Australia’s Annual GDP Growth Falls to 3.1%

And so this wonderful week of economic data hit the peak today with the national accounts being released by the ABS (labour force and industrial disputes are out tomorrow).

The September quarter figures should in seasonally adjusted terms, Real GDP rose by 0.5%, for an annual rate of 3.1%. This was a fall from the year on year rate in the June quarter of 3.8%. Those sharp thinkers among you might recall that in September when the last figures were released the year on year growth was 3.7%. The ABS revised the last few quarter a bit:

	June Growth Figures	September Growth Figure
September 2011	1.128%	1.181%
December 2011	0.502%	0.695%
March 2012	1.376%	1.298%
June 2012	0.644%	0.578%

Back when the March 2012 figures initially came out there was a fair bit of hoo-ha suggesting the ABS had stuffed it all up because the March growth was 1.3% (or more specifically 1.2957%).

Tim Colebatch (who I generally think gets it right) for example wrote at the time:

THERE'S an old saying among economists: if a figure looks wrong, it usually is. Yesterday's estimate that GDP grew 1.3 per cent in the March quarter amid all the job cuts is a good example.

These figures strain credulity.

And he ended with:

Wayne Swan wants us to take pride in these figures. I would if I could believe them.

At the time I tweeted a pretty scathing assessment of his piece.

Well since then the March quarter growth figures have been revised. Last quarter they were revised up to 1.376%, and this month they were revised down to 1.298%, leaving them a whopping  0.001% different form the initial estimate.

I think we can believe them.

OK some graphs – here is the quarterly growth:

It doesn’t look all that wonderful to be honest. Take out the (very good) March figure and things are not looking that rosy. And the trend certainly gives you a sense of where things could be headed.

The annual growth figures say much the same:

Now one very interesting thing about the figures released today is the GDP deflator. This is essentially the inflation gauge used to determine the “real GDP” – which is nominal GDP growth minus inflation . The GDP deflator shows we have been experience deflation

To get a sense of how unusual this is look at the annual GDP deflator all the way back to 1960:

Things are pretty irregular at the moment.

What this means is that rather oddly nominal GDP growth is actually below real GDP growth:

This is not actually a good thing. Sure we love low inflation, but deflation? That ain’t a sign that things are healthy.

Similarly let’s compare GDP growth to GDP per capita growth. What you see is that during the GFC Real GDP (which ignores growth in population) grew more (or fell less) than did GDP per capita growth. After falling back to near average levels in 2011 once again it is increasing – a sign that the economy might be doing OK, but it is not really being felt across the nation.

The quarterly growth of 0.5% is being talked down as a bit of a disappointment. Personally I was relieved – I thought it could be less given how crappy things were in that September quarter. The Terms of Trade for example were really bad, falling 4.0% for a 13.7% fall in the past 12 months. For a country that loves making money from mining, that makes it hard to keep growing:

OK, now to productivity.

It increased in the September quarter by 0.7%, for an annual rate of 3.1% (seasonally adjusted). Needless to say, it’s along way from the 1% annual productivity growth level thrown around whenever any business leader wants to talk about the need for “flexibility”. Also don’t forget that the big drop in productivity during 2010 was due to the floods in QLD, where GDP fell but employment did not (because mines etc didn't sack staff, because they knew the mines would re-open once the water was cleared away).

But even if you ignore that we’re looking at a run of positive annual productivity growth not seen since around 2000. (But don’t worry, tomorrow the industrial disputes figures will come out and no doubt there’ll be a way to say how terrible is the Fair Work Act for the economy)

Now to labour costs. I’ll use non-farm just to be as fair as possible – because total real unit labour costs actually fell 0.7% this last quarter, whereas non-farm stayed flat:

In my Drum piece a couple week’s back looking at IR legislation I noted that real unit labour costs, while they had increased of late, were still pretty much in keeping with the trend decline of the last 6 years of the Howard Government and had only increased in the past year because they had declined so abnormally during the GFC. This quarter’s figures confirm this to be the case:

Similarly the nominal unit labour costs continue to be low – lower than the average from 2002-2007. So the RBA certainly won’t be worrying about labour costs when considering inflationary pressures:

A quick look at where the national income is going shows us now back to pre-GFC ratios:

And the Household Savings Ratio stayed much the same:

So that’s the big picture stuff. I’ll have a bit more of a look at the data tomorrow (time permitting) – examining the states etc.

