Our top econocrats make a lot more speeches these days, but sometimes they say things that represent a clear advance in our understanding of what's happening with that mysterious animal we call the economy. Glenn Stevens, governor of the Reserve Bank, gave such a speech this week.
One device economists use to get a handle on economic developments is to distinguish between those that are ''cyclical'' and those that are ''structural''....
Saturday, July 30, 2011
Wednesday, July 27, 2011
Crime has become a mind game
The older I get, the more I realise how complicated - even mysterious - the world is. When I was young I tried to keep everything straightforward, concrete and logical. Then I realised the direct effects of some action can sometimes be overshadowed by its indirect effects.
Accountants and economists, as you've no doubt realised, tend to evaluate things in monetary terms. And there's no denying money is important - even to those...
Monday, July 25, 2011
Don't wish a fall in interest rates on us
So you like the sound of a cut in interest rates? Don't get your hopes up. It's possible, but not probable. And remember, rates go down only when times get tougher. Is that what you want?
Though the likelihood is that hysteria over the imminent devastation to be wrought by the carbon tax accounts for the greatest part of the present caution among consumers, vague anxiety over the incomprehensible goings on in Greece is probably...
Saturday, July 23, 2011
Keynesian economists keen on Gillard's way
They say if you laid all the economists in the world end to end, they still wouldn't reach a conclusion. In truth, though they do tend to be an argumentative lot, there's a fair bit of agreement between them - as you can see from the Economic Society of Australia's latest survey of its members' opinions.
Much of the agreement is on things you'd expect but there are a few surprises. If you judged professional economists' views...
Wednesday, July 20, 2011
Trust makes the world go around, honestly
What does Britain's phone hacking scandal have in common with its earlier scandal over parliamentary expenses and with the failure of several of its banks during the global financial crisis? As Jonathan Tame, of Britain's Relationships Global, has observed, all three events shake the trust the Brits can have in key institutions of their democracy. The latest scandal raises questions about the trustworthiness of the press, the...
Monday, July 18, 2011
Decarbonising economy is not such a big deal
To a lot of thoughtful people, Julia Gillard's plan to virtually ''decarbonise'' our economy represents one of the most radical attempts at reform in our history.
It will present a profound challenge to the Australian way of life, we're told, requiring changes to our lifestyle, spending patterns, taxation burdens and possibly even people's chosen field of employment.
As well as changing our everyday practices, it will change...
Saturday, July 16, 2011
Gillard's flawed scehme worth doing
In this far from perfect world, no reform that makes it into law is ever ideal. It's always flawed and internally inconsistent, a product of the compromise necessitated by our democracy. Of course, some reform attempts are more flawed than others. So the question for Julia Gillard's carbon tax package is: is it too flawed to be worth bothering with?
In this far from perfect world, no reform that makes it into law is ever ideal....
Wednesday, July 13, 2011
How influential are (economic) journalists?
Australian Conference of Economists, Canberra
Wednesday, July 13, 2011
I take my title, How influential are journalists?, to be a reference to economic journalists, particularly economic commentators. My answer has changed little since a paper I wrote on the topic was published in the Australian Economic Review in 1995: not nearly as influential as you might imagine. But in preparation for defending that view, let me make a...
Give and take: The new tax is a piece of cake
Years ago, the Keating government had a problem with pensioners wasting taxpayers' money on prescriptions. Knowing their elderly patients got their prescriptions free, doctors were happily issuing ones their patients might or might not end up needing and pensioners were taking them to the chemist and getting them filled, just in case. Many of these often very expensive drugs were not used.
So the government decided to impose...
Monday, July 11, 2011
It will be neither as good nor as bad as we're told
So now, supposedly, we know exactly what to expect when, as seems likely, the carbon tax comes into effect on July 1 next year.
The average household's costs will increase by about $10 a week. All but the top 10 per cent of households will receive tax cuts and benefit increases to compensate them for this higher cost and two-thirds of households will be fully compensated.
Uncertainty over? Don't you believe it. Now begins the...
Labour isn't inanimate. We're human.
When Dr Martin Parkinson gave a speech urging a renewed effort to lift the productivity of labour, the subeditors at the ABC knew just what he meant: Treasury secretary says we should work harder. Whoops.
That ain't what he meant. As the old slogan says, improving labour productivity involves "working smarter, not harder". Indeed, increasing productivity requires producing more from the same inputs. So increasing output by increasing...
Saturday, July 9, 2011
Immigrants and oldies share our growing work load
Most of the interest in this week's figures for the labour force in June was in what they told us about the strength of the demand for labour. But what's happening to the supply of labour is just as interesting.
With the trend figures showing total employment grew by 188,000 over the six months to December, but by only 38,000 over the past six months, it's clear the demand for labour is slowing. This suggests the economy itself...
Friday, July 8, 2011
BY 2020 ONLY THE RICH WILL BE AT HOME IN AUSTRALIA
IQ2 Debate Sydney City Recital Hall
Tuesday, July 8, 2008
Some of you who read my column may be wondering what on earth I’m doing on the side opposing this motion that, by 2020, only the rich will be at home in Australia. Don’t I care about inequality? Well, yes I do. Do I believe everything in the garden is rosy? No I don’t. I do believe the gap between high and low incomes is too wide and I’d be happy to see governments do...
Monday, July 4, 2011
This very lucky country enjoys a good whinge
Another week, another batch of bad news, adding to the general impression things aren't going at all well in the economy. But the gloomy talk doesn't fit with the objective indicators. Will we snap out of it, or could we talk ourselves into genuine poor performance?
Undisputed winner of the Greatest Gloom award was the quarterly report of the Sensis business index. "Weak consumer spending and an uncertain economic outlook have...
Saturday, July 2, 2011
The price we would pay for keeping the farm
According to the Greens, the mining industry is 83 per cent foreign-owned. And their anxiety is matched by Senator Barnaby Joyce's worries about foreigners buying up rural land in NSW. But how concerned should we be about "selling off the farm" and what could we do about it?
The Greens' claims have not gone unchallenged. According to the Minerals Council, official figures show mining is actually 71 per cent foreign-owned. The...
Wednesday, June 29, 2011
West heads to a Greek tragedy, too
To boil it down, the reason Greece is in so much trouble is that every Greek wanted a government that did all the expensive things governments do, but none wanted to pay tax.
Greece's politicians did not have the courage to tell their people that, in the end, you cannot have one without the other.
The Greek government ran budget deficits for year after year, racking up more and more government debt, eventually doing dodgy deals...
Monday, June 27, 2011
How to blow the boom: cocoon manufacturers
The fusspots are right when they say we must make sure the nation gains lasting benefit from the resources boom. But doing so is as much about what we shouldn't do as what we should.
The first thing to note is that, even if the boom were to end a lot earlier than the policy-makers expect, the main thing we will be left with is a very much larger mining sector, producing and exporting a lot more minerals and natural gas than...
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