In the consensus spirit of dear departed Bob Hawke, Anthony Albanese is hoping it will be all sweetness and light at this week’s jobs and skills summit. And, to give them their due, the industrial parties have been doing their best, looking to realise John Howard’s maxim: “the things that unite us are greater than the things that divide us”.The ACTU has issued a joint statement with the peak small business organisation expressing...
Wednesday, August 31, 2022
Monday, August 29, 2022
Jobs summit: shut up those playing the productivity three-card trick
Anthony Albanese and his ministers are keen to ensure this week’s jobs and skills summit doesn’t degenerate into the talk fest the opposition is predicting it will be. Well, one way to avoid much hot air is to shut up people playing the usual three-card trick on productivity.The truth is there’s a lot of muddled and dishonest talk about the relationship between wages and productivity. Much of this comes from the employer lobby...
Friday, August 26, 2022
Don't expect great productivity if we give business an easy ride
An unwritten rule in the economic debate is that you can say whatever you like about the failures of governments – Labor or Liberal; federal or state – but you must never, ever criticise the performance of business. Maybe that’s one reason we’re getting so little productivity improvement these days.One reason it’s unwise to criticise big business is that it’s got a lot of power and money. It can well defend itself but, in any...
Wednesday, August 24, 2022
Welcome to the job, Treasurer. Rather you than me
Very occasionally, some poor misguided letter-writer suggests to my boss that I’d make a better treasurer than the incumbent. I’m flattered, of course, but it’s never been a job I’ve lusted after. Nor do I delude myself I’d be much good at it. And that goes double for the present incumbent, Jim Chalmers.I wouldn’t want to be in his shoes (especially not with people like that grumpy old bugger Gittins offering a critique of my...
Monday, August 22, 2022
Housing own goal worsens our inflation problem
A key part of the economic response to the pandemic was to rev up the housing industry. It’s boomed and now it’s busting. What’s been achieved? Mainly, a big, self-inflicted addition to our inflation problem.That, and a lot of recent first-home buyers now getting their fingers burnt. Well done, guys.It’s not a crime to be wise after the event. Indeed, it’s a crime not to be. As we all know, you learn more from your mistakes than...
Friday, August 19, 2022
Good news: why our low unemployment rate will last
Nobody’s noticed, but something really good has come out of the upheaval of the pandemic: more than 100,000 people who’d spent ages searching for a job without success, finally found one. The benefit to them – and the economy – will last a long time.When I say nobody noticed, I mean no economist or econocrat. The person first to notice was a former economics writer for this august organ, now economics editor for The Conversation...
Wednesday, August 17, 2022
I foresee a world where workers gain the upper hand
Former NSW premier Neville Wran was the first politician – but far from the last – to say the election would be about “jobs, jobs, jobs”. That line captured perfectly one of the great economic certainties of our age: you can never, ever have enough jobs to go around.That’s what most of us think, and the reason we think it is that it’s been true for the past 50 years. That’s how long it’s been since we had a rate of unemployment...
Sunday, August 14, 2022
Inflation psychology: firms charge what they can get away with
Economists think inflation is all about economics. What they don’t know is that it’s also about psychology. But Reserve Bank governor Dr Philip Lowe shows a glimmer of understanding when he refers not to “inflation expectations” but to “inflation psychology”.Notorious for their “physics envy” – where the world works according to known and unchanging laws, so everything can be reduced to mathematical calculation – economists think...
Friday, August 12, 2022
Our hidden inflation problem: business has too much pricing power
Why is Reserve Bank governor Dr Philip Lowe so worried about getting inflation down when so much of the rise in prices comes from foreign supply constraints that will eventually go away, and so much of the rise won’t be passed on to workers in higher wages?Because what he can’t admit is that inflation won’t fall back to the target range of 2 to 3 per cent until the nation’s businesses decide to moderate their price rises. And...
Wednesday, August 10, 2022
We've got more than we've ever had, but are we better off?
It probably won’t surprise you that the Productivity Commission is always writing reports about … productivity. Its latest is a glittering advertisement for the manifold benefits of capitalism which, we’re told, holds The Key to Prosperity.Which is? Glad you asked. Among all the ways to co-ordinate a nation’s economic activity, capitalism – which the commission prefers to call the “market” economy – is by far the best at raising...
Sunday, August 7, 2022
Fixing inflation isn't hard. Returning to healthy growth is
Despite any impression you’ve gained, fixing inflation isn’t the end game. It’s getting the economy back to strong, non-inflationary growth. But I’m not sure present policies will get us there.The financial markets and the news media have one big thing in common: they view the economy and its problems one day at a time, which leaves them terribly short-sighted.Less than two years ago, they thought we were caught in the deepest...
Friday, August 5, 2022
If higher productivity comes from new ideas, it's time we had some
Economists and business people talk unceasingly about the crying need to improve the economy’s productivity, but most of what they say is self-serving and much of it’s just silly. Fortunately, this week’s five-yearly report on the subject from the Productivity Commission, The Key to Prosperity, is far from silly, and might just stand a chance of getting us somewhere.It’s the first of several reports and, unlike the tosh we usually...
Wednesday, August 3, 2022
A damaged environment leads to an unlivable economy
Economists are paid to worry about the economy, which they usually define fairly narrowly. And, like all specialists, they tend to overemphasise what they know so much about and underrate everything else.Karl Marx usually gets the credit for saying that, in the economy, “everything’s connected to everything else”. The most conservative economist would agree. The economy is circular because what’s an expense to you, is income...
Monday, August 1, 2022
We're struggling with inflation because we misread the pandemic
It’s an understandable error – and I’m as guilty of it as anyone – but it’s now clear governments and their econocrats misunderstood and mishandled the pandemic from the start. Trouble is, they’re now misreading the pandemic’s inflation phase at the risk of a recession.The amateurish way governments, central banks and economists have sought to respond to the pandemic is understandable because this is the first pandemic the world’s...
The inflation fix: protect profits, hit workers and consumers
There’s a longstanding but unacknowledged – and often unnoticed – bias in mainstream commentary on the state of the economy. We dwell on problems created by governments or greedy workers and their interfering unions, but never entertain the thought that the behaviour of business could be part of the problem.This ubiquitous pro-business bias – reinforced daily by the national press – is easily seen in the debate on how worried...
Wednesday, July 27, 2022
Inflation: small problem, so don't hit with sledgehammer
It’s an old expression, but a good one: out of the frying pan, into the fire. Less than two years ago we were told that, after having escaped recession for almost 30 years, the pandemic and our efforts to stop the virus spreading had plunged us into the deepest recession in almost a century.Only a few months later we were told that, thanks to the massive sums that governments had spent protecting the incomes of workers and businesses...
Friday, July 1, 2022
THE STATE OF THE ECONOMY
Although most of us would like to think the pandemic is receding into the past and we can move on to other things, we’re starting to realise that it’s still with us and is still having a big effect not only on our health and our overstrained hospitals, but also on our economy. It’s still being greatly affected by the pandemic itself and by our response to the threat it poses to life and limb.When the pandemic began in March 2020,...
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