Banks: The Cash Rate and the Real Interest Rates

In my monthly round up of stuff to do with the RBA’s interest rate announcement I as a rule show this graph:

Now I must admit that by itself it is a bit misleading. It suggests the banks are making out like bandits, and are screwing mortgage holders royally.

In reality it only tells half of the story.

Today after tweeting a link to the graph, Stephen Koukoulas and Margaret Godfrey quite rightly suggested that I also graph the difference between mortgage rates and deposit rates. That’s a good idea – clearly if the spread of mortgage to deposit rates was increasing then a case could be made that banks are raising rates on mortgage holders (or lowering them by less than the cash rate is declining) while not doing the same for deposit rates. It’s also important because domestic deposits now account for over 50% of banks funding (prior to the GFC it was closer to 40%).

First off let’s compare the spread of 6 months term deposits to the cash rate:

Yes my friends, up until 2008, the rate for a 6 month term deposit was less than the cash rate. Now it is above it. This more than anything is why the first graph shows a bump from 2008 on. Prior to then, banks were laughing with respect to 40%+ of their funding. They were paying you up to 150 basis points less to hold your money than the cash rate. Sweet. But as you can see things started going a bit chaotic as the GFC neared, and then more expensive as the GFC hit. Now banks are paying around 100 basis point more than the cash rate to hold your money.

So obviously they have needed to get that extra money from somewhere….

So now let’s look at the difference between the mortgage rate and the 6 months deposit rate:

The current spread is 250 basis points – the average mortgage rate is 6.45%, the average 6 month term deposit is 3.95%. This spread is currently lower than the 304 basis points average for the term of the Howard Government.

Today when asked what he would do if the banks didn’t pass on the full rate of the cut, Tony Abbott pointedly refused to answer the question (because there’s bugger all he could do) but he said under Peter Costello the banks did what they were told (patent bullshit).

What has happened is that the funding mix has changed, and perhaps surprisingly the gap between what the banks are charging you to lend from them, and what we are charging them to lend from us (which is essentially what a deposit is) has shrunk of late, and at the very least is not much different to what it was when Peter Costello’s hand on the economic tiller. For Tony Abbott to say things would go back to the way they were under Howard and Costello is to suggest that actually not much would change in reality – but given the focus is almost always on mortgage holders rather than deposits (and I admit I am guilty of this as well) it’s an easy sell.

One last thing, let us look at the difference between the two rates – mortgage and deposit – and inflation:

First 6 month term deposits. This gives in essence the real return on your deposit. If the bank is giving you 4% and inflation is 2% then your real return is 2%:

Well what do you know. The real rate of return is currently 1.65% – the same as the average under the Howard Government – and that average includes the now abnormally high returns left over from the high interest rates under Keating. If you look from 2000-2007 however, savers were being mightily screwed compared to now.

But it’s good to know Joe Hockey and Tony Abbott want that to return. Incidentally any self-funded retirees out there whinging about interest rates going down etc, please stop it. The past 2 years you have been doing very well. You cannot expect to always get a real return of 3.5% from just sticking your money in the bank and putting you feet up. Be realistic. 1.65% is about .5% better than you would have average over the past decade.

OK now to see mortgages compared to inflation. Again this looks at the real cost. If inflation is 2% and the bank charges you 7% that is a greater real cost to you than if inflation is 5% and the bank is still only charging you 7%:

Again we find that the real rate you are paying for your mortgage is less than the Howard Government average. Again that average includes the big rates coming down from the Keating Government, but Joe Hockey likes to cites the average mortgage rate during that time, so what’s good for the goose…

All up I think these graphs nicely show that yes life has changed sine the GFC with respect to mortgages and their relation to the cash rate, but that actually things aren’t that much different, and an argument could be made that they are better – for both borrowers and savers.

Also remember as well – the RBA knows this, and as I pointed out yesterday, if the spread of the mortgage to the cash rate was lower, then the RBA wouldn’t have needed to lower the cash rate by as much.

RBA Cuts the Cash Rate to 3%

Today the RBA announced that it was cutting the cash rate by 25 basis points from 3.25% to 3.0%.

This now puts the cash rate at the equal record lowest level.

