Is there any problem that neoliberals can't fix with industrial relations deregulation and shrinking the size of government? Apparently not. Today, former Deutsche Bank economist Adam Boyton takes to the pages of the Financial Review to offer his take on wage stagnation. "Given some of the commentary on this issue you could almost be forgiven for thinking there is a conspiracy of sorts holding wages back," Boyton argues. But against these tinfoil-hatted loons, Boyton makes his case: wage stagnation is because workers aren't working hard enough and government is too big.
"Given the importance of productivity growth in sustaining higher real wages, if there is little or no growth in one it shouldn't be too surprising to see little or no growth in the other," he insists, pointing out relatively weak productivity measure growth in the national accounts. "Increasing the size of government is also popular these days ... Australia has, for nearly a decade now, seen total government spending above 40 per cent of GDP following a step up during the GFC. If modern economies are driven by creativity and innovation, then bigger government and more regulation is likely to be the problem, not the solution."