A new economic theory may yet cut the ground from under Australian Prime Minister Scott Morrison's feet

ABC News, 17 July 2020:

We may be on the cusp of a revolution. What if everything we thought we knew about public finance over the past 40 years has been wrong? 

A new economic theory has emerged that could rewrite our understanding of how governments create and spend money and what type of society we can afford to build. 

And if it is correct, people may be furious. 

Because it could show that Australia's political elite can afford to spend far more than they are on public health and education, social housing, scientific research and green energy schemes, while eliminating unemployment. 

And yet they're not — either from a misunderstanding of government finances or because they don't want to. 

However, to embrace this radical economic theory you will have to forget what you've learned about budget deficits (that they're bad) and government debt (that it burdens future generations). 

Why? Because proponents of the theory say that far from being a problem, budget deficits are often a good thing — they can be the source of healthy economic growth. 

They argue a country like Australia that controls its own currency doesn't need to tax or borrow before its national government can spend money — the government can create all the money it needs to fund itself … within limits. 

It all sounds too good to be true, which is why critics warn the theory is naive, simplistic and potentially dangerous. 

But supporters of the theory — who are growing in number — say many of the world's problems today (extreme wealth inequality, poorly funded public hospitals and schools, chronic underemployment, stagnant wages) are a consequence of misunderstanding government financing. 

They say macroeconomic theory — which looks at the bigger picture of how the national economy works — has got too many major questions wrong. 

So what are we talking about? Let's take a closer look.... 

The theory is called Modern Monetary Theory (MMT). It is challenging the neoliberal economic orthodoxy that has dominated policymaking in Australia, the United States, the United Kingdom and many other countries since the mid-1970s. 

The reigning orthodoxy assumes a couple of things. 

Firstly, it assumes every country has a "natural rate" of unemployment and it's unwise to try to force the jobless rate below the natural level because inflation (and wages) will rise too quickly. Therefore, it assumes it's better to accept a certain amount of unemployment to keep prices stable (and to keep wage demands weak).

At the moment, Australia's natural rate of unemployment is assumed to be somewhere between 4 and 5 per cent. 

Secondly, the economic orthodoxy holds that the national government needs to collect taxes, or borrow from savers, before it can spend money. 

Politicians repeat this point incessantly. 

When you hear a politician saying the government must "live within its means," what they're really saying is the government mustn't spend more than it collects in taxes or borrowings.

However, MMT economists want to turn these orthodoxies on their head, among others...... 

The people who developed it have been working on the body of theory for decades, quietly, in countries such as Australia and the United States, but their ideas have recently burst out into the open as global leaders search for fresh ideas to deal with the unprecedented economic crisis of 2020, and the lingering effects of the global financial crisis in 2008-09.

 MMT economists make several claims: 

Firstly, they say we've been thinking about budget deficits incorrectly. 

They say budget deficits are not always bad. In fact, deficits are often necessary and beneficial. A budget deficit is merely evidence of extra government spending, and government spending boosts the wealth of private sector businesses and households.  

They say it depends what deficit spending is used for. Increasing the deficit to finance a war is not the same thing as increasing the deficit to build more hospitals and schools. 

They argue investments that will enhance productivity through better health, greater knowledge and skills, improved transport and the like are worth funding, even if it results in a budget deficit. 

Secondly, MMT economists say we've been thinking about government spending incorrectly. 

They say the argument (promoted famously by British prime minister Margaret Thatcher) that national governments must tax or borrow before they can spend is wrong. 

MMT argues it's the other way around — national governments have to spend money into the economy before they can tax or borrow. Government spending actually precedes taxation. Accepting this proposition is key to embracing MMT. 

Thirdly, they say taxes are necessary, but not for the reasons you may think. 

They say government taxes can be used to keep inflation under control, to control our behaviour (via fees and levies and rates), and to get us to produce things the government needs. 

MMT economists draw on the ideas of chartalism to make this last point. They say governments use taxes to create demand for their own currency — that is, if a citizen has to pay tax then they're going to have to work to earn the currency to pay the tax in that currency. 

Essentially, governments use taxes to put everyone to work. 

"At the end of the day, a currency-issuing government wants something real, not something monetary," writes Professor Stephanie Kelton, one of the highest-profile MMT economists and a senior adviser to Bernie Sanders in both his 2016 and 2020 Democratic presidential primary campaigns. 

"It's not our tax money the government wants. It's our time. 

