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Friday, 04 March


TPP: Govt accused of "willful blindness" AFTINET

3 March 2016

Economics Editor for The Age Peter Martin has questioned whether Prime Minister Malcolm Turnbull - or anyone else for that matter - would mind if the TPP "fell over". 

He argues that economic modelling finds the benefits of the deal for Australia to be "almost non existent," criticises DFAT's National Interest Analysis for "merely summarising" the deal, and accuses leaders of "willful blindness." 

He is also critical of new Trade Minister Steve Ciobo's approach. He writes:

"Hillary Clinton is misguided. Her opposition to the Trans-Pacific Partnership is based on "misinformation". Malcolm Turnbull's new trade minister says so.

The woman most likely to be the next US president, the former secretary of state who ran America's missions abroad, the woman who criss-crossed the world pressing flesh about the Trans-Pacific Partnership, knows less about it than Steven Ciobo."

Read the full article here

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Thursday, 03 March


Japan – another week of humiliation for mainstream macroeconomics Bill Mitchell – billy blog

In September 2010, The Project Syndicate, which markets itself as providing the “Smartest Op-Ed Articles from the World’s Thought Leaders” gave space to Martin Feldstein – Japan’s Savings Crisis. Like a cracked record, Feldstein rehearsed his usual idiotic claims that interest rates in Japan would rise because “of the continuing decline in Japan’s household saving rate” and that “the higher interest rate would eventually raise the government’s interest bill by about 4% of GDP. And that would push a 7%-of-GDP fiscal deficit to 11%”. Then, so the story goes, “This vicious spiral of rising deficits and debt would be likely to push interest rates even higher, causing the spiral to accelerate”. At which point, Japan sinks slowly into the sea never to be seen again. It turns out that the real world is a little different to what students read about in mainstream macroeconomics textbooks. At the risk of understatement I should have said very (completely) different. Better rephrase that to say – what appears in mainstream macroeconomics textbooks bears little or no relation to the reality we all live in. Anyway, events over the last week in Japan have once again meant that this has been just another week of humiliation for mainstream macroeconomics – one of many.

One should note at the outset that the predictions of Harvard Professor Martin Feldstein should always be disregarded. Please read my blog – Martin Feldstein should be ignored – for more discussion on this point.

With the Eurozone crisis on-going, commentators have regularly suggested that any day now, Japan is likely to follow Greece down the path to bankruptcy.

On April 11, 2010, a Agence France journalist wrote...


Victoria thinks the unthinkable – land tax Prosper Australia

The Andrews government is flying a kite today in The Age to gauge public opinion on removing conveyancing Stamp Duty and using State Land Tax instead. This initiative deserves thunderous applause. With many young Victorians now excluded from home ownership and renting instead of building asset wealth in their own homes, the government can see […]


Market reform, not subsidies, needed to unlock “massive potential” of battery storage Renew Economy

CEC says government-led initiatives like electricity market reform critical to drive battery storage "revolution" – not subsidies.


What we’re reading: Policy vs industry, and the GOP’s climate vacuum Renew Economy

UK report finds flaky government energy policy has chased off investors and added $A230 p.a. to household bills... it might also have spawned the UK's first unsubsidised wind farm. Plus: fact-checking Obama's claim that GOP primary candidates have not a climate plan between them.


Large scale solar costs near parity with wind energy in Australia Renew Economy

ARENA releases data from its $100 million funding program for large scale solar, suggesting that utility scale solar projects are not far off "cost parity" with wind projects.


Post-Fukushima Japan urged to dump nuclear, refocus on 100% renewables Renew Economy

Five years after Fukushima disaster, Greenpeace Japan calls on govt to get serious about 100% renewables, quitting nuclear and coal.


Graph of the Day: Rooftop solar now number 2 generator in Queensland Renew Economy

Rooftop solar continues growing in Queensland, although the state has much to do to reach its renewables target.


Australian pro-CCS institute one of many lobby groups hit by Arch Coal bankruptcy Renew Economy

Arch Coal says Melbourne-headquartered Global Carbon Capture and Storage Institute one of numerous coal industry lobby groups it owes money to.


