Abbott's Economy: Wages Down, Now Investment and Growth Down

[Mugwump]

^ ptid, assuming you've studied economics, you'll realize that microeconomics and macroeconomics are related as (analogously) physics and chemistry are. One is the best model we have to explain the manifestation of the other. Do you imagine that economics professors teach that stuff because they're moonlighting in business studies ? Supply and demand is the very basis of what national Treasurers do, and why they expect their interventions to work, as you surely must know.

And as for the fact that low skills are not prone to moving offshore, let me introduce you to the exiguous Australian textile clothing and footwear industry, or the great data entry centres which still exist in India. If offshoring to you solely means call centres, you can substitute "imported as finished manufactures". The point about technology - the other force I mentioned - is one you can ponder standing by the self-serve machines at Safeway or Shell

[Mugwump]

^ I can buy some of that. tannin, by your analysis smacks of the idea that the economy is entirely an artifact of government. In reality the forces of international trade and mobile capital are probably more influential than anything Howard and Costello did. How they might have managed the pace of mining growth while China was roaring is rather obscure, to me. In reality, I suspect China would have bought more from Brasil, entered the same downturn as at present, and Australia would now be selling lower volumes at lower prices without having enjoyed the sunny interim.

The point where I agree strongly is point 2. When the sun shines you should put away savings against the coming storm. Instead, it was used to buy votes.

It's harder for me to judge hockey's policy. Given the dramatic change in the terms of trade, I doubt it'd make much difference either way, though I s spect it'd help a little. This is not a temporary downturn in demand caused by a change in animal spirits, though - It's a major external shock. Keynesian responses are less effective under those conditions. But I agree that Australia's net debt position does not warrant the level of contraction being deployed.

[pietillidie]

[HAL]

I know one is between zero and two but I had no idea it was the best model we have to explain the manifestation of the other.

[Tannin]

[Mugwump]

^again, Tannin, I can buy most of the argument around the revenue line. I doubt your assumption that fewer mining projects in Australia would not have meant more in Brazil or Africa, given China's voracious demand. They may even have opened up new competitors, but I have no special insight into that.

[pietillidie]

^The other reason this is hitting now is that present reform now is not about inefficiency and protection as it was in H-K's time; Australia's productivity in what it does is fine. The problem is that it doesn't have many high value strings to its bow. It could have them, but since Howard the nation has taken the easy mining money and refused to value add around its education system. The disgraceful disregard for science, tech, alternative energy, the higher education sector, the STEM disciplines, communications infrastructure, and so on, at the precise time a strong focus on these was needed, is exactly why the Glibs were to blame both in government and in their opposition to even modest attempts to push those things forward.

Look no further than the defunding of the CSIRO, the scoffing at the NBN, climate change denial, alternative energy mockery, and the horrific treatment of the science portfolio as evidence for complete recklessness in the face of global economic reality. That is exactly why Abbott and co. are to blame, especially in the face of the expected softening of oversupplied commodities and the declining prices of substitutes such as alternative energy.

[Mugwump]

^ptid, it certainly is scalable. If it were not, then nothing in macroeconomics would be predictable. It doesn't account for all the outcome variance, and behavioral economics helps with what remains, but we still use supply and demand and equilibrium theory to manage the macroeconomy insofar as we can at all.

Your theory that more unskilled workers will expand the demand for unskilled workers is a most Unorthodox one in any school of economics.

[Culprit]

http://www.theage.com.au/comment/intergenerational-report-prepared-by-baby-boomers-who-had-the-best-deal-of-any-generation-20150305-13ujt7.html

[pietillidie]

[Joel]

[stui magpie]

[Tannin]

Duh. She didn't have time to scratch. She was dealing with a hostile traitor in her own party trying to bring her down at every opportunity, a media smear campaign unprecedented in the history of this nation, the most negative and vociferously untruthful opposition we have ever seen, and had to negotiate every single bit of legislation through a minority parliament. It's amazing she managed to get anything done, but she did. Among other things, Gillard and Swan brought in more than 100 necessary tax reforms to, for example, cut down on international transfer pricing tax evasion, restore just a little sanity to the mining industry, and price carbon. It wasn't anywhere near enough, just a drop in the bucket really, but it was a step in the right direction.

Abbott, in stark contrast, immediately engaged reverse gear and wrecked almost all of the good work Gillard and Swan had done, and followed it up with further idiocies of his own. The GP tax is a perfect example: it was not just a piddly bit of revenue with high compliance costs, but also was set to impose a huge extra cost burden on the health budget. As every medical expert and economist knows, the worst think you can do to increase health care costs is stop people seeking preventative primary care. You save a few pennies on GP visits, and lose five times as much on expensive hospital treatment later.

[stui magpie]

She had 3 years and a compliant senate, as long as she put stuff up that the Greens liked or didn't fundamentally disagree with. That's how she managed to get so much legislation through, but nothing for the economy funny enough.

Yes she had distractions but that's a piss poor excuse really when she was able to focus on so many other things.

Maybe the real question is, was it her failing or was it the greens showing their economic credentials?

[David]

^ Huh? The carbon and mining taxes were good economic policy (at least before they got watered down, against the will of the Greens). Just because Abbott and Hockey say otherwise doesn't make it so.