In which, after time with Uncle Leon, the pond goes desiccated economic coconut with Dame Groan...

 

While some are taking delight in Justin's passing, the pond is taking delight in Uncle Leon, getting more deeply weird and extreme by the day, radicalised by his own site and whatever he's been ingesting.

Lately Uncle Leon has been making plans for Nigel, as in Daniel Boffey in the Graudian's Bromance on the rocks: where does Musk’s brush-off leave Nigel Farage?, The Reform leader’s dalliance with the US billionaire looks in trouble after an abrupt about-turn from the X boss, with Zoe Williams providing commentary in Elon Musk loves to provoke – and Nigel Farage is his latest victim.

Uncle Leon also loves to be provoked, as detailed in Elon Musk Cusses Out Student Who Called Him a Fake News Machine.

Elon Musk launched into a foul-mouthed X tirade directed at a student who called him out for allegedly spreading disinformation.
“Elon Musk is rapidly becoming the largest spreader of disinformation in human history, hijacking political debates in the process,” wrote Joni Askola, a Finnish graduate student and activist for defense of Ukraine. “The EU must take action!”
“F u retard,” came Musk’s response, containing a slur used against people who have mental disabilities. He then replied saying “yes” to another person who said: “We could have avoided a lot of disasters by simply telling leftist retards to stfu.”
Musk appears to have made a conscious choice to reintroduce the word into right-wing parlance of late, often using it on his X platform.
An analysis of his X posts and replies shows that he has used the term or a variant of it 15 times since Dec. 20, having never used it before that.

Deeply weird, and with endless speculation about that relationship, as in Trump Privately Complains About Clingy Elon Musk: NYT Reporter. 

Thought for the day: be wary of the letter X and ketamine.

Meanwhile, there have been all sorts of stories about Uncle Leon's truck, and not just the one that blew up ... there are the ones where punters are thinking about writing off their $2,500 deposit as a better bet than being stuck with a lemon ...

The Verge story The Tesla Cybertruck isn’t all it’s cracked up to be / ‘It hasn’t become a large volume competitor.’ is typical of a very competitive and crowded field.

Meanwhile, Tesla share prices are in a state of flux - on the one hand, Tesla shares fall as company reports first decline in annual deliveries and Tesla Stock Is Down As Shipments Fall And Rivals Keep Up Pressure; on the other hand, Tesla Stock Rises. Selling Cars Is Now Less Important Than This., Investors wiped out all of Thursday’s losses with a big Friday gain, showing that current sales numbers aren’t what’s driving the stock.

It seems that selling unicorns with an AI horn, and idle talk of futurist cab services and such like is enough to sway speculators to speculate.

The pond mentions all this, because this day is economics day at the lizard Oz. 

Sure, Justin dominated the front digital page ...

.

Sure Justin was at the top over in the far extreme right of the digital edition, celebrated by a lesser member of the Kelly gang ...

But mostly pundits were being exceptionally productive.

Dame Groan, in her usual way, led with US has productivity lessons for Australia, We’re not the only country facing low or negative productivity, but we need to work out why, which the reptiles assured the pond was a tedious five minute read, an exceptional effort by the groaner.

It began with a snap of the newly appointed redeemer, US president-elect Donald Trump. Picture: Getty Images

Dame Groan was inspired - not for her any Krugman-style talk of The Dollar and the Trade Deficit, What will Trump do when his favourite obsession goes the wrong way? 

She was all in on the tangerine tyrant and a productive future for all:

The unexpected coexistence of high inflation and high unemployment that emerged in the 1970s prompted economists at the time to invent a new term – stagflation – to describe the situation.
Up until that point, it was an article of faith that there was a trade-off between inflation and unemployment. A government could dial down the rate of inflation by accepting a slightly higher unemployment rate. By the same token, a lower rate of unemployment could be achieved by living with higher inflation. (It’s what economists call an exploitable Phillips curve.)
If the collapse in the relationship had only involved a new name, then it would have been neither here nor there. But the breakdown was critical to fracturing the belief in the Keynesian model of active demand management by government, even if it took many years for the message to be widely accepted. (Arguably, belief in the Keynesian model continues to influence bureaucratic thinking to this day, including in Australia.)
While it’s common these days to parody Paul Keating’s comment about the early 1990s – “it’s the recession we had to have” – the real intent of his statement is generally overlooked. The point he was making was that it was necessary to stamp out persistently high rates of inflation to enable the economy to reset on a sustainably productive basis.
Keating understood that the suite of supply-side reforms that had been enacted – think financial deregulation, removal of high tariffs, sale of government businesses, labour market reforms – would pay strong dividends over time.

