THE ECONOMICS AND POLITICS OF GOVERNMENT INTERVENTION IN THE ECONOMY

Talk to Graduate School of Government, University of Sydney I want to give you a primer on the pros and cons of government intervention in the economy. While, as public servants, you take government policy activity for granted - it’s what you’re employed to do - the appropriate role of government (whether, and under what circumstances, governments should intervene in markets) is perhaps the most contentious topic in politics...

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We pay for miners' impatience

Is patience a virtue? Our mothers taught us that it was, but much economic thinking treats it as a vice. And business people treat their impatience as though it's a virtue. But I'm with mum. What isn't in doubt is that impatience is a pretty much universal human characteristic; we're all impatient, to a greater or lesser extent. I hardly think that makes impatience "rational" but, even so, conventional economics is careful to...

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Productivity more about technology than reform

A while back I met a businessman who'd been a big wheel in IT. He expressed utter amazement that the Productivity Commission and other economists could attribute the whole of the surge in productivity during the 1990s to micro-economic reform, without a mention of the information and communications technology revolution. He was right; that's exactly what they do. And he's right, it's pretty hard to believe that computerisation...

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We need a more balanced approach to progress

A lot of the problems the nation struggles with and argues over boil down to the considerable potential for conflict between what economists summarise as "equity" and "efficiency". We act as though one is right and the other wrong but, in truth, sensible people want a mix of both. So, though we don't always realise it, the hard part is finding the best trade-off between the two. "Efficiency" means taking the scarce resources...

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Productivity loses in unholy Gonski money fight

We've just stuffed up a great opportunity to improve worker productivity. You didn't notice? I bet you didn't. It slipped past without the business people and economists who claim to be so concerned about productivity noticing a thing. It happened last week. The independent schools lobby came out in full cry against the Gonski report's proposal to put federal funding of schools on a needs basis. As is now de rigueur for interest...

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The tax base is leaking - not good news

One of Julia Gillard's proudest claims is that the federal tax burden is much lower under Labor than it was when John Howard and Peter Costello were in charge. It's true. But it's not anything to boast about - the tax base has sprung a leak. Several leaks. In the mid-noughties, federal tax receipts hit a record 24.2 per cent of gross domestic product. This year they're expected to equal only 22.1 per cent, despite the introduction...

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THE EVER-EVOLVING POLICY MIX: Keeping up with changing fashions in macro management

Talk to VCTA Teachers Day, Melbourne, Friday, August 24, 2012 One of my self-appointed roles is to help economics teachers keep up to date with changing economic policy and economic thinking. Today I want to give you an update on the policy mix, but I’m going to put it in historical context and so it will also involve a bit of a refresher course. The macro managers change the policy mix in response to the economy’s ever-changing...

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Big Tobacco as caring corporate citizen

Surely we're being far too tough on Big Tobacco, as so many disparagingly refer to it, after the failure of its High Court challenge to the plain packaging legislation. If we'd only open our minds to what British American Tobacco and the others are saying, we'd see how remarkably public spirited they are. They're worried not for themselves but about the "serious unintended consequences" they fear plain packaging will bring....

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IS THE HIGH AUSSIE DOLLAR REALLY BAD FOR THE AUSTRALIAN AND VICTORIAN ECONOMIES?

Economic Society Forum, Melbourne, Monday, August 20, 2012 Rather than plunging into a debate about whether policy makers should seek to influence our exchange rate and, if so, how they should go about it, I want to start by examining the reasons for people’s great concern about its present level. The high dollar is disadvantaging all our tradeables industries, but for the miners (and, to a lesser extent, the farmers) that’s...

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Treasury thinks the unthinkable: tax rises

Note well: the secretary to Treasury, Dr Martin Parkinson, has provided voters with the only no-bulldust budgetary advice they're likely to get between now and the federal election. Everything they get from the politicians - on both sides - will be straight from vote-chasers' fantasy land. Even much of the media believe their interests lie in feeding their customers more of the self-delusion they prefer to hear rather than reminding...

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Rise of multinationals threatens our tax collections

As the world's centre of economic gravity shifts towards Asia, the process of globalisation - the breaking down of barriers between countries - is speeding up. This means there's no shortage of challenges looming for our political leaders. They'll pop up in many areas, but in a speech earlier this month the boss of Treasury's revenue group, Rob Heferen, outlined those affecting taxation. He says our present tax system, which...

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Self-funded retirees are kidding themselves - and us

One thing that gets me going is comfortably-off people who feel sorry for themselves: those who complain how hard it is to get by on $150,000 a year, or retired people who profess to be "self-funded". Someone once asked me why I was so disparaging of self-funded retirees when, from what they could see, I was going to end up as one myself. It's true. Or, rather, it's true my superannuation is too generous for me to get even a...

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