The struggles to teach political economy and the aftermath – we all lost

I started my undergraduate studies in economics in the late 1970s after starting out as an Arts student in the early 1970s studying philosophy, politics, history, anthropology and statistics. The Vietnam War movement and other things interrupted my first years of studies and it wasn’t until the Federal government introduced the National Employment and Training (NEAT) scheme in 1974 that I was able to get some government support to resume my studies, this time as an economics student combining statistics, politics, law and economics. The major student rebellions of the late 1960s around the world had ended and the Monetarists had seized control of the academy, which led to major shifts in the way economics was taught. The world is much poorer as a result of these changes and the end-game problems of neoliberalism that we are all struggling with now – housing crises, welfare retrenchments, aftermath of privatisation and outsourcing, casualised labour markets offering poorly paid jobs with precarious outlooks, rising income and wealth inequality, and the climate crisis to name just a few of the individual crises that are now converging into the poly crisis we are enduring now – are directly related to the shifts in the economics profession in the 1970s. I was a student then young academic through this early period and when I read an article in the Australian Financial Review this morning (September 1, 2025) – Why my dad fought against ‘Albonomics’ at Sydney University (usually behind a paywall) – I could hardly believe what I was reading.

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Australia’s unemployment rate is well above any reasonable full employment level

Central banks around the world tightened interest rates starting late 2021 in some places and there was a systematic period of hikes over the next year or more despite the inflationary pressures mostly showing signs of abatement as a result of factors that were not sensitive to the rising interest rates. In Australia, the RBA started hiking in May 2022 and continued through to November 2022, despite the inflation rate peaking in December 2022. The RBA consistently claimed the labour market was too tight and that the unemployment rate was below the unobservable Non-Accelerating-Rate-of-Unemployment (the so-called NAIRU), which meant to stabilise inflation in their eyes, they had to force unemployment higher. Their logic was not consistent with reality and tens of thousands of workers have lost their jobs over the last few years as a result of deliberate policy choices all for nothing. The inflation outbreak was not the result of excess spending and came down on its own accord as the COVID constraints abated and supply chains worked around Putin and all that. In this blog post I produce some research that further cements that conclusion. There are some technical details but essentially the narrative should be easy to follow.

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Cryptocurrencies are not currencies

I often get asked about cryptocurrency. And I immediately become bored. The sort of claims that people have made about this phenomenon, which is historically just another speculative asset, are over-the-top to say the least. There are two realities that seem to be ignored. First, we already have mainstream digital money and have had for a long time, before cryptocurrencies emerged. For example, when the central banks credit reserve accounts held by commercial banks as part of the daily payments system clearing, digitial transactions take place. Similarly, when you go on-line and conduct some bank transactions shifting deposits to other owners (paying bills etc) you are using digital currency. Second, cryptocurrencies are not currencies nor are they money, which makes their name rather misleading. In fact, they are just another speculative, non-money asset that are not backed by anything so we say that the fair value is zero. There is an intermediate asset that has emerged – the so called – Stablecoin – which differs from cryptocurrencies, in that the asset is specifically pegged in some way to some national currency or basket of assets. However, the hype surrounding stablecoins is similar to that which has accompanied the evolution of cryptocurrencies, the point being that the ‘stable’ bit is not backed in anyway by any government guarantees. I also distinguish this class of non-monetary assets from the recent developments in central banking known as – Central Bank Digital Currency – which is really just an extension of the already myriad of digital transactions that central banks conduct every day.

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Basing a childcare system on how much private profit it generates is a recipe for certain disaster

We knew in the 1980s, when neoliberal-influenced governments started selling off public trading enterprise for not much that the strategy would not deliver on its promises. At least some of us knew and wrote about it then. I was part of a team that analysed the disasters that would follow the sell off of the Commonwealth Bank and Qantas. Qantas, by the way, has gone through a sequence of high profile scandals, including selling tickets for flights it had already cancelled, illegally sacking workers during COVID, and other demonstrations of incompetent and capricious management. Just this week, it was fined $A90 million for the illegal sacking of the baggage handlers. The latest demonstration of how privatisation has failed is the revelation that the child care industry in Australia has become a honey pot for paedophiles and sociopaths as for-profit child care centres pursue profit at the expense of caring for the children in their centres. The solutions are always straightforward but rejected by governments – bring these activities back into the not-for-profit state sector. Meanwhile, the future of tens of thousands of children are being compromised by profiteering by corporations as governments wax lyrical about how much they care for the kids but do very little to stop the abuse.

