As Rebecca Shaw so perfectly put it, the world is being burned down by losers, but when did we decide to be OK with mediocrity? When did we decide to aim no higher than the middle – whether in politics or economics?
This week the OECD released its latest report on the global economy, where the pretence is that things are mostly normal and fine. The report’s title was Finding the Right Balance in Uncertain Times. And I had to think, “balance” between what?
The clear issue is Donald Trump, whose policies often seem like thought bubbles based on whatever unscientific garbage he heard on TV in the 1980s and still thinks is true. But we can’t mention that and so instead we talk about “uncertain times” and needing to find a balance between that and, I guess, reality?
Similarly, the IMF’s most recent report in April was A Critical Juncture Amid Policy Shifts.
Ah yes, policy shifts where Trump put a tariff on every country including those uninhabited by humans, and is instigating an authoritarian regime in the world’s biggest economy. But rather than sound the alarm we talk of “policy shifts” as though Trump is just tweaking a few regulations.
This week as well, the IMF’s economists warned of “weak growth as economic environment shifts” in a note that referred to “diverging pathways in a fragmented global economy”, which is bland even for that organisation.
But we have long taught ourselves to smother things of great concern with blandness and pretend that nothing truly bad is happening.
This week Trump’s speech was full of derision and division at the UN, and yet whether or not he would meet with Anthony Albanese remained a note of concern across Australian political media.
None of those talking up Trump “snubbing” Albanese think a meeting has any possibility of a good or logical outcome, but apparently we should not demand more from our politicians than their acting a foolish pantomime based on standards that haven’t applied for more than a decade.
Not to worry, Trump will spout idiocy and journalists will write it up as though it is normal.
The entire OECD report, for example, mentions climate change just once – as an afterthought in a list of “difficult budgetary choices … such as rising defence spending [which] augment the impending fiscal pressures from ageing populations and climate change.”
Don’t get too worried about climate change; it’s just a budget choice!
And don’t get too worried about the Trump administration’s policies – they are just “risks”, even as the OECD points out that effective tariff rate on US merchandise imports is now the highest rate since the Great Depression:
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The OECD report also included forecasts for economic growth for this year and the next, and Australia is set to do well in comparison with other large economies:
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That is fine for us, but the reality is Australia, as well as the rest of the advanced economic world, is mired in mediocre sludge.
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The OECD’s expectation of 2.3% GDP growth is not far off similar IMF’s estimates, which go out to 2030. At no point does the IMF predict growth anywhere close to the long-term average:
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To be fair, the OECD and IMF are a pretty dull organisations devoted to calming the horses, even as they are being led away to the knackery – ignore climate change, ignore Trump and just keep mentioning (as the OECD did) that “monetary policy should remain vigilant”.
This is important because next week the Reserve Bank will meet, and all signs are that it will “be vigilant” and keep the cash rate steady at 3.6%. And I have to ask myself: why would that be at all acceptable unless mediocrity was the aim?
No one thinks our economy is surging; indeed, the most recent unemployment figures show that unemployment has been rising and has now been above 4% all this year:
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Not that long ago economists were talking up the hope of locking in unemployment at 4%.
But no. The RBA decided it was wrong to aim for a situation where “everyone who wants a job should be able to find one without searching for too long” (as was stated in the 2023 employment white paper). Rather it felt it better that an extra 100,000 or so people lose their jobs, because it believes that needed to happen to get inflation below 3%.
The RBA so lacks ambition to lock in historic low unemployment that rather than provide stimulus to a slowing economy, it has sought every opportunity to avoid lowering rates.
As a result, Wednesday’s monthly CPI figures showing inflation grew at 3% over the past year will most likely be taken as reason to do nothing next week, despite the underlying inflation measure falling from 2.7% to 2.6%:
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Rather than seek stronger (heck, even average) growth or lower unemployment, the RBA’s governor, Michele Bullock, seems more concerned about things heating up.
On Monday she warned the House economics committee “there may be more excess demand in the economy, and labour market outcomes may be stronger than expected”. She also talked of household consumption picking up, without noting how far below trend level it remains:
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All of this however is unfortunately very much in keeping with the times.
If the RBA is to do nothing next week, it will not be a case of prudence or a need for more data, rather it will be just another example of one of our institutions aiming low – settling for the middle, rather than seeking better things.
• Greg Jericho is a Guardian columnist and policy director at the Centre for Future Work
