Booms in The Age

I have a short piece today in The Age [over the fold]:

Blurred picture of the landscape

The Age, 24th October, 2007

EVERYONE likes an economic boom, except when they don’t. We like low unemployment, high investment and cheaper imports when the Australian dollar is high. But we don’t like having to pay more to attract workers, lower prices for exports and, of course, inflation.

There are consequences to a booming economy – and those consequences are unevenly spread. Sometimes unevenness is resolved as a matter of course. For instance, mortgage holders hate high interest rates, but those living off past savings love them. There is no direct conflict between the two groups. The economy sorts it out.

In other situations, the consequences give rise to a flashpoint with visible conflicts. For instance, I might benefit if there are few job seekers in my profession but there will always be a flip side, when those who pay my wages face cost pressure.

Given that these two groups deal directly with one another, it should not surprise us that there will be disputes. In a booming economy, workers may take industrial action to increase wages while in a slump, they may engage in it to preserve what they have.

What is significant in this election is that the evenness in economic circumstances probably translates into a blurred picture on the political landscape. The flashpoints tell us that. So it is hard to believe that a single number – the CPI or the interest rate – will really drive the election outcome.