How economists lost their fear of minimum wage rises

Do rises in the minimum wage come at the expense of jobs? If you listen to the employer groups, they certainly do. But this is a question on which economists have changed their tune. So much so that the latest issue of the Reserve Bank’s Bulletin includes an article by one of its researchers, James Bishop, concluding there’s no evidence that modest, incremental increases in minimum award wages have an adverse effect on hours...

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Political corruption: with so much smoke, there must be fire

How easy is it for the rich and powerful to buy favourable treatment from our politicians? Honest answer: we just don’t know. What we do know is that we’ve become increasing distrustful of our pollies and doubtful of their honesty. Polling conducted this year by Griffith University and Transparency International Australia found that 85 per cent of respondents believe at least some federal Members of Parliament are corrupt. This...

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Frydenberg must lift Treasury’s game on spending control

I read that our new Treasurer, Josh Frydenberg, has already understood the chief requirement of his office: the ability to say no to ministerial colleagues wanting to spend more on 101 worthy projects. Sorry, Josh, but if you’re hoping to be a successful treasurer in the years beyond the coming election, you – and your Treasury minions - will need to do much better than that. It takes strength, but zero brain power, to say...

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Never mind carbon, let’s put a price on bad driving

What would an economist know about road safety? More than you’d think. Certainly, more than the road safety establishment thinks. Or maybe they just don’t want to disturb the insurance companies’ nice little earner from compulsory third-party car insurance. The economist in question is Dr Richard Tooth, a consultant with Sapere Research Group, who’s been working for some years on his pet project of using economics to reduce...

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Aged care abuses the latest of many economic mistakes

How will the era of “neoliberalism” end – with a bang or a whimper? With a royal commission – or three. But don’t worry. Royal commissions always make a lot of noise. With the memory of the government’s embarrassing delay in yielding to public pressure for a royal commission into banking still fresh, Scott Morrison got in before the Four Corners expose to announce a royal commission into aged care. Who’s to say this will be...

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Long way to go to get banks back in their box

Have we learnt from the mistakes of the global financial crisis, now 10 years ago? Yes, but not nearly as much as we should have. Of course, the answer is different for the Americans and the other major advanced economies to what it is for us, who managed to avoid bank failures and the Great Recession. Globally, much has been done under the Basel rules to strengthen requirements for banks to hold more capital and liquidity,...

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Morrison optimistic we’ll get much bracket creep

The mystery revealed. Consider this: how does the Morrison government cut income and company taxes and avoid big cuts in government spending, but still project ever-rising budget surpluses and ever-falling net public debt over the next decade? With publication of the Parliamentary Budget Office’s report on the May budget’s medium-term projections, we now know. Short answer: by assuming loads more bracket creep between now and...

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There are delusions for young and old

There are things oldies tell young people that the youngsters should believe, and things they shouldn’t. One thing I wouldn’t believe is the confident predictions about the huge number of different jobs and careers they’re likely to have. One thing I would believe is that eligibility for the age pension is likely to have risen to 70 by the time they get there, whatever Prime Minister Scott Morrison says about it being off the...

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The social sciences: so essential we neglect them

As I’m sure you’re only too well aware, today is the first day of the inaugural Social Sciences Week. Just as I’m sure you knew that someone somewhere in America declared a day last week to be Read a Book Day. Why do people name days, weeks, months and even whole years after worthy causes? Perhaps because there are so many worthy causes, and they’re hoping to gain theirs a little more attention amid the tumult. We just want...

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A beautiful set of numbers gets you only so far

This week’s national accounts don’t leave any doubt that the economy grew strongly in the first half of this year. But whether it can sustain that growth rate is doubtful. According to figures issued by the Australian Bureau of Statistics, real gross domestic product grew by 0.9 per cent in the June quarter and an upwardly revised 1.1 per cent in the March quarter, yielding growth of 3.4 per cent over the year to June. For...

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Punishing wrongdoers won’t fix our problem with banking

The other day I noticed a column I’d written in 1990 saying the banks’ abuse of their customers’ trust was getting them a bad name, so they should desist. That was almost 30 years ago. It tells you the banks started playing up not long after the Hawke-Keating government deregulated them in the mid-1980s. I was complaining about the way they’d offer new customers a better deal than their existing customers, then make no effort...

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How to damage Australia: don’t collect good data

You don’t have to be very bright to see that as we enter the information age, realise decisions need to be evidence-based, and glimpse the huge potential of “big data”, we need the Australian Bureau of Statistics to be at the top of its game. But you do have to be brighter than our econocrats and politicians. They’ve been cutting the bureau’s funding every year for more than a decade – meaning both parties have been at it –...

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EMPLOYMENT IS STRONG, WAGES ARE WEAK, GROWTH IS SO-SO. WHAT’S GOING ON IN THE ECONOMY?

WollongongI’m sure you’ve heard people talking about “the new normal”. It means that things have changed from the way they used to work, and the change isn’t temporary, it’s permanent. What’s normal has changed. Often it’s implied that the new normal isn’t as good as the old normal. If you translate that from the way ordinary people talk to the way economists speak, it’s saying that the way the economy is working at present isn’t...

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