Economic Growth – comparisons

One of our regular and valued bloggers, Homer, has regularly made the following statement:

I know understanding facts is foreign to you but if you actually understood how to look at economic statistics you would find that when Howard won office the period of economic growth was the longest period since the war. Hint other periods were curtailed by negative growth. Another hint it doesn’t start at 1990.

Since this is an assertion of fact, I thought it would be helpful to check.

The National Accounts are the official source of economic growth (GDP) statistics. There are the quarterly (cat no. 5206.0) and annual (cat no. 5204.0) versions.

Taking first the quarterly national accounts, and treating the March quarter 1996 as the start of the Howard Government we observe the following quarterly chain volume growth rates:

Dec-1991 -0.1
Mar-1992 0.9
Jun-1992 1.3
Sep-1992 0.6
Dec-1992 1.2
Mar-1993 1.1
Jun-1993 1.1
Sep-1993 -0.4
Dec-1993 1.4
Mar-1994 2.6
Jun-1994 1.1
Sep-1994 1.1
Dec-1994 0.1
Mar-1995 0.5
Jun-1995 1.5
Sep-1995 1.8
Dec-1995 -0.2
Mar-1996 1.9

So the immediately preceding quarter was negative.

And until the 1990 recession we had the following run:

Jun-1986 -0.4
Sep-1986 0.9
Dec-1986 0.6
Mar-1987 1.2
Jun-1987 2.1
Sep-1987 1.1
Dec-1987 1.1
Mar-1988 0.5
Jun-1988 1.2
Sep-1988 1.3
Dec-1988 0.7
Mar-1989 1.0
Jun-1989 1.8
Sep-1989 0.6
Dec-1989 0.6
Mar-1990 0.4
Jun-1990 0.1
Sep-1990 0.0
Dec-1990 -0.7
which is a run of 17 positive quarters in a row.

So clearly, on the basis of quarterly GDP growth, when Howard won office was most certainly NOT the longest period of economic growth since the war.

Annual National Accounts

Now taking the Annual National Accounts, we find the following run of economic growth to June 1996 which is close enough to when Howard took office.

Jun-1991 -0.6
Jun-1992 0.2
Jun-1993 3.6
Jun-1994 4.0
Jun-1995 4.4
Jun-1996 4.2
That’s a run of 5 years of economic growth, inclusive of June 1996.

Now from June 1961 to June 1982 there was an uninterrupted run of 22 years of positive economic growth. And last I checked, 1961 was after the war.

Jun-1961 2.5
Jun-1962 1.4
Jun-1963 6.3
Jun-1964 7.0
Jun-1965 6.0
Jun-1966 2.4
Jun-1967 6.3
Jun-1968 5.1
Jun-1969 7.1
Jun-1970 7.2
Jun-1971 4.0
Jun-1972 3.9
Jun-1973 2.6
Jun-1974 4.1
Jun-1975 1.2
Jun-1976 2.6
Jun-1977 3.5
Jun-1978 0.9
Jun-1979 4.1
Jun-1980 3.0
Jun-1981 3.4
Jun-1982 3.2
Jun-1983 -2.3
And even from 1983 to 1990 was a run 7 years of positive economic growth.
Jun-1983 -2.3
Jun-1984 4.6
Jun-1985 5.3
Jun-1986 4.5
Jun-1987 2.5
Jun-1988 5.0
Jun-1989 4.2
Jun-1990 3.1
Jun-1991 -0.6
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53 Responses to Economic Growth – comparisons

  1. Another “gem” from Homer Paxton – kill yourself…

    “The major reason we had such a high per capita income was the LOW population. Ian McFarlane talked about this in his Boyer lectures.”

  2. JC

    I can’t wait for the amateurish defense he puts up in the morning. The oaf is fast asleep at the moment, snoring away peacefully happy in job he’s done of lying and dissembling but oblivious to what awaits him in the morning. 🙂

    My guess is the reprobate will wait till mid morning before he responds with some incoherent drivel and then skulk back behind the garage hoping everyone forgets until his next infestation.

  3. C.L.

    Shame on you for this whopper, Homer. 😐

  4. THR

    It’s a shame that Homer misfired on this one, because there’s plenty of evidence that, at best, the Howard and Costello duo were economic bumblers, who had the good fortune to preside over a resources boom. Certainly, the key ‘reforms’ were undertaken by their predecessors (other than the GST). They left a structural deficit in the budget, and spent like drunken sailors, in the absence of any GFC or other mitigating factor, on such essentials as baby bonuses.

  5. C.L.

    In fact, as the IMF pointed out in early-to-mid 2008, the major reason Australia was in no real danger from the “GFC” was the financial solidity and fiscal soundness of the Howard-Costello economy.

