A lot of the debate about inflation targeting has been obscured by the Libs’ petrol bowser politics (and as well as it being dumb potential policy, I think it’s been dumb politics for Labor to start playing this game – however tentatively – as Mr Denmore said in comments, there’s a very simple political answer to the bowser tax wars the ALP should be employing). But I still think there’s a valuable point to make about the dissonance between elite discourses about the economy and perceptions about lived experience of the economy. The ALP, in government if not in opposition, has to keep both the policy wonks and the punters happy. And they were trying to with their claims about the budget being anti-inflationary in its fiscal impact and that much of inflation’s causes were from factors quite extraneous to influence by government policy. Even if they shot themselves in the foot by joining Brendan Nelson at the petrol pump. And I think it’s a direct result of an own goal from Kevin Rudd, when he said that he’d done “everything… possible” to address the price of petrol, and this was instantly characterised as being “complacency”, being “out of touch” and so on in the hyper-media cycle we all now deal with, including very clever Prime Ministers.
But what I wanted to raise was a thought inspired by this guest post at John Quiggin’s blog, where his guest poster Bruce Bradbury examines the much higher rate of inflation in staples rather than consumer durables:
This gap perhaps explains some of the divergence between the expressed concerns of consumers and the complacency of economists. Though consumers know that their next TV will be much better than their last one for much the same price, they are still struggling to meet their weekly supermarket and petrol station bills.
I wonder if the different perceptions of well paid policy wonks, pols and media types compared to average or low income folks that were in play last year are played out in a similar way in this year’s debate. That is – they just don’t get it because they make so much more dosh. In the case of economists, I started thinking about whether I could recall any economist in the public debate – at all – who’s female. I can’t. Not one. As far as I know, none of the economists who comment in the papers are women. I wonder if any of them do the grocery shopping? Serious question. For a lot of professional blokes, that’s women’s work. And it must influence perceptions.
And – when you think about it – the entire absence of women from the ranks of high profile economists must tell us something else!
Are you trying to stereotype yourself? Because you’re succeeding.
The root of the problem is that both sides are too well briefed and advised to get away with shamming it up like this. Both sides know that Australia’s government is a tiny speck of foam on the boiling seas of the global economy. Nothing our government can do, short of discovering a cheap way of turning houseflys into oil, will change the price at the bowser in the long run.
But they continue to pretend they can divert the course of a global market. And the media egg them on. It’s this kind of utterly cynical, utterly transparent bullshit — the determination to use the population’s misunderstanding as a weapon against them — that really steams me.
I genuinely am surprised that there are no female economists out there in the public arena, Jacques, now that I’ve had a think about it. How many female economists are there at all? I’m sorry you don’t agree that might have some (note qualifier) impact on the economist’s view of the world. Of course, whenever a woman raises a gender issue, she’s stereotyping herself, isn’t she? I’m afraid I disagree!
I agree with the rest of what you’re saying though!
Re female economists: This is something female academic economists ask ourselves a lot. See, for instance, the paper linked at:
http://www.marginalrevolution.com/marginalrevolution/2008/05/new-issue-of-ec.html
On why so few senior female economists, see Barbara Spencer’s write up of summer employment in Treasury in the early 1970s, the particularly nasty stuff in the sciences, and her subsequent experiences in Canada and the US:
http://pacific.commerce.ubc.ca/spencer/CWENtlk.pdf
Andrew Leigh recently had some comments about the numbers of women in his area at ANU, but I’ll stop linking now.
There is apparently a tendency for female economists to go more into government work than into academia or the private sector. This could account for lower visibility of women in the media. Back in the early 1990s, I know hires at Treasury were at most 1/3 women (they did hire 50-50 from my honours class, though, which was itself half female, so it could be that other econ departments were much less female-heavy, perhaps). That said, Treasury currently has about 13 women in exec positions, out of over 60. So perhaps there are problems retaining women?
http://www.treasury.gov.au/documents/210/PDF/Tsy_Org_Chart_210408.pdf
On whether it affects the analysis: who knows? Probably a bit. But I don’t think as much as you might expect.