The cut was largely expected – so expected that this is the impact it had on the exchange rate:

The rate cut actually saw the exchange rate rise! Seriously, the Aussie dollar is absolutely bullet proof at the moment. Have a look at the comparison of the cash rate with the Trade Weighted Index over the past decade:

The cash rate falls are having no impact on bringing down the exchange rate and at best are perhaps only stopping it from rising more. This is really unprecedented in the post-float world.

Now the word thrown around will be “emergency levels” because the cash rate is now at the same level as it was in the GFC.

Well yes it is, but there are a couple big differences.

• Firstly, when the cash rate last reached 3.0% Australia’s annual GDP growth was 0.8%, the latest national accounts are out tomorrow and the GDP annual growth is likely to be around 2.7-3.0%.
• Secondly, back then the Government was implementing a historically large budget stimulus spend. This time round the Government is undergoing a historically large budget contraction:

What happened back then was that both the Government and the RBA were working to stimulate the economy; now only the RBA is doing it. Had the Government back in 2009 not spent so much on stimulus (as the Liberal Party suggested) it is likely the RBA would have had to lower the cash rate to around 1.5% to compensate. You can debate whether or not that would have been a better way to avoid the GFC (I don’t think it would have – I think it would have almost certainly led to a recession), but you can’t look at fiscal and monetary policy and suggest that the reasons for a 3% cash rate now are the same as the cash rate of 3% in the GFC.

Unless of course you are Joe Hockey and you have to say something bad about the the decision, but then he has to stand by a leader who says such things as this only a month ago:

'”the trouble with a government which cannot get the Budget back into surplus is that it keeps putting more pressure on households because a government which is out there borrowing, in this case, $20 million a day, is always putting unnecessary upward pressure on interest rates…”

So why did the RBA drop the cash rate? Well one indicator (as you’ll see in my Drum piece tomorrow) job growth is pretty much non-existent and today the building approval data showed nothing joyful:

And then yesterday there was the retail sales figures:

Pretty limp.

Now of course the big issue is what will the banks do. If they follow the past few rate cuts and only pass on 20 of the 25 basis points well end up with this:

The standard variable mortgage will be around 6.45% – well below the 20 year average of 7.70%, and even the Howard Govt average of 7.26%.

But the small overdraft for businesses is likely to only fall to about 10.1% – still above the 20 years average of 9.84%.

This will all lead to the spread of the bank rates to the cash rate increasing to obscene levels:

Of course if the spread was narrower it is unlikely the RBA would have actually cut rates to as low as they have.

When we look at the percentage of disposable income spent on interest payments for housing mortgages we see that while the cash rate might be low, the amount spent servicing mortgages is not. Although the recent drops in the cash rate should get the percentage of disposable income spent on interest payment to below 8% for the first time since December 2004 (not including the GFC), and a long way below the 11.1% it accounted for in December 2008:

Now to the RBA statement. Let’s do a quick comparison with this month and last month:

Global growth is forecast to be a little below average for a time. Risks to the outlook are still seen to be on the downside, largely as a result of the situation in Europe, though the uncertainty over the course of US fiscal policy is also weighing on sentiment at present. Recent data suggest that the US economy is recording moderate growth and that growth in China has stabilised. Around Asia generally, growth has been dampened by the more moderate Chinese expansion and the weakness in Europe.

The big change from last month is the addition of mention of the US fiscal cliff, otherwise there’s no change.

Key commodity prices for Australia remain significantly lower than earlier in the year, though trends have been more mixed over the past few months. The terms of trade have declined by about 15 per cent since the peak, to a level that is still historically high.

The difference is that in November the terms of trade decline was 13 per cent since the peak.

Sentiment in financial markets remains better than it was in mid year, in response to signs of progress in addressing Europe's financial problems, though Europe is likely to remain a source of instability for some time. Long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Capital markets remain open to corporations and well-rated banks, and Australian banks have had no difficulty accessing funding, including on an unsecured basis. Borrowing conditions for large corporations are similarly attractive and share prices have risen since mid year.

No change except for a shift from “Financial markets have responded positively over the past few months…” to “Sentiment in financial markets remains better than it was in mid year”. Good luck working out if that is a positive or a negative!

In Australia, most indicators available for this meeting suggest that growth has been running close to trend over the past year, led by very large increases in capital spending in the resources sector, while some other sectors have experienced weaker conditions. Looking ahead, recent data confirm that the peak in resource investment is approaching. As it does, there will be more scope for some other areas of demand to strengthen.