    And would those be the “key reforms” Kevin Rudd denounced as “neo-liberalism” a couple of years ago?

    Nothing from the entire Howard era comes close to Rudd and Swan spending billions of dollars on such essentials as Chinese batts to make thousands of Australian homes electrified fire traps.

  6. THR

    The IMF have revised their forecast about 137 times since then, and they’ve also praised the Government’s response to the GFC. True, Rudd was hypocritical with his denunciations of neoliberalism, but the Howard/Costello spending spree had no global recession for a justification.

  7. JC

    THR:

    I would have thought you would have supported the spending program, no?

  8. C.L.

    Rudd had no recession justification either. There was no recession and the IMF correctly said – repeatedly – that Australia was in no real danger from the “GFC.” The budget was in surplus, the country’s financial regime was sound and the resources boom was far from quenched. So Rudd destroyed the budget and spent more than $40 billion needlessly.

  9. THR

    I have no problem with government spending per se. Birdian recession economics – cut spending, cut taxes, and shoot the public servants is not my prescription for economic recovery. Having said that, I’m no fan of Rudd, and I think you’ll find that most lefties aren’t.

    CL, there’s little reason for Treasury to be taking the advice of the IMF and nobody else. There were plenty of dire warnings. The IMF did praise the Rudd government’s response to the GFC, and Howard did leave a $25 million (IIRC) hole in the budget, due to presumed resources revenue. Hate and criticise Rudd and Swan as much as you like, it still won’t ever supply an argument that Howard/Costello were anything other than lucky nincompoops when it came to the economy.

  10. C.L.

    I don’t hate anyone in politics, THR. That’s more your thing. The IMF made plain that Australia would sail through the “GFC” because the fiscal and financial situation in the Howard-Costello economy was solid. Rudd and Swan inherited the biggest doddle in Australian political history. Since then, they’ve destroyed the budget, blown $40 billion unnecessarily and spent a few lazy billions creating thousands of fires traps for Working Families.

  11. rog

    CL keeps on bleating on and on and on and on about the IMF. Presumably this is the same IMF that forecast a recession, inflation, high unemployment and a collapse of the housing market in Australia.

    AUSTRALIA’S overvalued housing markets and high levels of debt put it at risk of being hit by the financial tsunami swamping markets in the United States, the International Monetary Fund has warned.

    IMF change their outlook to suit the prevailing conditions.

    The floating dollar acted as a cushion.

    IMF did not specifically say anything about Howard and Costello except that they warned against Howards fist full of dollars in 2007 and this was used against Howard in the election.

  12. Capitalist Piggy

    Just for the record, base metal prices didn’t start to rise substantially until 2005 and then sky-rocketed in 2006-07. Check out the RBA Base Metals Index ($A). So apart from the last few years, economic growth in Australia during the 1996-2007 period had little to do with the commodities boom.

    Here’s a weird fact I just discovered: In June 1996, mining output accounted for 8.9% of total industry gross value added. As at September 2009, it accounts for 8.0% of total industry gross value added. In other words, relative to other industries, mining sector output has been going backwards! So much for the mining boom.

    BTW, I’m no expert on the National Accounts, so if I have read it wrong, please let me know.

  13. “The floating dollar acted as a cushion.”

    Yep. The multiplier is close to zero as well. 120 000 jobs @ 43 bln = $358 333 per job, net of amortisation of the stimulus.

    Tighter inflation control before hand and permanent supply side tax cuts (i.e on payroll) to the tune of the surplus, funded to the states by the Commonwealth on a per capita basis would have been much better. Monetary policy would have had a marked effect and people would be gainfully employed in long term jobs. NSW BTW is still in doldrums. Word on discouraged workers isn’t out until March.

    How many people will be axed when the insulation and school toilets are gone? How do these add to long term employment?

  14. 17 billion divided by 240 000 jobs = real unit labour costs of $70 833 per worker. That and previously lower inflation targets would have seen costs not blow out and the forex and prices cushion being more long term and more effective.

    Another thing too is that Howard could have cut taxes for every year of his last two terms. Imagine what could have been done if spending was held constant. This could have funded the abolishment of payroll taxes and significant income tax cuts that may have eliminated poverty traps and greatly increased incentives to work and invest.

  15. Butterfield, Bloomfield & Bishop

    Marky still doesn’t understand a country with large resources and low population can have a high income per capita. Amazing what happens when the population increases.

    not a lot of evidence that tax cuts boost the supply side. Reagan and Bush are still looking for it.

