Dr Terry Dwyer is a tax expert who worked in federal treasury before going into private practice, then later taking up the law. He commented recently on the apparent paradox that Australia leads the world on so many economic indicators, yet there is widespread anxiety and concern about the state of the economy:
“It’s not so surprising. People instinctively know that rising land prices are phantom wealth, liable to evaporate when interest rates return to normal as they must if inflation is not to go berserk. The real measure of prosperity is not asset prices but the trend in after-tax real wages. Is it getting easier or harder to buy necessities and luxuries?
All the rest is economic noise.
For example, who cares if GDP rises because people are working 10% more hours? Unless after-tax buying power rises by more than 10% you are going backwards.
Most economists who comment on economic data don’t seem to understand these basic statistical truths and so are puzzled by what is rational economic behaviour by the so-called punters who are better intuitive economists than many economists.
For example, ordinary people rightly fear their children will never have homes of their own and have much lower living standards. Hence the concern about land price false ‘prosperity’ built on the enslavement of the next generation.”
Unlike most financial pundits, Dr Dwyer clearly has his finger on the nation’s pulse.