The pond loves the way that retrospectively the reptiles fell in love with the French clock man. 

At one time his tendency to fly over the dead heart on his way to Paris produced reptile outrage, these days he's rewarded with a caring, convivial snap, Former prime minister and treasurer Paul Keating. Picture: John Feder

Meanwhile, Dame Groan kept herself busy trolling pond correspondents:

Indeed, Australia experienced a purple patch of strong productivity growth and rising living standards after recovering from the recession of the early 1990s. Unemployment fell and treasurer Peter Costello was able to repair the budgetary position to the point that there was no government debt by the mid-2000s. Australia was poised for great things, particularly as commodity prices were moving strongly in our favour. No one was talking about stagflation.
If we fast-forward to this year, it may be time for a new term to describe what is an unexpected set of economic features – full employment, low economic growth, above-target underlying inflation, falling productivity and negative growth in per capita GDP. The term “per capita recession” is now widely used – a recession is defined as two successive quarters of negative GDP growth – but this doesn’t fully capture what is going on.
In order to unravel this puzzling bundle of characteristics, it’s worth reviewing what has been going on, including the government’s response to Covid and the aftermath.
A core issue is the slump in productivity, with the level of productivity now only at that achieved in 2016. According to the National Accounts, labour productivity fell by a massive 1.9 per cent in the year ending in the September quarter of 2023 and by 0.8 per cent in the year ending in the September quarter of 2024. This is the heart of the problem because productivity growth is the driving force of real wage growth and higher living standards. Unless we can understand why productivity in Australia is in the doldrums, we are incapable of devising appropriate policy responses.
To be sure, several other advanced economies have also experienced low or negative growth in productivity. But here’s the thing: the US is a standout when it comes to productivity growth, with the gap between average productivity in Australia and the US increasing over the past decade or so. The growth in labour productivity in the US has been 10 times higher than in Australia over the past 10 years, certainly on the raw figures.
James Thiris, senior research economist at the Productivity Commission, has taken a look at this “great productivity divide”, making the point that the two countries have slightly different approaches to measuring productivity and these differences should be taken into account.
The US figures focus on “the non-farm business sector”, which excludes the non-market sector, including education, healthcare and aged care. This non-market sector is largely funded by government and is known to be less productive than the market sector. Mining productivity also is much more volatile than in the rest of the economy.
Adjusting for these differences reduces the productivity gap between the two countries by about 20 per cent. But as Thiris concludes: “Even so, a sizeable gap still remains.”

When ever anyone talks about sizeable gaps, the pond is always reminded of Dr Strangelove: ...we must be increasingly on the alert to prevent them taking over other mine shafts space, in order to breed more prodigiously than we do. Thus, knocking us out of these superior numbers when we emerge! Mr. President, we must not allow a mine-shaft gap!

The reptiles managed this snap to show the sizeable gap, There is a ‘great productivity divide’ between the US and Australia. Picture: Getty Images

What on earth did that image mean? What was it intended to conjure up? A crowd in a street evokes a great productivity divide? Is that the result of a mine-shaft gap?

The pond is inclined to note that the United States at the moment seems like a country that is deeply divided and deeply unhappy. 

There seems to be a lot of divides going down, divides that are likely to get worse when King Donald I begins his reign.

Dame Groan would have none of it ...

Thiris considers some Australian characteristics to explain the gap, including the substantial JobKeeper program instituted during Covid to maintain the connection between employers and workers. In the end, the program propped up zombie firms and workers were discouraged from forming better job matches with other firms.
The strong surge in new entrants into the Australian labour market – much stronger than in the US – has also meant a relative glut of inexperienced, low-productivity workers. Over time, this effect may subside as workers acquire work-related skills and begin to hit their full potential.
Politicians often fall back on investment in education and training as a way of improving productivity. The reality is that the evidence on this link is unclear.
After all, there has been a significant ramp-up in the number of university graduates in Australia but productivity has not risen in tandem. In fact, the proportion of 25-34-year-olds with a post-secondary degree in Australia is higher (56 per cent) than in the US (51 per cent).
Another way of looking at the productivity gap between the two countries is to think about what has been happening in the US and to draw comparisons with Australia. There are some very noticeable differences in the two economies that are important to understanding the divergence in productivity growth. These include capital investment, energy prices, technology, a flexible labour market, and taxation arrangements. These factors are interlinked.

