u/Forsaken_Alps_793

"If our patients are living healthier lives, if our students are getting a better education, and if we're doing all of that for the same dollars, that should represent a productivity improvement," he says. 

Some of these economists need to expand their horizon and study scientific management.

• If patient are living healthier lives => it should be able translate to monetary term = lower health care budget [empirical data suggested otherwise]
• If our students are getting a better education => unless it is self funded and for personal improvement, it should translate to better specialization skills that society values => again that should be able translate to monetary term.
• If we're doing all of that for the same dollars but no and low return == parasitic [something we want to avoid]

In Georgia Harraway-Jones's case study, the measurement criteria is to remove her need to find houses. This is where balanced scorecard is important, not just a single headline metric. If our social housing is available, it goes along way to alleviate addiction, mental health and poverty AND remove her need to find housing = that's productivity and its is measurable in monetary terms.

My potato hotbed reduces demand from Agriculture sector [they grow like weeds here, i.e. cheap = productivity gain].

That should translate to cheaper price for those who can't have a backyard or a farm [all else being equals] and reduce food waste [and transport / pesticide etc costs]

Addendum to don't waste a good crisis.

Our current predicament is "is not of delay economic reform".

It is a "degenerate practice of Keynesian economics" [I leave the reasons for such practice to the r/AusPolitics] .

Public sector get most bang for "our buck" by investing infrastructure in a "crisis [aka recession]" = productivity gains - think Hoover Dam.

What did our political masters [by extension us] do instead?

Don't waste a good crisis!

Our biggest bank, Commbank is heavily reliant on Microsoft (including Azure) an American corporation.

Most cloud services which our government departments rely to deliver our services are American.

Should we remove and reduce our reliance on these too?

Our military assets are mostly American based.

So how far should we go?

Isn't most debit cards are now running as an app via EMV standard?

That is EMV stands for Europay (merged with Mastercard), Mastercard Visa

The RBA isn't trying to compel businesses to cut their prices to bring inflation down. It's trying to engineer a situation in which businesses stop raising their prices so quickly.

That's it.!

Really? It that the whole story?

• Increase in OCR will not depress asset prices - i.e. by increasing the discounting rate?
• Addendum to point 1. depressed asset price will not mean borrowers, be it "retail, business, or consumer" be able to borrow less than usual be it for collateral for personal loan, business loan, margin loan, investment loan, (i.e. decrease money supply) thus suppressing money circulation?
• Addendum to point 1 again, depressed asset prices will not mean more likelihood for a margin call be it retail, business or financial institutions, thus requiring more "cash buffer" (i.e. increase saving and thereby decrease money supply) thus suppressing money circulation?
• Higher discounting rate will not mean higher investment hurdle be it government and private sectors for asset building projects thus suppressing money circulation?
• Increase OCR will not mean more incentive to put money into bank account, be it by individual, business or government rather than embarking on risk taking adventure such as asset building venture (i.e. increase saving and thereby decrease money supply) thus suppressing money circulation?

The above are not demand side suppression function of an OCR [instead of stop business raising their prices so quickly] ?

[Tin Foil Hat] bias really show no?

Please note it is possible to have a deflationary event and RBA need to manage that too via the interest rate transmission process.

Please note 2 all else being equals the higher the debt the higher the sensitivity, i.e.the more effective, of the RBA's interest rate transmission mechanism [i.e. less need to raise more].

Given private sector is a pariah on investment, guess which sector are expanding money circulation via investment?

Hint a sector with (a) the highest tax take, (b) still embanking on investment calling it nation (asset) building projects and (c) despite previous points, the IGR said, we still be running a deficit for some time even though we are in a commodity boom?

AFR is trying ever so so hard.

No we are not.

All we need is to measure ourselves with simple 5 metrics [KPI - industry based].

1. How long does it take to start a "pop up store"? - lower the better.
2. How much does it take to start a "pop up store"? [incentive] - lower the better.
3. How many regulations does it touch to start a "pop up store"? - lower the better.
4. How quickly can one dissolve a "pop up store" [should MVP prove not to be a viable niche]? - lower the better.
5. How cheaply can on dissolve a "pop up store"? - lower the better.

