All in one chart
I was recently debating, in a different forum, the economic decline of Australia.
I brought up the per-capital recession, largest drop in disposable income in the developed world, and the highest proportion of government spending outside war and COVID.
I was told that things aren’t that bad and it was much worse, economically, during the time of federation.
Appart from the abject idiocy of such a statement, so what.
Yes. Australia is one of the most prosperous nations in the world. Right now.
You know what, Nauru was for a time the wealthiest nation on the planet - per capital.
So what.
The issue is where Australia is headed. And the light at the end of the tunnel is an oncoming train.
Paul Krugman is a great economist but an idiot social commentator. Perhaps why he is no longer at the NY Times. But he once said:
“Productivity isn't everything, but, in the long run, it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.”
And so if you would like to better understand why Australia’s economy is going to the dogs, just look at a single chart produced recently in the AFR:
What has caused this decline? Look at the timing. It starts around 2006, when the descicated coconut started preparing for his reelection campaign with a spendathon that was delivered by Kevin Rudd. Which delivered Phase I of labour market re-regulation and increased spending and taxing. Then Phase II, around 2022, when good old Albo delivered the next batch of labour market re-regulation and increased spending and taxing.
Sometimes correlation is causation.
The solution to productivity is not more regulation and taxation and government spending.
It is less of both.
Another reason is government workers have to keep a record of every single thing they do. The second half of the workday is spent recording what they did in the first half....in case someone asks. The rest of us work in the morning for ourselves and then afternoons are spent doing work for the tax office. When will someone do a study on how many forms Australians fill out compared to rest of world, I bet we would be the gold medalist and daylight second.
Productivity is mismeasured in any case. When a woman enters the paid workforce GDP per capita now rises - but usually at the cost of fewer Australian workers in the future.