"To get us to produce things for the state, the government invents taxes or other kinds of payment obligations." 

Fourthly, MMT economists say countries that issue their own fiat currency can afford to buy anything that's available for sale in their own currency, and they can never go bankrupt in their own currency. 

"Fiat" money is government-issued currency that isn't backed by any commodity, such as gold. It's paper or digital money that has no intrinsic value. We'll return to this point later too. 

Fifthly, MMT economists say "full employment" is not only possible, it's a moral imperative. Anyone who wants a job should have one. 

They say we must prioritise genuine full employment and governments should spend whatever is necessary to achieve it — no matter the debt or deficit. 

Sixthly, MMT economists say the national government should run a permanent "Job Guarantee" (JG) program to provide a job to everyone who wants one. 

They say it could be linked to other economic and social programs, such as a "Green New Deal" — a policy advocated by MMT proponents linked to the US Democratic senator Bernie Sanders, to create jobs by shifting to zero-emissions technologies.......

Read the full article here.

A little snatch of catchup

A few things of interest.....

Clarence Valley, NSW

* Much like the saplings in her hand, Hayley Talbot is hoping her idea to help local bushfire-affected areas will sprout and grow tall.

Ms Talbot, through her business Blanc Space, and project partner ex-professional surfer Daniel Ross have created the Caring for the Clarence project, in which 5000 trees will be planted to help rebuild the local koala population ravaged by bushfires.

Partnering with the NSW Government’s Save Our Species program to fund the initiative, Ms Talbot said she wanted to contribute to the area in a tangible way.

“I wanted to do something that has some longevity, that would help us as a community and help our homeland heal,” she said.

While the effort to plant 5000 trees on private properties around the Mororo and Woombah area may seem like a mammoth task for a group reduced in numbers by COVID-19 restrictions, Ms Talbot said they worked at it one tree at a time.

“I really feel like it’s been a great example of what any community member can do if they’re passionate and energetic,” she said.

Guided by conservation scientists and using trees of local provenance, the program used data from Google Earth combined with information on koala sightings to plant areas of use to sustain the population.

“From there it was about engaging with local property owners because every tree we’ve planted has been on private land,” Ms Talbot said….. [The Daily Telegraph, 1 July 2020]

* Clarence Valley local government area now eligible for federal government drought support administered by St. Vincent de Paul until end of 2020. [Queensland Country Life, 2 July 2020]

One of the largest capital works programs ever seen in the Clarence has passed through council, and is set to provide a $70.6 million investment in local roads and infrastructure during this financial year.

At Clarence Valley Council’s June 23 meeting councillors voted to adopt the 2020-21 budget, paving the way for a significant economic boost to the region.

“A significant capital works program totalling $70.6 million has been agreed for the 2020/21 financial year,” Clarence Valley Council’s general manager Ashley Lindsay said.

“The key features are $22 million to road and bridge infrastructure projects and approximately $32 million allocated to open spaces, community facility and building projects.” Mr Lindsay said an additional $5.2 million will be generated from the final year of a three-year special rate variation which commenced 2018/2019.

“The majority of these funds will be spent on roads and infrastructure asset renewals.

“This is the final year of council’s four-year financial improvement plan adopted in June 2017, which lays the foundations for the long-term financial well being of the organisation, and the services, facilities and infrastructure it provides for the community,” he said…. [The Daily Telegraph, 3 July 2020]

COVID-19 Pandemic

* 44% of all those in residential aged care who caught COVID-19 and 9% of older people receiving care services in the home died as a result of this viral infection [Australian Dept. of Health, 5 July 2020]

* COVID-19 growth rate graph 

[ABC News, 9 July 2020]

Liberal Party Politics

* Finance Minister Mathias Cormann, the man who revived Arnold Schwarzenegger’s “economic girly man’’ insult in the Australian political lexicon and privately called Scott Morrison “narcissistic” is set to quit politics sparking a cabinet reshuffle.

Australia’s longest serving Finance Minister has denied growing speculation he will quit politics for months, but has responded with notable silence to three reports in the last month that he plans to resign.

But his departure also is set to remind voters of the ongoing leadership fallout within the Coalition over the ascension of Prime Minister Scott Morrison and his increasing popularity, dominance and control of the government in the wake of the COVID-19 pandemic.

Last month, there was even speculation that he might return to Europe in a diplomatic posting for the Organisation for Economic Co-operation and Development.

But the Belgian-born Liberal senator told friends he is more attracted to making some money in the corporate sector. [News.com.au, 3 July 2020]

* By the end of this year we will be half-way through this current term of government.

