If you want a textbook example of why the economics profession in Australia is broken, look no further than RBA governor Michele Bullock’s comments to Senate Estimates on Wednesday morning ahead of today’s national accounts shocker:
Asked by Liberal senator Jane Hume if the economy was experiencing a per capita recession – that is population growth outstripping economy growth – Ms Bullock said the concept was not useful as recessions referred to “losses of jobs and human difficulties”.
“I just think that the word per capita recession just gets bandied around in a way that isn’t very helpful”, she said.
“Our sense at the moment is that the economy is weak, and it’s certainly showing up in consumption.”
Economists’ focus on aggregate GDP over per capita outcomes is one of the biggest failings of modern economics.
Who cares if the overall economy is growing when everybody’s slice of the pie is shrinking and living standards are falling?
The obsession with headline growth is why we have destructive policies like mass immigration because it makes the economy look stronger than it is.
Meanwhile, per capita outcomes continue to erode and living standards are crushed under the never-ending population deluge.
If I could have my way, I would require that per capita GDP be elevated to the headline figure in the national accounts that the media and politicians report on.
What good is a growing economy if living standards are declining?
Make no mistake, whether the economy is experiencing a per capita recession is far more relevant to Australians than whether the economy is experiencing a technical recession.
