Why India's development is so strange

Every Aussie who takes an interest in such matters knows how a country goes from being undeveloped to developed. We 've been watching our neighbours do the trick for years. It' s called export-oriented growth and it 's all about building a big manufacturing sector. You encourage under-employed rural workers to move to the city and take jobs in factories. Because your one big economic advantage is an abundant supply of...

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A good deal, but China wins on climate

At last, something to be positive about. Of all the Abbott government's efforts to improve our economic prospects over the year and a bit since its election, none compares with the benefits likely to flow from its remarkable trade agreement with China. I'm not expecting to see any noticeable gains from the G20 leaders' pledge to increase economic growth by 2 per cent over the four or five years to 2018 - not directly as...

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University status comes at a high price

Has it occurred to you that universities are fundamentally about the pursuit of status? Almost every aspect of their activities focuses on the acquisition of rank. And Christopher Pyne's proposed "reform" of universities is about harnessing the status drive to help balance the budget. Ostensibly, unis exist to add to the store of human knowledge and to educate the brightest of the rising generation. All very virtuous. When...

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No 'reform' could increase jobs in the short term

What do we need to do to get the economy growing properly again? Wait ... for at least a year. The most recent figures from the Bureau of Statistics confirm the economy has grown at an average annual rate of only 2.5 per cent over the past two financial years. Since it needs to grow at its medium-term trend rate of about 3 per cent just to hold unemployment steady, the jobless rate has been rising slowly over that time. With...

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Don't forget our other environmental problems

There's a hidden danger in the ascendancy of climate-change denialism in Canberra. It won't last - denials of reality can never last - but while it does it's an enormous distraction. The obvious cost is that the longer we leave it to get serious about playing our part in reducing global greenhouse gas emissions, the more expensive and disruptive our efforts will need to be. But there's also a hidden cost. The more time...

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Rationalists should stop burying their mistakes

I'm not a great proposer of royal commissions, but maybe such a spotlight is the only way to oblige blinkered economic rationalists to face the many failures of their knee-jerk advocacy of outsourcing, privatisation and deregulation. Economists aren't as scientific as they claim to be, being prone to what psychologists call "confirmation bias". Whereas the scientific method requires you to seek disproof of your theory,...

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Too busy chopping to make spending effective

The federal government spends a lot of money trying to "close the gap" between indigenous Australians and the rest of us. Actually, we've been spending a lot for years without making much headway. So what should we do? I suspect there are people within Treasury and Finance who think the answer's obvious: if the spending ain't working, give it the chop. Didn't you know we have a deficit problem? But the gap between us is...

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You were a stranger, so we wouldn't take you in

Do you get the feeling we're becoming a more selfish nation? While other countries were pitching in, we hesitated until this week to send experts to help stem the outbreak of Ebola. Sending people to risk their lives in wars doesn't seem a problem, but to send people for humanitarian reasons is asking too much when their personal safety can't be guaranteed. This comes on top of our decision to slash the planned increase...

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Red tape begins at home for business

Having worked all my life in the private sector - mainly for big business, including a big accounting firm - I've long known it's not just the public sector that's bureaucratic. Waste time and money on pointless rules and procedures? Sure. To imagine otherwise - that the profit motive makes business immune from inefficiency - you'd have to have spent all your life working in the public sector. In the old Treasury, say,...

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The good news about ageing

Politicians and economists have been banging on about the ageing of the population for ages, but how much do we actually know about the likely economic consequences? Not much - until now. We've been told incessantly that ageing spells bad news for the budget - greatly increased spending on pensions and healthcare - with ageing used to help justify the harsh spending cuts proposed in this year's budget. In truth, it has...

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Why federal-state relations are so hard to reform

There's been nothing like the death of Gough Whitlam to make me feel old. Was I on the job in the early 1970s watching the amazing scenes and taking note? Sure. Where was I when the Great Man was dismissed? In the building, where else? Later that night I was in a Canberra restaurant where Tom Uren wept from table to table. But there's nothing to make me feel more disillusioned and cynical than the latest prime minister...

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Econocrats touch base with reality

As every small-business person knows, the econocrats who think they manage the economy sit in their offices without ever meeting real people. Instead, they pore over figures the Bureau of Statistics bods dream up without ever leaving their desks. That last bit has always been wrong. Small business is run by people who think their sales this week equal the state of the national economy. If the official figures don't line...

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Economic chaos of Whitlam years not all his fault

Gough Whitlam was a giant among men who changed Australia forever - and did it in just three years. No argument. The question is whether the benefits of his many reforms exceeded their considerable economic costs. The answers we've had this week have veered from one extreme to the other. To Whitlam's legion of adoring fans - many of whom, like many members of his ministry, have never managed to generate much understanding...

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Health spending is quite sustainable

Oh dear, what an embarrassment. Thank heavens so few journalists noticed. Last month, one of the federal government's official bean-counters, the Australian Institute of Health and Welfare, issued its report on total spending on health in 2012-13. It didn't exactly fit with what the government has been telling us. As you recall, Health Minister Peter Dutton got an early start this year, warning that health spending was...

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Abbott's choice: competition v cronies

It's still too soon to tell whether Tony Abbott's government is pro-market or pro-business, but so far the evidence for the latter stacks higher than that for the former. The difference turns on whether the pollies want markets where effective competition ensures benefits to consumers are maximised and excessive profits minimised, or markets where government intervenes to limit competition - often under the cover of claiming...

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Re-writing the re-write of the GFC fiscal stimulus

Economists may be bad at forecasting - even at foreseeing something as momentous as the global financial crisis - but that doesn't stop them arguing about events long after the rest of us have moved on. That's good. Economists need to be sure they understand why disasters occurred so we can avoid repeating mistakes. They need to check the usefulness of their various models and whether they need modifying. One thing that...

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Competition is a wonderful thing - up to a point

The older I get the more sceptical I become. Goes with being a journo, I guess. I've become ever-more aware that no one and nothing is perfect. Not political leaders, not parties, not any -isms, not even motherhood. Take competition. Economists portray it as the magic answer to almost everything, but the more I see of it, the more conscious I become of its drawbacks and limitations. Which is not to say I don't believe...

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Interest rates to stay low, but lending curbs loom

With the Reserve Bank worried by fast-rising house prices, but the dollar coming down and the unemployment rate now said to be steady, can a rise in the official interest rate be far off? Yes it can. On the face of it, last week's revised jobs figures have clarified the picture of how the economy is travelling. The national accounts for the March and June quarters show the economy growing at about its trend rate of 3 per...

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