Bill Mitchell-en IMF recommends that firms should increase real wage growth in Japan1
(a) NMF-ak dioenez, Japonian alokairu handiagoak behar dira (sic)2
(b) Alokairuak eta produktibitate hazkundea, batera joan behar dira3
(c) Nahi horrek aldatzen du gizartearen eta ekonomiaren erlazioa, neoliberalismotik at4
Ukitutako zenbait puntu interesgarri:
(i) Ebidentzia: jaitsiera ekonomikoa pizgarri fiskalaren ez-nahikotasunari dagokio8
(ii) Politika fiskala eraginkorra da, bi norabideetan9
(iii) Txostena labur samarra gelditzen da10
(iv) Ebidentzia enpiriko interesgarria
Kasu, ondoko hau: “the empirical relationship between labor productivity growth and real
compensation growth for G7 countries” between 1995 and 2013.11”
(v) Txostenaren ondorioak linkean12
Mitchell-ek askotan aipatu du Krisi Fiskal Globalaren kausa bat hauxe izan dela: “the break between real wages growth and productivity growth”, 1970eko hamarkadan hasitako erreforma neoliberalarekin hasi zena , monetaristek politika bereganatu zutenean13.
Klase borroka zegoen, noski14
“There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning”
Lan merkatuaren liberalizazioa nonahi gertatu da15.
Eta, orain NMF (aka IMF) dator albiste onarekin, alokairuak direla eta, Japoniarako proposaturiko aldaketa giltza da neoliberalismoarekin bukatu ahal izateko24.
2 Ingelesez: “… the IMF extolling the virtues of higher wages in Japan. What? Yes, you read (…) correctly. The IMF considers that an essential new policy element (a “fourth arrow”) is required in Japan in the form of real wages growth outstripping productivity growth by around 2 per cent. It wants the government to legislate to ensure that happens.”
3 Ingelesez: “In general, the IMF solution for Japan is in fact one of the key changes that nations have to do bring in to restore some sense of stability into the world economy. Governments around the world has to ensure that real wages growth, at least, keeps pace with productivity growth and that workers can fund their consumption expenditure from their earnings rather than relying on ever increasing levels of credit and indebtedness.”
4 Ingelesez: “This will of course require a fundamental change in our approach to the interaction between society and economy. It will require increased employment protection, larger public sector employment proportions, decreased casualisation, and legislative requirements imposed upon firms to pass on productivity gains. It’s no small order, but it is one of a number of essential changes that we will have to do introduce as part of the abandonment of neoliberalism.”
5 Ingelesez: “What do you think would happen if the government in any nation announced that they would employ anybody who wanted to work and that such people should simply turn up at some designated address to commence their jobs? I predict millions of people around the world who are currently wallowing in unemployment would immediately take up the offer and start earning income and spending it.”
6 Ingelesez: “What do you think would happen if the government in any nation announced that they were intending to improve public transport, improve the hospital system, improve the education system, and engage in large-scale environmental restoration projects? How much non-government interest would you expect there to be in the subsequent public tenders to provide capital and labour services to support this strategy? I predict there would be substantial interest among firms who currently have idle capital and poor sales outlooks.
We could give any number of examples where government spending would immediately stimulate non-government sector activity and bring idle productive resources back into use.”
7 Ingelesez: “… an IMF Working Paper (No. 16/20) – Wage-Price Dynamics and Structural Reforms in Japan – published on February 10, 2016.”
8 Ingelesez: “The research evidence is that “part of the protracted downturn” in Japan is due “to insufficient fiscal stimulus” in the 1990s.
When the the property bubble burst in the early 1990s in Japan, the Japanese government ramped up public expenditure growth to maintain real GDP growth. In 1993, total tax revenue fell by 3.7 per cent and fell again in 1994 by 1.6 per cent.
Government spending growth increased by 6.4 per cent in 1993, 2.8 per cent in 1994, 4.1 per cent in 1995 and 4.8 per cent in 1996 – which was a combination of cyclical effects (automatic stabilisers) and discretionary decisions to stimulate growth.
The fiscal support that was provided allowed the Japanese economy to avoid any negative real GDP growth (on an annualised basis) despite the massive collapse in private spending after the property collapse.
That was a remarkable demonstration of the effectiveness of fiscal policy in offsetting fluctuations in private spending.”
9 Ingelesez: “The problem was that the Japanese government succumbed to the ideological pressure and in 1997 introduced a sharply contractionary fiscal shift, which included sales tax increases and cutbacks in spending. Expenditure growth was cut by 0.7 per cent in 1997.
This shift was to satisfy the likes of the IMF!
The results were almost immediate and a palpable reminder that fiscal policy is effective in both directions. The economy, which was showing some signs of recovery given the fiscal support, nose-dived.
Moreover, the fiscal deficit expanded. Tax collections fell by 3.4 per cent in 1998 and a further 1.9 per cent in 1999.
It was only the application of further fiscal stimulus that saw the economy resume relatively robust growth in the early 2000s.
Please read … – Japan thinks it is Greece but cannot remember 1997 and Japan returns to 1997 – idiocy rules! – for more discussion on this point.”
10 Ingelesez: “The IMF paper uses a standard New Keynesian framework, which is limited at best. For example, to make the mathematics tractable it “presents a closed-economy model where consumer-workers and firms interact in the labor market and in the product market, and the central bank pursues a price stabilizing monetary policy”.
Japan is hardly a closed economy.
