At Last, A Meaningful Economic Measure
Sydney Morning Herald
Friday February 28, 1992
WHY do economists so often get it wrong? It's because their models don't take proper account of human nature. And that's where Agenda's new Real World(patent pending) Economic Modelling comes in - the only computer predictions based on how people really behave.
Our forecast of the effect of the Keating package is spitting out of the computer right now.
UNEMPLOYMENT will fall faster than indicated by Treasury, due to the inclusion of Agenda's "windfall multiplier". This describes the human tendency to spend any windfall cheque - like Keating's $125 family bonus - at least seven times over.
First Mum replaces the busted lamp, then Dad comes home with the new toaster, then Nanna turns up with a two-bar heater, and then you all spend up big at Pizza Hut while you talk about what else you're going to snap up.
Indeed, the Agenda computer finds that the phrase "Oh, that cheque from the Government will cover that" will be used to excuse spending of an average$875.50 per family - in some cases ranging up to a $45,000 new car and a trip around the world.
GDP: And that's all before the cheque actually slips through the mailbox. Once it does, our computer forecasts a sharp rise in the divorce rate - the result of bitter family divisions on how to spend the cash.
The kids will set up a vain and yet intense campaign in favour of Nintendo, while Dad pitches for a new shirt so he doesn't look "a bloody disgrace at work".
Mum, meanwhile, will ring up when no-one is looking and order an electricity safety switch, to be fitted on Saturday.
The subsequent acrimonious divorce will be one of many - increasing GDP by an estimated 2 per cent as the newly separated go shopping for their own linen and crockery.
Production of single doonas alone is expected to rise fourfold.
SMALL BUSINESS: Half of these suddenly-single people will, of course, be men. Men who've become rather too comfortable in marriage. Men who, let's face it, have let themselves go.
Featherbedded and protected, just like Australian industry, they will now be exposed to the brutal world of competition: to wit, The Ambassador Nite Spot on a Saturday night, fighting for a new girlfriend.
Some, of course, will go to the wall - but competition, as Mr Keating says, will leave the survivors trimmer and fitter. Barbers, clothes stores, exercise gyms, balding clinics, alcohol detox centres - all will boom as the newly-exposed men try desperately to look marriageable.
The resultant steep rise in GDP will, of course, be partly offset by a sudden drop in beer consumption and gambling receipts. Luckily, our computer shows a return to normal behaviour patterns in 1993-94, once the remarriages have occurred.
TRANSPORT: Australia's efficient new rail network will cause a significant shift from road travel - with devastating effects on Australia's hundreds of roadside olde crafte shoppes.
Agenda's model shows $2.3 million lost production of toilet roll holders and a $1.2 million haircut in the frilly Kleenex box business. A complete collapse is predicted among pottery animals and lumpy clay cups.
Thankfully, this will be offset by sales of railway-platform food - with all this implies for a strong plastics industry.
MOTOR INDUSTRY: The overnight cut of $800 to new car price will provide an important economic boost.
While there won't be any new cars sold, there will be the creation of 900 extra jobs in the first month alone.
These will involve cleaning up the trail of destruction left by those Australians who signed up for a new car just a few hours before the statement and are now mad as hell.
The new jobs will be concentrated in the glazing, bricklaying and psychiatry industries.
CONFIDENCE: The promised 1994 tax cuts, meanwhile, will provide a great boast to workplace harmony - uniting management and workers in a chorus of spluttering laughter over which party will win the election and thus renege.
Overall, though, Agenda's computer finds confidence slowly increasing -largely because folks can't bear the thought of hearing one more grump economist talking about how stuffed we are.
Why not believe our predictions instead of theirs? Not only is Agenda predicting strong recovery; our assumptions about how the world works could hardly be more unlikely than those of our economists.
© 1992 Sydney Morning Herald