Why it's doubtful we need another interest rate rise

There’s nothing the media likes more than an interest rate rise on Melbourne Cup day. It’s surprising how often it’s happened, and many in the financial markets have convinced themselves that’s what we’ll get next Tuesday. And the good news is that, despite the radical reform of moving to a mere eight board meetings a year, the Reserve Bank has ensured that meetings on cup day will continue.What I’m not sure of is whether, if...

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Paying tax is good and, for better government, we should pay more

On Friday, a former top econocrat did something no serving econocrat is allowed to do, and no politician is game to do: he set out the case for us to pay higher, not lower, taxes.For years, politicians have sought our votes by promising smaller government and lower taxes. This often helped get them elected, but it hasn’t worked as promised.They’ve reduced the size of government by privatising government-owned businesses and outsourcing...

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Identity politics is destroying our public schools

When one of the most privileged and oldest private schools in Australia, The King’s School – home to the scions of the squattocracy – has to be ordered by the NSW government not to spend public money on a plunge pool at its headmaster’s residence, that’s when you know there’s something very wrong with the way federal and state governments are dividing their funding between public and private schools.It’s a system where the less...

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Want better productivity? Cut population growth

A simple reading of orthodox economics tells you that the urge to maximise profits leads businesses to continuously improve the productivity of their activities. But, as former competition tzar Rod Sims has often reminded us, improving productivity is just one way to increase profits, and there are other ways to do it that are a lot easier.One other way is to increase your share of the market by having a better product. Or better,...

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How much government spending is wasted? Sorry, don't know yet

Hands up if you think a lot of the money the government spends is wasted. I think a lot of people would agree. But the question’s not as easily answered as you may think.My guess is that many people’s impression of the amount of waste is exaggerated. When they see what they believe is wasteful spending they notice and remember it, whereas when everything seems to be going as it should, they don’t take note.And what’s wasteful...

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Why your income tax refund is so much less than last year's

The political hardheads in Canberra are convinced much of the resounding No vote in the Voice referendum is a message from voters that they want the Albanese government fully focused on the cost of living crisis – which is really hurting – not wasting time on lesser issues.I suspect they’re right. But if so, it’s the consequence of years of training by politicians on both sides that we should vote out of naked self-interest,...

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Chalmers should give the RBA an employment target

My trouble is I’m too nice. I’m too reluctant to tell people when I think they’re not trying hard enough. If I had time over again, I’d be tougher on nice young Treasurer Jim Chalmers and his white paper on employment.The Albanese government wants to revitalise our resolve to achieve full employment, but didn’t have the courage to put a number where its mouth is and nominate a numerical target for employment.I’ve been convinced...

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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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Voting No? You may have this key assumption wrong

If you’re thinking of voting No in the Voice referendum because governments have been spending so much taxpayers’ money trying to “close the gap” without much sign of success, perhaps you need to reconsider. If the Voice to parliament of Aboriginal and Torres Strait Islander people is enshrined in the Constitution, obliging our politicians and bureaucrats to listen, chances are that money will be better spent.But I can tell you...

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It's time for more sensible thinking on productivity

When will we tire of all the bulldust that’s talked in the name of hastening productivity improvement? We never do anything about it, but we do listen politely while self-appointed worthies – business people and econocrats, in the main – read us yet another sermon on the subject.Trouble is, when the sermons come from big business – accompanied by 200-page reports with snappy titles – they boil down business lobby groups doing...

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'Planetary boundaries' set the limits of economic freedom

One of the most important developments in economics is something in which economists had no hand: the identification of the environmental limits which humans, busily producing and consuming, cross at their peril.Earth has existed for about 4 billion years and humans have lived on Earth for about 200,000 years. For almost all of that time we were hunters and gatherers, but 10,000 to 12,000 years ago we settled down, to farm and...

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We need economic growth to make us better off, right? Well, actually

For all our lives, worthies – our politicians, business people and economists – have assured us we need economic growth to make us better off. Almost everything I write assumes this to be true. But is it?These days, there are more doubters than there used to be. Some people don’t believe that spending your life striving to own more stuff will make you happy. (Spoiler: they’re right.)But a growing number of scientists tell us...

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How full employment can coexist with low inflation

Who could be opposed to full employment? No one. Not openly, anyway. But Treasurer Jim Chalmers’ white paper on employment has been badly received by the Business Council and other business lobby groups. And, of course, business’s media cheer squad.At least since Karl Marx, the left has charged that business likes unemployment to stay high so there’s less upward pressure on wages and workers are more biddable. We know that when,...

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Albanese wants to put full employment back on its throne

Something really important to the management of the economy happened this week: the Albanese government released its white paper on employment. If the government achieves the vision it has laid out, it could be a turning point in how our economy works, one that begins a lasting reduction in the rates of unemployment and underemployment.This is Labor’s decision to put “full employment” back on its throne as a central objective...

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Labor sets out its alternative to neoliberalism

If, rather than wading through all the things the Albanese government has decided to do, you read what its white paper on employment actually says, you realise a remarkable thing: it reveals a vision of an alternative economy the government wants to take us to.In recent weeks we’ve seen before our eyes the worst of the economy that several decades of “neoliberalism” – the doctrine that what’s good for big business is best for...

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What's kept us from full employment is a bad idea that won't die

Lurking behind the employment white paper that Treasurer Jim Chalmers will release today is the ugly and ominous figure of NAIRU – the non-accelerating-inflation rate of unemployment. If the Albanese government can’t free itself and its econocrats from the grip of NAIRU, all its fine words about the joys of full employment won’t count for much.The NAIRU is an idea whose time has passed. It made sense once, but not anymore. The...

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