On whether this is an issue re the interpretation of CPI: wouldn’t think so. Visibility of price changes vs actual price changes is something that pretty much all economists are aware of (eg petrol price inflation vs overall inflation, which is certainly not gender specific). We’re also aware of research that shows people notice price rises more than they notice price falls, which may have a lot to do with the perception gap. Some of the commenters at JQ’s link to ABS data on whether inflation has been higher for the basket of goods purchased by some low income families than the average (which CPI is based on), which finds fairly small differences. So doesn’t look like it’s a problem where the data are missing showing something really important that’s going on that economists are missing coz they’ve got someone else to do the shopping for them.
For a lot of professional blokes, that’s women’s work. And it must influence perceptions.
rofl. I suspect IHBT.
cam
As it happens, I usually buy the groceries, but I think your general point is spot-on.
I can’t recall the name of the prominent American academic economist who underwent gender re-assignment surgery, and perhaps John or others may, but I recall reading that she believed that gender was an issue in forming the rhetoric and assumptions of conventional economics.
Mark: Deirdre McCloskey.
Thanks, christine.
Hello, I’m Kymbos and I am an economist. I’ve been an economist for about 8 years now. I still remember that first macro class…
Anyway, I moved from the public service to the consulting world about 3 years ago. There was not a single female consultant in the office of 10. That’s changed slightly now, but economics still seems a very male world. Unfortunately, I have nothing to add as to why.
I’d be interested to know if professional associations and university departments/schools/faculties are aware of this seeming gender imbalance – many others (ie engineering, IT) where a large imbalance exists are and active steps are taken to make the profession in question more inclusive – is this the case with respect to economics? If not, why not in people’s opinion?
It’s not so much that the economists themselves are male; it’s more the way the economic debate is conducted. The macro, top-down, pulling the policy levers view, production view of economics is more “male” than the micro, bottom-up, feeling the policy effects, consumption view.
Much of the most interesting work in economics these days is coming from the bottom-up, micro school. It’s just that the media debate feeds off the debates between macro economists – the big swinging d**ks in Treasury, the Reserve Bank and the financial markets.
In my current year of economics its about a 60/40 male female ratio, the honours year is about a 50/50 split. However theres only one female in the economics staff that I can think off, perhaps this will change as more female graduates come through.
Kymbos, are you a female economist?
Which sort of leads me to a not very related side point … I have been interested in my reaction when I become aware of blog commentators gender. A sort of “Oh, **** is a (wo)man”. I’m not sure if I am assuming every commentator is a bloke until told otherwise (as I am male, it might be natural to assume unknown other is the same as me?) or if they have some sort of neuter status. If I was being honest, it would probably be the former rather than the latter, I’ll try and pay attention when it happens again.
Why is everyone staring .. oh .. perhaps I’ll just slink out and hope no-one notices …
Aidan – no, I’m a bloke – perpetuating the imbalance.
Household groceries are a much smaller proportion of a rich person’s budget though, so although they may experience the same percentage rise it doesn’t bite nearly as much.
In the case of engineering/IT its a problem of the female intake into universities being very low which I don’t believe is the case with economics. With IT I think there is a growing realisation that they need programs to encourage girls in primary school and early high school.
I went through uni over ten years ago, and the averages were about the same as Stuart’s. I just assumed all the women ended up in miscellaneous ‘commerce’ jobs.
In a lot of professions, 50/50 has been the norm at undergraduate level for a very long time – two decades in law for instance. But there is still a big imbalance the higher up the food chain either educationally or professionally you go, and a lot of resistance to attempts to ameliorate that. In other words, experience demonstrates you have to do more than “just wait”. I’m surprised that economists as a profession haven’t collected any statistics on where the missing women go, and what blocks their advancement. Most everyone else does!
