Friday, August 10, 2007

The dismal science

Why do people hate economists? There's a multitude of reasons, but their utter disconnection from everyday life and shameless touting of the interests of the ultra-rich are surely among them. Take for example the reaction of one BNZ economist to New Zealand's tight labour market:

The Bank of New Zealand's head of research, Stephen Toplis, said the tightness of the labour market was the single biggest problem facing the economy. Job security left people feeling "bullet-proof" and comfortable spending up large both on housing and through the retail sector and becoming less resistant to price rises, he said.

At the same time business had to cope with increasing wage bills, high staff turnover and output being constrained by the inability to find staff. These factors compressed profit margins and encouraged firms to raise their prices.

You get that? People being secure and happy is a bad thing, because it reduces corporate profits and leads to (mild) inflation. But given the choice, I think most of us would consider that a fair price to pay for being able to live our lives generally free from the fear that we'll be thrown out on the street at a moment's notice.

No wonder they call it "the dismal science"...