Domain probes the question today with Shane Oliver:
“They just got it wrong,” he said.
And the Kouk:
“The emphasis has been on the unemployment rate but once you look at under-employment you see households are struggling,” he said.
“Around the world, in the UK, the US, across the Tasman in New Zealand, these are countries with much lower unemployment rates and they are still having trouble getting wages and inflation up. Australia is part of that phenomena.
“Factor in the fall in house prices and that wealth effect, which the Reserve was denying was a factor for so long, and you get to this point.”
Failing to appreciated the structural change in the labour market was a big part of it. In itself the question is worthy of a long thesis but it boils down roughly to this:
- denial about the impact of LNP policy hostile to workers;
- denial about the output gap as peak debt limited the consumer;
- denial about the role of part time “bullshit jobs” in the services economy;
- denial about a housing crash being manageable;
- denial about the heavy impact of the immigration supply side shock, and
- denial about how bad Australian resource policy has become.
That, in turn, points to the real problem. The RBA relied upon models of the economy for its forecasts rather than reading the economy changing before its closed eyes. It only needed to pay attention to MB to see. It was bloody obvious.
But the Bank preferred to rely upon Martin, its artificially stupid dynamic, stochastic equilibrium robot moron instead. All Martin ever does is draw a line back to trend from any deviation. He should be boxed as an arcade amusement in a circus sideshow doing 20 cent fortune telling.
Ultimately, that leads one further corollary, the most important of all. What kind of public service culture unquestioningly relies upon an artificial imbecile instead of history, intellect, empirical observation and creative outreach?
One that is closed, group thinking, defensive, arrogant, isolated, narcissistic and totally out of touch with reality.
Good people, I present to you the Reserve Bank of Australia in all of its ignominy.