GDP is going backwards. That doesn't mean your life is, too

By Millie Muroi, Economics Writer If gross domestic product – better known by its nickname GDP – were a perfect reflection of our quality of life, we would be in trouble.It’s a rough measure of how much we produce, earn and spend, and it grew a measly 0.1 per cent in the first three months of this year. If our population hadn’t boomed at the same time, Australia would be in recession. In fact, in per-person terms, we’ve...

Read more >>

How GPT (not that one) could help fix our inflation problem

By Millie Muroi, Economics WriterChatGPT is not the answer to Australia’s productivity problem. At least, not yet.But I asked ChatGPT what its chances were of productivity improving in Australia – if it was a betting man. The answer? 70 to 80 per cent.Productivity growth excites economics nerds, like those at the Reserve Bank ... and just about no one else. But it matters for everything from your mortgage to the prices you pay...

Read more >>

Think you've snagged a bargain online? It's you who's been snagged

By Millie Muroi, Economics Writer In a cost-of-living crisis, I’m sure I’m not the only bargain hunter who has put giant e-commerce sites Temu, Shein and Wish to the test.I’ve heard all the arguments against shopping online, and like most of my generation, I’ve shrugged off most of them, too. It’s how we do things when money is tight. Get with the program, or get old.One friend splashed cash on a giant stuffed pig from Temu...

Read more >>

RBA worries too much about expectations of further high inflation

Other central banks have started cutting interest rates, yet our Reserve Bank is declining to join them because, as governor Michele Bullock explained on Friday, it doesn’t expect our rate of inflation to fall back to the mid-point of its target range “in a reasonable timeframe”.Its latest forecasts don’t see the “underlying” (that is, smoothed) annual inflation rate returning to 3 per cent until the end of next year, and reaching...

Read more >>

Why the Reserve Bank thinks it's too soon to cut interest rates

By Millie Muroi, Economics Writer When the Reserve Bank’s second-in-command – recently appointed deputy governor Andrew Hauser – took shots at his closest observers this week, he ruffled plenty of feathers.“It’s a world of winners and losers, gurus and charlatans, geniuses and buffoons,” he proclaimed. Then he wagged a finger at those confidently commentating from the sidelines on the direction of the economy. “It’s a dangerous...

Read more >>

What does sharemarket turmoil tell us about our economy? Not a lot

 By MILLIE MUROI, Economics WriterWhen the Reserve Bank board walked into their two-day interest rate meeting in Sydney this week, most of their key numbers were locked in.By the time they closed their laptops and zipped up their bags on Monday, the Australian sharemarket had shed close to $100 billion in one day: the biggest single-day drop since the pandemic came knocking. The Reserve Bank board “discussed it, obviously,”...

Read more >>

Misbehaviour thrives in our age of capitalism without capitalists

There’s a vital lesson to be learnt from the latest episode in the saga of former chief executive Alan Joyce’s ignominious departure from Qantas last year: these days, no one’s in control of the capitalist ship.It seems clear that, in his last years in the job, Joyce decided to give the size of his final payout priority over the maintenance of good relationships with the company’s staff and customers. He left Qantas suddenly...

Read more >>

We should stop using a blunt instrument to manage the economy

In the economy, as in life, it helps a lot if you learn from your mistakes. Or, if you’re in public life, from the mistakes of your predecessors.Accordingly, the caning that former Reserve Bank governor Dr Philip Lowe got for his assurance that interest rates wouldn’t rise before 2024 does much to explain why his successor, Michele Bullock, has been so persistently cagey about the future of rates.Even as she’s announced a decision...

Read more >>

Our troubled universities have become the politicians' plaything

If it wasn’t for their sterling success in fattening their own salaries, I’d be tempted to feel sorry for the nation’s vice chancellors. They’ve been screwed around for years by federal governments of both colours, and the mess they’re in – some of which they try to cover up – gets ever deeper.They’re another victim of our decades-long dalliance with “neoliberalism”. But now the task is to sort out this and other messes a misguided...

Read more >>

There's a good case for cutting interest rates ASAP

What a difference a number makes. For weeks, the money market’s macho men had been telling us interest rates needed to rise yet further to ensure inflation would keep falling. But last week, their case went up in smoke and now almost no one thinks the Reserve Bank board will do anything at its two-day meeting starting today.The weeks of idle speculation came to an end when finally we saw the consumer price index for the June...

Read more >>

One reason for our inflation problem: weak merger law

Nothing excites the business section of this august organ more than news of another merger between two public companies. “Merger” is the polite word for it; usually the more accurate word is “takeover”.So, is the dominant firm offering a good price for the firm being acquired? And should the shareholders in the dominant firm be pleased or worried about the deal? Will it benefit them, or just the company executives who organised...

Read more >>

Cost-of-living crisis? Why only some of us are feeling the pinch

If you believe the opinion polls, we’re all groaning under the weight of the cost-of-living crisis. And Treasurer Jim Chalmers confirms we’ve all been “under the pump”. But it’s not that simple. Some of us are doing it a lot tougher than others. And some of us are actually ahead on the deal.In any case, where did the living-cost crisis come from? That bit’s simple. The economy’s been on a rollercoaster for the past four and a...

Read more >>

Construction industry a honeypot that capital and labour fight over

Don’t fall for the bogeyman theory of our troubled major constructions industry: its union has gone rogue, been infiltrated by criminal elements, and must be cleaned out, so life can return to normal. There’s much more to it than that.But first, let’s be clear. I’m trying to explain the phenomenon, not make excuses for thuggery and lawbreaking – even if perpetrated by the union movement, with successive Labor governments pretending...

Read more >>

Unthinking privatisation leaves much mess to be cleaned up

It’s been a week of facing up to the various troubles caused by the fad of governments trying to solve their problems with help from the private sector.All governments have indulged in the fashion of privatising their businesses and outsourcing the provision of public services to a greater or lesser extent, with varying degrees of success. Victoria was first with the idea of selling off its electricity monopoly, and it’s had...

Read more >>

Take heart! Australia is still better and fairer than most

Don’t be disheartened by recent events. Things in the Land of Oz are far from perfect, and we have our share of problems. But don’t be tempted by the thought that if America’s going to the dogs, we won’t be far behind. No, we’re holding things together much better than the Yanks are.With the US reverting to its traditional practice of taking shots at presidents and presidential candidates, this week of all weeks is the time to...

Read more >>

OECD’s message to our inflation warriors: calm down, she’ll be right

Last week a bunch of international public servants in Paris launched a rocket that landed in Sydney’s Martin Place, near the Reserve Bank’s head office and the centre of our financial markets. It carried a message we should already know. Australia has a big problem with real wages: they’re too low. In which case, why are you guys so anxious about continuing high inflation?The Organisation for Economic Co-operation and Development’s...

Read more >>

Forget smaller government, let's shoot for better government

We pay our taxes, then governments spend them. But where does all that money go? And how much of it is wasted? Well, where it goes is no secret, but how much of it does little to benefit us is something we don’t really know. Why not? Because we put so little effort into finding out.In 2022-23, the federal and state governments spent almost $890 billion. Nearly 33 per cent of that went on social security payments; 21 per cent...

Read more >>