If the US, the world's biggest economy, starts to contract again and the Europeans' government debt problems prompt more austerity, the world economy will be plunged back into recession. Is that what you think? If so, your picture of the world economy is about 20 years out of date.
There are cultural, historical, family and language reasons why we focus our attention on Europe and the US. The media keeps us well informed about...
Saturday, August 13, 2011
Wednesday, August 10, 2011
Sorry to be so sober. World not ending
At times like these, much of the media tends to cater to people who enjoy a good panic. The sky is falling and the proof is that billions have been wiped off the value of shares in just the past few days. Which makes me wonder how I've survived in the media for so many years. I hate panicking. So I'm always looking for contrary evidence. I just have hope there's a niche market of readers who prefer a sober assessment.
A bane...
Monday, August 8, 2011
What economists don't know about productivity
Our top econocrats are out banging the drum for more micro-economic reform as the obvious answer to our flagging productivity performance, and civic-minded economics writers are taking up the call. Sorry, but, as the Scots say, I hae me doots.
Economists are trained to believe in the need for ''more micro reform''. They'd want it even if our productivity performance was fine. You get the feeling the physician is prescribing...
Saturday, August 6, 2011
Are we talking ourselves into a recession?
Is it possible for a country that is the envy of the developed world to talk itself into recession? I don't know. But it seems we're about to find out. It won't be easy, of course. It's a question of whether our increasingly negative perceptions can overwhelm the reality that our economy has a mighty lot going for it. Let's start with reality, then move to perceptions.
The Europeans, and now the Americans, are rightly worried...
Wednesday, August 3, 2011
Net benefits at $50 billion and climbing
Like many major new technologies before it, the internet is steadily remaking a host of our industries - music, film, travel agencies, banking, newspapers, bookselling and now retailing more generally. You've heard a lot about the pain this is inflicting on businesses and their staff, and you'll hear a lot more.
But while we're being asked to feel bad about all the business people and workers displaced, there are two things...
Monday, August 1, 2011
Baby boomers' wealth effect hits the retailers
Back in the early Noughties, when the property market was booming, a lot of baby boomers began contemplating their future and realised they hadn't saved nearly enough to allow them to continue in retirement the privileged lives they'd always enjoyed. They decided they'd have to start saving big time.
So what did they do? Went out and bought a negatively geared investment property, of course. Their notion of saving was to borrow...
Saturday, July 30, 2011
Putting away dollars makes sense once again
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''....
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...
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