Again, no change except for the inclusion of “while some other sectors have experienced weaker conditions”. Hardly a stunning statement.

Private consumption spending is expected to grow, but a return to the very strong growth of some years ago is unlikely. Available information suggests that the near-term outlook for non-residential building investment, and investment generally outside the resources sector, remains relatively subdued. Public spending is forecast to be constrained. On the other hand, there are indications of a prospective improvement in dwelling investment, with dwelling prices moving a little higher, rental yields increasing and building approvals having turned up.

Hardly any difference to what they said in November. A bit of different wordage, but not of meaning. Also just note “Public spending is forecast to be constrained”, which doesn’t really match the wasteful and spendthrift ALP line that the LNP would have you believe.

Now to inflation:

Inflation is consistent with the medium-term target, with underlying measures at around 2½ per cent. The introduction of the carbon price affected consumer prices in the September quarter, and there could be some further small effects over the next couple of quarters. Partly as a result of that, headline CPI inflation will rise above 3 per cent briefly. Looking further ahead, with the labour market softening somewhat and unemployment edging higher, conditions are working to contain pressure on labour costs. A continuation of moderate wage outcomes and improved productivity performance will be needed to keep inflation low, since the effects on prices of the earlier exchange rate appreciation are now waning. The Bank's assessment remains that inflation will be consistent with the target over the next one to two years.

The big difference here is that in November the RBA talked of higher than expected inflation figures. That now is gone. Clearly the RBA is untroubled by the inflationary impacts of the carbon price. And it certainly didn’t stop them from dropping rates.

And the conclusion:

Over the past year, monetary policy has become more accommodative. There are signs of easier conditions starting to have some of the expected effects, though the exchange rate remains higher than might have been expected, given the observed decline in export prices and the weaker global outlook. While the full effects of earlier measures are yet to be observed, the Board judged at today's meeting that a further easing in the stance of monetary policy was appropriate now. This will help to foster sustainable growth in demand and inflation outcomes consistent with the target over time.

Again little change with last month. Absent are mention of higher than expected inflation data and in November the RBA also noted

“Business demand for external funding has increased this year, the housing market has strengthened and share prices have risen in line with markets overseas.”

This month it is not so positive in its summation that it wanted to mention those aspects.

And so tomorrow the National Accounts come out and on Thursday the Labour Force data and we shall see how the decision to let monetary policy do all the heavy lifting is going.

Drum Post: The Industrial War that Isn’t

My Drum post looks at talk about how the IR legislation is now too pro-union.

It’s an old issue. One that crops up every 2-3 months whenever any data is released that can somehow be shoehorned into conforming to the narrative. Mostly it involves things like suggesting strikes by state public service workers not covered by the Fair Work Act are signs that the Fair Work Act isn’t working.

Last week we had business groups suggesting Labor’s IR policies are too pro-business. John Howard even chipped in to say as much (yeah I know, I’ll give you a moment to let you pick your jaw up from off the floor). It is worth remembering that back in 2007 these type of business groups were among those funding adverts under the “National Business Action Fund”. You remember – those calm, fact-based adverts such as:

So let’s not pretend that these groups are some middle of the sphere, no bias-detected groups who only care about the economy of Australia. They’re unions for businesses and as such they advocate their policies as do labour unions. Oddly however, The Oz and the AFR seem to report the two types of unions differently. I would almost think it has something to do with their readership. But that would be wrong given newspapers just report facts and betray no bias at all.

The entire reason IR is considered a big issue is because of productivity. The problem is most commentary on productivity is bollocks. And we gets things like was reported today:

Companies do more with less: survey

Now before we go further I’ll just let you know that the survey being reported was done by Robert Half, a recruitment services company. OK. let’s continue:

Many companies are improving productivity by making greater demands on workers without providing additional resources, a survey has found.
…

A third of the 300 who participated said hiring additional temporary staff had improved productivity.

"In the current financial climate, driving existing employees to be more productive is a cost-effective solution," Robert Half Australia director Andrew Brushfield said on Tuesday.

Well that’s nice. But hiring new staff won’t improve productivity, unless those new staff are more productive than the current staff. Nor will getting your staff to work longer improve productivity – unless they are more productive in those extra hours than they are in normal hours.