    Gosh maybe the building industry will be at a higher level and builders will switch from school buildings to other buildings

  16. “Marky still doesn’t understand a country with large resources and low population can have a high income per capita. Amazing what happens when the population increases.”

    You don’t understand capital intensity. You misquoted MacFarlane. Don’t you have any sense of decency?

    “Gosh maybe the building industry will be at a higher level and builders will switch from school buildings to other buildings”

    Nor do you understand allocative efficiency. No wonder you thought WorkChoices was overall a bad idea.

    “not a lot of evidence that tax cuts boost the supply side.”

    No Homer, directly punishing employers for employing people based on a WWII tax to increase military enlistment has no costs in terms of employment.

    You’re a freaking genius you idiot.

  17. jtfsoon

    Homer
    are you going to apologise for mangling Mcfarlane?

    who next?

    Book sales into eastwood should be stopped.

  18. Butterfield, Bloomfield & Bishop

    The long-run decline argument
    A feeling that we have declined relative to
    other countries has pervaded a lot of our
    thinking. The most common form of this
    argument is based on long-run comparisons
    of income per head among developed
    countries, which showed Australia at number
    one at the turn of the century, but now back
    in the middle of the field. There is a feeling of
    disappointment that ‘we used to be number
    one, but look how far we have slipped’.
    The immediate response to this line of
    argument is to ask whether we were really that
    good, or was there a large element of luck. It
    does not take a great deal of historical
    knowledge to realise that there is more
    substance in the latter explanation than the
    former. In a sense, we were the Kuwait of the
    1890s in that we had a lot of land and a small
    number of people, and we were able to
    produce commodities that were relatively
    highly valued.

    err no as I was right.

    Gosh Ian McFarlane doesn’t understand it either!

    Work choices was not about allocative efficiency. It was a highly regulatory impost on employers to ultimately get rid if trade unions.
    That is why it had NO effect on the economy.

    wow that last paragraph is devastating

  19. Butterfield, Bloomfield & Bishop

    Oh Staman I am happy to take your apology though

  20. “In a sense, we were the Kuwait of the
    1890s in that we had a lot of land and a small
    number of people, and we were able to
    produce commodities that were relatively
    highly valued.”

    Um yes you muppet but what allowed us to “produce commodities that were relatively highly valued”?

    CAPITAL INTENSITY.

    For someone who asserts they are an authority on economics and economic history, the massive inflows of British capital as we advanced along the investment development path is simply a non event to you.

    “Work choices was not about allocative efficiency.”

    Soon you’ll be claiming there were no direct effects on increased employment.

    Here’s a refresher course for you: economics is not dictated by political belief. Not yours, and not mine.

  21. Butterfield, Bloomfield & Bishop

    I am very happy for you to provide evidence that workchoices had any effect at all.

    also nice to see you change the topic when you are quite clearly wrong.

  22. If you don’t understand how Work Choices had an effect on employment and allocative efficiency, you’re incompetent.

    Now, I am not wrong. Capital intensity is what raises living standards.

    Do you agree or disagree Homer: “Capital intensity raises human welfare”?

    The ball is in your court. You can regain the visage of competence or be relegated into the realm of Major Douglas, Marx etc.

  23. rog

    Keeping the ruin of workchoices alive will be a sure fire winner at the polls (not) – I see Abbott is copping it for suggesting that he would remove penalty rates

    Most voters are workers

  24. I heard Alan Jones say that no one should get penalty rates. That is perverse. Let the market decide.

  25. Butterfield, Bloomfield & Bishop

    ah yes when it comes to evidence Marks runs away.

    If the liberals had really wanted to liberalise the labour market they would have adopted the NZ labour policy.
    the was less than 100 pages of legislation and yes there is evidence it had an effect.

    work choices, on the other hand , was over 1800 pages of re-regulation that had no effect.

    Err Mark I am not arguing about Capital intensity. That is something else entirely.
    I merely echoed SuperMac’s reason for why Australia had such a high income per capita early on.
    err you disagreed and as usual were WRONG AGAIN.

    Statman, lost your voice?

  26. “Err I am not arguing about Capital intensity. That is something else entirely.
    I merely echoed SuperMac’s reason for why Australia had such a high income per capita early on.”

    Oh yes you imbecile you were arguing that capital intensity didn’t matter and insinuated that MacFarlane meant the same.

    The fact that you think it is “something else entirely” speaks volumes about your incompetence.

  27. Whereas a competent person would infer that Australia had a high level of capital intensity, Homer views its omission as a sign that it is totally unrelated.

    Your analysis is truly on the nose.

    A low population causes high living standards? It is a totally perverse idea and is like the flow of time is running backwards. Australia was better off in 1790 or 1820 than in 1900 was it?

