The certainty of better days we grew up with under Queen Elizabeth is over
What Peter Martin has been up to
Hello!
Thank you for subscribing (although it has been do long since my last newsletter (on a different platform) you might have forgotten you had).
I am going to try to produce these “what has Peter Martin been up to” newsletters more often, although never more than once a week. I promise.
If you are outside Australia, this mightn’t make complete thanks. Usually I won’t bother to convert Australian words such as #ausecon, NewStart and superannuation.
In my day job as Business+Economy Editor for The Conversation AU I commission and edit pieces for Australians with a reading age of 16. Rarely are they longer than 800 words. So expect simple. I also write a weekly column.
Let’s get started, with the most-recent most-important things.
Goodbye 1870-2010
I wrote this week that while much has been written about how, with the passing of the Queen, we have lost one of our last continuing links to the second world war, we have also lost something even more profound – the link she gave us back to when the kind of world we know began.
Two days before she died, Queen Elizabeth appointed a new prime minister of Britain, Liz Truss, who was born in 1975. Seven decades earlier, she ascended to the role alongside Prime Minister Winston Churchill, who was born in 1874.
And the 1870s matter. Bradford DeLong’s just-released book Slouching Towards Utopia makes the point that the 1870s (not long ago) was when the continual growth in living standards we think is normal began.
In the words of Billy Joel, we have come to think of it as natural that “every child had a pretty good shot to get at least as far as their old man got”.
But DeLong thinks the “Long 20th Century” that began in 1870 is over. He identifies the end as 2010, when living standards stopped reliably growing. (In earlier drafts of his book he dates the end as 2016).
The point of my column, apart from pointing to DeLong’s book (something I have wanted to do for a long time and did briefly in November last year) is that things can change, and it is very hard to see the change at the turning point.
John Stuart Mill’s commentary at the time that human ingenuity merely “enabled a greater population to live the same life of drudgery” turned out to be gloriously wrong.
This time? Decades on it will seem like it was obvious.
The certainty of ever-growing living standards we grew up with under Queen Elizabeth is at an end
Lately, in The Conversation, I’ve been running a running a few pieces busting myths.
Rent crisis? Average rents are increasing less than you might think
That $243 billion ‘saving’ from axing the Stage 3 tax cut is more mirage than reality
What happened when we gave unemployed Australians early access to their super? We’ve just found out
In my own writing, I have
tried to pick apart “productivity” a word mentioned more often in the issues paper prepared for the Jobs and Skills Summit than either ”jobs” or “skills”
The extraordinary success of the productivity gains we made in manufacturing and agriculture have made them less important as employers. Now most of us (almost 90%) work in services. And services are hard to automate.
Worse still, it’s hard to tell what the output of many services is. There’s a reason the debate about the government’s commitment to defence is couched in terms of spending. It’s hard to tell what we get.
Labor came to office promising every Australian living in aged care would receive an average of 215 minutes of care per day. When that happens, it will be a drag on measured productivity – on GDP per hour worked. Yet it will hugely improve the lives of Australians.
described the bizarre nature of Australia’s system of indexing some benefits with inflation and others with wages (on the at-present mistaken assumption that one grows faster than the other)
Just for now, the collapse in wages growth and the resurgence in inflation has frustrated what seems to have been a deliberate decision to allow JobSeeker to grow more slowly than the pension.
But it ought to be frustrated for good. Whatever the arguments for setting JobSeeker lower than the pension (the Centre for Independent Studies says pensions are for those out of work for “legitimate reasons”) there’s no defensible argument for a system that allows one to keep falling relative to the other.
And turned the idea of idea of labour market hysteresis on its head. We know that when unemployment shoots up, it stays up a long time, not quickly returning to its old state because people who lose their jobs become unemployable - they form a new floor under the unemployment rate.
What’s less well known, and is only now becoming apparent, is that it can work in reverse. If employers are forced to hire people they wouldn’t have in other circumstances, because they’ve run out of every other conceivable option, those people become employable.
They either develop the right skills, or employers discover they are not so bad after all. The floor under the unemployment rate drops.
We haven’t seen this before – at least, not in the past half century – because employers have never before been given no other option but to employ people they would really rather not.
People are regarded as long-term unemployed (and harder to employ) if they’ve been out of work for one year or more. In the year to June 2022, the number of long-term unemployed fell from 218,200 to 130,100.
That fall is far more important than the fall in the total number of unemployed from 682,400 to 493,900.
It means those Australians are more likely to be employed than shunned for years to come. It means future employments rates are more likely to start with a “2”, a “3” or a “4” than a “5”.
It means we’ve bought ourselves long-lasting lower unemployment, whatever happens from here on.
Ross Garnaut was kind enough to mention this insight in his excellent address to the Jobs Summit.