Output is not productivity. The only way increased hours could lead to increased productivity is if you don’t count those extra hours when you are working out your level of productivity (something which Matt Cowgill reminded me is what John Quiggin thinks might have occurred during the 1990s and thus led to Australia’s increase productivity levels) .

Anyhoo here’s the picture of why people are concerned about productivity:

I’ve used a rolling 5 year average because the annual rate jumps up and down a fair bit and this gives a much smoother picture – without distorting the issue.

Now something happened around 2002 that sent productivity downwards. One reason (in my opinion) is that the mining boom led to more unproductive mines being worked which due to the increase in minerals prices were now profitable.

You only need to look at the “multi-factor productivity” (which looks at both labour and capital productivity together) in the mining sector to see why I might think this:

If the mining boom helped spark our GDP growth it also certainly helped drive our decline in productivity growth.

Anyhoo the talk last week about IR rather oddly ignored the latest Wages Price Index data that was also released last week. I wrote about that here so you can go there to find all the graphs. But I’ll show a couple graphs that I didn’t have room for in my Drum piece.

Firstly in my Drum piece I quoted Terry McCrann saying:

The June-quarter numbers showed private sector wages rose a tick under 4 per cent over the year.

While previously that number would not have sparked concern, it now does. The reason is low productivity. If productivity is around 1 per cent, 4 per cent wages growth threatens the 3 per cent inflation ceiling.

Now that’s a good point, but it was odd that McCrann didn’t point out that for the last 5 years of the Howard Govt productivity was running at around 1% and yet wages growth was above what it is now, which suggests that when he is saying “previously that number would not have sparked concern” he is referring to a time he seems somewhat disinclined to actually state.

I thought it worth looking at the spread between the WPI annual growth and the 5 years productivity growth, to see if wages growth now are running higher above productivity growth than they were previously. I decided to also look at the 3 year average productivity growth just to ensure the current level isn’t getting too much benefit from levels seen under the Howard Govt:

So you can see once the mining boom took hold the spread of wages growth over productivity growth increased sharply (this is accentuated with the 3 year average).

You can see why when you look at both the WPI and Productivity on the same graph. From 2002- 2005 wages growth increased, while productivity growth decreased:

After 2005 productivity growth continued to decrease but wages growth stayed flat. So by 2006-2007 (depending on which average you use) the gap was greater that 3 percentage points – Terry McCrann’s danger zone.

But what has happened since then? Well as you can see the gap has decreased and is now around 2.5 percentage points on the 3 year average, and around 2.7 percentage points on the more laggy 5 year average.

Not counting the GFC – which killed wages growth, the spread between wages growth and the 3 year average is now smaller than any time since 2004.

Hardly a sign of IR legislation that isn’t working.

One other aspect is Real Unit Labour Costs. These have been rising of late and have been used to demonstrate that the IR picture is horrible. in my Drum piece I noted the abnormally low GDP deflator number of late that have caused the RULC to increase.

For example here are the past 5 quarterly growth in RULC starting from the June 2011 quarter: –0.2%; 0.1%; 0.3%; 1.4%; 0.2%. Clearly the 1.4% is a massive outlier and one that will affect the annual growth in RULC for another two quarters.

But one other aspect about the recent increase in the RULC is that it really is just a correction post-GFC. As you can see from above, the GFC wreaked havoc with wages growth. It also led to a big decline in RULC. Heck in the June 2009 quarter nominal unit labour costs fell 2.3%, the biggest fall since 1985. But the impact on real unit costs had hit even before then.

In the September 2008 quarter the year on year growth was minus 4.0%. There hadn’t been a quarter showing a year on year RULC growth decline of over 3% for 20 years. So it was certainly out of the ordinary. As you can see however if you look at RULC from the past decade, the current level is only just above the trend that was being exhibited between 2002-2008:

Now yes, we don’t want to see it continuing to rise. But the belief that real unit labour costs can infinitely decline is absurd, and is especially so when coming from the CEO of companies who certainly don’t show ever increasing profit rates year on year.

Wages Breakout Lets Us Down Once Again

It is really starting to get annoying. Today the ABS once again produced data that failed to show any sign of a wages breakout. How long must we go before we turf out these current union hacks and bring back some 1970s style leaders who will deliver the destruction of the economy so long promised us by conservative commentators since around mid-2007?

