Higher education

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Book Review: Dark Academia: How Universities Die by Peter Fleming

Published by Anonymous (not verified) on Sun, 05/09/2021 - 7:00pm in

In Dark Academia: How Universities Die, Peter Fleming explores the destructive impact of the bureaucratic and neoliberal structures of academia, which have turned universities into toxic workplaces. The book powerfully evokes despair and despondency at the loss of the intellectual environment promised of academics, writes Chelsea Guo, yet she questions whether the traditional academic institution has ever truly been … Continued

Faculty TeeVee

Published by Anonymous (not verified) on Sat, 21/08/2021 - 1:37am in

Photo credit: Lucas Viccellio/Netflix _____ It’s such a setup, and one of Dr. Ji-Yoon Kim’s colleagues knows it. As Dr....

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Reading Academic Quit Lit – How and why precarious scholars leave academia

Published by Anonymous (not verified) on Wed, 18/08/2021 - 8:10pm in

Academic ‘quit lit’ is an emerging genre of academic writing focused on authors’ reasons for leaving academia. Drawing on an analysis of this literature and interviews with precarious academics in Australia, Lara McKenzie discusses what this genre says about the current state of academia, those who leave it, and how not all acts of quitting … Continued

Austerity has damaged the ability of Greece to defend itself against fire threats

Published by Anonymous (not verified) on Wed, 11/08/2021 - 6:43pm in

It is Wednesday and I have been busy on other writing projects. But today I offer some data analysis on the Greek fire tragedy as well as a short video promoting a very important festival that is coming up. Then I offer some personal insights on the accusation by the right-wing press that on-line learning is just a ruse for lazy “work-shy” professors. And to calm us after all that – we have some fine jazz from 1960.

Resist Festival, October 16-17, 2021

I recorded a short video for the organisers of the – Resist Festival – which will finally be held in the UK over the weekend, October 16-17, 2021.

The Festival is part of the Resist: Movement for a People’s Party, which has been in the planning for some time now but its launch, originally planned for May 2020, was delayed by the pandemic crisis.

The video explains why I agreed to be part of the Festival, albeit from my remote location in Australia, given the external border restrictions imposed on travel by the Australian government at present.

I think the venture can energise grassroots activity at a time when our traditional political voices are largely divorced from the needs of our societies and globe.

It would be great if you can get involved with the Festival.

There is strength in numbers always.

Greek fires and austerity

The recently released – Climate Change 2021: the Physical Science Basis – Working Group 1 Report from the Intergovernmental Panel on Climate Change (IPCC) is terrifying to say the least.

I make that statement as a layperson in terms of climate science, which is why I won’t comment much on the science.

The projections are that climate change is:

… is intensifying the water cycle. This brings more intense rainfall and associated flooding, as well as more intense drought in many regions …

… is affecting rainfall patterns. In high latitudes, precipitation is likely to increase, while it is projected to decrease over large parts of the subtropics. Changes to monsoon precipitation are expected, which will vary by region.

Coastal areas will see continued sea level rise throughout the 21st century, contributing to more frequent and severe coastal flooding in low-lying areas and coastal erosion. Extreme sea level events that previously occurred once in 100 years could happen every year by the end of this century.

Further warming will amplify permafrost thawing, and the loss of seasonal snow cover, melting of glaciers and ice sheets, and loss of summer Arctic sea ice.

Changes to the ocean, including warming, more frequent marine heatwaves, ocean acidification, and reduced oxygen levels have been clearly linked to human influence. These changes affect both ocean ecosystems and the people that rely on them, and they will continue throughout at least the rest of this century.

For cities, some aspects of climate change may be amplified, including heat (since urban areas are usually warmer than their surroundings), flooding from heavy precipitation events and sea level rise in coastal cities.

Pretty scary and it comes in the week that Greece is undergoing shocking fire tragedies, which now appears to be a regular occurrence as the Northern summers get hotter and the rainfall abates.

A recent Reuters Report (August 10, 2021) – Angry Greeks criticise government response after wildfire devastation – informs us that in the face of devastating fires, the “emergency services failed to respond to … calls for help”.

The Greek population is asking why the services are incapable of responding to a predictable disaster that climate change has been threatening to make worse for some time now.

I also note that I have done extensive research on behalf of the Firefighting union in Australia on a variety of concerns over the years and have a very good understanding of the sector and its challenges.

The report tells us that the “head of Greece’s firefighters federation … said 5,000 firefighters needed to be hired immediately.”

It also appears that the firefighting equipement is “ageing” as a result of a lack of government spending.

A government official claimed that they had increased fightfighter numbers to 14,736 (an increase of 16 per cent) in the last three years.

