This post began Tuesday. I ended up holding it back because so much was happening. Since this post is in part a way of ordering my own thoughts and covers many topics, I am using headings.
Mental Health Numbers Overstated
Psychiatry professor Jon Jureidini argues that popular mental health campaigns are misleading the public into thinking that serious mental illness is more widespread than it actually is. I am sure that he is right and it’s not the only case. It all leads to some very distorted policy making, as well as making people obsessive and unhappy. Current economic reporting in this country is a case in point.
Oil, oil, oil! The collapse in global oil prices is having all sorts of ripple effects. Saudi Arabia and OPEC seem to be doing what the iron ore majors have been trying, expanding production to drive out high cost producers. Countries such as Russia and Venezuela who have been using oil to fund social or military adventures are in a degree of strife.
Commentators are focusing on the positives in the oil price move. Lower oil prices mean more disposable income for consumers, lower transport costs. I think that’s right, although lower oil prices also add to deflationary pressures in some countries.
The thing to remember with oil, LNG, iron ore and coal is that they are all commodities and behave that way. High prices draw new supply that progressively comes on stream as demand begins to fall, compounding subsequent price falls. We have seen it before. No doubt we will see it again.
There is something almost breathless in the reporting of international economic activity at present. Commentators have barely got one sentence out before events over-run them.
If the commentary and reporting on the international economy is almost breathless, that on domestic economy and politics is more so.
Reserve Bank Governor Glen Steven’s statement on the reasons why the Bank had yet again kept official interest rates on hold had a more negative if still balanced tone. It’s not surprising.
The global economic scene has become more clouded, while the latest national accounts figures show that real Australian incomes are falling. Lower commodity prices are hitting government revenues, while many Australians are beginning to suffer lower real incomes. You can see this from the latest national accounts figures. The economy is still growing if at a low rate, but real incomes are falling.
Over the last two weeks, domestic reporting has become increasingly frenetic. As happened with Senator Ricky Muir’s attempt to open a motor show on the lawns of Parliament House, the press flock swarms, swoops and wheels around every new development.
I find it all quite distracting. It makes it hard to think straight. Get over it, guys. There are significant issues, but we are also dealing with a natural end boom process that Australia has seen before. Each boom is different, but the pattern does repeat.
To my mind, the distinctive feature of this end boom is the absence of major crash. I don’t expect one, just a slow and sometimes painful adjustment.
Strange disconnects in Australian politics
All this means that there are some strange disconnects in Australian politics at the present time.
Down in Canberra, Public Service Minister Eric Abetz is engaged in a bitter dispute over public service pay. The Minister points out that public service pay increases have out stripped the rate of inflation by 14% over the last ten years. He clearly regards that as excessive. I'm not sure that people would agree: If you think about it, that's an annual increase in real wages of a bit over one per cent per annum during a long boom period. That's not a lot and is well below the overall rate of real economic growth during the period.
I think that the comment says more about Minister Abetz than anything else.
Meantime, the Australian Financial Review fulminates about the Australian Government's inability to bring about real reform, largely blaming the cross-benchers in the Senate. The paper is seriously disappointed. It's not just the failure to bring about change, it's a failure to bring about the changes that the paper has been advocating!
Disconnect comes in because the Australian population does not accept the argument as framed. Disconnect comes in because, as in the mental health case, the swirling arguments bring about their own behavioural responses. The paper seems to put its arguments, as does the Government and much of the media, in the context of the need to respond to the now when we are actually dealing with longer term processes and issues.