Indeed, indeed, the pond occasionally thinks about what's happening in the US, including but not limited to, the endless supply of guns and other weapons of war ...

But of course Dame Groan's beefs are the usual ones beloved by the hive mind ...

Take energy prices, for instance. They are significantly lower in the US compared with Australia. For instance, the price of natural gas in the US is close to 80 per cent lower than on Australia’s east coast.
Electricity prices are lower in the US, particularly in certain states. For energy-intensive enterprises, this environment is very attractive.
Technology is clearly playing an important role in driving productivity in the US – think Silicon Valley, AI and data centres. The combination of patient capital, huge rewards for success, and acceptance of failure contribute to the development and take-up of new technologies.
By contrast, Australia has lost its way when it comes to fostering productivity growth. There is a naive belief that the GDP can be divided up in different ways without affecting its growth.
In particular, the Labor government has sought to increase the labour share, in part by mandating or funding higher wages, and boosted government spending assuming neither would damage productivity or per capita incomes.
The economic impact of the hyper-regulation of industrial relations introduced by Labor is downplayed. Having large migrant intakes has led to a capital shallowing that has had a negative effect on productivity.
With the election of Donald Trump, there is a real possibility that the gap in productivity between the two countries could further diverge. We must be prepared to learn the lessons.

The lesson the pond learned? Always hedge your bets. 

Spend lots of time and words blathering away in an exceptionally productive way about productivity and gaps, and then when it comes to the crunch, allow yourself an out, "there is a real possibility", so if anyone bothers to look back, you can always say, oh it was only a possibility, and possibly it went the other way ...

And so to an economics bonus. This one comes from Dimitri and a sidekick.

The pond has noted Dimitri before, more commonly known as a member of the Speccie mob, where he has also consorted with his sidekick, Peter Swan.

A favourite theme is the Kommissars of Kanberra, which offers a little irony, given that Dimitri once paraded as a "former government policy analyst".

What the pond liked about Dimitri was the way he installed himself in a suburban house, 37 O'Connor Street Haberfield, gave his company name a fancy title, Eminence Advisory, dubbed himself a principal, and wandered forth into the world, and began letting off steam, as in The moral hazards of Canberra’s big government project,Without foundational changes to the Australian federation, all levels of government will likely continue to be inefficient.

The team of Burshtein and Swan began with a snap of the heroic Petey boy, Former Treasurer Peter Costello Picture: Jane Dempster/The Australian.

The pond was still trying to work out what the notion of 'moral hazard' had to do with it all. Enlightenment failed to follow ...

The pages of this august publication are replete with calls for ­reform. Tax reform. Economic ­reform. Labour market reform. Such calls are so frequent they offer an opportunity for budding entrepreneurs to produce bright red hats emblazoned with MARA – Make Australia Reform Again.
Unfortunately, Australia’s current political and bureaucratic landscape is so deeply impaired that meaningful and constructive reform of any kind seems improbable in the foreseeable future.
Just as politics is shaped by culture, economic reform requires institutional and structural changes. Without significant reforms within the bureaucracy, there will be no effective counterbalance to the increasing size and sloth of government. Likewise, without foundational changes to the Australian federation, particularly in the dynamics of commonwealth-state and territory relations, all levels of government are likely to persist in their expansion and inefficiency.
Recently, former treasurer Peter Costello lamented that “You cannot rely on the Treasury any more to try and defend taxpayers … they’ve thrown in their lot with this big government, big spend”.
It is difficult to disagree with such an observation given data showing the uncontrolled and unconscionable rise in the size of government in Australia, financed by a rising share of the economy confiscated through taxes.

Indeed, indeed, if everyone in government would just get themselves a suburban house and a grand pooh-bah title, how much better things would be.

As a side benefit, the reptiles could slip in a little AV distraction, cross promoting Sky Noise

Sky News host James Morrow slams Treasurer Jim Chalmers for announcing major changes to the investment mandate of Australia’s $230 billion Future Fund to direct funds to Labor’s agenda. The move has directed funds to prioritise investments in housing, renewable energy and infrastructure. “Just on this future fund business, it is absolutely disgraceful this money it was put aside it was created by John Howard chaired by Peter Costello very recently to provide the money for public service salaries, you know, public service pensions,” Mr Morrow said. “That Treasurer is Jim Chalmer - he is going to squander, absolutely squander, the legacy of 20-plus years of good governance.”