Perth shopping centre installs 312kW solar array – WA’s largest Renew Economy

Western Australia’s largest rooftop solar system has been installed, and will supply 30% of the shopping centre’s electricity needs.


A small country goes big with renewables: Denmark’s goal to be fossil-free Renew Economy

The small country of Denmark (pop. 5.6 million) is making a big commitment to renewables


Redflow raises $13m as it prepares to launch battery storage product Renew Economy

Simon Hackett to tip in up to $3m for launch of zinc bromine battery storage product, although some technical issues still to be resolved.


WA looks to solar + wind + storage for largest edge-of-grid microgrid Renew Economy

Western Power looks to build microgrid with wind, solar and storage to cut network costs and improve reliability in a town north of Perth.


The three party system (crosspost from Crooked Timber) John Quiggin

Warning: Amateur political analysis ahead. I posted this on Crooked Timber a few days ago. It isn’t as applicable to Australia. In part, I think, this is because Rudd (along with Henry and Swan) saved us from the GFC with Keynesian policies, but then failed to defend them, leaving the advocates of market liberal reform largely unchallenged.

Looking at the way politics has evolved over the past 25 years or so, in the English-speaking world and beyond, I have developed an analysis which is certainly not original, but which I haven’t seen set down in exactly the way I would like. Here’s the shorter version:

There are three major political forces in contemporary politics in developed countries: tribalism, neoliberalism and leftism (defined in more detail below). Until recently, the party system involved competition between different versions of neoliberalism. Since the Global Financial Crisis, neoliberals have remained in power almost everywhere, but can no longer command the electoral support needed to marginalise both tribalists and leftists at the same time. So, we are seeing the emergence of a three-party system, which is inherently unstable because of the Condorcet problem and for other reasons.

Now the longer version

First some definitions. Taking the three groups in reverse order, I’m using leftism as broadly as possible to encompass greens, feminist, social democrats, old-style US liberals, as well as those who would consciously embrace the label “Left”. Broadly speaking, this encompasses anyone critical of the current economic and social order on the grounds that is unfair, unequal and environmentally destructive.

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Monday, 29 February


Finland would be better off outside the Eurozone Bill Mitchell – billy blog

Towards the end of last year, I wrote a blog – Finland should exit the euro. I had been undertaking some detailed research on the plight of this relatively small Eurozone nation for a number of reasons. First, it had recently undergone a major industrial decline as Nokia/Microsoft missed market trends and went from world leader to irrelevance. Second, Finland was a vocal proponent of the view that Greece should be pillaried into oblivion by the Troika – to ‘take their medicine’ (more crippling austerity). Third, the data trends were unambiguously pointing to Finland descending into the Eurozone ‘basket case’ category itself as its own conservative government imposed harsh fiscal austerity on the tiny, beleagured nation. Two things are clearer than ever about the Eurozone. First, it is a dysfunctional mess and efforts to reform it so far have only made matters worse. Second, any single nation (and all together) would be unambigously better off exiting the mess and restoring their own currency sovereignty and letting their exchange rate take up some of the adjustment. The following text covers an article that I have written for a Finnish Report coming out in May 2016 to be published by the Left Forum Finland, which is a coalition formed by the political party Left Alliance, the People’s Educational Association (KSL) and the Yrjö Sirola Foundation.


The European Project – overextended and in the thralls of neo-liberal Groupthink

Thrall … slavery, bondage … a state of servitude or submission. (Merriam Webster online dictionary)

Groupthink … a pattern of thought characterized by self deception, forced manufacture of consent, and conformi...

