Aurora College Economics HSC Study Day, SydneyEvery year there’s some event in the news that’s relevant to your study of the global economy, and this year it’s Russia’s invasion of Ukraine. This has combined with the continuing disruptions to supply caused by the pandemic to greatly increase imported inflation in all the advanced economies. These supply-side price rises have interacted with the huge fiscal stimulus the rich countries...
Thursday, June 16, 2022
Wednesday, June 15, 2022
What we weren't told before the election: taxes to rise, not fall
The rule for Treasury bosses is that, as public servants, any frank and fearless advice they have about the state of the federal budget must be given only to their political masters, and only in private.But last week the present secretary to the Treasury, Dr Steven Kennedy, used a speech to economists to deliver a particularly frank assessment of the Labor government’s budgetary inheritance.We can be sure his remarks came as...
Monday, June 13, 2022
Maybe Left versus Right is turning into smart versus not-so
Here’s a funny thing to think about on a holiday Monday: what if all the well-educated people voted Labor and the lowly-educated voted Liberal or National? How would that change our politics? A preposterous notion? Not as much as you may think.As I’ve mentioned once or twice before, the great political stereotype is that the Liberals are the party of the bosses, while Labor, with its link to the union movement, is the party of...
Friday, June 10, 2022
Treasury boss’s message: higher taxes the cure for debt and deficit
Anthony Albanese and his Treasurer, Dr Jim Chalmers, have inherited many problems that won’t be solved quickly or easily. Nor will they be solved without the new government being willing to persuade voters to accept the sort of tax changes no pollie wants to talk about in an election campaign.That’s the conclusion I draw from Treasury secretary Dr Steven Kennedy’s belated annual speech to the Australian Business Economists this...
Wednesday, June 8, 2022
Albanese must stop government malice towards the jobless
I was chuffed on election night to hear Anthony Albanese repeat his election slogan, “No one held back and no one left behind” and his promise of “kindness to those in need”. Really? Kindness? Now that’s a first for Labor. And unimaginable from the Liberals, whose promise to give needy people “a go” was limited to those they judged to have “had a go”.Albanese’s magnanimity was a surprise considering Labor’s only mention of our...
Sunday, June 5, 2022
Labor mustn't be panicked into doing something stupid
Who’d want to be the new Treasurer, Dr Jim Chalmers? Certainly, not me. But that won’t stop me giving him a shed-load of free advice. Starting now.As Chalmers sees it, the economy he’s inherited is in “dire” straits. Everywhere he looks there’s another problem. First, “skyrocketing” inflation.Second, falling real wages as “a consequence of almost a decade of the deliberate undermining of pay and job security, now coming home...
Friday, June 3, 2022
An economy with falling real wages can’t be “strong”
The main message from this week’s “national accounts” is that the economy isn’t nearly as Strong – Strong with a capital S – as Scott Morrison and Josh Frydenberg unceasingly claimed it was during the election campaign. In truth, it’s coming down to Earth.According to the Australian Bureau of Statistics, real gross domestic product – the nation’s total production of goods and services – grew by 0.8 per cent during the three months...
Wednesday, June 1, 2022
Why Albanese will bring public servants in from the cold
The election was so much about getting rid of Scott Morrison that few but the party faithful turned to Anthony Albanese with great hope and enthusiasm. He’s not the most charismatic bloke you could meet. Yet almost everything we’ve heard from him so far has been encouraging.From his victory speech on, he’s said everything you’d want him to say. He made a promise which, to be fair, his predecessor never made and so never broke:...
Monday, May 30, 2022
Why the political duopoly is losing market-share
If you hadn’t noticed, economic policy and politics are closely entwined. And economic journalism is a just specialty within political journalism. But some parts of economics – agency theory and industrial organisation, for instance – are surprisingly useful in understanding how politics works.The big surprises in this election weren’t the election of Labor, but the steep decline in the two major parties’ share of the primary...
Friday, May 27, 2022
Printing money to fund the deficit ain't the free lunch it seems
The new Treasurer, Dr Jim Chalmers, is saying a lot about the trillion-dollar debt he’s just inherited. He’s saying less about the tension between the new government’s plan to “invest” in improving the economy and all the pressure he’ll be under from mainstream economists to reduce the budget deficit and so reduce what Labor will be adding to that debt.But whenever I write about debt and deficit, I know to expect puzzled or angry...
Wednesday, May 25, 2022
Replacing the misbehaving ScoMo is an easy act for Albo to follow
It is a truth (almost) universally acknowledged by Labor politicians that it’s near impossible to reform from opposition. Be too ambitious, make yourself too big a target, and the government will happily use the many advantages of incumbency to shoot you down.That’s because all reforms have opponents, and most create losers as well as winners. That’s why, after being reminded of this truth at the 2019 election, Labor made itself...
Sunday, May 22, 2022
Who's in government matters, but pollies have far from total control
According to Scott Morrison’s last-minute appeal, in deciding our vote we should have considered nothing but the economy and stuck with the Coalition, the only team to be trusted with financial matters. But we spurned his advice and put Labor in charge. Now what happens?Will the economy be better or worse under Anthony Albanese and a new treasurer, Jim Chalmers?Short answer: whether economic conditions get better or worse in...
Election: a win for the punters against the party professionals
Listening to Anthony Albanese’s victory speech on Saturday night – promising to be a better, more inclusive leader than his predecessor, to help the needy as well as the party heartland, to work hard fixing as many of our problems as humanly possible – my inner accountant came out. Yes, but how will you pay for it all?If ever there was a case of oppositions not winning elections but governments losing them, this is it. Much more...
Friday, May 20, 2022
Infrastructure spending has degenerated into wasteful vote buying
The capacity of our politicians to take a good economic policy idea and pervert it into a partisan waste of taxpayers’ money never ceases to appal.Once I was a big supporter of greater spending on infrastructure projects, even when most of the cost had to be borrowed. That’s because well-chosen projects will add to the economy’s productivity – say, by reducing the time taken to get from A to B – and thus more than pay for themselves...
Wednesday, May 18, 2022
Modern politics goads us to be greedy, and forget the needy
Mark, a voter in the Melbourne electorate of Higgins, told the ABC’s Virginia Trioli this would be the last federal election he’d be alive to vote in. So he’d decided his vote should not be for him, but for the younger generation coming after him.He wanted to cast his final vote for the party that best represented young people’s aspirations for their future. So he went to the local high school and got permission to talk to the...
Monday, May 16, 2022
Inflation: workers being unreasonable, or bosses on the make?
When you think about it clearly, the case for minimum award wages to be raised by 5.1 per cent is open-and-shut. So is the case for all workers to get the same. This wouldn’t stop the rate of inflation from falling back towards the Reserve Bank’s 2 to 3 per cent target zone.But if, as seems likely, the nation’s employers contrive to ensure that this opportunity is used to continue and deepen the existing fall in real wages, the...
Friday, May 13, 2022
Cutting real wages will help inflation, but weaken the economy
At last, as the election campaign reaches the final stretch, we’ve found something worth debating. Anthony Albanese has found his spine and supported a big rise in award wages, while Scott Morrison says a decent rise for the masses is a terrible idea that would damage the economy.First the politics, then the economics. My guess is history will judge this to be the misstep that did most to cost Morrison the election. Successful...
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