Tag: Ross Gittens

Thinking economists are grappling with why their profession has made our lives worse

Illustration: Andrew Dyson

By sanctifying selfishness, it has undermined community-mindedness and the role of co-operation in advancing our mutual interests. Voting has become a simple matter of “what’s in it for me and mine”, while businesses and industries have been licensed to lobby for preferment at the expense of everyone else. “In recent decades the balance between these instincts [of competition and co-operation] has become dangerously skewed: mutuality has been undermined by an extreme individualism which has weakened co-operation and polarised our politics,”

Since the late 1970s, however, Americans have talked less about the common good and more about self-aggrandisement; less “we’re all in it together” and more “you’re on your own”. There’s been “growing cynicism and distrust toward all the basic institutions of American society – governments, the media, corporations” and more.

Thinking economists are grappling with why their profession has made our lives worse

Coronavirus: Pandemic could kill off governments’ credit rating bogeyman

Reserve Bank governor Philip Lowe during a Senate select committee hearing.

At the parliamentary hearing, he said: “From my perspective, creating jobs for people is much more important than preserving the credit ratings. I have no concerns at all about the state governments being able to borrow more money at low interest rates. The Reserve Bank is making sure that’s the case.” At one level, this is a sign of the momentous times we live in. Governments around the world are borrowing massively as the only way they can think of to overcome the coronacession. With interest rates on long-term government borrowing at unprecedented lows, what have they go to fear?

Coronavirus: Pandemic could kill off governments’ credit rating bogeyman

Tribal prejudices about wages guarantee a weak recovery

Wage growth has recorded its lowest growth since records were kept. Illustration: Greg Newington

 

Wage growth has recorded its lowest growth since records were kept. Illustration: Greg NewingtonCredit:

 

Wage growth is the key to recovery because wages are the greatest single driver of economic activity and employment. But rather than thinking of ways to get wages up, both sides are working on ways to slow them further.

Not that private sector employers will need any help. They always skip pay rises during recessions because, afraid of losing their jobs, workers know they’re in no position to argue.

But, while as individuals, firms benefit from cutting the real value of the wages they pay, especially when all of them do it at the same time, they all suffer because the nation’s households have less money to spend on the products of the nation’s businesses.
Robbing Peter to pay Paul ain’t stimulus

via Tribal prejudices about wages guarantee a weak recovery

Productivity problem? Start at the bottom, not the top

Look to Australia's largest businesses rather than government when it comes to productivity.

Since 2002, Quinn showed, the most productive Australian firms (the top 5 per cent) had not kept pace with the most productive firms globally. In fact, Australia’s ‘productivity frontier’ has slipped back by about one-third. The best of ‘Made in Australia’ hasn’t kept pace with the best of ‘Made in Germany’, ‘Made in the Netherlands’ or even ‘Made in America’.”

And then there’s the other 95 per cent. In the past two decades, their output per hour worked has barely risen. So 19 out of 20 Australian firms don’t produce much more per hour than they did when Sydney hosted the Olympics.

A Productivity Commission study has found that half the slowdown in productivity improvement in the market economy in recent years is accounted for by manufacturing. A separate survey of management practices in manufacturing firms found that Australia’s managers rank below those in Canada, Sweden, Japan, Germany and the US.

The drop we’ve experienced is “not the fault of employees: there are simply fewer good opportunities available. According to Treasury’s analysis, much of the drop in job-switching is because workers are less likely to transition from mature firms to young firms. With fewer start-up firms, it stands to reason that there are fewer start-up jobs.”

Productivity problem? Start at the bottom, not the top

Why so many businesses are behaving badly

“Entitlement: When the Rich and Powerful feel it’s their Right” (ODT)

It’s an important, though sensitive, question for economists since their simple “neo-classical” model of markets predicts firms won’t mistreat their customers because, if they did, they’d lose them to a competitor.

Sims offers seven reasons for this evident “market failure” – a term economists use to acknowledge when real world markets fail to deliver the benefits the textbook model promises.
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via Why so many businesses are behaving badly

The social sciences: so essential we neglect them

This is what  ultra-Conservatives rail against and want our universities to be rid off HASS Humanities and Social Science degrees. They were poison to the Nazis as well the  Catholic Church which banned Catholics from studying or reading Sociology it’s too dangerous for them the Curch that is. In fact the social sciences can cause individuals to break down. Sociology likens  social life of men as sitting on a mop bucket and caught by the balls. When trying to stand putting ones foot on the pedal each time trapped. By revealing the mop buckets of our social life social science has the ability to set one free and that for conservatives is dangerous. (ODT)

It makes no sense. As Senator Arthur Sinodinos said while minister for industry, innovation and science, “the advancement of the Australian economy relies on robust research from physical science and social science alike.

Not being ones to boast, the social scientists would like you to know their former students pretty much run the world. They’ve produced the majority of ASX-listed chief executives. Probably just as true of the public service and politicians.

Add the arts and humanities, and most of the tertiary-educated workers in Australia have HASS degrees. Almost three-quarters of university students are in HASS courses. Most of the overseas students paying full freight for their degrees – and now constituting one of our top export earners – do HASS courses, particularly business courses.

The social sciences: so essential we neglect them

Let’s put the hype aside, jobs growth shifts from extraordinary to ordinary

But while we’re deflating the government’s triumphalism, its critics also need taking down a peg. They like to remind us that the official unemployment rate understates the true extent of worklessness. Specifically, it fails to take account of under-employment – people with part-time jobs who’d like to work more hours.

All that’s true. But when you correct the unemployment rate (for May) of 5.4 per cent by adding the underemployment rate of 8.5 per cent to give a broader measure of labour “underutilisation” of 13.9 per cent (as, admittedly, the bureau encourages you to do), you’ve gone from understating the problem to overstating it.

via Let’s put the hype aside, jobs growth shifts from extraordinary to ordinary

Budget 2018: This budget is too good to be true

Much of this rapid return to “the old normal” rests on the government’s forecast that the past four or five years of exceptionally weak growth in wages will end next month. Wage rises will be a lot higher in 2018-19, higher again the following year and still higher, at 3.5 per cent a year, in the following two years and for the remaining years out to 2028-29.

I think this is the basic explanation for the budget’s forecasts and projections, prepared by that well-known Italian economist, Rosie Scenario.

via Budget 2018: This budget is too good to be true

Banking royal commission: Misbehaviour shows power of KPI’s

 

Amid all the reluctant truth-telling at the banking royal commission, one big lie has yet to be apprehended: shame-faced witnesses keep admitting they put their shareholders’ interests ahead of their customers’. Don’t believe it.

via Banking royal commission: Misbehaviour shows power of KPI’s

The neoliberalism of Margaret Thatcher and Ronald Reagan has run its course

You can see it overseas in the electoral popularity of Bernie Sanders and Jeremy Corbyn, and the anti-establishment revolts in the Brexit vote and the election of Donald Trump.

Source: The neoliberalism of Margaret Thatcher and Ronald Reagan has run its course