“any others (ie engineering, IT) where a large imbalance exists are and active steps are taken to make the profession in question more inclusive”
Its funny that people always talk about this. People should check the statistics and then see how important it is — The ratio of females to males in Australian universities is almost 3:2 (it is for those that graduate — males drop out more), and females outnumber males in every major discipline area excluding engineering (where they are catching up) and IT (where they arn’t — but a large part of that is due to OS students where the gender skew is toward males). Yet no-one cares less about all those areas females outnumber males (often massively so). The problem with this is that if you want to end up with a large amount of social problems (think poorly educated males, mental health and crime), then worrying solely about areas where females are the minority seems like a good way to do it.
I know a female econometrician. Does that count?
The OP questioned whether female economists might see the world differently to male economists. My observations of a number of female policy economists in the agency I worked in for a number of years was they we on exactly the same “mission from god” as were the male economists! (And I say that as someone whose undergraduate degree was in economics)
Isn’t Helen Hughes an economist, as well as a right wing ding bat?
The big problem, which is probably more a class rhan a gender issue, IMO, is the gap between the strictures demanded by economists/their science fiction predictions etc and the lived reality of the day to day loves of the hoi-polloi/working class/ etc. (I refuse to use that dreadful exclusionary term “working families”, which I now predict will eventually come back to bite K. Rudd on the bum). The facr is with soaring food prices/rents/petrol prices/interest rates the ordinary person looks at these so wise economists pontificating in every strand of media and says to themselves, “Weell, that’s fine, mate. But in the first polacr I don’t quite get what you’re on about, nor do I think you really know, and, in any case it doiesn’t matter, because you’re earning heaps more money than me and your bull-sh*t is stuffing up my life”. Speaking for myself of course. And I do have a grasp of basic economic theory. But that’s the problem isn’t it? Its all theory.
But then I remind myself, The world dide okay without these blokes before Adam Smith. So do we really need them around confusing our pollies?
According to Andrew Leigh 43% of professors of economics in the ANU RSS program are women:
http://andrewleigh.com/?p=1903
ok – 3 out of 7 doesn’t sound as good – but as has been noted they are an impressive group.
Conrad at 19:
I’m sitting in the undergraduate computer science labs at ANU right now. There are about twelve people here right now, one of whom is a male international student, one of whom is female. The other ten are middle-class white males. This is not atypical in undergraduate IT at ANU (the situation is quite different for postgrads).
Fmark: As I pointed out, IT and engineering are the two disciplines where males outnumber females. Try every other discipline and then report on what you find. Even better, try universities that arn’t in Canberra, and you will see greater numbers of OS students also. Even more simply, just look at the statistics which have been already done (I’ll try and post these if I remember where they are — they may be on the DEST cite if I remember correctly)
Fmark,
Is my gum still under the desk there? Plus, there’s probably a printout of an Occam program I could never get to work sitting next to the line printer that I never picked up and may well still be running on one of the Vaxen if they bothered to keep their pitiful cluster around for posterity. You can put it in the bin now and kill that process, I don’t need it.
I think the inflation discussion in the developed economies is completely wrong, and its wrong because the people driving it don’t notice the cost of food. I think economists don’t know what they’re doing with this topic, or with the issue of comparative prices between countries where they are also stupidly wrong for the same reasons. The “baskets of goods” these surveys are based on must be wrong.
It may just be me, but whilst I do see plenty of blokes at my local ALDI (most with their wives, some not) very few of them look like they are economists doing their weekly shopping, I have to say.
Just what does an economist look like?
Besides maybe they do their grocery shopping online!
“But they continue to pretend they can divert the course of a global market. And the media egg them on. It’s this kind of utterly cynical, utterly transparent bullshit — the determination to use the population’s misunderstanding as a weapon against them — that really steams me.”