The same issue came up during the catastrophic 2018 fires in Greece and at that stage there was a lot of speculation that the austerity program inflicted on Greece by the Troika (European Commission, ECB and IMF) had undermined the firefighting capacity of the Greek government.

It is difficult to get coherent data to conclude definitively.

But here are two graphs derived from Eurostat data that tell a story.

The first shows the euro outlays on fire-protection services by the Greek government from 2001 to 2019. The data is annual and one has to convert a percentage of GDP into actual euro expenditure given that Eurostat has in the last two years mysteriously stopped publishing the direct expenditure data for this category for Greece.

In the early days of Eurozone membership, government expenditure on fireprotection in Greece grew in proportion with GDP and by 2009 was 1 percent higher (as a proportion) than it was in 2001.

That proportion has been maintained but in euro terms, the austerity was extremely damaging because as GDP plunged by up to 25 per cent, so did actual outlays on services.

That meant cuts to equipment and firefighters at a time when fire risk was increasing rapidly.

With the Greek economy basically stagnating, those cuts have not been restored.

The dotted line shows a simple linear trend based on the 2001-2007 average growth in total expenditure, which would have maintained the GDP proportion as well.

So a dramatic shortfall in where Greece might have been had it not been decimated by the political (ideological) forces in charge of the European Union

And, of course, the fire risk doesn’t understand ideology or austerity – the trees are still there to burn no matter how many firefighters there are.

The second graph shows the annual rise in firefighting expenditure by the Greek government.

Since 2012, as the fire risk increased, there has been slightly negative growth.

That is a significant reason why Greece is burning out of control at present.

I was also interested in tracing what the cuts in spending meant for employment in the fire services.

Recall, above, that the government official claimed that there were now 14,736 firefighters.

From the – World Fire Statistics 2009, No. 14 – we learn that:

Firefighters: 15,500

Fire stations: 290

So in 2021, by the government’s own admission there are 14,736 firefighters.

On that basis there are less workers being employed to fight fires.

The data is somewhat inconsistent, however.

The most recent – World Fire Statistics 2021, No. 26 – thinks there are:

Firefighters: 15,927

Fire stations: 285

It doesn’t really matter that much whether we quibble about a few more or less fighters now relative to 2009.

The point is that there should be many more fighters now than in 2009 given the increased risk.

Austerity has left Greece in an extremely vulnerable position on a number of fronts.

Lazy university academics

I saw this Tweet the other day from – Robert Halfon – who is a British Conservative MP representing Harlow and the Villages and occupies the position as Chair of the Education Select Committee.

He included an article from the UK tabloid, The Sun, written by one Natasha Clark, whose own Twitter feed has been dominated for some time by whether Geronimo should be put down or not.

The sentiment was clear – university academics are lazy and taking advantage of the pandemic to further their “work-shy” ways – having a sort of holiday on full pay is what the article suggests.

Essentially, the assertion is that by asking students around the world to undertake on-line learning as part of a sensible response to dealing with the pandemic, especially the Delta variant which seems to like infecting younger people, the universities are “conning” the students and not delivering value for money.

We could raise, initially, the question of why higher education students are being asked to pay for their education.

I wrote about that issue in these blog posts:

1. I feel good knowing there are libraries full of books (October 29, 2010).

2. Strong public benefit from tertiary education in Australia (September 29, 2014).

You will note that my own position on these issues moved a bit as more data became available to help us understand the situation better.

But I don’t want to revisit that discussion here.

I also don’t want to get into the issue of learning modes and student propensities. That is a complex area and far from resolved given the evidence that is available.

Some students find on-line learning difficult while others flourish.

We all learn in different ways, which is why a modern teaching program has to be multi-dimensional in the way it presents its pedagogy.

But on-line learning has really been forced upon us as an existential matter given the pandemic.

The point of the article is that university academics are “work-shy” and have to be “ordered back to class”.

First, teaching on-line is difficult for the academic – staring into a screen via Zoom from your office – without being able to read eyes or other body language.

So as a first choice for academics, we would much rather be back at our campuses, mixing with our colleagues and going face-to-face with the students.

Second, the idea that teaching on-line is less work (the “work-shy” inference) is completely wrong and reflects the fact that the journalist (nor the MP who recycled the stupid Sun article) have probably never had to prepare higher education courses for on-line delivery in their lives.

Halfon was a salesmane before he entered the political arena and Clark seems to have been a journalist only.

My experience in developing pedagogy at the University level for on-line delivery is that it is much more time consuming and challenging than preparing material for face-to-face delivery.

Much more thought and time spent in developing material is required.

It is not our first choice.

And my experience now developing material for MMTed has taught me how onerous developing multimedia content is.

