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You want the good news or the bad news first? Not sure?
OK, we'll start with the good news. The unemployment rate fell from 4.1 to 4 per cent in May as almost 40,000 jobs were added to the economy.
Now for the bad news. The unemployment rate fell from 4.1 to 4 per cent in May as almost 40,000 jobs were added to the economy.
And there's more.
In good news, economists predict the unemployment rate will grow by the end of the calendar year. And in bad news, economists predict the unemployment rate will grow by the end of the calendar year.
When the Australian Bureau of Statistics released its May employment figures last week, we were treated to the usual parade of economists offering their two cents worth about what it all meant - and why it was good and bad at the same time.
Good for Australians wanting full-time employment, they said. Bad for Australians in full-time employment labouring under high interest rates and sticky inflation, they also said. Chances of rate relief for borrowers doing the heavy lifting in the inflation fight crept further out towards the distant horizon. By week's end, the dismal science had served up depressingly grey analyses and affirmed our disdain for economists.
At the heart of their reasoning is an acronym, easily confused with an exhausted Pacific phosphate mine and dumping ground for people who come to Australia by boat.
Meet NAIRU, the Non Accelerating Inflation Rate of Unemployment, a theoretical formula supposed to show the percentage people needed to be cast onto the employment scrapheap for the economy to function without inflation.
Deep in the bowels of the Treasury bunker in Canberra, bloodless boffins have for half-a-century calculated the level of unemployment needed to keep inflation at bay. It's hovered around 5 per cent consistently, a crude calculus of misery informing the major decisions of government and the Reserve Bank for decades.
Remember Phil Lowe? The RBA chief copped the loudest flak for his dodgy interest rate prediction but before then, before the pandemic upended everything, he was roasted for keeping rates too high and causing unnecessary unemployment. The unspoken villain in that bungle: NAIRU.
Lowe's successor Michele Bullock affirmed her fondness for NAIRU last year, when she said unemployment would have to rise to 4.5 per cent if inflation was to be tackled.
Others are convinced that, like the phosphate mine, NAIRU has exhausted its utility. Commentators like the venerable Ross Gittins have been saying it and even the government has urged a rethink on its value. NAIRU worked fine when we had a strong union movement with too much bargaining power. In those days, workers in short supply could demand higher pay and fuel wage-price spirals. Keeping a lid on employment kept that impulse in check.
Today, however, circumstances are different. Our labour market is tight. The union movement is a shadow of its former self. And despite the lingering effects of a decade of stagnant wage growth under the Coalition, there's been no wages explosion. Indeed, the March quarter Wages Prices Index suggested whatever wages growth there had been had plateaued.
NAIRU triggered a brief frisson of interest last September, when the government released its budget white paper and suggested Treasury and the Reserve Bank needed to look beyond it. But like all mind-numbing economic acronyms, it quickly vanished from sight, no doubt to the relief of the Treasury boffins who didn't want a rethink of their longstanding assumptions to interrupt their morning tea.
But surely something has to give when we've arrived in a world where we welcome bad news and fear good news, when the economy's thought to be in better state because the Centrelink queues are growing.
HAVE YOUR SAY: Is there something wrong when economists grumble about low unemployment? Will it ever be possible to have full employment and tame inflation at the same time? Do you have any faith in what economists have to say? Email us: echidna@theechidna.com.au
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IN CASE YOU MISSED IT:
- The seat of North Sydney, held by teal independent Kylea Tink, could be abolished by the next federal election under a draft proposal by the Australian Electoral Commission. It is surrounded by the Labor-held seats of Reid and Bennelong, the Liberal-held Bradfield and the independent-held Warringah.
- Young men need positive and diverse role models as a small number of harmful voices dominate conversations online about masculinity, eSafety commissioner Julie Inman Grant says. Social media algorithms target young men and research by the commissioner reveals they both experience and perpetuate online harms, including finding it normal to respond to abuse with abuse in gaming communities.
- Investigators will comb through thousands of videos and images on the phone of a 16-year-old boy accused of stabbing a bishop during a live-streamed sermon. Investigators have identified 52,000 images and 7500 videos on the teen's phone, some of which will require a terrorism evidence notice to access, a court was told on Friday.
THEY SAID IT: "The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics." - Thomas Sowell
YOU SAID IT: Garry doubts grandstanding politicians and expensive and difficult to enforce laws will protect children from social media harm. But, he says, parental control might.
"The hypocrisy," writes Jennifer. "The conservatives are the ones constantly complaining about a 'nanny state'. They complain about education and libraries interfering in the parenting of their children. Now they want the state to control their children's use of technology. Do they not see the logical contradictions in their demands? Rationality and critical thinking is missing here. Apparently, the ability to parent effectively is also missing."
Narelle asks: "What use is a law if it can only be enforced by an army of Duttbots?"
"I've heard that one of the suggestions for verifying a user's age on social media will be to give a bot access to the phone camera and take a screenshot," writes Joanna. "Other than the security risks of allowing anything near a device containing confidential information, this won't work. Because of the shape of her face and the quality of her skin, my daughter who is well into her 30s is regularly required to produce ID as bartenders assume she is under 18."
"Oh how times have changed," writes Sue. "Or is it just the source of angst has changed? Your article reminded me of my mum in the 1940s as a child. If her parents caught her reading books she would be scolded. She should be doing chores, not wasting time with a book! Today, my daughter would be thrilled if she found her children with books in front of their faces, instead of iPads! Parental control is hard work, not always effective but we have to start somewhere."
Another Sue writes: "Parents have responsibilities and this is one of them. I am definitely in favour of the dumb phone for kids as a means of assisting parental control. Being on the ancient side, when my kids first got phones, as much older teenagers, these were the only phones available."
"Unfortunately, Garry, the concept of 'parental control' is a myth in an ever growing number of households," writes Bruce. "It's not that parents do not want to exert control, they can't. I'm afraid the inmates are running the asylum."