Exactly. But the question is, how can anyone ‘cut through’ the hyper unreality of what passes for economic debate? It is a rhetorical question of course. The result is policies that continue to tilt the economic field away from people whose sole source of disposable income is what they earn from wages and salaries.
Calculations I am doing at the moment for work activity have just reinforced the unbelievable gap between what people actually earn (even in industries not reliant on the Award safety net), and what the people who make and influence policy, earn. It is not just the base numbers. It is the intensity of work effort (measured in additional hours worked) that is required just to keep in the same relative place. I just wish the moonbats who blather about ‘prosperity’ were required to work the 12 hours a day (including shift penalties of course, we wouldn’t take that away from them!), rent/pay mortgage on a house, drive the average 15ks per day to and from work, and maintain a couple of kids to make a living which is AWE.
Perhaps we might hear a little less BS about how ‘well off’ everybody is, and a bit more attention might be paid to the unbeleivably long hours that have to be spent away from home, earning a living, just to maintain the ‘glow’ that comes from being ‘the best off you have ever been’. Bah humbug.
Well, economists are a scruffy lot but you shouldn’t draw conclusions from appearances.
No, sg and Chris (a different one). The ABS pulls these representative baskets of goods from the periodic Household Expenditure Survey (HES) – a very expensive survey whose main purpose is precisely to calculate these baskets correctly.
Its no good arguing “well they must be wrong” without specifying just why they’re wrong. That the results of the survey don’t accord with your political preferences is not enough to discredit the ABS professionals, who have spent many years thinking hard about these questions.
Quite rightv Derrida Derider, but of course these expenditure surveys are nationally averaged, are they not?
So if in my household FOOD or PETROL makes up a much higher, or indeed much lower, proportion of weekly expenses, then isn’t it possible I won’t really notice the price rises that the media are talking about?
Or as someone as already said, if one is very highly paid, the food AND petrol are likely to make up only a low % of one’s weekly expenses (because one is rolling in ‘discretionary income’ after routine weekly chores like eating and driving have been paid for). What’s $50 here or there?
Some folk stopped buying bananas for months after that cyclone hit the Quinceland Bananas. Others didn’t notice. It’s an income thing. It really is.
I’m not an economist (obviously). In our setup the working husband and the working wife hop for groceries about equally. The husband has learnt where all the necessaries are shelved in the supermarket. He quite enjoys the visit. Still doesn’t remember to take a heap of ‘green bags’ in, but.
*shop* for groceries
To Chris @29
Aren’t they all WASPs in suits and glasses
Maybe we need to follow Malaysia’s example:
“…the two most important regulators in financial services in Malaysia are also women — Tan Sri Dr Zeti Akhtar Aziz is the globally respected Governor of Bank Negara Malaysia and Dato Zarinah Anwar is the chairperson of the Securities Commission of Malaysia, the securities regulator. Dr Zeti is
often regarded as the most powerful woman in international finance, widely respected and who won the FT’s ‘Central Banker of the Year’ Award a few
years ago.” (Arab News)
sg, Chris (a different one) and Ambigulous: yes, they’re averages. How else do you manage to do a CPI? But as mentioned earlier, the results don’t appear to be that different (at least not now) if you take the average consumption basket of pensioners, or government transfer recipients, or just employees. So it’s not that economists (or statisticians) just completely ignore the issue of income in determining the basket on which to base the CPI. And it has been very comprehensively discussed in the case of international comparisons of the effects of recent staples price increases, to the extent that even The Daily Show did a bit on it. Many many academic econ bloggers have discussed it.
DD’s question remains: precisely how are these calculations wrong? The issue of regularity of purchases, which sparked this post, is one possibility, but even that suggests a gap between perception (with consumption bundle adjusted for regularity of purchase) and what’s actually happening (based on average consumption bundles over a longer period of time).
