Mar 052008

Today’s editorial in the Oz highlights, for me, a couple of things.

That Chris Mitchell, editor of The Australian, is as much a qualified economist as I am. Hindsight is a wonderful thing, as I’m sure Glenn Stevens will happily agree. I seriously don’t believe that an editorial, which reiterates what the governor of the Reserve Bank stated less than 24 hours previously, is telling us anything we didn’t already know.
What we can be sure of is that Mitchell’s ethics are still as suspect as they’ve ever been, and that he’ll willingly dance to his puppet-master’s string-pulls.

The federal Government’s actions to forcefully brand Australia’s inflation problem on to the hide of the Howard government for future political use has added to the problem of inflation expectations.

Politics is politics and economics is economics. The total inaction, and some might say actions, of the Howard government in the two years leading to it’s fall from grace in November 2007 deserve to be labelled for what they are. Failure to adequately address the inflationary spiral and runaway resource-fed growth has resulted in the Australian economy being where it is today. Under threat of a sudden and possibly catastrophic decline, or at best, stagflation. Fault branded into the political hide of the former Howard government? Rightly so!

One result of this is the ACTU’s decision, announced yesterday, to chase wage claims to compensate for higher petrol, childcare and food costs, truly the makings of an inflationary spiral.

So, which is it to be, Chris Mitchell? The Rudd government honouring election promises through granting of $31m in tax cuts? Perhaps it’s a former government’s inaction on the economic front which is fostering this cycle? I know…’s the RBA’s reticence to apply a fifty basis point rise to interest rates twelve months ago. Even as a non-economist, I fail to see how applying CPI rises to wages increases will adversely impact on an inflationary spiral.
I would suggest that ACTU decisions to seek cost-of-living wages increases is hardly likely to impact on an inflationary situation which the RBA acknowledges is softening. Equally, it’s hardly likely to impact adversely on resource sector growth and profitability, albeit that sector is showing the first signs of a plateau. What ACTU CPI wage claims will ensure is that our economy doesn’t nose dive because consumer spending dries up like water on a hot pavement. Retailers are already very concerned that consumer capacity is being adversely effected. Denying workers the ability to at least keep pace with the costs of living would sound a death knell for consumer confidence.
So, no, Chris Mitchell is no economist. He is an opportunist and his ethical standards remain questionable. He is still a puppet on the Murdoch strings and despite what some might have thought, in a post Howardian Main Steam Media world, The Australian is still as disreputable a broadsheet as it’s ever been, thanks to the man at the helm.

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