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Productivity growth is not the only source of increases in material well-being for the majority

One of the issues that emerges when one is studying undergraduate macroeconomics is that there is a curious disregard for the role that income and wealth distribution play in determining the aggregate outcomes, that are at the centre of the study. Most students in my cohort didn’t think about that and the curriculum certainly didn’t encourage such digressions. For me, a student of Marx basically, I was extremely interested in the topic and read a lot outside the standard curriculum, which took me into the work of Sidney Weintraub and others, for example, who demonstrated how aggregate spending was not just influenced by income but also how that income was distributed. I have been thinking about this issue in relation to the way the Australian debate at present is being dominated by the productivity question and the imperative for a degrowth strategy to emerge. This thinking is also in relation to the Federal government’s – Economic Reform Roundtable – which they are running in Canberra this week, led by the Treasurer. The overarching theme is ‘Making our economy more productive’ so we can grow faster. Exactly the opposite of a discussion about degrowth.

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Australian labour market – slight improvement but uncertainty continues

The Australian Bureau of Statistics (ABS) released the latest labour force data today (August 14, 2025) – Labour Force, Australia – for July 2025, which reveals that last month’s gloom might not have been the start of a downward trend. The current data has blurred that outlook and the best we can say is that the future is uncertain. The virtuous three were evident this month: rising employment (particularly full-time), constant participation, and falling unemployment. Underemployment also fell 0.1 point as a result of the strong full-time employment result. It remains a fact that with 10.1 per cent of available labour not being used it is ludicrous to talk about Australia being close to full employment. There is substantial scope for more job creation given the slack that is present.

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Australian workers get modest real wage gains in latest data – finally

Yesterday, the Reserve Bank of Australia finally lowered interest rates some months after it became clear the economy is slowing and the labour market is getting weaker. The RBA remain fixated on their claims that wages growth is too high. In yesterday’s – Statement by the Monetary Policy Board: Monetary Policy Decision ((August 12, 2025) – they claimed that the “labour market remains a little tight” and that “Measures of labour underutilisation nevertheless remain at low rates” – which must be them rehearsing for careers as comedians. Unemployment is rising quickly and the broad underutilisation rate was at 10.3 per cent. So for the RBA having 10.3 per cent of available labour not being used in one way or another is a ‘low rate’. Extraordinary. Anyway today (May 14, 2025), the Australian Bureau of Statistics released the latest – Wage Price Index, Australia – for the June-quarter 2025, which shows that the aggregate wage index rose by 3.4 per cent over the 12 months and is steady. The June-quarter 2025 nominal wage growth outpaced the standard inflationary measures. While most commentators will focus on the nominal wages growth relative to CPI movements, the more accurate estimate of the cost-of-living change is the Employee Selected Living Cost Index, which is still running well above the CPI change. Using that measure, purchasing power of the nominal wages grew modestly in the June-quarter after several quarters of zero or negative growth. However, there is no wages breakout evident. And while the RBA are fixated on low productivity, they fail to demand more investment from the business community which is the main reason for lagging productivity.

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What does it mean for a nation to become bankrupt?

The reason I ask that question is because I read in the UK Guardian article yesterday (published August 11, 2025) – As dark financial clouds gather, Labour has to heed its past: when it chooses austerity, it loses elections – that “Britain is in danger of going bankrupt. It may happen slowly or quickly, but since Labour took office this possibility has increasingly been promoted and discussed in the press, by opposition parties and in the City of London”. And when the author of that article poses his own question: “What exact form will this bankruptcy take?” – he offers the rather tepid response that it will happen because the government is “spending too much, generally on people who have little”, which offers nothing by way of clarification or definitiveness. So it is useful to interrogate the notion of a nation going broke. Can it happen? Can Britain become insolvent?

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The British government’s obsession with the fiscal rules is driving the economy towards recession

The UK economy is heading into a malaise. The latest news – UK construction activity in July falls at steepest rate since Covid (August 6, 2025) – and – UK services sector has biggest fall in orders for nearly three years (August 5, 2025) – confirms that there is a slowdown underway. That was prefaced by rising unemployment and falling overall GDP growth in previous data releases. However, when we examine statements coming from the Labour government, the Prime Minister is hinting that there might be tax rises in the Autumn Statement because a neoliberal oriented ‘think tank’ has told it that there is a £40 billion gap in the fiscal outcomes, which will breach the self-imposed limits specified in their fiscal rules. So the Government is contemplating more austerity and contractionary policy at a time when private spending is subdued and the economy is going backwards. It just demonstrates how the obsession with these fiscal rules grossly distorts fiscal decision making and focuses government eyes on all the wrong things. I am still amazed when I think how stupid we all have become for thinking that any of the stuff is acceptable.

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