Joe Hockey and Competition and Consumer Commission boss Rod Sims must surely deserve a medal for their selfless devotion to the interests of foreigners, after their shocked reaction to Twiggy Forrest's suggestion that the world's big producers stop the plunge in iron ore prices by limiting their output.
And here was me thinking economics was about rational self-interest.
Hockey sniffed that the idea smacked of forming a cartel....
Monday, March 30, 2015
Sunday, March 29, 2015
State governments don't greatly affect the economy
With the election over, Sunday is the first day of the rest of the life of the NSW economy under the new Baird government. So how much has changed?
A lot less than the rhetoric of the election campaign may have led you to expect.
State elections are times when governments claim the credit for all the good things happening in the economy and get blamed by oppositions for all the bad things.
In truth, they should get only some...
Saturday, March 28, 2015
A rational analysis of Hockey's 'asset recycling'
I'm never sure who annoy me more, the business types who are certain every business is better run if privately owned, or the lefties who oppose every sale of government-owned businesses on principle.
On the question of privatisation, mindless prejudice is no substitute for rational analysis of the pros and cons. On the tricky question of the "asset recycling" being promoted by Joe Hockey to all state governments with businesses...
Friday, March 27, 2015
Poles and wires: who's misleading us about what
The politicians' decades of bad behaviour may have caused them to lose our trust, but not our mistrust - making us suckers for scare campaigns.
This election campaign has been dominated not by reasoned debate but by Labor and the power unions' almighty scare campaign over the sale of the state's electricity poles and wires.
It's the most successful scare-job since all the dishonest things Tony Abbott said about how the carbon...
Wednesday, March 25, 2015
Should taxpayers develop properties for churches?
Election campaigns are busy times for interest groups. They turn up the pressure on governments and oppositions to give them written promises to grant them particular benefits, or not do things the groups don't fancy, during the next term.
It's surprising how often the pollies give in to such tactics. They do so for fear the interest groups will campaign against them if they don't sign on the line.
In the last federal election,...
Monday, March 23, 2015
Budget needs more efficiency, less deficit repression
Joe Hockey's intergenerational report says something I really agree with: "to ensure government expenditure is sustainable and better targeted . . . governments need to focus their efforts on achieving the efficient provision of services".
At last, Hockey is acknowledging that we need to reduce the rate of growth in government spending in ways that increase the efficiency of the government's delivery of services.
To me – but...
Saturday, March 21, 2015
Why fiscal policy may be making a comeback
For four decades, fiscal policy has been the poor relation among the tools available for countries to use to stabilise demand as their economies move through the ups and downs of the business cycle. Monetary policy has been the preferred instrument. But this may be about to change.
Monetary policy refers to the central bank's manipulation of interest rates, whereas fiscal policy refers to the government's manipulation of...
Thursday, March 19, 2015
ECONOMIC MODELING FOR JUDGES
Talk to Federal Court judges’ continuing education day, Brisbane, March 19, 2015It’s normal for economists in my position to give you a happy chat about the state of the economy - or the world economy - full of forecasts about how things will turn out and warnings about what the economic managers need to do to ensure everything turns out well. But we all know many of my predictions would turn out to be wrong, and those that were...
Wednesday, March 18, 2015
Our kids need social skills, not just high marks
My father raised me to be contemptuous of fashion in all its forms, and I try not to be overawed by the rich and powerful. But, like my mum, there's one thing I am impressed by: brains.
My job brings me into regular contact with the econocrats at the top of the Reserve Bank, Treasury and other departments. Let me tell you, they're the brightest of the bright. I have to keep telling myself this as I struggle to keep up with...
Monday, March 16, 2015
We're not taking productivity seriously
Given our obsession with materialism, productivity "isn't everything, but in the long run it is almost everything," as Paul Krugman famously said. If so, the intergenerational report's consideration of the topic is quite inadequate.
It's partial in both senses. It mentions most of the key factors that influence productivity improvement - defined as increased goods and services produced per hour worked - but doesn't do justice...
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