You can be sure Scott Morrison and Josh Frydenberg will be boasting about this week’s job figures, which show the jobs market remaining unusually strong. But their critics know not to believe the numbers.
The Australian Bureau of Statistics’ figures for January show the seasonally adjusted rate of unemployment steady at 5 per cent – the lowest it has been since the start of the decade. The more reliable “trend” (smoothed) estimate...
Saturday, February 23, 2019
Wednesday, February 20, 2019
If only the Indigenous had the worries of the well-off aged
One thing I hate about elections is the way politicians on both sides seek to advance their careers by appealing to our own self-centredness. I suppose when they know how little we respect them for their principles, they think bribing us is all that’s left.
The federal election campaign hasn’t started officially, but already the one issue to arouse any passion is the spectacle of the most well-off among our retired screaming...
Monday, February 18, 2019
Having stuffed-up deregulation, don't stuff-up re-regulation
As the banking royal commission finishes, the aged care royal commission begins investigating the mistreatment of old people by – taking a wild guess – mainly the for-profit providers. Surely it won’t be long before the politicians, responding to the public’s shock and outrage, are swearing to really toughen up the regulation of aged care facilities.
It’s not hard to see we’ve passed the point of “peak deregulation” and governments...
Saturday, February 16, 2019
Back to the future: Keynes can lift us out of stagnation
Every so often the economies of the developed world malfunction, behaving in ways the economists’ theory says they shouldn’t. Economists fall to arguing among themselves about the causes of the breakdown and what should be done. We’re in such a period now.
It’s called “secular stagnation” and it’s characterised by weak growth – in the economy, in consumer spending, in business investment and in productivity improvement. This...
Wednesday, February 13, 2019
We could be among the world's climate change winners
In the dim distant past, politicians got themselves elected by showing us a Vision of Australia’s future that was brighter and more alluring than their opponent’s.
These days the pollies prefer a more negative approach, pointing to the daunting problems we face and warning that, in such uncertain times, switching to the other guy would be far too risky.
We’ve gone from “I’m much better than him” to “if you think I’m bad, he’d...
Monday, February 11, 2019
Politicians, economists will decide if bank misbehaviour stops
In the wake of the Hayne report on financial misconduct, many are asking whether the banks have really learned their lesson, whether their culture will change and how long it will take. Sorry, that’s just the smaller half of the problem.
You can’t answer those questions until you know whether the politicians and their economic advisers have learned their lesson and whether their culture will change.
Why? Because the game won’t...
Saturday, February 9, 2019
The economy isn’t in trouble, but let’s cut interest rates anyway
Rather than merely acknowledging that the next move in interest rates is as likely to be down as up, I think the Reserve Bank should get on with cutting them. But not for the reason you may imagine.
There are plenty of people – many of them in the media – silly enough to believe a fall in interest rates is always good, and a rise always bad. They have a mortgage-centred view of the universe.
They forget that lower rates are...
Tuesday, February 5, 2019
Bank royal commission the start of re-regulation
If you think the banking royal commission’s damning report means you’ll never again be overcharged or otherwise mistreated by a bank, you’re being a bit naive. If you’re hoping to witness leading bankers being dragged off to chokey, you’ll be waiting a while.
But if you think that, once the dust has settled, we’ll find little has changed, you haven’t been paying attention.
I think we’ll look back on this week and see it as...
Monday, February 4, 2019
Hey pollies: weak wage growth won't fix itself
The economy’s prospects are threatened by various risks from overseas – about which we can do little – and by continuing weakness in wage growth – about which the two sides contesting the May federal election have little desire to talk.
In his major economic speech last week, Scott Morrison gave wages only a passing mention: “by focusing on delivering a strong economy we create the right environment for wages growth, which we...
Saturday, February 2, 2019
Rates of tax tell us nothing about economic success
When Leigh Sales of 7.30 asked Scott Morrison what evidence he had to support his claim that the economy would be weaker under Labor because it would impose higher taxes, he replied “I think it’s just fundamental economics 101”. Sorry, don’t think so.
The belief that an increase in taxes must, of necessity, discourage work effort, saving and investing is regarded as a self-evident truth by the well-paid. Similarly with the converse:...
Wednesday, January 30, 2019
Unhealthy, unhappy lives aren't fair exchange for higher incomes
In his Australia Day address, social researcher Hugh Mackay said that "the Australia I love today – this sleep-deprived, overweight, overmedicated, anxious, smartphone-addicted society – is a very different place from the Australia I used to love".
He identified three big changes: the gender revolution, increasing disparity in wealth, and social fragmentation.
He approves of the first, but laments that we’re "learning to live...
Monday, January 28, 2019
Give economists a PC and they start making more sense
Economies turn down and back up, but one of the biggest, long-running economic stories of our time is the way the digital revolution is disrupting one industry after another. So let me tell you how it’s changing the academic study of economics.
You probably imagine the economic research carried out in universities is terribly theoretical and impractical. It used to be, but not anymore.
You can trace the progress of academic...
Saturday, January 26, 2019
You'd be surprised what's propping up our living standard
It’s the last lazy long weekend before the year really gets started, making it a good time to ponder a question that’s trickier than it seems: where has our wealth come from?
The question comes from a reader.
“Australia has been without a recession for 25 or more years, the economy seems booming to me, just by looking around: employment, housing prices, explosive building in major capitals, etc. Where is the wealth coming from?...
Wednesday, January 23, 2019
More jobs for older workers than ever before
“Too old, too senior, too experienced, too expensive – heard ’em all. Ours is a society which does not value age and lived experience. Over 50? It’s the scrap heap for you.”
I can’t remember where I saw that quote, but I bet you’ve heard those sentiments many times. The media are always bringing us stories about people who, having lost their job in late middle age, find it very hard – even impossible - to get another one.
It’s...
Monday, January 21, 2019
Positions vacant: economists (women preferred)
Never in the field of economic conflict was so much analytical effort devoted to so few... as in Reserve Bank governor Philip Lowe’s one-man crusade to save the economics profession.
This latter-day Lord Kitchener wants more young Australians studying economics at high school and university, then enlisting as economists in the holy war against economic inefficiency.
His message: Your country needs you. Opportunity cost is being...
Saturday, January 19, 2019
Squaring the world's waste circle ain't that easy
If you think we’ve been standing still – even going backwards – on reconciling the economy with the natural environment, that’s not wholly true. While our refusal to get real on climate change drags on, we’ve started our journey to the nirvana of a “circular economy”.
Never heard the term? Heard of it, but not sure what it means? Really? It’s the great intellectual fashion statement of 2018.
And, since it has more merit than...
Tuesday, January 15, 2019
We are too busy for our own good
Years ago, I took a sabbatical and we lived a few months in California and a few in the backblocks of New Zealand’s South Island. I’d just got used to how impatient shop assistants were if you couldn’t immediately spit out exactly what you wanted to buy, when we moved back Down Under and I was expected to wait politely while the person ahead of me in the queue passed the time of day with the lady behind the counter.
We’re not...
Monday, January 14, 2019
How canny treasurers keep the tax we pay out of sight
We can be sure that tax and tax “reform” will be a big topic (yet again) this year, but what will get less attention is how behavioural economics explains the shape of the existing tax system and makes it hard to change.
I read that this year we may attain the economists’ Holy Grail of replacing state conveyancing duty with a broad-based annual tax on the unimproved value of land under people’s principal residence.
Economists...
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