Monday, June 20, 2016

Bill Mitchell — Full employment = mass idle labour – detaching language from meaning

In the Golden Egg by Donna Leon, which I was reading on a flight over the weekend, there was a discussion about language and meaning. The detective in question was musing about how crimes are described and concluded that when we “detach language from meaning … The world is yours”. The worst crimes become anaesthetised. In my professional domain (economics), this detachment is rife and leads to poor policy choices. One such example, which is close to the focus of my own research work over the years has been the way in which the mainstream economists have revised the concept of full employment. We now read that Australia, for example, is at “full employment” when its official unemployment rate is 5.7 per cent (1.7 per cent above its previous low in February 2008), underemployment is 8.4 per cent, and the participation rate is still a full 1 percentage below its November 2010 peak (meaning some 190 thousand workers have dropped out of the labour force). By any stretch, the total labour underutilisation rate (that is, idle but willing labour) is in excess of 16 per cent. But to some smug journalists who cannot even get their facts straight, that is ‘full employment’. Mainstream economics – detaching language from meaning and misleading a nation as a result.

We have many examples in the recent past of this capacity to detach language from meaning.…
Bill Mitchell – billy blog
Full employment = mass idle labour – detaching language from meaning
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

16 comments:

Bob said...

Or... redefining terms you don't like to fit your narrative.

Andrew Anderson said...

Well, not having a job, even if one desires one, does not mean one is idle or not doing useful work.

Also, it's probably more accurate to say people need incomes and desire to do personally meaningful work than that they desire jobs. Jobs are just a necessary (they think) evil that allow them to do some personally meaningful work in exchange for some income, adequate or not.

So the ultimate solution is not to increase jobs per se but to universally increase incomes and the freedom to do personally meaningful work.

Bob said...

I'm not idle, I read MNE :)

Andrew Anderson said...

I read MNE Bob

Indeed. Slavery allowed the elites in ancient Greece to have leisure and with that leisure they made major advances in mathematics, science, etc.

Not that slavery is good but leisure is.

That's one reason (justice is the primary one) why I oppose a Job Guarantee* (JG) and support instead a Universal Basic Income (UBI) or Basic Income Guarantee (BIG) - for the sake of progress**.

* But if the government wishes to organize volunteer labor, why not?
** Eg. let's not have another Einstein forced to waste his time at a patent office.

Kaivey said...

I agree.

Matt Franko said...

Hey this is from Bill's today:

"First, the ECB cut interest rates (as did most central banks) in 2009. The crises deepened."

hmmmmmmmm......

Ignacio said...

Because people don't magically take on more loans when they are already overleveraged and/or the economy is going downhill.

CB's are idiots.

Matt Franko said...

Ignacio they dont look at sinks AND sources (both)...

What would have happened if they had just kept the rates static? Maybe status quo and no deepening....

Tom Hickey said...

Hey this is from Bill's today:

"First, the ECB cut interest rates (as did most central banks) in 2009. The crises deepened."

hmmmmmmmm......


Right. The crisis had nothing to do with the interest rate being too high so cutting it was not a fix and may have even exacerbated the situation since it did not stimulate investment as supposed while it did reduce interest payments.

All this was foreseen by MMT economists.

Tom Hickey said...

What would have happened if they had just kept the rates static? Maybe status quo and no deepening....

The status quo was downhill because not enough euro were being created. This has nothing to do with the interest rate but with ECB decisions that are influence by the monetary agreement and neoliberal elite (mostly German) pressure to stay with the limits of the agreement.

The interest rate did not cause this fiasco and the interest cannot be used to fix it either. They need to revisit the agreement or less permit fiscal loosening with its context.

Matt Franko said...

I thought we were for ZIRP?

Matt Franko said...

" and neoliberal elite (mostly German) pressure"

Well then why are the German's now complaining that rates are too low????

Tom Hickey said...

I thought we were for ZIRP?

We are. But making ZIRP permanent and using fiscal instead. And some other pretty important stuff, too.

Andrew Anderson said...

But making ZIRP permanent and using fiscal instead. Tom Hickey

Wrong approach since the central bank should only create fiat for the monetary sovereign, not lend to or buy assets from the private sector.

Instead, if lower interest rates are desired, the proper approach is equal fiat distributions from the monetary sovereign to all citizens - financed with sovereign coins (eg. "Trillion Dollar Coins") deposited at the central bank.

Tom Hickey said...

Well then why are the German's now complaining that rates are too low????

Adjustment is supposed to be through cutting budgets (social expenditure) and reducing wages not using monetary or fiscal policy.

Andrew Anderson said...

Adjustment is supposed to be through cutting budgets (social expenditure) and reducing wages ... Tom Hickey

Ah yes, reward risk-free* money hoarding with deflation - as if that's a recipe for economic growth!

*Actually, NOT risk-free per Matthew 25:14-30 - The Parable of the Talents.