Digital disruption is stopping retail prices from rising

I’ve heard of the gap between perception and reality, but this is ridiculous. According to the experts, increased competition among supermarkets, department stores and other retailers is holding down prices in a way we’ve rarely seen before. This fits with the consumer price index, which showed prices rising by just 2.1 per cent over the year to June. Over the past three years, the annual increase has averaged even less: 1.8...

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Weakening dollar looks a lot worse than it is

Oh dear. While the pollies have been playing their games, the dollar has been falling and there’s even talk in the market of it going below US70¢. Is this a worry? Short answer: naah. At the local close on Friday the Aussie was at US72.8¢. That’s down from a recent peak in January of almost US81¢. Is that a bad thing? Depends who you ask. You can find plenty of people who’ll tell you a low dollar is bad and a high dollar is...

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“Lags”: one reason economists keep getting it wrong

I’m compiling a short-list of the main things economics teaches us. One is: economic developments take longer to affect the economy than you’d expect. Economists call these delays “lags”. That there are so many of them – and their lengths keep changing – does a lot to explain why economists’ forecasts are so often wrong. Last week Dr Luci Ellis, an assistant governor of the Reserve Bank, gave a prestigious lecture at the Australian...

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THE DISRUPTED ECONOMY

Uni of Newcastle Boardroom Lunch, Sydney Business Chamber, Thursday, August 23, 2018I’m pleased to be invited back with fellow alumni of the university to talk about the disrupted economy. But though, as someone working for a newspaper, I’m only too well aware of just how disruptive digital disruption can be to whole industries and the people working in them - with, no doubt, much more disruption to come – if you’ve come today...

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Our concern about the drought isn’t fair dinkum

It’s taken him too long, but public concern and the looming election have finally obliged Malcolm Turnbull to do the right thing by our farmers struggling with severe drought. In Forbes on Sunday, Turnbull announced a further $250 million in assistance to farmers and communities, including initial grants of $1 million each to 60 drought-affected councils in NSW, Queensland and Victoria, bringing Canberra’s direct handouts to...

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We could increase bank competition if we wanted to

Would you like to put your savings in a super scheme presently reserved for public servants? Would you like your bank account or mortgage to be with the Reserve Bank? Impossible to imagine such a crazy idea? Well, that’s what the Productivity Commission thinks, but it’s neither as impossible nor as crazy as it may sound. Everyone says they believe in innovation, but when we’re used to thinking and doing things one way and some...

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Immigration is sharply slowing the ageing of our population

Reserve Bank governor Dr Philip Lowe thinks Australia’s strong population growth in recent years is a wonderful thing, and he sings its praises in a speech this week. I’m not sure he’s right. Like most economists and business people, Lowe is a lot more conscious of the economic benefits of population growth than the economic costs. As for the social and environmental costs, they’re for someone else to worry about. But whatever...

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This country is run for home owners, by home owners

Name a group that accounts for about a third of the population and rising, is much more likely to suffer stress in affording their housing than other groups, and yet has never had much sympathy from politicians, voters or the media. Ironically, the bit of sympathy they’ve had in recent days hasn’t been warranted. They’re the forgotten minority – more forgotten than the forgotten people we keep being reminded about. They’re...

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How to lift our schools’ performance

We’re at it again. Every time education or healthcare pops up in the news, it’s almost always people arguing about money and how much of it they’re getting. Rarely is it people discussing how the billions we’re already spending could be used more effectively. There’s nothing the media love more than a fight. And when it comes to government spending, there’s never a shortage of interest groups demanding more or predicting death...

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It's weak investment that’s crimping productivity and prospects

US President Donald Trump said his big cut in company tax would do wonders for the economy. It’s certainly done wonders for company share buybacks. Which may be a clue to why America’s rate of improvement in productivity is so pathetic. The continuing puzzle for the rich world’s economists is explaining the unusually weak rate of productivity improvement throughout the advanced economies. In Oz we’re not doing so badly, though...

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Young people bearing the brunt of a weak economy

Without wanting to be branded a class traitor, I have to admit that we Baby Boomers have enjoyed a rails-run in the race of life. Most of us had little trouble getting ourselves set up in the jobs market and then the housing market. I look at today’s bright and bushy-tailed youngsters, just starting out in both markets, and don’t envy them one bit (except, of course, their instinctive understanding of the right place to click...

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