Today the ABS revealed that the Wages Price Index rose by 0.9% in trend terms over the previous quarter, and in seasonally adjusted terms rose only 0.71%.

Both the Public and Private Sector WPI rose by 0.9% in trend terms, in seasonally adjusted terms, the Private sector WPI rose 0.8% and the Public Sector by 0.7%.

It’s clearly dire times for us who are trying to find evidence of the Fair Work Act leading to wages spiralling out of control, especially in that clearly, wasteful public sector:

Oh look, bugger the quarterly numbers – they clearly must be just exaggerating an anomaly. Surely the annual figures will reveal the spike in wages:

Bloody data. Adam Creighton was right – it’s bringing down this country. How the hell am I supposed to argue things if facts keep making stuff up?

Ahh well. I guess in three months time we’ll finally see the true picture. 

OK, let’s look at the various Industries. Somewhat surprisingly the mining sector had very small wages growth in the September Quarter:

But it probably should not be too great a surprise as Ryan Buckland on Twitter informed me, September is usually the quarter that sees the smallest rise in the mining sector wages – and has been since 2009:

But a look at the quarterly increases in the Mining sector since 2005 shows that things are pretty flat;

In annual terms however there has been an increase – coming off the rises of the proceeding two quarters. Over the past 12 months only the Wholesale Sales sector has had a bigger increase in wages. But again nothing we haven’t seen before – such as back in 2008 when Work Choices was the IR legislation of concern:

Of course its the Wharfies who are really running rampant. And we can see evidence of that when we look at the increase in wages in the industry they come under – the Transport, Postal and Warehousing industry:

Which leads to this rather shocking annual rise:

Ahh well. Maybe next time. See you all in three months, as we go wages break hunting (be wery wery quiet).

Les Miserables: Keeps looking damn good

So the latest trailer is out for Les Miserables.

The first one had me hooked – I was feeling pretty confident that they weren’t going to stuff it up. This second version is almost a summary of the film. Whereas the first only featured Anne Hathaway singing “I Dreamed a Dream”, this one shows most of the lead actors getting a chance to show their stuff (pretty much the only ones we don’t hear are Sasha Barron Cohen and Helena Bonham Carter – though we do get to see them).

And OK. I’m in. I am fully invested in this. If this sucks as a film, then I’m likely to be seen on TV being dragged out of some cinema by the authorities on Boxing Day screaming “You bastards!! You ruined it!!! Damn you!! Damn you all to hell!!!”

Because this trailer has me completely in. All the actors look the goods. Russell Crowe doesn’t sound like Philip Quast but I’m still confident he’ll be fine, and the line we hear him sing from “One Day More” is not a great one to show off any singing – his real test will come with “Stars” and “Javert’s Suicide” (sorry if that title is a spoiler for anyone!).

Lock in Anne Hathaway for a Best Supporting Oscar. Just lock her in. There is no way she will lose. She acts, she cut her hair, she sings and she’ll make every person in the theatre bawl their eyes out. She gets the gold statue.

Amanda Seyfried looks rather like Cosette – which is pretty much means she comes off as perfectly nice and perfect. The role is a tough thing given everyone really loves Eponine, and in that role I’m happy to see Samantha Barks, because if she flubbed “On My Own”, things would get rather sad (and not in a good way). Given she sang the role for the 25th Anniversary Concert, we know she can hold the tune, and when she tells Marius that the girl’s name is Cosette and then looks down and knows all is lost, well, I’m with her.

And I pretty happy with Hugh Jackman as the bloke to carry this film: Jean Valjean spent 19 years in prison so he’s can’t be Mister Nice but you have to like him, and you have to think he could be the type of guy who could spend 19 years in jail and come out not be full of hate. He also needs to do a fair bit of singing. We don’t see much of that in the trailer, and I’m interested to see how “natural” he goes. While I love the idea of the live singing as opposed to miming a standard Broadway cast score, I think there is a danger in going “too natural”. At the end of the day (to quote a song) it’s still a musical.