Having decided not to recontest the next election, I can confirm that I have advised the Prime Minister that the end of this year would be an appropriate time for an orderly transition in my portfolio. [Australian Finance Minister Mathias Cormann, Statement, 4 July 2020]

* THOUGHT FOR THE DAY: It's only taken PM Scott Morrison a little over 23 months to quietly push Dutton-supporter Mathias Cormann out of the Australian Parliament. Who is next? [@no_filter-Yamba, 5 July 2020]

* The NSW Liberal Party has appointed a former ICAC executive to investigate claims the minutes of the local branch of Prime Minister’s right-hand man Alex Hawke were doctored to secure his power base.

In the most significant development since the scandal was first revealed by News Corp almost two years ago, the party office has confirmed in an email sent to affected branch members on Friday that it has enlisted the former head of the corruption watchdog’s investigations unit, Michael Symons, to head up the internal inquiry.

Liberal MP Alex Hawke. Picture: Kym Smith

The party head office has been in internal turmoil since being made aware of allegations that Mr Hawke’s factionally-aligned heads of the Baulkham Hills branch in his electorate of Mitchell changed the minutes to block the memberships of 10 new conservative members.

Had the new members been recorded accurately at the meeting — held in a western Sydney funeral home — Mr Hawke’s Centre Right faction would have lost control of the branch, potentially putting his preselection in jeopardy.

Control of branches is critical in influencing Federal, State and local government preselections. At a State level, the Baulkham Hills branch is critical for NSW Police Minister David Elliott. [The Daily Telegraph, 5 July 2020]

Eden-Monaro Federal By-election

* At 7:30pm on Saturday 4 July 2020, when First Preference vote counting ceased for the night in the NSW Eden-Monaro federal electorate, it was apparent that an est. 62,22% of voters were not having a bar of Scott Morrison & his hard right Lib-Nats government. [Australian Electoral Commission, 4 July 2020]

At the same time in bushfire ravaged little Cobargo at least 59.68% of local voters refused to give the Morrison Government candidate their First Preference vote.

Even after they appear to have been not so subtly threatened:

the residents of Cobargo – the centre of a tragedy in January – swung to the Liberals on Saturday night. Perhaps this is a bushfire effect in the sense locals accepted the government’s core message during the campaign: the fire clean up will move much faster if you send Fiona Kotvojs to Canberra, rather than a member of the opposition. [The Guardian, 5 July 2020]

* By early Sunday evening 61.71% of all voters in Eden-Monaro who cast a formal vote had refused to give the Morrison Government’s candidate their First Preference vote. So the inevitable happened…..

I'm pleased and honoured to be elected the next Member for Eden-Monaro.

To the people of Eden-Monaro – thank you.

I won't let you down. pic.twitter.com/tTpIZguggB

— Kristy McBain (@KristyMcBain) July 5, 2020

Research economist discovers ‘Scotty From Marketing’ Morrison’s economic playbook

So, a short recession’s not enough. You want to create a prolonged depression, right?

Perhaps you run businesses that specialise in disaster capitalism. Maybe you want to suckle at the teat of a dying fossil fuel industry for a little longer. It could be that you miss the social division and inequality of the Victorian era. Maybe you’re just a jerk.

Whatever your motivations, this guide will take you through the basic steps of pushing an already struggling economy into a full-blown crisis…

Read the full article here. [The New Daily, 5 July 2020]

About endangered flying foxes

“Their supermarket has been destroyed...and there isn’t another one within flying distance”. The Grey-Headed Flying Fox is being threatened with extinction by the effects of climate change, their future looks grim.
📸 #AnnetteRuzickaPhotography pic.twitter.com/zDGac9XrQJ

— ACF (@AusConservation) July 5, 2020

Protecting the Orange Roughy

Fishers For Conservation

The orange roughy fishery, which some have dubbed the "posterchild of fishery mismanagement", has been the subject of debate since the 1990s when stocks collapsed after just 20 years of commercial fishing.

It's a fish that can live for more than 140 years and can't breed until around 30 — and conservationists say its unusual biology should make it off-limits to commercial fishing.

But industry groups say they've learnt from past mistakes and can harvest orange roughy sustainably.

Now, acting on behalf of an Australian trawl-fishing interest group, US-based consultancy MRAG Americas Inc has recommended the fishery be given sustainability status.

