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The Forum > Article Comments > Economic factors affecting the housing market > Comments

Economic factors affecting the housing market : Comments

By Saul Eslake, published 19/3/2007

Australian residential property prices have shown remarkable resilience despite the end of the boom.

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Saul, your response is much appreciated.

“...those who believe that a lower population growth rate should be pursued as an objective in its own right should support measures designed to increase the growth rate of per capita income…”

Yes indeed! Along with better wealth distribution. Currently in Australia we have high economic growth that just simply isn’t translating into significant average per-capita improvements in overall quality of life, even with the minerals boom.

“However I get the impression that 'Guy V' and 'Ludwig' also favour the pursuit of lower, and possible even zero or negative, per capita income growth as an objective.”

Not at all. Real economic growth should continue. But it needs to lead to significant per-capita improvements and not be just providing approximately the same quality of life for ever-more people, and huge wealth gains for a small fraction of the populace.

Economic growth needs to be based progressively more on sustainable industries and an innovation-oriented platform, and less on non-renewable primary industries and potential renewable industries that are being overexploitative. And it most definitely should NOT be based on continuous expansionism, ie on population growth. In short, it MUST sit within a sustainability framework.

Economic growth that is based on technological advances can continue almost indefinitely.

We need to separate the two halves of ‘growth’. They are very different things. One side of it is the expansion aspect while the other side is the good development aspect. The first is highly undesirable within a scenario of stressed resources and a damaged environment, while the second is highly desirable.

And we need to get right away from the notion that economic growth per se is the bottom line, and that we must have high population growth in order to maintain high economic growth.

continued
Posted by Ludwig, Friday, 30 March 2007 3:37:51 AM
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Saul, you don’t seem too concerned about the highly unsustainable nature of our current expansionist-based growthism. It is reaching a critical stage in Australia, especially with our water problems. There is a huge imperative to wean ourselves off of our expansion-based economic system.

This is surely the great challenge for yourself and all economists and politicians – to do this quickly while maintaining a healthy economy and implementing true per-capita economic growth that translate into significant quality-of-life improvements.

So as it pertains to the housing market, the answer to unaffordable housing must NOT be to simply free up more and more land. It must be to address the demand side of the equation by lobbying strongly for much-reduced immigration and other population stabilisation measures.
Posted by Ludwig, Friday, 30 March 2007 3:40:18 AM
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Saul,

Apologies for having the temerity to point out the extent to which your objectivity is compromised by your employment as Chief Economist for the ANZ bank. I believe it is an ethical imperative that this point be brought to the attention of your readers in order that they may assess your views in their full and proper context.

In response to your statement that: ‘I don’t feel under any obligation to respond to comments on articles of mine which are posted on OLO’; if you do not wish the quality of your opinion pieces to be the subject of critical debate, I suggest you stop having them published in the Australian Financial Review and posted on Online Opinion.

Your arrogant and dismissive attitude demonstrates a contemptible disregard for your readers. I will wager that this is the last time you ever post an article on Online Opinion and that you will petition the operators of this site to have my comments removed. As Ludwig notes, your silence undoes your credibility.

Returning to the issue at hand, I do welcome your candid admission that personally you don’t argue for ‘increased immigration on the grounds that it boosts [per capita] economic growth’. Indeed, how could anyone? Instead you found the justification for Australia’s immigration program on ‘net social benefits’ stemming from increased ‘diversity’.

In doing so you appear to be attempting to close down any debate on the issue. If anyone dares challenge you now, you can rattle off hackneyed claims of ‘racism’ and ‘xenophobia’. I seem to recall the last person to seriously question our immigration policy on this basis, Pauline Hanson, was ruined financially and eventually wrongfully convicted and sent to jail.

(continued)
Posted by Insider, Saturday, 31 March 2007 4:16:08 PM
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(continued)

I leave the issue of diversity and its benefits, or otherwise, for others to debate and focus instead on the core issue which still remains unaddressed. Liberal and Labor governments since 1975 have presided over a deliberate policy of population growth founded on immigration. That program has done little to improve GDP per capita while pushing house and land prices beyond the reach of average Australian households.

Leaving aside other relevant factors, the exorbitant cost of housing has seriously damaged the standard of living of all Australians, particularly young families. The decline is not captured in traditional proxies of welfare like GDP per capita or real wages. The next generation of Australians are attempting to commence families while carrying an incredible financial burden unprecedented in our history, a burden for the most part represented by money lent by the major banks.

We are all diminished by the curtailed freedom of speech that surrounds our immigration policy. Bi partisan political support and a supine media has permanently removed the issue from public consideration.

If you want to talk to anyone, talk amongst yourselves. The politicians, bureaucrats and business leaders determining our immigration policy are not going to listen.
Posted by Insider, Saturday, 31 March 2007 4:16:52 PM
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Insider: Do you think we have democracy in this country? Let me rephrase that. Do you think people really get the governments they want?

If the major parties, media, big business and perhaps some others thrown in for good measure, are conspiring against the average Australian, why do you think people put up with this?

Maybe Pauline Hanson and other minor parties or independents really are nitwits, but if the major parties, media, big business, etc. really are on the nose, then why aren't people deserting them in droves to at least follow people like Pauline Hanson who are so much more down-to-earth?

It seems to me that people are either really, really dumb, or we have some sort of fascism where elections are rigged, or maybe people actually don't find this system too intolerable. I can't find another explanation for why election after election (state or federal), we keep getting more of the same. We can't even claim it's to do with voter apathy since people must vote, and if they really didn't care, they'd either donkey vote or randomly pick candidates (and you'd expect a fairly even split between all candidates).

I can predict right now that I'll be getting a major sense of deja vu after the federal election later this year.

Incidentally, I don't know why Saul contributes articles to this site, let alone responds. Maybe it's just me, but if I were in his position, I'd be lapping up the high life ostentatiously and if I did deign to speak to a pleb like me (in my current, real form), it would be in a "let them eat cake" manner. Of course, maybe he's not as twisted an individual as I am, or he's at least better at hiding it. ;D
Posted by shorbe, Saturday, 31 March 2007 4:36:22 PM
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The only reason 'Insider' can 'point out the extent to which my objectivity is compromised by my employment as Chief Economist for ANZ' is because my name and occupation is fully disclosed on this website and in everything that I say or write. On the other hand, who is 'Insider'? Who does he (or she) work for? Why does he (or she) hide behind the veil of pusillanimous anonymity, making gratuitous (and as it happens) totally erroneous assumptions about my salary, and suggesting that my employment or my income disqualifies me from having an opinion on this particular subject?

I have no intention of petitioning the operators of this site to have 'Insider's comments removed. Nor do I have any intention of seeking to 'close down' debate on this issue by accusing 'Insider' of 'racism'. I do however challenge 'Insider' to out him/herself if he/she wants to continue making gratuitous personal attacks on me rather than debating the issue. And if he/she wants to wager that 'this is the last time I will ever post an article on OLO' then he/she will lose his/her stake.

I was not intending to be 'arrogant' or 'dismissive' in stating that I felt 'under no obligation to respond to comments on my articles on OLO'. Where is it stated that I am under such an obligation? However I went on to say (although 'Insider' chose to overlook it) that I am usually happy to do so, as I again have in this instance - as 'Ludwig' (who can attest that I do respond to comments on my articles) and 'Guy V' have been kind enough to acknowledge in this thread. I also respond to interlocutors on other sites such as Tasmanian Times and Club Troppo. I suspect I do this more willingly than many other authors whose articles are posted on OLO.

(to be continued)
Posted by Saul Eslake, Saturday, 31 March 2007 5:58:41 PM
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