The banana example adds another layer of complexity – the CPI gives you cost of living changes with no substitution away from more expensive goods (it can’t, or it can’t do its job properly). But that means that if there’s a lot of substitution, actual costs don’t increase as much as it appears from the CPI. (Naturally, this is easier in the case where banana prices increase but other fruit prices don’t than in the case where all food prices are increasing rapidly.)
But economists have actually thought about that, you know. A lot. Even male ones.
More broadly on the female economists question, a few points. One: no woman has ever got the ‘Nobel’ in econ. Two: for the first time last year, a woman (Susan Athey) won the John Bates Clark Medal for best young economist. Three: for Mark, lots of info on and analysis of women in economics in the US at http://www.cswep.org/annual_reports.htm, which discusses leaky pipeline issues.
I pretty much agree with Ambigulous.
Living in a resource town, I am surrounded by relatively high income earners and not one of them has grizzled to me about the price of groceries. The biggest whinge has been how much more a six pack of black rats costs now. Big deal. If you earn the big coin, rising food costs will scarely register as significant with you.
So yes they are aware of the spiralling price of groceries but they don’t give a rat’s (much) because it doesn’t affect them personally.
christine,
yes they’re averages over households, and yes they must be, and yes they are calculated correctly; and yes the best way is to hold the “basket of goods” steady over a period, otherwise comparisons are impossible; and yes the basket must change (slowly) to reflect changes in consumption [e.g. no longer includes typewriter ribbon or oil lamps or other superseded products]. Yes, consumers substitute: sometimes from week to week. Some consumers are more picky about price than others.
I’ve heard of the different ways the CPI can be calculated (Laspeyres? etc.] But that wasn’t my main point. My point was that someone for whom food and petrol (just examples here) cost a RELATIVELY LOW fraction of their weekly expenditure, is LESS LIKELY to notice a sudden (or indeed a slow, long-term) increase in that sub-basket of the CPI basket. I think that’s likely to be the case, because if the weekly supermarket visit costs an extra $40, that might be around the size of a “discretionary” purchase of 2 bottles of wine,
OR it might be such a low fraction of the person’s total “discretionary” spending [non-essentials like restaurant bills, holidays, random recreation, dabbling in shares, etc] that it simply WON’T be noticed. That may be because the discretionary spending is “lumpy” – it bounces around to a large degree, from week to week. Not just because boys are careless with money and girls are careful (though that may be true – on average – also).
IMIO the “noticing price rises” is about two things:
i) how different from a mean value, many persons’ spending is,
and
ii) what fraction of one’s income is taken up by the ‘goods du jour’ being discussed in the press [other recent examples include "soaring rents" for renters, "soaring interest rates" for mortgagees, "rising child care costs" for those using child care, etc etc]
I don’t believe economists have been negligent or ignorant. I do believe there’s a good deal of interesting texture in the particularities of household and individual spending that simple averages can only hint at. Those who wish to ameliorate poverty, may be interested. I dunno. Some journalists cover these topics, others seem oblivious or uninterested.
To any passing economist: please make allowances if I’ve used terminology incorrectly above. Corrections welcome.
BTW (but for another thread) almost the same problem = “mean versus individual variations” bedevils some sciences, such as ecology, hydrology, etc I think. Statisticians can deal with “extreme events”; mean [average] values can be very misleading; temporal and spatial VARIABILITY is sometimes the main effect!!, rather than a little quibble to tack onto a story where the mean is the leading indicator.
In a separate context of theorising, what did Karl Marx call it? “uneven development”? My guess is that development is always uneven: get bloody used to it.
IMIO = In My Ignorant Opinion
to test the theory of whether things are getting tougher out there, try this simple experiment. Warning, may cause some pain in the stress centres.
Have your partner unexpectedly break his ankle and have no income for six weeks. Attempt to live on just over half your normal income. Notice the effect of mortgage, electricity, rates,phone, gas, house insurance, car insurance, health insurance on your bank balance. Then try to find some money for food. Also try to fill your car – side experiment, how long can you go with that little light on? Hey presto, an emerging hypothesis.