The consultancy handed down its recommendation last week to MSC, an international non-government organisation that certifies the sustainability of fisheries based on the sustainability of the exploited fish stocks, maintenance of the fishery ecosystem, and responsible management.

Objections were raised by the Australian Marine Conservation Society and conservation group WWF but were dismissed on a technicality, according to AMCS spokesperson Adrian Meder.

Mr Meder said the report contains a number of flaws that show a lack of understanding of the biology of the species and fishery.

"It's the shonkiest piece of greenwashing I think I've seen in my entire career. It gets the basics wrong on so many levels," Mr Meder said…..

Orange roughy facts

• Researchers have caught orange roughy up to 149 years of age, making them one of the longest-lived fish species. It's estimated that individuals may live up to 200 years.
• They don't reach sexual maturity until around 30 years of age and by fish standards, don't produce a lot of offspring.
• Orange roughy live between 700 metres and 1500 metres deep. They roam across seabeds but congregate on underwater shelves and seamounts to breed, meaning they can be easily caught in large numbers.
• The fish are caught by bottom trawling, usually across seamounts.
• They live in cold water, and in Australia are mostly found off Tasmania, Victoria and the Great Australian Bight.
• Commercial fishing for orange roughy began in earnest in the 1970s, with the biggest extractions taking place in New Zealand waters followed by Australia.
• They're also found in the waters of Namibia, Chile, in the Atlantic and south Indian Ocean, however stock data is limited in many of these places.
• The flesh is pearly white and delicate. [ABC News, 5 July 2020]

Just for the nostalgia

https://youtu.be/i8rVI7AMKiY

Year 1987

George Harrison: Voice & Guitar

Eric Clapton: Guitar (a Les Paul)

Jeff Lyne: Guitar

Phil Collins: Drums

Ringo Starr: Drums

Ray Cooper: Percussion

Mark King: Bass

Elton John: Piano

Jool Holland: Piano

Pauline Hanson, One Nation’s Racist-In-Chief

Pauline Hanson labelled residents in the nine public housing estate towers "drug addicts" and "alcoholics" who can't speak English, in an interview this morning on Channel Nine's Today Show.

After widespread backlash across the morning, Channel Nine released a statement to announce that Hanson won't be joining the Today Show in the future…..

[SBS News, 6 July 2020]

Rex Regional Express Airine

The more than a little petty and spiteful, Messrs. Lim Kim Hai, John Sharp, Lee Thian Soo, Neville Howell, Chris Hine, James Davis and Ronald Bartsch remain firm in their refusal to continue to fly Rex Express small passenger jets into Grafton Airport in the Clarence Valley.

Leaving the valley without an airline service.

IMAGE: Rex Regional Express revised air routes

Australian Prime Minister and Liberal MP for Cook Scott Morrison uses the old excuse that 'Jen & the girls deserve a break' to bolt out the backdoor once again

* It appears that 'Scotty From Marketing' has been away on holidays for most of the last six days and intends to keep holidaying for another six to seven days.

IMAGE: Found on Twitter

* "As you know, it is a school holidays and Jenny and the girls will be taking some time on the outskirts of Sydney....We have technology where I can be with them and continue to take briefings, calls and meetings in dealing with the situation whether it be Victoria or the other situations in the country. "As a dad, I will take some time but at the same time I can assure you we will remain absolutely focused on the things we need to focus on next week."  [9 News, 10 July 2020]

Morrison holidaying in a crisis *again* proves he doesn't regard it as a serious job. He's there for the power, not the service.

That he's not getting chased with cameras says a similar thing about our political press.

— Richard Chirgwin (@R_Chirgwin) July 10, 2020

Scott Morrison was ALREADY on holiday with the family and Twitter busted him AGAIN. Not that you heard anything from the MSM. Now he has been busted, he says he won’t be with them full time in wish washy words. I call BS. #auspol

— 🐨🦇🎀💧Angry Granny (@AngryGranny1) July 10, 2020

Cartoon of the Week

Cathy Wilcox

Cartoons for the Festive Season

@FionaKatauskas

@Broelman

Cartoons of the Week

David Rowe

Australia 2019: freedom of speech and the citizen's right to know

In 2019 it is not hard to hear and read evidence of politicians and industry leaders publicly telling blatant lies or deliberately misleading in an effort to deceive the general public and voters in particular.

Often this evidence of lying comes straight from the horse's mouth so to speak - via live radio or to camera interviews. 

Other times the veil of secrecy is lifted by mainstream and social media.

