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Tag Archives: economic policy

End oil imports

One of the consequences of the pandemic has been the realization that reliance on the ready availability of imported goods may be a problem in a crisis. This isn’t new, particularly in relation to oil, which plays an outsized role in geopolitics. The supposed need to protect sea lanes, and particularly oil supplies against disruption has been a major part of the rationale for naval defence spending. And we have repeatedly been criticised for failing to maintain stocks of refined...

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Would freezing minimum wages help recovery ?

I’ve just responded to a poll of economists, run by The Conversation and The Economic Society of Australia on this question. Here’s my response No There has been extensive debate on the effects of minimum wages on labor demand. Over the last 25 years, the general conclusion has been that these effects are relatively small.However, these questions are irrelevant in the current context. The pace of economic recovery will be determined entirely by macroeconomic conditions, including...

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Universities and the pandemic

As I foreshadowed a while ago, the financial effects of the pandemic have been reflected in an agreement for university staff to take temporary pay cuts in order to save the jobs of casual workers. Lots of people are unhappy about this, but it’s hard to see an alternative, and the deal seems to be the best that can be reached, with the requirement that senior management take the biggest cuts and (I think) the cuts for academic staff being scaled to protect the lowest paid. The...

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Supporting a Livable Income Guarantee

Some responses I gave to a student journalist asking about universal basic income. There are two main approaches to implementing a universal basic income. One is to introduce a universal payment to everyone in the community, funded by taxation, and gradually increase this to a “livable income”, that is, one sufficient for people to meet their basic needs on a sustainable basis. The second is to focus on those who currently don’t receive a basic income and provide it to them....

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In print today

I’ve got two newspaper articles out today. In the Australian Financial Review, a piece written jointly with Warwick McKibbin and Richard Holden, arguing that the Reserve Bank should dump inflation targeting and switch to targeting the level or growth rate of nominal GDP. Paywalled, but a near-final version is over the fold. And, in Inside Story, a piece looking at the kinds of reforms we need once the lockdown phase of the pandemic is over. Rather than trawling over the remnants...

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What Morrison should do next

I was contacted by a Greek language newspaper with questions about the next steps in economic policy. On the assumption that most of my readers don’t read Greek, I’m posting my response here The Morrison government’s economic policy response to the pandemic so far has been broadly appropriate, putting practicality ahead of ideology in general. There are numerous anomalies arising from the haste with which the program was developed and from some residual ideological constraints...

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Dump inflation targeting

Yesterday, I pointed out that the first instalment of the rescue package could be financed by cancelling the Stage 3 income tax cuts legislated for 2024-25. Today, the same suggestion is on the front page of the SMH. Morrison is apparently resisting the idea, but that can’t last long. Trying to keep one day ahead, I’ve turned my mind to how the Reserve Bank should operate during and after the crisis. The first step is to abandon inflation targeting once and for all. The policy of...

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Renationalisation in Australia

I got a message from a student asking about examples of renationalisation in Australia. Here’s my response There hasn’t been much explicit renationalisation of business enterprises in Australia. What we have seen is (a) Public private partnerships (PPPs) being wound up and returned to the public sector. As well as Port Macquarie, some others are mentioned herehttps://grattan.edu.au/news/public-private-hospital-partnerships-are-risky-business/and here on private...

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Job vouchers: a step towards a Jobs Guarantee

It seems quite likely that we will soon see the introduction of a wage subsidy along the lines of that announced by Boris Johnson (himself now testing positive!) in the UK. That is, a payment to employers equal to 70 or 80 per cent of workers’ pre-crisis wages, in return for keeping them on for some period. That would be better than doing nothing beyond what has already been announced, but I have two big problems with it. First, it is paid to companies rather than workers. The ACTU...

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