Paying for public services, in a monetary sovereign state

An excellent explanation by Steven Hail of how our modern monetary system really works. Read this to help understand the false impressions created by just about all the press, all the politicians and most economists


If our national Government was to spend more than the currently budgeted amount on your health care system next year, it would be good to know how they would finance that spending. It is a question that advocates of more health spending are always likely to be asked. More generally, exactly how is the total public spending which is currently budgeted for across the next year going to be funded? Do the various charts you see, linking the total tax take and government borrowing to items of government expenditure make any sense? If not, then why not?

The conventional view

This is that public spending must be paid for through taxation, government sales of assets, or issuing government bonds – in other words, through taxes now, ‘selling off the family silver’ now, or borrowing at interest now money which will have to be repaid in the future, and presumably setting…

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More low-paid work is part of the problem, not the solution

Reducing Wages of Australia’s Lowest Paid workers would worsen the sociao-economic situation says John Buchanan

Employer organisations such as the Australian Retailers Association, supported by the federal government, have recently argued that wages for Australia’s lowest-paid workers should be increased by less than inflation. This would mean a cut in real wages. But none of their assertions are sustained by evidence or research.


Three arguments have been put forward to cut the minimum wage. First, that the cut will ensure employers create more low-paid jobs, thereby reducing unemployment. Second, that low wages are not a problem anyway, as low-paid workers are “often found in high-income households”. Finally, that there have not been sufficient productivity improvements to support wage increases for the low-paid.

This is counter to the current thinking on wages. After advocating for decades that Australia needed more (downward) “wage flexibility” to solve unemployment, key international agencies – including the World Bank, IMF and the OECD – now recognise this misses the point. Australia’s award wages for our lowest-paid workers are among the highest in the world and this is now recognised as a good thing.

Meanwhile, deepening inequality, much of it originating in the labour market, is retarding the demand necessary to sustain output and employment growth. If people’s real earnings fall, then they have less to spend. When people spend less, demand for goods and services falls, and in turn so does the demand for labour (i.e. jobs). This is why a cut in wages for low-paid workers will not create jobs; rather it will reduce living standards for those earning them.

Benchmarking Working Europe 2017

The European Trade Union Institute (ETUI) has some sobering statistics on the state of Europe for working people, and some solid proposals on how to deal with issues.


The European Commission’s autumn forecast from November 2016 (European Commission
2016a) predicts GDP growth slowing to 1.5% in 2017, with employment
increasing by only 0.9%. These modest forecasts reflect concerns over possible economic
uncertainties elsewhere in the world and over the UK’s preparations to leave
the EU. The European Commission has been worried enough to argue for the benefits
of a slightly expansionary fiscal policy across the euro area countries, albeit with no
means to ensure its implementation. This, it hopes, will supplement the effects of its
investment plan and the ‘structural reforms’ implemented in recent years in a number
of countries. Unfortunately, these measures will bring very few benefits.
The key to sustained recovery should be fiscal policy, both to stimulate internal
demand and to create the basis for a more serious investment plan.

The European Commission’s rhetoric and accompanying policy measures reflect neither the depth of the problems nor the extent of policy change required to tackle them. There has been a verbal recognition that past policies have failed and that a big change is needed if GDP and employment growth are to be restored and maintained, but this has led only to half-hearted and uncoordinated responses. The key to supporting sustained growth is a switch to expansionary policies, raising demand through higher public spending and higher pay

Higher child support doesn’t lead to welfare dependency for single mums

Hayley Fisher’s research shows that child support reduces poverty among single mothers in Australia and does not discourage employment or reduce the number of hours worked

A popular concern is that higher levels of child support could enable long-term welfare dependence. Single mothers may rely on child support and parenting payments and then transition to other income support payments as their children grow up.

However I found that more child support can increase employment for single mothers, this means that higher levels of child support could in fact reduce long-term welfare dependency for this high-risk group.

How ‘structural reforms’ of labour markets harm innovation

Paul Mason pointed out recently that the dire state of wages growth in the UK meant that it was cheaper to have people in low wage dead end jobs like washing cars than having a machine do it. Poverty level wages with no way out.


This research report from Alfred Kleinknecht examines that fact in the light of “structural reform”pursued in many countries since the 1980s.  Structural reforms of labour markets frustrate the diffusion of labour-saving technologies. Moreover, they damage the functioning of the ‘creative accumulation’ innovation model that depends on the long-run accumulation of firm-specific knowledge. It is not by accident that the champions of ‘structural reforms’ of the 1980s (i.e. the US, the UK, Australia or New Zealand) show persistently lower rates of labour productivity growth when compared to countries in ‘Old Europe’ and have problems competing in classical industries.

Strikes Aren’t for the Privileged


The claim that strikes are reflections of privilege is totally disconnected from the history of women’s labor organizing in the US. by Kate Aronoff

In discussing the historical precedents for Wednesday’s strike, several writers have pointed to recent actions abroad — like those in Iceland and Poland — and a 1970 women’s strike for equality in the workplace, organized by America’s National Organization for Women. American history, however, is rife with examples of women striking as workers, at considerable risk to their lives and livelihoods. Following mining and the building trades, for instance, the textile industry — staffed almost entirely by women — was the third most strike-prone industry in the country in the early 20th century. Here are just a few examples of women who walked off the job.

The Rise of the Intern Economy

Internships and the Informalization of Labour in Italy by Marco Marrone

There is an increasing tendency around the world to hire interns, often
without pay and with very little possibility of achieving a real education
or a stable job. In the last few years, the rise of the intern economy has
attracted the attention of journalists and activists.
On one hand, in fact, it allows companies to make use of internships to avoid employer

responsibilities, including that of paying a salary. On the other hand, the obscuring of interns’ productivity (in terms of work) by educational aims operates as a narrative that increases their motivation and flexibility. In other words, the perspective of the informal economy not only seems to help us to understand the lack of recognition of interns’
working activities, but also to understand why the internship is crucial for contemporary capitalism.
Specifically, it is the possibility of obtaining a cheap, docile and motivated labour force that makes the internship one of the assets that capitalism is looking at with a growing interest. Moreover, such a mechanism does not seem limited only to internships. Thus, understanding the rise of internships as part of the growth of informal labour makes the internship a useful lens through which to examine the transformation of the labour market and the most predatory tendencies of contemporary capitalism.