I’m sorry I’m writing on this today. It’s boring and it adds nothing but Ross Gittins returns from holiday today to reiterate, with renewed freshness, that our only economic challenge is whining:
I can’t make myself sleep on the long plane trip to or from Europe. These days I just keep myself distracted by the plane’s entertainment system. Returning at the weekend from a walking holiday in England, I really enjoyed rewatching the Jack Nicholson movie As Good As It Gets, with its theme tune, an American-sanitised version of Always Look on the Bright Side of Life.
In Australia we’re usually a land of bright-siders, though this hardly makes us unique. It’s actually this optimism about the future that keeps our economy moving onwards and upwards.
At present, however, we’re looking on the dark side. Until recently it was fashionable to complain that, whoever was benefiting from the resources boom, it wasn’t you or me. These days, the worry is that with the initial stages of the resources boom passing its peak, it’s hard to know where the growth and the jobs will be coming from.
Did you detect the logical inconsistency between those two worries? They can’t both be true. If most of us gained nothing from the boom, most of us have little reason to mourn its departure. All the two positions have in common is their pessimism.
Yet despite all the political and economic commentary to which we’re exposed, it took a speech last week from Reserve Bank governor Glenn Stevens to point out the contradiction.
The truth is you and I got plenty of benefit from the resources boom. The reason so few of us realise it is that most of those benefits were indirect. We often have trouble joining the economic dots.
One of the most easily detected indirect benefits of the boom is the high dollar which, among other things, has made it so much cheaper for us to take overseas holidays (and, until recently, left the world crawling with Aussie tourists).
Now, with the resources boom receding and the American economy finally picking up, the dollar is coming down again, allowing those who never acknowledged the high dollar’s benefit to complain about its departure.
This last line tells you all you need to know about this simplistic narrative. No evidence. No examples. No argument. Just a big, fat straw man.
So, let’s take a look at confidence shall we. Here’s the long term chart of Westpac Consumer Confidence:
The long term average is 100. We are currently at 102.2. So for starters we’re not especially lacking in confidence in reference to the long term. Next, let’s ask ourselves, what is confidence? Is it strolling through life with a beanie pulled over your eyes and the presumption that everything will always be hunky dory? Of course not. That’s ignorance (or recklessness).
Rather, confidence is looking around you, surveying the landscape, understanding the opportunities and risks and having done so, having done your due diligence, concluding reasonably that you should proceed down your chosen course.
As Australians survey their household debt levels at 150% disposable income and richly valued assets prices, surrounded by a world of potholes where high debt and asset value countries used to be, is it really unexpected or untoward that they should respond with historically average levels of confidence?
Of course not. It’s a damn fine effort.