Our first four week course that we ran in March 2021 took a team six months to develop.

A standard 13-week course of around 4 hours of ‘contact’ is another matter again.

Music – The John Wright Trio

This is what I have been listening to while working this morning.

I felt like something clean and traditional.

So I dug out my copy of – South Side Soul – which was recorded on the Prestige lable in 1960 by the US pianist – John Wright.

I first encountered his playing in the early 1970s and discovered he had recorded 5 albums on Prestige between 1960 and 1962.

He faded from the scene quite early and worked as a librarian but came back with another album in 1994.

He was a great player and his trio was clean as clean can be.

I still play this album a lot.

It features John Wright on piano, Wendell Roberts on bass, and Walter McCants on drums, which was the first of many trio configurations he used in his early years.

I was especially interested in John Wright because he saw the clear links between a musical life and an activist life.

He was involved in the US civil rights movement in the 1960s.

He said in an – Interview – from August 2011, six years before his death, that:

The first time I marched was in Gage Park. Ben Branch was part of the movement and affiliated with Jesse Jackson. They thought that I and a few other fellows should never march, because we didn’t have much tolerance, and what they wanted was people to march who could withstand the dogs and the throwing the bricks and rocks and the name calling, I wasn’t ready for that, just coming out of the military, seeing in the South how we were treated …

He later became inspired by MLK when he came to Chicago.

A great talent, but too much whisky early on.

That is enough for today!

(c) Copyright 2021 William Mitchell. All Rights Reserved.

British Labour remains unelectable – Part 104

Published by Anonymous (not verified) on Wed, 14/07/2021 - 1:40pm in

It is Wednesday and I am now unable to get home to Melbourne as a result of the border closure between Victoria and NSW. That closure is the result of the incompetence of the conservative NSW government who thought they could beat the Delta variant of COVID and leave Sydney open for business. They have now learned that their claim to be the world’s best virus containing government were hubris and so regional NSW is also suffering, what will be a very long lockdown. Victoria has sensibly closed its border as have the other states to NSW, which now is an isolated, pariah state. Pity the NSW Labor opposition is so weak. Anyway, today is a few snippets about the British Labour party being so weak, some reflections on monetary sovereignty, and a note that the barbarians are trying to kill off social sciences in our universities. Then some happiness via some great bass playing.

British Labour Party remains unelectable

The latest Survation poll results in the UK carried the headline – Conservative lead jumps to 11 points.

The poll was run between July 5 and 13, 2021 and shows that if a British General Election was held in that period the following voting intentions would be expressed:

More damning is that “There is no change from two weeks ago on who the public think would make the best prime minister, with Boris Johnson still leading Keir Starmer by 45% to 28%.”

And, “On party leader ratings, Boris Johnson and Keir Starmer’s net ratings are both down in the past fortnight, Johnson on -3%, down 3 points, and Keir Starmer on -11%, down 2 points on a fortnight ago.”

So, at a time that the Tories and the PM are obviously not very popular, the Opposition leader is going backwards.

Clearly, the Opposition leader is still locked into a neoliberal macroeconomic mindset.

The latest example is the debate in recent days about the Tory cuts to foreign aid.

The BBC article (July 13, 2021) – Foreign aid: Covid costs mean we have to cut payments, says PM – demonstrates that both political parties are locked into a flawed conception of the fiscal capacity of the government.

The Tories have cut aid by around £4 billion – which will leave aid around 0.5 per cent of GDP rather than the 0.7 per cent commitment that the Government voted on in 2015.

The Government is claiming that the pandemic has seen it spent £407 billion during the pandemic to “shelter our people from an economic hurricane never before experienced in living memory” so that there has to be “consequences”.

They cited the rising debt associated with that spending boost as the reason for cutting aid, despite the fact that the Bank of England has purchased most of that debt – the government buying its own debt in practice.

The Opposition leader played it ‘cute’ with his response in the Commons (see video below).

http://bilbo.economicoutlook.net/blog/wp-content/uploads/2021/07/Keir_Starmer_Foreign_Aid_July_2021.mp4

He said that the 0.7 per cent target should be retained and allowed the Government to scale aid to the current GDP levels.

Interestingly, he said that:

Every member here was elected on a manifesto promise to retain the 0.7% target … Cutting aid will increase costs and have a big impact on our economy. Development aid reduces conflict. It reduces disease and people fleeing from their homes.

It is a false economy to pretend that this is some sort of cut that doesn’t have consequences.

So, he is being cute because he is pretending he supports no cuts in spending while retaining the 0.7 per cent of GDP target.

Imagine GDP is 1000

0.7 per cent of 1000 is 7.

