Notes

Introduction

1 G. Monbiot, How Did We Get Into This Mess?, London, Verso, 2016, p. 3.

2 For the fundamentals of the framework, see P J Brain, The Macroeconomic Structure of the Australian Economy, Melbourne, Longman Cheshire, 1986; for a brief account, see P Brain and I Manning, ‘An overview of the national, state and regional modelling system’, National Economic Review No 66, September 2011, pp. 1–13. Forecasts have been published regularly in Natonal Economics conference and working party documents and in the National Economic Review. National Economics is the trading name of the National Institute of Economic and Industry Research (NIEIR).

3 P J Brain, Beyond Meltdown, Melbourne, Scribe, 1999, p. 206.

4 M Grubb, Planetary Economics, London, Routledge, 2013.

Chapter 1: Economic breakdown as a threat to prosperity

1 R J Barro and J F Ursua, ‘Macroeconomic Crises Since 1879’, National Bureau of Economic Research working paper 13940.

2 Op. cit.

3 C M Reinhart and K S Rogoff, This Time is Different: eight centuries of financial folly, Princeton, Princeton Uiversity Press, 2009, p. 280.

4 European Commission occasional paper 92, 2012, ‘Scoreboard for the surveillance of macroeconomic imbalances’. Statistical values for the indicators discussed in this chapter are available on the National Economics website, nieir.com.au.

5 EC staff working paper, 2012, ‘Completing the Scoreboard for the Macroeconomic Imbalance Procedure’.

6 EC staff working paper, 2015: ‘Adding employment indicators to the scoreboard of the macroeconomic imbalance procedure to better capture employment and social developments’.

7 Data to support the following assessments has been generated by the ABS (especially Cat 5204.0 and Cat 6203), with a summary available on the National Economics website.

8 Reinhart and Rogoff, p 280.

Chapter 2: Financial deregulation

1 P J D Wiles, Economic Institutions Compared, Oxford, Blackwell, 1977, p. 321.

2 I Manning, Incomes and Policy, Sydney, Allen and Unwin, 1985.

3 ACTU/TDC Mission to Western Europe, Australia Reconstructed, Canberra, AGPS, 1987.

4 Wiles, op cit., p. 322.

5 Names associated with the Austrian school include E Böhm Bawerk, L von Mises, and F Hayek. The latter’s cri de coeur, which was written under the shadow of Hitler and Stalin, and emotively mistitled The Road to Serfdom (originally published 1944, with numerous editions since), condemns all forms of economic planning as lying on a slippery slope towards authoritarian government. The book has curiously little to say about how authoritarianism equates to serfdom, in which the mass of the population become debt-slaves, or about the threat that financial systems may impose debt-slavery on their borrowers.

6 P Lawrence, QE 64, comment on ‘The Enemy Within’ by Don Watson, Quarterly Essay 64, p. 86.

7 J B Gewirtz, ‘The Cruise that Changed China’, Foreign Affairs, November–December 2016, pp. 101–9.

8 For the story of this transition, see G Hand, Naked Among Cannibals, Sydney, Allen and Unwin, 2001.

Chapter 3: Financial deregulation and household debt

1 Strictly comparable estimates are not available — see RBA occasional paper no 8, table 3.2.

2 For data, see www.nieir.com.au/credit code red

3 ASX Australian share price movements, 1982 to date.

4 M Kohler and M van der Merwe, RBA bulletin 9/15, p. 21.

5 M Gizycki and P Lowe, ‘The Australian Financial System in the 1990s’, paper presented at an RBA conference, 2000, p. 181.

6 National Economics, State of the Regions 2013–14, report for the Australian Local Government Association, 2013, chapter 8.

Chapter 4: Financial deregulation and overseas debt

1 EC 2002, p. 11.

2 Op. cit., p. 10.

3 T Kryger, Australia’s foreign debt, data and trends, 2009, table 9.

4 2016 estimate from ABS National Accounts, national balance sheet.

5 Paul Keating on ABC Lateline, 1 October 2008; more recent RBA analysis has tended to downplay the problems at the big four banks, see D Rogers, ‘Credit Losses at Australian Banks 1980–2013’, RBA discussion paper 2015–06; also Gizycki and Lowe 2000 (op cit.).