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Wednesday, 24 February


Real wages falling in Australia Bill Mitchell – billy blog

The Australian Bureau of Statistics published the latest – Wage Price Index, Australia – for the December-quarter yesterday and annual private sector wages growth fell to 2.0 per cent (0.5 per cent for the quarter). This is the fourth consecutive month that the annual growth in wages has recorded its lowest level since the data series began in the September-quarter 1997. Real wages in the private sector are now in decline. In the Mid-Year Economic and Fiscal Outlook published in December, the Government assumed wages growth for 2014-15 would be 2.5 per cent rising to 2.75 over 2016-17. They also assumed real wages (the difference between growth in the nominal Wage Price Index and the Consumer Price Index would be positive (0.5 per cent in 2016-17). On current trends, neither assumption will be realised, means the forward estimates for taxation revenue are already falling short and the fiscal deficit will be larger than assumed. There will be then the typical hysteria about the size of the fiscal deficit and the need to cut it which will be missing the point entirely. The rising deficit is just responding to a generalised decline in economic activity, falling employment and suppressed wages growth. Depending on how we measure inflation, the annual wages growth translates into a small real wage rise or fall. Either way, real wages are growing well below trend productivity growth and Real Unit Labour Costs (RULC) continue to fall. This means that the gap between real wages growth and productivity growth continues to widen as the wage share in national income falls (and the profit share rises). The flat wages trend is intensifying the pre-crisis dynamics, which saw private sector credit rather than real wages drive growth in consumption spending. The lessons have not been learned.


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Tuesday, 23 February


If I was in Britain I would not want to be in the EU Bill Mitchell – billy blog

The foundations of national sovereignty are the currency-issuing capacity of the national government. The foundations of a democracy include the ability of the citizens of that currency zone (the ‘national government’) to choose the political representatives at regular intervals who will make decisions on their behalf. A direct chain of responsibility between the elected officials to the voters is thus established and the citizens can take action accordingly if they feel they are being disadvantaged by the legislative outcomes. The anathema of this sort of direct responsibility and accountability is the European Union, which is cabal ruled by unelected officials (in the conventional sense) who are not held accountable for their decisions, no matter how poor they turn out to be. The history of the Eurozone is one of policy failure with millions of people rendered unemployed, in poverty, or otherwise disadvantaged by the destructive decisions made by successive European Commission administrations. There was a good reason why the French president Charles de Gaulle resisted the development of supranational power blocks in Brussels and elsewhere (for example, in Frankfurt under the Eurozone). His preference for Inter-Governmental relations, where large common issues such as climate change, migration, rule of law, etc could be decided upon by representatives of each Member State government, without surrendering national sovereignty, was sound. Given all of that, the United Kingdom should exit the dysfunctional European Union immediately and only negotiate with other states on a government to government basis.

In May, I will be doing a two week lecture tour of Spain promoting the soon-to-be-released Spanish translation of my book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale. Full details will be forthcoming soon,...

Monday, 22 February


Democrats in glass houses – you know the rest! Bill Mitchell – billy blog

So-called US ‘progressive’ economists arena flap at the moment after Gerald Friedman, an academic economist at UMass released a report on January 28, 2016 – What would Sanders do? Estimating the economic impact of Sanders programs – which suggested that the US economy could perform significantly better and deliver substantially improved outcomes for those disadvantaged citizens with Bernie Sanders in the White House. When I say progressive, I mean those who would consider themselves Democrat Party insiders (former Chairs of the US Council of Economic Advisers under previous Democratic administrations). Last week (February 17, 2016), they created a special Internet site to publish – An Open Letter from Past CEA Chairs to Senator Sanders and Professor Gerald Friedman – which claimed that “no credible economic research supports economic impacts” proposed by Friedman and that “Making such promises runs against our party’s best traditions of evidence-based policy making and undermines our reputation as the party of responsible arithmetic”. As if the policy-making and arithmetic of these attention-seeking (neo-liberal) Democrat insiders is anything to be guided by.

The evaluation of the – Sanders’ Plan for a Broadly-shared prosperity – by Gerald Friedman attempts to enumerate the impacts of the policy announcements in a number of documents and statements that the US Senator has made in recent years. They are documented in footnote 1 in the report.

There are “two dozen distinct proposals” that form the corps of Sanders’ Plan. They include spending initiatives, tax changes and changes to the social...

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