If GDP falls to 900, then 0.7 per cent falls to 6.3.

A cut of 0.7.

So if “Development aid reduces conflict. It reduces disease and people fleeing from their homes”, then the Opposition leader is voting to increase conflict and disease and force more people from their homes in less developed countries.

Sure enough, the Tory decision cuts aid more than if the 0.7 per cent rule was retained but that is not the point here.

In the video statement, the Opposition leader said:

Nobody in this House is arguing for overseas aid to be maintained at the pre-pandemic levels during the downturn … We all recognise that a contracting economy means a relative contraction in our aid budget.

I don’t recognise that.

There is every need at present for the British government to actually increase foreign aid spending to help the nations that are less able to help themselves.

There is absolutely no need for the contracting UK economy to cut foreign aid.

There was an interesting article about Fiji in the ABC News last weekend (July 11, 2021) – Fiji is racing against time to vaccinate its population while a COVID-19 outbreak explodes.

The COVID situation there is difficult now after a long period of being free of the virus.

The government there has “refused to implement a nationwide lockdown” despite “recording around 700 new infections daily”.

The Prime Minister Frank Bainimarama is a sort of Bolsonaro character and claimed that “We don’t want to lock people up”.

Better to let them die, it seems.

He invoked the myth that lockdowns do not work against the virus but “kill jobs”.

I think the evidence is to the contrary as long as there is good fiscal support for income protection etc.

Which brings me to the point.

An Australian-based professor of epidemiology was quoted as saying that while:

In a rich country, it’s a very easy solution. In a poor country, this becomes a major problem.

Apparently, “Australia could turn to lockdowns as a way to reduce case numbers or minimise deaths, but countries like Fiji may not be able to afford such decisions.”

Fiji issues its own currency, the dollar but the central bank of Fiji does administer capital controls which “help prevent large and/or sudden outflows, which can significantly reduce Fiji’s foreign reserves.”

Fiji is a small, open economy that is impacted by foreign commodity price swings and natural disasters.

They gain foreign exchange from large flows of tourist income, remittances and sugar exports.

Tonight, I am presenting a lecture at the Madrid Summer School on the topic of monetary sovereignty.

One of the sub-topics is related to the Fiji question, which generalises to many small, less developed economies.

When we talk about monetary sovereignty, we must also recognise that there are other limits, even when a nation issues it’s own currency.

Some economists like to express this in terms of a spectrum of monetary sovereignty from high to low depending upon the circumstances that prevail in each situation.

Most developing countries do have limitations on the extent to which they can claim to be monetarily sovereign.

What Modern Monetary Theory teaches us is that any currency-issuing nation can ensure that all the productive resources that are available to it can be fully and productively employed.

But that doesn’t insulate the nation from material poverty.

A nation with very limited productive resources, particularly in terms of food and energy self-sufficiency may well be able to achieve full employment but still remain relatively poor in material terms.

There are several ways that developing countries lose monetary sovereignty.

The main reasons relate to their propensity to issue debt in foreign currencies and to peg their currencies to other currencies.

The extreme example of the latter phenomenon is dollarisation, where the nation uses a foreign currency (in this case, the US dollar) as its own.

The experience of the West African nations who still use the CFA franc as a relic of the colonial era is another example.

Within these constraints, mainstream economists, represented, for example, by the policies and practices of the World Bank and the IMF, prescribe various solutions for developing countries to improve material living standards.

The problem is that they all tend to undermine the goal.

None of the current advanced nations, which enjoy high material standards of living, could have achieved that state of development if they had have followed the prescriptions now in vogue and applied by the IMF and the World Bank.

The package of solutions that are proposed (and enforced through debt relief and structural adjustment programs) are multi-dimensional.

The first IMF-type strategy is to encourage Export-oriented growth.

This strategy has been a staple of the IMF, and, involves the conversion of subsistence agriculture into cash crop production for export mixed with some form of assembly-line manufacturing, which means the nation is seen as an assembly line for products destined to be sold in the advanced nations.

The problems of this strategy are many.

With the agricultural conversion, sustainable practices and food security are lost and nations depend on prices in world markets for income, which are volatile.

They also lose subsistence food self-sufficiency and become increasingly dependent on imported food, often of lower nutritional quality.

I am referring here, for example, to the rising dominance of the fast food industry.

History tells us that price drops are common in markets flooded with produce, which, in turn, creates problems of debt sustainability and nations enter a vicious cycle of increasing debt and resource depletion.

The decimination of finite resources, such as forests also undermines future prosperity.

The creation of assembly-line manufacturing, involves the importation of high value-added goods (capital, machinery, etc) and energy resources, which further imbalances the precarious trade situation of the nation.

