Part of my job is making sure readers are kept fully informed about the
messages our top econocrats are trying to get across to the public.
They're usually much franker and clearer than the spin we get from our
political leaders.
But just because I report their views faithfully
doesn't mean I always agree with them.
As it related to the outlook for
the economy, the message in the speech Treasury secretary Dr Martin
Parkinson delivered last week fitted well with the messages we've been
getting from Glenn Stevens and Dr Philip Lowe, of the Reserve Bank.
It's
a warning that, between the slowdown in our rate of productivity
improvement, the expected continuing fallback in mineral export prices
and the reversal of the "demographic dividend" delivered by the baby
boomers, "we face a significant challenge in maintaining the rate of
growth in living standards that Australians have come to expect".
Specifically,
Parkinson projected that, even if we assume labour productivity grows
at its long-term average, the other two factors would cause real income
per person to grow by just 0.7 per cent a year over the decade to
2023-24, rather than the 2.3 per cent "to which Australians have become
accustomed".
So over 10 years our present annual real income of
$63,600 per person would grow only to $69,000, rather than $82,000,
leaving us only $5400 a year better off, rather than the $18,400 a year
to which we've become accustomed.
To keep average incomes growing
as fast as we've come to expect will require us to double our present
rate of productivity improvement to 3 per cent a year.
Sorry, but I
very much doubt we'll be willing to make the many controversial reforms
needed to achieve such a transformation. More to the point, I'm not
convinced we should.
The admonitions we get from our econocrats
are far too relentlessly materialist and, hence, mono-dimensional.
Whatever their professed "wellbeing framework", when the chips are down
their advice is to make maintaining the rate at which our material
standard of living is rising our highest priority, if not our only
priority.
We're always being reminded of the pecuniary price to be
paid for worrying about foreign ownership, or saving family farming or
preserving the weekend. But the warnings never run the other way: the
greater personal stress or relational problems or loss of leisure or
greater social disharmony that could accompany going all out to maximise
economic growth.
No one knows better than I do that you can't say
everything you want to say in the time allotted for a speech or the
space allotted for a column. But, even so, some obvious caveats and
qualifications almost never rate a mention.
The most obvious is
the environment. What reason is there to believe acting to maintain our
rate of growth won't do significant further damage, even unacceptable
damage to the ecosystem? How do we know continuing climate change - a
problem about which we've decided not to make a genuine contribution to
international efforts to combat - won't negate our productivity-raising
efforts?
How can we talk about capturing a big share of the growth
in Asia's demand for Western foodstuffs without mentioning climate
change?
To be fair, their present political masters are so down on
the environment that our econocrats aren't free to speak on the
subject. Parkinson is facing the sack for having been chief designer of
the emissions trading scheme (including the Howard government's version)
and his successor - an outstanding Treasury officer - has already had
the chop. It's a wonder Professor Ross Garnaut isn't behind bars - or at
least had his office raided by ASIO.
Another obvious but
never-mentioned caveat is the distribution of all this increased income.
It's all very well to talk about increasing the average income,
implicitly assuming the extra income will be shared in line with the
existing distribution. Our experience of income growth over the past 30
years is that a disproportionate share ends up in the hands of the
people at the top.
Why no mention of this when ordinary workers are being asked to support reforms that could cost them their jobs?
More
basically, how do the econocrats know we'd find a slower rate of growth
in our affluence bitterly disappointing? They don't. Their confident
claims that we would are based on their faith in materialism, not
evidence.
Most of us are condemned to spend 40 years of our lives
working 40 hours a week. Why do econocrats never wonder whether making
that work more satisfying would do more for our "wellbeing" than making
extracting more productivity from our labour the only priority?
