Well, to be fair to Alan Oster, Group Chief Economist National Australia Bank, at least he said today he’s come to see “the glass is half-empty”. (See yesterday’s blog)
China’s still looks to be a goer for us, and watch out for Australia’s LPG sales rapidly escalating, he forecasts.
But do economies really work from the top down?
Almost in passing, he said people are leaving their money in the bank.
Unfortunately, he didn’t take that thought any further.
It was left to other speakers at “State of the Market” to mention that, apart from increasing their savings, the punters are also trying to pay down the mortgage. They’re still worried, and don’t quite believe the recent increases in some residential markets are indicative of a genuine upturn.
People know there’s more correction to be wrung out of this bubble but today’s trying-to-be-upbeat speakers were unprepared to say as much.
To me, this all this decodes to ineffective demand being slowly visited upon Australia. Retail’s certainly in the doldrums: just pop into any Myer or David Jones.
And isn’t it really whether people are spending that determines the direction of the economy?
Oster said eateries and health are sustaining us – but I guess health cuts both ways, Mr Oster?
I’m suggesting the glass may have recently been half-empty, Alan, but its contents continues to diminish.
Demand is why supply rises to meet it. It’s certainly no myth. Humans have infinite wishes/demand, but these days less and less EFFECTIVE demand, Chris. And if you understand the laws of distribution, ineffective demand can be easily remedied by letting people retain their EARNINGS.
Yes, I understand the original, but thought the interpretation amusing.
I just think you missed my point; demand is a myth.
Near enough, but actually, “quod erat demonstrandum”. [Which was to be proved.]
Had someone explain QED as ‘quite easily done’ today. Amusingly, it fits quite well with its usage.
No disagreement with the need for the collection of rent, or the need to reduce wage and capital taxation.
Demand necessarily comes after supply. You can only go to market with what you have produced. You cannot demand save that you have already supplied.
This entirely a different thing than supplying something that is not in demand. Demand always exceeds supply, it is a bottomless pit. To improve the strength of an economy, production must increase. You cannot increase demand.
You read but do not comprehended, grasshopper! Manufacturers may produce all they wish but it must sit on shelves and in warehouses if there is little effective demand.
We have high taxes, high land prices and much debt. Resource-based revenues instead of taxation would remedy maldistribution of created wealth, so that people come to RETAIN what they have EARNED but pay for the land and resources over which they have been granted exclusive possession.
The rentier, the 0.01%, has seen to it that deadweight of taxation and high land prices have left the vast majority with insufficient wherewithal. Reversing the process is the world’s greatest need. Amend twisted revenue regimes excessively rewarding property and resource holders and penalising labour and capital, then watch as production rises to meet enormously increased demand. QED
Actually, no, it’s not how much people are spending that determines the strength of the economy. It’s how much they are producing.
It’s another basic truth that has been largely forgotten since the time of Henry George.