Comment on RBA Monetary Policy Board member refutes on-going claims from the RBA governor about unemployment by Peter Martin

The useful part

Bill's saying that the RBA economists are infested with NK type thinking and NAIRU concepts which means that they want to push up interest rates to increase unemployment as so reduce the rate of inflation. I'd also go along with Bill's point that some economists who are in the employ of the commercial banks may have additional and more pecuniary motives. Incidentally I'd add another U to the NAIRU to include underemployment as well as unemployment.

How it works

• Workers are less likely to strike for better pay and conditions, and be generally more compliable if there's a real danger they will lose their jobs.
• I used to work in the electronics industry in the telecommunications sector.
• It was fine at first but over the years it became increasing difficult to secure work against foreign competition.
• The company I worked for in both Australia and the UK shifted its telecomms activity to China.
• I'd also add most politicians who might not like to use the term NAIRU in public but maybe they do when they are chatting with RBA economists.

What to take from it

The tech boom, or dot-com bubble, of the late 90s reversed that for a while but when the "tech wreck" hit in the early 21st century it was pretty severe. The companies that survive in both the UK and Australia, largely only do so because of defence contracts which aren't open to Chinese and other foreign competition. I'm not saying the exchange rate is the only factor but it is a big factor in the de-industrialisation o...

Details worth keeping

Also that they do genuinely believe in what they are saying. So maybe they aren't as wrong as we sometimes claim. It kept the military side for a while but later sold out to US ownership.