Start at the grass-root!!!

The rest will take care of itself.

That is, the 5 metrics are designed to encourage experimentation - MAKE SURE SUCH EXPERIMENTATION IS CHEAP AND QUICK [in order to determine whether such business venture is a signal rather than noise. If the former, expand and if later disband]

Have a Extremistan mindset - NOT a Mediocristan [i.e. encourage dynamism - the world is not deterministic and exploit turbulence flow].

Take heed that even with all those differential equations in econometrics [i.e. deterministic] for RBA / economists, they still can't even predict interest rate and inflation. So the next best thing is to trial and error!!!!

[btw trial and error is also where most differential equations came from]'

EDIT: For example.

If I were to sell my surplus persimmon this year at my farm gate.

- I need to be aware of whether I am classified as a "commercial horticulture" regulation - hit 1.

- If I sold more than $100, I will need to fill in some form and pay the 6c+ to the government - persimmon levy - hit 2.

- If I to processed this - that is freeze the astringent varieties) and packages it as an plastic "ice cream" cup like container- there is whole boat load of regulations I need to comply -hit 3.

Before I even try, I already need experts and compliance officers!!!

Not a very attractive proposition isn't it.

Are you sure RBA is not following the dictate of the market?

Even if RBA does not raise the OCR, our Banks will regardless.

The cost of capital (bond yield) is rising. So lenders will pass on this on and raise the interest rates accordingly regardless of RBA's decision.

IMHO, more like RBA [most Central Banks for that matter] is [are] playing catch up.

Funny timing isn't it [tin foil hat]?

Did some digging.

Came across an old article [2014] from RBA by Peter Tulip.

https://www.rba.gov.au/publications/bulletin/2014/dec/pdf/bu-1214-3.pdf

Page 21 is of particular interest lol.

On Housing:

The increase in household disposable income has involved a surge in demand for housing. However, whereas most other elements of consumption are supplied elastically, the supply of housing is relatively fixed in the short run. Thus, the mining boom results in a substantial reduction in vacancy rates and an increase in rents. Although high rents and house prices encourage housing construction, these effects are more than offset by higher interest rates after 2009 relative to the counterfactual (Graph  7), which depress dwelling investment. So despite a large increase in nominal consumption, the supply of housing declines, compounding the downward pressure on vacancies and upward pressure on rents.

On Manufacturing:

The manufacturing sector has been the focus of concern about the ‘Dutch disease’ and ‘deindustrialisation’. In the short term, manufacturing output is supported by the higher incomes and expenditure associated with the mining boom. In particular, manufacturing benefits from strong demand for equipment and material used in construction. As a result, investment by manufacturing is higher in the first few years of the boom. However, this effect is more than offset by the 40 per cent appreciation of the exchange rate, which makes manufacturing less competitive. In the first decade of the boom the net effect is moderate with manufacturing output estimated to be about 5 per cent lower in 2013 than it would have been in the absence of the boom (Graph 10). Then, as mining investment fades, and with it the demand for manufacturing inputs, the relative price effects increasingly dominate. By 2016, manufacturing output is estimated to be about 13 per cent lower, an effect that continues to increase over time. However, it would be wrong to conclude that the mining boom is the main source of the manufacturing sector’s relative decline. Manufacturing has been declining as a share of total employment for decades (Graph 11). The mining boom accentuates this trend, but its contribution is small compared with the changes that have come before

Love it....more of this please. Thanks OP.

Relying too heavily on "useful" model and ignored the possibility of fat tail and dragons that do exist in reality much like LTCM perhaps?

Sad case but pioneering a new frontier always operating on Law of Large Number principle, especially when the fog of unknown is large. Fail fast, fail cheaply (I hope lol), learn from it AND hope the outsize potential gain once realised it larger than all those failures - so it is to be expected.

Side note - Drill is one thing. Getting it to market (setting up the supply chain) is a whole new ball game and cost consideration [same as renewable - ala the grid]

Great finding. Great direction to the productivity puzzle.