All the above have been creeping up month by month, impacting very slowly on discretionary income which is lumpy no doubt and can be trimmed without much pain. A big drop in income brings the stark realisation that all that money you thought you had is an illusion, the discretion is now all gone, the last thing to go is the essentials like food and essential travel costs. Things are bad, do we need an expert to confirm it, they are going to get worse, basically the experts will only get the figures when its already here.
Absolutely, people on low incomes will notice food price rises more than people on high incomes. A high income person would I suspect be less likely to notice general price inflation too, I’d think, on the same grounds.
But this started with the question of why policy makers/economists are not particularly worried about general price inflation at the moment, not why some random high income person doesn’t notice it. This was suggested to be because economists are male and high income, so they don’t actually see any prices themselves, AND because the statistics that they look at in their daily jobs are not telling the true story. If the statistics are not wrong and the economists are looking at the statistics (I can assure you they are), then how does it matter for policy whether they notice prices themselves when they are shopping?
And again, the calculations of price inflation for the basket of goods purchased by the ‘average’ old age pensioner household and the ‘average’ government transfer recipient household don’t appear to be very different from that for the average of all households. So there’s not much evidence that signals on inflation coming from the average CPI are wrong for even very low income households. This doesn’t mean that it’s not affecting some households, or that there aren’t any households going through rough times for whom any price increases are a big problem (sorry, Maggie, sounds very nasty; I hope your partner gets better soon). This is why, eg, pension payments are indexed to the CPI. But there isn’t much evidence this indexing is wrong (due to wrong basket issues), or that macro policies are wrong because they’re not based on correct estimates of average price inflation rates, much less that policy is wrong because the economists involved don’t know what’s really happening to prices.
christine, Derida D, I am aware that these indices are based on surveys, but I’m still pretty sure that they must be missing something somewhere. I think it’s in the balance of purchases, i.e. they include too many big ticket items in their representative basket, so that they produce an index which acts as if one were buying a TV every week, or some other kind of manufactured good whose price has been plummeting. There’s a lot of talk on US blogs about how the US version of these stats doesn’t include oil and food (the core inflation rate). I think there is something wrong with these indices. I don’t think it’s the case, for example, that they cold call houses to ask what they bought and then turn that into the index – they carefully choose a shopping basket and then ask people what they spent on those items. Maybe these surveys are heavily biassed towards families which answer the landline on a Wednesday, i.e. people who use their car to do infrequent, big shops at supercentres. There has to be a bias in there, and it was all that “lived economy” stuff which got Rudd over the line, right?
An alternative explanation is that the CPI (similarly to an odds ratio) is a number which people just can’t relate to reality. So that when one hears “3.7%” it sounds like it has to be low, but the actual real effect of a 3.7% inflation rate for a normal person is actually really noticeable.
As for international comparisons, any survey which turns up Tokyo as more expensive than Sydney is just wrong. The methodology of these things seems okay, but there just has to be something wrong about them. People go to Tokyo with Nova, for example, they travel to Asia regularly and drink out regularly, and come home with savings, all on a $35000 a year job – but according to these surveys the city they lived in is the most expensive city in the world. There’s something wrong with these “representative baskets” and price comparisons more generally. I don’t have to know what that something is to think something’s up.
Sorry to hear that Maggie.
Thanks Christine,
you clearly know your stuff. You wrote: “the ‘average’ government transfer recipient household don’t appear to be very different from that for the average of all households.”
Fine. Now I have one supplementary question, if I may. When the surveys of household expenditure are published, do they publish the sample standard deviations for each category of spending in the basket? e.g. if the average household spends (say) $136 per week on food…, do they cite
$136 +/- $22
so we can see the SPREAD in that figure over the sample;
and for fuel it could be $63 +/- $19,
and for rent it might be $196 +/- $68, etc.
