The great unravelling, Part 4: Neoliberalism and its discontents

 

This is the fourth part of my blog on neoliberalism. It goes back further in time (a few centuries in fact) to trace the origins and revival of neoclassical economics. I ask the following questions:

  • What is neoliberalism?
  • Where did it come from?
  • What explains its ascendancy in the 1980s?
  • And its decline in the 2010s?

The star-studded cast of this blog includes Adam Smith, Karl Marx, Jeremy Bentham, Alfred Marshall, Friedrich Hayek, John Maynard Keynes, and Milton Friedman.

Here’s the rap versionKeynes Vs Hayek rap (just kidding, but hey this is good!), and a two minute slideshow version from Robert Skidelsky.

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The great unravelling: demise of the neoliberal centre, part 3: Neoliberalism in Australia

This is the third part of my blog on neoliberalism, which asks the following questions:

  • Were the economic policies of the Hawke-Keating governments neoliberal, or simply pragmatic?
  • Was ‘Fightback’ a triumph of neoliberalism or the beginning of its decline?
  • Did it advance or retreat under Howard and Costello?
  • What’s left of neoliberalism?

The star-studded cast of this blog includes Dani Rodrick, John Quiggin, Bob Hawke, Paul Keating, Paul Kelly, Alan Bond, John Hewson, John Howard, and Peter Costello.

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Is the Job Services Australia model ‘made for measure’ for disadvantaged jobseekers?’

Peter Davidson, presentation at ‘Employment Services for the Future conference’, Centre for Public Policy, University of (Melbourne, February 2013).

Two-thirds of recipients of Newstart Allowance have been unemployed for more than a year.Long term unemployment is associated with poverty, poor health, and higher levels of structural unemployment. As the population ages and gaps emerge in the paid workforce, Australia will have an opportunity to solve one of our worst social problems and meet one of our most pressing economic needs at the same time.

While sustained economic growth is essential to reduce long term unemployment, it is not sufficient. Evidence from Australian and international program evaluations suggest that employment services can improve the job prospects of people unemployed long-term.

Australia’s largest public employment program, Job Services Australia (JSA), is under review and a revised program is expected to be announced this year.

 This paper attempts to answer the following three questions:

  • What forms of employment assistance are most effective in reducing long term unemployment, based on recent international evidence?

‘Activation’ of unemployed people can reduce long term unemployment by requiring and assisting people with reasonable good job prospects to search for employment more effectively. Activation on its own is not sufficient. People who are unemployed long term or at risk of it usually face specific hurdles to employment such as low skills, a lack of work experience, or disabilities. Broadly speaking, paid work experience (using wage subsidies) in regular jobs and substantial vocational training (preferably linked to a job) are relatively effective in overcoming these barriers to employment while very short training courses (for example, less than three months) and ‘make work’ schemes, whether paid or unpaid (work for benefits) are relatively ineffective. That said, the international evidence suggests that successful interventions are generally those which are tailored to individual needs (of jobseekers and employers), rather than standardised.

  •  Are resources in the JSA system effectively targeted to assist long term unemployed people?

Australian and international evidence suggests that it is generally cost-effective to target the most intensive help towards people who are unemployed for one to three years, since fewer of this target group would find employment without assistance. The JSA system shifted resources from people unemployed long term towards those people unemployed for less than a year who were assessed as at-risk of long term unemployment. As a result, providers are typically funded to interview a person unemployed for one to two years every two months and purchase only $500 worth of work experience or training, on average. While not conclusive, the evidence suggests that this shift of resources reduced the effectiveness of the program in assisting those who were already unemployed long-term.

  •  Does the JSA system encourage efficient investment in work experience, training and other supports needed by long term unemployed people?

Overall Australian public investment in labour market assistance has been low – about half average OECD levels – since the Job Network was introduced in 1998. Within this pool of funds, Australia spends relatively more on job search assistance and less on work experience and training programs for unemployed people. While in theory outcomes-based funding of non-Government employment services should encourage cost-efficient investment in disadvantaged jobseekers, in practice it has rewarded providers who concentrate on low cost job search assistance rather than patient investment in work experience and training. Since the late 1990s, Governments have directly funded their preferred forms of work experience and training to fill some of the resulting gap in employment assistance.