    Homer infers all we need is a low population and an abundance of natural resources. By golly gee Antarctica should have the highest living standards in the world.

    You keep on ignoring the massive inflow of British capital, particularly after the early colonial times. I hope you’re satisfied with your self compartmentalisation of economics, where different fields need not show any relation to each other.

  28. Butterfield, Bloomfield & Bishop

    You are an idiot.
    I never said anything to that end at all.

    I merely commented on why Asutralia had such a high per capita income in the early years.

    You are consistent however whenever you get caught out you then change the topic.

  29. jtfsoon

    No Homer
    Mark has established that you quoted ‘SuperMac’ out of context

  30. dover_beach

    You are consistent however whenever you get caught out you then change the topic.

    LOL.

  31. “I merely commented on why Asutralia had such a high per capita income in the early years.”

    Yes, you inferred that MacFarlane doesn’t understand capital intensity. He’s the freaking head of the RBA. Don’t you have any concern for our capital markets?

    If you think I keep changing topic Homer, I’ll discuss both.

    You keep on ignoring the role of British investment in late colonial Australia. You have compartmentalised your economics so no fields need be related or interlocking in any way. You are a pie short of a bakery if you cannot realise that Work Choices, although far from perfect, had direct effects on both employment and the marginal efficiency of capital.

  32. Butterfield, Bloomfield & Bishop

    Statan you are an absolute hypocrite.

    what has Marky done.

    I didn’t say population created wealth at all. I did say the MAJOR reason why we had such a high income per capita was a low population.
    Shucks I even made a mistake of saying Saudia arabia and not Kuwait

    This is the great thing about ctalaxxian crackpots ecven ewhen you catch them out they stil want to lie about it.

    and you crowd have the hide to snoot your noses at LP

  33. Butterfield, Bloomfield & Bishop

    No Marky I didn’t ignore investment at all However with large investment and a low population what do you get?

    Wella a high per capita income err a Kuwait of the 1890s.

    Show the evidence on workchoices then Marky show the evidence.
    Of course if you cannot then ….

  34. “I did say the MAJOR reason why we had such a high income per capita was a low population.”

    This is an economic fallacy. Macfarlane would not have at all meant to infer this.

    “No I didn’t ignore investment at all However with large investment and a low population what do you get?”

    You’ve ignored it until now, chump.

    “Show the evidence on workchoices then Marky show the evidence.”

    If you cannot see the direct benefits, you are deficient in your grounding of economic theory and probably are incompetent.

  35. dover_beach

    This is the great [shame] about [Homer] ecven ewhen you catch [him] out [he] stil want to lie about it.

    Agreed.

  36. jtfsoon

    did Homer just call me Satan?

    anyway devoting an entire blogpost complete with tables to one of his comments is like sending in Mike Tyson to knock out Woody Allen

  37. Sinclair Davidson

    Jason – surely not. I’d enjoy watching Mike Tysaon v Woody Allen. But I agree, a whole post fact-checking Homer? But, on the other hand, apparently nuclear weapons don’t kill cockroaches.

  38. Butterfield, Bloomfield & Bishop

    yes Marky what do you think he meant by saying we were the Kuwait of the 1890s?

    I didn’t ignore at all you merely mouthed off trying to change a topic you had just been demolished again.

    Now factchecking Sinkers would take years however sometimes it takes less time as I have shown

  39. C.L.

    CL keeps on bleating on and on and on and on about the IMF.

    Yeah, I do.

    April 2008:

    Australia safe from US recession, says IMF.

    September, 2008:

    Rudd says Aust economy looks good from Big Apple.

    Mr Rudd has also seized on the International Monetary Fund’s (IMF) positive assessment of the Australian economy, saying it underscores the need to maintain a strong budget surplus.

    The global financial organisation says that Australia’s economic policies and structural reforms have led to a prolonged economic expansion…

    October, 2008:

    The International Monetary Fund (IMF) has delivered a positive forecast for Australia despite the deepening global credit crisis, Prime Minister Kevin Rudd says.

    Overnight, the IMF released its world economic outlook, saying Australia was <a href="“>unlikely to slip into recession.

    So Australia’s Howard-Costello economy was in no real danger from the “GFC”. Rudd panicked, destroyed the budget and blew $40 billion for nothing.

    Here’s Rog in March 2009 ridiculing Homer and mocking Malcolm Turnbull for backing stimulus spending on roads.

    Poor old Rog.

  40. Butterfield, Bloomfield & Bishop

    What CL doesn’t mention was how many times the IMF and other Organizations changed their forecasts as things got much worse than they anticipated.
    By May of 2009 the IMF was forecasting a FALL of 1.9% in GDP for Australia.

