As if we needed any reminding, the latest flare-up of politicking over putting a price on carbon shows just how difficult it will be to gain sufficient community agreement to take effective action against climate change.
With a government lacking the numbers in both houses, the Greens demanding a sackcloth-and-ashes scheme and an opposition determinedly putting short-term partisan advantage ahead of the national interest, how...
Saturday, March 12, 2011
Wednesday, March 9, 2011
Money can ease the pain of disability
Did you know there's an expensive policy proposal Tony Abbott isn't opposed to? When it lobbed last week both sides made supportive noises about it so, thanks to the perversity of politics, it slipped past without getting the attention it deserves. It's the Productivity Commission's draft report on the government's desire to establish a national disability insurance scheme.
The scheme would cover people with severe disabilities...
Monday, March 7, 2011
No more ignorant talk of a two-speed economy
The more economists examine it, the more they explode the seemingly self-evident truth that we're living in a two-speed economy.
Why do people keep saying this? I think they're saying that whoever's benefiting from all the talk of a boom, it ain't my state or my industry. In short: I see no evidence of any boom around me and I'm certainly not getting any benefit from it.
If there is a boom, they seem to be saying, it's limited...
Saturday, March 5, 2011
Glimmering lights help dispel the gloom and doom
Peering through the statistical mist, the national accounts we saw this week tell us that, contrary to some messages we have been getting, the economy is on track and growing quite strongly. For the foreseeable future, growth will be coming more from business investment spending than from consumption.
Bureau of Statistics figures show real gross domestic product grew by 0.7 per cent in the December quarter. But Treasury estimates...
Wednesday, March 2, 2011
Bitter pill when politicians swallow big pharma's spin
Politicians always profess great sympathy for people struggling to keep up with the cost of living but often fail to put that sympathy into practice. Economists like to divide the economy into consumers on one side and producers on the other. They believe the economy should be run for the benefit of consumers, not producers. The consumer is supposed to be king.
Ostensibly, pollies think the same. But they're always doing deals...
Monday, February 28, 2011
Carbon courage, and for Gillard, no going back
Maybe Julia Gillard will make a good prime minister after all. Her decisions of late - culminating in her commitment to impose a price on carbon from July next year - suggest she has learnt from Labor's mistakes and understands what she must do to stay in office.
Kevin Rudd's biggest mistake was to abandon his carbon-pollution reduction scheme after the going got tough, rather than seeking to get it passed after a double dissolution...
Saturday, February 26, 2011
Surge in savings masks current account rise
One little-noticed consequence of the resources boom has been a big rise in the current account deficit on our balance of payments with the rest of the world. But when we get the latest figures on Tuesday we're unlikely to see any evidence of that. Why not? Because of the surge in household saving.
The current account deficit occurs because our imports and payments of interest and dividends to the rest of the world almost always...
Wednesday, February 23, 2011
Hard to hear angels above the racist heartbeat
Scientists used to think chimpanzees - our close relatives - were a gentle, peace-loving species, until they observed their behaviour in the wild and found they could be quite murderous in the treatment of other chimps.
And what was it that caused them to become so vicious? The arrival of chimps from a different troop in the part of the forest they considered to be their territory.
I remembered this one day after failing to...
Monday, February 21, 2011
The economy is a lion disguised as a lamb
The big divide in economists' views on the outlook for the economy - and hence, for interest rates - is whether they regard the present weakness in consumer spending as worrying or welcome. And that turns on how forward-looking they are.
I suspect it's also affected by what psychologists call "salience" - the tendency for our judgments to be most affected by those events that are highly visible and memorable, those that make...
Saturday, February 19, 2011
Urge to splurge fades as savers born again
The punters, pollies and shock jocks who tell us we're groaning under the weight of the rapidly rising cost of living need to answer a question: if so, how come households are managing to save 10 per cent of their disposable income?
It has drawn remarkably little comment, but the household saving ratio - saving as a proportion of household disposable (that is, after-tax) income - is the highest it has been in more than 20 years.
You...
Wednesday, February 16, 2011
Inflation whingers bite the very hand that feeds them
Have you been struggling to cope with the rapidly rising cost of living? Well, tell it to the pollies because I don't believe it. Actually, the pollies probably don't believe it either but they'll pretend to rather than risk offending you by telling you to stop feeling sorry for yourself. They care about your approval, not your edification.
Ever since 1957, when the British prime minister Harold Macmillan caused uproar...
Monday, February 14, 2011
Fiscal heaven is pollies worrying about deficits
The most surprising thing in the great debate over how Julia Gillard should finance the cost of "rebuilding Queensland" is the alacrity with which some economists have urged her to just add it to the budget deficit rather than - gulp - temporarily increase taxation.
Admittedly, the best argument for putting it all on the tick is that the sum involved - $5.6 billion over three or four years - is too small to worry about.
And...
Saturday, February 12, 2011
A carbon price can't save the planet by itself
I have a love-hate relationship with economic rationalism. I have great respect for the power of market forces - individuals and firms do change their behaviour in response to changing prices - but I'm well aware of their limits.
To me the test of economic understanding is whether it's pragmatic and "evidence-based" or ideological and faith-based. Is the neo-classical model simply a tool of analysis, suited to some jobs better...
Wednesday, February 9, 2011
Carbon price is no fix-all
Our wide brown land has always been subject to ''extreme weather events'' - droughts, floods, cyclones, bushfires and heatwaves. That's why no one can say the extreme events we've been suffering lately are a direct consequence of climate change.
But scientists have long predicted that one effect of global warming would be for extreme events to become more extreme, which is just what seems to be happening. So it would be a brave...
Monday, February 7, 2011
All views about the levy are political
Some economists stress that Julia Gillard's decision to finance part of the Queensland infrastructure rebuild by means of a temporary tax levy is a "political" choice, not one dictated by the needs of economic management.
It's true. But the economists don't go on to acknowledge that their almost universal opposition to the levy is based not on value-free (or "positive") economic reasoning, but on a political philosophy buried...
Saturday, February 5, 2011
Productivity, or a future paved with gold?
Economists are convinced our highest priority is to keep increasing our material standard of living as rapidly as possible. I'm not sure they're right. But if they are, we have a problem.
There are three ways for a country to get richer, to raise its real income (gross domestic product) per person. The first is to keep increasing the labour and physical capital being used to produce goods and services at a faster rate than the...
Wednesday, February 2, 2011
Floods expose national loss of respect
It's a pity Julia Gillard announced her flood levy after Australia Day rather than before it. Instead of spending the day telling ourselves what wonderful people Aussies are, we could have reflected on our darker side - why we're developing a Jekyll and Hyde personality.
As many acts of minor and major heroism during the Queensland floods have reminded us, Aussies are good people to be around in times of crisis.
We rise to...
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