Steve Keen's Debtwatch

Before the Pool Room, a quick com­ment on Aus­trali­a’s recent 0.4% growth in GDP in the first quar­ter of 2009–largely due to a sur­prise growth in net exports–and the sequel the next day of a sur­prise trade deficit.

Briefly, the “text­book” def­i­n­i­tion of GDP is:

GDP = C+I+G+X‑M

“GDP equals Consump­tion plus Invest­ment plus Govern­ment spend­ing plus eXports minus iMports”

M fell by 9 bil­lion, X (more on this below) fell by 3 bil­lion, so there was a +6 bil­lion turn­around in the “net exports con­tri­bu­tion to GDP” (as it’s known).

STEVE KEEN and EVAN JONES in conversation with FRANK STILWELL

In this event to cel­e­brate the pub­li­ca­tion of Polit­i­cal Econ­o­my Now!–the his­to­ry of the Polit­i­cal Econ­o­my strug­gle at Syd­ney University–Evan Jones, Frank Stil­well and Steve Keen will dis­cuss the strug­gles inside the uni­ver­si­ty eco­nom­ics depart­ments and their sig­nif­i­cance, not only for teach­ing, but for the world econ­o­my itself.

Polit­i­cal Econ­o­my Now! by Gavan But­ler, Evan Jones and Frank Stil­well is the sto­ry of one of the most sub­stan­tial and endur­ing con­flicts in the his­to­ry of Aus­tralian uni­ver­si­ties. Begin­ning in the late 1960s, it pit­ted those com­mit­ted to the teach­ing of main­stream eco­nom­ics at the Uni­ver­si­ty of Syd­ney against the pro­po­nents of an alter­na­tive pro­gram in polit­i­cal econ­o­my. It explores issues such as

Eco­nom­ic debate in Aus­tralia today reminds me of one of the great lines in The Rocky Hor­ror Show. As he invites Brad and Janet to meet Rocky, Frank-N-Furter taunts Janet with the lines:

I would like–if I may–to take you on a strange jour­ney…

“I see you shiv­er with antic­i­pa­tion!

But maybe the rain is real­ly to blame

So I’ll remove the cause,…

But not the symp­tom!”

It seems that in Aus­tralia, the reverse can apply: the symp­tom can be removed with­out elim­i­nat­ing the cause. We can avoid a seri­ous reces­sion while doing noth­ing to reduce pri­vate debt. 

Thanks again to blog mem­ber Evan Har­ris for com­pil­ing this week­ly list, and for blog mem­bers pass­ing on their sug­ges­tions. If you see any arti­cle or blog entry that you think deserves record­ing for pos­ter­i­ty, send the link to gfcwrap at gmail.com.

And a reminder for any blog mem­bers in Syd­ney that I’ll be speak­ing at Pol­i­tics in the Pub tonight at the Gael­ic Club in Devon­shire St Sur­ry Hills, start­ing at 6pm.

The Pool Room – Week End­ing Fri­day 29^th May

Aus­tralian-Relat­ed Links:

Hous­ing & Hous­ing Finance: The View From Aus­tralia & Beyond, Luci Ellis [RBA Research], Dec 2006

Two promi­nent eco­nom­ics text­book writ­ers have recent­ly writ­ten that the Glob­al Finan­cial Cri­sis (GFC) shows that the world needs more eco­nom­ics rather than less.

Writ­ing in the New York Times, Gre­go­ry Mankiw could see some need to mod­i­fy eco­nom­ics cours­es a bit in response to the GFC, but over­all he felt that:

“Despite the enor­mi­ty of recent events, the prin­ci­ples of eco­nom­ics are large­ly unchanged. Stu­dents still need to learn about the gains from trade, sup­ply and demand, the effi­cien­cy prop­er­ties of mar­ket out­comes, and so on. These top­ics will remain the bread-and-but­ter of intro­duc­to­ry cours­es.” (That Fresh­man Course Won’t Be Quite the Same, New York Times May 23 2009)

Fans of the Aus­tralian movie clas­sic “The Cas­tle” will remem­ber the arche­typ­al line “This one’s going straight to the Pool Room”, uttered by the ever-opti­mistic Dar­ryl Ker­ri­g­an when­ev­er he was giv­en a gift. If you haven’t yet seen the movie, con­sid­er set­ting aside a cou­ple of hours to watch it.

Debt­watch’s “Pool­room gifts” come from the media cov­er­age of the Glob­al Finan­cial Cri­sis. Some are gems–incisive bits of analy­sis that are an infor­ma­tive read. Oth­ers are … well, best char­ac­terised as spin, though they range from out­right spin, to delu­sion derived from think­ing like a neo­clas­si­cal econ­o­mist.

A new Face­book group ded­i­cat­ed to reform­ing eco­nom­ics tuition has just been estab­lished by Edward Full­brook, the coor­di­na­tor of PAECON, the Post-Autis­tic ECO­nom­ics Net­work.

Called Tox­ic Text­books,  its aim is to sup­port and coor­di­nate stu­dent protest against neo­clas­si­cal eco­nom­ics at uni­ver­si­ties and schools around the world. Its man­i­festo is:

Toxic textbooks helped cause the economic meltdown

The cur­rent eco­nom­ic melt­down is not the result of nat­ur­al caus­es or human con­spir­a­cy, but because soci­ety at all lev­els became infect­ed with false beliefs regard­ing the nature of eco­nom­ic real­i­ty. And the pri­ma­ry sources of this infec­tion are the “neo­clas­si­cal” or “main­stream” text­books long used in intro­duc­to­ry eco­nom­ics cours­es in uni­ver­si­ties through­out the world. 

I’ll be speak­ing on the finan­cial cri­sis at the month­ly “Pol­i­tics in the Pub” meet­ing in New­cas­tle next week. It’s on Tues­day May 19 at 6pm at the Hamil­ton Sta­tion Hotel on the cor­ner of Fern and Beau­mont Streets Isling­ton (next door to Hamil­ton sta­tion on the Mait­land Road side of the rail­way line).

I’ll be speak­ing at Pol­i­tics in the Pub on Fri­day May 29, along with Jacob Saulwick from the SMH.  The Loca­tion is the Gael­ic Club, Lev­el 1 (Tel. 9212 1587) 64 Devon­shire Street Sur­ry Hills–just 50 metres or so from the Chalmers Street exit from Cen­tral Sta­tion.

The top­ic will be rather appo­site to the most recent blog entry: “The Rudd-Swan Bud­get 2009 – Whose Inter­ests Will It Serve?”

The event starts at 6pm and fin­ish­es at 7.45pm, after which any­one who wants to sol­dier on can join us for din­ner at a near­by restau­rant.

I first heard the best joke about eco­nom­ics in 1975. The teller was the nuclear physi­cist (and nuclear pow­er advo­cate) Sir Phillip Bax­ter, and he told it in answer to a ques­tion I had asked at a pub­lic forum.

The joke is:

A physi­cist, a chemist and an econ­o­mist are ship­wrecked on a desert isle, along with a con­tain­er full of cans of baked beans.

The chemist says that if they can start a fire, he can cal­cu­late the tem­per­a­ture at which a can will explode.