The second IMF-type strategy is to encourage foreign direct investment.

This often invokes a ‘smokestack’ chasing exercise where nations race to the bottom to attract foreign capital, and, end up with depleted environmental outcomes, poor working conditions and wages, and a compromised tax base.

Nations also sign free trade agrements which privilege corporations via investor dispute mechanisms and compromise the legislative capacity of the elected national government, which degrades the quality of their democracies.

Rarely will the interests of the foreign corporations align closely with those of the local population.

The third IMF-type strategy is to encourage financial market deregulation.

Related to the problems of foreign direct investment, is the relentless push from multilateral agencies, such as the IMF, for nations to deregulate their financial markets in order to attract speculators – the so-called ‘hot’ money investors.

In addition to allowing these speculative flows of capital to enter and exit without control, nations are pressured to bias monetary policy in the direction of higher interest rates and fiscal policy in the direction of lowering tax rates in order to attract immediate inflows of foreign capital.

Taken together, these strategies typically align the national policy with the interests of foreign capital, and, undermine the well-being and future prospects of the local population.

While a nation might record large short-term inflows of foreign capital, minor shifts in conditions in world markets, precipitate sudden outflows, which create financial crises and share market collapses.

The fourth IMF-type strategy is to encourage tourism.

Turning cities and/or regions in less developed nations into ‘playgrounds’ for foreign visitors is a popular strategy and proponents claim it allows the nation to acquire valuable foreign currency reserves.

There are many problems that arise however.

The quality of local urban environments where people live and work are compromised to satisfy the whims of the ephemeral inflows of foreign tourists.

Large scale resort style developments often permanently impair the local ecosystem and absorb valuable subsistence agricultural land.

Moreover, the nation has to import food, energy and capital to facilitate the hotels and other tourist infrastructure, which often undermines the trading situation and promotes currency instability as speculators bet on exchange rate depreciation.

The imports that are necessary to facilitate the tourist industry also reduce the import space available to the nation for bringing in essential goods and services to satisfy the basic needs of the local population.

We also witness race to the bottom strategies, where nations compete against each other for tourists via huge subsidies and tax breaks to foreign tourist operators, who often force local workers to work for poverty wages.

The final IMF-type strategy we consider here relates to the reliance on remittances.

The multilateral agencies often hold out that nations can develop if they allow their most skilled workers to work abroad and remit their incomes back to the local economy.

The problem with this strategy is that it builds cyclical fluctuations into family income where foreign workers are often the first to be made unemployed when the host nations encounter recessions.

But, the more basic problem with this strategy, is that it creates a brain drain, where the investment that the nation has made in education and skill development is lost and the benefits are enjoyed by other nations.

What is the alternative approach?

My MMT colleague, Fadhel Kaboub, who is the premier expert on these matters, refers to these mainstream approaches to economic development as ‘long-term structural traps’.

The alternative approach starts with a recognition that there several interrelated structural strategies that must be invoked to kickstart, and, then, sustain the development process.

First, the lack of food self-sufficiency has to be addressed to reduce the need to import basic nutritional requirements and free up ‘import’ space for other items, such as productive capital.

Sustainable agricultural policies lie at the heart of this approach.

Instead of converting subsistence agriculture into cash crops for exports, nations need to enhance the productivity and security of their subsistence sectors.

Second, nations need to reduce their dependency on imported energy sources by investing in renewable energy and reducing the need to import fossil fuels.

Third, the industrial strategy typically promoted by the multilateral agencies is typically deficient in that the value-added component of exports is low (unprocessed primary commodities or agricultural products) and the value-added component of the necessary imports (like fuel and processed food) is high.

Less developed nations need a big push led by state investment in infrastructure in the health, education and skill-development areas.

They need to invest heavily in research and development and seek to shift the value-added equation to processed exports and reduced imports.

They cannot just develop assembly lines for products that benefit the advanced nations.

As this strategy unfolds, subsidies to sectors and activities that do not fit this innovation profile should be phased out.

What should be the role of multilateral agencies like the IMF and the World Bank?

They should be replaced with a new agency that has the mission of ensuring less developed nations can always get sufficient foreign exchange to allow for imports of food and energy resources that are essential to maintaining adequate material living standards.

The bottom line is that Fiji can still protect the incomes of their workers in the same way that Australia can.

But that doesn’t mean that its other vulnerabilities are reduced.

It has experienced a huge GDP collapse – negative 19 per cent in 2020 in real terms.

It has a trade deficit and relies on imported energy.

It runs a continuous fiscal deficit – currently around 2.3 per cent of GDP.