6 Hand, 2001.

7 R Belkar, L Cockerel, and C Kent, ‘Current Account Deficits, the Australia Debate’, RAS discussion paper, 2007, p. 15.

8 P J Brain, Beyond Meltdown.

Chapter 5: Australia under credit watch

1 An alternative treatment would be to add bank overseas holdings of short-term assets, discounted for their hedging function, to official holdings of overseas reserves. We have elected to subtract them from the borrowing requirement, because this focusses attention on the adequacy of official reserves. To make this allowance, we discount bank overseas holdings by the ‘hedging ratio’, defined as the ratio of bank holdings of foreign financial assets (discounted by 80 per cent) to foreign liabilities excluding foreign-equity liabilities. This increased from 20 per cent in 1996 to a third in 2007, fell to a quarter in 2010, and climbed back to 36 per cent in the final quarter of 2015.

2 L A V Catao and G M Milesi-Ferretti, ‘External Liabilities and Crisis’, IMF working paper, May 2013.

Chapter 6: Crisis vulnerability over the next decade

1 ABS Catalogue No. 5368.0, China excluding Hong Kong.

2 Equity withdrawal is defined as the total change in household debt, less household-sector capital expenditures including dwelling construction and maintenance expenditures, less depreciation allowances. See chapter 3.

3 The discretionary household-savings ratio is the overall household savings ratio less the compulsory net superannuation saving ratio. See chapter 3

4 National Economics: Carbon crisis: systemic risk of carbon emission liabilities, Beyond Zero Emissions, December 2014.

Chapter 7: Neo-liberalism comes full circle

1 Pew Research Centre, Behind Trump’s Victory: divisions by race, gender, education, 9 November 2016.

2 FEED Economic data, Trading Economics website consulted late 2016 and early 2017: www.tradingeconomics.com/rss

3 Op. cit.

4 J Mayer, Dark Money, Melbourne, Scribe 2016.

5 B Bull and S Machin, ‘Brexit and Wage Inequality’, 16 August 2016, voxen.org/article/Brexit-and-wage-inequality.

6 J.R. Nunns, et. al., ‘An Analysis of Donald Trump’s Revised Tax Plan’, Tax Policy.

7 Committee for a Responsible Federal Budget, 26 April 2017.

8 Cingano F. (2014), ‘Trends in Income Inequality and its Impact on Economic Growth’, OECD Social, Employment and Migration working papers, No. 163, OECD Publishing Lttp://dx.doc.org/10.1787/5jxrjncwxv6j-en. See also M Brückner and D Lederman, ‘Effects of income inequality on economic growth’ www.voxeu.org 07 July 2015; Brueckner, M and D Lederman (2015), ‘Effects of Income Inequality on Aggregate Output’, World Bank policy discussion paper 7317; Brueckner, M, E Norris and M Gradstein (2015), ‘National Income and Its Distribution’, Journal of Economic Growth 20: 149–175; and J D Ostry, A Berg, and C G Tsangarides, ‘Redistribution, Inequality and Growth’, International Monetary Fund research department, February 2014.

Chapter 8: Economic policy after neo-liberalism

1 For a detailed account of the rise of global inequality, see B Milanovic, Global Inequality: a new approach for the age of globalization, Cambridge, Harvard University Press, 2016; see also T Piketty, Capital in the Twenty-First Century, Cambridge, Harvard University Press, 2014.

2 Standard and Poor report, Australian Financial Review, 22 November 2016.

3 See I W Mclean, Why Australia Prospered: the shifting sources of economic growth, Princeton, Princeton University Press, 2012.

4 There is a flourishing international literature on financial-sector reform. Helpful works include R J Shiller The New Financial Order, Melbourne, Scribe, 2003; R J Shiller, Finance and the Good Society, Princeton, Princeton University Press, 2012, and J Kay, Other People’s Money, New York, Public Affairs, 2015.

5 J S L McCombie and A P Thirlwell, Economic Growth and the Balance-of-payments Constraint, New York, St Martins, 1994.

6 National Economics, Creating Jobs, Cutting Pollution; the roadmap for a cleaner stronger economy. Melbourne, Australian Conservation Foundation and Australian Council of Trade Unions, 2010.