Successive federal governments, including those of both Keating and Howard, and the Reserve Bank have actively pursued the first two, hoped for the third and berated us all to conform with their theories. Analysis of the actual dynamics of our economy over the last 40 years shows that adherence to the fundamental tenets of official economic policy guarantees continued high unemployment, low growth and low savings. The next chart shows the relation between unemployment and inflation since the 50s. Each dot plots inflation and unemployment rates for a year. Solid dots are for the years up to 1974.
Squares are for the years since.
This data is striking. It reveals two quite different lines. The bottom one is the relation between inflation and unemployment until the mid 70s. The top line is the relationship since then. Until the mid 70s unemployment was consistently low.