And, its currency has been stable for many years

The Barbarians are at the gates

Like many universities in Australia, the University of Westen Australia is experiencing a budgetary crisis due to the COVID restrictions on international students and the failure of the federal government to provide adequate support to the higher education sector.

The budgetary crisis is, in part, due to the inflated salaries that the top managers take for themselves these days in the sector.

They always make budget cuts to the lower paid workers who actually do the work in our universities and keep rewarding themselves grossly scandalous salary levels.

Anyway, the UWA has decided to cut social sciences heavily and is basically scrapping the the Sociology and Anthropology areas.

You can read about the situation in this WA Today story (July 14, 2021) – ‘Degree factory’: UWA students revolt over $40 million restructure chasing ‘profits over people’.

The damage will be substantial.

If you want to send a protest voice to the UWA then please sign this petition – Save Social Sciences at UWA.

Music – Oscar Pettiford

This is what I have been listening to while working this morning.

One of the great bass players in jazz history is – Oscar Pettiford – who was one of the first bebop players.

He also pioneered the use of the cello in jazz (his story is interesting on that).

His great period was during the 1950s. He died of a polio related illness at the age of 37 in 1960.

This track is of a Bethlehem Records release in 1955 – Another One.

This track 0 – is the famous piece by – Hoagy Carmichael – and – Mitchell Parish

Appearing on this track with Oscar Pettiford is – Dan Abney (piano).

It is one of my favourite albums.

Great playing.

That is enough for today!

(c) Copyright 2021 William Mitchell. All Rights Reserved.

Culture of austerity distorts business decision-making and we all lose

Published by Anonymous (not verified) on Wed, 23/06/2021 - 6:34pm in

It is Wednesday and so a few snippets and some Afrobeat. Today, I briefly discuss a rather extraordinary claim by the Governor of the Reserve Bank of Australia that Australian employers refuse to pay higher wages in an environment where the federal government is biases aggregate policy towards surplus creation, even though that strategy was temporarily disabled during the first year of the pandemic. The overall austerity environment has distorted business decision-making to such an extent that firms are now obsessed with cost control and have forgotten that spending equals income and by encouraging a high wage, high productivity culture, their profits rise as well. Win-Win. At present it is lose-lose.

The way austerity distorts business decision-making

In a speech last week (June 17, 2021) – From Recovery to Expansion – which was delivered to the Australian Farm Institute Conference in Queensland, the RBA Governor reflected on the state of the economy.

To his credit he has been calling for employers and governments (state and federal) to increase wages growth as a way out of the economic slowdown that befell the Australian economy even before the pandemic struck.

He has cited the damage that government wage caps have had and noted that they have provided wage leadership (of the wrong kind) to the private sector, which has been suppressing wages growth for some years now.

Nominal wage growth continues at record low rates and that preceded the pandemic.

The most recent federal fiscal statement projects real wages cuts will persist over the next several years.

At a time when households are holding record levels of household debt, the only way that household consumption expenditure will underpin sustainable GDP growth is if wages growth rises.

In this Speech last week, the Governor noted that:

Notwithstanding these signs of a tightening labour market, wages growth and inflation remain subdued and there have not been upside surprises. The Wage Price Index increased by just 1½ per cent over the past year, with wages growth slow in the private and public sectors … And it is noteworthy that even in those pockets where firms are finding it hardest to hire workers, wage increases are mostly modest. There are some exceptions to this, but they are fairly isolated.

This experience speaks to a broader dynamic in the economy that has been evident for some time and is contributing to the subdued wage and price outcomes.

And what is that “broader dynamic”?

The Governor said:

Most businesses feel they are operating in a very competitive marketplace and that they have little ability to raise prices. As a result, there is understandably a laser-like focus on costs: if profits can’t be increased by expanding or by raising prices, then it has to be achieved by lowering costs. This has become the predominant mindset of many businesses.

This obsession with “cost control” has meant there is a reluctance to award any pay rises to staff.

Even when they are “facing labour shortages”, firms will not “increase wages in an effort to attract new employees”.

The Governor said that firms are choosing a “‘wait and ration’ approach: wait until labour market conditions ease, perhaps when the borders reopen, and until then, ration output.”

The problem is that this explanation does not help us understand the pre-pandemic reluctance to award wage increases.

The overall problem is that the obsession with fiscal surpluses at both federal and state/territory level for years now has distorted business decision-making in the way the Governor describes.

It was pre-pandemic.

Sure enough, the pandemic has added an additional element of uncertainty.

But the fiscal surplus obsession has meant that overall spending growth has been tightly constrained as governments have relied on households accumulating ever-increasing levels of debt in an environment of flat wages growth to maintain consumption expenditure and overall growth.