    Phillip Lowe of the RBA certainly doesn’t think the stimulus didn’t work.

  41. “what do you think he meant by saying we were the Kuwait of the 1890s?”

    I’d say you’re still choofing down sweet lady rock. Resources have no value whatsoever until capital is applied to them.

    “Phillip Lowe of the RBA certainly doesn’t think the stimulus didn’t work.”

    Hmm yeah right. Evidence please. An RBA dude offers his redundancy to the Government on a silver platter. Maybe they’d be better off with him installing foil insulation?

  42. C.L.

    April 2009:

    AUSTRALIA will escape relatively lightly from this year’s recession compared with other countries and its own history, the International Monetary Fund says.

    There were never any drastic consequences predicted from the “GFC.” Rudd panicked. The upshot is a destroyed budget and tens of thousands of potential death traps in the suburbs.

  43. JC

    Yes Evidence please homer. If you can, try not to recite individual authors anymore for obvious reasons. Just link will be fine.

    We don’t want you to running a wrecking ball through people’s reputations any more.

  44. Peter Patton

    One thing that gets my goat about this whole argument is the presumption by both sides that it is politicians and bureaucrats who are solely responsible for the wealth of nations. An even baser form of the argument admits academic macroeconomists into the club!

    Australia is not Soviet Russia or Maoists China. Why do both sides silence individual businesses, employees, managers, banks, venture capitalists, commercialized R&D, and civil/commercial society in general?

  45. I don’t exclude them at all Peter. I think the Austrians had a particularly good point about entrepreneurs.

    I go so far as to include workers. I think this is consistent with the best practices in management literature (small hierarchies) and the evidence on knowledge capital/workers in the economic and HR literature.

  46. Butterfield, Bloomfield & Bishop

    yeah Marky there is no capital in Kuwait at all.

    Take the egg off your face and say something anything sensible.

    Evidence try Retail trade Turnover First home loan growth etc etc.

    no Peter that is quite silly. No-one is saying the government is solely responsible at all

  47. “yeah there is no capital in Kuwait at all.

    Take the egg off your face and say something anything sensible.”

    Homer you idiot, that is what you inferred that MacFarlane meant.

    “Evidence try Retail trade Turnover First home loan growth etc etc.”

    How does this make any distinction between stimulus and quantitative easing led impetus?

    “no Peter that is quite silly. No-one is saying the government is solely responsible at all”

    You inferred that capital intensity was irrelevant and could be compartmentalised away. The correct response from you now is “touché”.

  48. JC

    Kuwait is not underpopulated for the size of the country you monstrous loon. Kuwait is the size of an average sized Australian back yard with lots of taps from which oil runs out instead of water.

    Debbie. You have no fucking business ever talking about economic matters as you are a total incompetent, worse even that Inspector Clouseau.

  49. Butterfield, Bloomfield & Bishop

    Yeah Marky Kuwait had no resources at all.

    I originally made the analogy of Saudi Arabia they have no capital either.
    I only said the reason for the high income per capita was the low population.

    I will give you the benefit of the doubt and merely assume you read too fast.

    no quantitative easing in Asutralia.

    Yeah Marky everything is always inferred

  50. JC

    Fed raised the discount rate 75 basis points. This is going to leave a mark.

  51. Butterfield, Bloomfield & Bishop

    Forrest you idiot that is not waht is being talked about.

  52. “Kuwait had no resources at all.”

    No, but you’re getting somewhere. Resources are worthless until capital is applied to them.

    “I only said the reason for the high income per capita was the low population.”

    Clearly a statement that implicitly rejects capital intensity as a driver of economic welfare.

    “no quantitative easing in Asutralia.”

    Perhaps, but there was in Australia. This is amazing – rather than debate the merits of fiscal and monetary policy, you just deny that the levers of monetary policy were ever used.

    I am astonished and cannot ascertain whether you are dishonest or stoned out of your mind.

  53. JC

    I originally made the analogy of Saudi Arabia they have no capital either.

    So what, Dickhead, AMARCO, a joint venture between Exxon (I think) and the Saudi regime exploited the fields first. Exxon introduced capital in Saudi, you nimbus.

    I only said the reason for the high income per capita was the low population.

    Not only did you fuck that one up. You also suggested the former governor of the RBA made comments that supported your worthless claim. As usual you were caught out lying about what the poor guy said and now you’re trying to weasel you way out.

    I will give you the benefit of the doubt and merely assume you read too fast.

    You have no business at all talking to anyone like that you ignorant feather brain.

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