Are you able to advise?
In an earlier post I suggested that MEAN [average] values of expenditure might not be telling us the whole story, even though the means are calculated in a fair and reasonable and technically correct way.
Simple example: Fiona uses public transport (electric trains) + bike; Jimmy is a tradesman in a rural town and does 77,000 km in his car every year: they may be affected quite differently by a 36% increase in fuel costs (though I am aware they’ll both pay more for any food & other goods transported by trucks).
cheers
sg: As DD said, the basket and weights are based on the HES, which surveys around 7000 households and 400 categories of goods and services. They don’t just see who they could find one Wednesday afternoon and ask them what stuff they’d bought in the last couple of days. Details of the survey methodology are available publicly.
If you Google “household expenditure survey, detailed”, you’ll get to an ABS page from which you can download a spreadsheet on the detailed spending of all households on each of the 400 items. Using sg’s example, spending on TVs per week ranges from $2.35 to $5 per week, or 0.6% to 0.3% of total household spending, depending on income quintile. Probably enough to buy a cheap TV every 2 years, or a good TV every 10 years? Food and oil are often excluded from ‘core’ calculations (used for monetary policy targeting purposes only) because their prices go up and down a lot so basing longer-run policy on those measures can be a bit difficult. But policy analysts look at both core and headline rates. If you still think the ABS is making horrible mistakes, all the info you need to prove it is publicly available, and you’ll be doing a public service if you expose them. But my bets are on the ABS. (Issues of international comparisons are much harder, coz what’s the appropriate basket? But there are hundreds of papers/books dealing with this.)
Re Ambigulous/variation: Figure 2 in this publication (
http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/6D5F1DDFF4729C60CA25705900755727/$File/65300_2003-04.pdf) shows the highest vs lowest income quintile spending shares, and there are important differences, in exactly the way you would expect. Relative standard errors on estimates are given in Tables A1 and A2. And I agree, yes, variation matters. Yes, someone who has to drive a lot is hurting at the moment relative to someone who bikes to work. But macro policy or even pensions just can’t be based on each individual’s personal inflation rate. (Also thanks for kind words on knowing my stuff, but macro’s not really my area these days – google is my friend, though.)
Thanks Christine for all the deatil and your well-informed comments.
You wrote:”And I agree, yes, variation matters. Yes, someone who has to drive a lot is hurting at the moment relative to someone who bikes to work. But macro policy or even pensions just can’t be based on each individual’s personal inflation rate.”
Well, my feeling is that some folk are saying, “The official inflation rates [CPI] sdon’t seem to tally with what I notice from week to week!”. It’s a story of “feel my pain!” or “Treasury boffins don’t understand how tough it is for me”. I agree, macro policy has mostly to be based on national or regional totals, means [averages], long-term trends, projections of totals and means, etc. For that reason alone, the macro policies are unlikely to meet ALL of the expectations of an individual or household.
That’s where welfare, charities, social workers, counsellors et al can try to fill in the gaps and help the worst-affected. Understood.
cheerio
Well there are economists and economists. Basically there are 3 groups:
(1) Mouthpieces for corporations and ‘think tanks’ (e.g. paid lobby groups (actually I typed that ‘tjink tanks’ the first time, looking at it it seems more appropriate).
Their message can be easily summarised: Less tax for the rich and corporations, lower wages (and benefits) for everyone else. Monopolies are good, despite the rabbiting on about ‘competition’, I’ve never heard one say anything about yet another takeover/merger/etc, that it ‘wasn’t good for productivity and investment’. They are paid to make those statements. If they don’t they will be fired and someone else will say them.
(2) Academics, who with a very few honourable exceptions live in a fantasy land of arcane, irrelevant theory.
(3) Realists, including some excellent amateurs, ‘eco-physicists’, cognitive psychologists and mavericks from the economic mainstream.
