Today marks the start of a new era at the Reserve Bank, with an array of reforms introduced in the wake of the government’s review of the central bank, commencing with the first two-day meeting of its board. This will be followed by a media conference tomorrow, along with the usual post-meeting statement, plus various smaller changes like the earlier release of the quarterly statements of monetary policy, hitherto released the Friday after a meeting, with the relevant meeting statement teasing various forecasts as if to excite the monetary cognoscenti.
The meetings will be two days long, but there’ll only be eight of them a year, rather than 11 day-long (or, rather, morning-long) meetings. Sixteen days a year to produce our monetary policy, compared to 11. Or, explained in another way, a 45% decline in productivity. Not to mention the extra cost of the additional day’s meeting for the Reserve Bank board, and the expense of the new monetary policy board as well, with travel costs and fees.
When talking about productivity, you can measure outputs like monetary policy statements — but what about outcomes? If you compare the performance of the US Federal Reserve to that of the Reserve Bank, you’d see the US economy in such a Goldilocks state that even right-wing commentators are talking about how good the jobs data is there — versus Australia where the labour market remains tight but consumer spending and economic growth have been clobbered by successive rate rises. Which bank has been more productive?
Running monetary policy is a service, and services are automatically less amenable to output-based measurement than producing goods — and the story of the past 40 years here and across the West has been the rapid growth of services compared to manufacturing and other industries highly amenable to output-based measurement. In recent decades, the story has been of the rapid growth of services where output-based measurement is the very antithesis of productivity. Stuffing our classrooms and childcare centres full of more kids per adult, forcing aged care workers to care for more people per hour, making nurses work longer shifts to cover for sick colleagues — doing this destroys what we want delivered by those services.
The Reserve Bank and its tyro governor Michele Bullock keep banging on about wages growth without productivity growth. We’ve been having a “productivity crisis” for half a decade now, with the debate never shifting from the ritualistic calls for tax cuts for business and industrial relations deregulation, with minimal recognition that we’re no longer talking about an economy dominated by how many widgets can be produced and assembled per hour.
But not all services are equal — certainly, few are as equal as health and social caring. Another thing that has proliferated in recent decades is a variety of service jobs that add little or no value — advisers, lobbyists, middlemen and women, middle managers, ticket-clippers, intermediaries, the beneficiaries of outsourcing the stripping of expertise from both the public and private sectors. Many of these are “bullshit jobs” that in turn make extra demands on people doing real work, or make that work harder to complete.
A particularly noxious form of bullshit job is management consulting, especially in the public sector, involving expensive advice to senior managers about how to restructure organisations, processes and internal systems in order (notionally) to increase efficiency. Much of this “advice” is the simple repackaging of what was fashionable a decade ago and which has temporarily fallen out of favour in the face of new trends — trends that themselves will return to life some years hence in an endless cycle of non-advice that makes money for consultants but inflicts costs and disruption on the luckless “beneficiaries”.
The changes to the RBA smell of that kind of pointless managerial recycling. It’s not so much that the RBA and its board will be less productive, but that the changes represent a whole ethos of non-productivity.
The whole ‘productivity’ thing is hilarious if you think most economic activity benefits from a distinct lack of productivity.
I mean the housing market is particularly unproductive if you think about all of the middle men, hanger onners and parasites feeding off the same limited housing supply.
How many estate agents does it take to sell a house during a housing shortage?
Why does it take any estate agents?
Where does the money come from for a pensioner to pay seven figures for an investment property?
And then you have entire industries who charge out at hourly or daily rates, and are therefore incentivised to be as unproductive as possible.
Why does anyone think they’re getting good value for money from lawyers, accountants, management consultants, IT projects, economists and 90% of passed for modern capitalism.
The only people who are actually productive are the much aligned public sector works and essential workers.
I mean one health worker produces multiple healthy productive humans. One estate agent produces many overpriced houses that price out the nurses.
But my do the most unproductive members of society criticise, look down upon and undervalue the more productive members.
Congratulations on stumbling upon economic theory that has been well understood for about a century now.
It’s almost as if economics and economists have a deep resource of research that goes beyond sensationalist headlines and argumentative comments sections….
“We’ve been having a “productivity crisis” for half a decade now,…”
You’re kidding aren’t you? We’ve been having a productivity crisis in this country since Federation. I remember these debates since the 1970s with the advent of the pastoralist, Malcolm “The Terrible” Fraser when all his governments apparatchiks, underlings, Ministers wanting a talking point, economists who wanted labour market deregulation but said nothing about the finance sector – all of them were in the paper, on the idiot box, even in university classrooms and tutorials expounding on the need for greater productivity. Saying things like we should have more tradesMEN and less Arts students and Arts courses and how people who work with their hands are more valuable. Well the recessions of the 80s and 90s and their slow, ad hoc recoveries put paid to that notion when tradespeople and semi and unskilled workers were out on their ass in their tens, no! hundreds of thousands in these years but the lies continued and we have more of that from the RBA, a real productivity sucking enterprise.
I knew new eadership of the RBA wouldn’t work, I said it first and the chickens have come home to roost.
‘Productivity’ is an exclusive club – used to beat workers, an excuse to screw down their wages.
“Some productivity is more equal than others.”
It’s more selective in it’s application when it comes around to the likes of management, employers, business and politicians (who usually ‘earn’ pay rises no matter how bad their output. Look at banks and airlines?) – let alone that business sponsored media magic jerk circle club that like to invoke it against ‘workers’ too.
Productivity, especially headline per capita, is no longer fit for purpose and has been misused for political ‘wedging’ eg. describing and blaming esp OS student temporary churn over, as ‘immigrants’ etc., but ignoring the complexity of working age versus generations ago.
Whiff of old Frederick Taylor’s scientific management of industry, but ignoring intangibles inc innovation etc.
If only we could ban the words ‘productivity’and ‘growth’ we might get a better view of what a sensible economy would look like.