Ross Garnaut is probably the best known Australian economist working in Australia (Geoff Harcourt is the best Australian economist, but is at Cambridge). Garnaut has the ability to pinpoint the real issues facing Australia, as he did with climate change.
He has now entered the debate about the great danger that faces the Australian economy, namely it is high wage and low productivity and there has to be a unified and bipartisan approach to solving this.
The article below was motivated by Maurice Newman's contention that its all the fault of a high minimum wage in Australia. Newman is an adviser to the idiot Abbott and a climate change denier and represents the sort of partisan politics that Garnaut is arguing has got to stop.
Lets deal with productivity first. Productivity is a measure of efficiency, how much of an input has to be used to produce a given amount of output. The higher the level of productivity the higher the level of wages that can be afforded. Productivity is raised by investment in capital and people and using resources to their maximum potential.
Australian's are complacent about the challenges of the future according to Garnaut. They want higher wages but are not prepared to make the changes necessary to raise productivity. He blames the pursuit of self interest by unions and employers and the disfunctional process of government.
Newman on the other hand wants the minimum wage to be lowered to make it cheaper for firms to employ people. He also wants lower taxes on firms. Both raise profits.
The contrast between the approach of the academic, Garnaut, and the vested interest of business, Newman, is something those studying Economics must be able to distinguish between.
The data in the article on Newman shows that Australia does have a high minimum wage. It's Australian to aim for greater equality and such a choice is quite reasonable by a society. But that does not mean people can simply sit back and enjoy the them, they have to justify the high wages with high productivity.
Just to be clear this is not just the fault of business as represented by Newman. The 'new Founders building' would have been ready for the start of Term 4 in Europe, but union intransigence on work practices means it will be a close run thing for Term 1.
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