Don’t knock the amateurs, an example is the ‘peak oil’ crowd, largely non-mainstream, who have been more right than anyone else. Or the famous ‘War Nerd’, who has also been right every time about the outcomes of all those little military adventures that Western countries are so enamoured with nowadays. Or, our own Poll Bludger, who was bang on and more accurate than every ‘professional’ in the last election.
Anglo-Saxon Govts, whatever the party, all subscribe to post 1980 neo-liberal economics. The Rudd (did I say Dudd?) one is no different.
The US, UK and Australian Govt’s policies over that time have been designed to:
• Maintain US financial system leadership (with a nod to the UK). Allowing them to extract a ‘rent’ from the rest of the world for basically nothing.
• Reduce wages by legislation, smashing unions, more immigration, etc, plus ‘free trade’ and ‘globalisation’ (which weren’t).
• Aid and maintain monopolies and oligopolies
• Reduce the tax ‘burden’ on rich people and companies, lower rates, more loopholes, etc.
• Reduce research and development and science (subtle sociology here which I’ll go into another time).
In simple terms, try to return to a supposed ‘golden age’ for the elites, the 1920’s in the US, which was in reality quite a different time.
The Rudd Govt record tells you exactly where they want to go:
• Cut withholding taxes on overseas corporations.
• Cut solar incentive (ok it was not that great but it was something, I don’t see any alternatives being offered).
• Spend money on carbon sequestration*.
• Cut innovation grants to small and medium companies. Note: did NOT return the R&D tax allowance to previous levels.
• Cut $36M from the CSIRO.
• Increase immigration, already at a historic 300,000 per year to 330,000, adding that they would also be increasing low skilled migrants. Despite their own Budget forecasting increased unemployment.
• Spend .. HOW MUCH .. on a futile bid at getting the World soccer tournament here .. cynical populism .. nah.
OK, so you tell me where they are going?
Standard neo-liberal stuff. Bit of bone here and their to keep the proles in line, a bit of rhetoric and populism to keep everyone distracted while they get on with their real job economically.
Unfortunately for them, like the US and the UK the economy here is about to fall off a cliff.
Overburdened by debt, with a huge current account deficit ($70B+ a year now and growing), running out of oil (only 60% self sufficient), running out of food (at this rate we will lose food self sufficiency in 6-8 years).
In 3 years:
• Average property values will have dropped by 30%, some areas will be a lot more.
• Unemployment will be 8-10% (officially that is, the real numbers are double that).
• The Ozzie dollar will be a peso (you can’t have debt and deficit numbers like that and maintain a strong currency).
• Inflation will be in the 6-10% region (all imported and there is nothing we can do about it).
• Wages, for the majority of people will be down in real, inflation adjusted, terms. For the lowest end of society they will go down in actual dollar terms. For the unemployed they will be very down.
But don’t worry, we will still build new roads, desalination plants, cut the CSIRO budget (again), give even more tax breaks to the elite, bring in even more migrants and use our tax money (the elite don’t pay tax) to bail out the banks, etc, that start to go under. And the gap from the bottom to the top in wages and wealth will grow more and more.
Protests? Well we have all that lovely ‘national security’ legislation to use.
Now ignore this and go back to rabbiting on about Hansen or whatever.
*( I have an alternative to carbon sequestration. Build a Starship Enterprise. Use its transporters (teleporters for the non-Trekies) to move CO2 from coal power stations to (say) Mars.
Now I admit there are a few technical issues to overcome. We have to invent mass volume teleporters (we can move a few atoms at the moment though), we have to mass produce anti-matter (just a scaling up issue from a few atoms to kilotons of the stuff), we have to build a million ton Starship in Earth Orbit.
Now these are real problems, but trust me, they are insignificant to the issue of carbon sequestration, in both cost and technical difficulty. And this solution does have the advantage that, albeit difficult, it actually has a higher probability of succeeding.