Are you better off now? That's Dutton's trick question

For most people, the simple answer to Peter Dutton’s repeated question – are you better off today than you were three years ago? – is “no, I’m not”. But if Dutton can convince us this is the key question we need to answer in this election, he’ll have conned us into giving him an easy run into government.Why? Because it’s the wrong question. It’s the question of a high-pressure salesman. A question that makes the problem seem...

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Cost-of-living crisis? Why only some of us are feeling the pinch

If you believe the opinion polls, we’re all groaning under the weight of the cost-of-living crisis. And Treasurer Jim Chalmers confirms we’ve all been “under the pump”. But it’s not that simple. Some of us are doing it a lot tougher than others. And some of us are actually ahead on the deal.In any case, where did the living-cost crisis come from? That bit’s simple. The economy’s been on a rollercoaster for the past four and a...

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Is a Future Made in Australia a good or bad idea? Maybe a bit of both

What exactly is a Future Made in Australia? You can read the long speech Anthony Albanese made about it and still not be sure. My guess is it’s a slogan designed by spin doctors to mean whatever you’d like it to mean.As I wrote on Monday, what I hope it means is that the government intends to secure our economic future by ensuring all the income we’re going to lose from the world’s decision to stop buying our exports of fossil...

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Why our standard of living will be rising more slowly

You could call it gloom, or call it realism, but the likelihood is the economy will be growing more slowly from now on.And we’re talking not just the next year or two – where the Reserve Bank’s rapid rise in interest rates means if we don’t go backwards, we’ll have been let off lightly – but the next maybe 40 years.No one – not even economists – knows what the future holds, of course. But this long-term slowing is the considered...

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It's not the wolf at the door that's driving women to work harder

Why do mothers go out to work? Why are more women doing paid work than ever before? And why are more of those women working full-time? At a time when so many are struggling with the cost of living, it’s easy to conclude that more women are having to work more hours just to keep up. But I think that sells women short.Worse, it’s a fundamental misreading of perhaps the greatest social change of our age: the economic emancipation...

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How party politicking let mining companies wreck our economy

A speech by former Treasury secretary Dr Ken Henry last month was reported as a great call for comprehensive tax reform. But it was also something much more disturbing: an entirely different perspective on why our economy has been weak for most of this century and – once the present pandemic-related surge has passed – is likely to stay weak.The nation’s economists have been arguing for years about why the economy has grown so...

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One small step for the wellbeing budget, giant leap yet to come

Hey, wasn’t this budget supposed to be Australia’s first “wellbeing” budget? Whatever happened to that? Well, it happened – sort of – but it turned out to be ... underwhelming. Didn’t arouse much interest from the media.It met the expectations of neither the sceptics nor the true believers. Treasurer Jim Chalmers began talking it up long before he got the job. The treasurer at the time, Josh Frydenberg, thought it was a great...

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If only Labor's wage changes were as bad as the bosses claim

Have you ever wondered why capitalism has survived for several centuries in the advanced economies? How a relative handful of rich families and company executives have been getting richer and more powerful for so long in countries where everyone gets a vote and could, if they chose, insist on something different?It’s because the capitalists, counselled and coerced by politicians anxious to keep the peace, have made sure that...

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We've got more than we've ever had, but are we better off?

It probably won’t surprise you that the Productivity Commission is always writing reports about … productivity. Its latest is a glittering advertisement for the manifold benefits of capitalism which, we’re told, holds The Key to Prosperity.Which is? Glad you asked. Among all the ways to co-ordinate a nation’s economic activity, capitalism – which the commission prefers to call the “market” economy – is by far the best at raising...

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Reduced competition between businesses is harming productivity

In the search for explanations of the slowdown in productivity improvement, the world’s economists are closing in on one of the significant causes: reduced competition between the businesses in an industry, giving them increased “market power” – ability to raise the prices they charge.Research by various Treasury economists has found evidence of this happening in Australia. And this month US President Joe Biden acted to increase...

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Little sign Morrison is serious about improving productivity

Improving the economy’s productivity is so central to lifting our material standard of living that politicians and big business people talk about it unceasingly. But the funny thing is, most of what they say makes little sense.But first, let’s be sure we know what “productivity” means. It may be that politicians and business people get away with talking so much nonsense on the subject because so many of us aren’t sure.A lot of...

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This budget couldabeen a lot better than it is

This is the lick-and-a-promise budget. The budget that proves it is possible to be half pregnant. Which makes it the couldabeen budget. Scott Morrison and Josh Frydenberg had the makings of a champion of budgets, but their courage failed them.It’s not a bad budget. Most of the things it does are good things to do. Its goal of driving unemployment much lower is exactly right. Its approach of increasing rather than cutting government...

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Cutting workers' pay and conditions worsens productivity

It’s a long weekend, so let’s relax and think more laterally than usual. I’ve been pondering one of the great mysteries puzzling the rich world’s economists: why has there been so little improvement in the productivity of our businesses over the past decade or two?I’m wondering if a big part of the explanation is that business people have been finding easier ways to make a bigger buck.Economists worry about productivity – producing...

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Don’t forget: we all benefit from the magic of capitalism

The human capacity for adaptation – our ability to soon get used to our changed circumstances – is one of our great strengths. It means we can suffer a major misfortune – the death of a spouse, divorce, loss of a limb – and yet eventually get back to being pretty much as happy as we were. But this pillar of human resilience has a big downside. It means when good things happen to us – even things we’ve long strived for – we soon...

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The great drawback from 27 years of economic sunshine

Talk about ingratitude. It’s enough to make a grown economist cry. The nation’s dismal scientists labour mightily to produce almost three decades of continuous economic growth, and few people care. In April this year a venerable crowd called CEDA – the Committee for Economic Development of Australia, the gentlepersonly end of big business – conducted an online survey of almost 3000 people from all states, asking for their thoughts...

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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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Sorry, but using migration to boost growth ain’t smart

Ask an economist where the growth in the economy will be coming from and it's surprising how often they fail to give the most obvious answer: from growth in the population. Why don't they? Partly because it's an admission of failure: more people, bigger economy. Wow, that must have been hard to engineer. Economists aren't supposed to believe in growth for its own sake. Their sales pitch is that economic growth is good because...

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What you'd have to live on if you were poor

Speaking of the cost of living, how much do you need to live on? Surveys show most people's answer is: just a bit more than I'm getting at present. Trouble is, they keep saying that no matter how much their income rises. One way to convince yourself you're not doing all that well is to compare what you earn with people of your acquaintance who're earning a lot more than you. A better assessment would be to compare your finances...

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