Welcome to the harsher, tougher economy

Our high dollar - which could easily go higher - is imposing considerable pain on our farmers, manufacturers, tourist operators and education providers. The pain will intensify over time, but guess what? The econocrats think it's a good thing. The pollies don't mind either, because the punters think parity with the US dollar is Christmas come early. Remember, too, that about three-quarters of Australian industry is non-tradeable...

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A little fiddling is fine in terms of our currencies

WHAT contrary times: up the front of the paper we're celebrating the Australian dollar's approach to parity with the greenback; up the back we're worrying about the global currency war. Take both with a grain of salt. The Aussie's latest bout of strength is, of course, a byproduct of the alleged currency war. Perhaps a better term is "competitive devaluation". It seems a lot of countries would like their currency to be weaker...

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Don't think you can keep on neglecting me, Darling

Sustainability is a dangerous word, but one to which politicians are irresistibly attracted. It has a wonderful ring to it and drips with virtue. Can you think of anyone who would admit to supporting anything that wasn't sustainable? And Julia Gillard has brought sustainability back into its own. Kevin Rudd appointed Tony Burke our first Minister for Population, but one of Gillard's first acts was to change his title to Minister...

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Do not let the environment go to waste

I sympathise with the calls from ecologists and others for an end to economic growth. But that doesn't mean I'd like to see no further increase in gross domestic product. Huh? Let me explain. There's a lot of confusion between scientists and economists on exactly what is meant by "economic growth". Each side uses the words to mean something different. As Professor Herman Daly, of the University of Maryland, a founder of...

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Obesity problem is bigger than we think, despite GDP benefits

I have bad news and good about the O-word. Although there has been a suggestion in some quarters the media got over-excited about the "obesity epidemic", a report from the Organisation for Economic Co-operation and Development - unlikely to be a purveyor of faddish enthusiasms - has confirmed the seriousness of the problem. The report says...

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Psychologists needed to help implement policies

In my next life I'm going to be a psychologist. If I can make myself work harder at uni than I did last time, I'll become an academic and start a new branch of the discipline called PPP - public policy psychology. Why? Because there's such a glaring need for it. The politicians themselves have a reasonable feel for how people think and behave, but much of their advice comes from a profession that believes the principles of human...

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CURING AFFLUENZA: WHY ECONOMIC GROWTH SHOULD BE STOPPED

Talk to Festival of Dangerous Ideas, Sydney Opera House October 3, 2010 Our economy, and pretty much every economy, has been growing for at least the past 200 years. Almost every year the quantity of goods and services being produced has increased. Production has grown faster than the population has grown, meaning that, on average, people’s annual consumption has increased. Our material standard of living has risen by a percent...

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Number's up for the far side of the brain

Try this holiday quick quiz: A bat and a ball cost $1.10 in total. The bat costs $1 more than the ball. How much does the ball cost? If your answer is 10, sorry, you're wrong. (If the ball costs 10 then the bat costs 90 more than the ball not $1 more.) But don't feel bad. Even the brightest people who read that sentence tend to get the wrong answer. But don't feel good if, having taken a closer look at the question, you've...

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Save before Reserve Bank forces you

Barring some global catastrophe, the outlook for our economy is particularly bright - so a lot of people aren't going to like it. Why not? Because of something many people have trouble getting their head around, the great paradox of macroeconomics: good things happen in bad times and bad things happen in good times. We're looking at a long period in which a lot more people find jobs and part-timers get to work the longer hours...

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How to limit looming interest rate rises

It's a pretty safe bet we'll get another rise in the official interest rate this year and several more next year. A rise next Tuesday is possible, though the Reserve Bank board has a predilection for changing rates on Melbourne Cup day, after it has seen the quarterly consumer price index figures. After the minutes of last month's board meeting and the speech the governor, Glenn Stevens, gave last week, there's not much doubt...

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Setting rates by the rules has worked a treat

I touch wood as I say this - hubris has a long history in economics - but we're doing a lot better at the day-to-day management of our economy than we used to. That's clear when you compare our management with most of the rest of the developed world at present, but it's also clear when you look back on our performance over the years. When I got into this business 36 years ago, the economy was out of control. So was the budget...

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The word we ignore at our peril

Symbolism is important because it affects the way people think and act. Symbolism is particularly important to politicians because it influences people's perceptions, and pollies know that, with voters, perceptions are often more real than the reality. That's why it was such a bad sign for Julia Gillard to announce her cabinet - initially, at least - without mention of the word ''education''. She had Chris Evans as Minister...

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Don't make taxpayers subsidise status seeking

Sometimes I despair of our politicians. They went through the election campaign carrying on about wasteful spending and the desperately urgent necessity to get the budget back to surplus and eliminate the public debt - all while promising to add to middle-class welfare. Take the federal government's spending on grants to private schools, under which more than half the schools receive more than they're entitled to under John...

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Getting richer as we mess up our world

I guess you've heard the good news: the devastation of the Christchurch earthquake will be a godsend to New Zealand's gross domestic product, giving it an almighty and much-needed boost. So maybe it's a pity earthquakes don't happen more often. Perhaps we could do the Kiwis a favour and send our air force bombers over there to use a few cities for target practice. If you think this sounds stupid, you're right. To anyone in...

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Our deprived country folk, and other myths

So, we're back to worrying about RARA - rural and regional Australia. Thanks to the newly acquired political leverage of the two country independents, we're now being told the regions haven't been given their fair share and, in future, "equity principles" should prevail. There's a lot of righteous indignation on the part of many country people and, I suspect, quite a bit of sympathy on the part of city folk. But there are also...

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