That strategy was coming unstuck before the pandemic as GDP growth was below 2 per cent when trend is more like 3.25 per cent.

The suppression of spending is what has created the “very competitive marketplace” as firms scramble to eke out revenue in a product market environment that is very tight.

The distortion has led to this ridiculous focus on costs and wage suppression.

The firms would be far better off innovating (increasing productivity), creating a high wage culture, and then enjoying the profit bouyancy that would follow.

They would also be better off withdrawing support for governments that impose these public sector wage caps that have encouraged suppressed private sector wages growth.

And instead of going to the wage setting tribunal hearings demanding zero wage adjustments and begging the tribunals to cut penalty rates etc, firms would be better off encouraging the tribunals to award strong wages growth.

Spending equals income.

Ultimately, a wage suppression strategy damages profits and biases the fiscal outcome towards deficits anyway.

Incomprehensible decision making

My own university (Newcastle) has been mired in controversy in recent weeks over the decision by the University Council to appoint Mark Vaile as the new Chancellor.

Vaile is a former deputy prime minister and a former member of parliament serving the National Party (rural conservatives).

When he left Parliament he took up a number of high profile corporate positions, including the position of Chairman of Whitehaven Coal, which is a large coal company – “The leading Australian producer of premium-quality coal” – that also has been mired in scandal (see below).

It is also trying to build new coal mining capacity in northern NSW when community sentiment and the funding bodies (banks etc) have moved firmly away from that sort of future development.

On June 4, 2021, the University announced – Former Deputy PM named 8th University of Newcastle Chancellor.

The decision by the Council shocked many people – staff, students, donors, community etc.

It was an incomprehensible decision given the change in sentiment in the external community away from carbon-based investments and activities.

Within days, the wheels were falling off the decision.

Senior academic staff members resigned from Council and/or made damaging statements to the media attacking the decision.

A full-page statement appeared in the Newcastle newspaper from major philanthropists announcing that they were blacklisting the University as a result of the decision.

Millions of dollars of donor funding was then at risk.

This statement received national media attention.

In this UK Guardian article (June 18, 2021) – Donors say they won’t support University of Newcastle after coalmining executive made chancellor – we read that major philanthropists told the University that:

… it up to us to decide which universities we will support. As significant donors we write this letter to make clear to the university, that we, and many like-minded others, will not support a university who would choose as their leader someone who is determined to build new coalmines when most of the world is determined to reduce fossil fuel use.

Whitehaven’s attempts to build new mines was the “the subject of a recent landmark federal court judgment that found the federal environment minister, Sussan Ley, had a duty of care to protect young people from the climate crisis.”

Smaller donors like me – I have channelled nearly all of my consulting/commission research income back into the university over the years – millions in fact – would have also followed suit.

All the main national media outlets covered the appointment, which amplified the controversy and brought the University’s reputation further under scrutiny.

It was a incomprehensible decision to appoint such a person to a senior role in an Australian university in a time where climate issues are dominating the public debate.

The University likes to style itself as ‘looking forward’, but, having a coal miner as the most senior appointmentment didn’t look like move forward at all.

But the incomprehensible nature of the decision went further than that.

When he was Minister for Trade, Vaile oversaw the Australian Wheat Board scandal which saw hundreds of millions of dollars being channelled from Australia into funds used by Saddam Hussein via a “sham” Jordanian trucking company as part of the ‘oil-for-food’ program.

The Cole Inquiry – was established as a Royal Commission to investigate:

… whether decisions, actions, conduct or payments by Australian companies mentioned in the Volcker Inquiry into the United Nations Oil-for-Food Programme breached any Federal, State or Territory law.

The Volcker Inquiry had investigated allegations of corruption and fraud in the UN Oil-for-Food program and found that the AWB “was the biggest single source of kickbacks made to the Iraqi government” which were paid to ensure Australian wheat would disembark without trouble in exchange for oil.

The conservative Australian government had deliberately underfunded the Cole Inquiry and restricted its scope and the result was obvious – no findings of corruption.

The AWB executives deliberately frustrated the Cole Inquiry’s attempts to get answers and the Chair of the Inquiry regularly criticised them.

The “memory lapses” displayed by top officials on big salaries were comical.

While Vaile denied any knowledge of the kickbacks, there were documents submitted to the Cole Inquiry that were somewhat at odds with his recollections.

He had allegedly met with “an Australian businessman lobbying for the recovery of illicit $US5 million BHP debt from Saddam Hussein’s regime” (Source).

At the time, he issued a press statement saying he had no record of any relevant meeting.

Whitehaven Coal was fined in 2014, for having had a “phantom environmentalist” as part of a community consultation panel to oversee the the destruction of a forest in NW NSW. They had “pretended Greening Australia was on the committee, until the organisation demanded their name no longer be used” (Source).

