Here, Have Some More Idiot Economics

This is The West’s useful idiot of an economics editor Shane Wright, wondering the other day where WA’s economic growth was going to come from. If you would like to play along at home, try to strain your brain for the answer – goodness knows Shane tried to have a go:

Where is WA’s economic growth going to come from?

Over the past six months the WA economy, excluding imports and exports, grew about 1.3 per cent or a touch over $660 million.

For a State that’s gone the rounds of economic pain for so long, it was a great result.

But we’ve got to put this in some context. Domestic economic activity in WA peaked at $60.4 billion in the September quarter of 2012. The same figure for the just-completed September quarter was a smidgen under $51 billion.

In other words, there is more than $9 billion less in local economic activity running through the financial veins of WA taxpayers and businesses.

That’s the pain that we’ve all felt over the past four years.

It is hard to expect another mining boom to generate a huge lift in wealth and activity. The last boom was the biggest since the 1850s gold rushes that made Victoria one of the richest parts of the world (like the iron ore boom made WA one of the richest spots on the planet).

For instance, it took just 15 months for State final demand to climb from $50 billion to $60 billion. The quantum of that climb is what WA needs to make up just to get back where it was — but the chances of it taking just 15 months is akin to the Gold Coast winning next year’s premiership flag.

This is one of The West’s beat writers reporting the bleeding obvious WHICH HAS BEEN THE WORST KEPT SECRET GOING AROUND TOWN yesterday:

There are fresh signs of growing confidence among WA businesses, with the State’s environment watchdog reporting a return to numbers of major projects not seen since the resources boom.

Environmental Protection Authority chairman Tom Hatton has revealed the agency received about as many proposals “warranting” assessment in the five months since June as it did in each of the previous three financial years.

Treasurer Ben Wyatt welcomed the figures as “further evidence” that WA’s economy had turned the corner, while the State’s peak business lobby said they showed investment confidence was rising.

Between July and last month, the EPA moved to assess 15 proposals ranging from iron ore, nickel, lithium and copper mines to transport, agriculture and land developments.

Well blow me down with the piece of paper Shane’s economics degree is written on (assuming he has one): WA’s economic growth might just come from digging things out of the ground and using those kinds of things to build other things. Wow, what a revelation. I think I need to meditate on this.

(Hot tip Shane: you might want to have some senior HR people in your network and see where they’re recruiting and not recruiting – AND WHERE THEY’VE BEEN RECRUITING LIKE MAD LATELY. Wink, wink!).

You see, when Shane’s not busy making economic conclusions based on the global iPad and iPhone indices – and telling us that the same product should cost the same amount everywhere in the world (yes, really) – he’s busy trying to guess the answer to the world’s most obvious question. Seriously, you might as well be asking where Saudi Arabia’s economic growth is going to come from.

Of course, in typical style, when it comes to answering his own question, Shane has enjoyed mixing his apples with his oranges – beginning with WA’s Gross State Product before moving on to ‘final State Demand’ as the metric of ‘choice’. He then succeeds in putting together the most illogical and nonsensical ‘answer’ possible (i.e. to where WA’s economic growth is going to come from) by effectively concluding that:

  • the effectiveness of mining should be judged by whether it can bring WA’s ‘State final demand’ back to previous boom conditions (within the next 15 months it would appear);
  • there’s no way there could possibly be another $9 billion or so in WA mining (!);
  • WA’s previous peak ‘State final demand’ had nothing to do with WA’s economy being overvalued and is an appropriate target to aim for right now (based on what exactly I don’t know); and
  • mining can’t possibly be the answer to WA’s economic growth because we just had a boom, it couldn’t possibly happen again and therefore WA needs to look elsewhere for economic growth and stop wasting its time with mining.

Excuse me?

One can only guess that Shane thinks we need to be demanding more iPads to lift the WA economy. And just what do they make those out of I wonder?…

The problem with leftists like Shane is that they seem to think that economies are demand driven – and that you can simply drive an economy by ‘stimulating demand’, with everything else following thereafter (which is akin to watering nothing but the leaves of a plant and expecting it to grow properly). It’s why people like Shane incredibly have no idea where WA’s economic growth is going to come from. Presumably, Shane would have people dig holes, fill them up and re-dig them in the exact same spot and call it economic activity – while advanced aliens from outer space looking down on the whole affair would wonder what species of Neanderthal they were observing.

One can only imagine the bunch of flies that must be buzzing around in Shane’s brain when he sees that it’s the supply side yet again doing the heavy lifting and driving the rest.

Keep gettin’ dem cheques Shane!

PS: try to guess where Shane is a regular panelist (you’ll need to click the yellow ‘show more’ button a couple of times).

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