One of my favourite films for this year was Moneyball. Ostensibly, it's the story of how the real-life Billy Beane (Brad Pitt), general manager of the Oakland As baseball team, took the second-poorest team in the comp almost to the top.
At a deeper level, it's about how the super-cool guys of professional baseball got beat by the nerds.
It's about how the science of statistics can tell us things we didn't know about our world.
It's...
Monday, December 26, 2011
Saturday, December 24, 2011
A little regulation brings out the best for all of us
Ask economists who is the father of economics and almost all of them will say Adam Smith. But a new book makes the amazing claim the true father is Charles Darwin. And if you ask economists the question in 100 years' time, that's what they'll say.
The book is The Darwin Economy, by Robert Frank, professor of economics at Cornell University.
Smith was the Scottish moral philosopher, who published his most famous work, The Wealth...
Wednesday, December 21, 2011
How to get more bang from your bucks
The retailers may be worried we aren't spending enough this Christmas, but that doesn't mean most of us aren't spending a fair bit. We always do. And, of course, for those of us off on summer holidays, the spending doesn't stop on Christmas Eve.
Economists are great apostles of efficiency, which they advocate so we have more money to spend on consumption. Strangely, however, they have little interest in how efficiently we spend...
Monday, December 19, 2011
Secret of successful economy is 'frameworks'
The proof we suffer from an economic cringe as well as a cultural one is our tendency to attribute our better position relative to the other advanced economies purely to good luck. In truth, it's owed as much to our markedly superior economic management over the past 20 years.
What? Poor little Oz runs its economy far better than the mighty Yanks and the haughty Europeans? You betcha.
Last week both Ric Battellino, deputy governor...
Saturday, December 17, 2011
Economy follows wherever our moods take us
To anyone but the economists and financiers, getting to the bottom of what the problem is in Europe is hellishly complicated. The more you read the more confused you get. But you can boil it down to the combination of the availability of credit and what Keynes called ''animal spirits''.
To anyone but the economists and financiers, getting to the bottom of what the problem is in Europe is hellishly complicated. The more you read...
Wednesday, December 14, 2011
PM Gillard: hard worker, hard-nosed, hard to read
Having observed Julia Gillard's government for more than a year, I must say she's hard to pigeon-hole. Is the woman who changed the government's mantra from "working families" to "hard-working families" a typical Labor prime minister, as many business critics of Fair Work believe, or a pale imitation of a Liberal leader, as her willingness to sell uranium to India and her opposition to same-sex marriage lead many critics on the...
Monday, December 12, 2011
Reserve has re-assessed outlook for world growth
Just as a stopped clock is right twice a day, so the financial markets' belief that Europe's sovereign debt problems are the primary factor influencing the Reserve Bank's decisions about interest rates, having been wrong for most of the year, has finally proved on the money.
A psychologist would say the financial markets have been suffering a "salience" problem. Their judgments about how the Reserve will adjust the official...
Saturday, December 10, 2011
Nice set of figures should shut up the gloomsters
Something strange is happening to the Australian psyche at present. A lot of people are feeling down about the economy. They're convinced it's pretty weak, and any bit of bad news gets a lot of attention.
But most of the objective evidence we get about the state of the economy says it is, under the circumstances, surprisingly strong. Consider the national accounts we got this week.
They show the economy - real gross domestic...
Wednesday, December 7, 2011
Breakdown in relations is everyone's business
I get to meet a lot of famous and interesting people in my job, but few have had more influence on me than Dr Michael Schluter, the social thinker, social entrepreneur and founder of Britain's Relationships Foundation.
They say genius is being the first to say the obvious. If so, Schluter is one. I'm sure Socrates or Aristotle beat him to it but, in our time, Schluter is the first to forcefully remind us of something we all...
Monday, December 5, 2011
Business economists play politics over budget surplus
Business economists have been surprisingly critical of Julia Gillard's efforts to keep her promise to return the budget to surplus next financial year, but if I were her I'd have done much the same thing.
She, her cabinet and her econocrat advisers turn out to have a much better understanding of real-world macro-economic management than the know-it-all business economists.
Their repeated statements that the government's obsession...
Saturday, December 3, 2011
How budget update affects stance of fiscal policy
The most remarkable thing about this week's mini mini-budget is how many words the media could spill without clarifying a rather important question: how will it affect the economy?
One of the ways politicians (and journalists) make such announcements sound big is by giving us the cost of measures ''over four years''. But the economy is lived through, and managed, one year at a time. So it's the year-by-year figures that matter...
Wednesday, November 30, 2011
Farmers fall silent while food brings home the bacon
Sometimes, as when Sherlock Holmes solved a mystery by noting the dog that didn't bark, the story is not what happened but what didn't happen. If so, don't hold your breath waiting for the media to tell you such a story. Omission is much harder to notice than commission.
But let me ask you - in this year of endless complaint about the supposed two-speed economy - what's been missing? The retailers have been doing it tough and...
Monday, November 28, 2011
Econocrats get smarter on dodgy forecasts
You've heard the joke that economic forecasters are there to make weather forecasters look good. What you haven't heard is that the nation's top economic forecaster, Glenn Stevens, the governor of the Reserve Bank, thinks the joke "has something going for it".
There's an even older joke: everybody complains about the weather, but no one does anything about it. Actually, nothing we could do would change the weather. But, as Stevens...
Saturday, November 26, 2011
Why economists are obsessed by the resources boom
The world is throwing two big things at our economy. One is new, exciting, even frightening, and is getting all the headlines. The other is old news and getting boring. But get this: the boring one is by far the more important.
The new and exciting story is the increasingly worrying developments in the euro area. The old story is the resources boom. Both come to us from the rest of the world. In terms of their effect on our...
Thursday, November 24, 2011
Outlook for politics and government in 2012
Talk to Australian Business Economists Annual Forecasting Conference
Sydney, November 24, 2011
Taken as a whole, the first full year of the Gillard government has been terrible. Julia Gillard has hardly taken a trick all year and her present standing in the polls is worse - much worse, consistently worse - than it was at last year’s election, when she failed to attract enough votes to form government in her own right. Her present...
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