Secular Stagnation: Low Inflation in a World of Monetary Stimulus

The Reserve Bank’s bulletin series returns in the September quarter of 2017 with a back-to-basics review of the transmission mechanism of monetary policy. In ‘The Transmission of Monetary Policy: How Does It Work?’, Tim Atkin and Gianni La Cava bifurcate the transmission mechanism into two stages, the first being a concentrated impact on interest rates, the second being the wide-ranging spill-over impacts on economic activity and inflation. Their core insight is that the housing market is responsible for propagating activity through the economy: it is where the transmission mechanism is at work. Atkin’s and La Cava’s analysis, however, would be improved if a consideration of the breakdown of the transmission mechanism was included in the light of what Larry Summers (2014) terms ‘secular stagnation’, a situation of high debt, low growth, low demand, low interest rates, and low inflation.

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Fordism, Post-Fordism and the plight of taxi drivers around the world

A collectivist society would never have adopted Fordism. So it is a curious thing that Fordism coincided with the ‘New Deal’, a period of unrivalled growth and low unemployment, generous government benefits, and strong labour union power, which taken together constituted — you guessed it — a collectivist society.

Alienation and the revolution of the automobile

Marx, and later the existentialist philosophers, theorised that workers became alienated from their works under capitalism because they were produced for others, and were instruments of profit and revenue for the sustenance of life in a commodity-exchange economy. It was with the advent of the Fordist production line that this alienation had taken on its most distinct and vivid character.

It begs the question: What was produced on those production lines? Were they really just cars?

They were nominally speaking replacements for the horse-and-cart. But Ford conjured up a very effective way of polluting the planet, from one combustion engine to the next, completely transforming the environment. Aside from the fact that a car takes you from point A to point B, they also revolutionised the world, introducing the modern conception of the city.

In this way it is not just a machine but the embodiment of an idea: the car is predicated on the assumption you would own a conveyance that could get only you from point A to point B, without ever asking anybody else for permission, or depend on a centralised public transport system, or a timetable that would sanction as much.

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