In the Job Network period, a ‘work for benefits’ scheme (Work for the Dole) was favoured over vocational training, and this was reversed with the introduction of JSA. If funds invested in Work for the Dole (a relatively ineffective program) were replaced by substantial vocational training linked to employment opportunities, this would likely have improved the effectiveness of employment assistance. However, providers were only resourced to purchase relatively ineffective short courses and faced pressure to place people in readily-available State Government-funded courses to meet jobseeker activity requirements at low cost. Average employment consultant caseloads were over 100 which left little room for individualised assistance.

Under these conditions, the JSA program was likely to have a similar net employment impact to the Job Network, since the basic design of the two programs was otherwise similar. Average ‘gross’ employment outcomes following participation in JSA were at first similar to those of the Job Network, with just under 50% of participants in employment three months after leaving the program. Average employment outcomes fell after the GFC and declined further during 2012, but this is likely to be due to adverse labour market condition rather than changes in employment assistance.

The conference presentation concludes with a brief assessment of the Government’s restructure of Job Services Australia, which was not available at the time of writing.

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The great unravelling – Demise of the neoliberal centre (Part 2): The odd couples

In Part 1 of this series on ‘the demise of the neoliberal centre’ we examined the outcome of the Australian elections in May. Surprising all, the conservative Coalition won narrowly.

Despite talk of ‘Trump conservatives’ in Australian politics, a basic difference between recent Australian and US (and indeed UK) politics is that this election was won by the party promising stability, not radical change.

And yet – recent elections in all three countries reveal new fault lines in the old two-party systems dominated by a liberal-conservative bloc and a social democrat-labourist bloc, and between the economic prospects and ideological outlook of inner city, outer urban and country people.

In the US and UK, this has led to a radical break with the neoliberal economic policies championed by the very same countries in the 1980s. In place of free trade and (more) open borders, the Trump administration promises to ‘build a wall’ against Latino migrants and Chinese products. In the UK, the Conservatives, once champions of British membership of the European Union, has changed its mind, and the political divide between ‘remainers’ and ‘leavers’ is as bitter as that between Conservatives and Labor.

In Part 2, we ask why those two countries broke with the liberal economic order, and who supports the main advocates of aggressive nationalism in each country.

In future blogs, we’ll move from politics to economics to examine neoliberalism (what it is and where it came from), recount the shift to neoliberal policies in Australia; and then move on to political philosophy (the contest between conservatism, liberalism and social democracy); to assess what might replace the 30 year neoliberal consensus that has prevailed in many, but not all, western nations.

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The great unravelling: the demise of the neoliberal centre Part 1: Australian election surprise

When an election result is as unexpected as Australia’s in May 2019, the battle to explain it can be as fierce as the campaign itself.

The victorious Liberal-National Coalition claims the opposition Labor Party underestimated the aspirations of the working and middle classes to grow their income and wealth. Labor leaders either accept they ran a poor campaign to promote a crowded policy platform, or claim that right-wing parties and the right-wing press misled voters over its contents.

Sounds like the usual ideological tussle between Right and Left.

Yet for many analysts, there’s more to the story.  They point to the disruption of politics in the US and Europe by the newly-assertive ‘alt-right’. There’s talk of  ‘Trump Australians’. Could the same factors and forces that led to the election of Trump and Britain’s vote to leave to EU be at work in Australia? Has a disaffected working class living beyond our major cities abandoned the parties of the Left and parked its votes with the far-right?

Yes, we’re witnessing a structural break in western politics, but all is not quite as it seems!

In this series of blogs, I examine the demise of the ‘neoliberal centre’ in western politics since the Great Recession of 2008, the rise of aggressive ‘tribal’ conservatism, and the struggle of traditional parties of the Right and Left to come to terms with all this.

To understand what’s going on, we need to retrace history with the help of economics, politics and sociology. It’s a journey we need to take to avoid being taken hostage by forces we don’t understand.

Part 1 kicks off with a quick run-down of what we know about the 2019 Australian election (as at July 2019, two months later), the disruption of Australian politics since the Great Recession (or Global Financial Crisis), and points to similarities and differences to the American and British experience.

In future blogs, we’ll explore international politics (why have two leading countries in the Anglosphere seemingly turned their backs on neoliberalism?); economics (what is neoliberalism and where did it come from?); and political philosophy (the contest between conservatism, liberalism and social democracy); to assess what might replace the 30 year neoliberal consensus that has prevailed in many, but not all, ‘western’ nations.

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