Now the next question would be "why do not these employees switch firms to increase in their earning power"?

What "barrier" (or are we operating in a monopolistic / oligopoly economic regime environment) preventing these employees from demanding higher prices for their increase productivity?

Another research direction, are these individuals going oversea to seek better pay for their increase in productivity skillset and/or what barrier stopping them working remotely oversea to fetch better price?

Business must compete for resource. And employee itself is a business by proxy. So what stopping these individual risking it and starting their business for their increase in productivity offering the same specialised functions?

R!!!!!!!

pffttt!!!! ok ok I get it lol.

Yup agree.

Just because we can't measure directly does not mean we can't measure it, indirectly - we know sub-particles exists yet we can't see it directly.

Even this seems dubious

And in a mature, high-income economy like Australia, success may increasingly be defined not by how fast we grow, but by what we choose to value.”

Not sure there is a link between "productivity vs how fast we grow" come from.

But the fact that we complaining about CoL, Inflation and Wage Growth means using O’Mahony's framework tells us, using his words "current economic policy [regime] is not maximising societal wellbeing,"

But good read though - it challenges one's assumptions.

Fully agree. That's why I ask:

Question then, how should the capital deepening to occur when the incentive and risk structures [including RBA's constraint from increasing interest rate] of most investment [borrowing and by extension money supply] ties [and biases] toward the return from non productive assets, like housing [if I may, not quite true, but the analogies of Ponzi scheme / Pyramid Marketing scheme paint the right heuristic vibe - hence OP's assertion]?

I would further invite you, please DO start harping.

Otherwise, if it not measure, it will not get done!

Staying silence means no one knows and implied a complicit to the current regime.

Harping on is that gauging meter for investment on productive metric.

Point taken but employment market is not a major issue [and mostly agree with your assertion technically]. We have low unemployment number and many people seem to be able to secure multiple jobs.

Investment in productive asset that increases productivity creates a "competitive incentive for labour". This is because they are more willing, CAN AND ABLE to pay more for that labour than the low productivity counterpart [i.e. liberating / raiding non productivity roles] - which also explain why we have a wage growth problem.

What we need is increase in investment on productive asset - capital deepening - again ties back to the harping on increasing productivity.

And that capital deepening is not the sole domain or exclusive to the business sector.

Government [as an institution] thru their spending can ALSO increase capital deepening - for example the expected return from an infrastructure spending exceeds the interest rate on the debt [*]

Question then, how should the capital deepening to occur when the incentive and risk structures [including RBA's constraint from increasing interest rate] of most investment [borrowing and by extension money supply] ties [and biases] toward the return from non productive assets, like housing [if I may, not quite true, but the analogies of Ponzi scheme / Pyramid Marketing scheme paint the right heuristic vibe - hence OP's assertion]?

* so going back to your NDIS argument - should the productivity gain i.e. by freeing/liberating up more opportunity for that labour and that money that would otherwise locked in from pursuing capital deepening outweigh the cost of NDIS, why shouldn't we support it? - that was the original design of NDIS (or HECS or Medicare for that matter) and has the government [as an institution] releases any metrics to measure that "critical success criteria's" performance?

With interest rate increase in proportion to inflation?

IMHO, the underlying root cause is low interest rate [*].

Increasing interest rate theoretically depresses asset prices

It also creates friction on government spending via increasing the interest servicing cost.

RBA should start there.

But RBA is walking on a tight rope.

This is because we (including our government) are too leveraged on the back of non productive assets (including weird infrastructure projects, housing, etc). Lifting the interest rate too quickly will cause a financial crisis.

And lifting the interest rate will probably kill the already dutch disease weakens business sector - i.e. productive assets will become even more unproductive [especially when it reaches terminal point].

The only way to navigate this tight rope safely without crashing both is to increase productivity from our productive assets rather than focusing on redistribution - fix the underlying structural issue not applying lipstick on a pig.

* compare to recent history, 4%+ interest is barely a blip. Ask the older generation about their mortgage interest rate!