This was extremely productive, inspiring the pair of scribblers to a bout of peak productivity, splendidly designed to troll pond correspondents:

Government spending is consistently rising and as a proportion of GDP sits at 26.5 per cent, up from 24.0 per cent 20 years prior – the equivalent of an additional $70bn in annual spending. And because spending is also growing much faster than taxes, gross debt is also rising and currently sits an inch under $1 trillion.
To the recent generations of Australian politicians and policy boffins, the word reform has come to be an adjective rather than a verb.
Costello additionally warned that the “rigour” within the Treasury had “declined considerably”. But what has not “declined considerably” within the Treasury is the remuneration of its secretaries and executives.
Over the same 20 years that Australian government has undergone its slothful expansion, the annual salary of the Treasury secretary has increased from $465,000 to $960,000. This is an average annual increase of 5.3 per cent, well exceeding both inflation and economic growth.
This misalignment of remuneration and results seems to validate the observation of Thomas Sowell that “it is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong”.
More so in the hands of people who are actually rewarded when they are wrong.
Why advocate for constraint or important reforms when your remuneration is untethered from economic growth and productivity?
But Australia’s growing economic rot is not just institutional. It is also structural, with the effective dismemberment of the Australia Federation.
Where once Australian states and territories were “laboratories of democracy” that could experiment with policies and solutions to address various issues, the decentralisation of borrowing powers coupled with the central­isation of taxing and policy in Canberra has created the mother of moral hazards, incentivising economic irresponsibility across all tiers of government.
Before 1994, the commonwealth set strict annual borrowing limits for state and territory governments. That year, however, the Keating government “reformed” the Loan Council to better align with (what was then) the federalist structure of Australian government.
In doing so, the commonwealth relinquished its power to borrow on behalf of the states. The states would henceforth be accountable to financial markets rather than the commonwealth for their borrowing and financial (mis)management.
Unknown at the time were subsequent legal and policy decisions that today expose all Australian taxpayers to the fiscal and economic ineptitude of Australian governments.
In 1997, in the landmark Ha vs New South Wales case, the High Court of Australia determined that alcohol and tobacco taxes were excises and as such the constitutional provenance of the commonwealth. This decision punched a significant hole in the fiscal wall between the states and Commonwealth. Then in 2000, in a near complete demolition of the fiscal wall, the introduction of the GST transferred a further giant swath of state revenues to the commonwealth.
Today, the commonwealth collects more than 80 per cent of all taxes in Australia. And with this control over the vast rivers of tax revenue, the commonwealth not only started to grow in relative size but started to increasingly meddle in the affairs of the states and territories using the carrot and stick of commonwealth funding.
The outcome has been a disastrous big government and anti-productivity project run out of Canberra that has centralised, standardised, and bureaucratised policy and wrung out any vestiges of policy innovation and tax competition. Consider, for example, education, where despite not operating a single school, the federal Department of Education today employs 1700 people, including 10 based overseas, and has an annual operating budget of more than $370m.

Indeed, indeed, if they just shifted the entire department into a house in Haberfield, think how much better things might be.

At this point, the reptiles interrupted with a snap of another hero, the lying rodent, Still of John Howard in a Labor Party television commercial on GST for the 2001 election.

Then there was time for a final message:

To make matters worse, as part of the political compact to gain passage of the GST laws, John Howard agreed to a system of “horizontal fiscal equalisation” whereby the commonwealth would distribute GST revenues to states and territories to ensure that each had the financial capacity to provide a comparable level of public services to its residents, regardless of differences in their revenue-raising abilities.
This is why Northern Territory residents received $5.06 for every dollar of GST collected in the Territory compared to NSW residents, who received $0.87 for every dollar of GST collected in their state.
The surrender of influence over state debt by the commonwealth, coupled with the dominance of tax collection at the commonwealth level, further overlaid with horizontal fiscal equalisation, has removed key incentives for fiscal constraint. A likely factor why among all the forms of reform proposed, nary a word is said about spending reform or government efficiency.
Federation and institutional reform are a necessary precondition for all other reforms. Don’t listen to us. Listen to Sir Humphrey Appleby who accurately observed: “The public doesn’t know anything about wasting government money. We (government) are the experts.”

Strangely, all this unproductive ranting about productivity plunged the pond into a deep fit of nostalgia, remembering the glorious days when tea ladies (they always seemed to be ladies) wandered around the ABC with a large urn on a trolley, dispensing tea and little biccie treats.

What a glorious, golden time. These days, it seems, you're lucky if you get to piss in a bottle so that Uncle Leon can keep up his ketamine supply...

