has a point there. But the recent sackings of Commonwealth public servants and his stubborn negative to increase the dole to the unemployed (which I've chronicled before: here, for instance) do not speak well of his moral authority.

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Meanwhile, the NSW state government also has its own plans to sack public servants (according to rumours, up to 10K). But this is not what I want to touch here.

The local topic of the day for me is this:

"The NSW government is considering a bold plan that would lead to hundreds of coal seam gas wells being drilled across Sydney's drinking water catchment, supplying a fifth of the city's gas". (See here)

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This is a bizarre, grotesque world. Decent working class people are mere statistics, collateral damage and pawns in the power games of our fearless "leaders".

And yet, the same working class people, the real victims, do not deserve more than a passing mention in the news. No faces, no names, no statements; only figures. The victimizers hoard all the attention: and, on top, they are courageous and bold.

Keep listening to these people and taking orders from them.

I guess it takes a communist to perceive this madness.

Image Credits:
[A] "Manicomio", by Francisco de Goya (1812-1819. Wikipedia.

For a Fistful of Dollars.

On breaking the news that Gina Rinehart "offered a $50,000 bounty to a representative of the resources industry who best promotes mining in the face of 'far left or non-understanding media attacks' " (see here), the good folks of MacroBusiness humorously nominated one of their regular readers, well-known for his/her consistent, invariable and unconditional support of anything mining.

MacroBusiness, which excels in financial and business news, seem to have found a fool-proof way of attracting what looks like entirely new readers, for the comment thread numbers 102 (as at September 7, 08:05 am EST), which (to me and without having any hard data) seems to be a rather considerable number of comments.

And (surprise, surprise!) several of these new readers seem to be extremely well-disposed towards... the mining industry!

Rinehart's initiative is the latest in a series of innovative ideas recently advanced by local magnates. In July, her fellow mining gazillionaire Clive Palmer unveiled the blue-prints of his new Titanic II. (See here)

Who is "Us", Exactly?

I've always wondered why economic pundits have such a, to me, alien outlook on reality.

However, thanks to one of Tim Colebatch's latest pieces, I think I had a kind of an epiphany: it's a matter of pronouns!

Commenting on Victorian Treasurer Kim Wells' presentation on the economic perspectives for Victoria, Colebatch says:

"But Asia's growth also brings opportunities. Wells noted that Victorian firms also gain from the mining boom, and was one of many to highlight the potential for our agricultural, manufacturing, tourism and knowledge industries to service the growing demand from Asia's middle class, for quality food, goods and services.
"The problem is that to reap that benefit, we must regain the competitiveness the high dollar took away. If we can't change the dollar, we will have to make dramatic changes to workplace productivity and relative labour costs." (See here)

Observe carefully what Colebatch says: "Victorian firms also gain from the mining boom". Notice the pronoun: "they". They also gain from the mining boom.

But note, now: "We must regain competitiveness". The pronoun changed; it's no longer "they", now it's "we".

A second case: "We will have to make dramatic changes to workplace productivity".

So, it is the firms who gain, but it is us who pay the price for the adjustments required.

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The reader may be objecting right now: "Okay, I think I get your point. But firms are only abstract entities. They are formed by people, by us. When Colebatch/Wells say 'firms also gain from the mining boom', they're really saying 'the people who work for them also gain from the mining boom'. So, there is indeed a cost to be paid by us, but the gain comes back to us, too."

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I don't think that's quite right but, for the sake of the argument, let's assume it for now: people lose with the changes in the economy, but people also gain from those changes. One thing compensates for the other: tit-for-tat. There may be even a net gain, to be measured somehow.

So, who are the "people who work for" the firms, who are "also gaining from the mining boom"?

Let's answer with Colebatch's own example: "Victoria used to be Australia's manufacturing capital; that's gone, as hundreds of textile, clothing and other factories shut their doors". The people who used to work for these industries aren't winning anything; they're net losers.

According to Colebatch, this is where the net winners are: "Our construction workforce has doubled, as has the workforce in cafes, hotels and restaurants".

So, those who lost (say, manufacturing workers) do not necessarily wind up compensated (say, become construction workers). Losses and gains are not equally distributed.

But, there's more: in reality, what these "winners" gained doesn't necessarily compensate what the losers lost. The winners won largely casual, temp, part-time, minimum wage jobs: shitty jobs; the losers lost permanent, full-time, relatively well paid jobs. Not much of a gain for the "winners". It's unlikely there was a net gain, while a net loss seems likely.

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But I said that the objection wasn't quite right. One cannot think of firms as simply shorthand for "the people who work for them". A firm also belongs to concrete people.

When "firms gain from the mining boom", the firms' owners benefit. So, to those who lost big time, and those "winners" who won a crappy prize, we need to add a third group: the firms' owners. And they won without paying anything for it.

So, within Victoria, there's a group of people "gaining from the mining boom". The others paid the costs for those gains and got at most a partial and unequally distributed compensation.

It is this reality that those pronouns hide.

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During the last 6 years, we see that story, writ large for Australia, reflected in this colourful chart coming from the latest Statistical Bulletin produced by the Library of the Parliament of Australia:

The Bulletin says this: "The wages share [seasonally adjusted] peaked at around 63 per cent in 1974 while the profit share bottomed at just over 15 per cent at the same time". (See here)

Observe a peculiarity with that chart: when profits decrease, wages increase and viceversa, when wages decrease, profits increase. If there were no other reason, simple arithmetic means that what bosses get comes at the expenses of workers (and viceversa). But here I provided a simple mechanism, beyond simple arithmetic, that explains how this transfer takes place. [*]

Similar wage data, starting now in 1962-62 is in the much less attractive chart produced by the ABS (5204.0 - Australian System of National Accounts, 2010-11 - Analysis of Results, here):

Compensation of employees (COE) as share of GDP (government excluded)

Notes:
[*] Paragraph added, at the suggestion of a reader, after the post was published. Thanks PK.