Interest rate rises will be a good thing - provided they're not too soon

Sometimes I think you can divide the nation’s economy-watchers into those desperate to see the Reserve Bank start raising interest rates and those desperately hoping it won’t. As usual, the sensible position is somewhere between them.To some, interest rate rises are always a bad thing. They’re either speaking from self-interest or they’re victims of a media that unfailingly assumes all its customers are borrowers and none are...

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The news on the economy is better than we're being told

From the way the financial markets – and an easily-led media – are telling the story, our troubles have multiplied. Along with all our other worries, Australia now has a big new problem: inflation is back with a bang. But that’s not the way Reserve Bank governor Dr Philip Lowe told the story this week. He thinks we’re going great guns.According to the markets, recent figures show we’ve caught America’s disease and inflation has...

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We should make the economy less unequal - and we can

Since the working year doesn’t really get started until after Australia Day, it’s not too late to tell you my New Year’s resolutions. Actually, they’re more in the nature of re-affirming my guiding principles as an economic commentator. Why are we playing the economic game? Who are the people it’s supposed to benefit? And would all the policies I write in support of lead us towards or away from these ultimate objectives?My first...

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It's the holidays, so let's have some fun with economic puzzles

So it’s holiday season, when (almost) everyone takes a break, chills out and tries not to think about workaday worries. So let’s have some fun. Let’s do a few economic puzzles.There’s an old joke in economics that says, “it may work in practice, but does it work in theory?” If you take that to mean economists care more about getting their theory right than about its usefulness then, yes, too many of them do.But an empirical revolution...

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There are many ways to stuff up productivity

A good New Year’s resolution for readers of the business pages would be to read more widely and think more broadly, so their thinking about economic problems and their solutions doesn’t get into a rut, returning repeatedly to the same old solutions to the same problems.No reader of these pages needs to be told that the key to higher material living standards is improved productivity – the ability to create more outputs from the...

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Prep for the new year: what I've learnt about happiness

Let me wish you a happy new year. And not just a happy New Year’s Eve, a whole year of happiness. But the thing about happiness is to be sure you know what you’re wishing for. It’s something that’s surprisingly easy to get wrong.Normal economic journalists don’t waste time thinking about such a touchy-feely topic, but I went astray. I spent a lot of time reading and thinking about it. Even wrote a book about it.I blame Bob Hawke,...

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This isn't America, so please stop acting like a Yank

If there’s one thing that annoyed me about 2021, it’s the way people have been aping all things American. Our financial markets copped a bad dose of it, the media got carried away, we looked to the Yanks – the smart ones and the crazies - to know what we should think and do about the coronavirus, and many on the Right of politics took their lead from Trump’s Republicans.One on one, I like the Americans I know. But put them together...

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Have a good break – this time you’ve more than earned it

Looking forward to some time off over the summer holidays? I am. Long time since I’ve been in more need of a decent break. Few more columns to go, and I’m off for four weeks.This will surprise and shock you, but regular polling by the Roy Morgan outfit has found that, by September, the total annual leave owing to Australian employees had reached a record 185 million days, up almost a quarter on a year earlier.No need to tell...

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Frydenberg right to put full employment ahead of budget repair

It’s hard to feel sympathy for a government that used ignorant scaremongering about the public debt to get elected in 2013, but now doesn’t want to mention the D-word and is being attacked by its own deluded conservatives (plus point-scoring Laborites). Even so, Treasurer Josh Frydenberg has his priorities right in leaving budget repair for later.It’s noteworthy that the governments’ critics have turned their guns on the likelihood...

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Like election promises, many budget forecasts never materialise

You’d think after the fiasco of Back in Black, Josh Frydenberg would have learnt not to count his budgets before they’re hatched. But no, he’s a politician facing an election and nothing else matters.His message in this week’s mid-year budget update is: the virus is in the past and the economy is fixed – as you’d expect of such great economic managers as our good selves.Well, it’s not certain the pandemic has finished messing...

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Inheritance: the major life event no politician wants to mention

When I was growing up, my family didn’t have much. We lived rent-free in a succession of down-at-heel manses (the Salvos called them “quarters”), but my father’s stipend was a small one on which to support four kids.Mum worried about where my parents would live after they retired but, with much scrimping and saving (including making my sisters hand over almost all their wages), they built and paid off a small cottage at Lake...

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Stop kidding: the 2024 tax cut will be economically irresponsible

It’s a safe bet that, once we’ve seen the mid-year budget update on Thursday, we’ll hear lots of economists and others saying the government should be getting on with budget repair: spending cuts and tax increases.That’s despite the update being likely to show that the outlook for the budget deficit in the present financial year and the following three years is much better than expected in the budget last May.It’s also true even...

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Don't let any politician convince you your taxes will be going down

Whenever an election approaches, we can expect the bulldust count to soar on claims about the prospects for the economy and, particularly, about how well the budget’s being managed.Election campaigns inhabit a financial fantasyland, with both sides promising lower taxes, higher government spending and improved budget balances.Our politicians have spent decades training voters to believe that, when it comes to the budget, we can...

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Beware of governments using algorithms to collect revenue

A great advantage of having children and grandchildren is that they can show you how to do things on the internet – or your phone – that you can’t for the life of you see how to do yourself. But a small advantage that oldies have over youngsters is that we can remember how much more clunky and inconvenient life used to be before the digital revolution.When you had to get out of your chair to change the telly to one of the other...

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Panicking financial markets could stuff up another global recovery

In economics, there’s not much new under the sun. When I became a journalist in the mid-1970s, the big debate was about which mattered more: inflation or unemployment. You may not realise it, but that’s the great cause of contention today.With prices having risen surprisingly rapidly this year in the US and Britain – but few other advanced economies – we’re witnessing a battle between people in the financial markets, who fear...

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A quick economic rebound seems assured - but then what?

The good news in this week’s “national accounts” for the three months to end-September is that the Delta-induced contraction in the economy was a lot less than feared – not just by the financial market economists (whose guesses are usually wrong) but by the far more high-powered econocrats in Treasury and the Reserve Bank. So now it’s onward and upward.According to figures from the Australian Bureau of Statistics, real gross...

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When house prices soar, everyone forgets who suffers most

One of the darker arts of politics involves manoeuvring to ensure that election campaigns focus on issues that favour my side over yours, regardless of whether these are the issues most likely to be pertinent to the nation’s needs over the next three years.Because the pollies believe us all to be self-centred, they never try to appeal to the greater good. If the world worked the way it should, you’d expect housing affordability...

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