Never mind, credit where 'Speccie mob visits the lizard Oz' credit is due ...

Dimitri Burshtein is a principal at Eminency Advisory; Peter Swan is professor of finance at the UNSW-Sydney Business School.

Ah, productivity ...

The holiday season at Amazon: Swag, prizes — and mandatory overtime, To offset the burdens of the annual rush known as “peak,” the online retailer offered workers corporate cheer and a talent contest.

(WaPo paywall)

One gingerbread house in Charlotte stood out from others built across the nation this holiday season. Out front, a spiced-cookie figure in a safety vest like those worn by Amazon workers tended a prone gingerbread person wrapped in a Band-Aid.

The candy-studded construction stood inside an Amazon warehouse last week after an internal gingerbread building contest for workers. It was part of a corporate feel-good blitz aimed at boosting morale during the mandatory extra hours the company requires during the holidays.

As many white-collar workers log back on to work after the holiday break, Amazon staffers are reeling from the annual crush known internally as “peak,” which runs from November’s Black Friday discounts through the flood of returned gifts in January. Managers in one Ohio warehouse felt the need to post a notice reminding workers to shower and use deodorant.

Amazon tried to soften the impact of its extra demands in Charlotte this year with the gingerbread house contest, raffles, free T-shirts and a holiday meal catered by Golden Corral, said Aleasha Reese, 65.

Around the country, workers also received incentive pay and free drinks from 7-Eleven, and won prizes like water bottles and stress balls from roving “swag carts.” They were also invited to submit videos for a global “Unbox Your Talent” competition offering trophies and raffle prizes. It was ultimately won by a German employee with a talent for balancing.

Reese, who has worked at Amazon for seven years and won a TV during a previous peak season, said the perks have declined in quality. “The stuff they was giving out wasn’t worth it” this year, she said. “It’s like, y’all done made a billion dollars, and this is all you can offer for a prize?”

Peak rolls around inside Amazon each year as millions of consumers have come to rely on the company as a way to score deals after Thanksgiving and source convenient holiday gifts in December.

The jump in orders is huge. Amazon said that one Massachusetts delivery station that usually receives up to 65,000 packages daily handles more than 100,000 each day during the holidays.

The strain placed on workers during peak can be serious. In July, a Senate report found that workplace injuries increase during Amazon’s busy seasons.

Just before Christmas, an overwhelmed Amazon delivery driver in Massachusetts abandoned more than 80 packages in the woods and later told police they had been “stressed.” Amazon said all the packages were ultimately delivered on time.

Amazon spokesperson Steve Kelly said during peak, Amazon places “an extra emphasis on recognizing, honoring, and celebrating our employees for their commitment to safety, teamwork, and service to our customers,” and that employees are encouraged to share ideas for new appreciation programs with local managers. Amazon founder Jeff Bezos owns The Washington Post.

To get those millions of holiday packages where they’re going on schedule, Amazon implements what the company calls Mandatory Extra Time. Employees can have an extra 45 minutes added to their usual shift, or in some cases be required to work five eleven-hour shifts rather than their usual four ten-hour shifts, workers said.

In a November message to workers at one Amazon facility, management warned “peak season is just around the corner … there is a potential risk of working up to 60 hours per week.”

Amazon said employees are paid overtime for any additional hours, and can’t be asked to work more than 60 hours in one week, 12 hours in a single day, or six days in a row.

Some Amazon sites also offer additional incentive pay, such as $50 extra per shift or an added $5 an hour for holiday overtime. “It’s a great time for people who want to get extra money,” said an employee at a Florida delivery station, who like most other Amazon workers interviewed for this story spoke on the condition of full or partial anonymity to protect their job.

But some workers say the grueling pace of peak can take a toll that worsens the already taxing environment inside Amazon facilities.

At more than seven delivery stations and fulfillment centers in New York, Southern California, San Francisco, Illinois and Georgia this year, peak games and promotions unfolded while members of the Teamsters union picketed outside and some Amazon workers walked off the job to demand higher pay, better working conditions, and for Amazon to bargain on a contract with workers who’ve voted to unionize...

So it goes in productivity land ... productive for billionaires, not so productive for others ...

The pond does apologise. There are always going to be occasional down days like this, when the lizard Oz's A team hares off for a productive January doing SFA ... 

But the summer holyday season will soon be over and soon the A team will be back, refreshed by doing SFA and ready for a new bout of peak productivity, and then there'll be a productive time for all ...