LAUNCH OF BOOK BY MENADUE AND KEATING

Sydney, Thursday, November 5, 2015Paul Samuelson, the famous American economist, is said to have remarked that the stockmarket has predicted nine of the past five recessions. I thought of that this week and decided the Canberra press gallery could top it: the gallery has predicted nine of the past two early elections. They were at it again last weekend, reporting that, with the Coalition now riding high in the polls, serious...

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Why we're sure to be voting on a rise in GST

About a year ago, I began confidently predicting the Coalition would not be going to next year's election with any proposal to increase the goods and services tax. I've been tardy in advising you that, with the removal of Tony Abbott and the ascension of Malcolm Turnbull, that prediction has become, as George W. used to say, inoperative. Indeed, I now confidently predict the Coalition will be seeking the voters' agreement to...

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Econocrats propose same old answer to all problems

If Malcolm Turnbull wants policy reforms that make the economy more innovative and agile, he should think long and hard before accepting advice from the economists in Treasury and the accountants in the department of Finance. If you want innovation and agility, the last people to whom you should look for help are the two professions that, in their approach to problems new or old, demonstrate minimal innovation or mental agility. I...

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IS DEMOCRACY STILL RELEVANT IN THE 21st CENTURY?

Talk to group in Maitland, NSW, November, 2015Particularly for those of us of a progressive or left-of-centre perspective, it’s easy to doubt whether democracy still works in the 21st century.You look around and see so much you don’t like. You see governments - even Labor governments - pursuing policies that seem to be always giving big business what it wants and disadvantaging ordinary people.Making so-called free trade agreements...

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How digital disruption affects jobs and wages

A lot of people worry about the bad economic consequences of the digital revolution. Among the worriers is Dr Andrew Leigh, the shadow assistant treasurer and a former economics professor at the Australian National University. Leigh made his concern clear in the "distinguished public policy lecture" he delivered this week at Northwestern University in Chicago. But whereas most people worry that the digital revolution will lead...

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We need more agile thinking about "reform"

What do we want of our government? What should it to do for us? It's clear from his recent observations that our new Prime Minister is thinking hard about these things. Good. But we – the governed – should be thinking about them, too. Malcolm Turnbull says his government's goal will be to set Australia up "to remain and be secure as a high-wage, generous-social-welfare-net, first-world country". Speaking in Parliament, he said...

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To be great, Turnbull must govern for the other side

A great attraction of my job is that I'm paid to offer gratuitous advice to everyone from the prime minister down. So step up, Malcolm, it's your turn. Everyone has high hopes that Malcolm Turnbull will be the successful, long-lasting prime minister so many of us have been seeking. Business people are hoping he'll deliver the economic reform we need to rejuvenate and energise the economy. Though his performance won't fail to...

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Timid financial changes get Turnbull started on reform

Since the election of the Coalition government we've heard a lot more talk about the need for micro-economic reform than we've had actual reform. Indeed, the main "reform" we've had so far has been abolition of the previous government's chief reforms: the carbon tax and the mining tax. But all that changed this week, with the announcement of the Turnbull government's response to the recommendations of the Murray inquiry into...

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It's fine to be well-off so long as you pay your whack

It's no doubt true, as many commentators are saying, that Labor has won itself no points by reminding us how wealthy Malcolm Turnbull is. We hear frequently about "the politics of envy", but actually there isn't a lot of it about these days. You've done well? Good luck to you. In any case, I think there's huge goodwill towards Turnbull. Everyone can see how super smart he is, and we're hoping he'll use that smartness to make...

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Banks ponder their next game with interest

Actual mortgage interest rates have fallen from 7.1 per cent to 4.7 per cent over the past five years, but let one bank – Westpac – increase its rate by 0.2 percentage points and the righteous indignation knows no bounds. It may not be the end of the world, but it's certainly the end of the housing boom as we know it. Well, maybe. But outrage is a poor substitute for understanding. Why did Westpac move? Why now? Will the other...

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Nitty-gritty of unemployment shows small improvement

Why does unemployment increase? For a lot more reasons than you probably imagine. It's a good question to ask this week when the media informed us that, last month, the number of people in employment fell by 5000, the number unemployed fell by 8000 and the proportion of people participating in the labour force fell from 65 per cent to 64.9 per cent, but the rate of unemployment was unchanged at 6.2 per cent. I could devote...

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Moratorium on new coal mines makes economic sense

What are we meant to do about coal? For some time now it's looked like Australians face a painful choice between doing the right, moral thing by the rest of the world and continuing to make a living from our rich endowment of natural resources. The burning of coal is by far the biggest source of the greenhouse gas emissions that are causing climate change. Australia is one of the world's biggest producers of coal. Greenies...

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Competition does have its drawbacks

Competition is billed by economists as a wonderful thing, the invisible restrainer of a capitalist economy and essential to ensuring consumers get a good deal. But many economists aren't as conscious as they should be that competition has costs as well as benefits. It's true, of course, that monopoly is usually a terrible thing, allowing arrogant, inflexible behaviour on the part of producers, with little pressure on them to...

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