I have considered the limitations of these type of models before. Please read … – Mainstream macroeconomic fads – just a waste of time – for more discussion …
A detailed critique of both the formal (mathematical) and the logical aspects of these New Keynesian equilibrium models is also presented in my 2008 book with Joan Muysken – Full Employment abandoned.
So I won’t continue to eviscerate that aspect of the work. Any macroeconomist who uses the New Keynesian approach (Krugman, Simon Wren-Lewis) is wasting their brain power.”
11 Txostenak dioenez, ingelesez: “… over the last two and a half decades productivity improvements did not lead to increases in real wages … As a consequence, the labor income share has declined markedly since the 1990s, from 66 percent in 1991 to 59 percent in 2007. (…)
… workers’ bargaining power in Japan has been deteriorating since the early 1990s … [and] explains the fact that real wages have failed to keep up with productivity improvements and CPI inflation has hovered around zero over the last two and a half decades. On the one hand, Japan has been able to keep a low rate of unemployment despite the strong economic slowdown, but the unfavorable wage-price dynamics resulting from workers’ declining bargaining power have made price reflation even more difficult.”
1. “Everybody agrees: wages need to grow if Japan is to make a definite escape from deflation.”
2. “Full- time wages have increased by a mere 0.3 percent since 1995! For example, despite its record profits …”
3. “the labor market has continued to tighten and participation reached a historic high. By end 2015, only 3.3 percent of people looking for jobs were unemployed”
4. “Yet the current wage negotiations are hardly aggressive at all”.
5. “a fourth arrow needs to be loaded:
– The government could replicate the success of the corporate governance reform by introducing a “comply or explain” mechanism for profitable companies to ensure that they raise wages by at least 2 percent plus productivity growth.
– The authorities could strengthen existing tax incentives to raise wages.
– Policymakers could even go a step further by introducing tax penalties for companies not passing on excessive profit growth.
– Another option is to set the example by raising public sector wages in a forward looking manner.“
13 Ingelesez: “I have long been arguing that one of the causes of the GFC and its extended aftermath has been the break between real wages growth and productivity growth, which was deliberately engineered by the neoliberal reforms that began in the 1970s as Monetarists took hold of the policy levers.”
14 Ingelesez: “We know better now – and increasingly the recognition, exemplified in 2006 by Warren Buffett’s suggestion that “There’s class warfare, all right … but it’s my class, the rich class, that’s making war, and we’re winning” (…), is that class is alive and well and in prosecuting their demands for higher shares of real income, the elites have not only caused the crisis but are now, in recovery, reinstating the dynamics that will lead to the next crisis.
The big changes in policy structures that have to be made to avoid another global crisis are not even remotely on the radar.
One of the defining characteristics of the neo-liberal period has been the relentless attack on the capacity of the workers to translate productivity growth into real wages growth.
I considered such distributional shifts in this early blog (2009) – The origins of the economic crisis.
The deregulation in the labour markets not only created increased job instability and persistently high unemployment but also led to large shifts in national income from wages to profits.”
Ikus In Class Warfare, Guess Which Class Is Winning: http://www.nytimes.com/2006/11/26/business/yourmoney/26every.html.
15 Ingelesez: “A 2013 ILO Report written by Englebert Stockhammer – Why have wage shares fallen? A panel analysis of the determinants of functional income distribution – reported similar trends in other advanced OECD nations.”
16 Ingelesez: “… the wage share in national income has fallen significantly over the last 35 years in most nations. This is because real wages have lagged behind productivity growth. The redistributed national income has gone to profits.”
17 Ingelesez: “… in the Anglo nations, “a sharp polarisation of personal income distribution has occurred”…, with the top percentile and decile of the personal income distribution substantially increasing their total shares.
The munificence gained at the expense of lower-income workers manifested, in part, as the excessive executive pay deals that emerged in this period.”
18 Ingelesez: “It has also channelled income into the unproductive casino we know as the financial markets – the gambling chips have come at the expense of real wages growth.”
19 Ingelesez: “We know what happened next. Imbued with the, now discredited, efficient markets hypothesis, promoted by University of Chicago economists, policy makers bowed to pressures from the financial sector and introduced widespread financial deregulation and reduced their oversight on the banking sector.”
20 Ingelesez: “This not only led to a massive expansion of the financial sector, but also, set the stage for the transformation of banks from safe deposit havens to global speculators carrying increasing, and ultimately, unknown risks. The massive redistribution of national income to profits provided the banks and hedge funds with the gambling chips to fuel the rapid expansion of the ‘global financial casino’ expanded.”
21 Ingelesez: “But the reality was different. The vast majority of speculative transactions that occur every day in the financial markets are unproductive, in that they are unrelated to the real economy and advancing our welfare.”
22 Ingelesez: “A substantial portion of the “wealth” generated was illusory and we subsequently discovered that the socialised losses were enormous as the huge, unregulated gambling casino collapsed under its own hubris, criminality and incompetence.”
23 Ingelesez: “The increasing private sector indebtedness – both corporate and household – is another marked characteristic of the neo-liberal period.”
24 Ingelesez: “The IMF solution for Japan is in fact one of the key changes that nations have to do bring in to restore some sense of stability into the world economy.
Governments around the world has to ensure that real wages growth, at least, keeps pace with productivity growth and that workers can fund their consumption expenditure from their earnings rather than relying on ever increasing levels of credit and indebtedness.
This will of course require a fundamental change in our approach to the interaction between society and economy.
It will require increased employment protection, larger public sector employment proportions, decreased casualisation, and legislative requirements imposed upon firms to pass on productivity gains.
It’s no small order, but it is one of a number of essential changes that we will have to do introduce as part of the abandonment of neoliberalism.”