Honestly, they’re like Daleks, these official economists:
A surge in employment combined with scant investment by firms to improve output triggered a sharp drop in worker productivity, limiting prospects for income growth without fanning inflation, the Productivity Commission said in its annual report.
Across the economy, productivity fell 3.7% in 2022-23, as output growth failed to keep pace with a record 6.9% increase in hours worked, the commission said. A rush by employers to hire new staff was much higher than in previous bursts – the nearest comparison was the 4.3% rise in hours worked in 1988-89.
“Australians’ incomes grew in 2022-23, mostly because they worked more hours,” said the commission’s deputy chair, Alex Robson. “But productivity growth is about working smarter, not working harder or longer.”
With labour market participation hovering near its record 67%, the economy has little scope to generate higher incomes by adding workers or time on the job, he said.
“What’s worse, we know nominal wage growth without productivity growth can fuel inflation,” Robson said. “Sustainable, long-term wage growth can only be realised by securing productivity gains.”
Yawn. This is how a regular economy that is led by business investment works. It is not the Australian economy, which is led by labour supply growth from immigration.
In the Aussie economy both productivity and wages fall together. The only way to get ahead is to work more hours.
And you can. The disproducivity of the model, with falling capital stock per capita, ensures that economic activity becomes less efficient over time, requiring more labour for the same amount of output.
Look everywhere, and you see it. To house more people with fewer dwellings per capita equals more labour. Treating more people with fewer hospital beds per capita equals more labour. We need new roads to prevent more traffic from slowing us down further, which equals more labour.
So on and so forth. Crushloading permeates everything. None of it lifts living standards or output per capita. The economy is forever running full tilt to slip steadily backwards.
This is all very obvious in the empirical evidence. That no official economist wants to acknowledge it is another example of immigration-led disproductivity owing to:
- A top-down woke political culture that suppresses rational thought.
- The crowding out of economic activity by the disproductive winners – banks, realty, retail etc – making disagreement with the model career suicide.
- Migrant communities serving their own interests to, understandably, bring in more friends and family.
- Economists, whose job is to promote rising living standards via efficiency gains, do the opposite.
As the PC joins the Treasury and the RBA in creating ever more elaborate economic balderdash to cover for the failing model, I can only warn that a test of immense magnitude lies ahead.
The next phase in the cycle is the simultaneous decline in productivity and wages. Inflation will disappear as idle labour piles up.
This will run headlong into accelerating secular trends:
- AI puts a quarter of jobs at risk, primarily white collar and especially at the low where low-skilled migrants congregate.
- Weight loss drugs will structurally boost labour participation.
- Vehicle automation injects another wave of unemployment.
- China’s structural slowing means crashing terms of trade, nominal growth, national income and higher taxes.
Running massive inflows of unskilled labour into this scenario of excess labour and shrinking national income will annihilate nominal growth, wages and inflation.
It thus guarantees that all productivity gains from the technologies will accrue to capital, and there will be no rise in per capita demand.
Canberra will react to this weakness with, you guessed it, even higher immigration, rinse and repeat.
Interest rates will collapse to boost property prices instead, and the currency will collapse.
It’s either that and/or some form of universal basic income.
