Ecomomics

British economist John Maynard Keynes predicted in an essay, Economic Possibilities for our Grandchildren (1930), that by 2030 our grandchildren would be working a 15 hour week, due to the power of compound interest  and to technological advances.  Keynsian economics gradually gained acceptance during the 1930s, then revolutionized global government economic policy in the aftermath of World War II. The 15 hour week seemed realistic In the 1960s, but then in the 1970s came ‘stagflation’, a crippling combination of inflation and economic stagnation. This, together with the OPEC oil price shock of the 1970s, caused a macroeconomic rethink and the rise of Monetarism, i.e. control of the money supply. Later, the New Classical Macroeconomics suggested  ways of aligning  Monetary Policy with Keynesian economics. However, although the Monetarist and Keynesian schools tend to agree on economic goals, they are still in hot dispute over  priorities, strategies, targets, and tactics.

From the late 1970s, various Governments, including the US, UK and Australia, used monetary policy to combat rising inflation but the harsh social impact of monetary policy  caused lasting public and political backlash.  Some economists see this as the key reason for the current populist revolt, including Trump and Brexit. GEOFF DAVIES. Brexit, Trump and a Rigged System is a February 2017 2-part article in John Menadue’s  Pearls and Irritations, which claims that “ Neoliberalism let loose the anarchic forces of free markets just at the time when we most needed them to be restrained and redirected so as not to wreck our planetary home.”

Economists are still arguing about whether  it was mainly via Keynesian stimulus measures that Australia was one of only 4 of the world’s 35 developed countries to get through the Global Financial Crisis (GFC) without a recession in 2009, see the 30 August 2017 ABC Fact check.

So, having survived the GFC, are we now any closer to a 15 hour week by 1930? The latest GDP statistics from the Australian Bureau of Statistics show the opposite. A June 12, 2017 post,  by Jim Stanford, Australia Institute Centre for Future Work, gives a summary and link to his full report, “Labour Share of Australian GDP Hits All-Time Record Low”. He concludes that working Australians “can work more productively, and produce a larger economic pie.  But they need pro-active supports (including stronger and more comprehensive minimum wages, protecting penalty rates rather than cutting them, strengthening employment standards, and rebuilding collective bargaining) to win a fairer share of that pie.”

Further support for a fairer share of the pie (or pudding) comes in a Sep 22, 2017 Crikey Insider article by Alan Austin, Workers’ share of the pudding at an all-time low. This article uses ABS data to demonstrate that “What is transpiring now is quite bizarre: a sudden and apparently sustained collapse in workers’ share from a historically low starting point — just 48.6% — and with no problems whatsoever with the global economy. In fact, these are global boom times with all-time high trade volumes, robust commodity prices, record company profits and arguably the most benign tax and regulatory regime ever.” Alan Austin also refers to the above Jim Stanford, Centre for Future Work post and suggested solution, noting “Under Turnbull and Morrison? No chance.”

However, although the 15 hour week is currently going backwards, maybe it is not a lost cause.

Maybe the global populist momentum, including Trump and Brexit, will cause Governments to provide the pro-active supports recommended above Jim Stanford. In fact, many people and organisations have been arguing this case for years, in support of numerous causes.

Writing in John Menadue’s  Pearls and Irritations, Leanne Wells, CEO,  Consumers Health Forum of Australia has a 16 August 2017 article, LEANNE WELLS. Health insurance: the big shift that’s left patients short, which says:

“The transformation of big health funds into for-profit business enterprises sheltered by significant government subsidy and regulations has failed to prompt a complementary  response from federal governments, Coalition or Labor, to even the playing field for consumers. “

The article notes that the Consumers Health Forum (CHF) is now calling for a Productivity Commission inquiry into the benefit of government involvement in health insurance. It also seeks a robust public benefit test to ensure the community is gaining from this investment.

A 21 September 2017  Media release, Health consumer groups appeal for private insurance to benefit ALL is “A joint statement by the Consumers Health Forum, Australian Hospitals and Healthcare Association, CHOICE, Public Health Association of Australia and the National Rural Health Alliance”  which calls on the Government to establish a comprehensive Productivity Commission inquiry into Government assistance to health insurance looking at the costs and benefits of health insurance within the overall health sector.

In some of our recent QESP Newsletter articles other voices have called for  Government intervention, e.g, in Health, Changes to high-risk medical devices often supported by low-quality research, in education, AI, automation & 21st century skills needs: what do they mean for education and perhaps most importantly in innovation, Award Winning Innovation or High Tech Fantasy?

Will all these voices fall on deaf ears? Can we still hope for a 15 hour week by 2030? A perceptive lady pointed out to me that many hard working people are now forced to work a number of 15 hour jobs each week just to make ends meet. Not quite what John Maynard Keynes had in mind.

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