Monday, December 30, 2013

How to save money and wreck productivity

I've just had a great idea for raising the productivity of Australia's knowledge workers: try treating them with greater consideration so as to improve their concentration. Simple hard-headed economics tells us that the scarcer the skills of workers, the more you have to pay for their services and the better you have to make their working conditions. It's only those workers with few skills and who can be easily and cheaply...
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Saturday, December 28, 2013

Darwin improves on Adam Smith

What can the theory of evolution tell us about how the economy works? A lot. But probably not what you think it does. Famous economists such as Joseph Schumpeter (author of the notion of "creative destruction") and Milton Friedman, and the contemporary economic historian Niall Ferguson, have viewed economies as Darwinian arenas: competition among firms reflects the ruthless logic of natural selection. Firms struggle with...
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Monday, December 23, 2013

Blame for budget worries widely shared

For months I've been having a nightmare: what if Australia's period of exemplary fiscal policy - which began with Paul Keating's return to budget surplus in 1987-88 - is already over and we've joined most of the other rich economies in running budget deficits every year, not just in the aftermath of major downturns? That is, what if we've collectively lost the political will to make ourselves...
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Saturday, December 21, 2013

Hockey's midyear budget forecasts are plausible

In this week's midyear budget review, Joe Hockey's claim to have found a black hole left by Labor was dishonest, but the revised forecasts for the economy and the budget deficit are credible and not the product of political spin. In other words, there was nothing wrong with the document - it was prepared with Treasury's and the Finance Department's usual diligence and professionalism - just with what Hockey said...
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Wednesday, December 18, 2013

Why KPIs are a dangerous fad

You have heard of painting by numbers, but these days the great fad is management by numbers. I call it the metrification of business - although it's just as prevalent in the public sector. If you know what the initials KPI stand for, you'll know what I'm talking about. I've been a bean-counter all my working life, first as an accountant, then as an economic journalist. So I've long believed in the importance of measurement,...
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Budget deterioration is real, but Labor not to blame

How on earth did we convince ourselves this bunch would be miles better at fixing the budget than the last lot? Joe Hockey claims his midyear budget update is an honest assessment of the state of fiscal affairs he inherited from Labor. It isn't. Rather, it is an attempt to lower our expectations about the speed and ease with which the Coalition will be able to get the budget back on track. He won't be able to achieve it...
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Monday, December 16, 2013

How six states became one economy

It's been a year of anniversaries: 50 years since The Australian Financial Review became a daily, 30 years since the floating of the dollar, 21 years since the Council of Australian Governments replaced the special premiers' conference and 15 years since the start of the national electricity market. In the Fin Review's self-congratulatory anniversary edition - apparently, the paper brought about micro-economic reform single-handedly...
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Saturday, December 14, 2013

Holden's fate will have little effect on economy

Contrary to appearances, the economy is not falling apart nor has the Abbott government taken leave of its senses. The threat to the economy from Holden's decision to cease making cars has been greatly exaggerated by those with axes to grind - the opposition, the motor vehicle union and other industry apologists, plus the overexcited media. The greatest threat comes not from what happens to the car...
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Multi-factor productivity not what it's cracked up to be

Figures for the economy's productivity performance haven't looked good for the past decade, causing consternation among economists and business people. But a careful study by the Productivity Commission has failed to find any particular problem, nor anything we could do to make the figures look better. Productivity is a measure of the efficiency with which the economy turns inputs of labour and capital into outputs of goods...
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Wednesday, December 11, 2013

AN ECONOMIC RESPONSE TO THE LIMITS TO GROWTH

Mathematics of Planet Earth, Limits to Growth symposium, Parade Theatre, University of NSW, Wednesday, December 11, 2013Virtually all our business people, economists and politicians have long rejected the contention there are ‘limits to growth’. They are able to do this primarily because their way of thinking about the economy is based on a model of the economy that excludes a role for the natural environment except as a passive...
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Trans-Pacific Partnership: we pay more for longer

According to someone called Oscar Ameringer, politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other. However, when Tony Abbott spoke at the Business Council's 30th anniversary dinner last week, he was very much in protecting-big-business mode. "On election night, not quite three months ago, I declared that Australia is under new management...
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Monday, December 9, 2013

Keating gives Abbott a masterclass

With our neophyte Prime Minister and his Treasurer struggling to find their feet - and a direction to travel in - let's hope they've been watching the ABC's interviews with Paul Keating. If not, they're out on DVD this week. For those of us who lived through the Hawke-Keating government's extraordinary 13 years - and those who didn't - Kerry O'Brien's four interviews are a reminder of Keating's indisputable claim to be...
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Saturday, December 7, 2013

Mining still driving economy - slowly

The economy performed poorly in the September quarter, but that's OK. It was all Labor's fault, but now Labor is out. From here on it will be the Coalition's watch and everything will be much better. Or not. At least from here on Joe Hockey will be talking the economy up - as a treasurer should - not talking it down. The national accounts we got this week show the economy grew by only 0.6 per cent in the quarter and by...
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Wednesday, December 4, 2013

How patients and taxpayers lose out to chemists

Sometimes the good news just doesn't get through. Did you know, for instance, that the prices of three widely used medicines fell from the start of this month, meaning more than 850,000 Australians will be paying less? As federal Health Minister Peter Dutton announced, this is happening because of a wise policy instituted by the Howard government in 2007. The saving on the most frequently prescribed medication on the pharmaceutical...
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