Inflation
Australia's March quarter inflation figures came in above expectations. Especially worrying was the sticky services and non-tradables inflation, making rate cuts very unlikely this year. To fix inflation we desperately need fiscal policy to start working with monetary policy, rather than against it.
News
Our states should close their foreign offices; the Zuck discusses his AI strategy; why we can't build any more; economists debate AI and productivity; and will China invade Taiwan?
Growth
New Zealand's economy is in trouble, with a double-dip recession and shrinking per capita growth. The decline stems from a lack of productivity reforms and an excessive focus on equity over efficiency. But Australia isn't much better, and we could easily join them if policymakers get complacent.
Budget
In 2023, the IMF ranked Australia #2 in the G20 for budget management, mostly due to good luck and fortuitous timing. The government's "responsible approach" claim is overstated and our fiscal position remains vulnerable to economic shocks.
News
Senator Nick McKim wasted everyone's time for a headline; the replication crisis in social sciences rolls on; why even a little productivity matters; manufacturing can't create enough good jobs; and how crises past can have long lasting effects on people's financial decision-making.
Artificial intelligence
Today's AI, with its many flaws, is more of a force multiplier than revolutionary tech. Australia should avoid rushing to compete with global leaders in the name of AI sovereignty and instead focus on building guardrails, without being so prescriptive as to kill innovative attempts at AI diffusion.
Industrial policy
Australia should resist Albo's "Future Made in Australia", which will make all but a few well-connected businesses and workers worse off. Instead, we should focus on boosting industry productivity through reforms such as eliminating trade barriers and zoning restrictions.
News
How are interest rates affecting Australia; merger reform and misunderstanding competition; India's Modi and policy uncertainty; and does Australia need parliamentary reform?
China
China's economy faces structural issues that Xi's policies can't fix. His "new quality productive forces" strategy will distort the economy and fail to make China rich. To stay ahead, Australia should embrace China's subsidised exports to benefit consumers while ensuring economic flexibility.
Industrial policy
The Albanese government's "new approach" to industrial policy is simply mid-20th century interventionism with a lick of green paint. It is wasting money on uncompetitive industries and creating a reliance on subsidies that are politically difficult to remove, burdening consumers and taxpayers.
News
Inflation should be the highest policy priority; Bayesian reasoning and the Wuhan lab leak; the urgent need for economic reform; how to reduce debt, Jamaica style; and even when wrong, models can be useful.
Monetary policy
Australia risks "sticky" inflation if real wages start to outpace productivity, requiring higher rates longer and job losses as businesses start to adjust on the employment rather than not wage margin. Continued fiscal deficits also fan future inflation risks.