You probably saw RBA Governor Michele Bullock's comments calling dentistry a 'recreational activity'.
You probably also saw others criticise her for calling it a luxury.
And you were probably ropeable.
Except that, if you were, it wasn't deserved. Because you weren't being told the truth.
That didn't stop those who should know better from misrepresenting her words.
Or others from being outraged on the basis of an incorrect headline, or tweet.
Worse, if you're someone who really cares about better economic (and broader public) policy, this sort of stuff makes it less likely, rather than more.
And if we don't call it out, when it happens, we'll get more of it.
Because it is vital that our policymakers are truly making policy that's in our long term national interest.
And it's equally vital that we don't get so caught up in the selective outrage game that we don't actually focus on the stuff that really matters.
But let's go back a step.
On Wednesday night, Governor Bullock gave a speech.
In it, she said:
"Hairdressers and dentists, dining out, sporting and other recreational activities – the prices of all these services are rising strongly. This reflects domestic economic conditions and is an indication that aggregate demand is sufficiently greater than aggregate supply to sustain these price increases."
And let's break that down.
Her first sentence: 'Prices for services are rising too quickly.'
Second sentence: 'That's because the economy is running hot, and when demand exceeds supply, prices tend to rise.'
Outrageous? Hardly.
(Does anyone really think she was bracketing 'hairdressers, dentists, dining out and sports' all as recreational activities? Or was she, instead listing 'sporting and recreational activities' as one category, alongside the others? Clearly, unless you have a very jaundiced view, or an vendetta against the RBA, it was the latter!)
Michele Bullock was simply saying what the ABS data is telling us: inflation started off as a globally driven phenomenon, but has morphed into a local one.
And, unspoken: if that continues, we'll have a longer-term inflationary spiral.
Did she say too many people are going to the dentist? No.
Did she say dentistry was a recreational activity? No.
You'd have to assume malice (or be using malice of your own) to believe either of those things was what she was trying to say.
And yet, that's the impression many would have you draw.
Maybe their preconceptions led them to hear what they wanted to hear.
Maybe the headlines were just too easy to share, without the context of the article.
Maybe outrage just gets the clicks.
I don't know.
What I do know is that when we are talking about the parsing of Michele Bullock's sentences, we're missing two larger opportunities.
First, the fact that inflation remains too high, and that it's because the economy is running too hot (demand is outstripping supply).
Second (and related), while we're vilifying the Reserve Bank Governor, we're being distracted from asking what the Federal Government is doing to help out the RBA.
(Hint: Despite the Treasurer's comments to the contrary, the answer is 'nothing'.)
Reducing demand can be done with interest rates alone – but that means higher rates and disproportionate pain for one section of our community.
Or it can be done with a combination of interest rates and government policy: population, tax, spending and more. The benefit is that such action can be far more targeted than the blunt sledgehammer of interest rates.
But while we're all yelling about the dentist, we're not having those broader, far more important conversations.
And it's symptomatic of the conduct of much of our public policy debate these days.
At the moment, the government is doing a lot to stoke demand (rapid population growth, a structural budget deficit and pending Stage 3 tax cuts) while the RBA is desperately trying to restrain that very demand – as Governor Bullock clearly stated in her comments, above.
The Westminster tradition might prevent an RBA Governor directly criticising Ministers of the Crown, but Michele Bullock has neatly laid out all of the pieces.
To mix my metaphors, we just need to join the dots.
The sting in the tail?
As the RBA Board said in its minutes, released this week:
"A scenario prepared by the staff illustrated that even a modest further increase in inflation expectations would make it significantly more challenging and costly to return inflation back to target within a reasonable time frame," the minutes read."
The RBA has been very clear. Hopefully the rate rises, thus far, are enough to prevent such an outcome.
But if not – and in the absence of any support from the Government – it may feel it has no choice but to continue to lift rates further.
Fingers crossed for the inflation numbers, due out next Wednesday.
Have a great weekend.
Fool on!