But anyway. Well done to the trailer makers because you got me. I’m there Boxing Day:

Time to end Post-Truth Politics

The win by President Obama was a win for facts. For reality. For truth, if you will. Does this mean Obama only told the truth on the way back to the White House? Hell no. He’s a politician. But unlike Mitt Romney, his entire campaign wasn’t based on a foundation of lies. Actually – it was worse than that – Mitt’s was founded on an alternate reality.  He argued against a health care system that was based on one he had introduced as Governor of Massachusetts. He argued that he and his running mate Paul Ryan were fiscal conservatives all the while running with a tax policy that didn’t add up. He was for abortion, against it, for it, against it; he said he would create 12 million jobs in 4 years and based this assertion on reports that said he might create 7 million jobs over 10 years and an extra 3.6 million jobs over the next 8 years and 2 million jobs from “cracking down on China” which no one would suggest would occur. He lied about Obama and the auto bailout – probably the final lie really – the one that broke the back of the voters carrying 12 months plus of bullshit. He and the GOP lied and lied and lied.

In these lies Mitt was unfortunately assisted by the right-wing elements of the media in the USA – namely Fox News, talk-back hosts like Rush Limbaugh and blogs like the Drudge Report.

Everything Obama did was “a conspiracy”. I fully envision in the next few months “Hurricane Sandy Truthers’ coming out to show how Obama actually did things to ensure the Hurricane hit the east coast when it did, and that he probably did an under the table deal with New Jersey Governor Chris Christie to get him to thank Obama for his efforts. You know it’s true.

Anytime Obama said anything that if twisted could be shown to be a “he clearly hates America” “gaffe” then we’d see it. From “You didn’t build that” (oh my God did the right wing think that would cost Obama the election) right up till last weekend when Obama quietened a crowd that was booing mention of Romney’s name by saying “no, no. Don’t boo. Vote. Vote. Voting is the best revenge.” 

And of course the right wingers and Mitt played ignorance on ever having heard a line like “Living well is the best revenge”, and thinking it was a play on that; instead Obama hated America:

 

But in the end Mitt was just telling those who were already firmly lodged in his fundament that what they were smelling was roses and honey. And it wasn’t.

We see this factless and reality lost politics here in Australia as well. Our debt will have us like Greece and Spain; the carbon price will kill the economy; Julia Gillard is just a gender card playing victim who was a corrupt lawyer; welfare is bad except when the Govt decides to take some away; climate change is a global conspiracy; we’re on the cusp of a wages breakout; the unions are back in charge; the mining tax will send mining off to Sierra Leone; the newspolls are rigged; the newspolls are the only polls that matter; gay marriage will destroy our society; low interest rates are bad; low interest rates are good; if we don’t have a surplus that means Labor never wants to pay off the debt.

Look there are more – and Labor throws out a few of them as well – mostly related to asylum seekers.

But this type of debate led by fools who use data when it suits and then promptly ignore it – or suggest it no longer really matters – helps no one. It leads to a debate where it boils down to “ideology”. Today in The Australian, Adam Creighton, apparently with a straight face, wrote:

CALLS for more "evidence-based policy" in Australia are routine. For former prime minister Kevin Rudd, under whose watch little reform occurred, it was "at the heart of being a reformist government".

But more "ideology-based policy" is what this country needs. Evidence is useless without underlying principles to guide what to do with it. Statistics are often crafted from poor data and reported tendentiously.

Yep, apparently we suffer from too much data. But don’t worry Creighton knows how to fix things:

How can we improve productivity in Australia? Shrink government and thereby expand the fraction of the labour force producing goods and services that people are willing to pay for.

Does he offer any proof that this is correct? Proof? What are you a hippie? If you don’t know that this is true then clearly your ideology is wrong and really it’s time for you to piss off and let the intelligent people run the country. Don’t worry about the fact that such an assertion is bollocks – it won’t do anything for productivity because if you expand the labour force producing goods, you only improve productivity if that increased labour force produces goods more efficiently than does the current market sector of the economy. Shrinking the government won’t do anything to improve the productivity of the mining sector.

He continues:

At the federal level, abolish patently absurd departments -- and their attendant expenditures -- such as "innovation", "climate change", "agriculture", and "families". At the state level, contract out the management and operation of hospitals and schools and deliver subsidies direct to the people consuming these services.

At the local level, sack diversity officers and community outreach programs in favour of fixing potholes and approving new developments.

How wonderful life is when you don’t need to support your assertions with evidence. You get to kill off everything in society you don’t like. I really should have adopted this strategy earlier.