It has become so increasingly common over these last twenty years that it seems that the majority of those who are elected to govern on our behalf at federal, state and local government level now see deception and deceit as being the pattern card of a successful politician.

Indeed, even certain industry and ideological lobby groups are apparently contaminated by this warped pattern card.

The ability for media or private individuals to fact check all the fake news currently in the public domain falters before its sheer volume.

Checking veracity is complicated by the fact that News Corp (through its online/print newspapers & televised news outlets such as Sky News and Fox News) as well as social media giant Facebook Inc (which has a company policy of allowing politicians to lie repeatedly and unchecked on its digital platform) derive considerable income from disseminating demonstrably false information supplied by vested interests.

Thus in Australia, along with the U.K. and U.S.A., we are now beginning to drown in all that fakery and lying - our democratic processes are threatening to become highly dysfunctional.

Whilst freedom of speech is implied in the Australian Constitution it is not clearly spelt out - leaving a great deal of wriggle room for governments of the day to bully both the media and the private citizen whenever they have the temerity speak out against deceit or corruption.

This bullying, which often begins as an abuse of parliamentary privilege, appears to be an attempt to protect those perpetrating ongoing deceit and whatever is the political malfeasance or financial fraud cover-up of the day.

When 'doxing' an individual, phone calls from ministerial aides, emails expressing displeasure or legal letters threatening defamation do not work, these days the next step is for governments to use the federal police to raid media or union offices and the homes of journalists/whistleblowers in a further effort to intimidate.

A growing pile of legislation now exists at federal and state level which establishes a 'right' for government to bully, intimidate, coerce and ultimately silence those journalists, whistleblowers and ordinary citizens who do speak up.

Rather belatedly mainstream media is beginning to express its concerns about the path government is now treading.....

The Singleton Argus, 28 October 2019, excerpt from Voice of Real Australia: 

Meanwhile, elsewhere in Scotty Morrison's Chamber of Secrets, everyone's been donning invisibility cloaks in the all-seeing-no-talking halls of the magical-mystery castle of Hogwash:

Home Affairs is being investigated for its failure to process Freedom of Information requests within the legally required time limits.

Australia's cyber security agency has confirmed it pressured organisers of a major conference to drop two speakers, one a noted whistleblower.

And a report into a computer hack at Parliament House might not be released, even in redacted form.

A week after the unprecedented all-media #righttoknow campaign was launched with the front pages of the nation's daily newspapers symbolically censored with a redacted government document, Coalition MPs and Senators have for the most part lined up behind the Prime Minister and his "no one is above the law" rhetoric, while Labor has used the press freedom push to bash the government (despite its earlier support for some of the laws in question).

Thankfully, there have been some independent voices speaking up, and sensibly, from the cross-bench. And, yes, that includes Senator Jacquie Lambie.

The front pages of ACM's 14 daily newspapers featured an example of a "redacted" government document to highlight to increasing restrictions being placed by government and goverment agencies on the release of information the public has a right to know.

Here's what some of Australian Community Media's leading journalists and columnists have had to say on the issue over the past week:

Newcastle Herald journalist Joanne McCarthy:

"I've spent more than 13 years challenging powerful Australians, including churchmen, who thought they were above the law. Too many politicians, for too long, stayed mute.

"I know hundreds of quiet Australians - women abused and abandoned by our health system, and people sexually abused and betrayed by churches and other institutions. Many were betrayed again when they sought help from powerful churchmen who counted prime ministers as friends.

"The quiet Australians I know were the silenced Australians. Until they spoke to the media and found their voices."

Read Joanne's opinion here.

Canberra Times commentator Jack Waterford:

"The problem is bigger than excessive secrecy and inadequate accountability in matters loosely connected with national security.

"Once we have agreed to restrict our liberties by increasing the powers of those in the national security state, the slippage begins.

"Soon cops and others will have access to bugging, tapping, interception and coercive powers - extending all the way down to parking fines."

Read Jack's full analysis here.

The Border Mail columnist Zoe Wundenberg:

"If you see something, say something. Or so we are told by our government in the fight against terror on our home soil. Dob in your neighbour. Report your colleague. Be the eyes and ears of the government.

"Unless, of course, you aim your telescope at Parliament House."

Read Zoe's comments here.

Australian Community Media is part of Australia's Right To Know, the coalition of 20 media organisations and industry groups leading the #righttoknow campaign. Read more here.

James Joyce

Executive Editor, Australian Community Media