The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Monday, May 9, 2011

Disappointing attack on Glenn Stevens

I am pretty shocked by Ross Gittins' highly personalised attack of Glenn Stevens in the SMH today. I have previously explained why these criticisms are specious. The comparison with Bernanke, who can expect to earn tens of millions once he leaves the Fed, is baloney. The argument that because the RBA does not want average, across-the-board wage rises of greater than 4.5% per annum, individual workers, such as Stevens himself, should not be able to earn more is equally spurious (by definition, there will be a distribution of workers' pay outcomes above and below the average). Finally, Gittins completely ignores the fact that the adjustments to Stevens's pay, which remains relatively paltry given his responsibilities and opportunity cost, are once-off adjustments to the level of that pay, rather than reflective of longer-term growth rates. This is no different to a once-off hit to inflation due to a supply shock (eg, the floods), which can be contrasted against a persistent increase to core inflation due to some growth-effect (eg, wage-price spirals). Very disappointing.