A year later, the company tried to claim there was no qualified applicants for the position, despite two highly qualified applicants being refused their applications.

In 2017, the company “fought to keep secret … a litany of environmental licence breaches at its north-western NSW mines over the past six years. The breaches relate to a range of problems, from contaminating nearby streams to air pollution at Whitehaven Coal’s four mines.” (Source)

Last year, the company was “charged with 16 breaches of NSW mining laws”, which included “alleged breaches including the construction of unauthorised tracks, drilling of bores in contravention of approval conditions and failure to rehabilitate drill sites” (Source).

There were many other scandals (tyre burials, etc) that this company has been involved in.

And, increasingly, banks and superannuation funds have been withdrawing their funding from the coal industry.

For example, late last year, “the country’s largest superannuation fund has dumped its holding in Whitehaven Coal as it ramps up its climate policy to include a net zero emissions by 2050 target.” (Source).

Vaile largely silent over these scandals then became very animated.

Here is a former Deputy PM of a ‘free market’ government calling out banks for engaging in market behaviour.

Vaile demonstrated complete hypocrisy in 2020 when he started attacking the commercial banks for pulling out of funding deals for big coal projects.

You can read about this in the Australian Financial Review article (October 22, 2020) – Vaile tells big banks to back coal if they want government guarantees.

As the Chairman of Whitehaven Coal, Vaile claimed that:

There ought to be an unwritten, but semi-moral obligation by the major banks in Australia to support those major Australian industries … It is not just about coal. It is right across the resources base.

When Vaile was Federal Trade Minister he pushed the liberalisation, free trade narrative.

The banks and super funds have just been making ‘market’ decisions, realising that their own corporate image will suffer and they will endure losses if they continue to fund carbon-based industries.

At least they had the antennas on that told them that an association with this sort of industry is not good for their repute.

So while pushing the free market line when it suits the corporate interests Vaile represents, he is not shy to push an authoritative, regulative approach when those interests are threatened.

In the last week or so, massive community pressure has been brought to bear on the University.

It would have certainly lost millions of dollars of donor funding and significantly damaged its reputation in a very competitive higher education sector.

And, then, the University sent out an E-mail message to staff indicating that Vaile had decided not to take up the appointment in July 2021.

The statements from the University and Vaile himself demonstrated how little they had understood the situation.

The main media sources covered that decision too – see, for example – Mark Vaile quits Newcastle University chancellor role amid backlash over coal links.

The Federal education minister in the conservative federal government came out yesterday claiming that “cancel culture is to blame for former Nationals leader Mark Vaile’s decision to turn down the role” (Source).

The right-wing media are having a picnic over the affair – citing “activists” for the demise of an otherwise “excellent appointment”.

The problem of echo chambers is that those inside don’t hear things outside.

It was obvious that there was widespread horror at the appointment and it wasn’t just confined to so-called environmental activists.

We don’t know how the decision was made that Vaile would withdraw, but, we, the sensible ones – all breathed a sigh of relief.

The University of Newcastle has dodged a bullet in this rather tawdry and sorry affair.

However, I think it should be investigated how the Council etc thought this was a good idea in the first place.

Music – Tony Allen and Hugh Masekela – where the South and West of Africa combine

This is what I have been listening to while working this morning.

I love – Afrobeat – which combines Ghanian – Highlife – and Nigerian – Fuji rhythmic patterns with Jazz.

Last year, a collaboration between the master Nigerian drummer – Tony Allen and the late South African horn player – Hugh Masekela – came out in the form of an album entitled – Rejoice.

Tony Allen was the founder (with Fela Kuti) of Afrobeat.

Hugh Masekela was a champion of the anti-apartheid movement and met Tony Allen while he lived in exile in West Africa.

Both are giants of the African jazz scene and among my favourite players.

Both believed that music was a political force and that social criticism was an essential aspect of social change.

The UK Guardian article (March 19, 2020) – Tony Allen: Afrobeat’s master on Hugh Masekela, Damon Albarn and friction with Fela Kuti – provides some insights into the album, which was recorded in 2010 but waited a decade before release.

The album was the product of improvisation sessions with the horn and drums – no material was written before they entered the studio.

After Hugh Masekela’s death in February 2018, Tony Allen added some bass lines, some keyboard parts and some vibes over the original recordings.

Then on April 30, 2020, Tony Allen died at the age of 79.

This is the final track on the album – We’ve Landed – and features some killer bass playing among other instruments.

Turn up the volume and EQ the bass!

Perfect.

That is enough for today!

(c) Copyright 2021 William Mitchell. All Rights Reserved.

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