Creighton ends with this doozy:

Not only does "evidence-based policy" thwart sensible reform with a barrage of data, the very process of producing statistics and "evidence" encourages governments to meddle with the economy. No one would pay to know Australia's gross domestic product or supposed aggregate productivity, for instance. Australia would be far freer and more prosperous if government produced fewer statistics.

Yep. There you go – finally the solution to our productivity. Less data! And why? Does he have evidence to support this? (You know for those deluded types who still think evidence maters). Why nope. He just asserts:

Australian businesses do not even measure their productivity in the way the Australian Bureau of Statistics does. They are more interested in profit, a far more reliable indicator of success.

To the extent any principle guides modern economic policy it is a crude utilitarianism that mandates fleecing the many to curry political favour with the few.

What a seriously fucked up vision of the world this bloke has (see I was using ideology there, not evidence). He asserts his ideology is right because it’s his ideology. So what does he do if he meets someone who disagrees with him? Well clearly evidence is not what we need, we just need whoever is strongest to prevail. Because that’s what happens when you trumpet ideology over evidence. If you want to see the germ of every totalitarian regime in history it starts with people asserting ideology over facts.

But it’s not surprising that Creighton would argue such things given back in April he wrote:

It doesn't matter which party is in power. As Winston Churchill said, democracy may be the best form of government among known alternatives, but it is probably not sustainable.

Democracies subsidise bad decisions. Voters, especially ones who pay no tax, care little for the preferences of future generations. The benefits of considered, sensible votes and the costs of careless ones mainly accrue to other people.

Yeah, that cursed democracy.

It is the view that flows underneath most of the right wing’s commentary post the Obama win. Take this nausea inducing excrement from RMIT lecturer of Economics Steve Kates on why Obama won:

The confluence of the mendicants, the envious, the abortion lobby, what I will call the cohort of damaged women, and the social sciences know-nothings has proven a formidable combination. They are a new constituency amalgamation that will affect the politics of the United States for the foreseeable future.

Damaged women? Yep, you see women are now all pretty slutty really – they conform to the Playboy view of the world, but unfortunately it has left them hurt:

But who has come out of this genuinely hurt by the changed attitude to women. Both men and women are worse for it, but if you ask me, it is women who have been psychologically damaged far more than the men. And I suspect Miss 29 has not avoided the deep and fearsome pains of commitment-free sexual relations either.

These are the attitudes that Obama was tapping into. Watching the Middle East burn and the American economy trashed by debt and deficits are irrelevant to such women whose anger is beyond all understanding, particularly for men of my and Romney’s generation.

I sure as shit wouldn’t want to have to make a list of things that are beyond Kates’s understanding.

He ends:

We are in dangerous times. Obama and Gillard are two of a kind. Empty of ability, proven failures at everything they have tried to achieve, but nevertheless able to command majorities in the legislative systems of our two nations. But the American election is the one that will matter most and whose outcome will resonate far into the future in ways that are incalculable. Re-electing Obama has endangered our way of life and may even make it unsustainable.

It’s almost impossible where to begin with such a paragraph. Perhaps it is best not to at all. It’s perhaps best just to quietly walk past and hope Kates doesn’t catch our gaze.

But Kates is not alone. Many of his Quadrant mates are on board the unhinged express. Try this on for size from Christopher Carr:

At this early stage, a few random thoughts will have to do. It seems that there are two Americas, which inhabit parallel universes. In addition to the obvious demographic divisions, there is an information division. Unless voters were tuned to the Fox News Network or followed conservative blogs, they would scarcely have heard of the scandal concerning the White House’s repeated denial of requests for backup during the terrorist attack at Benghazi. The mainstream media did a brilliant job covering for Obama.

Mitt Romney played Mr Nice Guy. President Obama played the demagogue.

Wait. Fox News? The same Fox News that used graphs repeatedly to mislead and outright lie? The same Fox News that frequently refers to “we” when talking about the Republican Party?

And if you still have any strength left, go read Peter Smith parrot every blog written on the National Review where he blames the loss on Obama being mean to Mitt and painting him as an evil capitalist (and ignoring that that was exactly what his fellow Republicans did during the Primaries).

There’s only so much delusion you can handle. And it helps no one – not even the other side – because what usually happens is when the contest of ideas becomes a contest of ideology then stupidity rises.

On this aspect Rachel Maddow of MSNBC conveys it all perfectly, and I have no more to add: